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Evli Oyj Annual Report 2015
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Annual Report
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EVLI
Evli Bank Plc
ANNUAL REPORT
2015
From brokerage firm to private bank
30 YEARS OF INVESTING AND ASSET MANAGEMENT
Founded in 1985, Evli initially concentrated on equity brokerage and grew rapidly in the 1980s and 1990s. In 2001 Evli was granted a banking license and became Evli Bank Plc. In the mid-2000s, Evli carried out a successful project to change its strategy to focus especially on providing individual asset management services. In addition to organic growth, Evli grew through numerous acquisitions in all its business areas. Evli celebrated its 30th anniversary in 2015, and has grown from a brokerage firm to a private bank that specializes in increasing its clients' capital and assets.
since 1985
EVLI BANK PLC
ANNUAL REPORT 2015
CONTENTS
4 Evli in brief
6 Year 2015 in brief
8 Evli's strategy and objectives
9 CEO's review
CONSOLIDATED FINANCIAL STATEMENTS
12 Board of Directors' report
19 Income statement
20 Balance sheet
22 Statement of changes in equity
23 Cash flow statement
24 Accounting policies
31 Segment reporting
33 Corporate governance
36 Risk management
40 Capital adequacy of the group
43 Notes to income statement
47 Notes to balance sheet
PARENT COMPANY
65 Income statement
66 Balance sheet
68 Cash flow statement
69 Accounting policies
70 Notes to the income statement
73 Notes to balance sheet
84 Proposal for the distribution of profit
85 Auditors' report
86 Board of Directors
88 Management Group
Financial reporting in 2016
Evli Bank Plc will publish its Interim Reports for 2016 as follows:
January-March: 21.4.2016
January-June: 13.7.2016
January-September: 20.10.2016
More information at www.evli.com
EVLI BANK PLC
ANNUAL REPORT 2015
Evli in brief
COMPREHENSIVE SERVICE OFFERING TO BENEFIT CUSTOMERS
Evli is a genuine private bank specializing in investment. We offer individuals, companies and institutions a full range of investment and asset management products and services, backed by robust professional skills. Evli has a professional staff of over 200 employees, and has a total of EUR 9.4 billion in client assets under management (net 12/2015). Our asset management, markets and corporate finance services form the core of our business.
WEALTH MANAGEMENT
The Wealth Management unit provides personal asset management service to private individuals who have substantial investment assets, their families and related companies (Private Banking), and also to institutional clients such as insurance companies, pension funds, organizations, municipalities and companies (institutional asset management). Fund products are also an integral part of the service and product offering of the asset management business. These include Evli's own mutual funds and the mutual funds of external fund managers.
MARKETS
The Markets unit offers brokerage of equity and other investment products, market making services and investment research. The unit's clients are mainly Finnish and international professional clients. In addition to equities, the Markets unit brokers derivatives, ETFs, money market products, corporate bonds and structured products.
CORPORATE FINANCE
The Corporate Finance unit provides advisory services related to M&A transactions and securities offerings. The Corporate Finance unit's clientele consists mainly of listed and unlisted companies, corporate management and owners including private equity firms and private equity funds, as well as institutional investors, entrepreneurs and families. Advisory services regarding mergers and acquisitions include advisory services related to corporate acquisitions, divestments, mergers and demergers, for example. Securities offerings include IPOs, share issues and sales, equity and debt arrangements and private placement arrangements, for example.
Share of Group revenue 2015*
- The rest (6%) is associated to elimination and group operations. The group operations include treasury, payment transactions, loan services, the management of group investments, financial administration, risk management, information management, group communications, legal and compliances, human resources and internal services.
EVLI BANK PLC
ANNUAL REPORT 2015
HIGH QUALITY AND COMPREHENSIVE SERVICES
Asset management is a growth area for Evli, complemented by its capital market and corporate finance operations. The comprehensive services provided by these three business units allow Evli to flexibly combine high-quality services to meet each customer's individual needs.
EVLI BANK PLC
ANNUAL REPORT 2015
Year 2015 in brief
ANNIVERSARY YEAR CULMINATES IN STOCK EXCHANGE LISTING
- Evli Group's profit for the financial year increased by over 60 percent and was EUR 12.3 million (2014: EUR 7.7 million).
- The Group's net revenue increased by 8 percent and was EUR 64.2 million (EUR 59.7 million). Performance was excellent in all three business areas.
- The ratio of Evli's recurring income to fixed operating expenses, representing predictability of operations and long-term profitability, improved during 2015 and was 93% (83%).
- The target for return on equity, 15%, was clearly exceeded. The return on equity in the review period was 20.2 percent (15.2%).
- Group's liquidity is good and its capital adequacy remained at a high level.
- Evli strengthened its service offering in alternative investment products and founded a new subsidiary, Evli Alternative Investments Ltd during the year. Its first investment product, EAI Residential fund, provides a new way of investing in real estates.
- Net assets under management grew considerably and totaled EUR 9.4 billion at the end of the year, including associated companies.
-
Evli Bank strengthened its Wealth Management business and acquired 90 percent of the stock of the asset management provider Head Asset Management Ltd.
-
The combined capital of mutual funds managed by the company was EUR 5.2 billion (EUR 4.4 billion). This makes Evli the 5th largest fund management company in Finland.
- Evli was selected as the best asset manager based on an evaluation of overall quality and was ranked in first place for its investment performance and portfolio management expertise in the TNS Sifo Prospera institutional client survey.1 Evli was selected as Finland's best (joint 1st place) and most widely used asset management house in a SFR 2015 institutional asset management client survey. In recognition of this, Evli received the SFR Platinum Award for best institutional asset manager.*2 In the Euromoney survey, Evli was selected as the best provider of asset management services to super affluent clients for the second time.
- Evli concentrated the services it provides to asset management clients in the Baltic countries in Helsinki and closed down the operational activities of Evli's subsidiary, Evli Securities AS.
- Measures to concentrate Russian-based advisory services in Finland and to serve clients from Helsinki were launched.
- Evli's 30-year journey as Finland's leading bank for investors culminated in its stock exchange listing on Nasdaq Helsinki's main list in December. The listing provided Evli with a broad ownership base. Quotation of Evli Bank Plc's B share started on the main list of the Helsinki stock exchange on December 2, 2015 under the trading code EVLI.
- TNS Sifo Prospera 2015 - External Asset Management Institutions 2015, Finland
** SFR Investment Services Programme, Finland 2015; Competitive Positioning Report
1 Shared first place (individual/personal asset management + funds, total quality)
2 Shared first place (Finland's most used institutional asset manager)
EVLI BANK PLC
ANNUAL REPORT 2015
Net Revenue
(million euros)
Operating profit (million euros) and profit margin (%)
BIS-adequacy
(%)
Earnings/Share, diluted (IFRS)
(euro)
* Includes an additional return of capital 0.20 euros/share.
Dividend/Share
(euro)
Evi Group's investment funds and asset management contracts
Northern Horizon Capital
Evi Alexander Management
Not assets under management including associated companies
(billion euros)
Proportion of recurring revenue to operating expenses (%)
See Financial Review for more detailed description of the company's key figures.
Return on equity
(%)
EVLI BANK PLC
ANNUAL REPORT 2015
Evli's strategy and objectives
SIMPLY UNIQUE
Evli's long-term objective is to be a growing and profitable private bank with a unique clientele and broader international business operations than at present. The Company's vision is to be "Simply Unique." This describes the aim of simplifying Evli's own and its clients' investment-related processes, and offering clients unique product and service solutions.
Revenue growth is sought primarily organically, and as far as possible also through acquisitions. The operational focus is on asset management business operations, where growth is sought by increasing the amount of assets under management and the number of new client relationships. In addition to Finland and Sweden, the Company sees growth potential in asset management also in the other Nordic countries. Moreover, selected, internationally successful investment products will be used to pave the way to other European markets.
Evli's clientele is demanding, which is why the Company is constantly focusing on finding and developing new investment solutions and products. Development and innovation work makes use of the robust professional skills and special expertise of three business areas and their different points of view regarding the markets and clients' needs. Services are provided by Evli's different business units depending on the client's situation and stage in the life cycle. In addition, Evli offers banking services that support clients' investment operations.
FINANCIAL TARGETS
GROWTH
- Increase in fee income
- Growth in assets under management
PROFITABILITY
- Average return on equity exceeds 15.0%
- Recurring revenue fully covers or exceeds fixed operating expenses
MISSION, VISION AND VALUES
Increasing client's wealth according to their individual targets
Simply Unique, according to clients, by offering high quality service and unique customer experiences 24/7
Entrepreneurship
Valuable relationships
Learning
Integrity
EVLI BANK PLC
ANNUAL REPORT 2015
CEO's review
STOCK EXCHANGE LISTING HERALDS NEW PHASE IN EVLI'S OPERATIONS
2015 was a very special and significant year for Evli. In August, we celebrated the company's 30th anniversary with our stakeholders, and we crowned off our anniversary year with the share issue at the beginning of December and our listing on the main list of Nasdaq Helsinki. It was also an excellent year in terms of results.
At the anniversary events, we were proud to point out that Evli has emerged strongly from several market upheavals. Through determined work, we have grown from a small brokerage firm to a bank that specializes in increasing our clients' capital and assets.
Towards greater strategic room for maneuver
We had been planning Evli's stock exchange listing for years, but the time was now ripe for it from the point of view of both the company's own operations and the market situation. The implementation of the IPO was very successful, and demand for the shares was many times greater than supply, which is something that we are very happy about and grateful for.
EVLI BANK PLC
ANNUAL REPORT 2015
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The aim of the issue is naturally to strengthen our capital base in order to support growth and improve the awareness and attractiveness of the company among potential clients. However, the most important aim of the public listing of our share was to make it easier to use the share in rewarding personnel and as a payment instrument in acquisitions. This increases our strategic room for maneuver in our industry, the consolidation of which we expect to continue in the coming years. Although we aim to increase our revenue mainly organically, we will also be keeping our eyes open for the kinds of acquisitions that can be used to strengthen our Wealth Management operations with new competence and clients. The Aurator Asset Management and Head Asset Management transactions implemented in 2012 and 2015 are excellent examples of these kinds of acquisitions.
Patience is key also in growth
After the anniversary and IPO, we have returned to the daily grind. We have been a public limited company that reports quarterly already for 10 years, and as a bank we are also subject to strict regulation and monitoring, so the stock exchange listing has not changed our practical work very much. Compliance with insider regulations and duty of disclosure is naturally new to us, but as a capital market party, we are familiar with the content and practices of the Securities Markets Act and securities market guidelines.
However, a very substantial change for us is that instead of around 70 owners who are in the company's immediate circle, we are accountable to a large group of new, external owners. They are expecting a good return on their investment, which means strong growth on our part, and preferably as quickly as possible. Being the subject of these expectations, we must have the presence of mind to grow judiciously: not just for growth's sake, but by carefully choosing the right ways of growing that are sustainable in all market environments. In the long term, this will be in the best interests of our shareholders.
Amid the pressures of growth expectations, it is also essential to ensure that the level of service provided to our clients does not suffer at any stage while we acquire new clients. I do not believe that this will happen, as our operations are guided by a culture of stewardship, and based on this we manage all our clients' assets as though they were our own with unceasing diligence and professionalism.
Favorable development continued in 2015
Despite the market uncertainty, which increased in the second half of the year, our operating environment developed positively on the whole in 2015, and there was strong demand for our services. Evli Group's net revenue increased by eight percent and was EUR 64.2 million (2014: EUR 59.7 million). The Group's operating profit increased by as much as 36 percent and was EUR 13.3 million (EUR 9.8 million). This development again illustrates that our strategic aim of scalability of operations has been very appropriate, as it enables strong earnings growth even with just a slight increase in revenue. The ratio of our recurring profits in relation to the Group's total costs continued to improve and had already reached 93 percent. Our target is 100 percent coverage because as a bank, our operations must be profitable and predictable. Our capital adequacy and liquidity continued to be very good throughout the year.
Revenue performance was especially positive in our largest unit, Wealth Management. Institutional assets under management in Finland achieved record-breaking growth, and we were very successful in the competitive tendering for the management of these assets. Institutional customers' trust in us is also exemplified by the excellent results we received in several client surveys. The net revenue of our largest unit, Wealth Management, increased by 15 percent to EUR 42.8 million (EUR 37.4 million), and its operating profit increased by 42 percent to EUR 11.3 million (EUR 8.0 million). Net assets under our management totaled EUR 9.4 billion (EUR 6.3 billion) at the end of the year, and the capital of our mutual funds was EUR 5.2 billion (EUR 4.4 billion). The year was very good for our asset management clients, as nearly all the client portfolios under our management outperformed their benchmark indexes. Our funds in several different fund classes also produced good returns in comparison with both benchmark indexes and competitors.
Our Markets unit also achieved good results in a still challenging operating environment. The unit's net revenue
EVLI BANK PLC
ANNUAL REPORT 2015
increased by 10 percent to EUR 11.9 million (EUR 10.8 million), and its operating profit was EUR 0.4 million (EUR -1.3 million).
For our Corporate Finance unit, the year was slightly weaker than the excellent previous year, but still quite good. The unit's net revenue decreased by 17 percent to EUR 5.5 million (EUR 6.6 million), and its profit decreased by 28 percent to EUR 0.9 million (EUR 1.2 million).
Complementary business functions as a competitive advantage
During the past 10 years, we have been focusing on the importance of asset management in our strategy. This focus has been reflected in our revenue, of which two thirds was from asset management in 2015. Although asset management will be a growth area also in the future, markets and corporate finance operations also play a key role in our strategy. Our complementary businesses allow us to flexibly compile service packages for our clients that conform to their individual and evolving needs. Development and innovation work can make use of the special expertise of our three business areas, and of various points of view regarding the markets and clients' needs. This is a strong competitive advantage for us, and a key factor that sets us apart from others.
Our long-term objective is to be a growing and profitable private bank with a unique clientele and broader international business operations than at present. In addition to Finland and Sweden, we are seeking growth with selected investment products also in the Nordic countries and Europe.
Our fund products are already being sold in Italy and France, and we are looking into the possibilities of entering new markets.
At the end of this historic year for Evli, I would like to thank our new shareholders for their confidence in us, all the parties that participated in arranging our IPO for their excellent work, and our Board of Directors for their valuable support in planning and implementing our issue. Our personnel produced excellent results again amid all the events. I would like to warmly thank them for this. I am convinced that our competence and strategy form a solid base for the successful continuation of Evli's journey as a stock exchange-listed company.
Maunu Lehtimäki
CEO
FINANCIAL STATEMENT 2015
BOARD OF DIRECTORS' REPORT
Market performance
Valuation levels on the capital markets have fluctuated substantially during 2015. The development of the capital markets was dominated by the central banks' interest rate decisions and the uncertainty which grew during the summer over the Chinese economy's growth outlook, which led to market fluctuation and a decrease in commodity prices.
Equity markets in Europe rose strongly in the first half of the year as the European Central Bank, ECB, started its quantitative easing monetary policy program. In the spring, the ECB announced a bond purchasing program worth over EUR 1,000 billion in total. Under the program, the ECB is spending EUR 60 billion each month purchasing euro area government bonds and other interest-bearing papers.
Share prices, which rose substantially in the early part of the year, started to decline during the spring and summer. The downswing in the European equity market in the summer was caused by the continuation of the uncertain financing situation in Greece and the cashing in of profits after the rally in the first half of the year.
In particular, uncertainty regarding China's growth outlook caused the equity and commodity markets to fluctuate during the early fall. The slowing of growth and the consequent decline in equity prices and commodity prices has weakened the economic outlooks and equity prices of those countries in particular that are dependent on the export of commodities, such as Russia and Brazil. The OPEC crude oil-producing countries did not reach an agreement on cutting production, and therefore, the price of crude oil continued to decline and went down to USD 34.74 per barrel at its lowest in December. The level was the lowest in ten years.
The markets' concerns were eased momentarily in the fall, but in December, the European Central Bank's decision not to increase its purchasing program caused great disappointment on the market. In contrast, the US Federal Reserve started raising interest rates, which had been low for a long time, as expected. The federal funds rate was raised by 0.25 percentage points. The Fed's interest rate decision had a calm reception on the markets.
Despite increased market fluctuation, 2015 was positive in many market areas. In Europe the Stoxx Index rose by 9.6 percent during the year. The Finnish equity market rose by 15.9 percent (OMX Helsinki Cap Index) during the year despite Finland's challenging outlook and tight labor-market situation. In the USA, the S&P 500 index rose by just 1.4 percent. However, the weakening of the euro raised the total return to 12.9 percent measured in euros. On the other hand, emerging markets' share prices declined substantially.
The performance of the fixed income markets was modest during the year. The return levels of the US and German governments' 10-year bonds almost reached the levels at the turn of the previous year. However, during the year, the return levels of both bonds fluctuated by about one percentage point.
Revenue performance
The Evli Group's net revenue for the financial year increased by 8 percent and was EUR 64.2 million (EUR 59.7 million). The Group's net commission income for the review period was EUR 57.2 million (EUR 53.1 million). The growth in net revenue was positively influenced by the performance of the Wealth Management and Markets units, in particular.
The Wealth Management unit's net revenue grew 15 percent compared with the corresponding period of 2014, and was EUR 42.8 million (EUR 37.4 million). The performance was supported by successful sales to new clients, a substantial increase in assets under management and the payment of performance-based fees resulting from strong performance in client profits.
The Markets unit's net revenue for the financial year increased by 10 percent year on year and was EUR 11.9 million (EUR 10.8 million). An increase in the number of client initiatives in nearly all of the unit's product areas contributed to the positive revenue.
The Corporate Finance unit's net revenue decreased from the level of the previous year and was EUR 5.5 million (EUR 6.6 million). Significant fluctuations in net revenue from one quarter to the next are typical for the Corporate Finance business.
Evli's strategic objective is to raise the proportion of revenue accounted for by recurring revenue to a level that would fully cover fixed operating expenses. In the review period, recurring revenue covered 93 percent (83%) of the Group's fixed operating expenses. The following are deemed to be recurring revenue: revenue from Wealth Management operations, fund operations, custody and management of incentive systems. Performance bonuses reserved for the financial year are not taken into account in the calculation of the ratio.
Result and cost structure
The Group's operating profit for the review period increased by 36 percent on the corresponding level of the previous year to EUR 13.3 million (EUR 9.8 million). The operating margin was 21 percent (16 percent). The profit for the period was EUR 12.3 million (EUR 7.7 million). The profit performance was supported by good revenue development in Evli's core businesses and non-recurring profit from the sale of the property management business in Evli's associated company Northern Horizon Capital.
Overall costs for the period, including depreciation, amounted to EUR 51.0 million (EUR 50.0 million). The Group's personnel expenses totaled EUR 27.5 million (EUR 26.7 million) including performance bonuses paid to the personnel on account of the good result. The Group's administrative expenses were EUR 15.8 mil
EVLI BANK PLC
ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
13
lion (EUR 14.0 million). Non-recurring expenses of EUR 0.7 million related to Evli's anniversary year are included in the administrative expenses for the period under review. The Group's depreciation, amortization and write-downs were EUR 3.9 million (EUR 5.3 million), which includes a EUR 0.7 million goodwill write-down. The goodwill write-down is related to the company's operations in the Baltic countries and Russia. During the period under review Evli concentrated the services it provides to asset management clients in the Baltic countries in Helsinki and closed down the operational activities of Evli's subsidiary, Evli Securities AS, in conjunction with this. As a consequence, the company assessed that there was no longer any separate goodwill associated with taking care of asset management client relationships in the Baltic countries and so the full value of the goodwill was written down. In addition, Evli has made a EUR 0.3 million impairment to goodwill in relation to the company's Russian operations. Other operating expenses totaled EUR 3.8 million during the period under review (EUR 4.0 million). Evli's expense/income ratio remained at the level of the previous year and was 0.79 (0.84).
The strategic project launched in 2014 to simplify both Evli's and its clients' investment processes proceeded according to plan during the financial year. The project is expected to further lighten the company's cost structure in the near future.
Balance sheet and funding
At the end of the review period, the Evli Group's balance sheet total was EUR 632,2 million (EUR 490,0 million). Due to daily changes in client activity, significant fluctuations in the size of the balance sheet are possible from one quarter to the next.
The Group's equity totaled EUR 70.2 million (EUR 52.2 million) at the end of the financial year. The company's equity rose substantially during December due to the implemented share issue. Evli applies the standardized approach (capital requirement for credit risk) and the basic indicator approach including the extra capital requirement for operational risk) in its capital adequacy calculation. The Group's capital adequacy ratio of 19,2 percent clearly exceeds the regulator's requirement of 10,5 percent including the extra capital requirement. The Group's own minimum target for capital adequacy is 13 percent. With the permission of the Financial Supervisory Authority, the profit for the past financial year and estimated dividend for 2015 have been taken into account in the capital adequacy calculation.
The Group's funding from the public and credit institutions increased by 16 percent on the previous year. The company's loan portfolio decreased by 2 percent year on year to EUR 56,0 million. The ratio of loans granted by the Group to Evli Bank Plc's deposits from the public was 16 percent. The Group's liquidity is very good.
Personnel and organization
The Group had 248 (242) employees at the end of the review period. This represented a year-on-year increase of 6 persons, or approximately 2.5 percent.
90 percent of the personnel were employed in Finland and 10 percent abroad.
Business areas
Evli modified its business area reporting at the beginning of 2015 by concentrating the business functions that generate what is known as recurring revenue in the Wealth Management unit. These functions include management of incentive systems and custody operations, which were previously reported under the Markets unit. As a result, Evli's business reporting will correspond better with a reporting structure that is based on the company's strategy.
Group operations
The net revenue of Group operations decreased by 21 percent year on year and was EUR 3.3 million in total (EUR 4.1 million). Administrative expenses increased by 5 percent year on year as a result of expenses related to the company's 30th anniversary celebrations, for example. Correspondingly, depreciation was at a lower level than in the previous year. Overall costs declined slightly from the level of the comparison period.
Evli's associate Northern Horizon Capital sold its business focusing on property management during the third quarter. The transaction was completed during the fourth quarter. Evli's share of the sales profit generated in the transaction is over EUR 2 million, and this is included in the income statement's line 'share of associated companies' profit'.
Wealth Management
| Wealth Management in numbers | 1-12/2015 | 1-12/2014 | Change % |
|---|---|---|---|
| Net revenue, M€ | 42.8 | 37.4 | 15 |
| Operating profit/loss before Group allocations and bonuses, M€ | 20.6 | 17.3 | 20 |
| Operating profit / loss, M€ | 11.3 | 8.0 | 42 |
| Personnel, at the end of period | 96 | 90 | 7 |
| Market share (Evli Fund Company), %* | 5.4 | 5.2 | |
| Net subscriptions to own funds, M€* | 493 | 168 | |
| Average rating of Evli funds in MorningStar | 3.6 | 3.5 |
*) Source: fund report by Federation of Finnish Financial Services
EVLI BANK PLC
ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
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| Evi Group's Assets Under Management (EAM*) including associated companies, billion euros | 31.12.2015 | 31.12.2014 |
|---|---|---|
| of which in mutual funds and asset management, | 10.3 | 8.4 |
| in real-estate funds managed by Northern Horizon Capital, | 1.4 | 1.0 |
| in incentive systems managed by Evli Alexander Management | 0.4 | na |
| Evli Group's gross AUM | 12.1 | - |
| Evli Group's net AUM** | 9.4 | - |
**) Net AUM excludes mutual funds within asset management agreements.
The Wealth Management unit performed very well during the review period. Net revenue rose by 15 percent compared to the corresponding period in 2014 and came to EUR 42.8 million (37.4 million). The performance was supported by newly acquired client relationships and the general market performance, which caused asset values to rise. Performance-based fees paid during the financial year also contributed to the revenue growth. The Wealth Management unit's net assets under management totaled EUR 9.4 billion at the end of the year, including associated companies.
Net subscriptions to funds registered in Finland totaled EUR 8.8 billion in 2015 (EUR 8.6 billion). Net subscriptions to Evli's funds totaled EUR 493 million (EUR 168 million). Evli Fund Management Company's market share increased by 0.2 percentage points on the previous year and was 5.4 percent at the end of the year. The combined capital of the 26 mutual funds managed by the company was EUR 5,213 million (EUR 4,442 million) and the number of shareholders according to the fund report compiled by Investment Research was 22,444 (17,480).
The best-performing equity fund was Evli Swedish Small Cap (full-year return 30.9%), the best-performing balanced fund was Evli Wealth Manager (11.0%), and the best-performing fixed income fund was Evli European High Yield (3.26%). Evli Nordic outperformed its benchmark index by the widest margin, +16 percent.
Of Evli's funds, the biggest net subscriptions were gathered by Evli Euro Liquidity (EUR 234 million) and Evli Europe (EUR 193 million). Evli Euro Liquidity (EUR 953 million) and Evli European High Yield (EUR 802 million) had the most assets at the end of the year. In a fund comparison carried out in December by the independent Morningstar, the average star rating of Evli's funds was 3.6 (3.5). Of Evli's 26 funds, 20 were included in the comparison, and 12 of them received the highest or second highest Morningstar rating.
During the year, Evli gained significant recognition in respected and independent studies. Evli was ranked best asset manager based on an evaluation of overall quality in the recent TNS Sifo Prospera "External Asset Management Institutions 2015, Finland" institutional client survey. Evli was also ranked in first place for its investment performance and portfolio management expertise.
Evli was selected as Finland's best asset management house in a recent SFR 2015 institutional asset management client survey. In recognition of this, Evli received the SFR Platinum Award for best institutional asset manager. In addition, Evli was voted the best provider of asset management services to super affluent clients for the second time in the Euromoney survey.
During the year Evli Bank founded a new subsidiary, Evli Alternative Investments Ltd, which operates as an alternative investment fund manager as referred to in the Act on Alternative Investment Fund Managers. The real estate fund managed by the company started operations during the fall.
Evli Bank strengthened its Wealth Management business and acquired 90 percent of the stock of the asset management provider Head Asset Management Ltd.
Markets
| Markets in numbers | 1-12/2015 | 1-12/2014 | Change % |
|---|---|---|---|
| Net revenue, M€ | 11.9 | 10.8 | 10 |
| operating profit/loss before Group allocations and bonuses, M€ | 3.3 | 2.1 | 58 |
| Operating profit / loss, M€ | 0.4 | -1.3 | - |
| Personnel, at the end of period | 46 | 45 | 2 |
| Market share (Nasdaq Helsinki), EUR volume, % | 1.07 | 1.30 | |
| Market share (Nasdaq Helsinki), number of trades, % | 0.82 | 1.00 |
Net revenue for the financial year increased by 10 percent year on year and was EUR 11.9 million (EUR 10.8 million). Nearly all the product areas of the unit grew on the previous year. The commission performance of derivatives and ETF brokerage, which was better than last year, was especially positive.
The target of Evli's Markets unit is to raise the proportion of non-equity brokerage in its operations. In the fourth quarter of 2015, the proportion of the unit's brokerage income accounted for by product areas other than equity brokerage was 50 percent.
EVLI BANK PLC
ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
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Corporate Finance
| Corporate Finance in numbers | 1-12/2015 | 1-12/2014 | Change % |
|---|---|---|---|
| Net revenue, M€ | 5.5 | 6.6 | -17 |
| Operating profit/loss before Group allocations and bonuses, M€ | 1.4 | 2.3 | -39 |
| Operating profit / loss, M€ | 0.9 | 1.2 | -28 |
| Personnel, at the end of period | 21 | 28 | -25 |
The M&A market was active throughout the financial year and client initiative remained on a good level, especially in M&A activity. Evli was an advisor in a total of 16 executed transactions (21 transactions in 2014). These included among others
- Advisory to Lantmännen AB regarding acquisition of Finnish Vaasan –company from Lion Capital
- The sale of Mediplast AB in Sweden to listed Addtech AB
- Advisory to Mediplast AB regarding acquisition of Finnish Fenno Medical
- Dedicare, which is listed in Sweden, in the sale of the company's Norwegian personal assistant operations
- The listed company SSH Communications Security Corporation regarding the issuing of a convertible hybrid bond
- Assisting Nordic Mines regarding restructuring of company's capital structure
- advisor in a share transaction between Grimaldi and Ilmarinen, in which Grimaldi acquired 10.58 percent of Finnlines stock from Ilmarinen
- Advisor to Northern Horizon Capital regarding its sale of BPT Real Estate –business unit
The Corporate Finance unit's net income decreased by 17 percent from the previous year and was EUR 5.5 million (EUR 6.6 million). Significant fluctuations in revenue from one quarter to the next are typical of the Corporate Finance business. The unit's mandate base is strong.
Changes in Group structure
Evli Bank Plc founded a new 100-percent-owned subsidiary, Evli Alternative Investments Ltd, which was entered in the Trade Register on March 9, 2015. Evli Alternative Investments Ltd is a manager of alternative funds that is registered by the Financial Supervisory Authority.
In September 2015, Evli concluded an agreement on the acquisition of a majority holding in the investment firm Head Asset Management Ltd. The transaction was executed on October 19, 2015. The acquired business is included in the Group's fourth-quarter result.
