Contents. Board of Directors and Management. Financial Highlights. Chairman s Statement. Directors Report. Statement of Directors Responsibilities

Transcription

1 Bank Mandiri (Europe) Ltd Annual Report

2 Contents Board of Directors and Management 02 Financial Highlights 03 Chairman s Statement 04 Directors Report 05 Statement of Directors Responsibilities 06 Auditor s Report 07 Corporate Profile and Services 09 Profit and Loss Account 12 Balance Sheet Bank Mandiri Network Inside Back Cover

3 Board of Directors and Management Appointed Resigned Directors Gatut Subadio Chairman 10/11/05 20/02/09 Iman Nugroho Soeko Chairman 20/02/09 Ken Widjajanto Chief Executive 14/09/05 Mansyur Nasution NonExecutive Director 09/11/07 20/02/09 Suresh Gummalam NonExecutive Director 20/02/09 Patrick Quinn NonExecutive Director 31/05/07 John Williams NonExecutive Director 11/07/07 Management Ken Widjajanto Chief Executive Rudy Hutagalung General Manager Ajay Joshi Deputy General Manager Steve Wansell Deputy General Manager Brendan Battle Deputy General Manager Company Secretary Ajay Joshi Deputy General Manager and Company Secretary Auditors Ernst & Young LLP 1 More London Place London SE1 2AF Registered Office 6 Thomas More Square Thomas More Street London E1W 1YW Registration Number:

4 Financial Highlights Restated Income Statement Net interest income Fees & commissions receivable Operating income Overhead expenses (1) Profit before tax & provisions Provisions for bad debts Provisions for commitments & contingencies Profit/(Loss) before taxation Taxation Profit/(Loss) after taxation 6,538 3,839 10,377 6,806 3,571 2,442 1,129 (351) 778 8,455 5,133 13,588 7,482 6,106 (82) 6,188 (1,822) 4,366 7,692 4,867 12,559 6,399 6,160 (662) 6,822 (1,997) 4,825 6,298 3,700 9,998 6,488 3,510 (2,032) 5, ,415 4,942 3,323 8,265 7, ,203 1,499 (3,817) (3,817) Balance Sheet Loans and advances to banks Loans and advances to customers (2) Debt securities (3) Total assets Deposits from banks Customer accounts Debt securities in issue Shareholder s funds (4) 45, ,157 40, , ,346 39,722 72,474 12, ,421 50, , ,348 49,561 70,504 57, ,467 52, , ,938 60,981 67,244 18, ,371 74, , ,913 37,283 10,000 62,827 32,638 68,929 72, ,694 73,007 39,708 8,514 55,457 Ratios Capital adequacy ratio Total equity to total assets Return on average equity Return on average assets (5) 41.2% 30.9% 1.6% 1.6% 32.5% 23.8% 9.2% 1.9% 29.9% 24.5% 10.4% 2.7% 36.3% 28.4% 10.7% 1.8% 51.9% 31.0% 8.2% 0.5% (1) 2005 Includes exceptional costs in respect of: a Staff restructuring costs US$154k b Premises move costs of US$528k c Exceptional client administration and legal costs relating to a borrower in default US$377k (2) Net of specific provisions (3) Comparative after adoption of FRS26 to 2005 (4) Shareholder s funds restated for 2005 to include reserves of available for sale & hedge accounting (5) Excluding tax and bad debt provisions Basis for Calculation of the Ratios Capital Adequacy Ratio Capital adequacy ratio is calculated in line with the format prescribed by the Financial Services Authority Total Equity to Total Assets The total equity to total assets ratio is calculated by dividing the shareholders funds (see note 19) by the total assets after deducting specific provisions for bad debts. Return on Average Equity The return on average equity is calculated by dividing profit before tax by the average equity during the year. Return on Average Assets The return on average assets is calculated by dividing profit before tax and provisions for bad debts by the average total assets during the year. 03

