19th Sep 2007 07:00
Bank Pekao SA18 September 2007 BANK POLSKA KASA OPIEKI SPOLKA AKCYJNA Condensed Interim Unconsolidated Financial Statements of Bank Pekao S.A. for the period from 1st January 2007 year to 30th June 2007 year Warsaw, September 2007 Income statement BALANCE SHEET STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENT NOTES TO THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL STATEMENTS 1. Accounting polices 2. Interest income 3. Interest expenses 4. Fee and commission income 5. Fee and commission expense 6. Dividend income 7. Result on financial instruments valued at fair value 8. Result on investment securities 9. Other operating income and expense 10. Net provision charges for financial assets and contingent liabilities andcommitments 11. Administrative costs 12. Earnings per share 13. Loans and advances due from banks 14. Financial assets held for trading 15. Derivative financial instruments 16. Other financial instruments measured at fair value through profit and loss 17. Loans and advances to customers 18. Investment securities 19. Non - current assets held for sale 20. Investments in subsidiaries 21. Investments in associates 22. Intangible assets 23. Tangible fixed assets 24. Investment properties 25. Amounts due to other banks 26. Financial liabilities held for trading 27. Amounts due to customers 28. Debt securities issued 29. Provisions 30. Equity 31. Contingent liabilities and insurance contracts 32. Dividends paid 33. Litigation 34. Transactions with related parties 35. Events after the balance sheet date Condensed INTERIM UNCONSOLIDATED Financial Statements of the Bank Pekao S.A. The financial data included in these condensed interim unconsolidated financialstatements have been presented in PLN thousand. Income statement Note I Half I Half 2006 2007 Interest income 2 1 967 746 1 824 170 Interest expense 3 (837 950) (724 368) Net interest income 1 129 796 1 099 802 Fee and commission income 4 1 004 291 849 757 Fee and commission expense 5 (117 621) (82 998) Net fee and commission income 886 670 766 759 Dividend income 6 243 055 170 025 Result on financial instruments at fair 7 44 380 19 451value Result on investment securities 8 10 651 63 412 Foreign exchange result 136 883 119 190 Other operating income 9 51 953 89 626 Other operating expense 9 (28 094) (32 518) Net other operating income 23 859 57 108 Net provision charges for financial assets 10 (76 668) (100 914)and contingent liabilities and commitments Administrative costs 11 (1 112 (1 075 127) 462) Operating profit 1 286 164 1 119 706 Profit before income tax 1 286 164 1 119 706 Income tax expense (217 920) (184 068) Net profit 1 068 244 935 638 Earning per share (in PLN per share) - basic 12 6.39 5.61 - diluted 12 6.39 5.61 BALANCE SHEET Note 30.06.2007 31.12.2006 ASSETS Cash and amounts due from Central Bank 4 329 485 3 573 882 Debt securities eligible for rediscounting at 2 147 2 519Central Bank Loans and advances due from banks 13 10 051 184 10 395 551 Financial assets held for trading 14 1 326 580 2 050 828 Derivative financial instruments 15 690 340 526 643 Other financial instruments at fair value 16 1 509 910 1 613 195through profit or loss Loans and advances to customers 17 33 350 465 32 352 315 Investment securities 18 13 847 516 12 999 469 1. Available for sale 13 416 936 12 574 059 2. Held to maturity 430 580 425 410 Non-current assets held for sale 19 2 777 8 784 Investments in subsidiaries 20 1 143 827 671 100 Investments in associates 21 51 092 51 092 Intangible assets 22 579 699 597 050 Tangible fixed assets 23 1 361 472 1 399 804 Investment properties 24 57 775 49 916 Income taxes 305 650 274 824 1. Current tax assets - - 2. Deferred income tax assets 305 650 274 824 Other assets 512 104 409 783 TOTAL ASSETS 69 122 023 66 976 755 LIABILITIES Liabilities Amounts due to the Central Bank 1 606 898 2 045 278 Amounts due to other banks 25 5 400 281 1 926 999 Financial liabilities held for trading 26 126 230 203 408 Derivative financial instruments 15 676 290 504 194 Amounts due to customers 27 51 581 437 51 811 250 Debt securities issued 28 8 12 Current income tax liabilities 81 180 201 631 Provisions for deferred income tax - - Provisions 29 216 107 221 012 Other liabilities 1 333 409 1 442 806 Total liabilities 61 021 840 58 356 590 Equity Share capital 30 167 103 166 808 Other capital and reserves 30 6 864 836 6 724 818 Prior and current year profits 30 1 068 244 1 728 539 Total equity 8 100 183 8 620 165 TOTAL LIABILITIES 69 122 023 66 976 755 STATEMENT OF CHANGES IN EQUITY Share Reserves Other equity capital -of which -of which