ANNUAL REPORT AND FINANCIAL STATEMENTS - Alpha Bank · Alpha Bank Jersey Limited Annual Report and...

ALPHA BANK JERSEY LIMITED

AANNNNUUAALL RREEPPOORRTT AANNDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS

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Alpha Bank Jersey Limited Annual Report and Financial Statements

31 December 2005

2

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

15

Balance Sheet Assets

17

Balance Sheet Liabilities

19

Equity

20

Off-Balance Sheet Information

20

Additional Information

21

Transition to IFRS

27


31 December 2005

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 733133 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 2005

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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 2005.

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 2005 (2004: £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.


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Mr M. J. Waghon is Managing Director of Alpha Bank London Limited, the Company’s immediate parent. Mr A. Gibb and Mrs L. Cullen are senior employees of Alpha Bank London Limited. Mr S. N. Filaretos and Mr M. S. Yannopoulos are General Managers and Mr V. J. Karaindros and Mr D. P. Verriopoulos (until his resignation) Divisional Managers of Alpha Bank AE, the Company’s ultimate parent.

The directors are responsible for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards. Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and apply them consistently; make judgments and estimates which are reasonable and prudent;

state whether applicable accounting standards have been followed, subject to any material departures disclosed

and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

company will continue in business.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

KPMG Channel Islands Limited served as auditors throughout the year. A resolution for the reappointment of KPMG Channel Islands Limited as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.

By order of the board

Neil A Haworth

Secretary

10 March 2006


31 December 2005

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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 2005 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.


31 December 2005

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Independent auditors’ report to the members of

Alpha Bank Jersey Limited - continued

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion the financial statements:

• give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the company’s affairs as at 31 December 2005 and of its profit for the year then ended; and

• have been 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.

Chartered Accountants

10 March 2006


31 December 2005

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IInnccoommee SSttaatteemmeenntt For the year ended 31 December 2005

Note Interest and similar income 2 4,135 2,720

Interest expense and similar charges 2 3,219 1,947

Net interest income 916 773 Fee and commission income 3 52 27

Net fee and commission income 52 27 Other income 4 116 22

116 22

Staff costs 5 220 211 General administrative expenses 7 288 310 Depreciation and amortisation expenses 13 17 62

Income tax expense 8 114 62

The notes on pages 12 to 29 form part of these financial statements.


31 December 2005

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BBaallaannccee SShheeeett As at 31 December 2005

Note

Due from banks 9 82,056 61,616 Loans and advances to customers 10 30,000 18,074 Investment securities - Available-for-sale 11 10,355 18,738 Investments in subsidiary undertakings 12 50 - Property, plant and equipment 13 107 17 Other assets 14 71 190

Due to banks 15 13,209 5,657 Due to customers 16 101,824 85,936 Liabilities for income tax 17 176 98 Liabilities for withholding tax 17 153 - Other liabilities 18 34 151

Share capital 19 5,000 5,000 Fair value reserve 20 (7) (12) Retained earnings 21 2,250 1,805

The notes on pages 12 to 29 form part of these financial statements. These financial statements were approved by the Board of Directors on 10 March 2006 and were signed on its behalf by: Martin Waghorn Neil Haworth Chairman Chief Executive


31 December 2005

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SSttaatteemmeenntt ooff CChhaannggeess iinn EEqquuiittyy For the year ended 31 December 2005

For the year ended 31 December 2004

The notes on pages 12 to 29 form part of these financial statements.

