A.1 – General part

Section 1 – Statement of compliance with international accounting standards

The 2012 consolidated financial statements have been drawn up in accordance with the IASs/IFRSs, together with the relative interpretations (IFRICs and SICs). These standards have been in force since 31 December 2012, were issued by the International Accounting Standards Board (IASB), endorsed by the European Commission in accordance with the provisions in article 6 of European Union Regulation no. 1606/2002 and implemented in Italy with Legislative Decree no. 38 of 28 February 2005.

Interpretation and adoption of the international accounting standards were carried out referring also to IASB’s ‘Framework for the preparation and presentation of financial statements’, even though it was not officially approved.

These consolidated financial statements are subject to certification by the delegated corporate bodies and the Corporate Accounting Reporting Officer, as per article 154 bis paragraph 5 of Legislative Decree no. 58 of 24 February 1998.

The consolidated financial statements are audited by KPMG S.p.A..

Section 2 - Basis of preparation

The consolidated financial statements consist of:

  • the consolidated financial statements (statement of financial position and income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows);
  • the Notes to the Consolidated Financial Statements.

In addition, they contain the Directors’ Report.

The consolidated financial statements have been drawn up according to the general principles of IAS 1 (2007), also referring to IASB’s ‘Framework for the preparation and presentation of financial statements’, with particular attention to the fundamental principles of substance over legal form, the concepts of relevance and materiality of information, the accruals and going concern accounting concepts.

For the preparation of these financial statements, reference was made to the format set out by Bank of Italy’s Circular no. 262 of 22 December 2005, updated in full on 18 November 2009 due to changes in the accounting framework.

The money of account is Euro and, if not indicated otherwise, amounts are expressed in thousands of Euro. The tables in the notes may include rounded amounts; any inconsistencies and/or discrepancies in the data presented in the different tables are due to these rounding differences.

Assets and liabilities, as well as costs and revenues, have been offset only if required or permitted by an accounting standard or the relevant interpretation.

Items in the financial statements were classified as in the previous financial year.

The notes do not show the items and tables required by Bank of Italy’s Regulation no. 262/2005 where these items are not applicable to the Banca IFIS Group.

Information on the business as a going concern

The Bank of Italy, Consob and Isvap, with document no. 2 issued on 6 February 2009 (“Disclosure in financial reports on the going concern assumption, financial risks, asset impairment tests and uncertainties in the use of estimations”), together with the subsequent document no. 4 of 4 March 2010, require directors to assess with particular accuracy the existence of the company as a going concern, as per IAS 1.

Unlike in the past, present conditions on financial markets and in the real economy, together with the negative short/medium-term forecasts, require particularly accurate assessments of the going concern assumption, as records of the company’s profitability and easy access to financial resources may no longer be sufficient in the current context.

In this regard, having examined the risks and uncertainties connected to the present macro-economic context, and considering the financial and economic plans drawn up by the parent company, the Banca IFIS Group can indeed be considered a going concern, in that it can be reasonably expected to continue to operate in the foreseeable future. Therefore, the 2012 consolidated financial statements have been prepared in accordance with this fact.

Uncertainties connected to credit and liquidity risks are considered insignificant or, at least, not significant enough to raise doubts over the company’s ability to continue as a going concern, thanks also to the good profitability levels that the bank has continually achieved, to the quality of its loans and to its current access to financial resources.

Section 3 - Consolidation scope and method

The consolidated financial statements have been prepared based on the draft financial statements at 31 December 2012, prepared by the directors of the companies included in the consolidation scope for approval by the Shareholders’ Meeting.

They include the financial statements (drawn up using the line-by-line method of consolidation) of the parent company, Banca IFIS S.p.A, its Polish subsidiary, IFIS Finance Sp. Z o.o., and the company TF Sec S.r.l., to be liquidated. The company Fast Finance S.p.A. was merged into Banca IFIS S.p.A. on 29 June 2012, with accounting and tax effects applied as from 1 January 2012.

The financial statements of subsidiaries expressed in foreign currencies are translated into Euro by applying the end-period exchange rate to asset and liability items. In the income statement, figures are translated according to the average exchange rate, which is considered as a valid approximation of the spot exchange rate at the date of the transaction. Exchange differences arising from the application of different exchange rates for the statement of financial position and the income statement, together with the exchange differences from the translation of the investee companies’ equity, are recognised under capital reserves.

Assets and liabilities, off-balance-sheet transactions, income and expenses, as well as the profits and losses arising from relations between the consolidated companies are all eliminated.

Starting with the financial statements for periods beginning after 1 July 2009, business combinations must be recognised by applying the principles established by IFRS 3; purchases of equity investments in which control is obtained and counting as “business combinations” must be recognised by applying the acquisition method, which requires:

  • identification of the acquirer;
  • determination of the acquisition date;
  • recognition and measurement of the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree;
  • recognition and measurement of goodwill or a gain from a bargain purchase.

As for the subsidiary IFIS Finance Sp. Z o.o., the consolidation process has brought about goodwill for 850 thousand Euro at the end-period exchange rate, recognised under item 130 ‘Intangible assets’.

1. Investments in exclusively and jointly controlled companies (consolidated using the proportional method)

Banca Ifis group

 

Name of company Registered Office Type (1) Investment Voting rights % (2)
Held by Quota %
Companies:
- Consolidated line by line
   IFIS Finance Sp. Z o.o. Varsavia 1 Banca IFIS S.p.A. 100% 100%
   TF SEC S.r.l. in liquidazione Firenze 1 Banca IFIS S.p.A. 100% 100%
Key (1) Type: 1 = majority of voting rights in the Annual Shareholders’ Meeting 2 = dominant influence in the Annual Shareholders’ Meeting 3 = agreements with other shareholders 4 = other forms of control 5 = exclusive control as per article 26, paragraph 1, of Legislative Decree no. 87/92 6 = exclusive control as per article 26, paragraph 2, of Legislative Decree no. 87/92 7 = joint control (2) Voting rights in the Annual Shareholders’ Meeting, distinguishing between effective and potential voting rights.

Section 4 – Subsequent events

No significant events occurred between year-end and the preparation of these consolidated financial statements other than those already included herein.

For information on such events, please refer to the Directors’ report.

Section 5 – Other aspects

Estimates on the carrying amounts of items recognised in the consolidated financial statements at 31 December 2012, as per the international accounting standards and regulations in force, are largely based on expected future recovery of the amounts recognised and were made on a going concern basis. Specifically, as far as non-performing loans are concerned, it should be noted that

the expected cash flows used to calculate the amortised cost were estimated with a statistical model. The model's parameters are based on historical time series on collection of loans and are periodically reviewed.

It is important to note that this estimation process was particularly complicated by the current macroeconomic and market setting, which could undergo unpredictable and rapid changes.

No other aspects as laid down by IAS 8, paragraphs 28, 29, 30, 31, 39, 40 and 49 require mentioning herein.

 

 

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