Board of directors` report and financial statements

Transcription

Vuosikertomus
Board of Directors’ Report
and Financial Statements
02
15
16
17
Board of
Directors’ Report
Luottokunta Group
Balance Sheet
Luottokunta Group
Income Statement
Luottokunta
Group Cash Flow
Statement
18
20
21
22
Luottokunta
Balance Sheet
Luottokunta
Income Statement
Luottokunta Cash
Flow Statement
Notes to
accounting principles
57
57
58
59
Auditors’ Report
Statement of the
Executive Board
Key Figures
Administrative
Bodies
BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2011
Board of Directors’ Report
Business Environment
Strong growth in card payments continued.
In Finland, the rate of payment card use as a
payment method is three times the EU average.
SEPA compliant general-purpose debit cards
have replaced national debit cards in Finland.
In 2011, purchase transactions’ share of all card
transactions rose to 87 per cent and the share
of cash withdrawals was 13 per cent.
The SEPA migration will boost demand for
trans-national payment services. Growing internationalisation among customers and companies providing card services is placing greater
demands on the efficiency and range of card
payment solutions. Rapid technological progress is bringing new payment channels and
players to the markets. This trend emphasises
the benefits provided by economies of scale.
The market transformation offers new opportunities to Luottokunta for growing globally
with its customers. New service solutions and
cooperation structures allow Luottokunta to
diversify its service selection and improve its
cost-efficiency. Luottokunta has seized the
opportunities offered by market change. It has
decided to revise its company structure by
placing business operations in the limited
liability company fully owned by the Luottokunta Co-operative. The objective is to generate shareholder value, while offering customers
services that are always up to date, efficient
and competitive.
Luottokunta Group 2011
Luottokunta group operating surplus for the
financial year 2011 was EUR 12.4 million. The
total surplus for the period was EUR 9.3 million.
At period end, Luottokunta’s capital adequacy
ratio stood at a solid 29.9% per cent.
Total sales generated by card services offered by
Luottokunta grew by 33%, to EUR 37.9 billion.
Luottokunta processed 1.6 billion card payment
transactions and authorisations, representing an
increase of 39% over the previous year.
The chip card management service provided by
Luottokunta was adopted in Finland, Sweden
and Norway. Since 2011, Luottokunta has been
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LUOTTOKUNTA 2011
offering acquiring services to banks as well as
merchants. At the year end, Luottokunta introduced the luncheon prepaid card to complement
the traditional Lounasseteli luncheon voucher.
Services for Banks
Luottokunta provides banks with a wide range
of card-issuing services, as well as administrative and processing services for card schemes.
Luottokunta’s bank services currently cover
over 13 million payment and credit cards, of
which around 1.6 million are Visa cards issued
jointly by Luottokunta and the banks.
Chip card data management and security calculation services were adopted for Nordea’s payment cards in Finland, as well as in Sweden and
Norway. In 2012, the service will be extended
to Denmark, bringing the total number of cards
included to more than 7 million.
After the completion of the authentication stage
of the new issuing card system, preparations
for customer-specific introduction were initiated with the objective of reaching the first
production stage in autumn 2012. The new
card system will allow Luottokunta to provide
even more flexible and comprehensive services
to its customers.
Merchant Services
Luottokunta offers routing and settlement services to those accepting card payments, as well
as payment terminal solutions and services
related to distance and self-service sales. At
the year end, the network of card payment
locations comprised over 100,000 points of
sale accepting Visa and MasterCard cards, as
well as some 2,000 distance selling locations.
Strong growth in Merchant Services continued in 2011. The volume of Merchant Services
grew by 39% to EUR 31.9 billion. The shift from
national bank cards to Visa and MasterCard
debit cards contributed to this strong growth.
The number of payment transactions received
by the acquiring service grew by 36% during the
accounting year, to 949.9 million transactions.
During the year, Luottokunta processed 569.9
million authorisation transactions, showing a
year-on-year increase of 53.4%. According to
preliminary information, Luottokunta was the
second-biggest Visa and MasterCard payment
transaction acquirer in the Nordic countries
and the seventh-biggest in Europe in 2011.
Luottokunta revised its merchant pricing in
February 2011. The objective of this revision
was to make card payment a cost-efficient
method for all parties involved. It was also
aimed at encouraging merchants to adopt a
secure payment environment.
Good progress was made with the switchover
to chip card payment in Finland in 2011; at
the year-end, more than 95% of all merchants
used a chip terminal to accept card payments.
Since late 2011, Luottokunta has also offered
banks the so-called co-acquiring service, i.e.
card payment acquiring and processing services. Based on this service model, the bank
agrees with the merchant on the terms and
conditions of the service, and Luottokunta offers
its superior competence, backed up by years of
experience, in card payment settlement services.
Merchants appreciate the high availability of
services, flexibility, and cost efficiency, which
translates into low prices.
Corporate Services
Luottokunta offers companies and the public
administration sector Business Eurocard payment solutions and prepaid products.
Business Eurocard sales increased by 8% to EUR
616.6 million. Similarly, sales of Lounasseteli
luncheon vouchers and Virikeseteli recreational
vouchers were strong, showing 8% growth to
23.7 million vouchers and to EUR 190.1 million.
In autumn 2011, Luottokunta introduced the
corporate card service provider business model.
An account-linked Lunch Card was launched
on the markets, to supplement the traditional
Lounasseteli luncheon voucher. In addition to
an EMV chip, the Lunch Card features a Visa
standard-based contactless payment feature.
The Lunch Card makes financial administration in companies and organisations easier,
simplifies payment processes in restaurants,
and offers added convenience to consumers.
Group Profit Performance and
Financial Position
Profit Performance
Luottokunta Group operating surplus came to
EUR 12.4 million (9.5)1) and the surplus for the
period was EUR 9.3 million (7.1).
Depreciation, amortisation and impairment of
Group goodwill and tangible and intangible
assets totalled EUR 11.9 million (9.8). Of this,
amortisation of Group goodwill accounted for
EUR 1.1 million (1.3). Depreciation, amortisation and impairment on tangible and intangible
assets totalled EUR 10.7 million (8.5).
Liabilities
Liabilities to credit institutions totalled EUR
21.4 million (30.1), while liabilities to public
and public-sector entities increased by 24.1%
to EUR 400.4 million (322.7), due to the growth
in the volume of received payment transactions.
Other operating expenses came to EUR 21.3
million (15.1).
Other liabilities totalled EUR 8.9 million (5.2),
with statutory provisions in other liabilities accounting for EUR 0.3 million (0.3) of this figure.
Impairment losses on credits
and other receivables
Equity capital
Income
Net income from operations was EUR 107.6 million, which is 15.2% higher than in the previous
year (93.4). Interest income was EUR 8.4 million
(5.3) and interest expenses EUR 1.0 million (1.4).
An increase in interest-bearing receivables
from customers boosted the growth of interest income. Income from equity investments
totalled EUR 0.1 million (0.1).
Commission income amounted to EUR 186.8
million (163.6). This increase was due to the
strong growth in the volume of received payment transactions. The main commission income items were merchant commissions (EUR
125.1million), annual card administration fees
(27.0 million) from the banks and cardholders’
usage charges (12.5 million).
Commission expenses totalled EUR 92.7 million (78.4). This increase was also brought on
by the strong growth in payment transaction
volumes. The main commission expense items
were interchange fees paid to card issuers (EUR
75.6 million) and fees paid to international card
companies (7.6 million).
Impairment losses on credits and other receivables decreased to EUR 1.2 million (5.1).
Gross impairment losses on credit equalled
EUR 5.1 million (7.4 million). Credit loss reversals totalled EUR 4.2 million (2.8). This includes
non-recurring income of EUR 1.1 million from
the sale of receivables undergoing debt collection. Losses from card misuse amounted
to EUR 0.3 million (0.5).
Unused credit and spending limits granted
to customers, under off-balance-sheet commitments, decreased to EUR 926.4million
(1,161.2).
The balance sheet total rose by 15.4 % to EUR
634.6 million (549.7) through growing business volumes.
Assets
Claims on credit institutions grew to EUR 113.1
million (76.9) as the number of payment transactions received grew. Debt securities totalled
EUR 149.0 million (149.8).
Claims on the public and public-sector entities
increased by 10.3% to EUR 291.0 million (263.7).
At year-end, non-performing receivables totalled
EUR 3.4 million (4.2).
Expenses
Capital expenditure totalled EUR 22.0 million
(11.6), mainly involving the overhaul of the
issuing card system and business model development for card payment settlement services. At year end, the balance sheet value of
intangible and tangible assets amounted to
EUR 39.2million (30.3).
Administrative expenses totalled EUR 60.9 million (53.9), of which personnel costs accounted
for EUR 28.7 million (27.9) and other administrative expenses for EUR 32.2 million (26.0).
Off-Balance-Sheet Items
Balance Sheet and Financing
Other operating income totalled EUR 6.0 million
(4.3), and included an EUR 1.0 million income
recognition for overdue vouchers.
Administrative expenses, depreciation and
other operating expenses totalled EUR 94.0
million (78.8). This increase in expenses resulted
from planned investments in the development
of operations.
The year-end Luottokunta Group equity capital
came to EUR 181.9 million (167.9), co-operative
capital accounting for EUR 7.2 million (7.5)
of this.
Comparative figures for 2010 are in parentheses. January–December figures were used as comparatives for the
Income Statement and similar accumulated figures. For balance sheet and other cross-sectional data, the figures of
the previous balance sheet date (31 Dec. 2010) were used as comparatives.
1)
LUOTTOKUNTA 2011
3
LUOTTOKUNTA GROUP BALANCE SHEET AND INCOME STATEMENT – SUMMARY
BALANCE SHEET (EUR million)
2011
2010
2009
Claims on credit institutions
113.1
76.9
233.7
Claims on the public and on public-sector entities
291.0
263.7
378.0
Debt securities
149.0
149.8
Shares and participations
18.8
12.4
Intangible and tangible assets
39.2
30.3
29.8
Other items
23.5
16.6
22.0
634.6
549.7
677.7
Assets
Total
14.3
Equity and Liabilities
Liabilities to credit institutions
21.4
30.1
31.6
400.4
322.7
455.8
23.0
23.0
17.8
7.9
5.9
10.0
181.9
167.9
162.5
634.6
549.7
677.7
INCOME STATEMENT (EUR million)
2011
2010
2009
Commission income
186.8
163.6
153.6
Liabilities to the public and public-sector entities
Other liabilities
Deferred tax liabilities
Equity capital
Total
Net income from operations
107.6
93.4
88.4
Personnel costs
-28.7
-27.9
-25.4
Other administrative expenses
-32.2
-26.0
-31.6
Depreciation and impairment on tangible
-11.9
-9.8
-22.4
-21.3
-15.1
-10.9
-1.2
-5.1
-7.6
12.4
9.5
-9.4
Income taxes
-3.0
-2.4
1.7
Surplus for the period
9.3
7.1
-7.7
and intangible assets and goodwill
Other operating expenses
Impairment losses on credits and other receivables
Operating surplus
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LUOTTOKUNTA 2011
LUOTTOKUNTA GROUP KEY FIGURES AND RATIOS
(EUR million)
2011
2010
2009
Net sales
201.3
173.2
163.3
12.4
9.5
-9.4
Operating surplus
Operating surplus, % of net sales
6.1
5.5
-5.8
ROE %
5.3
4.3
-4.7
ROA %
1.6
1.2
-0.9
Equity ratio %
28.7
30.6
24.0
Capital adequacy %
29.9
32.0
26.4
Gross capital expenditure
22.0
11.6
11.6
0.9
0.8
1.0
Income/Expense ratio
FORMULAS FOR KEY FIGURES AND RATIOS
Net sales
Sum total of interest income, income from equity investments, commissions,
net income from available-for-sale financial assets and other operating income
Operating surplus
Operating surplus shown in the Income Statement
ROE %
Operating surplus - Income taxes
Equity capital + Accrued appropriations less deferred tax liability
x 100
(average of opening and closing Balance Sheet)
ROA %
Operating surplus - Income taxes
Average Balance Sheet total (average of opening and closing Balance Sheet)
Equity ratio %
Equity capital + Accrued appropriations less deferred tax liability
Balance Sheet total
Capital adequacy %
Total capital base
Total minimum capital requirement
Gross capital expenditure
Capitalised gross capital expenditure for the period
Income/Expense ratio
Administrative expenses + Depreciation + Other operating expenses
x 100
x 100
x 8%
LUOTTOKUNTA 2011
5
Risk Management and
Capital Adequacy
Risk-Bearing Capacity and
Capital Adequacy Management
Luottokunta Group Capital Base
and Capital Adequacy Ratio
The purpose of risk management is to systematically manage threats and opportunities which might affect Luottokunta’s
achievement of its business goals. Risk
management helps Luottokunta to meet its
business goals and ensure the continuity
of its business operations, by ensuring that
operational risks are within its risk-bearing
capacity.