The Lithuanian branch of Evli Bank's subsidiary Evli Securities AS was shut down on December 4, 2015.
Evli's shares and share capital
Pursuant to the authorization to acquire Evli shares issued by the AGM on March 6, 2015, the company acquired a total of 2,250 shares during the second quarter of 2015, and a total of 4,000 shares during the third quarter of 2015. The shares were acquired in accordance with the shareholder agreement through changes in ownership.
Evli Bank Plc's total number of shares changed during the second quarter by a total of 157,500 shares. The change in the number of shares resulted from the entry in the Trade Register of new shares subscribed for and paid in full in partial payment share issues arranged in the fall of 2011, and the entry in the Trade Register of new shares subscribed for on the basis of stock options according to the 2014 option program. The new shares were entered in the Trade Register on May 5, 2015.
Evli Bank Plc's total number of shares changed during the third quarter by a total of 11,375 shares after the company's Board of Directors decided to annul the remaining Evli shares held by the company on September 8, 2015. The new number of shares was entered in the Trade Register on September 21, 2015.
The share amounts mentioned above describe the situation before the share issue without payment carried out on October 1, 2015.
Evli Bank Plc's Extraordinary General Meeting held on October 1, 2015 decided to amend the company's Articles of Association. As a result, Evli has two share series: series A and series B, whose rights are determined in the manner specified in the amended Articles of Association. The main difference between the share series concerns the voting rights. The A share confers 20 votes in a General Meeting, while a B share confers one vote. The General Meeting also decided to increase the number of shares by giving shareholders new shares free of charge in proportion to their holdings, so that three (3) new series A shares and one (1) series B share were given for each series A share. Now that the decisions have been implemented, there are a total of 16,971,136 series A shares and a total of 4,242,784 series B shares, all in all, totaling 21,213,920 shares. The Extraordinary General Meeting also decided to change the terms and conditions of the 2014 stock option program so that one stock option gives entitlement to subscribe for four (4) series A shares and one (1) series B share.
On November 16, 2015 Evli Bank Plc submitted its listing application to NASDAQ Helsinki Ltd to admit the Company's series B shares for trading on the official list of the Helsinki Stock Exchange. Pursuant to the issue authorization granted to the Board of Directors by the Extraordinary General Meeting, a total of 2,100,000 new series B shares were offered for subscription in the IPO. Evli Bank Plc's Board of Directors decided on the issuance of the shares offered in the IPO and on the approval of the share subscriptions and payments of investors who made a subscription commitment
in accordance with the terms and conditions of the IPO and the allocation proposal on November 25, 2015. Trading with series B shares (the ticker symbol is “EVLI” and the ISIN FI4000170915) commenced on December 2, 2015. The total number of series B shares that are subject to trading is 6,342,784.
The company's total number of shares at the end of the financial year was 23,313,920 shares, of which 16,971,136 are series A shares and 6,342,784 are series B shares. At the end of the review period, no Evli shares were held by the company.
Shareholders' equity was EUR 30,194,097.31 at the end of the review period. There were no changes in share capital during the review period.
The invested unrestricted equity fund grew by EUR 13.7 million in the Group and EUR 14.2 million in the parent company as a result of the IPO.
Dividend
In accordance with the proposal of the Board, the Annual General Meeting of Evli Bank Plc held on March 6, 2015 resolved to distribute EUR 0.21 per share in dividends, a total of EUR 4,337,026.04 for the 2014 financial year. Dividends were paid on March 17, 2015. The dividend per share has been calculated using share amounts adjusted in accordance with a share issue without payment decided upon in the Extraordinary General Meeting of October 1, 2015.
Additional return of capital
In accordance with a proposal of the Board, the Extraordinary General Meeting of Evli Bank Plc held on June 30, 2015 resolved to pay an additional return of capital of EUR 0.20 per share, and EUR 4,246,784 in total. The return of capital was paid on July 9, 2015. The return of capital per share has been calculated using share amounts adjusted in accordance with a share issue without payment decided upon in the Extraordinary General Meeting of October 1, 2015.
Board of Directors and auditors
Evli Bank Plc's Annual General Meeting, held on March 6, 2015, confirmed six as the number of members of the Board of Directors. Henrik Andersin, Robert Ingman, Harri-Pekka Kaukonen, Mikael Lilius, Teuvo Salminen and Thomas Thesleff were re-elected to Evli Bank Plc's Board of Directors. Henrik Andersin was chosen as Chairman of the Board.
Evli Bank Plc's Extraordinary General Meeting decided on October 1, 2015 to raise the number of Board members to seven and elected Johanna Lamminen as the seventh Board member.
On March 6, 2015, the AGM elected KPMG Oy Ab, Authorized Public Accountants, as the company's auditor and Marcus Tötterman, APA, as the principally responsible auditor.
Board authorizations
Evli Bank Plc's Annual General Meeting resolved on March 6, 2015, to authorize the Board of Directors to decide on issuing shares and stock options and/or issuing special rights entitling the holder to shares pursuant to Chapter 10, Section 1, of the Limited Liability Companies Act in one or more lots in such a way that the total number of shares granted on the basis of the authorization would be a maximum of 307,240 shares. Evli Bank Plc's Extraordinary General Meeting resolved on October 1, 2015 to authorize the Board of Directors to decide on the issuance of new shares. The total number of new B shares granted on the basis of the authorization would be no more than 3,000,000 shares. The authorization repealed the authorizations given previously and is valid for five years after the decision of the General Meeting. The Board of Directors used the authorization by issuing a total of 2,100,000 new series B shares in the IPO.
The AGM resolved on March 6, 2015, to authorize the Board of Directors to decide on buying back Evli shares. The total number of shares granted on the basis of the authorization would be no more than 409,665 shares. Evli Bank Plc's Extraordinary General Meeting decided on October 1, 2015 to authorize the Board of Directors to decide on acquiring no more than 2,127,079 Evli shares in such a way that no more than 1,701,664 series A shares may be acquired and no more than 425,415 shares may be acquired. The authorization given by the Extraordinary General Meeting on October 1, 2015 repealed the previous authorization and is valid until the next Annual General Meeting, provided this is not more than 18 months from the General Meeting's decision.
Trading on NASDAQ Helsinki Ltd
At the end of the financial year, Evli had 6,342,784 series B shares subject to public trading on Nasdaq Helsinki. The shares were made subject to trading on December 2, 2015. Share trading during the financial year was EUR 2,290,877. In terms of number of shares, 281,284 shares were traded on the stock exchange during the financial year. The share price on December 31, 2015 was EUR 8.19. The highest share price during the financial year was EUR 9.21 and the lowest was EUR 7.95. Evli's market capitalization was EUR 190.9 million on December 31, 2015. The market value is calculated on the basis of both unlisted series A shares and listed series B shares excluding acquired Evli shares. Series A shares are valued at the closing value of the series B share's reporting period.
Risk Management and business risks
The objective of risk management is to support the uninterrupted implementation of the Group's strategy and income-generating activities. The Board of Evli's parent company confirms the risk management principles, the Group's risk limits and other guidelines according to which risk management and internal control are organized at Evli. The Board has also set up a credit and asset li
EVLI BANK PLC
ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
17
bility committee (Credalco) that briefs it on risk-taking matters. The Risk Management unit oversees daily operations and compliance with the risk limits granted to the business units.
Evli's most significant near-term risk is the impact of market performance on the company's business functions. Capital market performance has a direct impact on the asset management business, whose revenue is based on the performance of assets under management and is therefore subject to market fluctuations. The general performance of the markets also has an impact on brokerage operations. In the Corporate Finance unit, any changes in the market confidence of investors and corporate management may result in the lengthening or termination of projects.
The delta-adjusted price risk of Evli's own investment portfolio and proprietary trading was approximately EUR 7.4 million at the end of December, and a 20 percent negative market movement would have resulted in a scenario loss of approximately EUR 1.4 million. At the end of December, the Treasury unit's interest rate risk was approximately EUR +/- 0.4 million, assuming that market rates rise/fall by one percentage point. Evli's liquidity has remained solid. The estimated effect on profit of realized operational risks during
the review period was EUR 1.0 million. A more detailed explanation of the risks of Evli's business functions and their management can be found in the company's financial statements.
In conjunction with the share issue, Evli referred to a litigation that was directed at its associate which was resolved during the last quarter of the year.
Outlook for 2016
The performance of the asset management and capital markets has been strong in recent years, and interest in Evli's services and products is expected to remain stable. In the Corporate Finance business, substantial fluctuations in annual profits are possible. The unit's mandate base was good at the turn of the year. The ratio of Evli's recurring income to expenses improved during 2015, and the income almost covered fixed operating expenses in full. We believe that the result for 2016 will be clearly positive.
Helsinki, February 15, 2016
Board of Directors
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
18
KEY FIGURES
| 1.1 - 31.12.2015 | 1.1 - 31.12.2014 | 1.1 - 31.12.2013 | 1.1 - 31.12.2012 | 1.1 - 31.12.2011 | |
|---|---|---|---|---|---|
| Net Revenue, 1 000€ | 64 249 | 59 734 | 55 528 | 48 344 | 59 033 |
| Operating profit, 1 000€ | 13 261 | 9 764 | 6 710 | 3 553 | 3 642 |
| % of net revenue | 20.6 | 16.3 | 12.1 | 7.4 | 6.2 |
| Profit for the financial year, 1 000€ | 12 349 | 7 674 | 5 647 | 2 144 | 3 794 |
| % of net revenue | 19.2 | 12.8 | 10.2 | 4.4 | 6.4 |
| Return on equity (ROE), % | 20.2 | 15.2 | 11.5 | 4.3 | 7.1 |
| Return on assets (ROA), % | 2.2 | 1.4 | 0.9 | 0.4 | 0.6 |
| Equity-to-assets ratio, % | 11.1 | 10.7 | 8.5 | 8.3 | 8.7 |
| Expense ratio (operating costs to net revenue) | 0.8 | 0.8 | 0.9 | 0.9 | 0.9 |
| Capital adequacy ratio, % | 19.2 | 15.2 | 13.9 | 14.6 | 14.5 |
| Dividend/Share, € | 0.41* | 0.21 | 0.24 | 0.12 | 0.25 |
| Personnel, at the end of period | 248 | 242 | 245 | 243 | 276 |
- Includes an additional return of capital 0.20 euros/share.
Calculation of key ratios
| Income | Net interest income + fee and commission income + net income from securities transactions and foreign exchange dealing + other operating income | |
|---|---|---|
| Net revenue | From Income Statement. Includes gross returns, deducted by interest and commission expenses. | |
| Operating profit | From Income Statement | |
| Profit for the financial year | From Income Statement | |
| Return on equity (ROE), % | = | Profit/Loss for the financial year |
| x 100 | ||
| Equity capital and minority interest | ||
| (average of the figures for the beginning and at the end of the year) | ||
| Return on assets (ROA), % | = | Profit/Loss for the financial year |
| x 100 | ||
| Average total assets | ||
| (average of the figures for the beginning and at the end of the year) | ||
| Equity / Total assets ratio, % | = | Equity capital + appropriations |
| x 100 | ||
| Total assets | ||
| Expense ratio as earnings to operating costs | = | Administrative expenses + depreciation and impairment charges + other |
| x 100 | ||
| Net interest income + net commission income | ||
| + net income from securities transactions and foreign exchange dealing | ||
| + other operating income | ||
| Earnings / share | = | Total recognised income and expenses for the period without the share of the non-controlling interest |
| Shares outstanding |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
19
CONSOLIDATED INCOME STATEMENT, IFRS
| 1 000 EUROS | Note | 1.1.-31.12.2015 | 1.1.-31.12.2014 |
|---|---|---|---|
| Interest income | 1. | 2 598 | 2 831 |
| Interest expenses | 2. | -1 192 | -1 794 |
| NET INTEREST INCOME | 1 406 | 1 037 | |
| Fee and commission income | 4. | 58 986 | 54 908 |
| Fee and commission expenses | 5. | -1 770 | -1 795 |
| Net income from securities transactions and foreign exchange dealing | 6. | ||
| Net income from securities transactions | 4 105 | 2 435 | |
| Net income from foreign exchange dealing | 952 | 1 777 | |
| Income from equity investments, total | 334 | 1 007 | |
| Other operating income | 7. | 236 | 366 |
| NET REVENUE | 64 249 | 59 734 | |
| Administrative expenses | |||
| Personnel expenses | 8. | ||
| Wages and salaries | -21 550 | -20 842 | |
| Other social security costs | -1 612 | -1 613 | |
| Pension expenses | -4 318 | -4 228 | |
| Other administrative expenses | 9. | -15 785 | -14 007 |
| Impairment losses from goodwill | 10. | -705 | -1 606 |
| Depreciation, amortization and impairment losses | 10. | -3 239 | -3 683 |
| Other operating expenses | 11. | -3 779 | -3 980 |
| Impairment losses on other financial assets | 12. | 0 | -12 |
| OPERATING PROFIT/LOSS | 13 261 | 9 764 | |
| Share of profit or loss of associates | 2 104 | 266 | |
| PROFIT BEFORE INCOME TAX | 15 366 | 10 030 | |
| Income taxes | 13. | -3 017 | -2 355 |
| PROFIT/LOSS FOR THE FINANCIAL YEAR | 12 349 | 7 674 | |
| Attributable to | |||
| Minority interest | 867 | 864 | |
| Shareholders of parent company | 11 482 | 6 810 | |
| PROFIT/LOSS FOR THE FINANCIAL YEAR | 12 349 | 7 674 | |
| INCOME AND EXPENSES RECOGNISED DIRECTLY IN EQUITY: | |||
| Items that are or may be reclassified subsequently to profit or loss | |||
| Foreign currency translation differences - foreign operations | 135 | -130 | |
| PROFIT / LOSS FOR FINANCIAL YEAR | 135 | -130 | |
| Other recognized income and expenses after taxes | 135 | -130 | |
| TOTAL RECOGNISED INCOME AND EXPENSES FOR THE PERIOD | 12 484 | 7 545 | |
| Attributable to | |||
| Non-controlling interest | 867 | 864 | |
| Equity holders of parent company | 11 617 | 6 680 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
20
CONSOLIDATED BALANCE SHEET, IFRS
| 1 000 EUROS | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| ASSETS | |||
| Cash and cash equivalents | 127 986 | 103 998 | |
| Loans and other receivables | |||
| Claims on credit institutions | 14. | 119 396 | 108 877 |
| Claims on the public and public sector entities | 15. | 56 042 | 56 944 |
| Loans and other receivables, total | 175 438 | 165 822 | |
| Financial assets at fair value through profit or loss | |||
| Debt securities eligible for refinancing with central banks | 16. | 38 461 | 74 192 |
| Debt securities | 16. | 132 965 | 32 769 |
| Shares and participations | 17. | 37 958 | 35 730 |
| Derivative contracts | 19. | 21 603 | 32 035 |
| Financial assets at fair value through profit or loss, total | 230 988 | 174 726 | |
| Saleable financial assets | |||
| Shares and participations | 17. | 0 | 0 |
| Saleable financial assets, total | 0 | 0 | |
| Other than financial assets | |||
| Shares and participations in associates | 18. | 5 018 | 3 514 |
| Intangible assets | 20. | 9 971 | 7 598 |
| Property, plant and equipment | 21. | 1 934 | 2 337 |
| Other assets | 22. | 77 671 | 28 581 |
| Accrued income and prepayments | 23. | 2 954 | 2 860 |
| Deferred tax assets | 24. | 287 | 613 |
| Other than financial assets, total | 97 835 | 45 502 | |
| TOTAL ASSETS | 632 247 | 490 047 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
21
CONSOLIDATED BALANCE SHEET, IFRS
| 1 000 EUROS | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| LIABILITIES AND EQUITY | |||
| LIABILITIES | |||
| Financial liabilities at amortized cost | |||
| Liabilities to credit institutions and central banks | 25. | ||
| Credit institutions | 5 530 | 8 000 | |
| Liabilities to the public and public sector entities | 26. | ||
| Deposits | 352 439 | 297 037 | |
| Other liabilities | 0 | 94 | |
| Debt securities issued to the public | 27. | ||
| Bonds | 35 722 | 33 095 | |
| Financial liabilities at amortized cost, total | 393 691 | 338 225 | |
| Financial liabilities at fair value through profit or loss | |||
| Derivative contracts and other liabilities held for trading | 28. | 36 468 | 40 739 |
| Other than financial liabilities | |||
| Other liabilities | 29. | 116 058 | 43 137 |
| Accrued expenses and deferred income | 30. | 15 127 | 15 341 |
| Deferred tax liabilities | 31. | 668 | 405 |
| Other than financial liabilities, total | 131 854 | 58 882 | |
| TOTAL LIABILITIES | 562 013 | 437 847 | |
| EQUITY | 33., 34. | ||
| Share capital | 30 194 | 30 194 | |
| Share premium fund | 1 839 | 1 839 | |
| Fund of invested non-restricted equity | 24 218 | 13 178 | |
| Other reserves | 180 | 180 | |
| Translation difference | -279 | -405 | |
| Retained earnings | 12 855 | 5 996 | |
| Minority interest | 1 227 | 1 219 | |
| TOTAL EQUITY | 70 234 | 52 201 | |
| TOTAL LIABILITIES AND EQUITY | 632 247 | 490 047 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
22
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, IFRS
| 1 000 EUROS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Consolidated statement of changes in equity | Share capital | Share premium fund | Reserve for invested unrestricted equity | Other reserves | Translation difference | Retained earnings | Total | Minority interests | Total equity |
| 2014 | |||||||||
| Equity capital 1.1. | 30 194 | 1 839 | 12 738 | 107 | 90 | 2 753 | 47 722 | 1 049 | 48 771 |
| Translation difference | -85 | -85 | -254 | -340 | |||||
| Profit/loss for the period | 6 810 | 6 810 | 864 | 7 674 | |||||
| Total recognized income | 0 | 0 | 0 | 0 | -85 | 6 810 | 6 725 | 610 | 7 335 |
| Dividends | -4 271 | -4 271 | -440 | -4 711 | |||||
| Transfer between items | -411 | 411 | 0 | 0 | |||||
| Share issue | 615 | 615 | 615 | ||||||
| Share options exercised | 73 | 73 | 73 | ||||||
| Acquisition of own shares | -176 | -176 | -176 | ||||||
| Other changes | 293 | 293 | 293 | ||||||
| Equity capital 31.12. | 30 194 | 1 839 | 13 178 | 180 | -405 | 5 996 | 50 982 | 1 219 | 52 201 |
| Consolidated statement of changes in equity | Share capital | Share premium fund | Reserve for invested unrestricted equity | Other reserves | Translation difference | Retained earnings | Total | Minority interests | Total equity |
| 2015 | |||||||||
| Equity capital 1.1. | 30 194 | 1 839 | 13 178 | 180 | -405 | 5 996 | 50 982 | 1 219 | 52 201 |
| Translation difference | 127 | 127 | 41 | 167 | |||||
| Profit/loss for the period | 11 482 | 11 482 | 867 | 12 349 | |||||
| Total recognized income | 0 | 0 | 0 | 0 | 127 | 11 482 | 11 609 | 907 | 12 516 |
| Dividends/Additional return of capital | -4 247 | -4 337 | -8 584 | -899 | -9 483 | ||||
| Transfer between items | 252 | -252 | 0 | 0 | |||||
| Share issue | 1 370 | 1 370 | 1 370 | ||||||
| IPO | 14 175 | 14 175 | 14 175 | ||||||
| Expenses related to IPO | -436 | -436 | -436 | ||||||
| Acquisition of own shares | -75 | -75 | -75 | ||||||
| Other changes | -34 | -34 | -34 | ||||||
| Equity capital 31.12. | 30 194 | 1 839 | 24 218 | 180 | -279 | 12 855 | 69 008 | 1 227 | 70 234 |
The translation reserve includes foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
23
CONSOLIDATED STATEMENT OF CASH FLOW, IFRS
| 1 000 EUROS | 1.1.-31.12.2015 | 1.1.-31.12.2014 |
|---|---|---|
| Cash flow from operating activities | ||
| Interest and commission received and proceeds from securities transactions incl. dividends | 76 287 | 57 812 |
| Open trades, net | -2 755 | 7 908 |
| Interest and commissions paid | -3 176 | -3 593 |
| Cash payments to employees and suppliers | -34 091 | -42 885 |
| Increase (-) or decrease in operating assets: | ||
| Net change in trading book assets and liabilities | -91 990 | 28 708 |
| Deposits held for regulatory or monetary control purposes | 6 953 | -24 243 |
| Issue of loan capital | 2 627 | -37 626 |
| Funds advanced to customers | 91 028 | 57 779 |
| Net cash from operating activities before income taxes | 44 883 | 43 860 |
| Income taxes | -2 591 | -1 777 |
| Net cash used in operating activities | 42 292 | 42 083 |
| Cash flow from investing activities | ||
| Proceeds from sales of subsidiaries and associates | -6 343 | 0 |
| Dividend received | -11 | 400 |
| Interest received | 9 | 4 |
| Proceeds from sales of non-dealing securities | 0 | -121 |
| Acquisition of property, plant and equipment and intangible assets | -1 726 | -773 |
| Net cash used in investing activities | -8 071 | -491 |
| Cash flow from financing activities | ||
| IPO | 13 739 | 0 |
| Proceeds from issue of share capital | 1 370 | 615 |
| Purchase of own shares | -75 | -176 |
| Net decrease in other borrowings | 19 | 242 |
| Payment of finance lease liabilities | -220 | -250 |
| Dividends paid | -8 581 | -4 631 |
| Net cash from financing activities | 6 252 | -4 200 |
| Net increase in cash and cash equivalents | 40 473 | 37 392 |
| Cash and cash equivalents at beginning of period | 163 581 | 126 325 |
| Effects of exchange rate changes on cash and cash equivalents | -65 | 136 |
| Cash and cash equivalents *1 at end of period | 203 989 | 163 581 |
| * Cash and cash equivalents include cash and cash equivalents and claims on credit institutions repayable on demand. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basic information on the company
Evli Bank Plc is a private bank specializing in investment whose clients are institutions, companies and present or future high net worth individuals. Evli Bank Plc and its subsidiaries form the Evli Group (“Evli”). Clients are served by international groups operating in three business areas that provide asset management services and mutual funds, broker shares, derivatives, exchange‐traded funds, bonds and structured investment products, and provide advisory services. The Evli Group operates in four countries and its head office is in Finland. The company operates in Sweden through its branch office and its subsidiary Evli Corporate Finance Ab, in Estonia through its subsidiary Evli Securities, in Russia through its subsidiary Evli Russia Oy, and in the United Arab Emirates through its subsidiary Terra Nova Ltd.
The Group's parent company is Evli Bank Plc. The parent company is domiciled in Helsinki and its registered address is Aleksanterinkatu 19 A, 00100 Helsinki.
A copy of the consolidated financial statements can be obtained from www.evli.com or from the parent company's registered office at Aleksanterinkatu 19 A, 00100 Helsinki.
Accounting policies
Basis for preparation of the financial statements
The consolidated financial statements have been prepared in compliance with IFRSs (International Financial Reporting Standards), approved for application in the EU, and IASs (International Accounting Standards) valid at the end of 2015, together with their respective SIC (Standing Interpretations Committee) and IFRIC (International Financial Reporting Interpretations Committee) interpretations. In addition, Finland's Act on Credit Institutions and official regulations have also been applied in preparing the consolidated financial statements. The figures in the financial statements are presented in thousands of euros, unless indicated otherwise. The consolidated financial statements have been prepared based on historical cost, with the exception of financial assets and liabilities recognized at fair value through profit or loss, and derivative financial instruments.
During the year, the figures are presented in the interim reports so that the income statement items are compared with the corresponding period of the previous year while the comparison of balance sheet items relates to the previous year‐end, unless specified otherwise.
As of 1 January 2014, capital adequacy has been calculated according to the Basel III standards. The term Basel III is used in the financial statements to mean the EU's Capital Requirements Regulation 575/2013 and the related additional regulations issued by the European supervisory authority and international supervisory authorities.
Consolidation principles
The consolidated financial statements comprise the financial statements of parent company Evli Bank Plc and all the subsidiaries in which the parent company has a controlling interest. The Group is considered to have a controlling interest if its shareholding directly or indirectly carries more than 50 percent of the company's voting rights, or if it is otherwise entitled to exercise an influence on the company's financial position and operating policies so as to obtain benefits from its activities.
The consolidated financial statements encompass those subsidiaries in which the parent company directly or indirectly owns 50 percent of the shares with voting rights or in which it otherwise has a controlling interest.
The Group's internal shareholdings are eliminated using the acquisition method of accounting. The assets, liabilities, contingent assets and contingent liabilities of a company acquired according to the acquisition method are assessed at fair value at the time of acquisition. Intangible assets, such as trademarks, patents or client relationships, that are not included in the acquired company's balance sheet are identified and assessed in connection with the acquisition. Following assessment at fair value, either goodwill or negative goodwill can arise. Goodwill is tested at least in connection with the financial statements. Subsidiaries are consolidated from acquisition date to date of sale.
The consolidated financial statements encompass those associates in which the parent company directly or indirectly owns 20--50 percent of the shares with voting rights or in which it otherwise exercises significant influence, but not control. Associates are consolidated using the equity method. In the equity method the Group's share of the associate's equity and results increases or decreases the value of the shares recognized on the balance sheet date. An investment in an associate includes the goodwill generated by the acquisition. In accordance with the equity method, these stakes are measured at acquisition cost, including the changes in the Group's stake in the company's net assets following the acquisition.
All intra‐group transactions, receivables, liabilities, unrealized gains and internal distribution of profits are eliminated in preparing the consolidated financial statements. Unrealized losses are not eliminated if the loss is due to impairment of an asset. The profit for the period attributable to the parent company's equity holders and non‐controlling interests is presented in the income statement, and the non‐controlling interest's share of equity is presented separately in the balance sheet within equity.
Mutual funds managed on behalf of clients are not consolidated, since the Group has no control over them.
Northern Horizon Capital Ltd was consolidated using the equity method. Evli Bank Plc holds a 50 percent stake in Northern Horizon Capital Ltd shares, which confer a 45 percent voting right in the company. This company specializes in the management of real estate funds and Evli acquired a stake in conjunction with a corporate transaction carried out in 2011.
The figures of Evli's associates Baltic SME Management B.V. and BIF Management Ltd are not significant for the Group.
Evli Alexander Management Ltd is a company specializing in preparing executive reward systems. Evli Bank Plc has a 45.01 percent stake in the company. Pursuant to the shareholder agreement, Evli Bank Plc has control in the company, and therefore the company is consolidated as a subsidiary.
The subsidiaries and associates included in the consolidated financial statements are listed on section ‘Companies included in the Consolidated Accounts'.
Translation of items denominated in foreign currency
The figures showing the profit/loss and financial position of the Group's units are measured in the currency used in each unit's main functional environment (“functional currency”). The consolidated financial statements are presented in euros, which is the functional and presentation currency of the Group's parent company.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the date of the transaction. Monetary balance sheet items are translated into the functional currency at the rate prevailing on the balance sheet date. Exchange rate differences arising in connection with the valuation are included in net income from foreign exchange.
The income statements of foreign Group entities are translated into euros at the weighted average rates for the period, and the balance sheets at the rates prevailing on the balance sheet date. In the consolidated income statement and balance sheet, the translation differences resulting from the use of different rates for the translation of Group results for the period is recognized in income and expenses recognized directly in equity and presented under equity. The translation differences arising from the elimination of the acquisition cost of foreign subsidiaries and from post-acquisition cumulative changes in equity items are recognized in income and expenses recognized directly in equity and presented under equity. When a subsidiary is disposed of wholly or partly, the cumulative translation differences are recognized in profit or loss as part of gains or losses from disposal.
Property, plant and equipment
Tangible fixed assets are measured at historical cost less accumulated depreciation and impairment losses. Subsequent costs are included in the carrying amount of tangible fixed assets only if it is probable that the future economic benefits attributable to the assets will flow to the Group and that the cost of acquiring the assets can be reliably measured. Other repair and maintenance costs are recognized in profit or loss in the period in which they were incurred.
Assets are depreciated on a straight-line basis over their estimated useful lives. The estimated useful lives are as follows:
Machinery and equipment: 5 years
IT equipment: 3 years
Assets under finance leases: 3--5 years
Renovations of leased premises: term of lease
The residual values and useful lives of assets are reviewed at each reporting date and, if necessary, are adjusted to reflect changes occurring in expectations of useful life.
The depreciation of an item of property, plant and equipment will cease when the tangible fixed asset is classified as held for sale under IFRS 5 Non-current assets held for sale and discontinued operations.
Gains and losses from the sales or disposals of tangible fixed assets are included in other operating income and expenses.
Intangible assets
Intangible assets are recognized in the balance sheet only if their acquisition cost can be reliably measured and if it is probable that the expected future economic benefits attributable to the assets will flow to the company. Intangible assets with definite useful lives are recognized in the balance sheet at historical cost and are amortized in the profit and loss account on a straight-line basis over their known or estimated useful lives. Intangible assets include software licenses and other intangible rights whose useful life is 3--5 years.
