2008 Annual Report Julius Baer Holding Ltd. - Julius Bär Gruppe

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Notes the acquired non-financial asset or liability. If a hedge of a probable forecast transaction results in the recognition of a financial asset or financial liability, any gain or loss on the hedging instrument that was previously recognised in other components of equity is reclassified into the income statement in the same period in which the financial asset or liability affects income. If the hedged forecast transaction results in direct recognition through the income statement, any related cumulative gain or loss previously recognised in other components of equity is recognised in the income statement in the same period in which the hedged forecast transaction affects income. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are reported in the income statement. The changes in the fair value of the hedged item that are attributable to the risk hedged with the derivative are reflected in an adjustment to the carrying value of the hedged item and are also recognised in the income statement. Certain derivative transactions represent financial hedging transactions and are in line with the risk management principles of the Group. However, in view of the strict and specific guidelines of IFRS, they do not fulfil the criteria to be treated as hedging transactions for accounting purposes. They are therefore reported as trading positions. Changes in fair value are recognised directly in the income statement in the corresponding period. Financial investments available-for-sale Security positions, including money market instruments, which are not held for trading purposes are reported as debt and equity securities available-forsale and are recognised at fair value. Unrealised gains and losses are recognised in other comprehensive income and reported in other components of equity until the security is sold, or an impairment loss is recognised, at which point the cumulative gain or loss previously recorded in other components of equity is recognised in the income statement in other ordinary results. 40 JULIUS BAER GROUP Equity securities are deemed impaired if there has been a significant or prolonged decline of fair value below the initial cost. A debt instrument is deemed impaired if the creditworthiness of the issuer significantly deteriorates or if there are other indications that an event has a negative impact on the future estimated cash flows related to the debt instrument, i.e. if it is likely that the amount due according to the contractual terms cannot be entirely collected. Interest on debt securities is accrued using the effective interest method and, together with dividend income on equity securities, recognised in interest income. Property and equipment Property and equipment includes bank premises, IT, communication systems, leasehold improvements as well as other installations and equipment. They are carried at cost less accumulated depreciation and impairment losses. Items of property and equipment are depreciated over their estimated useful lives using the straight-line method. Bank premises are depreciated over a period of 66 years. Leasehold improvements are depreciated over the shorter of the residual lease term or useful life. Installations are depreciated over a period not exceeding ten years, IT hardware over three years and other items of property and equipment over five years. Leasehold improvements are investments made to customise buildings and offices occupied under operating lease contracts to make them suitable for the intended purpose. If a leased property must be returned to its original condition at the end of the lease term, the present value of the estimated reinstatement costs is capitalised as part of the total leasehold improvement costs. At the same time, a provision for reinstatement costs is recognised to reflect the obligation incurred. The reinstatement costs are recognised in the income statement
through depreciation of the capitalised leasehold improvements over their useful life. Subsequent expenditure on an item of property and equipment is recognised in the carrying value of the item if it is probable that the Group will profit from the future economic benefits of the investment. Current maintenance and servicing costs are expensed through the income statement. On each balance sheet date, the items of property and equipment are reviewed for indications of impairment. If such indications exist, it is determined whether the carrying amount of the item is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount. Leasing Under operating leasing, leased assets are not recognised on the balance sheet, as the rights and responsibilities of ownership remain with the lessor. Lease payments for operating leases are recognised through the item general expenses in the income statement over the lease term on a straight-line basis. Intangible assets Intangible assets are classified into the following categories: Goodwill: The assets, liabilities and contingent liabilities of acquired subsidiaries are revalued at the acquisition date. The resulting fair value of the identifiable assets, liabilities and contingent liabilities is set off against the purchase price paid, and any resulting difference is recognised in the balance sheet as goodwill. Goodwill is not amortised; it is tested for impairment annually at the cash-generatingunit level and a write-off is made if the recoverable amount is less than its carrying amount. Customer relationships: This position comprises longterm customer relationship intangibles from recent business combinations. Customer relationships are amortised over their estimated useful life not exceeding ten years using the straight-line method. Brand: The Group considers the capitalised brand to have an indefinite useful life. It is therefore not amortised, but tested for impairment and confirmation of its indefinite status on an annual basis. Software: The Group capitalises costs relating to the acquisition, installation and development of software if it is probable that the future economic benefits that are