Luottokunta’s risk-bearing capacity is determined by the size and quality of its capital base,
and its profitability level. Risk-bearing capacity
also depends on qualitative factors such as the
reliability and functionality of its administration,
internal audit, risk management and capital
adequacy management. The capital adequacy
management process is based on the identification, measurement and evaluation of risks, as
well as a capital adequacy assessment based
on these. The management process is used to
determine the desired level of capital adequacy
and the required quality and quantity of capital.
Luottokunta Group’s capital adequacy is calculated following the same principles as the
Luottokunta Group Financial Statements. At
the end of 2011, the Luottokunta Group’s capital
adequacy ratio was 29.88% (32.01). The capital
adequacy ratio of Tier 1 capital was 28.29%
(31.32).
Capital adequacy management is a continuous process, closely linked to Luottokunta’s
risk management system and internal control. Capital adequacy assessment comprises identifying, measuring and evaluating
risks. Assessment of capital adequacy and
capital requirements form an important part
of Luottokunta’s yearly business planning
and target-setting processes.
Risk Management Organisation
Luottokunta’s Board of Directors is in charge
of organising and maintaining internal control and risk management, and it confirms the
general principles for internal control and risk
management on an annual basis. Furthermore,
the Board annually approves Luottokunta’s
strategy, business and capital management
plans and risk-bearing capacity, as well as the
plan for maintaining a capital adequacy position proportioned to said risk-bearing capacity.
The Board of Directors appoints a Risk Management Steering Group, which is responsible
for developing and maintaining procedures
compliant with the risk management principles adopted by the Board of Directors, as well
as reporting risks to the Board. This Steering
Group is tasked with maintaining Luottokunta’s
risk management principles, supervising the
company’s risks and ensuring the viability and
practical implementation of its risk management activities.
The Steering Group appoints the necessary
task forces, whose roles and responsibilities
are specified in Luottokunta’s Risk Management System.
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LUOTTOKUNTA 2011
Risk-based capital requirement evaluations
are based on Luottokunta’s risk management
system, which allows the company to systematically and comprehensively identify risks
arising from, and fundamentally linked to, its
operations, and to assess their causes, scope
and consequences. The most significant risks
associated with Luottokunta’s operations in
terms of capital adequacy are credit, operational,
market, financing and strategic risks.
The evaluation results in a capital plan, which
specifies the targeted capital adequacy level
and the objectives for capital quantity and quality for the following three years. The Board of
Directors approves the capital plan as part of
annual planning.
Luottokunta publishes its capital adequacy
data at least once a year, in the annual report.
With regard to credit risk, the minimum capital
requirements of Pillar 1 are calculated using
the standardised approach, and with regard to
operational risk using the basic indicator approach. Since Luottokunta bears no commercial
stock, exchange rate or asset risk, no account
is taken of the capital requirement for market
risk in accordance with Pillar 1.
The Group’s capital base was EUR 148.9 million
(144.3), of which Tier 1 capital accounted for
EUR 141.0 million (141.1). The surplus for the
financial year is included in the capital base for
capital adequacy calculations. Risk-weighted
receivables from credit and counterparty risk
rose by 10.4% to EUR 317.5 million (287.6).
Total risk-weighted items came to EUR 498.4
million (450.6).
Group Capital Adequacy – Summary (EUR million)
Tier 1 capital
Tier 2 capital
Total capital base
Risk-weighted credit and counterparty risk
Risk-weighted operational risk*
31.12.2011
31.12.2010
141.0
141.1
7.9
3.1
148.9
144.3
317.5
287.6
180.9
163.1
Total risk-weighted items
498.4
450.6
Capital adequacy ratio %
29.88
32.01
Tier 1 capital adequacy ratio %
28.29
31.32
Minimum capital requirement
39.9
36.1
Capital buffer (regulatory capital ratio – minimum capital requirment)
109.0
108.2
31.12.2011
31.12.2010
7.2
7.5
* Capital requirement 15% calculated on the basis of the three previous years’
average gross income multiplied by risk-weighting factor 12.5 (= 1 / 0.08).
Total Capital Base (EUR million)
Tier 1 capital
Equity capital
Co-operative capital
Total funds
Retained surplus
64.5
57.4
Reserve fund
46.5
46.5
Contingency reserve
46.4
46.4
9.3
7.1
-29.0
-16.3
-4.0
-7.3
141.0
141.1
Deductions from Tier 1 capital
Intangible assets
Consolidated goodwill
Total Tier 1 capital
Tier 2 capital
Superior Tier 2 capital
Fair value reserve
Other capital
Total capital base
7.9
3.1
7.9
3.1
0.0
0.0
148.9
144.3
LUOTTOKUNTA 2011
7
Minimum Capital Base Requirement
(EUR million)
Risk-weighted receivables
Minimum capital base requirement
31.12.2011
31.12.2010
31.12.2011
31.12.2010
0.0
0.0
0.0
0.0
Capital adequacy requirement for credit and
counterparty risk
Credit risk standardised approach liability groups
Claims on governments and central banks
52.5
45.4
4.2
3.6
Claims on companies
61.6
62.4
4.9
5.0
164.3
149.7
13.1
12.0
3.5
4.3
0.3
0.3
35.6
25.9
2.8
2.1
317.5
287.6
25.4
23.0
0.0
0.0
0.0
0.0
180.9
163.1
14.5
13.0
498.4
450.6
39.9
36.1
Capital adequacy ratio %
29.88
32.01
Tier 1 capital adequacy ratio %
28.29
31.32
Retail receivables
Overdue receivables
Other items
Total credit risk standardised approach
Off-balance-sheet commitments
Capital adequacy requirement for operational risk
Basic indicator approach
Total capital adequacy requirement
Capital Adequacy Formulas
Capital adequacy ratio:
Total capital base
x8%
Tier 1 capital adequacy ratio:
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LUOTTOKUNTA 2011
x8%
Credit Risk
The purpose of credit risk management is
to ensure that credit risks’ negative effects
on profit are kept at an acceptable level.
This process is guided by the limits set by
the Management Team and acceptance
authorisations and operating guidelines approved by the CEO. Application and credit
granting processes play a key role in credit
risk management.
Luottokunta grants unsecured credit, mainly
to individual and corporate cardholders. The
company has no client or merchant specific
risk concentrations that would prove significant in regard to the scope of its business, because credit risk is spread on the
basis of its large number of customers and
client-specific liability. Client-specific credit
risks are restricted by setting specific credit
limits for each account.
In order to control merchant- or sector-specific risk clusters, Luottokunta also monitors
credit risk in relation to merchants accepting
card payments in lines of business where
customers pay advance fees for products
or services delivered only after payment.
Credit risk management is based on prudent
processing of applications, credit granting processes and customer relationship
management. Credit-granting decisions are
made within the framework of unit-specific
credit-granting and approval authorisations
defined by the CEO.
Using deviating data, Luottokunta monitors the status of customer credit balances
daily. The objective of such monitoring is to
identify at-risk customers whose solvency
has declined. The necessary risk management measures are determined on the basis
of an assessment of the credit and credit
rating of at-risk customers. Assessment of
credit risk arising from merchant customers
begins with an assessment of the merchant
customer’s line of business and the nature
of its business, the number of customer
complaints, and changes in the merchant’s
settlements.
and unused credit and spending limits. The
management receives credit risk reports on
a monthly basis.
The basis for calculating credit risk capital requirements is the minimum capital
requirement in accordance with Pillar 1,
which is calculated using the standardised approach. The capital requirement for
counterparty risk is calculated using the
historical cost method. The credit portfolio is
properly diversified and simple in structure,
with liabilities unlinked to one another. Because Luottokunta does not use credit risk
reduction techniques, and its credit portfolio
does not contain securitised items, there is
no need to correspondingly supplement Pillar 1 calculations when calculating capital
adequacy. For credit risk, Pillar 1 calculations are supplemented with an assessment
of changes in capital requirement when
receivables grow materially.
The credit risk indicator is derived from
non-performing receivables’ and impairment
losses’ proportion of total liabilities and of
the total credit portfolio. Total liabilities
refer to the sum total of the credit portfolio
CREDIT RISK INDICATORS – LUOTTOKUNTA GROUP
31.12.2011
Non-performing loans (EUR million)
31.12.2010
3.4
4.2
% of total liabilities
0.28
0.29
% of credit portfolio
1.23
1.64
Net impairment loss on credits (EUR million)
1.9
4.6
% of total liabilities
0.15
0.15
% of credit portfolio
0.75
1.23
LUOTTOKUNTA 2011
9
GENERAL CREDIT RISK INFORMATION
Total Liabilities
during the year
average
31.12.2011
of which
domestic
12.5
18.6
18.6
244.7
262.6
262.6
Claims on companies
616.7
557.1
540.7
Retail receivables
698.4
650.1
650.1
(EUR million)
foreign
impaired
Credit Risk Liabilities by Group
Overdue receivables
Other items
Total
16.4
3.9
3.5
3.5
30.7
35.6
16.7
18.8
3.5
1 606.9
1 527.4
1 492.2
35.2
3.5
Less than 3 months
3-12 months
1-5 years
5-10 years
Over 10 years
0.0
0.0
0.0
Liability Exercise Period
(EUR million)
Credit Risk Liabilities by Group
213.0
Claims on companies
557.1
Retail receivables
650.1
Overdue receivables
Other items
Total
Operational Risk
Operational risk refers to the risk of loss, or
otherwise being unable to meet business
goals due to inadequate or ineffective internal processes, poor staff performance,
inappropriate systems or external factors.
Operational risks materialise, for example, in
the form of expenses, compensation, incorrect information on operations, or business
interruptions. They can also materialise as
loss of reputation.
Operational risk management is based, for
example, on maintaining and developing
processes, staff competences and regular
reporting. It requires that operational risks
associated with Luottokunta’s products,
services, processes and IT systems, as well
10
18.6
LUOTTOKUNTA 2011
49.6
3.5
35.6
1 477.8
49.6
as any major changes in them, are constantly
monitored, identified and assessed in line
with its risk management processes. On
the basis of risk assessments, Luottokunta
decides on the measures required by said
risks, controlling the practical implementation and efficiency of these measures.