Prior and Total revaluation foreign current equity reserve exchange year differences profit from translation of foreign entities Equity as at 1st January 166 808 6 724 818 (14 586) 555 1 728 539 8 620 1652007 Share issue 295 31 623 - - - 31 918 Dividend payments - - - - (1 503 928) (1 503 928) Profit distribution - 224 611 - - (224 611) - Current year net profit - - - - 1 068 244 1 068 244 Revaluation of available - - (117 830) - - (117 830)for-sale investments net ofdeferred tax (117 830)Revaluation of management - 1 899 - - - 1 899options Foreign exchange differences - (285) (285) (285) - (285)from translation of foreignentitiesEquity as at 30th June 2007 167 103 6 864 836 (132 701) 270 1 068 244 8 100 183 Equity as at 1st January 166 482 6 522 997 96 719 884 1 506 779 8 196 2582006 Shares issued 326 34 851 - - - 35 177 Dividend payments - - - - (1 234 381) (1 234 381) Profit distribution - 272 398 - - (272 398) - Current year net profit - - - - 935 638 935 638 Revaluation of available - - (268 953) - - (268 953)for-sale investments net ofdeferred tax (268 953)Revaluation of management - 2 939 - - - 2 939options Foreign exchange differences - 322 322 322 - 322from translation of foreignentitiesEquity as at 30th June 2006 166 808 6 564 554 (171 912) 1 206 935 638 7 667 000 CASH FLOW STATEMENT I Half 2007 I Half 2006 Cash flow from operating activities -indirect method Net profit 1 068 244 935 638 Adjustments: 1 725 737 1 651 199 Amortization 151 400 150 599 (Profit) loss on foreign exchange 106 874 63 620differences (Profit) loss on investing activities (20 858) (64 542) Impairment 2 002 - Interest and dividend (631 541) (590 661) Change in loans and advances to banks (125 993) (1 169 398) Change in financial assets as held for 827 533 (38 936)trading and other financial instruments atfair valueChange in derivative financial instruments (163 697) (121 818) Change in loans and advances to customers (997 778) (822 885) Change in investment securities available (3 979) 565for sale Change in deferred income tax assets (3 252) (34 972) Change in other assets (80 228) (989 311) Change in amounts due to banks 3 034 902 2 216 943 Change in liabilities as held for trading (77 178) (44 814) Change in derivative financial instruments 172 096 (38 983)and other financial liability at fair value Change in amounts due to customers (229 813) 3 007 966 Change in provisions (4 905) (17 154) Change in other liabilities (110 362) 25 494 Income tax paid (340 657) (99 554) Current tax 221 171 219 040 Net cash flow from operating activities 2 793 981 2 586 837 Cash flows from investing activities Investing activity inflows 23 254 617 17 620 525 Sale of shares investment securities 22 650 230 17 127 285 Proceeds from sale of intangible assets and 271 919tangible fixed assets Other investing inflows 604 116 492 321 Investing activity outflows (24 291 341) (18 692 599) Purchase of subordinated undertakings (474 729) - Purchase of investment securities (23 708 784) (18 606 583) Purchase of intangible assets and tangible (107 828) (86 016)fixed assets Net cash flow used in investing activities (1 036 724) (1 072 074) Cash flows from financing activities Financing activity inflows 31 918 35 177 Shares issues 31 918 35 177 Financing activity outflows (1 503 932) (1 234 386) Redemption of debt securities (4) (5) Dividends and other payments to (1 503 928) (1 234 381)shareholders Net cash flow from financing activities (1 472 014) (1 199 209) Total net cash flows 285 243 315 554 Net change in cash and cash equivalents 285 243 315 554 Cash and cash equivalents at the beginning 10 577 405 7 688 574of the period Cash and cash equivalents at the end of 10 862 648 8 004 128the period NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS 1. Accounting polices Statement of compliance Condensed interim unconsolidated financial statements were prepared inaccordance with the International Accounting Standard 34 "Interim FinancialReporting" as adopted by the European Union and other applicable regulations. Basis of preparation These condensed interim unconsolidated financial statements have been preparedin accordance with the same accounting policies as presented in the interimconsolidated financial statements with an exception of capital investment rulesdisclosing, described below. Accounting polices have not been changed with relation to accounting policespresented in Bank financial statements for the financial year ended 31stDecember 2006. Investment in subsidiaries, associates and joint ventures Subsidiaries Subsidiaries are the entities over which the Bank has direct or