attributable to the asset will flow to the Group and that the costs of the asset can be identified and measured reliably. The capitalised software is amortised using the straight-line method over its useful life, usually not exceeding three to five years. On each balance sheet date, the intangible assets with a finite life are reviewed for indications of impairment. If such indications exist, it is determined whether the carrying amount of the intangible assets is fully recoverable and a write-down is made if the carrying amount exceeds the recoverable amount. Due to banks and customers Amounts due to banks and customers are initially recognised at fair value less directly attributable transaction costs and subsequently reported at amortised cost. Interest and discounts are debited to interest expenses on an accrual basis, using the effective interest method. Debt issued Issued bonds are initially recognised at the fair value of the consideration received, net of directly attributable transaction costs. They are subsequently reported in the balance sheet at amortised cost using the effective interest method. Own bonds that the Group holds as a result of market-making activities or for resale in the near term are treated as redemption and therefore are extinguished. Notes JULIUS BAER GROUP 41
Page 1 and 2: 2008 Annual Report Julius Baer Hold
Page 3 and 4: Content 2 Foreword 6 Corporate Gove
Page 5: Total client assets of the Julius B
Page 8 and 9: Corporate Governance Corporate gove
Page 10 and 11: Corporate Governance certain Julius
Page 12 and 13: Corporate Governance b) The new sha
Page 14 and 15: Corporate Governance 3.1 Members of
Page 16 and 17: Corporate Governance 3.2 Other acti
Page 18 and 19: Corporate Governance Attendance of
Page 20 and 21: Corporate Governance Compensation C
Page 22 and 23: Corporate Governance The ultimate r
Page 24 and 25: Corporate Governance 5. Content and
Page 26 and 27: Corporate Governance 6.3 Convocatio
Page 28 and 29: Corporate Governance 9. Information
Page 30 and 31: Financial Report Group 2008 29 Cons
Page 32 and 33: Consolidated statement of comprehen
Page 34 and 35: Consolidated statement of changes i
Page 36 and 37: Consolidated statement of cash flow
Page 38 and 39: Summary of significant accounting p
Page 40 and 41: Notes amount, taking into account t
Page 44 and 45: Notes Provisions A provision is rec
Page 46 and 47: Notes Contracts on shares of Julius
Page 48 and 49: Notes ments and in its consolidated
Page 50 and 51: Notes the examination and oversight
Page 52 and 53: Notes eral and the portfolio’s di
Page 54 and 55: Notes The following table provides
Page 56 and 57: 12 000 000 10 000 000 8 000 000 6 0
Page 58 and 59: Notes 6. Liquidity and financing ri
Page 60 and 61: Notes The following table shows an
Page 62 and 63: Notes - to assess all operational r
Page 64 and 65: Notes Capital adequacy Hybrid Tier
Page 66 and 67: Notes The following table gives an
Page 68 and 69: Notes 3 Net trading income 66 JULIU
Page 70 and 71: Notes 7 Income taxes 68 JULIUS BAER
Page 72 and 73: Notes 8 Reporting by segment 70 JUL
Page 74 and 75: Notes 9 Earnings per registered sha
Page 76 and 77: Notes 10c Allowance for credit loss
Page 78 and 79: Notes 12a Financial investments ava
Page 80 and 81: Notes 78 JULIUS BAER GROUP Balance
Page 82 and 83: Notes 14 Future annual commitments
Page 84 and 85: Notes 17 Debt issued 82 JULIUS BAER
Page 86 and 87: Notes 19 Provisions 84 JULIUS BAER
Page 88 and 89: Notes Additional information 21 Rel
Page 90 and 91: Notes 22 Pension plans and other em
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Notes 6. Defined benefit pension pl
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Notes 24 Derivative financial instr
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Notes 25a Financial instruments by
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Notes The following methods are use
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Notes Sensitivity of fair values to
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Notes 100 JULIUS BAER GROUP Head Of
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Notes 102 JULIUS BAER GROUP Head Of
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Notes 28 Share-based payments Equit
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Notes Movements in options granted
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Notes Assets in own-managed collect
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110 JULIUS BAER GROUP
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112 JULIUS BAER GROUP
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Income statement 114 JULIUS BAER HO
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Notes 116 JULIUS BAER HOLDING LTD.
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Compensation, loans and share- and
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120 JULIUS BAER HOLDING LTD. 31.12.
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Compensation of the members of the
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Proposal of the Board of Directors
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126 JULIUS BAER HOLDING LTD.
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JULIUS BAER HOLDING LTD. Bahnhofstr
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02/2009 Publ. No. 5 © JULIUS BAER
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Content 1 Introduction 2 2 Capital
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2 Capital adequacy 2.1 Capital rati
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2.3 Minimum capital requirement The
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The securities lending and repo tra
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3.3 Credit risk by region In the ta
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3.5 Credit risk after deduction of
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JULIUS BAER HOLDING LTD. Bahnhofstr
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2008 Annual Report Julius Baer Holding Ltd. - Julius Bär Gruppe

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