5 Chairman s Statement I am pleased to present the report and financial statements of Bank Mandiri (Europe) Limited for its tenth year as a wholly owned subsidiary of PT Bank Mandiri (Persero) Tbk, Indonesia. continued to be a challenging year for the banking industry worldwide. Asset values remained depressed and wholesale funding remained contracted. Notwithstanding this continuing worldwide economic turmoil, the Bank still performed satisfactorily and we recorded operating income of US$10.4 million for the year, which was 23.5% lower than in. Operating profits before provision adjustments and taxes of US$3.57 million were (41.5%) lower than in due to a larger proportionate reduction in Net Interest margin and Fee Income of 22.67% to US$6.5 million and 24.73% to US$3.7 million respectively. To compensate for this we managed to reduce our overheads by 8.72% to US$6.6 million. Net profits, after taxes and provision adjustments, were US$0.78 million in (US$4.36: ). I am pleased to confirm that the Bank has no subprime mortgage exposure in its balance sheet and has never been involved in the subprime mortgage or securitisation market either directly or indirectly. Whilst the quality of the Bank s credit portfolio has largely remained unaffected by the credit crunch, some of our customers have been affected by the economic turmoil of recent years. In view of the foregoing, total specific impairment provisions on our balance sheet now amount to US$2.25 million of which US$1.74 million were booked in. Furthermore, on 10 th February 2010 an impaired loan, with a net balance of US$11.3 million, was transferred to a fellow group company for cash proceeds of US$11.3 million. This demonstrates in a very real way the support that the parent group provides to the Bank. The Bank maintained adequate capital resources to support its business activities and our capital adequacy ratio measured in accordance with Basel 2 guidelines was 41.2%. This ratio is well above accepted industry norms and gives the Bank ample scope to further expand its business and profitability. Mr. Gatut Subadio and Mr. Nasution retired from the Board during. I wish Mr. Subadio well in his new position and would also like to thank him for the stewardship he provided during his tenure as Chairman. I would also like to thank Mr. Nasution for the guidance that he provided during his tenure as NonExecutive Director. Mr. Gummalam was appointed as NonExecutive Director during and I would like to welcome him to the Board. It is an honour to be have been appointed Chairman of BMEL and I look forward to working with management and staff in fulfilling our business objectives and targets over the coming year. With the demonstrated support of our parent, I believe that the actions we have taken in will provide a solid foundation for us to build our business and I am optimistic that we will achieve growth in assets and profitability during Finally, on behalf of the Board, I should like to express my gratitude to our customers and business counterparts for their continued support and custom over the past year and to my fellow directors, the executive management and, not least to the staff who have remained extremely professional, focused and committed for their hard work and dedication. As at 31 st December our total balance sheet footings were US$234.4 million, which was 20.4% lower than at the end of. The reduction was mainly due to the liquidation of a cash collateralised loan for US$50 million. Growth was slower than in prior years as, given the difficult market conditions, we continued to take a conservative approach to business and new lending activity was focused primarily on self liquidating trade finance business. Total loans and advances to banks and customers (including cash held by banks & excluding US$50 million cash collateralised loan) grew by 0.83% to US$192.2 million. The Bank actively manages its assets and liabilities to ensure that business growth is supported by the appropriate level of funding and liquidity resources; more details as to the Bank s liquidity management are contained in note 23 to the financial statements. Iman Nugroho Soeko Chairman 24 th February

6 Directors Report The Directors present their Report and the Financial Statements for the year ended 31 st December. Results and Dividends The trading profit after tax for the year amounted to US$777,885. The Directors do not recommend the payment of a dividend. Principal Activities and Review of Business The Bank is an authorised UK Bank under the Banking Act 1987 and carries on international corporate and institutional banking business, which includes the following activities: (1) Trade Finance. (2) Ship Finance. (3) Interbank Deposits. (4) Current and Deposit Accounts. (5) Purchase of Investment Securities, Marketable Securities and Secondary Market Debt. Details of the Review of Business have been covered in the Chairman s Statement. Principal Risk Uncertainties The Board, in conjuction with Senior Management of the Bank, has established comprehensive policies and procedures in order to manage and mitigate the risks and uncertainties facing the Bank and the ongoing implementation of such is monitored by management and through a robust and independent internal audit fuction. More detail as the principal risks and uncertainties facing the Bank and the mitigation thereof is contained in Note 23 to the Financial Statements. Fixed Assets Details of the Bank s fixed assets are shown in Note 12 to the financial statements. Future Developments The Directors aim is to maintain the management policies which have resulted in the Bank s growth in recent years. As per the Chairman s statement, we expect that the Bank will be able to achieve growth and profitability in the year ahead. The details of the directors who served during can be seen on page 2 of this report. Subsequent Events An impaired loan, with a net balance of US$11.3 million, was transferred to a fellow group company for cash proceeds of US$11.3 million on 10 th February On 19 th February 2010, a borrower went into Administration. See note 27 for details. Disclosure of Information to Auditors At the date of Board approval of this Report and Financial Statements for the year ended 31 st December, each of the Directors has confirmed that: as far as they are aware, there was no relevant audit information of which the auditors were unaware; and, they have taken all the steps necessary as a Director in order to make themselves aware of any relevant audit information and to establish that the auditors have been made aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act Auditors Ernst & Young LLP have indicated their willingness to continue in office as Company s auditors. A resolution proposing their reappointment and giving authority to the directors to fix their remuneration will be tabled at the next Annual General Meeting. By order of the Board Ajay Joshi, Company Secretary 26 th February

7 Statement of Directors Responsibilities The directors are responsible for preparing the Director s Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 06