indirectcontrol. Control is the ability to manage financial and operating policies inorder to gain economic profits. Control basically is involved with larger numberof votes in governing bodies. Control usually is implicated with the possessionof the majority of votes in governing bodies. Associates Associated entities are entities over which the Bank has significant influenceand are not subsidiaries or joint venture entities. The Bank usually determinessignificant influence by possession of 20 % to 50 % of the total number of votesin governing bodies. Joint ventures Join venture are entities, which are contractually agreed and in which the splitof control over the activities dictates that any strategic financial andoperating decisions relating to the activity require the unanimous consent ofparties sharing control. Recognition and valuation Investments in subsidiaries, associates and joint ventures are recorded at costof purchase less impairment if any. The carrying value is subject to tests forimpairment in accordance with IAS 39. Any impairment is recognized in the profitand loss account as "Net provision charges for financial assets and contingentliabilities and commitments". Dividends are recognized in the profit and lossaccount when the Bank obtains legal rights to receive them. Moreover equity investments in foreign entities represent non-monetary assets.Non-monetary assets are measured in accordance with historical cost expressed inthe foreign currency and translated on the base of exchange rate from thetransaction date. Investment in foreign entities purchased before IFRS adoptionis calculated on the basis of balance sheet value as of the day of thetransition into IFRS. Condensed interim financial statements are presented in Polish zloty, and allamounts, unless indicated otherwise, are stated in PLN thousand. 2. Interest income I Half 2007 I Half 2006 Income on placements in other banks 240 423 155 109Income on other placements on money market 14 351 17 710Income on loans and advances to customers 1 281 589 1 148 291Income on investment securities 365 218 435 576Income on financial assets held for trading 18 539 16 708Income on financial assets designated at fair 47 626 50 776value through profit and loss Total 1 967 746 1 824 170 3. Interest expenses I Half 2007 I Half 2006 Expense on other bank's deposits 43 648 24 670Expense on other deposits on the money market 58 547 36 735Expense on customer's deposits 575 702 480 676Expense on obtained loans 134 149 151 866Expense due to the amortization of premium on 25 904 30 421investment securities Total 837 950 724 368 4. Fee and commission income I Half 2007 I Half 2006 Accounts maintenance and payment orders 310 053 304 292Payment cards 222 846 188 645Acquisition services 332 794 228 960Credits and loans granted 94 135 86 704Custody activity 15 084 15 744Guarantees and similar operations 11 441 8 747Securities operations 2 619 1 963Other 15 319 14 702 Total 1 004 291 849 757 5. Fee and commission expense I Half 2007 I Half 2006 Payment cards 100 047 68 385Securities operations 2 234 2 443Custody activity 1 382 736Acquisition services 5 084 3 331Accounts maintenance 1 254 1 320Other 7 620 6 783 Total 117 621 82 998 6. Dividend income I Half 2007 I Half 2006Dividend income from the issuers: Subsidiaries 164 347 111 320Associates 76 713 57 094Other entities 1 995 1 611 Total 243 055 170 025 7. Result on financial instruments valued at fair value a) Result on assets and liabilities held for trading I Half 2007 I Half 2006 Derivative instruments 57 634 92 557Debt Instruments 28 437 12 818 Total 86 071 105 375 b) Result on financial assets and financial liabilities valued at fair valuethrough profit and loss I Half 2007 I Half 2006 Debt Instruments (41 691) (85 924) Total (41 691) (85 924) Total result on financial instruments valued at 44 380 19 451fair value (a+b) 8. Result on investment securities Realized result on financial assets and liabilities other than valued at fairvalue through profit and loss I Half 2007 I Half 2006 Realized profits Financial assets available for sale 12 242 63 306Investments held to maturity - 106 Total 12 242 63 412 Realized losses Financial assets available for sale 1 591 - Total 1 591 - Net realized profit 10 651 63 412 9. Other operating income and expense I Half 2007 I Half 2006Other operating income Rent and other revenue 12 087 14 912Gains on sale of equity investments - 50 178Gains on sale of properties and other assets 11 297 1 923Recovery of prescribed, written-off against 6 883 7 343provisions and bad debtsCredit insurance 7 838 4 131Recovery of debt