With a contract signed on October 7, 2009, Evli Acquired the entire share capital of Carnegie Asset Management Finland and Carnegie Fund Management Finland. No goodwill was generated from this transaction; the other intangible rights included in the sale price, such as client agreements, will be completely amortized within 2--7 years.
Evli acquired a majority holding in Aurator Asset Management Ltd on January 4, 2013. The intangible rights arising from the transaction will be amortized over five years. No goodwill was generated from this transaction.
Evli acquired a majority holding in Head Asset Management Ltd with an agreement signed on September 30, 2015. The transaction was executed on October 19, 2015. Goodwill was generated from this transaction. In addition to this, the sale price included intangible rights, such as client agreements, which will be completely amortized within 5 years.
Goodwill
Goodwill represents the excess of the cost of an acquired entity over the Group's interest in the fair value of the identifiable net assets and liabilities acquired at the acquisition date. Goodwill is measured at historical cost less cumulative impairment losses. Goodwill is not amortized. Goodwill arising in connection with acquisitions is tested annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For this purpose, goodwill is allocated to cash-generating units, or, in the case of a subsidiary, goodwill is included in the subsidiary's acquisition cost and the subsidiary forms a cash-generating unit. If the carrying amount of goodwill for a cash-generating unit exceeds its recoverable amount, an impairment loss equal to the difference will be recognized.
For the testing of impairment, the recoverable amounts of an asset are determined by calculating the asset's value in use. The calculations are based on five-year cash flow plans approved by the management. In the cash flow model, items affecting each cash-generating unit's operational cash flow -- mainly income and expenses -- are examined. Cash flows extending after the five-year forecast period have been calculated using the “final value method”. In the final value method growth is determined using the management's conservative assessment of the long-term growth of cash flow. In the testing carried out in 2015, annual growth of either 1 or 2 percent, depending on the risk of the unit tested, has been used as the growth factor of the final value. The cash flows used to measure value in use are discounted to the present value using the discount rate that reflects assessments of the time value of money and the risks specific to the asset. The discount rate used in the testing of business functions not including those in Russia was 11.5 percent and 13.5 percent for business functions in Russia.
In conjunction with goodwill testing, the sensitivity of the testing to changes in the variable affecting each result is also
assessed. Sensitivity analyses are performed on goodwill impairment testing calculations using worst‐case scenario forecasts. These scenarios were used to examine the change in value in use by changing the basic assumptions in the definition of value. Future income and expense cash flows, the discount rate and final value growth rate were changed in the sensitivity analyses. On the basis of the sensitivity analyses carried out, the change in the recoverable amount for the units tested does not lead to a situation in which the carrying amount is greater than the value in use.
Borrowing costs
Borrowing costs are recognized as an expense in the period in which they are incurred. The attributable transaction costs of a certain borrowing are included in the original amortized cost of the borrowing, and are amortized as interest expense by using the effective interest method or, if necessary, by following a formula whose result can be deemed as being sufficiently near the sum calculated by using the effective interest method.
Leases
Leases of property, plant and equipment in which substantially all the risks and rewards of ownership are transferred to the Group are classified as finance leases. Workstations, multifunction printers, monitors and servers have been obtained in the Group through finance leases. An asset leased under a finance lease is recognized at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. An asset leased under a finance lease is depreciated over the shorter of the asset's useful life and the lease term. Lease payments are allocated between the interest expense and the reduction of the outstanding liability during the lease term to produce a constant periodic rate of interest on the remaining balance of the liability for each financial period. Finance lease liabilities are included in other liabilities.
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made on operating leases are recognized in profit or loss on a straight‐line basis over the lease term.
Impairment
At each balance sheet date the Group assesses whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. In addition, goodwill and intangible assets not yet available for use are tested for impairment annually, regardless of the existence of indication of impairment. The need for impairment is assessed for each cash‐generating unit which, in the case of the Evli Group, means for each subsidiary or segment.
The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. The value in use is determined as the future net cash flows expected to be derived from the said asset or cash‐generating unit which are discounted to present value. The discount rate used is a pre‐tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognized if the carrying amount of an asset is higher than its recoverable amount. The useful life of the asset is reviewed when the impairment loss is recognized. An impairment loss is reversed if circumstances have changed and the recoverable amount has changed since the date of recognizing the impairment loss. Impairment losses recognized for goodwill are not reversed under any circumstances.
Employee benefits
Pension obligations
All of the Evli Group's retirement plans are defined contribution plans. Payments to defined contribution plans are reflected in profit or loss in the period in which they are incurred. The Evli Group finances all its retirement plans as contributions to pension insurance companies. The contributions take different countries' local regulations and practices into account.
Remuneration
The objective of the Evli Group's reward system is to support the implementation of the company's strategy as well as promote its competitiveness and long‐term financial success. A further aim is to contribute to a positive trend in Evli's shareholder value, committing the company employees to the company's objectives in the long run. The system comprises fixed and variable remunerations and long‐term incentive systems.
The Compensation Committee, which is made up of members nominated from the Board of Directors, prepares a reward system in accordance with the targets set by the Board of Directors in which the criteria for determining the variable salary elements are determined. The Compensation Committee consists of at least three Board members and is chaired by an independent Board member. The Board adopts the reward system annually. The Board also decides on the remuneration of the CEO and the remuneration of the members of the Executive Group based on a proposal by the CEO.
The reward system must always comply with the valid legislation and guidelines issued by the authorities. The Compensation Committee monitors the functioning and results of the reward system. The Compensation Committee also monitors compliance with the reward system and the rewarding of the persons that are responsible for the company's risk management and control functions. Evli's internal audit function performs an annual audit of the reward system.
Under all circumstances, remuneration in line with the reward system is always subject to a Board resolution. Through a Board resolution, the company can decide, if appropriate, not to pay the variable remuneration element, either in part or in total. Moreover, the company always has the right to reclaim a paid variable remuneration element, should it later discover that actions taken by the individual remunerated have jeopardized the financial position of the company, the individual has violated the regulations affecting the company or the company's own operative principles and procedures, or has contributed to such an action through negligence.
The Evli Group's reward system contains restrictions to ensure that the variable element of the remuneration is not paid out if the Group's result does not show a favorable trend. The premise for bonus payments is a result that is sufficiently strong so that the company's solvency is not jeopardized
through variable remunerations. Under no circumstances can remuneration and bonuses exceed 30 percent of the company's result before the profit distribution with employees. The reward system also contains restrictions to ensure that the variable element in the total remuneration does not grow excessively in relation to the fixed salary which would encourage risk‐taking beyond the risk‐bearing capacity. In case of individuals, the share of the variable element must not exceed 100 per cent of the total fixed salary element, unless the General Meeting decides otherwise. Nevertheless, the share of the variable element cannot exceed 200 percent of the total fixed salary of the individual in question.
In order to avoid conflicts of interest, the remuneration of persons in control functions does not depend on the financial success of the Group or any of its business units. The remuneration of those working in control functions will be tied to their individual performance and attainment of objectives.
A certain percentage of the result of the Evli Group business units is reserved for the purposes of the reward system, to be determined on the basis of the unit's and Group's results. An upper limit has been set for the variable remunerations. In situations where the consolidated result exceeds this upper limit, no variable remuneration depending on the result is promised for the part in excess of the limit. The heads of the business units define the indicators and internal models that are used to determine the distribution of the bonus allocated to each business unit between the teams and individuals. The indicators and models are designed to account for long‐term performance and compatibility of eventual bonuses with the company's operations and related risks.
Under certain circumstances, the company will be obliged to postpone the payment of the variable remuneration element. In this case, the postponement will be three (3) years from the end of the respective earning period. The amount of the remuneration payable after the postponement depends on the company's financial performance during the period of postponement, and it can also be zero. The company requires that the employees do not take any personal action to protect themselves against risks related to the amount of their future variable remunerations or risks at the time of payment.
In addition to the above remuneration methods, the company may create separate long‐term incentive systems. The Evli Group has one share‐based incentive program that is based on stock options that is currently in effect. Under this system, the stock options are issued gratuitously to the key persons employed or to be recruited by the Evli Group. In divergence to the preferential subscription rights of the shareholders, the option rights are issued to the key employees named by the company's Board of Directors, to promote their commitment and motivation. The company's Board of Directors decides upon the distribution of stock options. The Board also decides upon the redistribution of any stock options that may later be returned.
Provisions
A provision is recognized when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the Group can reliably estimate the amount of the obligation.
Income taxes
The profit and loss account's tax expense comprises current and deferred tax. Current tax is calculated on the taxable profit for the period determined on the basis of the enacted tax rate of each country, adjusted by any taxes related to previous periods.
Deferred tax is generally calculated on all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. However, deferred tax assets have been recognized to the extent that future taxable income is likely to be generated, against which the temporary difference can be used. The largest temporary differences arise from the depreciation of fixed assets and tax losses. No deferred tax is recognized on the undistributed profits of subsidiaries to the extent it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is measured by using the tax rates enacted by the balance sheet date.
Financial assets and liabilities
The Group's financial assets and liabilities are classified in accordance with IAS 39 Financial Instruments: Recognition and Measurement into the following categories: financial assets and liabilities at fair value through profit or loss, available‐for‐sale financial assets, loans and receivables and other financial liabilities. The classification is done when a financial instrument is recognized initially. The Group does not have financial assets that belong in the held‐to‐maturity investments category.
A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or the Group has transferred substantially all the risks and rewards of ownership of the financial asset to an external party. Financial assets and liabilities are recognized according to the trade date. A financial liability is derecognized when the obligation specified in the contract is discharged.
A financial asset and a financial liability shall be offset only when the Group has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
The Group's measurement process for financial instruments is approved by Evli Bank's Board of Directors. The measurements are based on IFRS 13 and IAS 39, and on the Financial Supervisory Authority's regulations 1/2013: Bookkeeping in the financial sector. The bank's financial administration together with risk management administers the Group's measurement process which includes the inspection and validation of valuation prices, checking the parameters used in measurement, and classification of financial instruments in accordance with the standard. Every quarter, the bank's Audit Committee audits and submits for approval by the Board of Directors the measurement of equities and units for which no market value is available (instruments in measurement level 3 and measurements by associates).
Financial assets
The financial assets at fair value through profit or loss category is divided into two sub‐categories: trading assets, e.g. shares and derivatives, and financial assets designated as at fair value through profit or loss
upon initial recognition, e.g. long-term investments in funds and shares, and the Treasury's investments in bonds and other interest-bearing papers.
The use of the fair value option for items not in the trading stock is justified because the performance and risk of these financial assets are evaluated on the basis of fair value in accordance with the risk management and investment strategy.
Trading assets are acquired principally to obtain profit in the short term through changes in market prices.
The value of financial assets at fair value is determined on the basis of prices quoted on active markets, i.e. bid quotations on the balance sheet date and closing prices. In cases where price quotations have not been available from active markets, the fair value has been determined using common theoretical measurement models, such as derivative pricing models. The fair value of unlisted equities, private equity funds and other instruments is estimated primarily using the instrument's net asset value, a cash flow analysis based on future outlooks, or the latest valuation published by a private equity fund's or real estate fund's management company. If the acquisition price of an unlisted investment falls short of the theoretical valuation, in individual cases, the instrument's acquisition price may be used as the measurement principle, subject to consideration. Unrealized and realized gains and losses arising from changes in the fair value are recognized in net income or loss from securities trading in profit or loss for the period in which they were incurred.
Available-for-sale financial assets include long-term investments for which a public price quotation is not available from an active market, and whose fair value cannot therefore be reliably determined. Such investments' fair value is estimated primarily using the share's net asset value or, alternatively, using a cash flow analysis based on future outlook. An estimate is made quarterly to assess whether there is objective evidence of the value of the investment declining. The bank's Audit Committee audits and submits its valuations to the Board of Directors for approval. The realized profit and impairment losses are recognized in profit or loss in net income from available-for-sale financial assets, while unrealized value increase is recognized in the fair value reserve. If the acquisition price of an unlisted investment falls short of the theoretical valuation, in individual cases, the instrument's acquisition price may be used as the measurement principle, subject to consideration. The total value of the Group's available-for-sale shares is very low.
Loans and receivables comprise nonderivative financial assets with fixed or determinable payments that are not quoted in an active market, and that the Group is not holding for trading purposes. Loans and other receivables are initially recognized at fair value inclusive of expenses immediately caused by the acquisition. After initial recognition, loans and receivables are measured at amortized cost.
Cash and cash equivalents comprise the cash reserves and minimum deposit balances required by the Bank of Finland. Repayable on demand deposits in credit institutions are also included in cash and cash equivalents in the cash flow statement.
Negative market values from derivatives
Financial liabilities are initially recognized at fair value based on the consideration received inclusive of expenses immediately caused by the acquisition. Subsequently, all bonds and certificates of deposit issued by the company are measured at amortized cost, using the effective interest rate method. Shorted shares, stock options set and other derivatives recognized as liabilities are measured at fair value through profit or loss.
The fair value of liabilities measured at fair value through profit or loss is determined principally on the basis of prices quoted on active markets, i.e. asking prices quoted on the balance sheet date and closing prices on the balance sheet date. In cases where reliable price quotations have not been available from active markets, the fair value has been determined using common theoretical measurement models.
In securities lending occurring in conjunction with shorting shares, the securities are retained in the original owner's balance sheet.
The liability corresponding to assets acquired with financial leasing agreements is included under other liabilities.
Impairment of financial assets
An item of loans and receivables is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
Objective evidence of adverse changes in the borrower's ability to settle its obligations is based on the borrower's risk rating and Group's experience and management's estimate of the effects of delayed payments on future cash flows.
An impairment loss is recognized if the present value of the estimated future cash flows of the receivable discounted at the original effective interest rate is lower than the carrying amount of the receivable. The analysis takes into account the amount received upon the liquidation of the collateral. After the impairment the interest expense is recognized on the impaired amount.
In addition to individual impairments, the management regularly evaluates the collective need for impairment losses.
The impairment is cancelled in part or in whole if, after recognition of the impairment, the recognition is deemed to be groundless due to an improvement in the debtor's financial position or due to another event that has a positive effect on the cash flows received from the debt.
The impairment is recognized as a credit loss when the debtor has been found insolvent in bankruptcy proceedings, it has closed down or the receivable has been forgiven in a voluntary or statutory loan arrangement.
Derivative contracts
The Group has treated derivative financial instruments in accordance with IAS 39 Financial Instruments: Recognition and Measurement. Derivative financial instruments are initially recognized at cost, which corresponds to their fair value. Subsequently derivative financial instruments are measured at fair value. Resulting gains and losses are treated in accordance with the purpose of the derivative instrument. Positive changes in the value of derivative contracts are recognized in the balance sheet as assets and negative changes as liabilities.
The company does not apply hedge accounting, and derivative financial instru
ments are classified as held for trading. Changes in the value of derivatives in this category during the year and the realized gains/losses are presented in the income statement under net income from securities trading.
Recognition of equity linked notes
The calculatory commission from issued equity linked notes, is recognized immediately in the income statement. The entire commission is available for use on the date of issue of the notes, and the commission is used to cover the arrangement and issuance of the notes. The notes are recognized in the balance sheet at the amortized cost, and the interest component of the loan, which is the same as the value of the option, is recognized as a separate debt item in the group “Derivative contracts and trading liabilities”. The interest expense for the notes is calculated by using the effective interest method.
Treasury shares
The cost of treasury shares acquired by the parent company is deducted from equity. When such shares are sold later, all of the consideration received is included in equity.
Operating profit
IAS 1 Presentation of Financial Statements does not define the concept of operating profit. The Group has defined it as follows: operating profit is the net sum formed after employee benefits expenses, other administrative expenses, depreciation, amortization and possible impairment losses, and other operating expenses are deducted from revenue. All other items than the ones mentioned above are presented below operating profit in profit or loss.
Earnings per share
Undiluted earnings per share are calculated by dividing the profit or loss attributable to the parent company's shareholders by the weighted average number of shares in circulation during the financial period, excluding Evli shares acquired and held by the Group during the period. Diluted earnings per share are calculated by adjusting the weighted average number of shares by the dilutive effect of the stock options.
Revenue recognition principles
Income from projects related to Corporate Finance operations are recognized as profits for the financial year in which the project's end result can be assessed reliably. The expenses arising from a project and the loss that can be expected are expensed immediately. Commissions from asset management are accrued monthly and are invoiced in arrears in three-, six- or twelve-month periods. Securities brokerage events are recognized according to the trading date. The income of the above-mentioned segments is recognized as profits in commission income.
Interest income and expenses are calculated by using the effective interest method or, if necessary, by following a formula whose result can be deemed as being sufficiently near the sum calculated by using the effective interest method. In recognizing an impairment loss on a contract classified as a financial asset, the recovery of interest is continued at the lowered accounting balance using the original effective interest rate of the contract. If the receipt of interest is unlikely, it is recognized as an impairment loss. Interest income obtained from financial assets is recognized as interest income.
Accounting policies requiring management's judgment and key sources of estimation uncertainty
Preparation of the financial statements requires the making of certain estimates and assumptions about the future, and the actual outcomes may differ from these estimates and assumptions. The estimates are based on experience and on management's assumptions that were considered reasonable under the circumstances at the time. The most significant estimates concern the impairment testing of goodwill and the measurement principles of theoretically measured financial instruments.
Impairment testing of goodwill is based on the estimated future recoverable net cash flows of the cash generating units to which goodwill has been allocated, which is then compared to these units' carrying amounts. The testing requires making of assumptions concerning variables such as the growth rate of returns, costs of operations and the discount rate.
In situations where no external market price is available for individual financial instruments when valuing unquoted securities or derivatives at their fair value, a price is used, which is theoretically calculated based on the generally approved valuation models used in the market. Alternatively, valuation based on net asset value is employed.
An impairment is recognized in an associate's value if the company's financial position has deteriorated substantially or if the company's future outlook is deemed to contain substantial risk factors that, if realized, would weaken the associated company's financial position. The valuation is calculated using theoretical methods, and the impairment is reported under impairment losses of other financial assets.
New International Financial Reporting Standards (IFRS)
The IASB has published the following new or revised standards and interpretations that the Group has applied from the beginning of 2015.
- Amendments to IAS 19 Employee Benefits - Defined Benefit Plans: Employee Contributions (effective for financial years beginning on or after 1 July 2014): The amendments clarify the accounting treatment under IAS 19 in respect of defined benefit plans that involve contributions from employees or third parties towards the cost of benefits. The amendments are not assessed to have an impact on Evli's consolidated financial statements.
- Annual Improvements to IFRSs (2011--2013 cycle and 2010--2012 cycle) (effective for financial years beginning on or after 1 July 2014): The annual improvements process provides a mechanism for minor and non-urgent amendments to IFRSs to be grouped together and issued in one package annually. The amendments cover in total four (2011--2013 cycle) and seven (2010--2012 cycle) standards. Their impacts vary standard by standard but are not significant.
- IFRIC 21 Levies (effective for financial years beginning on or after 1 January 2014; in the EU to be applied at the latest, as from the commencement date of its first financial year starting on or after 17 June 2014): The interpretation clarifies the accounting treatment of levies. A liability for a levy is recognised when the activity that triggers payment, as identified by the relevant legislation,
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FINANCIAL STATEMENT GROUP
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occurs. The interpretation is applicable to all levies other than income taxes, fines, penalties and outflows that are in scope of other standards. The interpretation had no significant impact on Evli's consolidated financial statements.
Adoption of new and amended standards and interpretations applicable in future financial years
Evli has not yet adopted the following new and amended standards and interpretations already issued by the IASB. The Group will adopt them as of the effective date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year.
-
= not yet endorsed for use by the European Union as of 31 December 2015.
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Amendment to IAS 1 Presentation of Financial Statements: Disclosure Initiative (effective for financial years beginning on or after 1 January 2016). The amendments are designed to encourage companies to apply judgement in determining what information to disclose in the financial statements. For example, the amendments clarify the application of the materiality concept and judgement when determining where and in what order information is presented in the financial disclosures. The interpretation had no significant impact on Evli's consolidated financial statements.
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Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets - Clarification of Acceptable Methods of Depreciation and Amortisation (effective for financial years beginning on or after 1 January 2016): The amendments clarify IAS 16 and IAS 38 that revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in limited circumstances to amortise intangible assets. The amendments will have no impact on Evli's consolidated financial statements.
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Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investments in Associates and Joint Ventures: Investment Entities: Applying the Consolidation Exception* (the amendments can be applied immediately; mandatory for financial years beginning on or after 1 January 2016): The narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 clarify the requirements when accounting for investment entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. The amendments will not have an impact on Evli's consolidated financial statements.
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Amendments to IFRS 11 Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations (effective for financial years beginning on or after 1 January 2016): The amendments add new guidance to IFRS 11 on how to account for the acquisition of an interest in a joint operation that constitutes a business, i.e. business combination accounting is required to be applied. The amendments are not assessed to have an impact on Evli's consolidated financial statements.
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Amendments to IAS 27 Separate Financial Statements - Equity Method in Separate Financial Statements (effective for financial years beginning on or after 1 January 2016): The amendments to IAS 27 will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The amendments will not have an impact on Evli's consolidated financial statements.
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Annual Improvements to IFRSs (2012-2014 cycle) (effective for financial years beginning on or after 1 January 2016):
The annual improvements process provides a mechanism for minor and non-urgent amendments to IFRSs to be grouped together and issued in one package annually. The amendments cover in four standards. Their impacts vary standard by standard but are not significant.
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New IFRS 15 Revenue from Contracts with Customers* (effective for financial years beginning on or after 1 January 2018): IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. Under IFRS 15 an entity shall recognise revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group is currently assessing the impact of IFRS 15.
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New IFRS 9 Financial Instruments* (effective for financial years beginning on or after 1 January 2018): IFRS 9 replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Group is assessing the impact of IFRS 9.
Other new or revised standards and interpretations will not have an impact on Evli's consolidated financial statements.
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ANNUAL REPORT 2015
FINANCIAL STATEMENT
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SEGMENT REPORTING
Evli Bank's primary segment reporting is based on the Group's business segments, and these are also used in the Group's internal reporting. The highest operational decision-making body in the company is the Board of Directors. Evli Bank Plc's business segments are asset management, markets and corporate finance. The Group also has a number of joint functions, which are reported under Group operations. Secondary segment reporting for monitoring revenue is based on geographical areas: Finland, Sweden and other countries.
The business segments consist of business units, each of which has its own products, services, earnings logic and profitability that differ from those of the other units. The business risks of the various segments are also different.
Inter-segment pricing occurs in arm's length transactions at fair value. The revenue and expenses that are deemed as directly attributable to, or can be allocated on a reasonable basis to, a particular business area are allocated to that business area. The revenue and expenses that are not allocated to a particular business area, and the inter-business-area eliminations in the Group, are reported under Group operations. The distribution of the Group's assets and liabilities among the business areas is not monitored on a regular basis and is therefore not reported in connection with the segment reporting.
Evli modified its business area reporting at the beginning of 2015 by concentrating the business functions that generate what is known as recurring revenue in the Wealth Management unit. These functions include custody operations and management of incentive systems, which were previously reported under the Markets unit. As a result, Evli's business reporting corresponds better with the reporting structure that is based on the company's strategy.
Asset Management
Evli's asset management service comprises individualized institutional asset management and the Evli Private Banking service, as well as a wide range of mutual funds. Institutional asset management offers professional total asset management solutions to clients such as insurance companies, pension funds, organizations, municipalities and companies. Evli's Private Banking is a comprehensive asset management service for private individuals with investment assets in excess of EUR 300,000. Other private clients are offered the electronic Online Banker asset management service, mutual funds, electronic banking services and other standardized money market products.
At the start of 2015, custody operations and the management of incentive systems were transferred to the asset management segment.
Markets
The Markets unit's operations are divided into four business areas: equity brokerage, alternative investment product brokerage, market making, and investment research. Alternative investment products include derivatives, ETFs and fixed income instruments, and structured products.
Corporate Finance
The Corporate Finance unit provides advisory services related to M&A transactions and securities offerings. M&A transactions include acquisitions, divestments, mergers and demergers. Securities offerings comprise initial public offerings, share issues, share sales, convertible bonds and private placement arrangements.
Group operations
Group operations comprise the treasury, payments, credit management, Evli Bank's investments, financial administration, risk management, IT, corporate communications, legal affairs, compliance activities, human resources administration and internal services.
| Markets | Corporate Finance | Asset Management | Group Operations | Unallocated | Group | |
|---|---|---|---|---|---|---|
| 2015 (1 000 EUROS) | 1.1.-31.12.2015 | 1.1.-31.12.2015 | 1.1.-31.12.2015 | 1.1.-31.12.2015 | 1.1.-31.12.2015 | |
| SEGMENT INCOME STATEMENT | ||||||
| REVENUE | ||||||
| External sales | 12 272 | 5 201 | 42 968 | 2 935 | 873 | 64 249 |
| Inter-segment sales | -361 | 324 | -150 | 189 | -2 | |
| Total revenue | 11 911 | 5 525 | 42 818 | 3 124 | 871 | 64 249 |
| RESULT | ||||||
| Segment operating expenses | -9 085 | -4 329 | -23 918 | -12 750 | -907 | -50 988 |
| Corporate expenses | -2 462 | 0 | -6 911 | 9 373 | 0 | |
| Operating profit | 365 | 1 196 | 11 989 | -252 | -35 | 13 261 |
| Share of profits (losses) of associates | 2 104 | 2 104 | ||||
| Segment income taxes | -3 017 | -3 017 | ||||
| Segment profit/loss after taxes | 365 | 1 196 | 11 989 | -252 | -948 | 12 349 |
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FINANCIAL STATEMENT
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| Markets | Corporate Finance | Asset Management | Group Operations | Unallocated | Group | |
|---|---|---|---|---|---|---|
| 2014 (1 000 EUROS) | 1.1.–31.12.2014 | 1.1.–31.12.2014 | 1.1.–31.12.2014 | 1.1.–31.12.2014 | 1.1.–31.12.2014 | |
| SEGMENT INCOME STATEMENT | ||||||
| REVENUE | ||||||
| External sales | 11 200 | 6 664 | 37 364 | 3 727 | 779 | 59 734 |
| Inter-segment sales | -393 | -2 | -10 | 425 | -19 | 0 |
| Total revenue | 10 806 | 6 662 | 37 354 | 4 151 | 760 | 59 734 |
| RESULT | ||||||
| Segment operating expenses | -9 565 | -4 721 | -22 499 | -12 505 | -679 | -49 970 |
| Corporate expenses | -2 527 | -210 | -6 584 | 9 321 | 0 | |
| Operating profit | -1 286 | 1 731 | 8 271 | 967 | 81 | 9 764 |
| Share of profits (losses) of associates | 266 | 266 | ||||
| Segment income taxes | -2 355 | -2 355 | ||||
| Segment profit/loss after taxes | -1 286 | 1 731 | 8 271 | 967 | -2 009 | 7 674 |
Regular reporting to top management does not include breakdown of assets and liabilities of Evli Group to different business segments. Because of this the breakdown of assets and liabilities to segments is not included in the official segment report. Allocated corporate expenses includes cost items relating to general administration of Evli Group and banking business that are allocated to business units using allocation drivers in place at each time of review. Group Operations comprise Management of Evli Group, certain back-office functions, Treasury, Group Risk Management, Financial Administration, Information Management, Group Communications, Legal Department and Compliance, and Human Resources.
| Finland | Sweden | Other countries | Group | |
|---|---|---|---|---|
| 2015 (1 000 EUROS) | 1.1.–31.12.2015 | 1.1.–31.12.2015 | 1.1.–31.12.2015 | 1.1.–31.12.2015 |
| SEGMENT INCOME STATEMENT (GEOGRAPHICAL) | ||||
| Net revenue | 56 075 | 7 114 | 1 061 | 64 249 |
| SEGMENT BALANCE SHEET (GEOGRAPHICAL) | ||||
| Segment assets | 626 491 | 4 843 | 913 | 632 247 |
| Finland | Sweden | Other countries | Group | |
| 2014 (1 000 EUROS) | 1.1.–31.12.2014 | 1.1.–31.12.2014 | 1.1.–31.12.2014 | 1.1.–31.12.2014 |
| SEGMENT INCOME STATEMENT (GEOGRAPHICAL) | ||||
| Net revenue | 55 575 | 3 090 | 1 069 | 59 734 |
| SEGMENT BALANCE SHEET (GEOGRAPHICAL) | ||||
| Segment assets | 487 014 | 2 155 | 879 | 490 047 |
| No individual clients of Evli Bank Plc have returns that exceed 10 percent of the total returns. |
CORPORATE GOVERNANCE
Abstract
The governance of Evli Bank Plc (hereinafter Evli) is based on the Articles of Association, the Finnish Limited Liability Companies Act, applicable statutory provisions governing the Finnish securities markets, the regulations of the Finnish Financial Supervisory Authority, the rules and regulations of Nasdaq Helsinki Ltd, and other statutes and regulations concerning the governance of public limited companies. Evli also complies with the Finnish Corporate Governance Code issued by the Securities Market Association. The Code can be viewed in full on the Securities Market Association website at www.cgfinland.fi/en/. Further information on Evli's risk management system is available in section ‘Risk Management and Internal Control'.