Once a risk has been identified, Luottokunta
assesses its probability and the seriousness
of any threat it may pose to attaining business goals. Operational risks detected but
not materialised, as well as realised risks, are
reported in accordance with the procedure
designed for observed and realised risks. The
objective of the reporting is to support risk
control and to further develop Luottokunta’s
operations. Realised operational risks and
near miss situations are documented.
The minimum capital requirement specified in Pillar 1 is used as a basis for evaluating operational risk capital requirements.
It is calculated using the basic indicator
approach (BIA). If materialised, almost all
operational risks would have an impact on
Luottokunta’s net income from operations,
which is used for calculating the BIA income
indicator (sum of the previous three years’
net income from operations / 3 * 15%). With
regard to identified operational risks, Luottokunta regards the capital requirement
according to Pillar 1 as covering all actual
risks. Pillar 1 calculations are supplemented
with scenario calculations.
Management of Market Risk for
Shareholdings
Since Luottokunta bears no commercial
stock, exchange rate or asset risk, no account is taken of the capital requirement
for market risk in accordance with Pillar 1.
However, Luottokunta bears some market
risk related to shareholdings, because it
owns shares classed as available-for-sale
financial assets set at market value. Changes
in market value are recorded in the Balance
Sheet’s fair value reserve, which is classified as Tier 2 capital. Valuation of these
shares poses a market risk when market
prices change.
Interest Rate Risk
Luottokunta bears a structural interest rate
risk originating from the financing of operations. Interest rate risk is measured by
the effect of interest-rate changes on net
financial income and the present value of
funds linked to interest rates.
Gap analysis is used to calculate interest rate
risk associated with net financial income.
On this basis, receivables and liabilities are
classed according to maturity, depending
on their revaluation dates. This evaluation
method is static, i.e. the basic assumption
is an unchanged financial position. Based
on the net financial position indicated by
Equity Not Held for Trading
(EUR million)
the gap analysis, the average effect is calculated of a 50–200 point change in interest
rates on 12-month net financial income.
Similarly, the change in the present value of
funds linked to interest rates is monitored
through a 50–200 point change in interest
rates. Luottokunta has set limits for its interest rate risks, confirmed by the Board of
Directors as part of the market risk strategy.
The management receives risk reports on
a monthly basis.
31.12.2011
31.12.2010
Book value
18.8
12.4
Fair value
18.8
12.4
Sales Profit during the period
0.0
0.0
Total Profit in Balance Sheet
7.9
3.1
– of which included in Tier 2 capital
7.9
3.1
31.12.2011
31.12.2010
-2.3
-2.5
0.4
0.1
Other investments
Interest Rate Risk (EUR million)
Effect of a 1 % decrease in interest rates
– on net financial income on annual basis
– on the current value of items tied to interest rates
Effect of a 2% increase in interest rates
– on net financial income on annual basis
– on the current value of items tied to interest rates
4.6
5.0
-0.7
-0.3
LUOTTOKUNTA 2011
11
Liquidity Risk
Due to the short duration of Luottokunta’s
receivables and liabilities, short-term liquidity risk is its most significant financial
risk element. The differences in the maturities of short-term receivables and liabilities
constitute liquidity risk. The purpose of
liquidity risk management is to ensure the
Luottokunta can manage its daily cash flows
without any negative effects on the company’s operations or its financial standing.
Liquidity risk is measured by forecasting future cash flows and evaluating their
probability. Cash flow forecasts are used to
monitor daily liquidity. On the basis of the
forecasts, the company seeks to optimise the
amount of liquid assets. To monitor liquidity
risk, a gap analysis is used in which receivables and liabilities are classified according
to maturity, depending on their due dates.
Such an analysis is used to keep track of
any imbalances in cash flows and to assess
the probability of a funding shortage and
the associated costs. Any off-balance-sheet
commitments are also taken into account
in the analysis.
In stress testing of liquidity risk, various
scenarios are used to depict key threats
to liquidity. These threats have to do with
Luottokunta’s operations, changes in the
markets, and combinations of the two. To
prepare for a sudden and unexpected decline in liquidity, a liquidity reserve based
on the results of stress tests is maintained.
This reserve consists of cash and cash equivalents included in investment assets, which
are invested so as to permit quick access
to the reserve if liquidity starts to decline.
Limits approved by the Board of Directors
as part of the liquidity strategy have been
set for the liquidity risk and the size and
composition of the liquidity reserve. The
management receives liquidity risk reports
on a monthly basis. Longer-term structural
financial risk and the costs of refinancing
are regularly monitored as part of business
planning.
Strategic Risks
At Luottokunta, strategic risk is defined as
a general business risk associated with the
company’s operational prerequisites, such as
the business environment, market structures
and stakeholders. Management of strategic
risks is based on monitoring changes in operating conditions and revising the business
plan accordingly. The capital requirement
for strategic risks is assessed as part of the
annual strategy and operational planning.
Other Risks
Since risks other than those mentioned
above have very little significance in terms
of Luottokunta’s capital adequacy, no capital
requirement is calculated for them. Such
risks include fraud risk, implying the misuse
of card data with criminal intent.
Events after the Balance Sheet Date
No events have occurred after the balance sheet date that would have an impact on the Financial Statements.
Prospects for 2012
Transfer of business operations to the
limited liability company included in the
Luottokunta Group is expected to take
place during spring 2012. The name of this
company will be Luottokunta Oy, and the
name of the co-operative will be Suomen
Luotto-osuuskunta. Luottokunta Oy will be
responsible for all business operations, i.e.
issuing, acquiring, payment terminal and
voucher operations, as well as for ICT and
12
LUOTTOKUNTA 2011
administration. Suomen Luotto-osuuskunta
is the sole owner of Luottokunta Oy. It will
provide some administrative services to
the parent company and the subsidiary,
and will be responsible for activities related
to the ownership of real estate and some
other assets.
Luottokunta is exploring alternative ways of
renewing the company’s ownership structure. The objective is to build a stronger
platform for future business growth and to
offer customers efficient and competitive
cutting-edge services.
Profit performance is expected to be weaker
than a year earlier, due to investments made
in the introduction of the new issuing card
system and the development of business
models for card payment settlement services, and in PCI requirement-compliant
data security.
Luottokunta Parent Company
Merger of Subsidiary
Screenway Oy, Luottokunta’s wholly-owned
subsidiary, was merged with the parent cooperative on 31 May 2011.
Corporate Governance
General Meeting of the Co-operative
General Meetings of the Co-operative constitute
Luottokunta’s highest decision-making body.
These meetings decide on issues in accordance
with the co-operative’s rules and regulations, including the adoption of the financial statements
and the distribution of any surplus. General Meetings of the co-operative are summoned by the
Executive Board. The General Meeting exercises
its authority to amend the Co-operative’s bylaws
and elect Executive Board members and auditors.
Executive Board
The Executive Board supervises Luottokunta’s
administration, which is the responsibility of the
Board of Directors and the CEO, and ensures that
the co-operative’s mission is optimally implemented. The Executive Board elects the members of the Board of Directors, and provides the
Annual General Meeting with a statement on
the financial statements.
Luottokunta’s Executive Board consists of a
minimum of 16 and a maximum of 23 members, elected by the Annual General Meeting
of the co-operative for a three-year term of office. If possible, four to eight Members of the
Executive Board should represent the banks,
and 12 to 15 should represent other members
of the co-operative. The Executive Board elects
a Chairman and Vice Chairman for one year at a
time. The General Meeting decides on Executive
Board emoluments.
Board of Directors
The Board acts as Luottokunta’s representative
and manages the company’s operations by attending to its administration and the proper
organisation of its activities. It also elects the
CEO and the deputy CEO, and determines their
remuneration, and the division of duties between
the CEO and the Board of Directors.
The Board of Directors consists of a minimum
of eight and a maximum of 13 members, half of
whom (if possible) are representatives of mem-
ber banks and half representatives of other
members, so that the banks and other member
organisations have equal representation. The
CEO of Luottokunta may be a member of the
Board of Directors. Members of the Board of
Directors are elected for three years at a time,
and the Board of Directors elects a Chairman
and a Vice Chairman from among its own members for one year at a time. The Executive Board
determines Board emoluments.
CEO
The CEO is responsible for the direct management of Luottokunta in accordance with the
instructions and decisions of the Executive
Board and the Board of Directors.
Luottokunta’s Management Team, appointed
by the Board of Directors, assists the CEO in
the company’s day-to-day management. In
addition to its regular weekly meetings, the
Management Team convenes once a month to
consider issues related to development, monitoring and decision making.
Organisation
Luottokunta has two business units: Issuing
and Acquiring. These units are responsible for
profitability, growth and risk management in
their own business area. Both business units
are also responsible for the management of their
own business processes, including customer
relationship management, service life cycle
management, and service production. Both
units run development programmes to support
their business; these include projects, customer
deliveries and minor development operations.
The incentive scheme is based on targets specified in employee appraisal discussions and
on the level of achievement with respect to
these targets. Depending on the remuneration
group, targets may be set for a combination
of the company level, the next organisational
level, and personal level. The Board of Directors determines the general rewarding criteria,
which may be linked to Luottokunta’s financial
results or main operational development goals.
Luottokunta’s management is included in the
long-term incentive scheme approved by the
Board of Directors. The key objective of the
incentive scheme is to encourage the management to pursue strategic objectives and
to increase their commitment. The scheme
consists of one three-year earning period 2011
– 2013. Any payments under the scheme will
be made over the four years following the close
of the earning period. Payment is conditional
to certain terms and conditions regarding the
validity of employment.
Luottokunta’s remuneration and rewarding
system meets the requirements of good corporate governance, the decree of the Ministry
of Finance regarding rewarding systems in
credit institutions and in investment service
companies, and complies with other regulations in effect.
In addition, Luottokunta has three support units:
ICT,Administration and Corporate Development
and Risk Management as a separate function.
All three support units run their own processes
and development programmes.
Luottokunta’s Board of Directors approves the
Luottokunta rewarding policy, which specifies
the key principles to be applied to employee
rewarding in general. The remuneration and
rewarding system is consistent with the company’s business strategy, objectives and values,
and is designed to ensure the company’s longterm interests. The remuneration and rewarding
system promotes good and efficient risk management, and does not encourage risk-taking
that would exceed a risk level specified on the
basis of the company’s risk-bearing capacity,
or an otherwise sustainable risk level.
Remuneration and Rewarding System
Audit and Control
Luottokunta’s defined remuneration system,
with an incentive system linked to approved,
specified targets is applied to all personnel.
The key objective of the incentive system is
to support the deployment of Luottokunta’s
strategy and fulfilment of objectives, to promote
compliance with Luottokunta’s values, culture
and core competence, and to reward personnel for fulfilment of challenging targets and for
excellent performance. The incentive scheme
is drawn up for one year at a time.
Luottokunta appoints one auditor, which must
be an accounting firm approved by the Central
Chamber of Commerce. The Board of Directors decides on internal audit tasks and the
general principles applied to audit planning
and the reporting of audit observations. The
Board annually approves the internal audit
plan and reviews the Annual Report. Internal
Audit is outsourced.
LUOTTOKUNTA 2011
13
Human Resources
At the year end, Luottokunta employed a
full-time equivalent staff of 465 (424). The
number of employees averaged 451 (443)
during the year, of whom 384 (363) worked
on a permanent, full-time basis. Permanent
part-time employees equalled 28 (26) fulltime staff. Temporary employees equalled 39
(52) full-time staff. At the end of the review
period, 34 (36) employees were on statutory
leave of absence.