collection costs 2 455 2 718Releases of provisions for other assets 2 842 2 418Releases of provisions for litigation and claims 33 495Compensation, fees and penalties 35 7Other 8 483 5 501 Total 51 953 89 626 I Half 2007 I Half 2006 Other operating expenses Debt recovery costs 5 854 6 420Credit insurance 6 416 3 686Donations 2 052 2 249Impairment of intangible and tangible fixed assets 467 2 944and other assetsCustomer complaints 878 1 734Losses on disposal and liquidation of properties 1 201 1 571and other assetsProvision charges for litigation and claims 2 155 734Amortization of start-up costs - 1 142Debt writte off's 4 17Compensation, fees and penalties 97 68Other 8 970 11 953 Total 28 094 32 518 10. Net provision charges for financial assets and contingent liabilities andcommitments I Half 2007 I Half 2006 Provision charges Loans and advances 904 282 531 018Investments held to maturity 17 10Investments in subsidiaries 913 -Contingent liabilities and commitments 108 077 21 118 Total 1 013 289 552 146 Provision releases Loans and advances 819 995 422 411Investments held to maturity 52 36Contingent liabilities and commitments 116 574 28 785 Total 936 621 451 232 Net provision 76 668 100 914 11. Administrative costs I Half 2007 I Half 2006 Payroll and employee benefits 583 344 543 947including: Wages and salaries 481 594 465 563Insurance and other charges related with employees 99 851 75 445Cost of share-based payments 1 899 2 939Other administrative costs 362 221 365 358Amortization and depreciation 151 400 150 599Taxes and charges 11 322 11 770Annual Bank Guarantee Fund fee 4 175 3 453 Total 1 112 462 1 075 127 12. Earnings per share Basic earnings per share Basic earnings per share are calculated by dividing net profit by the averageweighted number of ordinary shares listed during a given period. I Half 2007 I Half 2006 Net profit 1 068 244 935 638Weighted average number of ordinary shares in the 167 052 213 166 719 128periodEarnings per each share (in PLN per share) 6.39 5.61 Diluted earnings per share Diluted earnings per share are calculated based on the respective profit ofordinary shareholders of the holding company by dividing the profit of suchshareholders by the average weighted number of ordinary shares listed during agiven period, adjusted for all potentially diluting ordinary shares. There are diluting instruments in the Bank in the form of convertible bonds. Forcalculation purposes, it is assumed that these bonds will be converted intoshares. I Half 2007 I Half 2006 Net profit 1 068 244 935 638Weighted average number of ordinary shares in the 167 052 213 166 719 128periodAdjustments to the number of shares for the 193 423 126 952purpose of calculating the diluted earnings pershareWeighted average number of ordinary shares for the 167 245 636 166 846 080purpose of calculation of diluted earnings pershareDiluted earnings per each share (PLN per share) 6.39 5.61 13. Loans and advances due from banks 30.06.2007 31.12.2006 Current account 3 291 588 5 694 890Deposits and advances from other banks 4 793 127 3 456 766Loans and advances 644 564 664 200Unquoted securities 967 1 006Repo transactions 951 726 506 216Funds in transit 398 063 75 227Interest 44 613 72 800Total gross 10 124 648 10 471 105Impairment provisions (73 464) (75 554) Total net 10 051 184 10 395 551 14. Financial assets held for trading 30.06.2007 31.12.2006 Debt securities - issued by the State Treasury 1 137 233 1 921 838- issued by non-financial entities 79 288 42 228- issued by non-bank financial entities 110 059 86 762 Total 1 326 580 2 050 828 15. Derivative financial instruments 30.06.2007 Nominal Fair value Fair value values of (negative) (positive) base instrumentsCurrency transactions Currency swaps 19 952 935 (40 343) 57 252Currency forward contracts 9 789 255 (47 973) 35 120Currency options 13 434 887 (60 990) 60 990Cross Currency IRS 7 772 622 (31 311) 28 270Interest rate transactions - - Interest rate swaps (IRS) 57 371 945 (442 914) 456 215Forward Rate Agreement (FRA) 11 300 000 (4 366) 3 729Futures for debt securities 52 792 - -Other transactions Securities forward contracts 9 215 206 (1 907) 2 224Share options 921 471 (46 486) 46 540 Total 129 811 113 (676 290) 690 340 31.12.2006 Nominal Fair value Fair value values of (negative) (positive) base instrumentsCurrency transactions Currency swaps 11 533 140 (18 526) 60 189Currency forward contracts 8 752 063 (30 777) 37 135Currency options 7 094 164 (37 930) 37 930Cross Currency IRS 1 176 885 (27 337) 27 482Interest rate transactions Interest rate swaps (IRS) 32 789 675 (346 341) 322 198Forward Rate Agreement (FRA) 13 500 000 (6 484) 4 822Futures for debt securities 228 901 - -Other transactions Securities forward 438 554 (185) 268Options related to equity 868 072 (36 614) 36 619securities Total 76 381 454 (504 194) 526 643 16. Other financial instruments measured at fair value through profit and loss 30.06.2007 31.12.2006 Debt securities - issued by non bank financial entities 615 080 650 323- issued by the State Treasury 894 830 962 872 Total 1 509 910 1 613 195 The above presented debt securities have been designated by the Bank as at fairvalue through profit and loss among other in order to eliminate orsignificantly reduce a measurement or recognition inconsistency between debtsecurities and derivatives economically hedging interest rate risk attributableto the debt securities. 17. Loans and advances to customers 30.06.2007 31.12.2006 Loans 36 397 436 35 300 728Payment cards receivables 193 388 179 826Purchased receivables 136 901 147 025Realized guarantees and commitments 43 178 43 742Unquoted securities 72 645 82 965Receivables in transit 5 899 2 472Interest 104 179 135 777Total gross 36 953 626 35 892 535Provision for the impairment of receivables (3 603 161) (3 540 220) Total net 33 350 465 32 352 315 18. Investment securities 30.06.2007 31.12.2006 Securities available for sale 13 417 336 12 574 459Debt securities 13 402 826 12 568 441- issued by central banks 17 985 334 975- issued by other banks 45 412 45 479- issued by non bank financial entities 89 310 35 224- issued by non financial entities 492 340 420 265- issued by the State Treasury 12 312 204 11 286 508- issued by local governments 445 575 445 990Stock and shares in other entities 14 510 6 018Securities held to maturity 430 744 425 612- issued by central banks 231 827 219 178- issued by other financial entities 19 815 20 689- issued by the State Treasury 179 102 185 745Total gross 13 848 080 13 000 071Impairment of securities available for sale (400) (400)Impairment of securities held to maturity (164) (202) Total net 13 847 516 12 999 469 19. Non - current assets held for sale In accordance with IRFS 5 "Non-current Assets Held for Sale and DiscontinuedOperations", the Bank have been presented under at the separate balance sheetitem "Non-current asset held for sale" the Bank's property and shares of PekaoAccess Sp. z o.o. which fulfill the requirements of IFRS 5 regarding theclassification of non-current assets held for sale. Non-current assets held for sale: 30.06.2007 31.12.2006 Shares 820 -Properties 1 957 8 784 Total 2 777 8 784 Changes during the first half of 2007 Property Shares Opening balance 8 784 -Increase: 3 839 820Transfer from tangible assets 2 905 -Transfer from investments into subordinated - 820undertakingsForeign exchange differences 7 -Other changes 927 -Decrease: (10 666) -Transfer to tangible assets (60) -Asset disposal (10 606) -Closing balance 1 957 820 The disposals during the first half of 2007 were settled as follows: Property Shares Total Income from sale 23 069 - 23 069Book value of sold net assets 10 606 - 10 606(including costs of sales) Profit / Loss on sale 12 463 - 12 463 Changes in value of 2006 Property Shares Opening balance 2 220 35 430Increase: 10 523 45 922Transfer from investment properties 2 145 -Transfer from tangible assets 8 378 -Transfer from investments in subordinated - 41 167undertakingsForeign exchange differences - 4 755Decrease: (3 959) (81 352)Asset disposal (3 936) (72 494)Transfer to investments in subordinated - (8 858)undertakingsOther changes (23) -Closing balance 8 784 - During the 2006 year Bank did disposal of shares in subordinated undertakings. - 75,00% shares of Pekao Development Spolka z.o.o. in aid of Pirelli Real EstateS.p.A., - 49,40% shares of Hotel Jan III Sobieski Spolka z.o.o. in aid of Europa HawkS.a.r.l. The disposals of 2006 were settled as follows: Property Shares Total Income from sale 7 586 120 036 127 622Book value of sold net assets 3 936 72 497 76 433(including costs of sales) Profit / Loss on sale 3 650 47 539 51 189 20. Investments in subsidiaries 30.06.2007 31.12.2006 Banks 657 349 182 889Other financial entities 478 240 478 240Non - financial entities 8 238 9 971 Total 1 143 827 671 100 21. Investments in associates 30.06.2007 31.12.2006 Banks - -Other financial entities 42 234 42 234Non - financial entities 8 858 8 858 Total 51 092 51 092 22. Intangible assets 30.06.2007 31.12.2006 Research and development costs 19 950 27 625Concessions, patents, licences and similar items 427 207 452 850including:- computer software 427 207 452 850Other intangible assets 131 915 116 575Prepayments for intangible