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 (loss) for the period - 445 - 445

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 - - (12) (12)

Reversal of general loan provision - 121 - 121

Profit (loss) for the period - 177 - 177


31 December 2005

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SSttaatteemmeenntt ooff CCaasshh FFlloowwss For the year ended 31 December 2005

Note

Profit before tax 559 219

Adjustments for: Depreciation of property, plant and equipment 13 17 62 Amortisation of discount/premium on purchase of debt securities (5) (6)

Operating profit before changes in working capital and provisions 571 275

Net (increase) decrease in assets relating to operating activities: Loans and advances to customers (11,926) (5,963) Other assets 166 (100) Net increase (decrease) in liabilities relating to operating activities Due to banks 7,552 5,657 Due to customers 15,888 (26,643) Other liabilities 38 26 Cash generated from operations 12,289 (26,748)

Income taxes paid (38) (48)

Acquisition of subsidiary (50) - Purchase of fixed assets 13 (107) - Purchase of available-for-sale securities (2,220) (3,365) Redemption of available-for-sale securities 10,566 6,146

9


31 December 2005

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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. These are the Company’s first financial statements and IFRS 1 has been applied.

An explanation of the impact of the transition to IFRS on the financial position and the comparative figures, previously reported in accordance with United Kingdom Generally Accepted Accounting Principles (“UK GAAP”), is included in note 27. This note provides a reconciliation between UK GAAP and IFRS of the Balance Sheet, Equity and Income Statement for the year ended 31 December 2004. As a wholly owned subsidiary of Alpha Bank London Limited, the Company has taken advantage of the exemption in IAS 27 “Consolidated and Separate Financial Statements” and has not prepared consolidated financial statements. The principal accounting policies adopted are set out below. The financial statements are prepared on the historical cost basis except for financial instruments classified as available-for-sale which are stated at their fair value.

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.

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. • Financial assets at fair value through profit or loss.


31 December 2005

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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 carried at amortised cost.

b) Available-for-sale

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 bonds

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

c) Financial assets at fair value through profit or loss

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

1.5 Property, plant and equipment Furniture, fittings and equipment are stated at cost less accumulated depreciation.

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 is incurred. Depreciation is charged on a straight-line basis over the estimated useful lives of property, plant and equipment taking into account residual values. The estimated useful lives are as follows: - Computers, plant and other equipment: 3 to 10 years. The residual value of property and equipment and their useful lives are annually re-assessed and adjusted if necessary at each reporting date.

1.6 Impairment losses on 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. The company has concluded there were no impairment losses at the year-end (2004: nil).


31 December 2005

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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 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 on the balance after the impairment provision using the effective interest rate.

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 Comparatives

To the extent considered necessary the comparatives have been adjusted to facilitate changes in presentation of the current year amounts.

1.11 Subsidiary

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


31 December 2005

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IInnccoommee SSttaatteemmeenntt

Banks 63 54 Investment securities – Available-for-sale 418 450 Loans and advances to customers 1,097 725 Term deposits with parent 2,557 1,491

Banks 223 12 Customers 2,996 1,935

Loans 13 15 Fund transfers 9 7 Other 30 5

Release of unused provisions 95 - Foreign exchange gain 21 22

Wages and salaries 181 164 Social security contributions 8 7 Expenses of defined contribution scheme 19 20 Other 12 20


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The remuneration of the directors is as follows:

Directors’ emoluments 86 86 Company contributions to defined contribution schemes 16 15

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

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

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

Defined contribution schemes 1 1

Premises 42 40 Marketing and advertisement 1 - Banking fees 87 86 Communication and travel 6 5 Professional fees 30 19 Auditors’ remuneration: - Statutory audit 17 14 - Taxation services 5 4 Information systems 93 137 Other general administrative expenses 7 5

Banking fees include £75,000 (2004: £72,000) paid to Alpha Bank London Limited.

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.


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Income tax at 20% (2004: 20%) 113 61 Adjustments in respect of prior periods 1 1

Factors affecting the tax charge for the period:

Current tax on the above at 20% (2004: 20%) 112 48 Disallowable expenses 1 1 Capital allowances for the period less than depreciation - 12 Adjustments in respect of prior years 1 1

Balance Sheet Assets

Loans with parent 80,575 59,232

Placements with other banks 1,481 2,384

Housing 1,300 - Overdrafts 761 27 Term loans 27,939 18,047

Debt securities: - Listed 10,355 18,738


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The company has one subsidiary which is wholly owned and has issued ordinary shares to the value of £50,000.

