UNI - EN REPORT No 42/2012
Unofficial market - legal basis
In accordance with provisions of the Code of Best Practice for Warsaw Stock Exchange Listed Companies, the Ljubljana Stock Exchange Rules and the applicable legislation, Nova KBM d.d. hereby publishes the following announcement:
The Nova KBM Group's H1 2012 results were impacted by high provisions and impairment losses. The Bank is performing well and its liquidity position is adequate. The measures aimed at reducing operating costs and upgrading working processes are being implemented across all business segments.
The unaudited and non-consolidated results of the Nova KBM Group for the first half of the year were discussed at yesterday meeting of the Supervisory Board of Nova KBM d.d. The Group's profit before provisions and impairment losses totalled €35.8 million, whereas the Bank's profit before provisions and impairment losses reached €21.5 million. After accounting for provisions and impairment losses, the Group made a pre-tax loss of €34.0 million from continuing operations. Apart from discussing current operations of the Group, the supervisors appointed a body to conduct a forensic audit review, and were informed of the conclusions of the due diligence review of the Bank. In addition, they discussed the report of the Commission for the Prevention of Corruption in respect of alleged irregularities made by the previous Management Board of the Bank in an attempt to purchase the daily newspaper Večer. The measures aimed at strengthening the operations and enhancing the relations with customers are being implemented at both the Bank and the Group levels. The capital raising activities are underway. The Bank is performing well and its liquidity position is adequate. A number of activities to improve the performance of the Bank have already been undertaken by the new Management Board.
The operations of the Group continued to be affected by adverse market conditions and the stagnation of economic activities, resulting in enhanced credit risk and, consequently, fairly high impairment losses and provisions recorded by the Group. In the period from January through June 2012, net provisions and impairment losses reached almost €70 million. As of 30 June 2012, the total capital adequacy of the Nova KBM Group stood at 10.92 percent, while its total assets amounted to €5.7 billion, a decrease of 1 percent from the 2011 year-end. In spite of the difficult economic environment in Slovenia and internationally, the Nova KBM Group is performing well and is prepared to deal with new challenges and opportunities going forward.
ÂťIt is our intention to optimise the performance of the Bank across all business segments. Due to pressure on the interest rate margin, and especially due to high provisioning expenses, in the first half of the year the Bank focused particularly on cost reduction measures. We managed to reduce the number of staff, mainly through the so-called soft measures, as well as the administration costs. These went down by 4 percent compared to the same period last year. The measures aimed at reducing all types of operating costs, including staff costs, are being implemented. Apart from cost-cutting measures, we will make several business restructurings, and will hire additional staff, in particular in the finance divisionÂŤ, pointed out Aleš Hauc, President of the Bank's Management Board, upon the release of the H1 results.
The supervisors were informed of the deliverables of the due diligence review of the Bank, which was carried out over the last few months. The due diligence confirmed that a recapitalisation of the Bank should be done as soon as possible, and certain necessary activities in this regard have already been undertaken. The Supervisory Board appointed a body to conduct a forensic audit review. ÂťThe audit to be carried out, a part of which should be a forensic review, will be focused on the past operations of Nova KBM and some of its smaller subsidiaries located in Slovenia and abroad. We expect to receive the results of this audit within two months. Depending on the results, we will instruct the Management Board to ascertain any responsibility of the previous Management BoardÂŤ, said Peter Kukovica, Chairman of the Bank's Supervisory Board.
The Supervisory Board also discussed the report of the Commission for the Prevention of Corruption in respect of alleged irregularities made by the previous Management Board of the Bank in an attempt to purchase the daily newspaper Večer. The results of audits which have already been performed and which are yet to be performed will be first discussed by the Supervisory Board Audit Committee and then presented to the Management and the Supervisory Boards, which, if necessary, will take appropriate steps.
This announcement will be available on the Bank's website (www.nkbm.si) as from 31 August 2012.