General Meeting of Shareholders
The ultimate decision‐making power in the company is exercised by shareholders at General Meetings. At these meetings shareholders are able to participate in the control and supervision of the company. General Meetings are held at least once a year. The Annual General Meeting (AGM) is held upon completion of the company's financial statements, at a place and on a date designated by the Board of Directors. The date must be no later than the end of June.
Matters to be discussed at a General Meeting are specified in the Limited Liability Companies Act and in Evli's Articles of Association. The General Meeting normally discusses not only the matters specified by law and in the Articles of Association but also items presented to the meeting by the Board of Directors. Under the Limited Liability Companies Act, shareholders are also entitled to bring for discussion at a General Meeting any matter that falls within the authority of the meeting.
At the AGM, information is presented about the company's activities, and the financial statements for the preceding annual period are adopted. Resolutions are also taken at the AGM concerning the company's profit distribution, granting release from liability for the Board members and the CEO and his deputy, the election of Board members and appointment of auditors and the remuneration to be paid to them.
The Board of Directors may convene an Extraordinary General Meeting if it considers this necessary. The auditor and any shareholder with more than ten percent of the company's shares also have the right to demand that an Extraordinary General Meeting be called to discuss a matter to be presented by the auditor or shareholder.
Board of Directors and its committees
The Annual General Meeting of Evli Bank Plc each year elects a Board of Directors, which, between General Meetings, exercises the ultimate decision‐making power in the Evli Group. The task of Evli's Board is to manage the company in accordance with the law and official regulations, and in compliance with the Articles of Association and the decisions of the General Meeting.
The AGM elects four to eight members to the Evli Board of Directors from among representatives of the major shareholders and from among external, independent experts who have diverse experience of business and of the industry in which Evli operates. Board members are elected for a term of one year, which begins at the close of the AGM and expires at the close of the first AGM following their election. The Board elects a Chairman and Vice Chairman from among its members.
The Board has approved a written procedure defining its duties and meeting practices. The Board of Directors is responsible for the company's administration and appropriate organization of operations, and for ensuring that the company's accounting and asset management are monitored in an appropriate manner. The Board handles all matters that are of extensive and fundamental importance for the operation of the company and the entire Group. The Board's responsibilities include deciding upon the Evli Group's business strategy, approving the budget and the principles for the arrangement of the Evli Group's risk management and internal control. The Board appoints the CEO and the members of the Executive Group, relieves them of their duties and decides upon the CEO's salary and other benefits. The Board also approves the objectives for the Group's human resources planning and monitors the implementation of these objectives, and it decides the basis for the Group's remuneration system and other far‐reaching matters that concern the personnel. In accordance with the principles of good governance, the Board also ensures that the company, in its operations, endorses the corporate values that have been set out for compliance. The Board conducts an annual review of its activities and working practices in the form of an internal self‐assessment.
Evli Bank Plc's Annual General Meeting, held on March 6, 2015, confirmed six as the number of members of its Board of Directors. Henrik Andersin, Robert Ingman, Harri‐Pekka Kaukonen, Mikael Lilius, Teuvo Salminen and Thomas Thesleff were re‐elected to Evli Bank Plc's Board of Directors. Henrik Andersin was chosen as Chairman of the Board.
Evli Bank Plc's Extraordinary General Meeting decided on October 1, 2015 to raise the number of Board members to seven and elected Johanna Lamminen as the seventh Board member.
Evli's current Board of Directors consists of industry experts and the company's major shareholders. Harri‐Pekka Kaukonen, Mikael Lilius, Teuvo Salminen and Johanna Lamminen are independent of the company and shareholders .
The Board of Directors convened 13 times in 2015. The average attendance rate of Board members at the meetings was 91.6 percent. The meeting attendance fee payable to Board members in accordance with the AGM's decision was EUR 4,100 per month, and the Chairman's attendance fee was EUR 6,000 per month. The Chairmen of the committees were also paid EUR 800 for each committee meeting. During the financial year members of the Board received no shares or share‐based rights as remuneration.
The Board has established an Audit Committee and a Compensation and Nomination Committee to prepare matters to be handled by the Board. The committees have no independent decision‐making power; instead, decisions are made by the Board on the basis of recommendations and information supplied by the committees. The committees make regular reports on their activities to the Board.
Audit Committee
The Audit Committee is responsible for assisting the Board of Directors in ensuring that the company has an adequate internal control system covering all operations and that the company's risk management has been arranged appropriately, and it also monitors the financial statements reporting
process. Additionally, the Audit Committee is responsible for overseeing the accuracy and correctness of the company's financial reporting, monitoring the statutory auditing of the financial statements and consolidated financial statements, and preparing the proposal on the appointment of auditors and the auditors' fees, to be made to the AGM. Furthermore, the Audit Committee is responsible for ensuring that the company's operations and internal control have been arranged in accordance with all applicable laws, regulations, and good management and governance practices, as well as for monitoring the activity and efficiency of the internal audit function and assessing the independence of the statutory auditor or auditing firm, and especially the provision of ancillary services to the company. The Audit Committee consists of at least two members, who may not be part of the company's management and must be independent of the company. The committee is elected by the Board of Directors from among the Board's members. In addition to the committee's regular members, the meetings are attended by the auditors, the CEO, the CFO and the internal auditor. The committee meets every quarter.
The committee met five times in 2015. The Audit Committee's Chairman in 2015 was Teuvo Salminen and its members were Robert Ingman and Johanna Lamminen (from October 1, 2015). The Audit Committee members' average attendance rate at meetings was 100 percent.
Compensation and Nomination Committee
The Compensation and Nomination Committee is responsible for assisting the Board of Directors in the preparation of matters related to the management's employment terms and compensation, the compensation and incentive systems for management and personnel, and the regular assessment of the functioning of and compliance with the compensation system. The committee consists of at least three members, elected by the Board from among its members. The committee Chairman is chosen from among the committee members and must be an independent Board member.
The members of Evli's Compensation and Nomination Committee are Harri‐Pekka Kaukonen (Chairman), Henrik Andersin, Mikael Lilius and Thomas Thesleff. The committee met four times in 2015. The Compensation and Nomination Committee's members' average attendance rate at meetings was 87.5 percent.
Chief Executive Officer and Executive Group
Evli's Board of Directors appoints the company's CEO and decides the terms and conditions of his or her service relationship. The CEO is responsible for the company's day‐to‐day management in compliance with the instructions and decisions provided by the Board of Directors. The CEO's duties include the management and supervision of the Group's business, preparation of matters to be handled by the Board, and implementation of the Board's decisions. In accordance with the Limited Liability Companies Act, the CEO ensures that the company's accounting is lawful and that the asset management is arranged reliably.
The CEO's period of notice is six months, and the severance compensation payable to the CEO in addition to the salary for the period of notice corresponds to 12 months' salary. The CEO's retirement age is 63.
The company's CEO is Maunu Lehtimäki, M.Sc. (Econ.), born 1967. In 2015, the CEO was paid a salary of EUR 381,600.00 plus EUR 50,240.00 in performance bonuses and other benefits, making a total of EUR 431,840.00. As part of the incentive and commitment system 42,500 stock options were granted to the CEO.
In managing the company's operations, the CEO is assisted by Evli's Executive Group. The Executive Group consists of the CEO and six members. The CEO presents a proposal regarding the choice of members to the Executive Group, and these names are then subject to confirmation by the Board of Directors. The CEO convenes the Executive Group as necessary and serves as its Chairman. The Executive Group normally meets twice a month. The Executive Group's task is to support the CEO in preparing and implementing the strategy and in coordinating the Group's operations. The Executive Group's duties also include preparing and executing matters that are significant or involve fundamental principles, and ensuring internal cooperation and communication.
Evli holdings of Board members, the CEO and Executive Group members
At the end of 2015, Evli's current Board members held, either directly or indirectly, about 51.00 percent of the company's total stock and 55.46 percent of the total votes. At the end of 2015, Evli's CEO held, either directly or indirectly, about 2.33 percent of the company's total stock and 2.54 percent of the total votes. The other members of the Executive Group together held 4.36 percent of the company's total stock and 4.76 percent of the votes at the close of 2015.
Internal audit
Internal audit is a support function for the Board of Directors and senior management and is independent of the business functions. It is administratively subordinate to the CEO and it reports to the CEO and, via the Audit Committee, to the Board of Evli Bank.
Internal audit assesses the functioning of the Evli Group's internal control system, the appropriateness and effectiveness of the functions and compliance with instructions. It does this by means of inspections that are based on the internal audit action plan adopted annually by the Audit Committee of the Board of Evli Bank. Evli's Board of Directors, management and personnel can make use of the assessments for operational management, control and development purposes. Internal audit also proposes measures for developing risk management, internal control and managerial and administrative processes.
Internal audit follows not only the internal audit guidelines but also the internationally acknowledged framework of professional practices (The Institute of Internal Auditors) and corresponding information systems audit standards (Information Systems Audit and Control Association).
Auditors
The shareholders elect the company's auditors each year at the Annual General Meeting. The auditors must be an auditing firm approved by the Finland Chamber of Commerce. The auditors' term continues until the end of the first AGM that follows the election of the auditors. The auditors' duties are to ensure that the financial statements have been prepared in accordance with the applicable statutes and provide a true and fair view of the company's financial position and performance and other necessary information for the company's stakeholders.
EVLI BANK PLC
ANNUAL REPORT 2015
As part of their annual audit duties, the auditors of Evli Bank Plc audit the accounts and administration of the separate companies. The internal control requirements are taken into account in the auditors' audit plans. Each year, the auditors submit their report to the Annual General Meeting of Evli Bank Plc. The auditors also report the main points of the annual audit plan to the Board of Directors and to the Board's Audit Committee as well as presenting, in connection with each interim report and the financial statements, a written audit report covering the entire Group.
The 2015 AGM elected KPMG Oy Ab, Authorized Public Accountants, as the company's auditor and Marcus Tötterman, APA, as the principally responsible auditor. KPMG generally serves as the auditor for all the subsidiaries, with the exception of Terra Nova Ltd and Head Asset Management Ltd. Terra Nova's auditor was RSM Dahman Auditors and the auditor for Head Asset Management Ltd was Ernst & Young Oy, with Tuomas Rahkamaa as the principally responsible auditor.
In 2015 the auditing firms were paid fees totaling EUR 363,672.59. The fees for auditing came to EUR 242,776.37, and the fees for advisory services unconnected with auditing were EUR 120,896.22.
Description of the Evli Group's financial reporting process
The Board of Directors is responsible for overseeing the Evli Group's financial reporting. The Audit Committee assists the Board in this work. The CEO's and CFO's task is to monitor and ensure that the accounting and the financial reporting accord with the law, the Group's accounting policies and the guidelines and orders issued by the Group's Board of Directors.
The Group's accounting and results reporting are centralized under the responsibility of the Group's Financial Administration unit. The Financial Administration unit is subordinate to the CFO and is responsible for producing on a centralized basis the financial statements information required for external accounting. The unit also produces internal accounting analyses and the results reports for monitoring business activities, the separate companies and the Group's profitability. Profit performance is reported monthly both to the Executive Group and the Board of Directors in the form of specific results reports. The aim is to identify and demonstrate success factors as well as development areas well in advance, thus making it possible to react to these. Reporting practices are also used for monitoring the implementation of the business plans for the business units. The Group's Financial Administration unit is also responsible for monitoring and reporting on the performance of each business unit. Further responsibilities include reporting the financial results, sales and activity at least monthly, and even daily depending on the unit, to the Executive Group and other concerned parties. The Evli Group complies with the International Financial Reporting Standards (IFRS) approved for application in the EU. The Group prepares the annual financial statements and also a quarterly interim report (IAS34). The instructions on financial reporting and the accounting principles are applied in all the Group companies. The accounting of all the Group companies is included in the same accounting system, with the exception of Group companies in Russia and the United Arab Emirates. The accounting of the Group company Head Asset Management Ltd was outsourced in 2015.
Risk Management and Internal Control
Evil's values and its policy of transparent and appropriate communications support the company's operational integrity and high ethical standards. The company's organizational structure, clearly established responsibilities and authorizations, and its competent staff support the planning, execution, control and monitoring of business operations in a manner that facilitates the achievement of the set objectives.
Risk management refers to actions aimed at systematically surveying, identifying, analyzing and preventing risks. The objective of risk management is to ensure that the company's assets are sufficient in relation to its risk positions, that fluctuations in financial results and valuations remain within the confirmed objectives and limits, and that risks are priced in the right way to achieve sustainable profitability.
Organization of risk management
Evli Bank's Board of Directors is primarily responsible for the Evli Group's risk management, and confirms the risk management policies, responsibilities, the Group's risk limits and other general guidelines governing how risk management and internal control is to be organized. The Board has also set up a credit and asset liability committee (Credalco) that briefs it on risk‐taking matters. The members during the review period were Kristian Nybergh (Chairman), Juho Mikola, Lea Keinänen, and Maunu Lehtimäki, and the expert members were Mari Etholén, Jarkko Heikkilä and Bengt Wahlström.
The managers of the business units are responsible for ensuring that risk management is at a sufficient level in each respective unit. The business units' task is to develop risk management and internal control processes and competence, identify and analyze risks, and make decisions on risk management with the aid of various protection measures.
The Risk Management unit oversees daily operations and compliance with the risk limits granted to the business units, as well as compliance with risk‐taking policies and guidelines. Risk Management reports on the Evli Group's overall risk position to the Board and the Executive Group each month.
The Compliance function is responsible for ensuring compliance with the rules in all of the Evli Group's operations by supporting operating management and the business units in applying the provisions of the law, the official regulations and internal guidelines, and in identifying, managing and reporting on any risks of insufficient compliance with the rules in accordance with the separate Compliance policy and monitoring plan confirmed by Evli Bank's Board of Directors. The Compliance function reports regularly via the audit committee to Evli Bank's Board and also to the operating management.
The internal audit, which supports the Board of Directors and the senior management, is a body that is independent of business operations. It is organized administratively under the CEO and reports to the CEO and, by way of the audit committee, to Evli Bank's Board of Directors.
The internal audit assesses the functioning of the Evli Group's internal control system, the appropriateness and efficiency of its operations, and the compliance with guidelines, through audits that are based on a plan of action for internal auditing that is confirmed annually by the audit committee of Evli Bank's Board of Directors.
The internal audit follows not only the internal audit guidelines, but also an internationally acknowledged framework of professional practices (The Institute of Internal Auditors) and corresponding information systems audit standards (The Information Systems Audit and Control Association).
The Group also has an independent internal audit function which is responsible for the continuous auditing of the Group's functions.
Risk concepts
Evli divides risks into three main categories: Financial risks, including market, liquidity and credit risksOperational risks including legal, compliance and information security risksBusiness risks.
Market risks
Price risks:
One substantial market risk is the price risk of Evli's own investment portfolio and trading stock. The own‐book trading in which Evli engages on the equity markets is focused on securities quoted on the stock exchanges of Helsinki and Stockholm, and on derivatives connected to these securities. The investment activity related to the equity markets comprises market making operations, temporary investments for brokerage purposes, trading based on various trading strategies, and fund and private equity investments. Evli's Treasury engages in investment activity on the fixed income and currency markets.
The delta‐adjusted equity market risk was at the same level as in the previous year. The equity risk is measured by using delta‐adjusted risk and other so‐called “Greeks,” as well as by using stress tests. The delta‐adjusted average of the total equity risk for 2015 was EUR 7.3 million, and at the end of the year EUR 7.4 million (the corresponding figures for 2014 were EUR 6.7 million and EUR 8.0 million). See notes 17 and 19 in the Notes to the Financial Statements.
The equity‐related risks were moderate in relation to Evli's risk‐bearing capacity. In the end‐of‐year situation, a scenario featuring negative market movements of 20 percent would have led to a loss of about EUR 1.4 million (a loss of EUR 1.6 million in 2014). Evli did not have significant equity risks related to an individual issuer at the end of the year. The Board has set maximum limits for investments in single issuers and for the total amount of investments in the emerging markets. In addition, illiquid investments and investment commitments are monitored regularly.
Share‐based incentive plans managed for clients on a contractual basis were carried out by acquiring equities in the client companies in question. There was no equity market risk for Evli. The credit and counterparty risks arising from market price fluctuations are monitored separately.
Approximately 8 percent of the total value of the investment portfolio and the trading stock has been measured using valuation models. Information on the methods used to measure investment instruments can be found under Accounting Policies in the Financial Review. Instruments measured by theoretical means were recognized entirely through profit or loss during the financial year, because the maturity periods of theoretically measured agreements are short and the accounting parameters used are primarily based on information from the markets.
Currency risks and interest rate risks:
The Evli Treasury's currency risk limits have been defined by currency, and currency‐specific and aggregate stop‐loss limits have been linked to them. Considering the scope of Evli's business, direct currency risks were of minor significance in 2015. The fixed income risk of the Treasury's investments was approximately EUR 400,000 at the end of the year (EUR 500,000 in 2014) assuming that market rates change by one percentage point. The interest rate risk is also measured by means of change scenarios linked to the shape of the interest rate curve. If the shape of the interest rate curve is stressed on the assumption that the 3‐month rate would rise or fall by one percentage point and that the 5‐year rate would fall or rise by half a percentage point, the effect would be EUR 100,000.
In 2015, market risks accounted for 5.9 percent of Evli's total risk‐based capital requirement including operational risks (4.4%).
Liquidity risk and solvency
The Board of Directors of Evli Bank Plc sets limits for the use of corporate capital. The proposals for these limits are prepared by the Group's risk management committee, Credalco. Evli's funding policy always assumes the full use of these limits.
Evli's Treasury is responsible for managing the liquidity risk. Liquidity risk is monitored by the Group Risk Management Unit, which reports its findings to Credalco and the company's Board of Directors.
The use of funds was primarily related to capital market products and lending. Capital is also tied by collateral for settlement and derivatives trading. Deposits from the public and credit institutions totaled approximately EUR 358 million at the end of 2015. The immediately available liquidity, consisting of the sum of avista account funds and non‐pledged securities, was on average about EUR 304 million at the end of the year. This figure incorporates the use of capital within the Group. The bulk of funds were raised for a term of less than one year and the primary sources of funds were the customer deposits. The long‐term funding increased during 2015 and was about EUR 31.4 million (EUR 28.5 million in 2014).
Evli's Internal Capital Adequacy Assessment Process (ICAAP) found no need for extra capital to cover liquidity risk.
The Liquidity Coverage Requirement (LCR) entered into force on October 1, 2015 which means that the liquidity coverage ratio must be a minimum of 60 percent. The requirement will be raised gradually so that as of January 1, 2016 the requirement will be 70 percent and finally 100 percent in 2018.
The Liquidity Coverage Requirement reflects the bank's pool of liquid assets in relation to net cash outflows over a 30‐day stress period, such as outflows of deposits and other financial assets.
The Evli Group's LCR ratio was 102 percent on December 31, 2015.
Credit risks
The Board of Directors has approved a corporation‐wide strategy for managing credit risks. The strategy defines the lending policies and specifies collateral requirements, pricing and maturities. The credit risk strategy also defines a classification scheme for customers and loans to be used in Evli. Credit risks are monitored by the Group Risk Management Unit, which reports them to the Executive Group, to Credalco and to the company's Board of Directors. Credit risks occur primarily through lending, the Treasury unit's investment operations and counterparty risk in derivative operations.
The external credit exposure of Evli's banking operations was EUR 56 million at the end of the year (EUR 57 million at the end of 2014). Loans to corporate customers accounted for 10 (6%) percent of this. The bank did not have any unarranged receivables at the end of the financial year. Credalco is authorized to make credit decisions within the limits set by the Board of Directors. Lending is focused on asset management clients with collateral for security.
As the Treasury invests primarily in banks and credit institutions with high credit ratings (at least A‐) and bonds issued by governments and other public sector issuers, the credit risks of its investment portfolio are moderate. The investments in credit institutions are focused in credit institutions that operate in the Nordic countries. Limits on investment operations are set taking into account the issuer's credit rating and geographical location, for example.
Brokerage‐related credit risks were minor during the year under review. The counterparty risk in derivative operations is managed with daily collateral requirements and collateral management for both OTC and standardized contracts. Evli monitors the size of its clients' derivative positions, and limits the size of individual clients' derivative positions if necessary. All clients engaging in OTC derivative operations must be approved by Evli's risk committee. The risks of share brokerage settlement operations were minor during the year under review. The amount of matured sales receivables is small, and is monitored using specific guidelines.
In 2015, credit risks accounted for 54 percent of Evli's total risk‐based capital requirement (57% in 2014). The capital requirement primarily consists of the risks related to lending, the Treasury's investments and strategic investments. In 2015, credit risks outside the balance sheet accounted for approximately 8 percent of the overall credit risk.
Leverage Ratio
The Leverage Ratio reflects the ratio of tier 1 capital to total liabilities. The total liabilities includes the exposure values of all assets and the amount of off‐balance sheet items, which have not been subject to decreases when defining the amount of own funds. Off‐balance sheet items are included in the calculation according to the credit counter‐value ratio and derivatives according to the exposure value. The Evli Group's Leverage Ratio was 9.0 percent on December 31, 2015.
Operational risks
Operational risks refer to the direct or indirect risk of financial loss caused by shortfalls or failures in internal processes, systems, personnel or external factors. Legal, compliance and information security risks are also considered to be operational risks. Operational risks therefore relate to factors such as the company's management system, operating processes, information systems, personnel and various external factors or threats. Each unit is responsible for managing its own operational risks.
Evli continuously pays particular attention to the identification, monitoring and management of its operational risks. Each business unit conducts regular self‐evaluations of the operational risks related to its products, services, personnel, operating processes and systems. Evli has prepared specific, corporation‐wide guidelines for
the identification, assessment, monitoring and reporting of operational risks.
Operational risks increase the minimum capital requirements in the capital adequacy calculation. Evli applies the “Basic Indicator Approach” to capital adequacy, in which the capital requirement for operational risk is based on the average gross income of the preceding three years multiplied by a factor (0.15) set by the Basel Committee. Using this approach, the capital requirement for operational risk amounted to approximately EUR 8.8 million at the end of 2015. However, the capital requirement for operational risk calculated by Evli's own internal capital adequacy management process was smaller.
Processes
Business processes are developed due to changes in the Group's business. Evli's key processes are documented in process descriptions that can be used as tools in employee orientation and systems development. As these processes change, the guidelines are updated to reflect the new approaches. Processes and working instructions are reviewed and updated regularly. The responsibility for making the descriptions rests with the head of each unit, and compliance is monitored through spot checks by the corporate Internal Audit. Job descriptions and divisions of labor and responsibilities must be so clearly defined in writing that the party responsible for reconciliations, verifications and approvals is easily identifiable.
Legal risks
Rapid changes in legislation and legal practice create challenges for the introduction of different guidelines and regulations. Implementing the changes often takes a lot of time and effort. The primary responsibility for compliance with specific laws and governmental regulations applicable to the different Evli companies always rests with the line management in charge of the function in question. Evli's Board of Directors has appointed a Compliance Officer, and the Executive Group has designated a Compliance Steering Committee whose members represent the various business functions.
Information risk
Evli's operations are based to a large extent on the utilization of information technology and telecommunications. One of the key objectives of all Evli functions is the efficient, error‐ free and secure processing of information in a variety of formats. Evli handles and stores large amounts of information that is designated as confidential under applicable law, guidelines or contracts or otherwise requires special security arrangements. The confidentiality, accuracy and usability of such information must be protected at all times. In order to manage information risk, it is necessary to ensure that information systems function properly and reliably and to pay particular attention to the accuracy of information updated in databases and to the management of access rights.
Information asset owners are primarily responsible for protection of the information assets at Evli (authenticity, availability and confidentiality). The system administrator is the person who takes care of the technical maintenance tasks required for the system. Evli's Information Management is responsible for organizing the maintenance of Evli's systems. Technical maintenance is planned and executed in collaboration with the information system owner and the application administrator. For this reason, a specific “Information Security Policy” that addresses information security and related procedures has been prepared for the management of operational risks related to information systems and information security.
No financial losses were sustained in 2015 as a result of misuse of information systems or disturbances affecting them. In addition to arranging normal asset protection, Evli has comprehensive insurance coverage for liability and criminal losses.
Continuity management
Evli's operations may be threatened by external or internal crises of a physical or other nature. In crisis situations, an organization must:be prepared for crisis situationshave crisis management capabilityhave prepared by means of drills.
To ensure operational continuity, each function has a continuity plan. The purpose of continuity planning is to ensure that, in the event of certain threats materializing, it is possible to ensure the safety of Evli's customers and employees, to protect tangible and intangible property, to comply with the law and other regulations, to maintain the targeted level of customer service and internal operations and to preserve the trust of stakeholders.
Each continuity plan will include system recovery plans, including guidelines on how to get information systems into operating condition in situations of severe failure, how to continue operations and how to return operations to normal.
Evli has compiled a Recovery Plan that complies with official requirements. The law states that each bank must have a Recovery Plan that describes the measures that will ensure the continuation of operations if the bank's financial position weakens.
The coordination of continuity planning is the responsibility of the Group Risk Management Unit.
New products and services
The safe introduction of new products and services requires that, prior to making the final decision on introduction, assurance has been obtained that all units participating in the delivery of the product know their respective duties and that they have made the function in question aware of any operational and other risks involved in launching it on the market. The indirect effects of risks on the whole Group need to be assessed with particular care. Specific guidelines are in use in the Evli Group concerning the approval and introduction of new products and services.
Outsourcing of operations
The delegation of business operations to agents or other outsourcing of operations does not relieve Evli of its responsibilities or obligations. Evli has adopted guidelines regarding the principles that must be complied with when Evli's business operations are delegated outside the Group. These guidelines ensure that the management and monitoring of operational risks relating to the outsourced functions is arranged in the manner required by the Financial Supervisory Authority.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
39
Reporting
The Group Risk Management Unit is responsible for corporate-wide risk reporting, which consists of both numerical and written reports. The Group Risk Management reports include at least the following:
- Daily report to the Executive Group on the utilization of corporate limits and any observations arising from risk monitoring
- Monthly numerical and verbal risk management report and summary of customer exposure and limit utilization to Credalco
- Monthly report to the Board of Directors and the Executive Group
- Annual operational risk assessment report to the Executive Group and the Board of Directors.
In addition, the Compliance function and the internal audit report regularly on risk management matters to the top management.
Managing capital adequacy
An essential element of the Basel II capital adequacy regulations is compliance with the principles of pillar 2. Pillar 2 considers the risks included in the measurement of minimum capital requirements and all their dimensions and the residual risks outside this measurement. The capital adequacy regulation is based on the principle that the quantity, quality and allocation of the bank's own assets must be continuously sufficient to cover the material risks applying to the supervised party. It is not possible, however, to use capital to replace deficiencies in the qualitative aspects of risk bearing capacity. Broadly speaking, risk bearing capacity includes not only capital and profitability, but also reliable management, well-organized internal control and risk management. Evli's Internal Capital Adequacy Assessment Process (ICAAP) has been developed in line with the requirements of Basel III.