8 Auditor s Report Independent to the members of Bank Mandiri (Europe) Ltd We have audited the financial statements of Bank Mandiri (Europe) Limited for the year ended 31 st December which comprise the Profit and Loss Account, the Statement of Total Recognised Gains and Losses, the Balance Sheet, and the related notes 1 to 27. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors Responsibilities Statement set out on page 6, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the company s affairs as at 31 December and of its profit for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Emphasis of matter In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in note 27 to the financial statements concerning the company s loan exposure to its customer that went into administration in The ultimate outcome of the matter cannot presently be determined, and no provision for any loss that may result has been made in the financial statements. Ken Eglinton Senior Statutory Auditor for and on behalf of Ernst & Young LLP, Statutory Auditor London Date: 26 th February

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10 Corporate Profile and Services The bank that delivers Trade Finance and Shipping Solutions Worldwide BMEL s Profile Bank Mandiri (Europe) Limited ( BMEL ) was established on the 2 nd August 1999 and is a wholly owned subsidiary of Bank Mandiri, Indonesia. When BMEL was established it took over the banking business of PT Bank Ekspor Impor Indonesia (Persero), London Branch which had been based in London since 1992; and previously since 1983 as a representative office. BMEL is incorporated and licensed in the United Kingdom and is a British bank under the regulation of the UK Financial Service Authority (FSA) and has a complement of 29 staff. By virtue of its Indonesian ownership, BMEL can offer a more informed and proactive service in Indonesian related business than many of its competitors. Although BMEL is Indonesian owned, its business activities are not restricted to Indonesia and we like to consider BMEL, as the bank that delivers Trade Finance and Shipping Solutions Worldwide. BMEL s primary business activities are trade finance and ship finance. BMEL is staffed by a team of experienced banking professionals who are committed to providing an efficient, informed and personal service. The Bank has a wide network of correspondent banking contacts developed over many years of servicing its customers needs throughout the world. BMEL provides tailored financial solutions specific to individual client requirements which assist in the timely settlement of transactions and can substantially benefit the cash flow of our customers. BMEL s Services Some of the principal products and services we provide are listed below: Import letter of credit and documentary collection services; Supplier credit financing; Shortterm refinancing loans under import letters of credit; Export letter of credit services (advising, confirmation, negotiation, etc); Bill discounting and forfaiting; Contract bonding and guarantee facilities; Ship financing; Syndications. 09

11 Financial Statements

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13 Profit and Loss Account for the year ended 31 st December Notes Interest receivable Interest payable [3] 10,417 (3,879) 18,773 (10,318) Net interest income 6,538 8,455 Fees and commissions receivable Other operating Income [5] 3, , Total operating income 10,377 13,588 Administrative expenses Depreciation and amortisation Provision for bad and doubtful debts [6] [12] [10] (6,640) (166) (2,442) (7,274) (208) 82 Profit on ordinary activities before tax [4] 1,129 6,188 Tax charge [8] (351) (1,822) Profit on ordinary activities after tax 778 4,366 Statement of total recognised gains and losses for the year ended 31 st December Profit for the financial year Change in fair value of investment available for sale Current UK Corporation tax charge on fair value of investment available for sale Change in fair value of forward exchange contracts Realised to profit and loss Total recognised gains relating to the year Total recognised gains since last annual report (4) ,970 1,970 4,366 (354) (771) 19 3,260 The profit above is achieved from continued operations. The accompanying notes are an integral part of these financial statements. 12

14 Balance Sheet as at 31 st December ASSETS Notes Cash and money at call and deposits with central banks 36,068 31,598 Loans and advances to banks [9] 45,000 12,618 Loans and advances to customers [10] 111, ,421 Debt securities [11] 40,146 50,779 Tangible fixed assets [12] Other assets prepayments and accrued income [13] 1,784 4,994 Total assets [14] 234, ,728 LIABILITIES Deposits from banks [15] 120, ,348 Customer accounts [16] 39,722 49,561 Other liabilities, accruals and deferred income [17] 1,819 5,315 Total liabilities excluding capital and other reserves [14] 161, ,224 SHAREHOLDER S FUNDS Called up share capital [18] 49,000 49,000 Cash flow hedge reserve [24] 52 (771) Availableforsale reserve [19] 15 (354) Profit and loss account 23,407 22,629 Total shareholder s funds equity interests [19] 72,474 70,504 Total liabilities and shareholder s funds 234, ,728 MEMORANDUM ITEMS Contingent liabilities: Guarantees and assets pledged as collateral security [22] 3,986 8,545 The financial statements on pages 12 to 32 were approved by the Board of Directors on 26 th February 2010 and are signed on its behalf by: Ken Widjajanto, Chief Executive The accompanying notes are an integral part of these financial statements. 13