assets 627 - Total 579 699 597 050 23. Tangible fixed assets 30.06.2007 31.12.2006 Land 31 814 32 505Buildings 1 021 141 1 049 302Machinery and equipment 248 755 236 754Means of transport 16 192 19 272Other tangible fixed assets 12 391 12 737Assets under construction 30 931 49 229Prepayments for assets under constructions 248 5 Total 1 361 472 1 399 804 24. Investment properties 30.06.2007 31.12.2006 Land 7 543 7 498Buildings 50 232 42 418 Total 57 775 49 916 25. Amounts due to other banks 30.06.2007 31.12.2006 Current accounts 3 182 025 585 785Bank deposits and other liabilities 946 309 1 100 564Loans and advances 47 073 57 553Due in transit 181 094 43 639Repo transactions 1 037 644 134 896Interest accrued 6 136 4 562 Total 5 400 281 1 926 999 26. Financial liabilities held for trading 30.06.2007 31.12.2006 Short position in securities 126 230 203 408 Total 126 230 203 408 27. Amounts due to customers 30.06.2007 31.12.2006 Amounts due to corporate customers 20 693 161 20 408 231Funds at current accounts and overnight deposits 10 424 146 10 539 081Time credits, deposits and other liabilities 10 216 983 9 822 834Due in transit 21 060 21 825Interest accrued 30 972 24 491Amounts due to budget entities 6 419 685 4 030 292Funds at current accounts and overnight deposits 2 667 257 2 373 512Time deposits and other liabilities 3 742 880 1 651 664Due in transit - 1 165Interest accrued 9 548 3 951Amounts due to individuals 23 006 690 25 145 968Funds at current accounts and overnight deposits 11 653 850 11 474 293Time deposits and other liabilities 11 291 798 13 610 861Due in transit 6 086 4 600Interest accrued 54 956 56 214Repo transactions 1 461 901 2 226 759Time transactions 1 459 240 2 222 960Interest accrued 2 661 3 799 Total 51 581 437 51 811 250 28. Debt securities issued 30.06.2007 31.12.2006 Bonds convertible into shares 8 12 Total 8 12 The Bank never has defaulted on repayment of principal or interest or redemptionof its own securities. 29. Provisions I Half 2007 Provision Provision Provision Other Total for for for undrawn provision litigation retirement credit and claims benefits facilities and guarantees issued Balance as at 1st January 40 399 64 211 112 591 3 811 221 0122007Provision charges 2 155 2 721 108 078 1 905 114 859Provision utilization (2 413) - - - (2 413)Provision releases (33) - (116 574) - (116 607)Foreign exchange (81) - (272) - (353)differencesOther changes (391) - - - (391) Balance as at 30th June 39 636 66 932 103 823 5 716 216 1072007 2006 Restructuring Provision Provision Provision Other Total provision for for for provisions litigation retirement undrawn and claims benefits credit facilities and guarantees issued Balance as at 1st 4 590 19 655 60 443 20 325 - 105 013January 2006Provision charges - 24 083 3 768 189 218 3 811 220 880Provision - (4 813) - - - (4 813)utilizationProvision releases - (761) - (95 883) - (96 644)Foreign exchange - (56) - (1 069) - (1 125)differencesOther changes ( 4 590) 2 291 - - - (2 299) Balance as at 31st - 40 399 64 211 112 591 3 811 221 012December 2006 30. Equity 30.06.2007 31.12.2006 Share capital 167 103 166 808Supplementary capital 1 631 815 1 585 192Share premium 1 427 507 1 395 885Other 204 308 189 307Revaluation reserve (132 701) (14 586)Revaluation of securities available for sale (163 455) (18 051)Differed tax 30 485 2 910Foreign Exchange differences from translation of 269 555the resultGeneral banking risk fund 1 237 850 1 137 850Other reserves 4 102 609 3 992 998Bonds convertible into shares - equity 25 263 23 365instrumentsRetained earnings - -Net profit 1 068 244 1 728 539 Total 8 100 183 8 620 165 31. Contingent liabilities and insurance contracts Financial liabilities granted 30.06.2007 31.12.2006 Financial liabilities granted: 16 732 996 17 166 021- towards financial entities 2 247 464 3 763 975- towards non-financial entities 13 906 066 12 615 615- towards the budget 579 466 786 431Including: granted irrevocable contingent 16 447 851 16 948 460liabilities and commitments Guarantees liabilities granted 30.06.2007 31.12.2006 1) Liabilities granted towards financial 31 031 43 430entities:- guarantees 20 707 32 213- confirmed export letters of credit 10 324 11 2172) Liabilities granted towards non-financial 2 348 777 2 217 477entities:- guarantees 2 348 777 2 217 4773) Liabilities granted towards the budget: 29 978 41 638- guarantees 29 978 38 488- bills of exchange sureties - 3 150 Total 2 409 786 2 302 545 32. Dividends paid During the ordinary Shareholders Meeting of Bank Pekao S.A. on 26th April 2007 aresolution was made to pay out a dividends for the year ended as at 31stDecember 2006 in the amount of PLN 9,00 per share, what gives a total amount ofdividend of PLN 1,503,928 thousand. Dividends were proposed on 16th May 2007 tobe paid on 1st June 2007. All Bank' shares are ordinary shares. 