Evli Bank's Board of Directors has set a target of maintaining at least a 13 percent BIS capital adequacy. This target is monitored by means of the Group Risk Management Unit's monthly reports to the Board of Directors, the Executive Group and Credalco. Evli's internal capital adequacy management calculations are updated as deemed necessary by the management. However, this updating takes place at least once a year as part of strategic planning during the budgetary process.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
40
CAPITAL ADEQUACY OF THE GROUP
| 1.1.2015–31.12.2015 | 1.1.2014–31.12.2014 | 1.1.2013–31.12.2013 | 1.1.2012–31.12.2012 | 1.1.2011–31.12.2011 | |
|---|---|---|---|---|---|
| Own funds, € million | 52.4 | 39.3 | 35.0 | 34.9 | 33.1 |
| Risk-weighted receivables, investments and off-balance sheet obligations for credit- and market risk, € million | 162.9 | 157.5 | 152.8 | 137.4 | 130.5 |
| Own funds to cover operational risk, € million | 8.8 | 8.1 | 7.9 | 8.2 | 7.8 |
| Capital adequacy ratio, % | 19.2 | 15.2 | 13.9 | 14.6 | 14.5 |
| Evli Bank Plc's capital adequacy ratio, % | 24.0 | 18.7 | 18.4 | 18.7 | 19.3 |
| Own funds surplus, M€ | 30.6 | 18.7 | 14.9 | 15.7 | 14.8 |
| Own funds in relation to the minimum capital requirement | 2.4 | 1.9 | 1.7 | 1.8 | 1.8 |
The profit for the financial year is included in the own funds, based on a permission from the Financial Supervisory Authority to include the annual profit in Tier 1 capital. The permission was received 18.12.2015.
| Own funds | 2015 | 2014 |
|---|---|---|
| Own funds include share capital, funds and profits for the year. These items are not subject to special terms. | ||
| Total tier 1 capital, € million: | ||
| Share capital | 30.2 | 30.2 |
| Funds total | 38.8 | 20.8 |
| Minority interest | 0.0 | 0.0 |
| Decreases: | ||
| Intangible assets | 9.3 | 7.2 |
| Other decreases | 7.3 | 4.5 |
| Total tier 1 capital | 52.4 | 39.3 |
| Evli Bank has no tier 2 capital. | ||
| Capital adequacy management and minimum own funds | ||
| --- | --- | --- |
| See section 'Capital adequacy management'. | Min. requirement | Risk-weighted value |
| Minimum capital adequacy requirement by exposure group, standard method for credit risk, M€ | ||
| Claims from the state and central banks | 0.0 | 0.0 |
| Claims from regional governments and local authorities | 0.0 | 0.0 |
| Claims from credit institutions and investment firms | 3.9 | 48.9 |
| Investments in mutual funds | 0.1 | 0.8 |
| Claims secured with property | 0.2 | 2.2 |
| Claims from corporate customers | 0.8 | 9.9 |
| Items with high risk, as defined by the authorities | 0.3 | 4.4 |
| Matured receivables | 0.0 | 0.0 |
| Other items | 6.4 | 80.6 |
| Total | 11.7 | 146.8 |
| Minimum amount of own funds, market risk, € million | 1.3 | 16.1 |
| Risk-weighted receivables, investments and off-balance sheet obligations, total | 13.0 | 162.9 |
| Minimum amount of own funds, operational risk, € million | 8.8 | 110.2 |
| Total | 21.8 | 273.0 |
General information on credit and dilution risk
Loans are entered as non-performing if payment of interest or instalments is overdue by at least 90 days.
No value impairments concerning loans were made during the year, and there were no non-performing loans at year-end. The goal of the lending is to support customer relations and the Bank's main businesses, and also the risk corrected income from lending has to be sufficient.
Lending is focused on asset management customers, domestic private customer's share of the loan stock was 83%, and foreign private customer's share was 6%.
The Treasury unit's investments are focused at European bank bonds, whose credit rating is at minimum A-, and short term investments like certificate of deposits and local government notes. In the capital adequacy calculations, 55% of the investments had a risk weight of 0%, 43% a risk weight of 20% and 2% had a risk weight of 100%.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
41
Credit risk (standard method)
The credit rating institutions used in the standard method are Standard & Poor's and Moody's.
Techniques to reduce credit risk
The valuation of collateral uses risk committee-approved collateral factors that are based on the collateral's realizability and susceptibility to changes in value. The goal is to receive liquid collateral, which can also be used in the capital adequacy calculations. The Group's risk committee decides the maximum amount of illiquid collateral which can be accepted per customer. Only in certain special cases, can the Bank deviate from the normal process for accepting collateral
Principal real collateral types used in capital adequacy calculation:
- Residential property collateral
- Cash deposits
- Bonds issued by Evli
| Exposures hedged with approved collateral in capital adequacy calculation, € million | 2015 | 2014 |
|---|---|---|
| Mortgages | 6.4 | 9.9 |
| Other credits | 3.0 | 3.3 |
| Counterparty exposure of OTC derivatives | 14.8 | 30.4 |
Credit risk (counterparty risk), € million
| Positive fair value of OTC derivatives in the financial statement | 19.5 | 31.2 |
|---|---|---|
| The derivatives comprise equity, currency and fixed income derivatives | ||
| Collateral reducing counterparty risk in capital adequacy calculations | 14.8 | 30.4 |
| After the collateral-reducing effect the credit counter-value of derivatives totaled | 31.5 | 21.8 |
Market risk
| Minimun capital adequacy requirement, trading book, € million: | ||
|---|---|---|
| Position risk | 1.0 | 0.7 |
| Minimum capital adequacy requirement for the currency risk of all operations | 0.3 | 0.2 |
| Total | 1.3 | 0.9 |
The delta corrected equity risk for the trading book was at year end EUR -0.04 million, and the interest market risk EUR 1.7 million.
The largest net currency positions for the Group were 31.12. USD (EUR -1.0 million), GBP (EUR 1.6 million) and SEK (EUR 1.3 million).
Operational risk
The method applied in the capital adequacy calculations is the basic method, which is based on the Group's revenues for the previous three years.
Shares outside the trading book
Shares and participations in the banking book are measured at fair value through profit or loss and as available-for sale investments.
The value of the investments in the financial statements was EUR 23.4 million, which is the fair value of the investments.
The listed shares are related to the equity incentive schemes, the shares don't affect the market risk of the bank.
| Investment types, € million | ||
|---|---|---|
| Private equity funds | 2.9 | 2.7 |
| Real estate funds | 3.1 | 3.3 |
| Unlisted shares | 0.8 | 0.3 |
| Mutual funds | 0.7 | 0.5 |
| Listed shares | 15.8 | 6.8 |
| Total | 23.4 | 13.6 |
Private equity funds, real estate funds and mutual funds have been valued by applying the last known fair value from the funds' management companies. The fair value of unlisted shares is estimated primarily by using the share's net asset value or a cah flow analysis based on future outlooks. If no better estimate of the fair value is available, the acquisition price can be used as the fair value.
During the year, a profit of EUR 0.01 million has been realized from the investments.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
42
Companies included in the Consolidated Accounts
Evli Bank Plc, Helsinki (parent company)
- Evli Life Ltd, Helsinki (100%)
- Evli Fund Management Company Ltd, Helsinki (100%)
- Evli Alexander Management Oy, Helsinki (45%)*
- Evli Russia Ltd (100%)
- OOO Evli St. Petersburg, St.Petersburg (100%)
- OOO Evli Moscow, Moscow (100%)
- Evli Corporate Finance AB, Stockholm (75%)
- Aurator Varainhoito Ltd, Helsinki (91%)
- Terra Nova Capital Advisors Ltd, Dubai (58%)
- Evli Securities AS, Tallinn (100%)
- Evli Alternative Investments Ltd, Helsinki (100%) was founded on January 16, 2015
- EAI Residential Partners Ltd, Helsinki (78%) was founded on May 8, 2015
- Head Asset Management Ltd, Helsinki (91%) was acquired on October 19, 2015
- Evli Options Ltd, Helsinki (100%) was merged with Evli Bank Plc on October 31, 2014
- Evli Fonder AB, Stockholm (100%) was dissolved on September 3, 2014
- EPI Russia Partners II Oy, Helsinki (100%) was dissolved on July 21, 2014
Associated companies
- Northern Horizon Capital A/S, Copenhagen (50%)**
- Baltic SME Management B.V., Amsterdam (33.3%)
- BIF Management Ltd, Jersey (10%)
The Group's parent company is Evli Bank Plc, domiciled in Helsinki.
The consolidated accounts are available on the Internet at www.evli.com
or at the address Aleksanterinkatu 19 A, P.O. Box 1081, FI-00101 Helsinki, Finland
All subsidiaries and branch offices are included in the consolidated accounts.
The pooling method has not been used in the consolidation of subsidiaries.
All subsidiaries included in the consolidated accounts have the same financial year.
* The company is Evli's associated company: according to the shareholders' agreement Evli is the controlling company.
** The company is Evli's associated company: according to the shareholders' agreement Evli is not the controlling company. Associates are consolidated by using equity method.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
43
NOTES TO THE CONSOLIDATED INCOME STATEMENT
| £ 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 1. | INTEREST INCOME | ||
| At fair value through profit or loss | |||
| Debt securities | 833 | 1 019 | |
| Interest income from other loans and claims | |||
| Claims on credit institutions | 557 | 798 | |
| Claims on the public and public sector entities | 965 | 1 008 | |
| Other interest income | 243 | 6 | |
| Interest income, total | 2 598 | 2 831 | |
| Fixed income returns do not include returns from financial assets that have been impaired. | |||
| 2. | INTEREST EXPENSES | ||
| At fair value through profit or loss | |||
| Derivative contracts and trading liabilities | -6 | -8 | |
| Interest expenses from other borrowing | |||
| Liabilities to the public, public sector entities and credit institutions | -492 | -531 | |
| Debt securities issued to the public | -679 | -1 258 | |
| Other interest expenses | -16 | 2 | |
| Interest expenses, total | -1 192 | -1 794 | |
| 3. | INCOME FROM EQUITY INVESTMENTS | ||
| Dividends from financial assets valued at fair value | 334 | 1 008 | |
| Dividends from associated companies | 0 | -1 | |
| Income from equity investments, total | 334 | 1 007 | |
| 4. | COMMISSION INCOME | ||
| Credit related fees and commissions | 25 | 47 | |
| Income from payment transactions | 51 | 24 | |
| Insurance brokerage | 405 | 469 | |
| Advisory services | 8 219 | 10 526 | |
| Securities brokerage | 11 739 | 10 173 | |
| Mutual funds | 26 663 | 24 415 | |
| Asset management | 7 849 | 5 841 | |
| Custody services | 3 862 | 3 269 | |
| Other operations | 175 | 144 | |
| Commission income, total | 58 986 | 54 908 | |
| 5. | COMMISSION EXPENSES | ||
| Trading fees paid to stock exchanges | -543 | -763 | |
| Other | -1 227 | -1 031 | |
| Commission expenses, total | -1 770 | -1 795 | |
| 6. | NET INCOME FROM SECURITIES TRANSACTIONS AND FOREIGN EXCHANGE DEALING | ||
| Net income from securities transactions | |||
| Financial assets held for trading | 4 297 | 1 870 | |
| Financial assets at fair value through profit or loss | -193 | 566 | |
| Net income from securities transactions, total | 4 105 | 2 435 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
44
| 1 000 EUROS | 2015 | 2014 | |||
|---|---|---|---|---|---|
| Net income from securities transactions by instrument | Gains and losses on sales | Changes in fair value | Total | Total | |
| Debt securities | 715 | -416 | 299 | 833 | |
| Shares and derivative contracts | 3 485 | 321 | 3 806 | 1 602 | |
| Net income from securities transactions, total | 4 199 | -95 | 4 105 | 2 435 | |
| Net income from foreign exchange operations | 952 | 1 777 | |||
| Net income from securities transactions and foreign exchange operations, total | 5 057 | 4 212 | |||
| 7. | OTHER OPERATING INCOME | 2015 | 2014 | ||
| Rental income | 191 | 328 | |||
| Gain on sale of owner-occupied investment properties | -1 | 2 | |||
| Other income | 45 | 35 | |||
| Other operating income, total | 236 | 366 | |||
| 2015 | 2014 | ||||
| 8. | EMPLOYEE BENEFITS | ||||
| Wages and salaries | -21 550 | -20 769 | |||
| - of which bonuses | -3 123 | -3 118 | |||
| Other social security costs | -1 612 | -1 613 | |||
| -of which relating to bonuses | -170 | -74 | |||
| Pension expenses | -4 318 | -4 228 | |||
| - of which relating to bonuses | -539 | -586 | |||
| -defined contribution plans | -4 318 | -4 228 | |||
| Equity-settled share options | 0 | -73 | |||
| Employee benefits, total | -27 479 | -26 683 | |||
| 2015 | 2014 | ||||
| Number of personnel during the period, average | 239 | 251 | |||
| Number of personnel at the end of the period | 248 | 242 | |||
| Employees by business segment at the end of the period | |||||
| Markets | 27 | 38 | |||
| Corporate finance | 22 | 28 | |||
| Asset management | 108 | 86 | |||
| Administration and other | 91 | 90 | |||
| Total | 248 | 242 | |||
| Employees by geographic market at the end of the period | |||||
| Finland | 223 | 209 | |||
| Sweden | 17 | 16 | |||
| Russia | 6 | 14 | |||
| United Arab Emirates | 2 | 0 | |||
| Estonia | 0 | 2 | |||
| Lithuania | 0 | 1 | |||
| Total | 248 | 242 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
45
1000 EUROS
| Remuneration | ||||
| 2015 | Markets | Corporate Finance | Wealth Management | Group Operations |
| Variable remuneration paid in cash | ||||
| Wages and salaries | 440 | 278 | 1 741 | 403 |
| Other social security costs | 24 | 15 | 93 | 22 |
| Pension costs | 79 | 50 | 313 | 73 |
| Postponed remuneration | 8 | 12 | 158 | 11 |
| Number of recipients | 22 | 7 | 60 | 63 |
| 2014 | Markets | Corporate Finance | Wealth Management | Group Operations |
| Variable remuneration paid in cash | ||||
| Wages and salaries | 400 | 6 | 1 443 | 293 |
| Other social security costs | 21 | 0 | 89 | 15 |
| Pension costs | 71 | 1 | 247 | 52 |
| Postponed remuneration | 0 | 0 | 0 | 0 |
| Number of recipients | 18 | 1 | 62 | 40 |
| 2015 | Top management | Risk takers | ||
| Variable remuneration paid in cash | ||||
| Wages and salaries | 300 | 1 172 | ||
| Other social security costs | 16 | 63 | ||
| Pension costs | 54 | 211 | ||
| Postponed remuneration | ||||
| Number of recipients | 7 | 22 | ||
| 2014 | Top management | Risk takers | ||
| Variable remuneration paid in cash | ||||
| Wages and salaries | 273 | 261 | ||
| Other social security costs | 14 | 14 | ||
| Pension costs | 49 | 46 | ||
| Postponed remuneration | 0 | 0 | ||
| Number of recipients | 8 | 13 | ||
| At the end of an employment relationship, the company pays compensation in accordance with valid legislation and the applicable legislation and the applicable collective agreement. The company did not pay sign-on payments to new employees during the financial year. | ||||
| 9. OTHER ADMINISTRATIVE EXPENSES | 2015 | 2014 | ||
| Office maintenance expenses | -537 | -558 | ||
| Office expenses | -1 525 | -1 444 | ||
| Telephone and postage expenses | -432 | -380 | ||
| Information expenses | -3 527 | -2 735 | ||
| IT related expenses | -3 585 | -3 812 | ||
| Business expenses | -692 | -507 | ||
| Travel expenses | -793 | -752 | ||
| Car costs | -118 | -113 | ||
| Other human resources related expenses | -856 | -586 | ||
| Marketing expenses | -1 843 | -1 317 | ||
| Banking and custodian expenses | -618 | -623 | ||
| External services fees | -1 258 | -1 180 | ||
| Other administrative expenses, total | -15 785 | -14 007 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
46
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 10. | DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES | ||
| Depreciation and amortization | |||
| Applications and software | -1 607 | -1 774 | |
| Other intangible assets | -1 028 | -1 133 | |
| Leasehold improvements | -131 | -131 | |
| Assets acquired under finance leases | -147 | -166 | |
| Equipment and furniture | -325 | -479 | |
| Write-downs | |||
| Impairment losses of goodwill | -705 | -1 606 | |
| Depreciation, amortization and impairment losses, total | -3 944 | -5 290 | |
| 11. | OTHER OPERATING EXPENSES | ||
| Supervision expenses | -156 | -519 | |
| Rental expenses | -3 276 | -3 272 | |
| Loss on sale of owned properties, plant and equipment | 0 | -3 | |
| Other expenses | -346 | -186 | |
| Other operating expenses, total | -3 779 | -3 980 | |
| 12. | IMPAIRMENT LOSSES ON LOANS AND OTHER COMMITMENTS AND OTHER FINANCIAL ASSETS | ||
| Claims on the public and public sector entities | |||
| Impairment losses | 0 | 0 | |
| Other financial impairment losses | 0 | -12 | |
| Impairment losses, total | 0 | -12 | |
| 13. | Income taxes | ||
| Current tax expense | -2 857 | -2 427 | |
| Taxes from previous years | -99 | -53 | |
| Deferred taxes | -60 | 124 | |
| Other taxes | 0 | 0 | |
| Income taxes, total | -3 017 | -2 355 | |
| Reconciliation between the income tax expense recognized in the income statement and the taxes calculated using the parent company's domestic tax rate: | |||
| Profit/loss before taxes, Finland | 14 299 | 7 927 | |
| Profit/loss before taxes, other countries | 1 066 | 2 103 | |
| Profit/loss before taxes, total | 15 366 | 10 030 | |
| Tax at domestic tax rate | 3 073 | 2 006 | |
| Effect of foreign subsidiaries' differing tax rates | -67 | -42 | |
| Tax at source paid abroad | 0 | -25 | |
| Income not subject to tax | -159 | -2 | |
| Expenses not deductible for tax purposes | 257 | 101 | |
| Taxes from previous years | 99 | 53 | |
| Change in other deferred tax assets | -60 | 264 | |
| Unrecognized tax assets on previous years' losses | -126 | 0 | |
| Other taxes | 0 | 0 | |
| Income tax charge in the consolidated income statement | 3 017 | 2 355 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
47
NOTES TO THE CONSOLIDATED BALANCE SHEET
| 1 000 EUROS | 2015 | 2014 | ||
|---|---|---|---|---|
| 14. | CLAIMS ON CREDIT INSTITUTIONS | |||
| Repayable on demand | ||||
| Domestic credit institutions | 70 319 | 54 679 | ||
| Foreign credit institutions | 6 718 | 4 904 | ||
| Repayable on demand, total | 77 037 | 59 583 | ||
| Other than repayable on demand | ||||
| Domestic credit institutions | 2 576 | 23 181 | ||
| Foreign credit institutions | 39 783 | 26 113 | ||
| Other than repayable on demand, total | 42 359 | 49 294 | ||
| Claims on credit institutions, total | 119 396 | 108 877 | ||
| 15. | CLAIMS ON THE PUBLIC AND PUBLIC SECTOR ENTITIES BY SECTOR | |||
| Other than repayable on demand | ||||
| Enterprises and housing associations | 5 093 | 2 550 | ||
| Households | 46 714 | 49 626 | ||
| Foreign countries | 4 235 | 4 768 | ||
| Other than repayable on demand, total | 56 042 | 56 944 | ||
| Claims on the public and public sector entities by sector, total | 56 042 | 56 944 | ||
| 16. | DEBT SECURITIES | |||
| Public corporations | Publicly quoted | Other | Total | |
| Local government notes | 91 507 | 91 507 | ||
| Issued by public corporations, total | 0 | 91 507 | 91 507 | |
| Issued by other than public corporations | ||||
| Valued at fair value | ||||
| Banks' certificates of deposit | 0 | 0 | 0 | |
| Bonds issued by banks | 54 906 | 16 038 | 70 944 | |
| Other debt securities | 8 871 | 105 | 8 976 | |
| Issued by other than public corporations, total | 63 777 | 16 143 | 79 920 | |
| Debt securities, total | 171 426 | |||
| Debt securities by balance sheet category | ||||
| Debt securities eligible for refinancing with central banks | ||||
| On public sector entities | 0 | 0 | ||
| Other | 38 461 | 74 192 | ||
| Debt securities | ||||
| On public sector entities | 91 507 | 0 | ||
| Other | 41 458 | 32 769 | ||
| Total | 171 426 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
48
| 1.000 EUROS | 2015 | 2014 | ||
|---|---|---|---|---|
| Debt securities by country | ||||
| Finland | 122 685 | 18 718 | ||
| Australia | 14 435 | 18 055 | ||
| Sweden | 13 129 | 14 559 | ||
| Canada | 13 003 | 8 029 | ||
| Holland | 6 008 | 23 563 | ||
| France | 2 168 | 3 004 | ||
| United States | 0 | 13 006 | ||
| Switzerland | 0 | 8 018 | ||
| Luxembourg | 0 | 8 | ||
| 17. | SHARES AND PARTICIPATIONS | |||
| 2015 | ||||
| Publicly quoted | Other | Total | ||
| Shares and participations | ||||
| Available for sale | 0 | 0 | 0 | |
| Valued at fair value through profit or loss | ||||
| Held for trading | 14 461 | 147 | 14 608 | |
| Other | 16 533 | 6 817 | 23 350 | |
| Shares and participations, total | 30 994 | 6 965 | 37 959 | |
| 2014 | ||||
| Fair valued through profit or loss | Publicly quoted | Other | Total | |
| Shares and participations | ||||
| Available for sale | 0 | 0 | 0 | |
| Valued at fair value through profit or loss | ||||
| Held for trading | 22 060 | 82 | 22 142 | |
| Other | 7 256 | 6 332 | 13 588 | |
| Shares and participations, total | 29 316 | 6 415 | 35 730 | |
| Net risk position is described in the section Risk Management (Market risks). | ||||
| 18. | SHARES AND PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES | |||
| At the beginning of the period | 3 514 | 3 561 | ||
| Share of profit/loss | 2 104 | 379 | ||
| Disposals | -600 | -426 | ||
| At the end of the period | 5 018 | 3 514 | ||
| Shares and participations in associates contain the fair value of the indirectly owned funds by the companies. | ||||
| The Evli Group has combined the earnings of associates, taking uncertainty factors into account in accordance with the Group's accounting principles. | ||||
| Holdings in consolidated associated companies | ||||
| Company | Northern Horizon Capital A/S | BIF Management Ltd | Baltic SME Management B.V | |
| Domicile | Denmark | Jersey | Netherlands | |
| Assets | 10 774 | 0 | 1 | |
| Liabilities | 3 227 | 0 | 8 | |
| Revenue | 13 445 | 0 | 0 | |
| Profit/Loss | 2 656 | -3 | -1 | |
| Ownership (%) | 50 | 10 | 33.33 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
49
| 1.000 EUROS | ||||||
|---|---|---|---|---|---|---|
| 19. | DERIVATIVE CONTRACTS | |||||
| Overall effect of risks associated with derivative contracts | ||||||
| Nominal value of underlying , brutto | ||||||
| Remaining maturity | 2015 | 2015 | ||||
| Held for trading | Less than 1 year | 1-5 years | 5-15 years | Fair value (+/-) | ASSETS | |
| Interest rate derivatives | ||||||
| Interest rate swaps | 0 | 7 394 | 2 870 | 0 | 0 | |
| Currency-linked derivatives | 2 306 309 | 0 | 0 | 270 | 17 676 | |
| Equity-linked derivatives | ||||||
| Futures | 6 179 | 0 | 0 | 305 | 385 | |
| Options bought | 26 441 | 27 349 | 2 750 | 2 259 | 2 394 | |
| Options sold | 45 890 | 27 430 | 2 750 | -3 810 | 1 148 | |
| Other derivatives | ||||||
| Held for trading, total | 2 384 820 | 62 173 | 8 370 | -976 | 21 603 | |
| Derivative contracts, total | 2 384 820 | 62 173 | 8 370 | -976 | 21 603 | |
| Overall effect of risks associated with derivative contracts | ||||||
| 2014 | 2014 | |||||
| Held for trading | ||||||
| Interest rate derivatives | ||||||
| Interest rate swaps | 0 | 3 184 | 2 870 | 0 | 0 | |
| Currency-linked derivatives | 1 767 795 | 0 | 0 | 141 | 24 988 | |
| Equity-linked derivatives | ||||||
| Futures | 15 563 | 0 | 0 | 642 | 764 | |
| Bought | 27 805 | 17 400 | 0 | 5 825 | 5 891 | |
| Sold | 69 313 | 17 400 | 0 | -7 272 | 392 | |
| Other derivatives | ||||||
| Held for trading, total | 1 880 476 | 37 984 | 2 870 | -665 | 32 035 | |
| Derivative contracts, total | 1 880 476 | 37 984 | 2 870 | -665 | 32 035 | |
| Equity derivatives held for trading, and other liabilities held for trading (notes 19 and 28) hedge the equity delta risk for shares and participations in the trading book (note 17). The delta-adjusted equity risk was at the end of 2015 7.4 million euros, including shares and participations in the banking book. | ||||||
| Equity derivatives in the banking book hedge the equity risk in equity-linked bonds issued to the public. | ||||||
| The interest rate derivatives hedge the interest rate risk in assets and liabilities in the balance sheet. | ||||||
| Currency derivatives comprise commitments made against clients and the associated hedges, and contracts made to hedge currency risk in the balance sheet. | ||||||
| The net open risk position of the total amount is small. The largest part of the contracts are in SEK (EUR 1 124 million), and in GBP (EUR 679 million). |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
50
| 1 000 EUROS | 2015 | 2014 |
|---|---|---|
| 20. INTANGIBLE ASSETS AND GOODWILL | ||
| Goodwill | ||
| Cost at 1.1. | 4 663 | 4 663 |
| Increases | 3 482 | 0 |
| Decreases | -2 262 | 0 |
| Cost at 31.12. | 5 883 | 4 663 |
| Accumulated impairment losses at 1.1. | -2 087 | -481 |
| Decreases | -705 | -1 606 |
| Accumulated impairment losses at 31.12 | -2 793 | -2 087 |
| Book value at 31.12. | 3 090 | 2 576 |
| Software or projects in progress | ||
| Cost at 1.1. | 38 | 0 |
| Increases | 906 | 38 |
| Cost at 31.12. | 944 | 38 |
| Book value at 31.12. | 944 | 38 |
| Applications and software | ||
| Cost at 1.1. | 19 462 | 19 080 |
| Exchange difference | 0 | -4 |
| Increases | 624 | 498 |
| Decreases | 0 | -111 |
| Cost at 31.12. | 20 086 | 19 462 |
| Accumulated amortisation and impairment losses at 1.1. | -16 651 | -14 992 |
| Exchange difference | 0 | 4 |
| Amortisation for the period | -1 607 | -1 774 |
| Accumulated amortisation in respect of decreases | 0 | 111 |
| Accumulated amortisation and impairment losses at 31.12. | -18 258 | -16 651 |
| Book value at 31.12. | 1 828 | 2 811 |
| Other intangible assets | ||
| Cost at 1.1. | 6 827 | 6 951 |
| Increases | 3 016 | 70 |
| Decreases | -191 | -195 |
| Cost at 31.12. | 9 651 | 6 827 |
| Accumulated amortisation and impairment losses at 1.1. | -4 654 | -3 716 |
| Amortisation for the period | -1 028 | -1 133 |
| Accumulated depreciation in respect of decreases | 140 | 195 |
| Accumulated amortisation and impairment losses at 31.12. | -5 542 | -4 654 |
| Book value at 31.12. | 4 109 | 2 172 |
| The most significant "Other intangible assets" are client relationships with a remaining depreciation period of 5 years. | ||
| Intangible assets, total at 31.12. | 9 971 | 7 598 |
| Book value of intangible assets at 31.12. | 9 971 | 7 598 |
The Group's goodwill was allocated to the subsidiaries Evli Alexander Management Ltd, Evli Russia Ltd, Evli Securities AS, Head Asset Management Ltd and Evli Alternative Investments Ltd. Evli has made a EUR 1.6 million impairment in 2014 and EUR 0.3 million impairment in 2015 to the goodwill in its balance sheet. Those impairments were mainly attributable to the weakened market conditions in Russia. During the period under review Evli concentrated the services it provides to asset management clients in the Baltic countries in Helsinki and closed down the operational activities of Evli's subsidiary. Because of this the goodwill of EUR 0,4 million is written down. The goodwill testing process is described in detail in the notes to the consolidated financial statements.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
51
| 1 000 EUROS | 2015 | 2014 |
|---|---|---|
| 21. PROPERTY, PLANT AND EQUIPMENT | ||
| Equipment and furniture | ||
| Cost at 1.1. | 6 519 | 7 260 |
| Exchange difference | -7 | -94 |
| Increases | 54 | 62 |
| Decreases | -30 | -709 |
| Cost at 31.12. | 6 537 | 6 519 |
| Accumulated depreciation at 1.1. | -5 906 | -6 234 |
| Exchange difference | 8 | 81 |
| Depreciation for the period | -325 | -479 |
| Translation difference from depreciation for the period | -3 | 1 |
| Accumulated depreciation in respect of decreases | 85 | 724 |
| Accumulated depreciation 31.12. | -6 141 | -5 906 |
| Book value at 31.12. | 396 | 613 |
| Assets acquired under finance leases | ||
| Cost at 1.1. | 2 847 | 2 759 |
| Increases | 92 | 88 |
| Cost at 31.12. | 2 940 | 2 847 |
| Accumulated depreciation at 1.1. | -2 655 | -2 489 |
| Depreciation for the period | -147 | -166 |
| Accumulated depreciation at 31.12. | -2 803 | -2 655 |
| Book value at 31.12. | 137 | 192 |
| Property, plant, and equipment, total 31.12. | 533 | 805 |
| Leasehold improvements | ||
| Cost at 1.1. | 1 401 | 1 429 |
| Decreases | 0 | -28 |
| Cost at 31.12. | 1 401 | 1 401 |
| Accumulated depreciation at 1.1. | -470 | -367 |
| Depreciation for the period | -131 | -131 |
| Accumulated depreciation in respect of decreases | 0 | 28 |
| Accumulated depreciation at 31.12. | -601 | -470 |
| Book value at 31.12. | 800 | 931 |
| Other tangible assets | ||
| Cost at 1.1. | 601 | 589 |
| Increases | 0 | 12 |
| Cost at 31.12. | 601 | 601 |
| Book value at 31.12. | 601 | 601 |
| Property, plant and equipment, total at 31.12. | 1 934 | 2 337 |
| Book value of tangible assets at 31.12. | 1 934 | 2 337 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
52
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 22. | OTHER ASSETS | ||
| Securities sale receivables | 1 223 | 290 | |
| Commission receivables | 9 929 | 7 584 | |
| Securities broking receivables | 66 105 | 20 669 | |
| Other receivables | 414 | 2 | |
| Other assets total | 77 671 | 28 581 | |
| 23. | ACCRUED INCOME AND PREPAYMENTS | ||
| Interest | 418 | 228 | |
| Taxes | 101 | 45 | |
| Staff-related | 41 | 513 | |
| Other items | 2 395 | 2 074 | |
| Accrued income and prepayments total | 2 954 | 2 860 | |
| 24. | DEFERRED TAXES | ||
| Tax assets | |||
| Due to timing differences | 266 | 613 | |
| Other temporary differences | |||
| From tax losses carried forward | 21 | 0 | |
| Deferred taxes total | -381 | 208 | |
| Deferred tax assets result from timing differences in fixed asset depreciation. | |||
| 25. | LIABILITIES TO CREDIT INSTITUTIONS AND CENTRAL BANKS | ||
| Credit institutions | |||
| Other than repayable on demand | 5 530 | 8 000 | |
| Liabilities to credit institutions and central banks, total | 5 530 | 8 000 | |
| 26. | LIABILITIES TO THE PUBLIC AND PUBLIC SECTOR ENTITIES | ||
| Deposits | |||
| Repayable on demand | 352 158 | 296 702 | |
| Other than repayable on demand | 281 | 335 | |
| Other liabilities | |||
| Repayable on demand | 0 | 0 | |
| Other than repayable on demand | 0 | 93 | |
| Liabilities to the public and public sector entities, total | 352 439 | 297 131 | |
| 27. | DEBT SECURITIES ISSUED TO THE PUBLIC | ||
| Bonds | 35 722 | 33 095 | |
| Debt securities issued to the public, total | 35 722 | 33 095 | |
| Changes in bonds issued to the public | |||
| Issues | 14 959 | 15 968 | |
| Repurchases | 12 268 | 43 169 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
53
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 28. | DERIVATIVE CONTRACTS AND OTHER LIABILITIES HELD FOR TRADING | ||
| Derivative contracts | 22 579 | 32 700 | |
| Due to short selling of shares | 13 889 | 8 039 | |
| Derivative contracts and other liabilities held for trading, total | 36 468 | 40 739 | |
| 29. | BREAKDOWN OF OTHER LIABILITIES | ||
| Securities broking liabilities | 75 582 | -345 655 | |
| Securities purchase liabilities | 15 213 | 368 | |
| Finance lease payables | 147 | 204 | |
| Income tax payable | 64 | 71 | |
| Personnel related | 760 | 687 | |
| Other short-term liabilities | 20 169 | 8 148 | |
| Prepayments of cash customers | 3 505 | 10 833 | |
| VAT payable | 617 | 571 | |
| Other liabilities, total | 116 058 | 43 137 | |
| 30. | ACCRUED EXPENSES AND DEFERRED INCOME | ||
| Interest | 214 | 424 | |
| Tax payables | 923 | 995 | |
| Personnel related | 8 107 | 7 526 | |
| Other accrued expenses | 5 883 | 6 396 | |
| Accrued expenses and deferred income, total | 15 127 | 15 341 | |
| 31. | DEFERRED TAX LIABILITIES | ||
| Due to timing differences | 668 | 405 | |
| Deferred tax liability, total | 668 | 405 | |
| 32. | OWN SHARES HELD BY THE CREDIT INSTITUTION | ||
| The company acquired a total of 6250 shares during 2015. | |||
| The cost of purchase EUR 74 963 has been deducted from unrestricted equity. | |||
| The company's Board of Directors decided to annul the remaining Evli shares held by the company on September 8, 2015. On December 31, 2015 the company didn't hold any own shares. | |||
| 33. | SHARE CAPITAL, PARENT COMPANY | ||
| Evli has two share series: series A and series B, whose rights are determined in the manner specified in the amended Articles of Association. The main difference between the share series concerns the voting rights. The A share confers 20 votes in a General Meeting while a B share confers one vote. | |||
| Number of A shares | 16 971 136 pcs | ||
| Number of B shares | 6 342 784 pcs | ||
| Total number of shares is | 23 313 920 pcs | ||
| Dividend/Share, € | 0.21 | 0.21 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
54
1000 EUROS
| 34. | CHANGES IN THE SHARE CAPITAL, BOARD AUTHORIZATIONS AND OPTION PROGRAMS | |||||
|---|---|---|---|---|---|---|
| Number of own shares held | Number of outstanding shares | Share capital | Share premium fund | Fund of invested non-restricted equity | ||
| 1.1.2014 | 39 325 | 4 052 184 | 30 194 | 1 839 | 12 738 | |
| Aquisition of own shares 2013 authorization | 2 000 | -2 000 | 0 | 0 | -53 | |
| Aquisition of own shares 2014 authorization | 10 150 | -10 150 | 0 | 0 | -121 | |
| Nullification of own shares 2014 authorization | -46 350 | 0 | 0 | 0 | 0 | |
| Share issue 2014 authorization | 0 | 51 500 | 0 | 0 | 613 | |
| 31.12.2014 | 5 125 | 4 091 534 | 30 194 | 1 839 | 13 178 | |
| Total number of shares | 4 096 659 | |||||
| 1.1.2015 | 5 125 | 4 091 534 | 30 194 | 1 839 | 13 178 | |
| Aquisition of own shares 2015 authorization | 6 250 | -6 250 | 0 | 0 | -75 | |
| Nullification of own shares 2015 authorization | -11 375 | 0 | 0 | 0 | 0 | |
| Share issue 2014 authorization | 0 | 157 500 | 0 | 0 | 1 623 | |
| Additional return of capital 2015 authorization | 0 | 0 | 0 | 0 | -4 247 | |
| Share issue 2015 authorization | 0 | 16 971 136 | 0 | 0 | 0 | |
| IPO 2015 authorization | 0 | 2 100 000 | 0 | 0 | 14 175 | |
| Expenses related to IPO 2015 authorization | 0 | 0 | 0 | 0 | -436 | |
| 31.12.2015 | 0 | 23 313 920 | 30 194 | 1 839 | 24 218 | |
| Total number of shares | 23 313 920 | 24 218 | ||||
| Option programs | ||||||
| Evii Bank Plc's total number of shares changed during the second quarter by a total of 157,500 shares. The change in the number of shares resulted from the entry in the Trade Register of new shares subscribed for and paid in full in partial payment share issues arranged in the fall of 2011, and the entry in the Trade Register of new shares subscribed for on the basis of stock options according to the 2014 option program. The new shares were entered in the Trade Register on May 5, 2015. |
Share premium fund
The share premium fund comprises the following items: the amount exceeding the counter-book value of the share paid for shares prior to 1 September 2006 in a new issue; the amount paid for a subscription right based on an option right; gain on sale of the company's own shares; and the amount by which the share capital is lowered and which is not used to cover an adopted loss, transferred to a fund to be used in accordance with the decision of the general meeting of the shareholders or distributed to the shareholders.