15 for the year ended 31 st December 1 ACCOUNTING POLICIES The accounting policies, all of which, unless specifically stated, have been consistently applied throughout the year, are detailed below: A Basis of preparation The financial statements have been prepared under the historical cost basis of accounting except for availableforsale investments and derivative financial instruments that have been measured at fair value and in accordance with the special provision of CA 2006, relating to banking companies, and in accordance with applicable accounting standards and with the Statements of Recommended Accounting Practice issued by the British Bankers Association. The financial statements have been prepared in US Dollars, as this is the primary currency of the economic environment in which the Bank operates. B Cashflows Under Financial Reporting Standard 1 (revised 1996) the Bank is exempt from the requirement to prepare a cash flow statement on the grounds that it is a wholly owned subsidiary of a parent undertaking that includes the Bank in its own published consolidated financial statements, which include a consolidated cashflow report. C Foreign currencies Transactions or accruals in foreign currencies are recorded in the profit and loss account at the US Dollar rate of exchange applicable to the related monthend, such that all profits are ultimately booked in US dollars. Assets and liabilities denominated in foreign currencies are translated into US Dollars at the rates of exchange prevailing as at the Balance Sheet date. Both realised and unrealised foreign exchange gains and losses are recognised in the profit and loss account. D Fixed assets Fixed assets are included at cost less accumulated depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset on a straight line basis from the date of use over its estimated useful life as follows: Leasehold Improvements 5 years Computer Hardware 3 years Computer Software 3 years Furniture and Fixtures 5 years Office Equipment 3 years Motor vehicles 4 years The carrying values of the tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. E Pensions The Bank offers to its staff a money purchase arrangement. The cost to the Bank is charged to the Profit and Loss account as incurred. F Financial Instruments Date of recognition The purchase or sale of financial assets, liabilities and derivatives that require the delivery of assets within the time frame generally established in the market place are recognised on the trade date i.e. the date that the Bank commits to purchase or sell the assets. Initial recognition of financial instruments The classification of financial instruments at initial recognition depends on the purpose for which the financial instruments were acquired and their characteristics. All financial instruments are measured initially at their fair value less/plus any directly related costs. Subsequent measurement The subsequent measurement of financial instruments depends on their classification as follows: Heldtomaturity financial investments Heldtomaturity financial instruments are those which carry fixed or determinable payments and have fixed maturities and which the Bank has the intention and ability to hold to maturity. After initial measurement, heldtomaturity financial investments are subsequently measured at amortised cost using the effective interest rate method less allowance for impairment. A component of debt securities is included in this category. Availableforsale financial investments Financial investments classified as availableforsale are measured at fair value. Unrealised gains and losses are recognised directly in equity in the Availableforsale reserve. When the security is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the profit and loss account. A component of debt securities is included in this category. 14

16 for the year ended 31 st December 1 ACCOUNTING POLICIES (Continued) Loans and advances After initial measurement, loans and advances are subsequently measured at amortised cost using the effective interest rate method, less allowances for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The amortisation is included in interest income in the profit and loss account. Derecognition of financial assets and financial liabilities A financial asset is derecognised where: The rights to receive cash flows from the asset have expired; or The Bank has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party; and Either (a) the Bank has transferred substantially all the risks and rewards of the asset, or (b) the Bank has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Determination of fair value The determination of fair values of financial instruments is based upon quoted market prices or dealer price quotation for financial instruments traded in active markets. G Impairment of financial assets The Bank assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and the loss event has an impact on the estimated cash flows of the financial asset that can be reliably estimated. Loans and advances If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of specific provision, and the amount of the loss is recognised in the profit and loss account. Interest income continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. Loans together with the associated specific provision are writtenoff when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Bank. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the specific provision. If a writeoff is later recovered, the recovery is recognised in the profit and loss account. The present value of the estimated future cash flows is discounted at the financial asset s original effective interest rate. If a loan has variable interest rate, the discount rate for measuring any impairment loss is the effective interest rate at the date at which the impairment occurs. Availableforsale financial investments For availableforsale financial investments, the Bank assesses at each balance sheet date whether there is objective evidence that an investment or a group of investments is impaired. Debt instruments classified as availableforsale, are assessed for impairment based on the same criteria as financial assets carried at amortised cost. Interest continues to be accrued at the original effective interest rate on the reduced carrying amount of the asset and is recorded as part of interest receivable. If, in a subsequent year, the fair value of the debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the profit and loss account, the impairment loss is reversed through the profit and loss account. For loans and advances carried at amortised cost, the Bank first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant. 15