Members
At the end of 2011, the number of members
totalled 20 967 (23 072).
Administrative Decisions
General Meeting of the Co-operative
The co-operative’s Annual General Meeting
(AGM) of 26 April 2011 adopted the Financial
Statements for 2010, discharged those accountable from liability, and decided not to pay out
interest on the co-operative capital. The number
of Executive Board members was confirmed
as 19. The AGM elected KPMG Oy Ab, Firm
of Authorised Public Accountants, as Luottokunta’s auditors, with Raija-Leena Hankonen,
Authorised Public Accountant, as the chief
auditor.
The AGM re-elected the outgoing members
Ilkka Hallavo, Matti Halmesmäki, Kuisma Niemelä
and Heikki Suutala, and elected Jussi Laitinen
to serve out the remaining term of Pasi Kämäri,
who resigned at his own request.
At the extraordinary meeting of the co-operative
held on 14 November 2011, a decision was
made, as proposed by the Executive Board, to
transfer Luottokunta’s business to a subsidiary
fully owned by Luottokunta. The subsidiary’s
company name will be changed to Luottokunta
Oy. A decision was also made at the meeting, as
proposed by the Executive Board, to amend the
bylaws of the co-operative, and for Luottokunta
to voluntarily surrender its credit institution
licence in connection with the business transfer. Decisions concerning amendments to the
bylaws and the credit institution licence will
not enter into force until the implementation
of the business transfer has been registered.
Number of Personnel
Average number of personnel
2011
2010
2009
451
443
436
BOARD PROPOSAL FOR PROFIT DISTRIBUTION
Luottokunta Equity Capital at 31 Dec. 2011
171 739 271.32
– of which non-distributable
Reserve fund
Fair value reserve
Contingency reserve
7 232 200.00
46 503 961.67
7 943 963.07
46 400 000.00
Total
108 080 124.74
Luottokunta distributable surplus
63 659 146.58
The total retained surplus available for the co-operative’s Annual General Meeting amounted to
EUR 63,659,146.58. The Board of Directors proposes that the surplus for 2011 be retained on the
surplus account.
14
LUOTTOKUNTA 2011
Executive Board and Board of Directors
At its meeting on 4 May 2011, the Executive
Board elected Kuisma Niemelä as its Chairman
and Hannu Penttilä as its Vice Chairman. The
Executive Board meeting confirmed the number
of members of the Board of Directors at nine,
re-elected the outgoing members Jari Annala
and Pekka Nuuttila as Board members, and
elected Kasperi Saari to replace the outgoing
member Ralf Sandström.
In its meeting on 5 October 2011, the Executive
Board decided to call an Extraordinary General
Meeting of the co-operative on 14 November
2011 to discuss the transfer of Luottokunta’s
business to a subsidiary, an amendment to
Luottokunta’s rules, and the surrender of a
credit institution licence. The latter two proposals require the registration of the business
surrender before they can be implemented.
The Executive Board approved the Board of
Directors proposal not to accept new members
to the co-operative, except in accordance with
succession.
The Supervisory Board held four meetings during the accounting period.
At its meeting of 17 May 2011, the Board of
Directors elected Pekka Nuuttila as its Chairman and Tony Vepsäläinen as its Vice Chairman. The Board of Directors convened 13 times
during the year.
Luottokunta group balance sheet
Notes
www.luottokunta.fi
31.12.2011
31.12.2010
1,14
8 957
6 342
Total claims on credit institutions
1,12,13,14
1 301
111 826
113 126
23 674
53 210
76 884
Other
2,12,13,14
290 969
263 661
3,12,13,14
4,13,14
149 041
18 841
149 836
12 432
5,7,13
3 975
28 996
32 971
7 340
16 345
23 686
728
5 861
6 588
9 494
(EUR 1 000)
ASSETS
Liquid assets
Repayable on demand
Other
Debt securities
Other
Intangible assets
Other long-term expenditure
Total intangible assets
Tangible assets
Other properties
Other tangible assets
6,7,13
680
5 523
6 203
Accrued income and prepayments
8,13
13 809
Deferred tax assets
9,13
689
778
634 607
549 700
Total tangible assets
ASSETS
EQUITY AND LIABILITIES
LIABILITIES
Credit institutions
Other
12,13,14
21 388
30 148
Other liabilities
Other
12,13,14
400 416
322 709
10,13
8 557
311
8 868
4 901
301
5 202
11,13
14 130
17 788
9
7 923
5 903
452 725
381 750
7 232
7 458
46 504
46 504
7 944
54 448
3 136
49 639
46 400
64 469
46 400
57 391
Other liabilities
Other liabilities
Statutory provisions
Total other liabilities
Accrued expenses and deferred income
TOTAL LIABILITIES
EQUITY CAPITAL
Other restricted reserves
Reserve fund
Fair value reserve
Fair value reserve
Total other restricted reserves
Non-restricted reserves
Other reserves
Retained surplus
TOTAL EQUITY CAPITAL
15
OFF-BALANCE-SHEET COMMITMENTS
Unused spending limits/credit lines granted to customers
26
9 333
7 062
181 882
167 950
634 607
549 700
926 446
1 161 244
LUOTTOKUNTA 2011
15
LUOTTOKUNTA GROUP INCOME STATEMENT
Notes
www.luottokunta.fi
1.1. - 31.12.2011
1.1. - 31.12.2010
Interest income
16
8 439
5 280
Interest expenses
16
-1 001
-1 397
Income from equity investments
17
76
66
Commission income
18
186 756
163 597
Commission expenses
18
-92 701
-78 390
Other operating income
19
6 037
4 293
107 606
93 448
-23 238
-22 438
Pension costs
-4 374
-4 048
Other social expenses
-1 061
-1 457
(EUR 1 000)
NET INCOME FROM OPERATIONS
Administrative expenses
Wages, salaries and fees
-5 435
-5 505
Total personnel costs
Total social expenses
-28 673
-27 943
-32 222
-26 000
-60 895
-53 943
-1 141
-1 348
-10 718
-8 480
Total administrative expenses
Depreciation and impairments
21
On consolidated goodwill
On tangible and intangible assets
Total depreciation and impairments
21
-11 860
-9 829
20
-21 292
-15 069
-94 047
-78 840
-1 209
-5 131
12 351
9 477
-2 583
-4 370
-435
1 955
Total income tax
-3 018
-2 416
OPERATING SURPLUS AFTER TAX
9 333
7 062
SURPLUS FOR THE PERIOD
9 333
7 062
TOTAL EXPENSES
OPERATING SURPLUS
22
Income taxes
Current tax and tax for previous periods
Change in deferred tax
16
LUOTTOKUNTA 2011
LUOTTOKUNTA GROUP CASH FLOW STATEMENT
(EUR 1 000)
2011
2010
12 351
9 477
Cash flow from operating activities
Operating surplus before tax
Depreciation according to plan
11 860
9 829
Other non-cash income and expenses
-1 351
-2 531
Financial income and expenses
-7 515
-3 949
Other adjustments
Cash flow before change in working capital
-2 294
13 051
12 825
-89 201
86 865
74 547
-121 523
-14 655
-34 658
Cash flow from operations before financial items and taxes
-1 604
-21 833
Interest paid and other financial expenses
-1 029
-1 414
76
66
Interest received from business operations
7 761
4 572
Income taxes paid
5 511
241
10 715
-18 367
-21 966
-10 193
-21 966
-10 193
-225
-294
257
-4 462
-8 643
-7 143
-8 611
-11 899
Net increase (+) / decrease (-) in cash and cash equivalents
-19 862
-40 459
Cash and cash equivalents at period start
179 852
220 312
Cash and cash equivalents at period end
159 990
179 852
Increase (-) / Decrease (+) in current non-interest-bearing trade receivables
Increase (+) / Decrease (-) in current non-interest-bearing trade payables
Change in working capital
Dividends received from business operations
Cash flow from investing activities
Purchase of tangible and intangible assets
Proceeds from sale of tangible and intangible assets
Investments in subsidiaries’ shares
Other investments
Proceeds from other investments
Net cash used in financing activities
Change in co-operative capital
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Dividends paid and other profit distribution
LUOTTOKUNTA 2011
17
LUOTTOKUNTA BALANCE SHEET
(EUR 1 000)
Notes
www.luottokunta.fi
31.12.2011
31.12.2010
1,14
8 957
6 342
ASSETS
Liquid assets
Repayable on demand
1 048
22 650
153 770
94 507
1,12,13,14
154 817
117 158
2,12,13,14
236 344
215 497
3,12,13,14
149 041
149 836
Other
Other
Debt securities
Other
4,13,14
18 841
12 432
Holdings in Group companies
4,13,14
18 700
22 724
28 996
16 338
28 996
16 338
680
728
Intangible assets
Other long-term expenditure
5,7,13
Tangible assets
Other properties
Other tangible assets
5 523
4 287
6,7,13
6 203
5 015
Accrued income and prepayments
8,13
13 415
7 716
Deferred tax assets
9,13
689
659
636 003
553 716
Total tangible assets
ASSETS
18
LUOTTOKUNTA 2011
(EUR 1 000)
Notes
www.luottokunta.fi
31.12.2011
31.12.2010
12,13,14
21 388
30 148
12,13,14
400 056
322 666
10,13
8 434
4 524
LIABILITIES
Credit institutions
Other
Other liabilities
Other
Other liabilities
Other liabilities
311
301
8 745
4 825
11,13
13 083
16 603
9
2 791
1 102
446 064
375 344
18 200
15 800
7 232
7 458
46 504
46 504
7 944
3 136
54 448
49 639
46 400
46 400
59 076
39 922
4 584
19 154
171 739
162 572
636 003
553 716
431 021
547 209
Accrued expenses and deferred income
TOTAL LIABILITIES
APPROPRIATIONS
Voluntary provisions
EQUITY CAPITAL
Reserve fund
Fair value reserve
Measuring at fair value
Total other restricted reserves
Other reserves
Retained surplus
TOTAL EQUITY CAPITAL
15
OFF-BALANCE-SHEET COMMITMENTS
Unused spending limits/
credit lines granted to customers
26
LUOTTOKUNTA 2011
19
LUOTTOKUNTA INCOME STATEMENT
Notes
www.luottokunta.fi
1.1. - 31.12.2011
1.1. - 31.12.2010
Interest income
16
8 626
5 183
Interest expenses
16
-1 000
-1 397
Income from equity investments
17
76
1 427
Commission income
18
178 849
156 107
Commission expenses
18
-94 746
-80 149
Other operating income
19
11 931
8 196
103 737
89 368
-23 238
-22 348
-4 366
-4 031
(EUR 1 000)
NET INCOME FROM OPERATIONS
Administrative expenses
Wages, salaries and fees
Pension costs
Other social expenses
-1 061
-1 457
-5 427
-5 488
Total personnel costs
-28 666
-27 836
-31 251
-24 757
-59 917
-52 593
-10 314
-7 685
Total social expenses
Total administrative expenses
Depreciation and impairments
21
On tangible and intangible assets
Total depreciation and impairments
21
-10 314
-7 685
20
-23 194
-13 893
-93 425
-74 171
-991
-4 637
OPERATING SURPLUS
9 321
10 560
Appropriations
-2 400
14 325
-2 248
-4 002
-89
-1 729
Total income tax
-2 337
-5 731
OPERATING SURPLUS AFTER TAX
4 584
19 154
SURPLUS FOR THE PERIOD
4 584
19 154
TOTAL EXPENSES
22
Income taxes
Current tax and tax for previous periods
Change in deferred tax
20
LUOTTOKUNTA 2011
LUOTTOKUNTA CASH FLOW STATEMENT
(EUR 1 000)
2011
2010
Operating surplus before tax
9 321
10 560
Depreciation according to plan
10 314
7 685
Other non-cash income and expenses
-1 321
-2 463
Financial income and expenses
-7 702
-5 213
Other adjustments
-2 294
Cash flow before change in working capital
Increase (-) / Decrease (+) in current non-interest-bearing trade receivables
Increase (+) / Decrease (-) in current non-interest-bearing trade payables
Change in working capital
Cash flow from operations before financial items and taxes
Interest paid and other financial expenses from business operations
Dividends received from business operations
Interest received and other financial income from business operations
Income taxes paid
8 317
10 569
-72 936
88 629
73 527
-120 800
590
-32 170
8 908
-21 602
-972
-1 380
76
1 427
7 923
4 475
-5 205
10 730
-17 079
-21 867
-9 705
Purchase of tangible and intangible assets
Proceeds from sale of tangible and intangible assets
Other investments
Proceeds from other investments
Loans granted
-1 798
-21 867
-11 503
Increase in co-operative capital (paid issue)
-225
-294
257
-4 462
-8 643
-7 143
-8 611
-11 899
Net increase (+) / decrease (-) in cash and cash equivalents
-19 748
-40 481
Cash and cash equivalents at period start
179 485
219 966
Cash and cash equivalents at period end
159 737
179 485
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Dividends paid and other profit distribution
LUOTTOKUNTA 2011
21
Notes to Accounting Principles
Basis of preparation
The financial statements are prepared in ac
cordance with the provisions of the Finnish
Accounting Act and the Credit Institutions
Act, the decree on the financial statements
and consolidated financial statements of credit
institutions issued by the Ministry of Finance,
and the regulations issued by the Financial
Supervisory Authority.