Fund of invested non-restricted equity
The fund of invested non-restricted equity includes the proceeds from the disposals of own shares received after 1 September 2006. | | | | | |
| 35. | LARGEST SHAREHOLDERS AND SHARE OWNERSHIP BREAKDOWN | A-share | B-share | Shares total | % of all shares | % of all votes |
| | Oy Prandium Ab (Thomas Thesleff with family) | 3 803 280 | 950 820 | 4 754 100 | 20.39 | 22.27 |
| | Oy Scripo Ab (Henrik Andersin) | 3 803 280 | 950 820 | 4 754 100 | 20.39 | 22.27 |
| | Oy Fincorp Ab (Roger Kempe) | 2 319 780 | 579 945 | 2 899 725 | 12.44 | 13.59 |
| | Ingman Group Oy Ab | 1 860 000 | 500 000 | 2 360 000 | 10.12 | 10.90 |
| | Lehtimäki Maunu | 433 728 | 108 432 | 542 160 | 2.33 | 2.54 |
| | Tallberg Claes | 369 756 | 92 439 | 462 195 | 1.98 | 2.17 |
| | Hollfast John | 328 320 | 82 080 | 410 400 | 1.76 | 1.92 |
| | Thunekov AB | 224 000 | 56 000 | 280 000 | 1.20 | 1.31 |
| | Ridgeback Advisory AB | 210 000 | 52 500 | 262 500 | 1.13 | 1.23 |
| | Dudarev Grigory | 201 540 | 50 385 | 251 925 | 1.08 | 1.18 |
| | | 13 553 684 | 3 423 421 | 16 977 105 | 72.82 | 79.38 |
| | Others | 3 417 452 | 2 919 363 | 6 336 815 | 27.18 | 20.62 |
| | Total | 16 971 136 | 6 342 784 | 23 313 920 | 100.00 | 100.00 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
55
1000 EUROS
| Breakdown of shareholdings by owner group | Number of shareholders | Number of shares | Number of votes | Proportion of shareholders, % | Proportion of shares, % | Proportion of votes, % | |
|---|---|---|---|---|---|---|---|
| National economy total (domestic sector) | |||||||
| 1. Households | 2 417 | 5 927 656 | 84 284 416 | 91.5 | 25.4 | 24.4 | |
| 2. Companies | 172 | 15 723 130 | 245 339 954 | 6.5 | 67.4 | 71.0 | |
| 3. Financial and insurance institutions | 19 | 601 486 | 601 486 | 0.7 | 2.6 | 0.2 | |
| 4. Non-profit institutions | 7 | 76 936 | 76 936 | 0.3 | 0.3 | 0.0 | |
| Foreigners | |||||||
| 5. European Union | 9 | 32 508 | 260 508 | 0.3 | 0.1 | 0.1 | |
| 6. Other countries | 18 | 952 204 | 15 202 204 | 0.7 | 4.1 | 4.4 | |
| Total | 2 642 | 23 313 920 | 345 765 504 | 100 | 100 | 100 | |
| Breakdown of shareholdings by size class | Number of shareholders | Number of shares | Number of votes | Proportion of shareholders, % | Proportion of shares, % | Proportion of votes, % | |
| 1. 1-100 | 395 | 34 860 | 34 860 | 15.0 | 0.1 | 0.0 | |
| 2. 101-500 | 1 818 | 299 240 | 299 240 | 68.8 | 1.3 | 0.1 | |
| 3. 501-1 000 | 145 | 104 564 | 104 564 | 5.5 | 0.4 | 0.0 | |
| 4. 1 001-5 000 | 163 | 373 070 | 479 470 | 6.2 | 1.6 | 0.1 | |
| 5. 5 001-10 000 | 29 | 207 145 | 1 001 345 | 1.1 | 0.9 | 0.3 | |
| 6. 10 001-50 000 | 49 | 1 226 300 | 10 836 652 | 1.9 | 5.3 | 3.1 | |
| 7. 50 001-100 000 | 17 | 1 225 464 | 14 432 440 | 0.6 | 5.3 | 4.2 | |
| 8. 100 001-500 000 | 21 | 4 533 192 | 71 085 556 | 0.8 | 19.4 | 20.6 | |
| 9. 500 001- | 5 | 15 310 085 | 247 491 377 | 0.2 | 65.7 | 71.6 | |
| Total | 2 642 | 23 313 920 | 345 765 504 | 100 | 100 | 100 |
- MATURITIES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES OF CREDIT INSTITUTION
Due to the nature of the business, predicting future cashflows is difficult, especially for derivative contracts. The maturities of derivatives are also provided in note 19, with the nominal value of the underlying instrument as basis, which does not conform to real cash flows. Debt securities, loans and other claims, derivatives and financial liabilities at amortized cost are reported in the maturity class according to the maturity of the instrument. Shares and participations are reported so that quoted shares in the trading book and quoted mutual funds are in the shortest maturity period. Unquoted shares are reported according to the estimated liquidation period, and venture capital- and real estate funds are reported according to the expected ending day of the fund.
| 2015 | Less than 3 months | 3-12 months | 1-5 years | 5-10 years | Over 10 years | Total |
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and cash equivalents | 127 986 | 127 986 | ||||
| Loans and other claims | ||||||
| Claims on credit institutions | 119 396 | 0 | 0 | 0 | 0 | 119 396 |
| Claims on the public and public sector entities | 2 568 | 23 547 | 29 484 | 443 | 0 | 56 042 |
| Financial assets at fair value through profit or loss | ||||||
| Debt securities eligible for refinancing with central banks | 1 000 | 12 518 | 24 944 | 0 | 0 | 38 461 |
| Debt securities | 91 252 | 17 520 | 24 088 | 105 | 0 | 132 965 |
| Shares and participations | 31 106 | 417 | 4 671 | 1 764 | 0 | 37 958 |
| Derivative contracts | 15 901 | 5 198 | 504 | 0 | 0 | 21 603 |
| Financial assets available for sale | ||||||
| Shares and participations | 0 | 0 | 0 | 0 | 0 | 0 |
| Accrued interest | 349 | 68 | 0 | 0 | 0 | 418 |
| Debts | ||||||
| Financial liabilities at amortized cost | ||||||
| Liabilities to credit institutions | 3 530 | 2 000 | 0 | 0 | 0 | 5 530 |
| Liabilities to the public and public sector entities | 352 252 | 172 | 15 | 0 | 0 | 352 439 |
| Debt securities issued to the public | 200 | 4 078 | 24 725 | 6 720 | 0 | 35 722 |
| Financial liabilities at fair value through profit or loss | 30 020 | 5 920 | 528 | 0 | 0 | 36 468 |
| Accrued interest | 213 | 1 | 0 | 0 | 0 | 214 |
| Off-balance sheet commitments | 7 903 | 392 | 170 | 0 | 0 | 8 465 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
56
1000 EUROS
| 2014 | ||||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and cash equivalents | 103 998 | 0 | 0 | 0 | 0 | 103 998 |
| Loans and other claims | ||||||
| Claims on credit institutions | 108 877 | 0 | 0 | 0 | 0 | 108 877 |
| Claims on the public and public sector entities | 2 538 | 15 633 | 38 272 | 502 | 0 | 56 944 |
| Financial assets at fair value through profit or loss | ||||||
| Debt securities eligible for refinancing with central banks | 0 | 0 | 74 192 | 0 | 0 | 74 192 |
| Debt securities | 16 | 1 988 | 30 177 | 588 | 0 | 32 769 |
| Shares and participations | 29 316 | 204 | 4 326 | 1 884 | 0 | 35 730 |
| Derivative contracts | 23 240 | 4 389 | 4 406 | 0 | 0 | 32 035 |
| Financial assets available for sale | ||||||
| Shares and participations | 0 | 0 | 0 | 0 | 0 | 0 |
| Accrued interest | 22 | 206 | 0 | 0 | 0 | 228 |
| Debts | ||||||
| Financial liabilities at amortized cost | ||||||
| Liabilities to credit institutions | 7 000 | 1 000 | 0 | 0 | 0 | 8 000 |
| Liabilities to the public and public sector entities | 296 831 | 241 | 59 | 0 | 0 | 297 131 |
| Debt securities issued to the public | 3 662 | 888 | 25 674 | 2 870 | 0 | 33 095 |
| Financial liabilities at fair value through profit or loss | 32 132 | 4 208 | 4 399 | 0 | 0 | 40 739 |
| Accrued interest | 422 | 3 | 0 | 0 | 0 | 424 |
| Off-balance sheet commitments | 2 989 | 121 | 869 | 186 | 0 | 4 164 |
| Commitments outside the balance sheet are presented in Appendix 46. | ||||||
- ASSETS AND LIABILITIES DENOMINATED IN DOMESTIC AND FOREIGN CURRENCY
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| Balance sheet item | Domestic | Foreign currency | Total | Domestic | Foreign currency | Total |
| Loans and other claims | ||||||
| Cash on hand | 127 986 | 0 | 127 986 | 103 998 | 0 | 103 998 |
| Claims on credit institutions | 113 208 | 6 188 | 119 396 | 104 063 | 4 815 | 108 877 |
| Claims on the public and public sector entities | 56 042 | 0 | 56 042 | 56 944 | 0 | 56 944 |
| Financial assets at fair value through profit or loss | ||||||
| Debt securities | 171 426 | 0 | 171 426 | 106 945 | 16 | 106 961 |
| Shares and participations | 35 232 | 2 727 | 37 959 | 26 611 | 9 119 | 35 730 |
| Derivative financial instruments | 21 559 | 44 | 21 603 | 31 767 | 268 | 32 035 |
| Other assets | 88 806 | 9 029 | 97 835 | 40 043 | 5 459 | 45 502 |
| Total | 614 260 | 17 987 | 632 247 | 470 371 | 19 677 | 490 047 |
| Financial liabilities at amortized cost | ||||||
| Liabilities to credit institutions | 5 530 | 0 | 5 530 | 8 000 | 0 | 8 000 |
| Liabilities to the public and public sector entities | 312 026 | 40 414 | 352 439 | 269 263 | 27 868 | 297 131 |
| Debt securities issued to the public | 35 722 | 0 | 35 722 | 33 095 | 0 | 33 095 |
| Financial assets at fair value through profit or loss | ||||||
| Derivative contracts and liabilities held for trading | 36 446 | 22 | 36 468 | 40 107 | 632 | 40 739 |
| Other liabilities | 117 667 | 14 187 | 131 854 | 42 204 | 16 678 | 58 882 |
| Total | 507 391 | 54 622 | 562 013 | 392 669 | 45 178 | 437 847 |
The largest foreign currency assets and liabilities are in SEK (assets EUR 11.4 million, liabilities EUR 25.1 million) and USD (assets EUR 2.6 million, liabilities EUR 26.4 million).
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
57
1000 EUROS
- VALUE OF FINANCIAL INSTRUMENTS ACROSS THE THREE LEVELS OF THE FAIR VALUE HIERARCHY
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| Fair value | 2015 | 2015 | 2015 | |
| Financial assets: | ||||
| Shares and participations classified as held for trading | 10 778 | 0 | 3 830 | 14 608 |
| Shares and participations, other | 16 533 | 0 | 6 818 | 23 351 |
| Debt securities eligible for refinancing with central banks | 38 461 | 0 | 0 | 38 461 |
| Debt securities | 14 794 | 110 754 | 7 418 | 132 965 |
| Positive market values from derivatives | 2 276 | 17 676 | 1 650 | 21 603 |
| Total financial assets held at fair value | 82 842 | 128 430 | 19 716 | 230 988 |
| Financial liabilities: | ||||
| Shares and participations classified as held for trading | 12 604 | 0 | 1 285 | 13 889 |
| Negative market values from derivatives | 3 688 | 17 406 | 1 485 | 22 579 |
| Total financial liabilities held at fair value | 16 291 | 17 406 | 2 770 | 36 468 |
| 2014 | 2014 | 2014 | Total | |
| Financial assets: | ||||
| Shares and participations classified as held for trading | 20 563 | 0 | 1 579 | 22 142 |
| Shares and participations, other | 7 256 | 0 | 6 333 | 13 589 |
| Debt securities | 93 142 | 6 011 | 7 808 | 106 961 |
| Positive market values from derivatives | 1 339 | 24 988 | 5 708 | 32 035 |
| Total financial assets held at fair value | 122 300 | 30 999 | 21 427 | 174 726 |
| Financial liabilities: | ||||
| Shares and participations classified as held for trading | 6 942 | 0 | 1 097 | 8 039 |
| Negative market values from derivatives | 2 667 | 24 847 | 5 186 | 32 700 |
| Total financial liabilities held at fair value | 9 609 | 24 847 | 6 283 | 40 739 |
Explanation of fair value hierarchies:
Level 1
Fair values measured using quoted prices in active markets for identical instruments.
Level 2
Fair values measured using directly or indirectly observable inputs, other than those included in level 1.
Level 3
Fair values measured using inputs that are not based on observable market data.
Level 1 of the hierarchy includes listed shares, mutual funds and derivatives listed on exchanges, and debt securities that are traded in active OTC- and public markets.
Shares and participations classified in level 3 are usually instruments which are not publicly traded, like venture capital funds and real estate funds.
Derivatives in level 2 or 3 are derivatives whose values are calculated with pricing models widely in use, like Black-Scholes.
Derivative valuations for level 3 instruments contain inputs (volatility and dividend estimate) which are not directly observable in the market.
Debt securities valuations that are obtained from markets that are not fully active, have a fair value level hierarchy of 2. Level 3 valuations for debt securities are valuations received directly from the arranger of the issue.
The fair values of financial instruments are defined in accordance to IFRS 13. In principle, valuation of financial instruments is based on public market quotations. For unquoted financial instruments, Evli Bank's Financial Administration together with Risk Management function evaluate and classify instruments.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
58
| 1 000 EUROS | 2015 | 2014 |
|---|---|---|
| 39. ANALYSIS OF FINANCIAL INSTRUMENTS CATEGORIZED IN LEVEL 3 | ||
| Financial assets: | ||
| Shares and participations classified as held for trading | 3 830 | 1 579 |
| Unlisted shares and participations | 770 | 265 |
| Venture capital funds and real estate funds | 6 047 | 6 068 |
| Debt securities | 7 418 | 7 808 |
| Quoted equity derivatives | 0 | 0 |
| OTC equity derivatives | 1 650 | 5 708 |
| Total financial assets held at fair value | 19 716 | 21 427 |
| Financial liabilities: | ||
| Shares and participations classified as held for trading | 1 285 | 1 097 |
| Quoted equity derivatives | 0 | 0 |
| OTC equity derivatives | 1 485 | 5 186 |
| Total financial liabilities held at fair value | 2 770 | 6 283 |
| Significant changes during the year, considering level 3 categorized instruments: | ||
| Financial assets | 2015 | |
| Shares and participations classified as held for trading 31.12.2014 | 1 579 | |
| Net purchases and sales | 2 967 | |
| Valuation changes | -715 | |
| Shares and participations classified as held for trading 31.12.2015 | 3 830 | |
| Unlisted shares and participations 31.12.2014 | 265 | |
| Purchases | 506 | |
| Sales | 0 | |
| Valuation changes | 0 | |
| Unlisted shares and participations 31.12.2015 | 770 | |
| Venture capital funds and real estate funds 31.12.2014 | 6 068 | |
| Purchases | 8 | |
| Sales | 236 | |
| Valuation changes | 208 | |
| Venture capital funds and real estate funds 31.12.2015 | 6 047 | |
| Debt securities 31.12.2014 | 7 808 | |
| Purchases | 113 | |
| Sales | 508 | |
| Valuation changes | 5 | |
| Debt securities 31.12.2015 | 7 418 | |
| OTC equity derivatives 31.12.2014 | 5 708 | |
| Net purchases and sales | -1 279 | |
| Valuation changes | -2 778 | |
| OTC equity derivatives 31.12.2015 | 1 650 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
59
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| Financial liabilities | |||
| Shares and participations classified as held for trading 31.12.2014 | 1 097 | ||
| Net purchases and sales | 0 | ||
| Valuation changes | 188 | ||
| Shares and participations classified as held for trading 31.12.2015 | 1 285 | ||
| OTC equity derivatives 31.12.2014 | 5 186 | ||
| Net purchases and sales | -913 | ||
| Valuation changes | -2 788 | ||
| OTC equity derivatives 31.12.2015 | 1 485 | ||
| If the volatility estimate in the options pricing model for level 3 categorized options, is changed to a publicly available historical volatility (12 months), the options market value would change by net EUR - 0.04 million. Volatility is the standard deviation or variability of the price of the underlying instrument for a given time period. | |||
| 40. UNREALIZED PROFIT/LOSS FOR FINANCIAL INSTRUMENTS CATEGORIZED IN LEVEL 3 | Unrealized P/L at year-end 2015 | Unrealized P/L at year-end 2014 | |
| Financial assets: | |||
| Shares and participations classified as held for trading | -715 | -580 | |
| Shares and participations, other | -430 | -884 | |
| Debt securities | 5 | 0 | |
| Positive market values from derivatives | -548 | 2 327 | |
| Unrealized P/L at year-end, financial assets | -1 688 | 864 | |
| Financial liabilities: | |||
| Shares and participations classified as held for trading | -131 | 20 | |
| Negative market values from derivatives | 558 | -2 272 | |
| Unrealized P/L at year-end, financial liabilities | 427 | -2 253 | |
| Total unrealized profit (loss), level 3 instruments | -1 261 | -1 389 | |
| Total unrealized profit is recorded in net income from securities transactions. | |||
| 41. SECURITIES LENDING | 2015 | 2014 | |
| Market value of securities lending at 31.12., lent in | 15 830 | 29 497 | |
| Market value of securities lending at 31.12., lent out | 392 | 0 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
60
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 42. | FAIR VALUES AND BOOK VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES | 2015 | 2015 |
| Book value | Fair value | ||
| Liquid assets | 127 986 | 127 986 | |
| Debt securities eligible for refinancing with central banks | 38 461 | 38 461 | |
| Claims on credit institutions | 119 396 | 119 396 | |
| Claims on the public and public sector entities | 56 042 | 56 042 | |
| Debt securities | 132 965 | 132 965 | |
| Shares and participations | 37 959 | 37 959 | |
| Derivative contracts | 21 603 | 21 603 | |
| Financial liabilities | |||
| Liabilities to credit institutions | 5 530 | 5 530 | |
| Liabilities to the public and public sector entities | 352 439 | 352 439 | |
| Debt securities issued to the public | 35 722 | 35 071 | |
| Derivative contracts and other trading liabilities | 36 468 | 36 468 | |
| The lending rate is tied to the Euribor rates, and so the carrying amount of loans is not considered to differ significantly from the fair value. | |||
| 43. | ASSETS PLEDGED AS COLLATERAL AND OTHER COMMITMENTS | 2015 | 2014 |
| Securities | 38 500 | 43 000 | |
| Cash deposits | 42 359 | 49 294 | |
| Usage of collateral | |||
| Markeplace collateral, stock- and derivatives trades | 33 545 | 19 624 | |
| Collateral for currency trades | 2 607 | 19 478 | |
| Collateral for securities lending | 9 206 | 18 192 | |
| Bank of Finland, collateral for daily limit account | 35 500 | 35 000 | |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
61
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 44. | OPERATING LEASES | ||
| Not later than one year | 187 | 275 | |
| Over year not later than five year | 164 | 172 | |
| 45. | OTHER RENTAL COMMITMENTS | ||
| Rental liabilities up to one year | 2 411 | 2 780 | |
| Rental liabilities over one year and less than 5 years | 196 | 2 951 | |
| Rental liabilities over 5 years | 0 | 0 | |
| 46. | BREAKDOWN OF OFF-BALANCE SHEET COMMITMENTS | ||
| Commitments given to a third party on behalf of a customer* | 4 963 | 5 257 | |
| Irrevocable commitments given in favour of a customer | 562 | 555 | |
| Guarantees on behalf of others | 500 | 621 | |
| Unused credit facilities, given to clients | 2 441 | 2 989 | |
| * Commitments given on behalf of a customer for a third party include collaterals for derivatives positions given on behalf of customers in Nasdaq OMX and New Edge. The customers have covered their collateral to Evli in full. Other irrevocable commitments given on behalf of a customer comprise subscription commitments guaranteed on behalf of customers. | |||
| 47. | ASSET MANAGEMENT SERVICES OFFERED BY THE CREDIT INSTITUTION (MILLION EUROS) | ||
| Assets under management at Evli Bank's Asset Management as of 31 December | |||
| Gross | 10 263 | 8 437 | |
| Net | 7 559 | 6 327 | |
| Assets under management on the basis of power of attorney | |||
| Discretionary asset management | 3 926 | 3 091 | |
| Consultative asset management | 155 | 132 | |
| Total | 4 081 | 3 223 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
62
1000 EUROS
48. ACQUIRED BUSINESSES
Changes in corporate structure 2014
Evli Bank Plc's wholly owned subsidiary registered in Sweden, Evli Fonder AB, was dissolved on September 3, 2014.
Evli Bank Plc's wholly owned subsidiary EPI Russia Partners II Oy was dissolved on July 21, 2014.
Evli Options Ltd, a wholly owned subsidiary of Evli Bank Plc, was merged with Evli Bank Plc on October 31, 2014.
Evli Securities AS, a wholly owned Estonian subsidiary of Evli Bank Plc, sold its Lithuanian operations to the Lithuanian company Evernord UAB.
Changes in corporate structure 2015
Evli Bank Plc's wholly owned subsidiary Evli Alternative Investments Ltd was founded on March 9, 2015.
Evli Bank Plc acquired 90,83 percent of share capital and voting rights of Head Asset Management Ltd on October 19, 2015.
The Lithuanian branch of Evli Bank's subsidiary Evli Securities AS was shut down on December 4, 2015.
Evli Bank Plc acquired Head Asset Management Ltd with a contract signed on September 30, 2015.