33. Litigation As of 30th June 2007 the number of the legal proceedings in courts, appropriatebodies of arbitration or public administration bodies, concerning theliabilities of the Bank was 245. The total value of them was PLN 726,543thousand (as at 31st December 2006 there were 407 court proceedings amounting onPLN 970,538 thousand). As at 30th June 2007 Bank made a reserve on contingent liabilities being underthe court sentence due to the Bank, which in law's opinion are under the risk offunds outflow out of the obligation fulfillment. Amount of the reserves as at30th June 2007 was PLN 39 636 thousand (as at 31st December 2006 PLN 40,399thousand). As regards all other significant proceedings in progress against the Bank, therisk of cash outflow is believed to be. 34. Transactions with related parties Entity name Receivables Deposits 30.06.2007 31.12.2006 30.06.2007 31.12.2006Group parent companyUniCredito Italiano S.p.A. 1 966 042 2 311 422 113 304 2 330Entities of UniCredit Group'sexcluding entities of Pekao S.A.Group'sBayerische Hypo und Vereinsbank - 262 061 - -A.G.Bank AustriaCreditanstalt AG 61 227 194 985 95 191 -Bank BPH SA 255 223 18 736 305 752 1 379UniCredit Zagrebacka banka d.d. 227 635 229 645 - -Zagrebacka banka d.d. 150 952 153 609 - -UniCredit Factoring S.p.A. - 453 - -UniCredit Romania S.A. (Unibanka - - - 32A.SUniCredit Leasing Romania S.A. 52 950 71 699 - -UniCredit Bank Slovakia A.S. - 209 - 220(ex. Unibanka A.S.)Pioneer Pekao Towarzystwo - - 125 879 161 961Funduszy Inwestycyjnych S.A.SubsidiariesJoint Stock Commercial Bank HVB - - 60 -- Bank UkraineUniCredit Bank Ltd. 100 688 114 740 1 330 -Pekao Leasing Sp. z o.o. 918 009 876 740 7 914Pekao Faktoring Sp. z o.o. 230 315 284 938 17 605 814 Entity name Receivables Deposits 30.06.2007 31.12.2006 30.06.2007 31.12.2006 Centralny Dom Maklerski S.A. - - 1 071 582 1 326 364Pekao Fundusz Kapita(3)owy Sp. - - 42 606 41 618z o.o.Pekao Pioneer Powszechne - - 7 558 11 507Towarzystwo Emerytalne S.A.Drukbank Sp. z o.o. - - 8 283 705Centrum Kart S.A. - - 19 897 24 544Pekao Financial Services Sp. z - - 4 468 9 037o.o.Pekao Access Sp. z o.o. - - 4 97Joint venturePirelli Pekao Real Estate Sp. z - - 84 049 121 908o.o.Xelion. Doradcy Finansowi Sp. - - 8 492 16 576z o.o.Pioneer Pekao Investment - - 155 914 107 414Management S.A.Krajowa Izba Rozliczeniowa S.A. - - 5 017 9Key managing staff of the Bank 8 037 4 504 1 503 6 743or it's Parent CompanyOther related entities - - 21 41 Total 3 971 078 4 523 741 2 068 522 1 834 213 Income and expenses from transactions with related entities in the first half of 2007 Entity name Income from Interest Fee and Fee and Other Other interest expense commission commission income expense income expenseGroup parent companyUniCredito Italiano S.p.A. 6 040 6 215 678 16 7 205Entities of UniCredit Group's excludingentities of Pekao S.A. Group'sBayerische Hypo und Vereinsbank AG 655 - 3 - 28 568 -Bank AustriaCreditanstalt AG 5 121 64 2 91 - 2 173Bank BPH SA 4 158 2 488 2 536 2 520 - 476UniCredit Banca Mobiliare S.p.A. - - - - 5 143 -Zagrebacka banka d.d. 3 349 - - - - -UniCredit Global Information Services S.p.A. - - - - 304 600(ex. UniCredit Servizi Informativi S.p.A.)UniCredit (Suisse) Bank S.A. - - - - 132 -UniCredit Zagrebacka banka d.d. 6 026 - 54 - - -UniCredit Factoring S.p.A. 18 - 17 13 - -UniCredit Leasing Romania S.A. 1 541 - - - - -UniCredit Bank Slovakia A.S. (ex. Unibanka 161 58 - 1 61 -A.S.)Zivnostenska Banka A.S. 29 - - - - -Pioneer Pekao Towarzystwo Funduszy - 3 929 296 479 - 8 -Inwestycyjnych S.A.Total Group parent company and entities of 27 098 6 545 299 306 3 303 34 232 10 454UniCredit Group's excluding entities of PekaoS.A. Group's Income and expenses from transactions with related entities in the first half of 2007 Entity name Income from Interest Fee and Fee and Other Other interest expense commission commission income expense income expenseEntities of Pekao S.A. Group'sSubsidiariesUniCredit Bank Ltd. 2 744 16 408 352 - -Joint Stock Commercial Bank HVB - Bank Ukraine - - - 2 - -Centralny Dom Maklerski Pekao S.A. 1 23 304 1 875 51 1 802 49Pekao Leasing Sp. z o.o. 20 169 359 77 - 169 46Pekao Faktoring Sp. z o.o. 5 788 5 438 1 27 -Pekao Fundusz Kapita(3)owy Sp. z o.o. - 836 2 - 7 -Pekao Pioneer Powszechne Towarzystwo Emerytalne - 219 1 445 - 27 -S.A.Centrum Kart S.A. - 453 13 - 599 19 592Drukbank Sp. z o.o. - 98 1 - - -Pekao