17 for the year ended 31 st December 1 ACCOUNTING POLICIES (Continued) H Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Bank makes use of derivative financial instruments, i.e. forward foreign exchange contracts, to manage exposures to foreign currency risks, including exposures arising from forecast transactions. The derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at market prices. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains and losses arising from changes in fair value on the derivatives during the year that do not qualify for hedge accounting and the ineffective portion of an effective hedge, are taken directly to the profit and loss account. For the purpose of hedge accounting, the Bank uses forward foreign exchange contracts to hedge highly probable future sterling expenses. These hedges are classified as cash flow hedges. Cash flow hedges which meet the criteria for hedge accounting are accounted as follows: Cash flow hedges The effective portion of the gain or loss on the forward foreign exchange contracts is recognised directly in equity in the Cash flow hedge reserve, while any ineffective portion is recognised immediately in the profit and loss account. Cumulative gains or losses recognised in equity are transferred to the profit and loss account when the hedged future sterling expenses occur. If the forecast future sterling expenses are no longer expected to occur, any cumulative gain or loss previously recognised in the equity is transferred to the profit and loss account. If a forward foreign exchange contract is sold or terminated or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in equity remains in equity and is transferred to the profit and loss account when future sterling expenses occur. I Income recognition Interest income is recognised in the profit and loss account as it accrues. Once the recorded value of a financial asset has been reduced due to an impairment loss, interest income continues to be recognised using the effective interest rate applied to the new carrying amount. Interest expense is debited to the profit and loss account on an accruals basis. Fees earned for the provision of services over a period of time are accrued over that period. These fees include commission income. Loan commitment fees for loans that are likely to be drawn down and other credit related fees are deferred and recognised as an adjustment to the effective interest rate on the loan. J Taxation Corporation tax payable, where applicable, is provided on taxable profits at the current UK tax rate. K Deferred Taxation Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that the Directors consider it more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing difference can be deducted. L Related Parties The Bank has taken advantage of the exemption in paragraph 3 (c) of FRS8, from disclosing transactions with related parties that are part of the Bank Mandiri Group, as consolidated financial statements are publicly available. M Leasing Assets held under finance leases, which are leases where substantially all the risk and rewards of ownership of the asset have passed to the Bank, are capitalised in the balance sheet and depreciated over their useful lives. The capital elements of future obligations under the leases are included as liabilities in the balance sheet. The interest elements of the rental obligations are charged in the profit and loss account over the periods of the leases and represent a constant proportion of the balance of capital repayments outstanding. Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term. 16

18 for the year ended 31 st December 2 SEGMENTAL ANALYSIS Segmental Information By Class of Business The Directors consider that the Bank does not have more than one class of business namely Corporate & Institutional Banking, and therefore a disclosure by class of business has been deemed unneccessary. Segmental Information By Geographic Segment Region: UK & Europe Asia Others Intragroup Total US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Interest receivable 3,858 7,906 6,226 9, ,417 18,773 Interest payable (1,965) (6,852) (155) (1,259) (1,042) (1,757) (717) (450) (3,879) (10,318) Net interest income / (Expenses) 1,893 1,054 6,071 8,720 (726) (1,084) (700) (235) 6,538 8,455 Fees & commissions receivable 1,575 2,850 2,054 2, ,839 5,133 Net revenue / (Loss) 3,468 3,904 8,125 10,892 (564) (1,036) (652) (172) 10,377 13,588 Operating expenses (2,594) (3,366) (3,953) (3,803) (228) (226) (31) (87) (6,806) (7,482) Operating profit / (Loss) before provisions ,172 7,089 (792) (1,261) (683) (259) 3,571 6,106 Provisions for bad debts (2,442) 82 (2,442) 82 Profit/(Loss) before taxation ,730 7,171 (792) (1,261) (683) (259) 1,129 6,188 Total assets employed 86,110 92,167 99, ,300 49,090 31, , ,728 Total net assets/(liabilities) 41,041 (30,110) 22, ,192 35,634 14,633 (26,267) (15,210) 72,474 70,504 Notes: (i) Geographic segments are based on the ultimate market risk to which the Bank is exposed. (ii) Operating expenses have been allocated to each geographic segment based on the percentage of income attributed to that segment. (iii) The Bank s Capital is not directly attributed to business lines but its benefit is evenly distributed on the basis of assets employed within each respective segment. 3 INTEREST RECEIVABLE Due from banks Debt Securities (including available for sale) 2,877 3,369 Loans and Advances to customers 7,035 12,894 Loans and Advances to customers with indications of impairment Other ,417 18,773 4 PROFIT ON ORDINARY ACTIVITIES BEFORE TAX Is stated after charging: Operating lease rentals Buildings Operating lease rentals Office Equipment Auditors remuneration for audit work Other fee to Auditors taxation sevices

19 for the year ended 31 st December 5 OTHER OPERATING INCOME Foreign exchange profit ADMINISTRATIVE EXPENSES Staff Costs: wages and salaries social security costs pension costs [Note 21] other staff costs Other administrative expenses 2, ,606 6,640 2, ,027 2,801 7,274 The average weekly number of employees during the year ended 31 st December was 28 (27). 7 EMOLUMENTS OF DIRECTORS Directors remuneration and other emoluments were: Directors emoluments The emoluments of the highest paid director were US$ 565, month period, ( US$ 748,000). No director received benefits in the form of pension contributions during or. 8 TAX ON PROFIT ON ORDINARY ACTIVITIES (a) Analysis of charge for the year: Current Tax Current year Tax under provided in previous years Total current tax charge Deferred Tax Current year Adjustment in respect of prior periods Total deferred tax charge (3) (3) 351 1, ,828 (5) (1) (6) 1,822 18

