annual report <strong>2012</strong>NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December <strong>2012</strong>33. OWNERS<strong>The</strong> owners of the Company and their respective interest as at 31 December <strong>2012</strong> were as follows:Number of Percentageshares (%)Path Holdings Ltd 2.438.224 19,60Leon Investments S.A., SPF 2.438.224 19,60Constantinos Shiacolas 1.950.580 15,68Delphis Investments Ltd 1.751.459 14,08Leonidas Ioannou 1.751.459 14,08Intergaz Ltd 1.219.113 9,80CLR Investment Fund Public Ltd 609.556 4,90Emerging Financial Partners Ltd 248.799 2,00Panikos Katsouris 16.254 0,13Antonios Gerolemou 16.254 0,1334. RELATED PARTY TRANSACTIONSTHE GROUP AND THE COMPANY12.439.922 100,00<strong>2012</strong> 2011€’ 000 €’ 000Loans and advances to:Members of the current Board of Directorsand their connected persons (excluding membersof the Board who are key management personnel and are disclosed below) 9.435 11.421Key management personnel 206 229In addition to loans and advances, there were contingent liabilities and commitments in respect of members of the Board ofDirectors and their connected persons, in the form of guarantees and commitments to lend amounting to €1.435 thousand in <strong>2012</strong>(2011: €681 thousand).Connected persons include spouses, minor children and companies in which members of the Board of Directors or keymanagement personnel, hold directly or indirectly, at least 20% of the voting rights in a general meeting, or act as directors of theentities concerned or have guaranteed credit exposures of such entities.Key management personnel consists of the Chief Executive Officer and the Deputy Chief Executive Officer.All transactions with members of the Board of Directors and their connected persons are made on normal business terms.Transactions with key management personnel are made according to the terms applicable to the rest of the personnel of theCompany.61
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December <strong>2012</strong>35. ECONOMIC ENVIRONMENTIn June <strong>2012</strong>, the <strong>Cyprus</strong> Government applied to the European Commission, the European Central <strong>Bank</strong> and the InternationalMonetary Fund (“TROIKA”) to recapitalise the financial sector, cover fiscal deficits and refinance the <strong>Cyprus</strong> debt. On 25 March2013 the Finance Ministers of the Eurozone approved the funding of the <strong>Cyprus</strong> debt and restructuring of the banking sector. <strong>The</strong>Memorandum of Understanding, which provides financial assistance to the Republic of <strong>Cyprus</strong> of €10bil, was approved by allparties on 30 April 2013.<strong>The</strong> decisions of the “Eurogroup” on 25 March 2013 include, inter alia, the immediate restructuring of <strong>Cyprus</strong> Popular <strong>Bank</strong>Public Company Ltd (“Laiki”) with the contribution of its shareholders, bondholders and unsecured depositors (i.e. deposits over€100.000) on the basis of the decree issued by the Central <strong>Bank</strong> of <strong>Cyprus</strong> under the new law recently passed by the House ofRepresentatives “Resolution of Credit and Other Institutions Law”. <strong>The</strong> decree provides for the division of Laiki into “good” and“bad” bank, with the “good” bank being absorbed by <strong>Bank</strong> of <strong>Cyprus</strong> Public Company Ltd (“BOC”) and the “bad” bank to be woundup. <strong>The</strong> decree further provides for the recapitalization of BOC with the full contribution of its shareholders and bondholders andthe conversion of unsecured deposits into equity. With the Eurogroup’s decision, deposits up to €100.000 are guaranteed, whilecontributions from depositors of other financial institutions, including cdbbank, are not required.On 22 March 2013, the House of Representatives passed the “Restrictive Measures on Transactions Law of 2013” which imposerestrictions on banking transactions. <strong>The</strong> restrictive measures are approved by the Minister of Finance upon the recommendationof the Governor of the Central <strong>Bank</strong> of <strong>Cyprus</strong> and following consultation with “TROIKA” and include, among others, restrictionson cash withdrawals and fund transfers, no early termination of fixed-term deposits and notice accounts before maturity andmandatory renewal of specified amounts of fixed-term deposits.On 25 March 2013 the European Central <strong>Bank</strong> announced that it will provide liquidity to the Central <strong>Bank</strong> of <strong>Cyprus</strong> through theEmergency Liquidity Assistance (ELA) mechanism according to applicable legislation.Consequences of the recent developments<strong>The</strong> Directors and Management of the Group believe that, the depositors’ contribution for the recapitalization of BOC andrestructuring of Laiki, may result in a loss of confidence of foreign depositors and investors and significant movement in capital.<strong>The</strong> Group ensures its smooth operational efficiency by maintaining healthy liquidity and taking preventive measures.<strong>The</strong> Directors and Management of the Group are not in a position to assess future developments which could have an impact on the<strong>Cyprus</strong> Economy and, as a result, on the future financial performance, cash flows and financial position of the Group. <strong>The</strong> Directorsand Management of the Group take all necessary measures possible to maintain the viability of the Group and to manage thenegative impact on its operations resulting from the current economic environment. <strong>The</strong> Directors and Management of the Grouptake also all necessary actions to strengthen and maintain adequate capital base in order to comply with minimum supervisorycapital requirements. In case the Group is unable to continue as a going concern, appropriate adjustments will need to be madefor impairment of assets to their net realizable value and to make provision for any additional liabilities that may arise.36. EVENTS AFTER THE BALANCE SHEET DATECurrent developments in the economic environment in <strong>Cyprus</strong> are referred to in note 35 of the financial statements. Details of theGroup’s Capital Enhancement Plan are referred to in note 31 (e) of the financial statements. <strong>The</strong>re were no other material eventsafter the balance sheet date, which affect the financial statements as at 31 December <strong>2012</strong>.62
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