Financial Services Sp. z o.o. - 152 4 19 - -Pekao Access Sp. z o.o. - 1 2 - - -AssociatesPioneer Pekao Investment Management S.A. - 2 601 607 - - -Xelion. Doradcy Finansowi Sp. z o.o. - 247 16 127 58 -Krajowa Izba Rozliczeniowa S.A. - 34 3 - - 2 509Pirelli Pekao Real Estate Sp. z o.o - 1 644 26 5 3 579Total entities of Pekao S.A. Group's 28 702 29 969 4 917 557 2 692 22 775Key managing staff of the Bank or it's Parent 174 39 - - - -CompanyOther related entities - - 2 - - -Total related entities 55 974 36 553 304 225 3 860 36 924 33 229 Income and expenses from transactions with related entities in the first half of 2006 Entity name Income from Interest Fee and Fee and Other Other interest expense commission commission income expense income expenseGroup parent companyUniCredito Italiano S.p.A. 982 891 67 712 20 6 000Entities of UniCredit Group's excluding entitiesof Pekao S.A. Group'sBayerische Hypo und Vereinsbank AG 834 5 - - - 313Bank AustriaCreditanstalt AG 2 003 2 - 50 6 528 -Bank BPH SA 2 112 786 234 - 4 894 -BPH Bank Hipoteczny S.A. 41 - - - - -UniCredit Banca Mobiliare S.p.A. - - 228 - 35 930 -Banque Monegasque de Gestion S.A. - 1 - - - -Zagrebacka banka d.d. 2 583 - - - - -UniCredit Servizi Informativi S.p.A. - - - - 291 3 040UniCredit (Suisse) Bank S.A. - - - - 172 -UniCredit Zagrebacka banka d.d. 5 771 - 35 - - -UniCredit Factoring S.p.A. 9 - 23 - - -UniCredit Leasing Romania S.A. 2 241 - - - - -Pioneer Pekao Towarzystwo Funduszy - 2 769 192 150 - 9 14Inwestycyjnych S.A.Unibanka A.S. 29 3 - - - -Zivnostenska Banka A.S. 41 - - - - -Total Group parent company and entities of 16 646 4 457 192 737 762 47 844 9 367UniCredit Group's excluding entities of PekaoS.A. Group's Incomes and expenses from transactions with related entities in the first half of 2006 Entity name Income from Interest Fee and Fee and Other Other interest expense commission commission income expense income expenseEntities of Pekao S.A. Group'sSubsidiariesUniCredit Bank Ltd. 1 317 42 511 441 - -Pekao Leasing Sp. z o.o. 14 750 294 975 - 121 64Pekao Faktoring Sp. z o.o. 7 214 2 471 - 24 1Centralny Dom Maklerski Pekao S.A. - 16 840 1 517 8 1 596 51Pekao Fundusz Kapita(3)owy Sp. z o.o. - 551 1 - 7 -Pekao Pioneer Powszechne Towarzystwo Emerytalne - 722 1 376 - 3 -S.A.Drukbank Sp. z o.o. - 13 1 - 1 -Centrum Kart S.A. - 535 14 - 603 19 840Pekao Financial Services Sp. z o.o. - 224 7 18 - -Pekao Development Sp. z o.o.* 267 197 5 7 1 324Pekao Access Sp. z o.o. - 24 3 - - -Fabryka Maszyn w Janowie Lubelskim Sp. z o.o. 106 - 19 - - -AssociatesPirelli Pekao Real Estate Sp. z o.o.** 1 404 112 1 608 - 1 -Xelion. Doradcy Finansowi Sp. z o.o. - 623 14 94 - -Hotel Jan III Sobieski Sp. z o.o. 778 25 25 - 3 2 044Pioneer Pekao Investment Management S.A. - 1 708 296 - - -Krajowa Izba Rozliczeniowa S.A. - 105 2 - - 1 956Fabryka Sprzetu Okretowego MEBLOMOR S.A. - - 1 - - -Total entities of Pekao S.A. Group's 25 836 22 017 6 846 568 2 360 24 280Key managing staff of the Bank or it's Parent 134 43 2 - - -CompanyOther related entities 2 - 2 - - -Total related entities 42 618 26 517 199 587 1 330 50 204 33 647 * Data for I Quarter 2006** Data for II Quarter 2006 The off-balance sheet exposure related to: financing of related entities as at30th June 2007 amounted to PLN 777 000 thousand (as at 31st December 2006 PLN765 132 thousand); related to guarantying as at 30th June 2007 amounted to14 086 thousand (as at 31st December 2006 PLN 12 087 thousand); credit cardslimits towards related entities as at 30th June 2007 amounted to PLN 60 thousand(as at 31st December 2006 PLN 157 thousand). 35. Events after the balance sheet date On 3rd September 2007 the organizational merger of HVB Ukraine and UniCreditBank took place and the Extraordinary General Meetings of HVB Ukraine andUniCredit Bank resolved the merger. Currently the registration process in theNational Bank of Ukraine and the state registration the Legal entities is underway. . Signatures of all members of the Management Board 11.09.2007 Jan Krzysztof Bielecki President, CEO Date First Name/Family Position/Function Signature Name 11.09.2007 Luigi Lovaglio Vice President, GM Date First Name/Family Position/Function Signature Name 11.09.2007 Paolo Iannone Member of Management Date First Name/Family Position/Function Signature Name 11.09.2007 Christopher Member of Management Kosmider Date First Name/Family Position/Function Signature Name 11.09.2007 Marian Wazynski Member of Management Date First Name/Family Position/Function Signature Name This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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