20 for the year ended 31 st December 8 TAX ON PROFIT ON ORDINARY ACTIVITIES (b) Tax included in Statement of total recognised gains & losses: Current Tax UK corporation tax Total current tax charge Deferred Tax Deferred Tax Total tax charge (c) Factors affecting tax charge for the year: Profit on ordinary activities before tax Corporation tax at 28% ( 28.5%) Effects of: Expenses not deductible for tax purposes Capital allowances less than depreciation Tax under provided in previous years Current tax charge for the year 1, ,188 1, ,828 (d) Factors that may affect future tax charges: At the year end, the Bank has a deferred tax asset of US$65,154 (: US$62,154). The asset arises in respect of capital allowances in excess of depreciation. (e) Deferred Tax The deferred tax asset included in the balance sheet and changes recorded in the income tax gain are as follows: Provision at start of the year Prior period adjustment Other temporary differences LOANS AND ADVANCES TO BANKS Loans and advances Remaining maturity: Repayable on demand Other loans and advances: Between 3 months and 1 year 45,000 45,000 7,618 5,000 12,618 19

21 for the year ended 31 st December 10 LOANS AND ADVANCES TO CUSTOMERS Remaining maturity: Repayable on demand or short notice 3 months or less (excluding demand or at short notice) Between 3 months and 1 year Between 1 year and 5 years Over 5 years Less specific bad and doubtful debt provisions Nonperforming loans and advances to customers: Loans and advances before provisions Loans and advances after provisions 33,644 37,474 20,572 18,200 4,217 (2,950) 111,157 21,658 18,708 24,846 83,986 56,869 19,427 11,801 (508) 196,421 4,918 4,410 The Bank derives and manages its loan portfolio in a risk averse manner. The Directors have agreed that the customer portfolio will comprise principally of shortterm selfliquidating trade finance exposures and medium term asset backed ship financing loans. An impaired loan, with a net balance of US$11.3 million, was transferred to a fellow group company for cash proceeds of US$11.3 million on 10 th February A reconciliation of the allowance for impairment losses for loans and advances by class is as follows: Trade Finance Shipping Portfolio Total As at 1 st January Charges for the year 1, ,442 1, ,442 As at 31 st December 1,805 1,145 2,950 Individual Impairment 1,805 1,145 2,950 Trade Finance Shipping Portfolio Total As at 1 st January Charges for the year Recoveries 711 (82) 711 (82) (82) (82) Amounts written off (121) (121) As at 31 st December Individual Impairment The factors considered during impairment valuations of the loans and advances included future cash flows and collateral consisting of cash deposits and mortgaged/charged assets. 20

22 for the year ended 31 st December 711 DEBT SECURITIES Available for sale Held to maturity Total Available for sale Held to maturity Total Investment securities: Public sector securities Other debt securities banks 28,093 12,053 12,053 28,093 28,617 22,162 22,162 28,617 28,093 12,053 40,146 28,617 22,162 50,779 Investment securities: Listed Unlisted 5,557 22,536 12,053 17,610 22,536 10,012 18,605 22,162 32,174 18,605 28,093 12,053 40,146 28,617 22,162 50,779 Remaining maturity: 3 months or less Between 3 months and 1 year Between 1 year and 5 years Over 5 years 12,240 10,296 5,557 10,050 2,003 12,240 20,346 7,560 14,834 8,744 5,039 22,162 14,834 8,744 27,201 28,093 12,053 40,146 28,617 22,162 50,779 Original cost Fair value Original cost Fair value Valuation: Floating rate notes & fixed rate notes Commercial bills discounted 17,591 22,536 17,610 22,536 32,573 18,605 32,174 18,605 40,127 40,146 51,178 50,779 Securities (floating and fixed rate notes) are purchased with the dual purpose of complying with the necessary statutory liquidity requirements, and to provide an even flow of fixed floating rate interest receipts. Bills are purchased primarily as a result of the Bank s involvement in the discounting of letters of credit. Although some paper may be traded prior to maturity, it is not the Bank s original intention to sell these assets and they are therefore funded accordingly. The Directors consider that the book value of commercial bills is not materially different from fair value, since this is intrinsically linked to a Libor plus margin pricing regime which is reasonably consistent throughout this market. The Bank intends to hold the securities listed under heldtomaturity until their final maturity. 21

23 for the year ended 31 st December 12 TANGIBLE FIXED ASSETS Motor vehicles owned Leasehold improve ments * Computer and other equipment Furniture, fixtures and fittings Total Cost: Balance as at 31 st December Additions Disposals , (4) , (4) At 31 st December , ,412 Accumulated Depreciation: Balance as at 31 st December Charge for the year Disposals , (4) , (4) At 31 st December , ,206 Net book value at 31 st December Net book value at 31 st December *Included in the above is the telephone system under finance lease which had a NBV of Nil (: Nil) 13 OTHER ASSETS, PREPAYMENTS AND ACCRUED INCOME Accrued interest receivable Prepaid expenses Deferred tax asset (Note 8e) Forward foreign exhange contract fair value (Note 24) Other receivables ,784 2, ,484 4, ASSETS AND LIABILITIES Assets and liabilities denominated in foreign currencies: Denominated in US dollars Denominated in currencies other than US dollars Total assets Denominated in US dollars Denominated in currencies other than US dollars Total liabilities excluding capital and other reserves clear 207,761 26, , ,209 9, , ,252 29, , ,348 29, ,224 22