After the Financial Supervisory Authority's approval, the share transaction was implemented on October 19, 2015. The acquisition is for 90,83 percent of the target company's share capital and voting rights. The acquisition generated EUR 1 200 000 goodwill.
| Head Asset Management Oy's profit from 19.10-31.12.2015 includes in Evli Group's figures 2015. | -1 |
|---|---|
| -1 | |
| ASSETS | Fair values recognized in merger |
| Cash and cash equivalents | |
| Claims on credit institutions | 2 598 |
| Intangible assets | |
| Property, plant and equipment | 20 |
| Other assets | 111 |
| Accrued income and prepayments | 61 |
| TOTAL ASSETS | 2 790 |
| LIABILITIES AND EQUITY | |
| LIABILITIES | |
| Other liabilities | |
| Accrued expenses and deferred income | 50 |
| TOTAL LIABILITIES | 50 |
| Net assets | 2 740 |
| Acquisition price paid in cash | 6 202 |
| Additional transaction price | 251 |
| Transaction price allocated into customer contracts | -3 016 |
| Tax liabilities | 503 |
| Goodwill | -1 200 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
63
1.000 EUROS
49. RELATED PARTY DISCLOSURES
The Group's related parties include the parent company, subsidiaries, and associates. Related parties also include the Group management consisting of the members of the board of directors and the Group's management team, as well as the board members of the subsidiaries.
| Subsidiaries and associates | Domicile | In ownership from | In ownership until | Ownership, % | Share of voting rights, % |
|---|---|---|---|---|---|
| Evli Fund Management Ltd | Finland | 100 | 100 | ||
| Evli Life Ltd | Finland | 100 | 100 | ||
| Evli Alexander Management Ltd | Finland | 45 | Majority | ||
| Eli Russia Ltd | Finland | 100 | 100 | ||
| OOO Evli St. Petersburg | Russia | 100 | 100 | ||
| OOO Evli Moscow | Russia | 100 | 100 | ||
| AS Evli Securities | Estonia | 100 | 100 | ||
| Aurator Varainhoito Ltd | Finland | 91 | 91 | ||
| Evli Corporate Finance AB | Sweden | 75 | 75 | ||
| Terra Nova Capital Ltd | UAE | 58 | 58 | ||
| Evli Options Ltd | Finland | 31/10/14 | 100 | 100 | |
| EPI Russia Partners II Ltd | Finland | 21/07/14 | 100 | 100 | |
| Evli Fonder AB | Sweden | 03/09/14 | 100 | 100 | |
| Evli Alternative Investments Ltd | Finland | 16/01/15 | 100 | 100 | |
| EAI Residential Partners Ltd | Finland | 08/05/15 | 78 | 78 | |
| Head Asset Management Ltd | Finland | 19/10/15 | 91 | 91 | |
| Minority interest | |||||
| Evli Corporate Finance AB | Sweden | 25 | 25 | ||
| Evli Alexander Management Ltd | Finland | 65 | Minority | ||
| Terra Nova Capital Ltd | UAE | 42 | 42 | ||
| Associated companies | |||||
| Baltic SME Management B.V | Netherlands | 33 | 33 | ||
| BIF Management Ltd | Jersey | 10 | 33 | ||
| BPT Asset Management A/S | Denmark | 50 | 45 |
Evli Bank Plc holds 45 percent of the share capital of Evli Alexander Management Ltd, which confers a majority of votes in the company pursuant to the authorization under the partnership agreement.
Evli Bank Plc holds 50 percent of the share capital of Northern Horizon Capital A/S, which confers 45 percent of the votes in the company as agreed upon in the partnership agreement. Evli Bank Plc does not have control in the company, which is why the associate is not consolidated. The equity method of accounting is used in the consolidation.
The minority interests recognized in the consolidated financial statements are generated from Evli Alexander Management Ltd, Evli Corporate Finance AB and Terra Nova Capital Advisors Ltd.
| Company | Evli Alexander Management Ltd | Evli Corporate Finance AB | Terra Nova Capital Advisors Ltd |
|---|---|---|---|
| Domicile | Finland | Sweden | Dubai |
| Assets | 17 290 | 2 319 | 361 |
| Liabilities | 16 364 | 1 199 | 6 |
| Profit/Loss | 726 | 1 104 | 442 |
Mutual funds managed on behalf of clients are not consolidated, since the Group has no control over them.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
GROUP
64
| 1 000 EUROS | 2015 | 2014 | ||
|---|---|---|---|---|
| 50. | RELATED PARTY DISCLOSURES | |||
| The Group's related parties include the parent company, subsidiaries, and associates. Related parties also include the Group management consisting of the members of the board of directors and the Group's management team, as well as the board members of the subsidiaries. | ||||
| Compensation of Board of Directors and CEOs | ||||
| Salaries, CEOs | -1 498 | -1 650 | ||
| Salaries, Deputys to the CEO | -390 | -377 | ||
| Salaries, members of Board of Directors | -381 | -374 | ||
| Salaries, Members of the Executive Group | -1 697 | -1 465 | ||
| The company does not have any defined benefit pension plans. | ||||
| Management renumerations is reported in more detail under 'Compensation' | ||||
| and 'CEO and Executive Group'. | ||||
| Transactions with related parties 2015 | Subsidiaries | Associated companies | Group management | |
| Sales | 9 856 | 0 | 2 | |
| Purchases | 150 | 0 | 32 | |
| Receivables | 1 466 | 0 | 90 | |
| Liabilities | 130 | 0 | 1 215 | |
| Shares owned by related parties: 13 449 591 | ||||
| Transactions with related parties 2014 | ||||
| Sales | 8 562 | 0 | 0 | |
| Purchases | 2 | 0 | 0 | |
| Receivables | 1 708 | 0 | 156 | |
| Liabilities | 167 | 0 | 549 | |
| Shares owned by related parties: 3 361 218 | ||||
| Fees paid to auditors | 2015 | 2014 | ||
| Audit fees | KPMG | -186 | -229 | |
| Fees paid to auditors | KPMG | -121 | -110 | |
| Audit fees | Other | -57 | 0 | |
| Total | -364 | -339 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
65
PARENT COMPANY'S INCOME STATEMENT
| 1 000 EUROS | Note | 1.1.-31.12.2015 | 1.1.-31.12.2014 |
|---|---|---|---|
| Interest income | 1. | 2 624 | 2 877 |
| Interest expenses | 2. | -1 181 | -1 799 |
| NET INTEREST INCOME | 1 443 | 1 077 | |
| Income from equity investments | 3. | ||
| Dividends from Associated companies | 600 | 400 | |
| Dividends from financial assets valued at fair value | -244 | 413 | |
| Dividends from group companies | 7 063 | 1 706 | |
| Fee and commission income | 4. | 31 663 | 29 503 |
| Fee and commission expenses | 5. | -1 838 | -1 644 |
| Net income from securities transactions and foreign exchange dealing | 6. | ||
| Net income from securities transactions | 3 595 | 3 058 | |
| Net income from foreign exchange dealing | 1 094 | 1 665 | |
| Other operating income | 7. | 2 619 | 4 223 |
| NET REVENUE | 45 996 | 40 402 | |
| Administrative expenses | |||
| Personnel expenses | 8. | ||
| Wages and salaries | -14 756 | -13 310 | |
| Other social security costs | -907 | -803 | |
| Pension expenses | -2 797 | -2 705 | |
| Other administrative expenses | 9. | -12 719 | -10 572 |
| Depreciation, amortization and impairment charges | 10. | -1 852 | -2 424 |
| Other operating expenses | 11. | -3 401 | -5 472 |
| Impairment losses on loans and other receivables | 12. | 0 | 0 |
| Impairment losses on other financial assets | 12. | -1 573 | -2 269 |
| OPERATING PROFIT/LOSS | 7 992 | 2 848 | |
| PROFIT BEFORE INCOME TAX | 7 992 | 2 848 | |
| Income taxes | 13. | -493 | -575 |
| PROFIT/LOSS FOR THE FINANCIAL YEAR | 7 499 | 2 273 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
66
PARENT COMPANY'S BALANCE SHEET
| 1.000 EUROS | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| ASSETS | |||
| Cash and cash equivalents | 127 986 | 103 998 | |
| Debt securities eligible for refinancing with central banks | 16. | ||
| Other | 38 461 | 74 192 | |
| Claims on credit institutions | 14. | ||
| Repayable on demand | 73 376 | 56 014 | |
| Other than those repayable on demand | 42 359 | 49 294 | |
| Claims on the public and public sector entities | 15. | ||
| Other than those repayable on demand | 56 765 | 58 041 | |
| Debt securities | 16. | ||
| On public sector entities | 91 507 | 0 | |
| Other | 41 458 | 32 769 | |
| Shares and participations | 17. | 21 807 | 28 616 |
| Shares and participations in associates | 18. | 4 354 | 4 354 |
| Shares and participations in group undertakings | 18. | 21 241 | 15 909 |
| Derivative contracts | 19. | 21 603 | 32 035 |
| Intangible assets | 20. | 2 993 | 3 539 |
| Property, plant and equipment | 21. | 931 | 1 137 |
| Other assets | 22. | 71 173 | 24 758 |
| Accrued income and prepayments | 23. | 1 911 | 1 774 |
| Deferred tax assets | 24. | 441 | 441 |
| TOTAL ASSETS | 618 367 | 486 869 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
67
PARENT COMPANY'S BALANCE SHEET
| 1000 EUROS | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| LIABILITIES AND EQUITY | |||
| LIABILITIES | |||
| Liabilities to credit institutions and central banks | 25. | ||
| Credit institutions | |||
| Other than those repayable on demand | 5 530 | 8 000 | |
| Liabilities to the public and public sector entities | 26. | ||
| Deposits | |||
| Repayable on demand | 370 525 | 311 086 | |
| Other | 281 | 335 | |
| Other liabilities | |||
| Other than those repayable on demand | 0 | 92 | |
| Debt securities issued to the public | 27. | ||
| Bonds | 35 722 | 33 095 | |
| Derivative contracts and other trading liabilities | 28. | 36 468 | 40 739 |
| Other liabilities | 29. | 99 240 | 35 637 |
| Accrued expenses and deferred income | 30. | 6 172 | 7 515 |
| Deferred tax liabilities | 31. | 68 | 167 |
| TOTAL LIABILITIES | 554 006 | 436 667 | |
| EQUITY | 32. | ||
| Share capital | 30 194 | 30 194 | |
| Share premium fund | 1 839 | 1 839 | |
| Unrestricted reserves | |||
| Fund of invested non-restricted equity | 24 976 | 13 500 | |
| Retained earnings | -148 | 2 395 | |
| Profit/loss for financial year | 7 499 | 2 273 | |
| TOTAL EQUITY | 64 361 | 50 202 | |
| TOTAL LIABILITIES AND EQUITY | 618 367 | 486 869 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
68
PARENT COMPANY'S STATEMENT OF CASH FLOW
| 1 000 EUROS | 1.1.–31.12.2015 | 1.1.–31.12.2014 |
|---|---|---|
| Cash flow from operating activities | ||
| Interest and commission received and proceeds from securities transactions incl. dividends | 51 839 | 45 031 |
| Interest and commissions paid | -3 233 | -3 448 |
| Cash payments to employees and suppliers | -31 838 | -31 896 |
| Increase (-) or decrease in operating assets: | ||
| Net change in trading book assets and liabilities | -82 955 | 29 032 |
| Deposits held for regulatory or monetary control purposes | 6 935 | -24 243 |
| Issue of loan capital | 2 627 | -37 626 |
| Funds advanced to customers | 93 447 | 56 662 |
| Net cash from operating activities before income taxes | 36 824 | 33 512 |
| Income taxes | -870 | -193 |
| Net cash used in operating activities | 35 953 | 33 319 |
| Cash flow from investing activities | ||
| Proceeds from sales of subsidiaries and associates | -6 905 | 5 062 |
| Dividend received | 7 063 | 1 706 |
| Interest received | 47 | 51 |
| Acquisition of property, plant and equipment and intangible assets | -1 099 | -256 |
| Group loans receivables | 374 | 472 |
| Net cash used in investing activities | -520 | 7 036 |
| Cash flow from financing activities | ||
| Proceeds from issue of share capital | 14 853 | 615 |
| Purchase of own shares | -75 | -176 |
| Payment of finance lease liabilities | -284 | -322 |
| Dividends paid | -8 584 | -4 271 |
| Net cash from financing activities | 5 911 | -4 154 |
| Net increase in cash and cash equivalents | 41 343 | 36 200 |
| Cash and cash equivalents at beginning of period | 160 011 | 123 824 |
| Effects of exchange rate changes on cash and cash equivalents | 0 | -13 |
| Cash and cash equivalents* at end of periodt | 201 362 | 160 011 |
| * Cash and cash equivalents include cash and cash equivalents and claims on credit institutions repayable on demand. |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
69
PARENT COMPANY'S ACCOUNTING POLICIES
Basic information on the company
Evli Bank Plc is domiciled in Helsinki and its registered address is Aleksanterinkatu 19 A, 00100 Helsinki.
Evli Bank Plc's financial statements are prepared and presented in accordance with the regulations of the Act on Credit Institutions, the Ministry of Finance decision regarding credit institutions' and investment services providers' financial statements and the Financial Supervisory Authority's regulations. The Accounting Act and the regulations on financial statements of the Limited Liability Companies Act are complied with, with the exceptions stated in Section 30(2) of the Act on Credit Institutions.
Evli Bank Plc's notes to the separate financial statements correspond to the exceptions listed below with the exception of the Evli Group's principles.
Employee benefits
Evli finances all its retirement plans as payments to employee pension companies.
Income taxes
Deferred tax is generally calculated on all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The largest temporary differences arise from the depreciation of fixed assets.
Leases
Leases of property, plant and equipment in which the company bears a substantial portion of the risks and rewards of ownership are classified as finance leases. In the parent company financial statements, the payment made on the basis of such leases are treated as rental expenses. The assets acquired through finance leases are also not recognized in the balance sheet.
Acquired businesses
Evli Bank Plc acquired Head Asset Management Ltd with a contract signed on September 30, 2015. After the Financial Supervisory Authority's approval, the share transaction was implemented on October 19, 2015. The acquisition is for 90,83 percent of the target company's share capital and voting rights.
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
70
NOTES TO INCOME STATEMENT
| 1 000 EUROS | 2015 | 2014 | ||
|---|---|---|---|---|
| 1. | INTEREST INCOME | |||
| At fair value through profit or loss | ||||
| Debt securities | 820 | 1 019 | ||
| Interest income from other loans and claims | ||||
| Claims on credit institutions | 557 | 798 | ||
| Claims on the public and public sector entities | 1 012 | 1 057 | ||
| Other interest income | 236 | 3 | ||
| Interest income, total | 2 624 | 2 877 | ||
| 2. | INTEREST EXPENSES | |||
| Liabilities to the public, public sector entities and credit institutions | -492 | -531 | ||
| Debt securities issued to the public | -675 | -1 258 | ||
| Other interest expenses | -15 | -11 | ||
| Interest expenses, total | -1 181 | -1 799 | ||
| 3. | NET INCOME FROM SECURITIES TRANSACTIONS AND FOREIGN EXCHANGE DEALING | |||
| Dividends from Associated companies | 600 | 400 | ||
| Dividends from financial assets valued at fair value | -244 | 413 | ||
| Dividends from group companies | 7 063 | 1 706 | ||
| Income from equity investments, total | 7 420 | 2 520 | ||
| 4. | COMMISSION INCOME | |||
| Credit related fees and commissions | 25 | 47 | ||
| Income from payment transactions | 51 | 24 | ||
| Advisory services | 1 108 | 1 333 | ||
| Securities brokerage | 10 317 | 8 086 | ||
| Mutual funds | 10 390 | 11 321 | ||
| Asset management | 5 706 | 5 165 | ||
| Custody services | 4 005 | 3 385 | ||
| Other operations | 62 | 143 | ||
| Commission income, total | 31 663 | 29 503 | ||
| 5. | COMMISSION EXPENSES | |||
| Trading fees paid to stock exchanges | -543 | -763 | ||
| Other | -1 294 | -881 | ||
| Commission expenses, total | -1 838 | -1 644 | ||
| 6. | NET INCOME FROM SECURITIES TRANSACTIONS AND FOREIGN EXCHANGE DEALING | |||
| Net income from securities transactions | ||||
| Financial assets held for trading | 3 804 | 2 503 | ||
| Financial assets at fair value through profit or loss | -209 | 555 | ||
| Financial assets available for sale | 0 | 0 | ||
| Net income from securities transactions, total | 3 595 | 3 058 | ||
| Net income from securities transactions by instrument | Gains and losses on sales | Changes in fair value | Total | |
| Debt securities | 698 | -416 | 282 | |
| Shares and derivative contracts | 3 556 | -243 | 3 313 | |
| Net income from securities transactions, total | 4 255 | -659 | 3 595 | |
| Net income from foreign exchange operations | 1 094 | |||
| Net income from securities transactions and foreign exchange operations, total | 4 690 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
71
| 1 000 EUROS | 2015 | 2014 | ||
|---|---|---|---|---|
| 7. | OTHER OPERATING INCOME | |||
| Rental income | 275 | 398 | ||
| Gain on sale of owner-occupied investment properties | 0 | 2 | ||
| Profit from merger | 0 | 2 153 | ||
| Other income | 2 343 | 1 670 | ||
| Other operating income, total | 2 619 | 4 223 | ||
| 8. | EMPLOYEE BENEFITS | 2015 | 2014 | |
| Wages and salaries | -14 756 | -13 310 | ||
| - of which bonuses | -1 744 | -1 317 | ||
| Other social security costs | -907 | -803 | ||
| - of which relating to bonuses | -37 | -27 | ||
| Pension expenses | -2 797 | -2 705 | ||
| - of which relating to bonuses | -314 | -315 | ||
| - defined benefit plans | 0 | 0 | ||
| - defined contribution plans | -2 797 | -2 705 | ||
| Employee benefits, total | -18 460 | -16 818 | ||
| 2015 | 2014 | |||
| Number of personnel during the period, average | 164 | 152 | ||
| Number of personnel at the end of the period | 166 | 158 | ||
| Employees by business segment at the end of the period | ||||
| Markets | 24 | 24 | ||
| Corporate finance | 4 | 3 | ||
| Asset management | 54 | 51 | ||
| Administration and other | 84 | 80 | ||
| Total | 166 | 158 | ||
| 9. | OTHER ADMINISTRATIVE EXPENSES | |||
| Office maintenance expenses | -488 | -502 | ||
| Office expenses | -852 | -658 | ||
| Telephone and postage expenses | -323 | -242 | ||
| Information expenses | -2 391 | -1 911 | ||
| IT related expenses | -3 438 | -3 662 | ||
| Business expenses | -481 | -310 | ||
| Travel expenses | -434 | -415 | ||
| Car costs | -78 | -62 | ||
| Other human resources related expenses | -633 | -386 | ||
| Marketing expenses | -1 732 | -1 153 | ||
| Banking and custodian expenses | -588 | -598 | ||
| External services fees | -734 | -673 | ||
| Expenses related to IPO | -545 | 0 | ||
| Other administrative expenses, total | -12 719 | -10 572 | ||
| 10. | DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES | |||
| Depreciation and amortization | ||||
| Applications and software | -1 050 | -1 317 | ||
| Other intangible assets | -531 | -670 | ||
| Equipment and furniture | -271 | -437 | ||
| Depreciation, amortization and impairment losses, total | -1 852 | -2 424 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
72
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 11. | OTHER OPERATING EXPENSES | ||
| Supervision expenses | -48 | -412 | |
| Rental expenses | -3 165 | -3 167 | |
| Loss on merger | 0 | -1 886 | |
| Other expenses | -188 | -7 | |
| Other operating expenses, total | -3 401 | -5 472 | |
| 12. | IMPAIRMENT LOSSES ON LOANS AND OTHER COMMITMENTS AND OTHER FINANCIAL ASSETS | ||
| Claims on the public and public sector entities | |||
| Impairment losses | 0 | ||
| Other financial impairment losses | |||
| Impairment losses from subsidiary shares | -2 269 | ||
| Impairment losses, total | -2 269 | ||
| 13. | INCOME TAXES | ||
| Current tax expense | -529 | -720 | |
| Taxes from previous years | -92 | -1 | |
| Deferred taxes | 128 | 146 | |
| Other taxes | 0 | 0 | |
| Income taxes, total | -493 | -575 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
73
NOTES TO BALANCE SHEET
| 1.000 EUROS | 2015 | 2014 | |||
|---|---|---|---|---|---|
| 14. | CLAIMS ON CREDIT INSTITUTIONS | ||||
| Repayable on demand | |||||
| Domestic credit institutions | 69 117 | 54 233 | |||
| Foreign credit institutions | 4 259 | 1 780 | |||
| Repayable on demand, total | 73 376 | 56 014 | |||
| Other than repayable on demand | |||||
| Domestic credit institutions | 2 576 | 23 181 | |||
| Foreign credit institutions | 39 783 | 26 113 | |||
| Other than repayable on demand, total | 42 359 | 49 294 | |||
| Claims on credit institutions, total | 115 735 | 105 308 | |||
| 15. | CLAIMS ON THE PUBLIC AND PUBLIC SECTOR ENTITIES BY SECTOR | ||||
| Repayable on demand | |||||
| Other than repayable on demand | |||||
| Enterprises and housing associations | 5 093 | 2 550 | |||
| Financial and insurance corporations | 722 | 843 | |||
| Households | 46 714 | 49 626 | |||
| Foreign countries | 4 236 | 5 022 | |||
| Other than repayable on demand, total | 56 765 | 58 041 | |||
| Claims on the public and public sector entities by sector, total | 56 765 | 58 041 | |||
| 2015 | 2014 | ||||
| 16. | DEBT SECURITIES | Publicly quoted | Other | Total | Total |
| Issued by public corporations | |||||
| Local government notes | 0 | 91 507 | 91 507 | 0 | |
| Issued by public corporations, total | 0 | 91 507 | 91 507 | 0 | |
| Issued by other than public corporations | |||||
| Banks' certificates of deposit | 0 | 0 | 0 | 1 983 | |
| Bonds issued by banks | 54 906 | 16 038 | 70 944 | 101 267 | |
| Other debt securities | 8 871 | 105 | 8 976 | 3 711 | |
| Issued by other than public corporations, total | 63 777 | 16 143 | 79 920 | 106 961 | |
| Debt securities, total | 171 426 | 106 961 | |||
| Debt securities by balance sheet category | |||||
| Debt securities eligible for refinancing with central banks | |||||
| On public sector entities | 0 | 0 | |||
| Other | 38 461 | 74 192 | |||
| Debt securities | |||||
| On public sector entities | 91 507 | 0 | |||
| Other | 41 458 | 32 769 | |||
| Total | 171 426 | 106 961 | |||
| Debt securities by country | |||||
| Finland | 122 685 | 18 718 | |||
| Australia | 14 435 | 18 055 | |||
| Sweden | 13 129 | 14 559 | |||
| Canada | 13 003 | 8 029 | |||
| Holland | 6 008 | 23 563 | |||
| France | 2 168 | 3 004 | |||
| United States | 0 | 13 006 | |||
| Switzerland | 0 | 8 018 | |||
| Luxembourg | 0 | 8 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
74
1000 EUROS
| 17. | SHARES AND PARTICIPATIONS | ||
| Fair valued through profit or loss | |||
| 2015 | |||
| Balance sheet category | Publicly quoted | Other | |
| Shares and participations | |||
| Available for sale | 0 | 0 | |
| Valued at fair value through profit or loss | |||
| Held for trading | 14 461 | 112 | |
| Other | 419 | 6 815 | |
| Shares and participations, total | 14 880 | 6 927 | |
| 2014 | |||
| Balance sheet category | Publicly quoted | Other | |
| Shares and participations | |||
| Available for sale | 0 | 0 | |
| Valued at fair value through profit or loss | |||
| Held for trading | 21 768 | 80 | |
| Other | 435 | 6 332 | |
| Shares and participations, total | 22 204 | 6 412 | |
| Net risk position is described on the section 'Risk Management', 'Market risks'. | |||
| 18. | SHARES AND PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES | 2015 | |
| At the beginning of the period | 4 354 | ||
| Additions | 0 | ||
| Disposals | 0 | ||
| At the end of the period | 4 354 | ||
| Shares and participations in group undertakings | |||
| At the beginning of the period | 15 909 | ||
| Additions | 6 905 | ||
| Impairment | -1 573 | ||
| Other reductions | 0 | ||
| At the end of the period | 21 241 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
75
| 1 000 EUROS | ||||||
|---|---|---|---|---|---|---|
| 19. | DERIVATIVE CONTRACTS | |||||
| Overall effect of risks associated with derivative contracts | Nominal value of underlying, brutto | 2015 2015 | ||||
| Remaining maturity | ||||||
| Held for trading | Less than 1 year | 1-5 years | 5-15 years | Fair value (+/-) | ASSETS LIABILITIES | |
| Interest rate derivatives | ||||||
| Interest rate swaps | 0 | 7 394 | 2 870 | 0 | 0 | |
| Currency-linked derivatives | 2 306 309 | 0 | 0 | 270 | 17 676 | |
| Equity-linked derivatives | ||||||
| Futures | 6 179 | 0 | 0 | 305 | 385 | |
| Options bought | 26 441 | 27 349 | 2 750 | 2 259 | 2 394 | |
| Options sold | 45 890 | 27 430 | 2 750 | -3 810 | 1 148 | |
| Other derivatives | ||||||
| Held for trading, total | 2 384 820 | 62 173 | 8 370 | -976 | 21 603 | |
| Derivative contracts, total | 2 384 820 | 62 173 | 8 370 | -976 | 21 603 | |
| Overall effect of risks associated with derivative contracts | 2014 2014 | |||||
| Held for trading | ||||||
| Interest rate derivatives | ||||||
| Interest rate swaps | 0 | 3 184 | 2 870 | 0 | 0 | |
| Currency-linked derivatives | 1 767 795 | 0 | 0 | 141 | 24 988 | |
| Equity-linked derivatives | ||||||
| Futures | 15 563 | 0 | 0 | 642 | 764 | |
| Bought | 27 805 | 17 400 | 0 | 5 825 | 5 891 | |
| Sold | 69 313 | 17 400 | 0 | -7 272 | 392 | |
| Other derivatives | ||||||
| Held for trading, total | 1 880 476 | 37 984 | 2 870 | -665 | 32 035 | |
| Derivative contracts, total | 1 880 476 | 37 984 | 2 870 | -665 | 32 035 |
Equity derivatives held for trading, and other liabilities held for trading (notes 19 and 28) hedge the equity delta risk for shares and participations in the tradingbook (note 17). The delta-adjusted equity risk was at the end of 2015 EUR 7.4 million, including shares and participations in the banking book.
Equity derivatives in the banking book hedge the equity risk in equity-linked bonds issued to the public.
The interest rate derivatives hedge the interest rate risk in assets and liabilities in the balance sheet.
Currency derivatives comprise commitments made against clients and the associated hedges, and contracts made to hedge currency risk in the balance sheet. The net open risk position of the total amount is small. The largest part of the contracts are in SEK (EUR 1 124 million), and in GBP (EUR 679 million).