Owing to the nature of its operations, Luotto
kunta does not present net interest income
separately, but states income after other op
erating income, as net income from operations.
Notes to the Financial Statements are given
in accordance with Standard on Financial
Statements and Annual Report, issued by the
Financial Supervisory Authority, numbered
consecutively. In compliance with this standard,
Luottokunta does not provide information on
Notes to the Financial Statements on which
there is nothing to report.
Items at fair value through
profit or loss
Items held for trading, as well as items un
der fair value option are recorded at fair value
through profit and loss. Items held for trading
consist of financial assets and liabilities that
are acquired or created, mainly for the purpose
of being resold or repurchased within a short
period of time, or that are expected to generate
short-term income. Items under the fair value
option comprise financial assets and liabilities
that can be classified as such, under certain
conditions, when they are recorded.
In cases of card fraud, impairment loss is rec
ognised as soon as the fraud is detected, and
the loss becomes the liability of the card issuer.
Luottokunta has no items at fair value through
profit or loss.
Available-for-sale financial assets
Held-to-maturity investments
The consolidated financial statements include
the financial statements of Luottokunta (the
parent company) and its fully-owned subsidi
ary Eurocard Oy. Screenway Oy, Luottokunta’s
wholly-owned subsidiary, was merged into the
parent co-operative on 31 May 2011. Intragroup shareholdings are eliminated using the
acquisition cost method. Intra-group transac
tions, receivables and liabilities, as well as profit
distribution are eliminated when preparing the
consolidated financial statements.
Held-to-maturity investments are financial as
sets other than derivative instruments with fixed
or determinable cash flows and fixed maturities,
which an entity has the positive intention and
ability to hold to maturity. They do not include
items classed as held for trading, available-forsale or other liabilities or receivables.
Foreign currency items
Loans and other receivables
Transactions in foreign currency are translated
into euros and recorded at the exchange rate
prevailing on the date of the transaction. Any
exchange rate differences are recorded in the
income statement. On the balance sheet date,
balance sheet items in foreign currency are
translated into euros using the average ex
change rate quoted by the European Central
Bank on the balance sheet date.
Loans and other receivables are financial as
sets with fixed or determinable payments,
which are not quoted on the general market,
excluding items classed as held for trading or
available-for-sale.
Under the Financial Supervisory Author
ity’s Standard on Financial Statements and
Annual Report, financial instruments are clas
LUOTTOKUNTA 2011
The impairment of loans and other receivables is
valued in two stages: first individually by receiv
able, and then by group of receivables. Impair
ment loss of a receivable item is recognised if
there is objective evidence of the impairment
and its effect can be reliably determined. In
per-receivable evaluations, a circumstance
in which no transactions are allocated to the
receivable item under collection for six months
is regarded as objective evidence. In such a
case, the receivable is recorded entirely under
impairment loss. In group-specific impairment,
collection proceedings being initiated for the
receivable is regarded as objective evidence.
The amount of recognised group-specific im
pairment loss is based on historical data on the
success of collection.
Items are recognised at fair value and any fair
value changes are recognised as net income
from securities trading and currency operations
through profit or loss.
Consolidated accounts
Financial instruments
22
sified according to their purpose of use and
measurement.
Held-to-maturity investments are measured
at amortised cost.
Luottokunta has no held-to-maturity investments.
Loans and other receivables are measured at
amortised cost. If, on the balance sheet date,
an item’s value is lower than the amortised
acquisition cost, it is valued at amortised cost
with impairment loss. Income or losses from
loans and other receivables are recorded through
profit and loss, once the receivable is written
out of the balance sheet or its value has been
impaired.
Available-for-sale financial assets are nonderivative financial assets designated as avail
able for sale or not classified as other financial
assets stated above. Available-for-sale financial
assets include equity securities and holdings
in entities other than subsidiary and associ
ated companies.
Available-for-sale assets are primarily measured
at fair value. If available-for-sale assets include
equity instruments which do not have a quoted
market price in an active market and whose fair
value cannot be reliably measured, these are
measured at cost. The change in fair value is
recorded directly in the fair value reserve under
equity capital, until the asset item is written
off the balance sheet.
Interest income from available-for-sale financial
assets is recorded as interest income and divi
dends under income from equity investments
in the income statement.
The difference between the nominal value and
cost of certificates of deposit included in this
class is accrued over the receivable’s maturity,
using the effective interest rate method. The
amount corresponding to the acquisition cost is
recorded under debt securities and the amount
of accrued interest is stated under accrued
income and prepayments in the balance sheet.
Luottokunta has also defined its Series B shares
in MasterCard Incorporated and its Series
A shares in Visa Incorporated as availablefor-sale financial assets. The Series B share of
MasterCard Incorporated is not publicly quoted,
therefore shares are valued at the closing rate
on the balance sheet date of the Series A share
quoted on the New York Exchange. Series A
share of Visa Incorporated is quoted on the
New York Exchange, and shares are valued
at the closing rate on the balance sheet date.
Cash and cash equivalents
Cash and cash equivalents include money that
an entity holds, money deposited with finan
cial institutions that can be withdrawn with
out notice and highly liquid receivables from
financial institutions.
Other financial assets
Other financial assets include subsidiary shares
measured at cost and included in Luottokunta’s
separate balance sheet.
Other financial liabilities
Other financial liabilities include financial
liabilities other than those valued at fair value
through profit or loss. Other financial liabilities
are recorded at nominal value. The difference
between the liability’s nominal value and cost
is accrued over the liability’s maturity. After the
initial entry, financial liabilities are measured
at amortised cost.
Financial derivatives
Derivatives refer to financial or other instruments
whose value changes if the underlying instru
ment’s value changes. At the time of making
the contract, no net investment is required or
the net investment is lower than for other types
of contracts. The derivative’s value becomes
realised on a future date. Derivative contracts
held for hedging purposes are classified as
financial derivatives. Other derivative contracts
are included under items held for trading.
Luottokunta has no financial derivatives.
Offsetting of financial assets
and liabilities
Financial assets and liabilities are offset and
the net amount recognised in the balance sheet
only if an entity has a legally enforceable right to
set off the amounts and intends either to settle
on a net basis, or to realise the asset and settle
the liability simultaneously.
Intangible assets
Goodwill is measured as the excess of the cost
of the business combination over the acquirer’s
share of the net fair values of the acquiree’s
identifiable assets, liabilities, and contingent
liabilities on the acquisition date. It is presented
under intangible assets. Consolidated goodwill,
arising from the acquisition of Eurocard Oy
shares, will be amortised over a useful life of
ten years. This period is based on the expected
long-term return on investment. Consolidated
goodwill is tested annually.
Eurocard Oy has offered Business Eurocard
payment solutions to corporate customers since
1973. Business Eurocard is the leading busi
ness card scheme in Finland. Its customers
represent an extensive range of businesses and
public-sector organisations in this country. It is
anticipated that the number of Business Eurocard
cards and travel accounts, as well as card sales,
will continue to grow over the next few years. The
company’s growth expectations for business and
profitability are based on the expanding business
card market for business and public organisa
tions, and on investments in electronic services.
Such services designed for travel and financial
management are boosting the competitiveness
of the Business Eurocard scheme.
The Group acquired the payment terminal
business in connection with the acquisition
of Screenway Oy shares. When Screenway
Oy merged into the parent co-operative, the
remaining goodwill was capitalised in Luot
tokunta Co-operative’s balance sheet.
A marked increase in the number of payment
terminals is expected in the next few years.
Business and profitability growth expectations
are based on a growing need for efficient, secure
payment solutions.
Other intangible assets
Intangible assets include IT software and other
intangible assets, from which an entity expects
to gain financial benefits in the future. Intangible
assets are valued at cost less accrued depre
ciation and any impairment losses. Intangible
assets are amortised on a straight-line basis over
their expected useful lives as follows:
IT software
Other intangible assets 3 - 7 years
3 - 10 years.
Tangible assets
Tangible assets are valued at cost less accrued
depreciation and any impairment losses and
depreciated on a straight-line basis over their
expected useful lives as follows:
Buildings 34 - 40 years
Machinery
3 years
Equipment
5 years
IT hardware
3 - 5 years
Payment terminals
3 years.
Land is not depreciated.
Goodwill
Goodwill is measured as the excess of the ac
quisition cost over the acquirer’s share of the
net fair values of the acquiree’s identifiable
assets, liabilities, and contingent liabilities
on the acquisition date. It is presented under
intangible assets. The goodwill recorded in
Luottokunta’s balance sheet arises from the
acquisition of the payment terminal business
and will be amortised over a useful life of ten
years. This period is based on the expected
long-term return on investment. Goodwill is
tested annually.
LUOTTOKUNTA 2011
23
Income taxes
Statutory provisions include deferred, itemised
expenses and losses for the report or previous
financial year which are likely or certain to be
incurred, but whose amounts and dates are
not yet certain
Income taxes are calculated and recognised us
ing the tax statement based on taxable income.
Changes in deferred taxes are recorded in the
income statement and recognised as deferred
tax assets and liabilities in the balance sheet.
Deferred tax assets and liabilities are calculated
on temporary differences between the carrying
amounts of assets and liabilities according to
taxation and the accounts, using the tax rate
confirmed for the coming years on the balance
sheet date. The balance sheet includes deferred
tax liabilities in full and deferred tax assets
to the estimated probable realisable amount.
Appropriations
Voluntary provisions include voluntary ap
propriations recorded as permitted by tax leg
islation. Under the Business Income Tax Act,
a credit institution may deduct a credit loss
provision recorded for the tax year, accounting
for a maximum of 0.6% of the total amount of
receivables at the end of the tax year. The total
amount of credit loss provisions not released in
the tax year or previous years may account for a
maximum of 5% of the total amount of receiva
bles at the end of the tax year. Increases and
decreases in voluntary provisions are entered
in appropriations in the income statement. The
amount of, and change in, voluntary provisions
do not describe the Group’s anticipated risks.
