Annual report 2010 - Banca Privata Edmond de Rothschild Lugano ...

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26 • banca privata Edmond dE rothschild lUGano Financial investments Debt securities that at the time of purchase were already intended to be held to maturity are stated as per the accrual method, meaning that capital gains and losses are calculated up to the redemption date. Fixed-income paper bought within a shorter time horizon appear, like equities, at their purchase price or year-end market value, whichever is lower. Holdings This item includes stakes in companies that were bought for a specific purpose and with the intention of being kept indefinitely. Holdings are reported at their purchase price, less any depreciation deemed necessary. Dividends are entered directly in the profit and loss account as at the date they are collected. Fixed assets The values of fixed assets appearing in the balance sheet begin at the purchase price, which is written down each year as appropriate. Whereas the Bank’s premises at Via Ginevra 2 are depreciated each year in a linear manner until it has reached about the minimum limit authorised by the Tax authorities, our other properties have now been fully paid off. Other fixed assets are depreciated to reflect the value of their remaining useful life. This value takes account of the risk of rapid obsolescence, especially in the case of high-tech equipment and software, and is reviewed annually. If this assessment reveals a change in the remaining useful life of a fixed asset or a reduction in its value, the Bank respectively adjusts the value to the revised remaining useful life or writes it down further. This prudent depreciation policy may give rise to hidden reserves. Adjustment accounts These items include income and expenses that fall outside the reporting year: accrued income and prepaid expenses on the assets side; accrued expenses and deferred income on the liabilities side. Personnel welfare liabilities Contributions are reported as personnel expenses in the profit and loss account for the year to which they relate. Each year the Bank determines whether it has derived any economic benefits or commitments from personnel welfare plans and states them in the balance sheet pursuant to the Swiss GAAP RPC 16: – Liabilities are stated in the balance sheet and any difference in relation to the corresponding amount reported the previous year is included in “Personnel expenses” in the profit and loss account. – Benefits are not stated in the balance sheet. The annual study is based on financial statements bearing a closing date no older than 12 months and drawn up in accordance with GAAP RPC 26. Valuation adjustments and provisions Notes to the Financial Statements Every identifiable risk as at the balance sheet date is quantified and reported under this heading. Latent risks are covered by flatrate valuation adjustments and provisions. The resulting allocations may contain hidden reserves.
Notes to the Financial Statements Reserves for general banking risks These reserves are intended to cover the Bank’s general operating risks and are deemed to be part of shareholders’ equity, within the meaning of the relevant banking legislation. Off-balance sheet guarantees and commitments All the Bank’s liabilities towards correspondents and clients are reported at their total value. Derivative instruments Forward positions are stated at their residual value. Positions in derivative instruments held for trading purposes are reported at their market value, provided an organized market exists. If there is no such organized market, they appear at their purchase price or market price, whichever is lower. Derivatives held for hedging purposes are reported as per the same principles applied to the operations they are meant to cover. Capital gains and losses are recorded in the profit and loss account. Current taxes annUal rEport 2010 • 27 Current taxes are calculated on the basis of the year’s profit and reported capital. They are charged to the reporting year. A provision is allocated for the following year’s taxes under “Accrued expenses and deferred income”, on the liabilities side of the balance sheet. Consolidation The Bank’s financial statements are incorporated in the consolidated accounts of the Banque Privée Edmond de Rothschild Group, Geneva. These accounts are themselves included in the annual report of Banque Privée Edmond de Rothschild S.A., Geneva.
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Annual report 2010 - Banca Privata Edmond de Rothschild Lugano ...

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