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
76
| 1 000 EUROS | 2015 | 2014 |
|---|---|---|
| 20. INTANGIBLE ASSETS | ||
| Software or projects in progress | ||
| Cost at 1.1. | 38 | 0 |
| Increases | 906 | 38 |
| Cost at 31.12. | 944 | 38 |
| Book value at 31.12. | 944 | 38 |
| Applications and software | ||
| Cost at 1.1. | 16 230 | 16 222 |
| Exchange difference | 0 | -4 |
| Increases | 123 | 84 |
| Decreases | 0 | -71 |
| Cost at 31.12. | 16 354 | 16 230 |
| Accumulated amortisation and impairment losses at 1.1. | -14 315 | -13 073 |
| Exchange difference | 0 | 4 |
| Amortisation for the period | -1 050 | -1 317 |
| Accumulated amortisation in respect of decreases | 0 | 71 |
| Accumulated amortisation and impairment losses at 31.12. | -15 365 | -14 315 |
| Book value at 31.12. | 989 | 1 915 |
| Depreciation leasehold improvements FAS | ||
| Acquisition cost at 1.1. | 1 401 | 4 376 |
| Exchange difference | 0 | -2 |
| Decreases | 0 | -2 973 |
| Acquisition cost at 31.12. | 1 401 | 1 401 |
| Accumulated depreciation at 1.1. | -470 | -3 314 |
| Exchange difference | 0 | 2 |
| Depreciation for the period | -131 | -131 |
| Translation difference from depreciation for the period | 0 | 0 |
| Accumulated depreciation in respect of decreases | 0 | 2 973 |
| Accumulated depreciation at 31.12. | -601 | -470 |
| Book value at 31.12. | 800 | 931 |
| Other intangible assets | ||
| Cost at 1.1. | 4 215 | 4 145 |
| Increases | 0 | 70 |
| Decreases | -18 | 0 |
| Cost at 31.12. | 4 197 | 4 215 |
| Accumulated amortisation and impairment losses at 1.1. | -3 561 | -3 022 |
| Amortisation for the period | -400 | -538 |
| Accumulated depreciation in respect of decreases | 23 | 0 |
| Accumulated amortisation and impairment losses at 31.12. | -3 937 | -3 561 |
| Book value at 31.12. | 260 | 655 |
| Intangible assets, total at 31.12. | 2 993 | 3 539 |
| Book value of intangible assets at 31.12. | 2 993 | 3 539 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
77
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 21. | PROPERTY, PLANT AND EQUIPMENT | ||
| Equipment and furniture | |||
| Cost at 1.1. | 6 274 | 6 885 | |
| Exchange difference | 0 | -38 | |
| Increases | 64 | 53 | |
| Decreases | 0 | -626 | |
| Cost at 31.12. | 6 339 | 6 274 | |
| Accumulated depreciation at 1.1. | -5 738 | -5 973 | |
| Exchange difference | 0 | 38 | |
| Depreciation for the period | -271 | -437 | |
| Translation difference from depreciation for the period | 0 | 1 | |
| Accumulated depreciation in respect of decreases | 0 | 633 | |
| Accumulated depreciation 31.12. | -6 009 | -5 738 | |
| Book value at 31.12. | 330 | 536 | |
| Property, plant, and equipment, total 31.12. | 330 | 536 | |
| Other tangible assets | |||
| Cost at 1.1. | 601 | 589 | |
| Increases | 0 | 12 | |
| Cost at 31.12. | 601 | 601 | |
| Book value at 31.12. | 601 | 601 | |
| Property, plant and equipment, total at 31.12. | 931 | 1 137 | |
| Book value of tangible assets at 31.12. | 931 | 1 137 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
78
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 22. | OTHER ASSETS | ||
| Securities sale receivables | 1 581 | 591 | |
| Commission receivables | 2 744 | 2 921 | |
| Securities broking receivables | 66 105 | 20 634 | |
| Other receivables | 744 | 611 | |
| Other assets total | 71 173 | 24 758 | |
| 23. | ACCRUED INCOME AND PREPAYMENTS | ||
| Interest | 414 | 230 | |
| Taxes | 100 | 25 | |
| Staff-related | 23 | 377 | |
| Other items | 1 374 | 1 142 | |
| Accrued income and prepayments total | 1 911 | 1 774 | |
| 24. | Deferred tax assets | ||
| Due to timing differences | 441 | 441 | |
| Deferred tax assets total | 441 | 441 | |
| Deferred tax assets result from timing differences in fixed asset depreciation. | |||
| 25. | LIABILITIES TO CREDIT INSTITUTIONS AND CENTRAL BANKS | ||
| Credit institutions | |||
| Repayable on demand | 0 | 0 | |
| Other than repayable on demand | 5 530 | 8 000 | |
| Liabilities to credit institutions and central banks, total | 5 530 | 8 000 | |
| 26. | LIABILITIES TO THE PUBLIC AND PUBLIC SECTOR ENTITIES | ||
| Deposits | |||
| Repayable on demand | 370 525 | 311 086 | |
| Other than repayable on demand | 281 | 335 | |
| Other liabilities | |||
| Other than repayable on demand | 0 | 92 | |
| Liabilities to the public and public sector entities, total | 370 807 | 311 514 | |
| 27. | DEBT SECURITIES ISSUED TO THE PUBLIC | ||
| Certificate of deposits | 0 | 0 | |
| Bonds | 35 722 | 33 095 | |
| Debt securities issued to the public, total | 35 722 | 33 095 | |
| Changes in bonds issued to the public | |||
| Issues | 14 959 | 15 968 | |
| Repurchases | 12 268 | 43 169 | |
| 28. | DERIVATIVE CONTRACTS AND OTHER LIABILITIES HELD FOR TRADING | ||
| Derivative contracts | 22 579 | 32 700 | |
| Due to short selling of shares | 13 889 | 8 039 | |
| Derivative contracts and other liabilities held for trading, total | 36 468 | 40 739 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
79
| 1 000 EUROS | 2015 | 2014 | |
|---|---|---|---|
| 29. | BREAKDOWN OF OTHER LIABILITIES | ||
| Securities broking liabilities | 75 582 | 22 254 | |
| Securities purchase liabilities | 15 213 | 368 | |
| Income tax payable | 64 | 71 | |
| Personnel related | 507 | 442 | |
| Other short-term liabilities | 4 083 | 1 323 | |
| Prepayments of cash customers | 3 505 | 10 833 | |
| VAT payable | 285 | 345 | |
| Other liabilities, total | 99 240 | 35 637 | |
| 30. | ACCRUED EXPENSES AND DEFERRED INCOME | ||
| Interest | 214 | 428 | |
| Tax payables | 36 | 232 | |
| Personnel related | 5 170 | 4 818 | |
| Other accrued expenses | 751 | 2 037 | |
| Accrued expenses and deferred income, total | 6 172 | 7 515 | |
| 31. | DEFERRED TAX LIABILITIES | ||
| Due to timing differences | 68 | 167 | |
| Deferred tax liability, total | 68 | 167 | |
| 32. | CHANGES IN EQUITY CAPITAL | ||
| Share capital | |||
| Book value 1.1 | 30 194 | 30 194 | |
| Book value 31.12 | 30 194 | 30 194 | |
| Share premium | |||
| Book value 1.1 | 1 839 | 1 839 | |
| Book value 31.12 | 1 839 | 1 839 | |
| Fund of invested non-restricted equity | |||
| Book value 1.1 | 13 500 | 13 061 | |
| Increases | 15 798 | 615 | |
| Decreases | -4 247 | 0 | |
| Acquisition of own shares | -75 | -176 | |
| Book value 31.12 | 24 976 | 13 500 | |
| Retained earnings from previous years | |||
| Book value 1.1 | 4 668 | 6 629 | |
| Increases | 20 | 37 | |
| Decreases | -4 836 | -4 271 | |
| Acquisition of own shares | 0 | 0 | |
| Transfers between other items | |||
| Book value 31.12 | -148 | 2 395 | |
| Profit/loss for financial year | 7 499 | 2 273 | |
| 33. | OWN SHARES HELD BY THE CREDIT INSTITUTION | ||
| The company acquired a total of 6 250 shares during 2015. | |||
| The cost of purchase EUR 74 963 has been deducted from unrestricted equity. | |||
| The company's Board of Directors decided to annul the remaining Evli shares held by the company on September 8, 2015. | |||
| On December 31, 2015 the company didn't hold any own shares. | |||
| 34. | SHARE CAPITAL, PARENT COMPANY | ||
| Evli has two share series: series A and series B, whose rights are determined in the manner specified in the amended Articles of Association. The main difference between the share series concerns the voting rights. The A share confers 20 votes in a General Meeting while a B share confers one vote. | |||
| Number of A shares | 16 971 136 pcs | ||
| Number of B shares | 6 342 784 pcs | ||
| Total number of shares is | 23 313 920 pcs |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
80
1000 EUROS
35. CHANGES IN THE SHARE CAPITAL, BOARD AUTHORIZATIONS AND OPTION PROGRAMS
| Number of own shares held | Number of outstanding shares | Share capital | |||
|---|---|---|---|---|---|
| 1.1.2014 | 39 325 | 4 052 184 | 30 194 | ||
| Aquisition of own shares 2013 authorization | 2 000 | -2 000 | 0 | ||
| Aquisition of own shares 2014 authorization | 10 150 | -10 150 | 0 | ||
| Nullification of own shares 2014 authorization | -46 350 | 0 | 0 | ||
| Share issue 2014 authorization | 0 | 51 500 | 0 | ||
| 31.12.2014 | 5 125 | 4 091 534 | 30 194 | ||
| Total number of shares | 4 096 659 | ||||
| 1.1.2015 | 5 125 | 4 091 534 | 30 194 | ||
| Aquisition of own shares 2015 authorization | 6 250 | -6 250 | 0 | ||
| Nullification of own shares 2015 authorization | -11 375 | 0 | 0 | ||
| Share issue 2014 authorization | 0 | 157 500 | 0 | ||
| Additional return of capital 2015 authorization | 0 | 0 | 0 | ||
| Share issue 2015 authorization | 0 | 16 971 136 | 0 | ||
| IPO 2015 authorization | 0 | 2 100 000 | 0 | ||
| 31.12.2015 | 0 | 23 313 920 | 30 194 | ||
| Total number of shares | 23 313 920 |
Option programs
The company issued 127,500 stock options during the 2014 financial year, and these were all subscribed during the subscription period and were outstanding at the end of the period. Description of the stock option program on page 23 Share-based compensation.
Share premium fund
The share premium fund comprises the following items: the amount exceeding the counter-book value of the share paid for shares prior to September 1, 2006 in a new issue; the amount paid for a subscription right based on an option right; gain on sale of the company's own shares; and the amount by which the share capital is lowered and which is not used to cover an adopted loss, transferred to a fund to be used in accordance with the decision of the general meeting of the shareholders or distributed to the shareholders.
Fund of invested non-restricted equity
The fund of invested non-restricted equity includes the proceeds from the disposals of own shares received after 1 September 2006.
36. LARGEST SHAREHOLDERS AND SHARE OWNERSHIP BREAKDOWN
| A-shares | B-shares | Shares total | |
|---|---|---|---|
| Oy Prandium Ab (Thomas Thesleff with family) | 3 803 280 | 950 820 | 4 754 100 |
| Oy Scripo Ab (Henrik Andersin) | 3 803 280 | 950 820 | 4 754 100 |
| Oy Fincorp Ab (Roger Kempe) | 2 319 780 | 579 945 | 2 899 725 |
| Ingman Group Oy Ab | 1 860 000 | 500 000 | 2 360 000 |
| Lehtimäki Maunu | 433 728 | 108 432 | 542 160 |
| Tallberg Claes | 369 756 | 92 439 | 462 195 |
| Hollfast John | 328 320 | 82 080 | 410 400 |
| Thunekov AB | 224 000 | 56 000 | 280 000 |
| Ridgeback Advisory | 210 000 | 52 500 | 262 500 |
| Dudarev Grigory | 201 540 | 50 385 | 251 925 |
| 13 553 684 | 3 423 421 | 16 977 105 | |
| Others | 3417452 | 2 919 363 | 6 336 815 |
| Total | 16 971 136 | 6 342 784 | 23 313 920 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
81
1000 EUROS
| Breakdown of shareholdings by owner group | Number of shareholders | Number of shares | Number of votes | Proportion of shareholders, % | Proportion of shares, % | Proportion of votes, % | |
|---|---|---|---|---|---|---|---|
| National economy total (domestic sector) | |||||||
| 1. Households | 2 417 | 5 927 656 | 84 284 416 | 91.5 | 25.4 | 24.4 | |
| 2. Companies | 172 | 15 723 130 | 245 339 954 | 6.5 | 67.4 | 71.0 | |
| 3. Financial and insurance institutions | 19 | 601 486 | 601 486 | 0.7 | 2.6 | 0.2 | |
| 4. Non-profit institutions | 7 | 76 936 | 76 936 | 0.3 | 0.3 | 0.0 | |
| Foreigners | |||||||
| 5. European Union | 9 | 32 508 | 260 508 | 0.3 | 0.1 | 0.1 | |
| 6. Other countries | 18 | 952 204 | 15 202 204 | 0.7 | 4.1 | 4.4 | |
| Total | 2 642 | 23 313 920 | 345 765 504 | 100 | 100 | 100 | |
| Breakdown of shareholdings by size class | Number of shareholders | Number of shares | Number of votes | Proportion of shareholders, % | Proportion of shares, % | Proportion of votes, % | |
| 1. 1-100 | 395 | 34 860 | 34 860 | 15.0 | 0.1 | 0.0 | |
| 2. 101-500 | 1 818 | 299 240 | 299 240 | 68.8 | 1.3 | 0.1 | |
| 3. 501-1 000 | 145 | 104 564 | 104 564 | 5.5 | 0.4 | 0.0 | |
| 4. 1 001-5 000 | 163 | 373 070 | 479 470 | 6.2 | 1.6 | 0.1 | |
| 5. 5 001-10 000 | 29 | 207 145 | 1 001 345 | 1.1 | 0.9 | 0.3 | |
| 6. 10 001-50 000 | 49 | 1 226 300 | 10 836 652 | 1.9 | 5.3 | 3.1 | |
| 7. 50 001-100 000 | 17 | 1 225 464 | 14 432 440 | 0.6 | 5.3 | 4.2 | |
| 8. 100 001-500 000 | 21 | 4 533 192 | 71 085 556 | 0.8 | 19.4 | 20.6 | |
| 9. 500 001- | 5 | 15 310 085 | 247 491 377 | 0.2 | 65.7 | 71.6 | |
| Total | 2 642 | 23 313 920 | 345 765 504 | 100 | 100 | 100 |
- MATURITIES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES OF CREDIT INSTITUTION
Due to the nature of the business, predicting future cashflows is difficult, especially for derivative contracts. The maturities of derivatives are also provided in note 19, with the nominal value of the underlying instrument as basis, which does not conform to real cash flows. Debt securities, loans and other claims, derivatives and financial liabilities at amortized cost are reported in the maturity class according to the maturity of the instrument. Shares and participations are reported so that quoted shares in the trading book and quoted mutual funds are in the shortest maturity period. Unquoted shares are reported according to the estimated liquidation period, and venture capital- and real estate funds are reported according to the expected ending day of the fund.
| 2015 | less than 3 months | 3-12 months | 1-5 years | 5-10 years | more than 10 years | Total |
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and cash equivalents | 127 986 | 127 986 | ||||
| Loans and other claims | ||||||
| Claims on credit institutions | 115 735 | 0 | 0 | 0 | 0 | 115 735 |
| Claims on the public and public sector entities | 2 568 | 24 270 | 29 484 | 443 | 0 | 56 765 |
| Financial assets at fair value through profit or loss | ||||||
| Debt securities eligible for refinancing with central banks | 1 000 | 12 518 | 24 944 | 0 | 0 | 38 461 |
| Debt securities | 91 252 | 17 520 | 24 088 | 105 | 0 | 132 965 |
| Shares and participations | 14 993 | 417 | 4 634 | 1 764 | 0 | 21 807 |
| Derivative contracts | 15 901 | 5 198 | 504 | 0 | 0 | 21 603 |
| Financial assets available for sale | ||||||
| Shares and participations | 0 | 0 | 0 | 0 | 0 | 0 |
| Accrued interest | 346 | 68 | 0 | 0 | 0 | 414 |
| Debts | ||||||
| Financial liabilities at amortized cost | ||||||
| Liabilities to credit institutions | 3 530 | 2 000 | 0 | 0 | 0 | 5 530 |
| Liabilities to the public and public sector entities | 370 620 | 172 | 15 | 0 | 0 | 370 807 |
| Debt securities issued to the public | 200 | 4 078 | 24 725 | 6 720 | 0 | 35 722 |
| Subordinated liabilities | 0 | 0 | 0 | 0 | 0 | 0 |
| Financial liabilities at fair value through profit or loss | 30 020 | 5 920 | 528 | 0 | 0 | 36 468 |
| Accrued interest | 213 | 1 | 0 | 0 | 0 | 214 |
| Off-balance sheet commitments | 7 903 | 392 | 170 | 0 | 0 | 8 465 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
82
1000 EUROS
| 2014 | ||||||
| Assets | ||||||
| Cash and cash equivalents | 103 998 | 0 | 0 | 0 | 0 | 103 998 |
| Loans and other claims | ||||||
| Claims on credit institutions | 105 308 | 0 | 0 | 0 | 0 | 105 308 |
| Claims on the public and public sector entities | 2 538 | 16 729 | 38 272 | 502 | 0 | 58 041 |
| Financial assets at fair value through profit or loss | ||||||
| Debt securities eligible for refinancing with central banks | 0 | 0 | 74 192 | 0 | 0 | 74 192 |
| Debt securities | 16 | 1 988 | 30 177 | 588 | 0 | 32 769 |
| Shares and participations | 22 204 | 204 | 4 324 | 1 884 | 0 | 28 616 |
| Derivative contracts | 23 240 | 4 389 | 4 406 | 0 | 0 | 32 035 |
| Financial assets available for sale | ||||||
| Shares and participations | 0 | 0 | 0 | 0 | 0 | 0 |
| Accrued interest | 24 | 206 | 0 | 0 | 0 | 230 |
| Debts | ||||||
| Financial liabilities at amortized cost | ||||||
| Liabilities to credit institutions | 7 000 | 1 000 | 0 | 0 | 0 | 8 000 |
| Liabilities to the public and public sector entities | 311 214 | 241 | 59 | 0 | 0 | 311 514 |
| Debt securities issued to the public | 3 662 | 888 | 25 674 | 2 870 | 0 | 33 095 |
| Financial liabilities at fair value through profit or loss | 32 132 | 4 208 | 4 399 | 40 739 | ||
| Accrued interest | 426 | 3 | 0 | 428 | ||
| Off-balance sheet commitments | 2 989 | 121 | 869 | 186 | 0 | 4 164 |
| Commitments outside the balance sheet are presented in Note 44. | ||||||
- ASSETS AND LIABILITIES DENOMINATED IN DOMESTIC AND FOREIGN CURRENCY
| Balance sheet item | Domestic | Foreign currency | 2015 Total | Domestic | Foreign currency | 2014 Total |
|---|---|---|---|---|---|---|
| Loans and other claims | ||||||
| Cash on hand | 127 986 | 0 | 127 986 | 103 998 | 0 | 103 998 |
| Claims on credit institutions | 111 842 | 3 893 | 115 735 | 103 516 | 1 792 | 105 308 |
| Claims on the public and public sector entities | 56 764 | 1 | 56 765 | 58 041 | 0 | 58 041 |
| Financial assets at fair value through profit or loss | ||||||
| Debt securities | 171 426 | 0 | 171 426 | 106 945 | 16 | 106 961 |
| Shares and participations | 19 113 | 2 694 | 21 807 | 19 788 | 8 827 | 28 616 |
| Derivative financial instruments | 21 559 | 44 | 21 603 | 31 767 | 268 | 32 035 |
| Other assets | 95 266 | 7 778 | 103 043 | 46 887 | 5 024 | 51 911 |
| Total | 603 957 | 14 410 | 618 367 | 470 942 | 15 927 | 486 869 |
| Financial liabilities at amortized cost | ||||||
| Liabilities to credit institutions | 5 530 | 0 | 5 530 | 8 000 | 0 | 8 000 |
| Liabilities to the public and public sector entities | 330 269 | 40 538 | 370 807 | 283 646 | 27 868 | 311 514 |
| Debt securities issued to the public | 35 722 | 0 | 35 722 | 33 095 | 0 | 33 095 |
| Financial assets at fair value through profit or loss | ||||||
| Derivative contracts and liabilities held for trading | 36 446 | 22 | 36 468 | 40 107 | 632 | 40 739 |
| Other liabilities | 92 497 | 12 983 | 105 480 | 27 811 | 15 508 | 43 319 |
| Total | 500 464 | 53 542 | 554 006 | 392 659 | 44 007 | 436 667 |
The largest foreign currency assets and liabilities are in SEK (assets EUR 8.6 million, liabilities EUR 24.2 million) and USD (assets EUR 2.6 million, liabilities EUR 26.4 million).
- SECURITIES LENDING
| Market value of securities lending at 31.12., lent in | 15 830 | 29 497 |
|---|---|---|
| Market value of securities lending at 31.12., lent out | 392 | 0 |
EVLI BANK PLC
ANNUAL REPORT 2015
FINANCIAL STATEMENT
PARENT COMPANY
83
| 1 000 EUROS | |||
|---|---|---|---|
| 40. | FAIR VALUES AND BOOK VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES | Book value | Fair value |
| 2015 | 2015 | ||
| Liquid assets | 127 986 | 127 986 | |
| Debt securities eligible for refinancing with central banks | 38 461 | 38 461 | |
| Claims on credit institutions | 115 735 | 115 735 | |
| Claims on the public and public sector entities | 56 765 | 56 765 | |
| Debt securities | 132 965 | 132 965 | |
| Shares and participations | 21 807 | 21 807 | |
| Shares and participations in group undertakings | 21 241 | 21 241 | |
| Derivative contracts | 21 603 | 21 603 | |
| Financial liabilities | |||
| Liabilities to credit institutions | 5 530 | 5 530 | |
| Liabilities to the public and public sector entities | 370 807 | 370 807 | |
| Debt securities issued to the public | 35 722 | 35 071 | |
| Derivative contracts and other trading liabilities | 36 468 | 36 468 | |
| 41. | ASSETS PLEDGED AS COLLATERAL AND OTHER COMMITMENTS | 2015 | 2014 |
| Securities | 38 500 | 43 000 | |
| Cash deposits | 42 359 | 49 294 | |
| Usage of collateral | |||
| Markplace collateral, stock- and derivatives trades | 33 545 | 19 624 | |
| Collateral for currency trades | 2 607 | 19 478 | |
| Collateral for securities lending | 9 206 | 18 192 | |
| Bank of Finland, collateral for daily limit account | 35 500 | 35 000 | |
| 42. | OPERATING LEASES | ||
| Not later than one year | 176 | 275 | |
| Over year not later than five year | 151 | 172 | |
| 43. | OTHER RENTAL COMMITMENTS | ||
| Rental liabilities up to one year | 2 411 | 2 777 | |
| Rental liabilities over one year and less than 5 years | 196 | 2 951 | |
| Rental liabilities over 5 years | 0 | 0 | |
| 44. | BREAKDOWN OF OFF-BALANCE SHEET COMMITMENTS | ||
| Commitments given to a third party on behalf of a customer * | 4 963 | 5 257 | |
| Irrevocable commitments given in favour of a customer | 562 | 555 | |
| Guarantees on behalf of others | 500 | 621 | |
| Unused credit facilities, given to clients | 2 441 | 2 989 | |
| * Commitments given on behalf of a customer for a third party include collaterals for derivatives positions given on behalf of customers in Nasdaq OMX and New Edge. The customers have covered their collateral to Evli in full. Other irrevocable commitments given on behalf of a customer comprise subscription commitments guaranteed on behalf of customers. | |||
| 45. | ASSET MANAGEMENT SERVICES OFFERED BY THE CREDIT INSTITUTION (M€) | ||
| Assets under management at Evli Bank's Asset Management as of 31 December | |||
| Gross | 10 263 | 8 437 | |
| Net | 7 559 | 6 327 | |
| Assets under management on the basis of power of attorney | |||
| Discretionary asset management | 3 926 | 3 091 | |
| Consultative asset management | 155 | 132 | |
| Total | 4 081 | 3 223 |
EVLI BANK PLC
ANNUAL REPORT 2015
84
THE BOARD OF DIRECTORS' PROPOSAL TO THE GENERAL MEETING FOR THE DISTRIBUTION OF PROFIT
The parent company's distributable assets of 31st of December 2015 total EUR 32,327,244.28 which of retained earnings EUR 7,351,232.85 and reserve for invested unrestricted equity EUR 24,976,011.43. The Board of Directors proposes to the Annual General Meeting of Shareholders that a dividend of EUR 0.31 per share be paid, totaling EUR 7,227,315.20.
There has not been major changes in company's financial position after the end of the financial year. The Board of Directors feel that the proposed distribution of profit does not endanger the liquidity of the company.
Helsinki, February 15, 2016
Henri A
Henri Andersin
Chairman
Robert Ingman
Harri-Pekka Kaukonen
J
Johanna Lamminen
Mikael Lilius
Teuvo Salminen
T
Thomas Thesleff
Maunu Lehtimäki
Chief Executive Officer
EVLI BANK PLC
ANNUAL REPORT 2015
85
AUDITORS' REPORT
To the Annual General Meeting of Evli Bank plc
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Evli Bank plc for the year ended on 31 December 2015. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.
Responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act, Finnish Credit Institutions Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Opinion on the company's financial statements and the report of the Board of Directors
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Helsinki, 15 February 2016
KPMG OY AB
Marcus Tötterman
Authorized Public Accountant in Finland
EVLI BANK PLC
ANNUAL REPORT 2015
BOARD OF DIRECTORS
86
BOARD OF DIRECTORS
The composition of the Board of Directors was resolved at Evli Bank Plc's Annual General Meeting on March 6, 2015.
Henrik Andersin, born 1960
M.Sc. (Econ.)
- One of Evli Bank's founding partners and main owners
- Chairman of the Board of Directors of Nokian Panimo Oy
- Member of the Board of Directors of Evli Bank Plc since 1985, CEO of Evli Bank Plc 1994–2006 and Chairman of the Board since 2006
- Shareholding: Holdings of interest parties 3 803 280 A shares and 950 820 B shares
Harri-Pekka Kaukonen, born 1963
D.Sc. (Tech.)
- President and CEO of Sanoma Group 2011–2015
- Member of the Board of Directors of Evli Bank Plc since 2008
- Shareholding: 1 991 B shares
Robert Ingman, born 1961
M.Sc. (Tech.), M.Sc. (Econ. and Business Administration)
- Chairman of the Boards of Directors of Ingman Group Oy Ab, Etteplan Oyj and Halti Oy, Member of the Boards of Directors of Arla Ingman Oy Ab, Digia Oyj and M-Brain Oy
- Member of the Board of Directors of Evli Bank Plc since 2010
- Shareholding: Holdings of interest parties 1 860 000 A shares and 500 274 B shares
Johanna Lamminen, born 1966
Licentiate in Technology, MBA
- Managing Director of Gasum Ltd.
- Member of the Board of Directors of Evli Bank Plc since October 2015
- Shareholding: 306 B shares
EVLI BANK PLC
ANNUAL REPORT 2015
BOARD OF DIRECTORS
87
Mikael Lilius, born 1949
B.Sc. (Econ. and Business Administration)
- Previously served as a Senior Advisor at Fortum Corporation
- President and CEO of Fortum Corporation 2000–2009, and before this held various supervisory positions in the industry sector
- Chairman of the Boards of Directors of Metso Oyj, Wärtsilä Oyj and Mehiläinen Oyj, Member of the Board of Directors of Oy Kelonia Ab
- Member of the Board of Directors of Evli Bank Plc since 2010.
- Shareholding: 11 795 B shares
Teuvo Salminen born 1954
M.Sc. (Econ. and Business Administration)
- Various supervisory positions in Pöyry Plc 1985–2009
- Chairman of the Board of Directors of Havator Oy, Member of the Boards of Directors of Holiday Club Resorts Oy, Cargotec Oyj, Glaston Oyj, Tieto Oyj and YIT Oyj
- Member of the Board of Directors of Evli Bank Plc since 2010
- Shareholding: 5 986 B shares
Thomas Thesleff, born 1951
M.A.
- One of Evli Bank's founding partners and main owners
- In addition to Evli, holds several posts of trust
- Member of the Board of Directors of Evli Bank Plc since 1985, CEO of Evli Bank Plc 1985–1994 and Chairman of the Board 1994–2006
- Shareholding: Holdings of interest parties 3 803 280 A shares and 950 820 B shares
Shareholdings on February 15, 2016
EVLI BANK PLC
ANNUAL REPORT 2015
MANAGEMENT GROUP
88
MANAGEMENT GROUP
Maunu Lehtimäki
M.Sc. (Econ.), born 1967
- Chief Executive Officer
- Joined Evli Bank Plc in 1996
- Shareholding: 433 728 A shares and 108 432 B shares, holdings of interest parties 201 B shares
Mari Etholén
LLB, born 1973
- Head of HR and Legal Affairs
- Joined Evli Bank Plc in 2001
- Shareholding: 60 000 A shares and 15 306 B shares, holdings of interest parties 222 B shares
Panu Jousimies
M.Sc. (Econ.), born 1969
- Head of Capital Markets
- Joined Evli Bank Plc in 1997
- Shareholding: 179 072 A shares and 44 868 B shares, holdings of interest parties 400 B shares
Lea Keinänen
Certificate in Business Studies, MBA, born 1966
- Deputy to the CEO
- Head of Wealth Management, Funds
- Joined Evli Bank Plc in 1998
- Shareholding: 138 848 A shares and 34 712 B shares
EVLI BANK PLC
ANNUAL REPORT 2015
MANAGEMENT GROUP
Juho Mikola
M.Sc. (Econ.), born 1981
- Chief Financial Officer
- Joined Evli Bank Plc in 2004
- Shareholding: 68 000 A shares and 17 219 B shares
Esa Pensala
M.Sc. (Tech.), born 1974
- Head of Wealth Management Advisory
- Joined Evli Bank Plc in 2001
- Shareholding: 142 000 A shares and 35 500 B shares
Mikael Thunved
B.Sc. (Econ.), born 1965
- Managing Director, Corporate Finance
- Joined Evli Bank Plc in 2002
- Shareholding: 522 B shares, holdings of interest parties 224 000 A shares and 56 000 B shares
Shareholdings on February 15, 2016
EVLI
Evli Bank Plc
Aleksanterinkatu 19 A
P.O. Box 1081
FI-00101 Helsinki, Finland
Tel. +358 (0)9 476 690
Fax +358 (0)9 661 387
www.evli.com