24 for the year ended 31 st December 15 DEPOSITS FROM BANKS With agreed maturity dates or periods of notice, by remaining maturity of: Repayable on demand 3 months or less Between 3 months and 1 year Between 1 year and 5 years Amounts include: Due to group undertakings 1,303 80,000 28,043 11, ,346 25,000 1,344 95,000 35,004 40, ,348 14, CUSTOMER ACCOUNTS With agreed maturity dates or periods of notice, by remaining maturity of: Repayable on demand 3 months or less 1 year or less but over 3 months 39,722 39,722 49,561 49,561 A total of US$1.24 million ( US$4.07 million) of deposits are frozen and held as collateral against trade finance loan facilities. 17 OTHER LIABILITIES, ACCRUALS AND DEFERRED INCOME Accrued interest and expenses payable UK corporation tax Forward foreign exchange contracts fair value (Note 24) Other Obligations under finance leases payable: 1 year or less Less: future finance charges Current Obligations 1, ,819 1,819 2,685 1, , (1) ,315 23

25 for the year ended 31 st December 18 CALLED UP SHARE CAPITAL Authorised, issued, allotted and fully paid: 49,000,000 ordinary shares of US$1 each and 2 subscription shares of 1 each 49,000 49, RECONCILIATION OF MOVEMENTS IN SHAREHOLDER S FUNDS Issued Share Capital Retained profit for the year 1 st January 31 st December 778 4,366 Net addition to Shareholder s Funds 778 4,366 Opening Shareholder s Funds Fair value of Cash Flow Hedge Reserve (Note 24) Fair value of AvailableForSale securities Current UK Corporation charge on fair value Investment available for sale Realised to Profit & Loss from Cash Flow Reserve & Availableforsalereserve 70, (4) ,244 (771) (354) 19 Closing Shareholder s Funds 72,474 70, OPERATING LEASE COMMITMENTS Buildings Other Buildings Other At the year end, cumulative commitments under noncancellable operating leases were: Within 1 year Between 1 and 5 years PENSION COSTS The Bank provides each of its employees with an individual money purchase pension arrangement which is administered by the Standard Life Assurance Company. The sums allocated into each individual s pension fund are paid on a monthly basis, and the amounts are based on a scale linked to each staff member s age and salary. 24

26 for the year ended 31 st December 22 MEMORANDUM ITEMS Book value Fair value Book value Fair value CONTINGENT LIABILITIES: Transactionrelated: Guarantees pledged ,526 1, ,526 1,526 Traderelated: Letters of credit issued 3,148 3,148 7,019 7,019 3,148 3,148 7,019 7,019 3,986 3,986 8,545 8, RISK MANAGEMENT The identification, measurement and containment of risk is integral to the management of our business. Our risk policies and procedures are regularly updated to meet changing business requirements, and to comply with best practice. Our parent company, PT Bank Mandiri (Persero) Tbk, conducts an indepth review at least once a year of our loan portfolio and also conducts a review of our internal controls/procedures. Our Audit Committee is apprised of these and other developments throughout the year to ensure adequate controls are in place to meet our changing business requirements. A Risk Management and Control The Bank is firmly committed to the management of risk, recognising that sound internal risk management is essential to its prudent operation, particularly with the growing complexity, diversity and volatility of markets, facilitated by rapid advances in technology and communications. Risk management is given high priority throughout the Bank. Responsibility for risk management policies, limits, and the level of risk assumed, lies with the Board of Directors. The Board charges Senior Management with developing, presenting and implementing these policies and limits. The structure is designed to provide a reasonable degree of assurance that no single event, or contribution of events, will materially affect the wellbeing of the Bank. A Risk Committee comprised of Senior Management plays a key role in the identification, evaluation and management of all risks. All credit and other new product decisions require direct Senior Management & Risk Committee approval. Management is supported by a comprehensive structure of independent controls, analysis and reporting processes. The Bank has strict controls and detailed procedures in place for the monitoring of the financial instruments employed in its business. Before any new financial instrument is employed by the Bank approval must be sought from the Bank s Senior Management Committee and as part of this approval process the Senior Management Committee ensures that the Bank has the relevant expertise, adequate controls and operating procedures in place before the new financial instrument is initiated. Where it is deemed necessary product or sector limits are established and monitored such that excessive concentration risk is minimised. The Bank s Board of Directors, Asset and Liability Committee, Risk Committee and Audit Committee, assist in appraising market trends, economic and political developments, and providing strategic direction for all aspects of risk management. 25