This was incorporated on 14 September 2005 and has not produced financial statements for the period.

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

Additions - 107 107

Charge for the year 1 16 17

Prepayments 50 144 Amounts due from subsidiary 21 - Other debtors - 46


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Balance Sheet Liabilities

Term deposits with parent 13,209 5,657

Instant access accounts 4,207 9,172 Fixed deposits 97,617 76,764

Current year income tax 114 62 Prior year income tax 62 36

Witholding tax 153 -

Other accrued expenses 34 104 Other creditors - 47


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Equity

(12) - Movement in available-for-sale securities 5 (12)

1,805 1,628 Profit for the period 445 177

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.

Undrawn loan commitments 1,371 6,350 Letters of guarantee 2,988 3,988

2005 2004

5,000,000 ordinary shares of £1 each

5,000,000 ordinary shares of £1 each


31 December 2005

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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 treated as long term investments and generally held as available-for-sale. The main risks arising from the Company’s financial instruments are credit risk, interest rate risk, market price risk, liquidity risk and foreign currency risk, the Company’s policies for which are described below. These policies are the same as those in place last year.

Credit risk is the risk that a counterparty (borrower) will be unable to pay an amount in full when due. 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 industries 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 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.

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.

Market price risk arises from uncertainty about future prices of financial instruments held. 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 monitor market price movements on the financial instruments held, and these details are circulated for review by the Board of Directors.


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The Company’s exposure to liquidity risk is managed based on policies agreed with 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.

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 numerical disclosures in note 23.8 deal with financial assets and financial liabilities as defined in IFRS 7 “Financial Instruments: Disclosures”. As permitted by IFRS 7, short-term debtors and creditors have been excluded from the disclosures, other than the currency disclosures.

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 46 - 82,056 Loans and advances 7 - 30,000 Debt securities 68 - 10,355 Other assets 228 228

Total assets 7 228 122,639

Due to banks - 13,209 Due to customers 89 28 - 101,824 Other liabilities 363 363 Shareholders funds 7, 7,243

Total liabilities 89 28 7, 122,639

Interest rate sensitivity gap (21 (7, -

Cumulative gap - -


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Due from banks 5 - 61,616 Loans and advances 89 - 18,074 Debt securities - 18,738 Other assets 207 207

Total assets 6 207 98,635

Due to banks 6 41 - 5,657 Due to customers 7 - 85,936 Other liabilities 249 249 Shareholders funds 6,793 6,793

Total liabilities 8 7,042 98,635

Interest rate sensitivity gap (1 (6,835)

-

Cumulative gap (1 (1 (1 ( - -

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.


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The table below shows the Company’s currency exposures. 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 30,426 36,099 14,659 872 82,056 Loans and advances to customers 13,651 340 15,204 805 30,000 Investment securities -Available-for-sale 175 6,880 3,300 - 10,355 Investments in subsidiary undertakings 50 - - - 50 Property, plant and equipment 107 - - - 107 Other assets 70 - 1 - 71

Due to banks - - 12,402 807 13,209 Due to customers 36,974 43,259 20,723 868 101,824 Liabilities for current income tax and other taxes 243 58 27 1 329 Other liabilities 34 - - - 34

Total Assets 34,058 33,527 30,350 700 98,635 Total Liabilities 27,262 33,533 30,347 700 91,842

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:


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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 Investments in subsidiary undertakings - - - - 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

Due from banks 38,782 20,619 2,215 - - 61,616 Loans and advances to customers 27 1,502 901 5,649 9,995 18,074 Investment securities -Available-for-sale 1,086 2,549 3,010 4,396 7,697 18,739 Investments in subsidiary undertakings - - - - - -

Property, plant and equipment - - - - 17 17 Other assets - - - - 190 190

Due to banks 5,657 - - - - 5,657 Due to customers 9,173 75,691 804 268 - 85,936 Liabilities for current income tax and other taxes - - - - 98 98 Other liabilities - - - - 151 151


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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.