In the consolidated financial statements, vol
untary provisions are cancelled and recognised
under equity capital and deferred tax liabilities.
24
LUOTTOKUNTA 2011
Off-balance-sheet commitments
Off-balance-sheet commitments include
unused credit and spending limits granted to
customers.
Notes to the Luottokunta
Group Financial Statements
NOTES TO THE BALANCE SHEET (eur 1 000)
1. Claims on credit institutions
2011
Total
Central bank
Domestic credit institutions
Repayable
on demand
8 957
Other than those
repayable on demand
8 957
113 126
1 301
111 826
122 083
1 301
120 782
2010
Total
Repayable
on demand
Other than those
repayable on demand
76 884
23 017
53 867
83 226
23 017
60 209
2011
2010
54 597
51 761
219 982
201 490
16 391
10 410
290 969
263 661
- claims not generating recognised interest income
3 364
4 153
Impairment losses on receivables for the period
2011
2010
Impairment losses at beginning of period
1 226
2 858
Impairment losses for period by receivable
-153
-1 139
Impairment losses for period by group
-208
-493
0
0
864
1 226
Central bank
6 342
6 342
2. Claims on the public and on public-sector entities
Companies and housing corporations
Households
Foreign
Total claims on the public and on public-sector entities
Cancelled impairment losses for period by receivable
Impairment losses at end of period
LUOTTOKUNTA 2011
25
3. Debt securities
2011
Issued by other than
public-sector entities
Publicly quoted
Others
Total
Available-for-sale assets
Certificate of deposit issued by banks
Total debt securities
149 041
149 041
149 041
0
149 041
Others
Total
2010
Issued by other than
public-sector entities
Publicly quoted
Available-for-sale assets
149 836
149 836
149 836
0
149 836
Others
Total
18 841
18 841
4. Shares and participations
2011
Balance sheet item
Publicly quoted
In financial
institutions
Held-for-trading
Available-for-sale
Total
0
18 841
18 841
0
- of which at acquisition cost
0
0
0
0
Others
Total
In financial
institutions
12 432
12 432
2010
Balance sheet item
Publicly quoted
Held-for-trading
Available-for-sale
26
Total
0
12 432
12 432
0
0
0
0
0
LUOTTOKUNTA 2011
5. Intangible assets
IT expenses
2011
2010
25 129
15 048
3 975
7 340
Goodwill
2 664
1 203
1 297
32 971
23 686
2011
2010
Land
203
203
Buildings
477
525
Total real property
680
728
6. Tangible assets
Real property
In own use
LUOTTOKUNTA 2011
27
7. Changes in tangible and intangible assets during the period
2011
Total
Tangible assets
Intangible
Other properties and shares
Other tangible
tangible
assets
in property companies
assets
assets
Purchase price 1 Jan.
66 381
2 051
26 797 *
28 848
Increases
21 352
2 620
2 620
Decreases
-3 213
-22
-22
3
-1 848
-1 848
Transfers between items
Purchase price 31 Dec.
84 522
2 051
27 547
29 598
Depreciation/amortisation and impairment 1 Jan.
-42 695
-1 323
-19 089
-20 412
5
5
-2 870
-2 918
-70
-70
Depreciation/amortisation on decreases and transfers
Depreciation/amortisation for the period
16
-8 872
-48
Impairment
Accumulated depreciation/amortisation 31 Dec.
-51 551
-1 371
-22 024
-23 395
Book value 31 Dec.
32 971
680
5 523
6 203
Book value 1 Jan.
23 686
728
5 861
6 588
Revaluations
* This amount includes the payment terminals obtained in the merger with Screenway Oy EUR 1,848 thousand.
2010
Increases
Decreases
Total
Tangible assets
Intangible
Other properties and shares
Other tangible
tangible
assets
assets
assets
59 338
2 051
21 646
23 697
7 054
3 322
3 322
-46
-19
-19
35
66 381
2 051
24 949
27 000
-35 178
-1 275
-16 825
-18 101
-7 517
-48
-2 264
-2 311
-42 695
-1 323
-19 089
-20 412
23 686
728
5 861
6 588
24 160
775
4 821
5 596
Impairment
Revaluations
Book value 31 Dec.
Book value 1 Jan.
28
LUOTTOKUNTA 2011
8. Accrued income and prepayments
Interest receivables and advance interest paid
2011
2010
1 946
1 269
11 863
8 224
13 809
9 494
2011
2010
689
778
689
778
Due to fair value reserve
2 791
1 102
Based on appropriations
5 132
4 801
7 923
5 903
Other accrued income and advances paid
Total accrued income and prepayments
9. Deferred tax assets and liabilities
Tax assets on timing differences
Based on confirmed losses for taxation
Other, due to timing differences
Total deferred tax assets
Tax liabilities on other temporary differences
Total deferred tax liabilities
LUOTTOKUNTA 2011
29
10. Other liabilities
2011
2010
8 557
4 901
Pension provisions
311
301
8 868
5 202
Other statutory provisions
Total
Other liabilities
2011
Pension provisions
Book value 1 Jan.
Increase for the period
301
301
10
10
Amount used during period
0
Amount cancelled during period
Book value 31 Dec.
311
0
311
Total
2010
Pension provisions
Book value 1 Jan.
254
254
47
47
0
Book value 31 Dec.
301
0
301
2011
2010
37
65
Other accrued expenses and advances received
14 094
17 723
Total accrued expenses and deferred income
14 130
17 788
11. Accrued expenses and deferred income
Interest payable and advances received
30
LUOTTOKUNTA 2011
12. Distribution of maturity of credit institution’s financial assets and liabilities
2011
Less than 3 months
113 126
290 969
Debt securities
Total
Total
3-12 months
1-5 years
Over 5 years
0
99 574
49 468
503 669
49 468
0
9 246
5 000
7 143
5 000
7 143
0
3-12 months
1-5 years
Over 5 years
0
400 416
409 662
2010
Less than 3 months
76 884
261 561
Debt securities
149 836
Total
Total
2 100
488 281
2 100
0
9 362
6 500
14 286
6 500
14 286
322 709
332 072
LUOTTOKUNTA 2011
0
31
13. Breakdown of balance sheet items into domestic currency and foreign currency amounts
2011
Domestic currency
Foreign currency
Total
113 126
113 126
290 969
290 969
Debt securities
149 041
149 041
81 470
81 470
Other assets
Total
Other liabilities
Total
634 607
0
634 607
21 388
21 388
400 416
400 416
22 998
22 998
444 802
0
444 802
Foreign currency
Total
2010
Domestic currency
76 884
76 884
263 661
263 661
Debt securities
149 836
149 836
59 319
59 319
Other assets
Total
Other liabilities
Total
32
LUOTTOKUNTA 2011
549 700
0
549 700
30 148
30 148
322 709
322 709
22 990
22 990
375 847
0
375 847
14. Fair values and book values of financial assets and liabilities
Financial assets
Cash
2011
2011
Book value
Fair value
8 957
8 957
113 126
113 126
290 969
290 969
Debt securities
149 041
149 041
18 841
18 841
Book value
Fair value
21 388
21 388
400 416
400 416
Financial liabilities
Financial assets
Cash
2010
2010
Book value
Fair value
6 342
6 342
76 884
76 884
263 661
263 661
Debt securities
149 836
149 836
12 432
12 432
Book value
Fair value
30 148
30 148
322 709
322 709
LUOTTOKUNTA 2011
33
15. Equity capital
2011
Beginning
Increases
Decreases
End of
of period
during period
during period
period
-225
7 232
7 458
Reserve fund
46 504
46 504
Fair value reserve
3 136
7 944
4 808
Contingency reserve
46 400
Retained surplus
64 453
46 400 1)
64 469 2)
16
9 333
9 333
Total equity capital
167 950
14 158
-225
181 882
Since 1998, the co-operative has raised a contingency fund which the Executive Board can use for the benefit of the co-operative,
as proposed by the Board of Directors.
2)
The retained surplus includes EUR 13,620 thousand in depreciation difference and voluntary provision items.
1)
2010
Beginning
Increases
Decreases
End of
of period
during period
during period
period
-294
7 458
7 752
Reserve fund
Fair value reserve
46 504
46 504
4 494
-1 359
3 136
Contingency reserve
46 400
Retained surplus
57 391
46 400 1)
57 391 2)
7 062
7 062
162 541
7 062
-1 653
167 950
Since 1998, the co-operative has raised a contingency fund which the Executive Board can use for the benefit of the co-operative,
2)
The retained surplus includes EUR 23,992 thousand in depreciation difference and voluntary provision items.
1)
34
LUOTTOKUNTA 2011
Notes to the Income Statement (eur 1 000)
16. Breakdown of interest income and expenses by balance sheet item
2011
2010
269
215
Interest income
Debt securities
1 653
523
6 515
4 541
2
2
8 439
5 280
999
1 397
Other interest income
Total interest income
Interest expenses
1
Other interest expenses
1
Total interest expenses
1 001
1 397
2011
2010
Dividend income received
76
66
Total income from equity investments
76
66
2011
2010
147 765
127 477
38 991
36 119
186 756
163 597
92 701
78 390
92 701
78 390
17. Income from equity investments
Dividend income from available-for-sale financial assets
18. Commission income and expenses
Payment transactions
Other operations
Total commission income
Other operations
Total commission expenses
LUOTTOKUNTA 2011
35
19. Other operating income
2011
2010
Other income
6 037
4 293
Total other operating income
6 037
4 293
2011
2010
4 546
4 091
707
740
16 039
10 239
21 292
15 069
20. Other operating expenses
Rental expenses
Expenses due to property in own use
Other expenses
Total other operating expenses
21. Depreciation/amortisation and impairment on tangible and intangible assets
2011
Depreciation/amortisation according to plan
Intangible
Tangible
Intangible
Tangible
assets
assets
assets
assets
8 872
2 918
7 517
2 311
7 517
2 311
Impairment
Total
36
LUOTTOKUNTA 2011
2010
70
8 872
2 988
22. Impairment losses on credits, other commitments and other financial assets
2011
Claims on the public
and public-sector entities
Impairment losses by contract, gross
Other operations
Total
5 179
5 179
208
208
Deductions
-4 179
-4 179
Recognised in income statement
1 209
Impairment losses by group, gross
0
1 209
Other operations
Total
2010
7 409
7 409
493
493
Deductions
-2 772
-2 772
5 131
0
5 131
23. Business and market segment information
2011
Total income
Operating surplus
Credit card operations
Prepaid product operations
Total
194 543
5 765
200 308
11 249
1 102
12 351
Assets
630 756
3 851
634 607
Liabilities
561 770
72 838
634 607
436
15
451
Total
167 252
4 586
171 838
9 491
-14
9 477
Assets
541 523
8 177
549 700
Liabilities
482 102
67 598
549 700
429
14
443
Human resources
2010
Total income
Operating surplus
Human resources
LUOTTOKUNTA 2011
37
Notes on collateral and other contingent liabilities
(eur 1 000)
24. Pension liabilities
The personnel’s statutory pension cover is managed by Ilmarinen Mutual Pension Insurance Company. A direct pension liability
of EUR 311 thousand is included in statutory provisions.
