consolidated annual report - Gruppo Banca Sella

The consolidated financial statements for the financial
year ended as at 31 December 2004, which includes the
Balance Sheet, the Income Statement and the Explanatory
Notes to the Financial Statements, was prepared in accordance
with the regulations in force and it also contains
the Board of Directors’ Annual Report, as published in the
present volume in the relevant section.
218 - GRUPPO BANCA SELLA
FORM AND CONTENTS OF THE CONSOLIDATED
FINANCIAL STATEMENTS
SECTION 1 - ACCOUNTING PRINCIPLES
The principles adopted to prepare the Consolidated
Financial Statements are in accordance with Law by
Decree No. 87 of 27/1/1992, Law by Decree No. 213
of 24/6/1998 and to the instructions issued by Banca
d’Italia (Provision of 30/7/1992 and following modifications
and supplements), and are consistent with those
used in the previous financial year.
The accounting policies hereafter discussed, where
requested by the regulations in force, were fixed together
with the Board of Auditors.
As regards quoted securities, a decision was taken to
change the evaluation principles of securities entered in
the financial statements, passing from a lower between
book value and market value basis to a market value
only basis; moreover, the use of the price at the end
of period for the evaluation of positions (formerly the
average of prices for the last month of the period was
used) was deliberated. According to such a change, the
following differences with the method previously used
took place:
• capital gains are entered at Income Statement, evaluating
them at end of period price and relevant to
quoted securities previously not calculated;
• capital losses are entered evaluating them at end of
period price, instead of using the average of prices
for the last month of the period.
The Consolidated Financial Statements and the Explanatory
Notes are shown in euro thousand.
For a better understanding of the Group’s financial
position, the Statement of changes in shareholders’ equity
and the Statement of cash flow are annexed.
The consolidated accounts are audited by Reconta,
Ernst & Young S.p.A..
1. LOANS, GUARANTEES AND COMMIT-
MENTS
Loans are stated at their estimated realizable value,
calculated taking into account both the solvency of debtors
and the guarantees received for the same loans.
Default interest matured during the year are entered
in the Income Statement for the part collected or anyway
deemed to be recoverable.
Estimated losses are determined on a case-by-case
basis evaluation of non-performing cash loans and guarantees
given and are integrated with evaluations of other
loans likely to be recovered.
Losses ascertained during the financial year and the
estimated losses for the same period on cash loans and
on guarantees given are entered at item “Write-downs to
loans and provisions for guarantees and commitments”
of the Income Statement.
Write-ups to loans depreciated in previous financial
years are entered at item “Write-ups to loans and provisions
for guarantees and commitments”.
No provisions were made for country risk, the
amount of which is very limited and no losses are forecasted.
Also, no losses for guarantees given are estimated.
Active and passive financial leasing operations are entered
following the so-called “financial method”, which
provides that at the beginning of each contract the value