The outstanding balances with parent company and subsidiary and the related results of these transactions are as follows:

Due from banks – Alpha Bank London Limited 82,056 61,616 Other asset – Alpha Asset Finance C.I. Limited 21 -

Due to banks - Alpha Bank London Limited 13,209 5,657

Letters of guarantee issued - Alpha Bank London Limited 2,988 3,988

Interest income – Alpha Bank London Limited 2,557 1,491 Interest income – Alpha Asset Finance C.I. Limited 6 -

Banking fees - Alpha Bank London Limited 75 72

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 2005 the management charge was £75,000 (2004: £72,000).

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 AE, 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 AE 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.


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TTrraannssiittiioonn ttoo IIFFRRSS

The Company introduced International Financial Reporting Standards (“IFRS”) with effect from 1.1.2005. Due to the requirement to present 2004 comparatives on a consistent basis, the transition date to IFRS is deemed to be 1.1.2004. On this date the transition balance sheet is prepared in accordance with IFRS 1. This has had no effect on the Company’s cash flows.

Note UK GAAP

£’000 Reclassifications

£’000 IFRS £’000

Due from banks a 61,378 238 61,616 Loans and advances to customers b 17,877 197 18,074

Investment securities - Available-for-sale c 18,684 54 18,738 Property, plant and equipment 17 - 17 Other assets d 511 (321) 190

Due to banks e 5,645 12 5,657 Due to customers f 85,702 234 85,936 Liabilities for current income tax and other taxes 98 - 98 Other liabilities g 397 (246) 151

Share Capital 5,000 - 5,000 Retained earnings h 1,625 168 1,793

Valuation difference of available-for-sale securities at fair value (12) h

General Loan provision 180 h

Total adjustments 168


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Note UK GAAP

£’000 Reclassifications

£’000 IFRS £’000

Due from banks a 85,542 89 85,631 Loans and advances to customers b 11,978 133 12,111 Investment securities -Available-for-sale c 21,422 45 21,467 Property, plant and equipment 80 - 80 Other assets d 296 (161) 135

Due to banks e - - - Due to customers f 112,578 101 112,679 Liabilities for current income tax and other taxes 85 - 85 Other liabilities g 148 (100) 48

Share Capital 5,000 - 5,000 Retained earnings h 1,507 105 1,612

General Loan provision 121 h

Other adjustments (16) h

Total adjustments 105

2004 2003 a. Due from banks £’000 £’000

Balance in accordance with UK GAAP 61,378 85,542 Reclassification of accrued interest from other assets 238 89

b. Loans and advances to customers

Balance in accordance with UK GAAP 17,877 11,978 Reclassification of accrued interest from other assets 17 12 Reversal of general loan provision 180 121


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2004 2003 c. Investment securities available-for-sale £’000 £’000

Reclassification of carrying amount from securities, investments and other securities eligible for refinancing 18,684 21,422 Valuation difference (12) - Reclassification of accrued interest from other assets 66 45

Under UK GAAP available-for-sale securities are carried at amortised cost, whereas under IFRS they are carried at fair value.

d. Other assets

Balance in accordance with UK GAAP 511 296 Reclassification of accrued income (321) (161)

e. Due to banks

Balance in accordance with UK GAAP 5,645 - Reclassification of accrued interest from other liabilities 12 -

f. Due to customers

Balance in accordance with UK GAAP 85,702 112,578 Reclassification of accrued interest from other liabilities 234 101

g. Other liabilities

Balance in accordance with UK GAAP 397 148 Reclassification of accrued interest (246) (100)

h. Retained earnings

Balance in accordance with UK GAAP 1,625 1,507 Valuation difference of available-for-sale securities at fair value (12) (16) Reversal of general loan provision 180 121

The only adjustment made to the Income Statement in the transition to IFRS in 2004 relates to the removal of the general loan provision of £59,587 (2003 - £52,028).

ANNUAL REPORT AND FINANCIAL STATEMENTS - Alpha Bank · Alpha Bank Jersey Limited Annual Report and...

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