25. Lease and other rental liabilities
Lease and other rental liabilities
2011
2010
Contractual minimum rental payments:
No later than one year
3 868
3 929
11 952
13 442
5 876
12 830
2011
2010
Unused spending limits granted to customers
495 424
706 091
Unused credit lines granted to customers
431 021
455 153
Later than one year and no later than five years
Later than five years
The term of the contracts varies between 1 year and 10 years.
26. Off-balance-sheet commitments
38
LUOTTOKUNTA 2011
Notes on staff and management (eur 1 000)
27. Staff and members of governing and supervisory bodies
2011
Number of employees
2010
Average
Change in no.
Average
Change in no.
number
during period
number
during period
384
19
365
-11
Group
Permanent full-time staff
Permanent part-time staff
28
2
26
0
Fixed-term staff
39
-13
52
16
451
8
443
5
2011
2010
Executive Board members
71
59
Board members
86
78
1 067
744
446
353
Total
Wages, salaries and fees (eur 1 000)
Management Team, of whom
- CEO and Deputy CEO
The amount of variable remuneration paid to the Management Team in 2011 was EUR 261 thousand.
Cash loans, guarantees and off-balance sheet commitments
No cash loans have been granted to the above mentioned bodies or auditors, nor have any guarantees or other off-balance sheet
commitments been made for their benefit.
Pension commitments
The CEO’s retirement age is 60 years. His pension is covered by pension insurance and the resulting pension liability of EUR 311
thousand is included in statutory provisions. Board and Executive Board members are not covered by pension commitments.
Holdings
Board and Executive Board members and the CEO and the Deputy CEO hold neither shares in the credit institution, nor stock options
nor convertible bonds issued by the credit institution.
LUOTTOKUNTA 2011
39
Notes on shareholdings
(eur 1 000)
28. Subsidiaries
Eurocard Oy, Helsinki
Holding: 100% of shares
Equity on 31 Dec. 2011 EUR 9,053 thousand.
Profit for the period: EUR 971 thousand.
Notes on auditors’ fees
(eur 1 000)
29. Auditors’ fees
2011
2010
91
93
Other services
316
191
Total auditors’ fees
407
284
Audit
Tax advisory services
Other notes
(eur 1 000)
30. Outstanding co-operative fees and number of members
Number of co-operative members
Total outstanding co-operative fees
Total sum of recalled co-operative fees
40
2011
2010
20 967
23 072
0
0
440
465
- of which to be refunded in year
2012
239
2011
225
- of which to be refunded in year
2013
201
2012
239
LUOTTOKUNTA 2011
Notes to Parent Company
Financial Statements
Notes to the Balance Sheet
(eur 1 000)
1. Claims on credit institutions
Central bank
Central bank
2011
Repayable
Other than those
Total
on demand
repayable on demand
8 957
8 957
154 817
1 048
153 770
163 774
1 048
162 726
2010
Repayable
Other than those
Total
on demand
repayable on demand
6 342
6 342
117 158
22 650
94 507
123 500
22 650
100 849
2011
2010
2. Claims on the public and on public-sector entities
Companies and housing corporations
Households
3 632
219 982
201 490
16 362
10 374
236 344
215 497
3 349
4 099
0
2 100
Impairment losses on receivables for the period
2011
2010
Impairment losses at beginning of period
1 199
2 701
Impairment losses for period by receivable
-153
-1 086
Impairment losses for period by group
-189
-416
857
1 199
Foreign
Total claims on the public and on public-sector entities
- claims not generating recognised interest income
- subordinated claims
Cancelled impairment losses for period by receivable
Impairment losses at end of period
LUOTTOKUNTA 2011
41
3. Debt securities
2011
Issued by other than public-sector entities
Publicly quoted
Other
Total
Available-for-sale
149 041
149 041
149 041
0
149 041
Other
Total
2010
Issued by other than public-sector entities
Publicly quoted
Available-for-sale
149 836
149 836
149 836
0
149 836
Other
Total
18 841
18 841
18 700
18 700
18 700
4. Shares and participations
2011
Balance sheet item
Publicly quoted
In financial
institutions
Held-for-trading
Available-for-sale
in Group companies
Total
0
37 541
37 541
18 700
0
18 700
18 700
18 700
2010
Balance sheet item
Publicly quoted
In financial
Other
Total
12 432
12 432
22 724
22 724
18 700
institutions
Held-for-trading
Available-for-sale
in Group companies
42
Total
0
35 156
35 156
18 700
0
22 724
22 724
18 700
LUOTTOKUNTA 2011
5. Intangible assets
2011
2010
27 793
15 041
1 203
1 297
28 996
16 338
2011
2010
Land
203
203
Buildings
477
525
Total real property
680
728
IT expenses
6. Tangible assets
Real property
In own use
LUOTTOKUNTA 2011
43
7. Changes in tangible and intangible assets during the period
2011
Total
Tangible assets
Intangible Other properties and shares
Other tangible
tangible
assets
assets
23 321*
25 371
assets
52 772
2 051
Increases
20 705
1 946
1 946
-343
-22
-22
Decreases
1
73 135
2 051
25 244
27 295
-36 434
-1 323
-17 186
-18 509
5
5
-2 471
-2 518
-70
-70
18
-7 723
-48
Impairment
-44 139
-1 371
-19 721
-21 092
28 996
680
5 523
6 203
16 338
728
4 287
5 015
Revaluations
Book value 31 Dec.
Book value 1 Jan.
* This amount includes the payment terminals obtained in the merger with Screenway Oy EUR 1,848 thousand.
2010
Intangible Other properties and shares
Increases
Total
Tangible assets
Other tangible
tangible
assets
assets
assets
45 683
2 051
19 510
21 560
1 963
1 963
7 054
Decreases
35
52 772
2 051
21 473
23 523
-30 298
-1 275
-15 685
-16 960
-6 136
-48
-1 501
-1 549
-36 434
-1 323
-17 186
-18 509
16 338
728
4 287
5 015
15 385
775
3 825
4 601
Impairment
Revaluations
Book value 31 Dec.
Book value 1 Jan.
44
LUOTTOKUNTA 2011
8. Accrued income and prepayments
2011
Interest receivables and advance interest paid
2010
1 884
1 228
Other accrued income and advances paid
11 530
6 488
Total accrued income and prepayments
13 415
7 716
2011
2010
689
659
689
659
2 791
1 102
2 791
1 102
9. Deferred tax assets and liabilities
Tax assets on timing differences
Based on confirmed losses for taxation
Other, due to timing differences
Total deferred tax assets
Tax liabilities on other temporary differences
Due to fair value reserve
Total deferred tax liabilities
LUOTTOKUNTA 2011
45
10. Other liabilities
2011
2010
8 434
4 524
311
301
8 745
4 825
Total
Other liabilities
Other
Pension provisions
2011
Pension provisions
Book value 1 Jan.
301
301
10
10
Book value 31 Dec.
311
0
311
Total
2010
Pension provisions
Book value 1 Jan.
254
254
47
47
Book value 31 Dec.
301
0
301
2011
2010
37
65
13 047
16 538
13 083
16 603
11. Accrued expenses and deferred income
Interest payable and advances received
Other accrued expenses and advances received
Total accrued expenses and deferred income
46
LUOTTOKUNTA 2011
12. Distribution of maturity of credit institution’s financial assets and liabilities
2011
Less than 3 months
154 817
236 344
Debt securities
Total
Total
3-12 months
1-5 years
Over 5 years
0
99 574
49 468
490 734
49 468
0
9 246
5 000
7 143
5 000
7 143
0
3-12 months
1-5 years
Over 5 years
0
400 056
409 302
2010
Less than 3 months
117 158
213 397
Debt securities
149 836
Total
Total
2 100
480 391
2 100
0
9 362
6 500
14 286
6 500
14 286
322 666
332 028
0
LUOTTOKUNTA 2011
47
13. Breakdown of balance sheet items into domestic currency and foreign currency amounts
2011
Domestic currency
Foreign currency
Total From Group companies
154 817
154 817
236 344
236 344
Debt securities
149 041
149 041
95 801
95 801
Other assets
Total
Other liabilities
Total
636 003
0
636 003
21 388
21 388
400 056
400 056
21 828
21 828
443 273
0
443 273
41 944
41 944
0
2010
Domestic currency
117 158
Total From Group companies
117 158
40 641
3 625
215 497
215 497
Debt securities
149 836
149 836
71 226
71 226
Other assets
Total
Other liabilities
Total
48
Foreign currency
LUOTTOKUNTA 2011
553 716
0
553 716
30 148
30 148
322 666
322 666
21 429
21 429
374 242
0
374 242
44 265
0
14. Fair values and book values of financial assets and liabilities
2011
Book value
Fair value
Financial assets
Cash
8 957
8 957
154 817
154 817
236 344
236 344
Debt securities
149 041
149 041
18 841
18 841
Shares and participations in Group companies
18 700
18 700
21 388
21 388
400 056
400 056
2010
Book value
Fair value
6 342
6 342
Financial assets
Cash
117 158
117 158
215 497
215 497
Debt securities
149 836
149 836
12 432
12 432
Shares and participations in Group companies
22 724
22 724
30 148
30 148
322 666
322 666
LUOTTOKUNTA 2011
49
15. Equity capital
2011
Beginning
Increases
Decreases
End of
of period
during period
during period
period
-225
7 232
7 458
Reserve fund
46 504
46 504
Fair value reserve
3 136
7 944
4 808
Contingency reserve
46 400
Retained surplus
59 076
59 076
4 584
4 584
162 572
2010
46 400 *
9 392
-225
171 739
Beginning
Increases
Decreases
End of
of period
during period
during period
period
-294
7 458
7 752
Reserve fund
Fair value reserve
46 504
46 504
4 494
-1 359
3 136
Contingency reserve
46 400
Retained surplus
39 922
46 400 *
39 922
19 154
19 154
145 072
19 154
-1 653
162 572
* Since 1998, the co-operative has raised a contingency fund which the Executive Board can use for the benefit of the co-operative,
50
LUOTTOKUNTA 2011
Notes to the Income Statement (eur 1 000)
16. Breakdown of interest income and expenses by balance sheet item
2011
2010
841
504
Interest income
Debt securities
1 653
523
6 123
4 170
9
-13
Total interest income
8 626
5 183
- from Group companies
581
276
999
1 397
Other interest income
Interest expenses
Other interest expenses
Total interest expenses
- to Group companies
1
1 000
1 397
0
0
2011
2010
76
66
17. Income from equity investments
Dividend income from available-for-sale financial assets
Dividend income received
Dividend income from Group companies
Total income from equity investments
1 361
76
1 427
LUOTTOKUNTA 2011
51
18. Commission income and expenses
Payment transactions
Other operations
Total commission income
Other operations
Total commission expenses
2011
2010
145 406
125 278
33 443
30 829
178 849
156 107
94 746
80 149
94 746
80 149
2011
2010
11 931
8 196
11 931
8 196
2011
2010
4 546
4 091
707
740
17 941
9 063
23 194
13 893
19. Other operating income
Other income
Total other operating income
20. Other operating expenses
Rental expenses
Expenses due to property in own use
Other expenses
Total other operating expenses
21. Depreciation/amortisation and impairment on tangible and intangible assets
2011
Depreciation/amortisation according to plan
Intangible
Tangible
Intangible
Tangible
assets
assets
assets
assets
7 726
2 518
6 136
1 549
6 136
1 549
Impairment
Total depreciation and impairment
52
LUOTTOKUNTA 2011
2010
70
7 726
2 588
22. Impairment losses on credits, other commitments and other financial assets
2011
Deductions
Other operations
Total
4 739
4 739
189
189
-3 936
-3 936
991
0
991
Other operations
Total
2010
6 944
6 944
416
416
Deductions
-2 722
-2 722
4 637
0
4 637
Total
192 717
5 765
198 482
8 219
1 102
9 321
Assets
632 152
3 851
636 003
Liabilities
563 166
72 838
636 003
436
15
451
Total
164 930
4 586
169 517
10 574
-14
10 560
23. Business and market segment information
2011
Total income
Operating surplus
Human resources
2010
Total income
Operating surplus
Assets
545 540
8 177
553 716
Liabilities
486 119
67 598
553 716
427
14
441
Human resources
LUOTTOKUNTA 2011
53
Notes on collateral and other contingent liabilities
(eur 1 000)
24. Pension liabilities
The personnel’s statutory pension cover is managed by Ilmarinen Mutual Pension Insurance Company.
A direct pension liability of EUR 311 thousand is included in statutory provisions.
25. Lease and other rental liabilities
Lease and other rental liabilities
2011
2010
Contractual minimum rental payments:
No later than one year
Later than one year and no later than five years
Later than five years
3 868
3 929
11 952
13 442
5 876
12 830
2011
2010
The term of the contracts varies between 1 year and 10 years.
26. Off-balance-sheet commitments
Unused spending limits granted to customers
Unused credit lines granted to customers
54
LUOTTOKUNTA 2011
92 056
431 021
455 153
Notes on staff and management
27. Staff and members of governing and supervisory bodies
2011
2010
Average
Change in no.
Average
Change in no.
number
during period
number
during period
Permanent full-time staff
384
21
363
-11
Permanent part-time staff
28
2
26
0
Fixed-term staff
39
-13
52
16
451
10
441
5
Number of employees
Group
Total
Wages, salaries and fees (eur 1 000)
2011
2010
Executive Board members
71
59
Board members
86
78
Management Team, of whom
- CEO and Deputy CEO
1067
744
446
353
The amount of variable remuneration paid to the Management Team in 2011 was EUR 261 thousand.
Cash loans, guarantees and off-balance sheet commitments
No cash loans have been granted to the above mentioned bodies or auditors, nor have any guarantees or other off-balance sheet
commitments been made for their benefit.
Pension commitments
The CEO’s retirement age is 60 years. His pension is covered by pension insurance and the resulting pension liability of EUR 311
thousand is included in statutory provisions. Board and Executive Board members are not covered by pension commitments.
Holdings
Board and Executive Board members and the CEO and the Deputy CEO hold neither shares in the credit institution, nor stock options
nor convertible bonds issued by the credit institution.
LUOTTOKUNTA 2011
55
Notes on shareholdings
(eur 1 000)
28. Subsidiaries
Eurocard Oy, Helsinki
Holding: 100% of shares
Equity on 31 Dec. 2011 EUR 9,053 thousand
Profit for the period: EUR 971 thousand
Notes on auditors’ fees
(eur 1 000)
29. Auditors’ fees
2011
2010
87
86
Other services
316
191
Total auditors’ fees
403
277
2011
2010
20 967
23 072
0
0
Audit
Tax advisory services
Other notes (eur 1 000)
30. Outstanding co-operative fees and number of members
Number of co-operative members
Total outstanding co-operative fees
440
Total sum of recalled co-operative fees
56
465
- of which to be refunded in
2012
239
2011
225
- of which to be refunded in
2013
201
2012
239
LUOTTOKUNTA 2011
AUDITOR’S REPORT
To the members of Luottokunta
We have audited the accounting records,
the financial statements, the report of the
Board of Directors and the administra
tion of Luottokunta for the year ended 31
December, 2011. The financial statements
comprise both the consolidated and 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 CEO
The Board of Directors and the CEO are
responsible for the preparation of finan
cial statements and 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 Direc
tors is responsible for the appropriate ar
rangement of the control of the company’s
accounts and finances and the CEO 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 con
solidated 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 pro
fessional 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 ob
tain reasonable assurance about whether
the financial statements and the report of
the Board of Directors are free from mate
rial misstatement, and whether the mem
bers of the Board of Directors of the parent
company or the CEO are guilty of an act
or negligence which may result in liability
in damages towards the company or have
violated the Co-operatives Act or the rules
of the Co-operative.
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
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 perfor
mance 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.
Other opinions
We support the adoption of the financial
statements. The proposal by the Board of
Directors regarding the use of profits for the
financial period is in compliance with the
Co-operatives Act and the rules of the Cooperative. We support that the members of
the Executive Board and Board of Directors
as well as the CEO be discharged from lia
bility for the financial period audited by us.
Helsinki, 2 March, 2012
KPMG Oy Ab
Raija-Leena Hankonen
Authorized Public Accountant
Statement of the Executive Board
The Executive Board has examined the Board of Directors’ report and the financial statements for 2011, as well as the Auditor’s Report,
and approves of the Board of Directors’ proposal for the distribution of profits.
Helsinki, 26 March 2012
Executive Board
LUOTTOKUNTA 2011
57
KEY FIGURES – LUOTTOKUNTA GROUP
Clearing sales of card schemes, EUR million*
2011
2010
2009
2008
2007
36 182
27 135
17 667
15 265
13 052
1 633 000
1 656 000
1 700 000
1 781 000
1 731 100
104 000
103 000
98 100
97 500
92 100
100 000
101 500
98 100
82 800
74 700
190
177
165
161
142
Number of Cards
Visa
Business Eurocard
Number of outlets accepting cards in Finland
Visa/MasterCard
Voucher business
Sales, EUR million
Sales, no. of vouchers
No. of accepting outlets**
Personnel
23.7
22.0
20.6
20.6
18.8
8 788
8 712
8 556
8 500
9 000
451
443
438
379
332
12.4
9.5
-9.4
18.1
7.5
107.6
93.4
88.4
99.3
69.3
1.2
5.1
7.6
5.1
3.0
634.6
549.7
677.7
1 071.5
732.8
3.4
4.2
6.0
4.2
3.8
29.9
32.0
26.4
17.5
15.9
(Full-time equivalents)
Key financial figures, EUR million
Operating surplus
Impairment lossess on credits
Balance Sheet
Non-performing receivables
Luottokunta Group Capital Adequacy, %
* Clearing sales of card schemes refers to the aggregate sales of Issuing and Acquiring.
** Number of previous years accepting outlets has been calculated by using same method as now.
58
LUOTTOKUNTA 2011
Board of Directors
Pekka Nuuttila
Chairman
b. 1956, M.Sc. (Forestry)
Board Member since 2009
Executive Vice President,
Nordea Bank Finland Plc
Positions of trust:
Nordea Finance:
Board Member,
Realia Group:
Board Member,
Central Chamber of
Commerce:
Board Member,
Helsinki Region Chamber
of Commerce:
Delegation Member
59
(31.12.2011)
Tony Vepsäläinen
Vice Chairman
b. 1959, Master of Laws,
eMBA
Chief Business Development
Officer, OP-Pohjola Group
Positions of trust:
OP-Pohjola Group Central
Cooperative:
Vice Chairman of the
Executive Board,
Pohjola Bank Plc:
Vice Chairman of the Board
of Directors,
OP-Services Ltd:
Chairman of the Board,
Helsinki OP Bank Plc:
OP Life Assurance
Company Ltd:
Finnish Cultural Foundation:
Member of the Board,
Housing Fair Finland Co-op:
Member of the Supervisory
Board
Arja Talma
b. 1962, M.Sc. (Econ.), eMBA
Sakari Toivola
b. 1953, M.Sc. (Eng.)
President,
Rautakesko Ltd.
Executive Vice President,
Oil Retail, Neste Oil Oyj
Positions of trust:
VR-Group Ltd:
Member of the Board of
Directors and Chairman of
the Audit Committee,
Sponda Plc:
Directors and Chairman of
the Audit Committee
Positions of trust:
Finnish Petroleum
Federation:
Directors
LUOTTOKUNTA 2011
Jari Annala
b. 1964, M.Sc. (Econ.)
Pasi Kämäri
b. 1959, M.Sc. (Econ.), MBA
Kasperi Saari
b. 1952, BSc
Executive
Vice President, CFO,
SOK Corporation
Managing Director,
Savings Banks Association
Managing Director,
Royal Restaurants Ltd
Positions of trust:
Duo Life Insurance
Company Ltd:
Samlink Ltd:
Nooa Savings Bank Ltd:
Aktia Real Estate
Mortgage Bank plc:
Federation of Finnish
Financial Services:
Member of the Board
Positions of trust:
Finnish Hospitality
Association:
Board Member,
Tapiola General:
Member of the Supervisory
Board
Positions of trust:
Board Member of several
SOK Corporation
Companies,
S-Bank Ltd:
S-Voima Oy:
S-ryhmän logistiikkakeskukset Oy:
Realinvest Oy:
Fennovoima Oy:
Voimaosakeyhtiö SF:
Member of the Board
Risto Tornivaara
b. 1958
Board Member in
2002 - 2007 and since 2008
Deputy CEO, Head of
Business Development,
Sampo Bank Plc
Positions of trust:
Sampo Fund
Management Ltd:
Realty World Ltd:
Chairman of the Board
Heikki Kapanen
b. 1958, LL.M
Chief Executive Officer,
Luottokunta
Positions of trust:
Eurocard Oy:
Chairman of the Board
Management Team
(31.12.2011)
From left:
Pentti Unkuri
Executive Vice
President
ICT,
s. 1961, M.Sc. (Tech.)
Employeed by
Luottokunta since 2011
Maisa Hyrkkänen,
Chief Financial
Officer
Administration,
b. 1964, M.Sc.
(Econ.), Employed by
Executive Board
Anton Helander,
Executive Vice
President
Corporate Development,
b. 1974, D.sc. (Econ.),
Employed by
Heikki Kapanen,
Chief Executive
Officer
b. 1958, LL.M.,
Employed by
Petri Carpén,
Deputy CEO
Acquiring Services,
b. 1958, LL.M.,
Employed by
Mikko Pilkama,
Executive Vice
President
Issuing Services,
b. 1972, M.Sc. (Econ.),
Employed by
Jukka M. S. Salonen
Executive
Vice President,
Nordea Bank Finland Plc
AUDITOR
Heikki Suutala
CEO,
POP Bank Alliance
Authorised Public
Accountant
(31.12.2011)
Kuisma Niemelä
Chairman and CEO,
SOK Corporation
Catarina Fagerholm
CEO,
Instru optiikka Oy
Matti Halmesmäki
President and CEO,
Kesko Corporation
Heli Lehtonen
CFO,
VR-Group Ltd
Chairman
Lars Finér
CEO,
Sodexo Oy
Ari Kaperi
Executive
Vice President,
Nordea Bank AB (publ)
Peik Martin
General Manager,
Oy Finnmatkat Ab
Hannu Penttilä
CEO,
Stockmann Plc
Vice Chairman
Jukka Alho
President and CEO,
Itella Corporation
Ilkka Hallavo
Country Manager,
Danske Bank Finalnd
Seppo Halme
Managing Director,
Muotitalo Jokinen Oy
Reijo Karhinen
Executive Chairman,
OP-Pohjola Group
Jussi Laitinen
CEO,
Aktia Plc
Harri Nummela
CEO,
OP-Services Ltd
Ari Rajala
Managing Director,
AL-Services Ltd
Raija-Leena
Hankonen
KPMG Oy Ab
Jaana Tammisto
Managing Director,
Finland Travel Bureau
Ltd
Jaakko Uotila
President, CEO,
Alko Inc.
LUOTTOKUNTA 2011
60
45

Board of directors` report and financial statements

Transcription

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