27 for the year ended 31 st December 723 RISK MANAGEMENT [Cont d] The Bank has in place an extensive number of limit controls and management information systems to facilitate effective management overview. All limits are approved by the Board of Directors and are reviewed at least annually. Limit breaches, if any, are reported to the Chief Executive and Senior Management on a daily basis. The following basic elements of sound risk management are applied to all financial risk instruments, including derivatives. This includes where appropriate: Review by the Board of Directors and Senior Management. Risk management processes with integral product risk limits. Measurement procedures and information systems. Continuous risk monitoring and frequent management reporting. Segregation of duties, comprehensive internal controls and audit procedures. In the opinion of the Directors, the period end numerical disclosures are not materially unrepresentative of the entity s position during the period or its agreed objectives, policies and strategies. In addition, the Directors have no plans, at the current time, to make any significant changes either to the product base or to the methods employed in the management and control of the abovementioned risks. B Market Risk Market risk refers to the uncertainty of future earnings, resulting from changes in interest rates, foreign exchange rates, market prices and volatility thereof. Senior Management constantly monitors market risk by a combination of reports and real time market information systems. C Interest Rate Risk Interest rate risk arises when there is a mismatch between positions which are subject to interest rate adjustments within a specific period. In the Bank s funding/lending activities, fluctuations in interest rates are reflected in interest margins and earnings. Our interest rate risk profile is short term and liquid and the Directors therefore feel that risks have been minimised. Hedging techniques can be applied on a limited basis should the need arise. An interest rate gap is a common measure of interest rate sensitivity (note 25). A liability gap occurs when more liabilities than assets are subject to rate changes during a prescribed future time period. Interest rate gaps are monitored by Senior Management & Asset and Liability Committee regularly. D Currency Risk The Bank does not actively trade in the foreign exchange markets on its own account, and foreign exchange swaps and forward foreign exchange contracts are committed for management of the Bank s expenses and the Bank s assets and liabilities. Where possible the Bank matches its currency transactions. The majority of the asset and liability positions are denominated in US Dollars and therefore, in the opinion of the Directors, the level of currency risk is considered to be minimal. E Liquidity Risk Liquidity risk arises from fluctuations in cash flows. The liquidity risk management process ensures that the Bank is able to honour all of its financial commitments as they fall due. Liquidity is monitored daily through specialised reports provided to Senior Management against appropriate limits set by the Board of Directors and with reference to statutory requirements. In addition the Asset and Liability Committee and the Risk Committee review the liquidity position periodically. The Bank has access to a variety of funding sources including bank deposits, loan facilities, customer deposits and corporate trade finance deposits. Regular weekly reviews are conducted, via meetings of the Asset and Liability Committee, of these sources and requirements for perusal by Senior Management. In practice, the Bank operates well within its prescribed liquidity levels. In the light of market conditions, at the present time, the Bank does not generally offer mediumterm advances. As existing mediumterm advances run off, they are being replaced by shorterterm advances. Management forecasts for the year ahead, even on the assumption that all bank lines that fall due are not replaced, demonstrate that, taking into account reasonably possible changes in market conditions, the Bank can meet all repayment obligations through its existing cash resources, scheduled repayment of advances and/or the sale of assets. There is no reliance on facilities being granted by the parent bank, although in practice such facilities are likely to be available if required 26

28 for the year ended 31 st December 723 RISK MANAGEMENT [Cont d] Analysis of financial liabilities by remaining contractual maturities The table below summarises the maturity profile of the Bank s financial liabilities as at 31 st December based on contractual undiscounted repayment obligations. Repayments which are subject to notice are treated as if notice were to be given immediately. However, the Bank expects that many customers will not request repayment on the earliest date the Bank could be required to pay and the table does not reflect the expected cash flows indicated by the Bank s deposit retention history. On Demand Less than 3 months 3 to 12 months 1 to 5 years Over 5 years Total As at 31 st December Due to Banks Customer Accounts Other financial 1,303 39, ,000 14,043 1, ,346 39,722 1,819 Total financial liabilities 41, ,000 15, ,887 As at 31 st December Due to Banks Customer Accounts Other financial 1,344 49,561 95,000 * 35,004 4,844 40, ,348 49,561 5,315 Total financial liabilities 50,905 95,000 39,848 40, ,224 * This amount includes cash collateral deposits of US$50 million Ageing for Contingent liabilities As at 31 st December Guarantees Letters of credit issued 838 3, ,148 Total financial liabilities 3,986 3,986 As at 31 st December Guarantees Letters of credit issued 1,526 7,019 1,526 7,019 Total financial liabilities 8,545 8,545 27

29 for the year ended 31 st December 723 RISK MANAGEMENT [Cont d] F Operational Risk Operational Risk is the risk that deficiencies in information systems or internal controls result in unexpected business, financial and operating losses. Operational Risk is ultimately managed by the Board of Directors and is given the highest priority. Senior Management are charged with applying stringent procedures to mitigate risk of error, fraud, money laundering, and other irregularities. In addition, strong disaster recovery procedures have been formulated and are tested on at least a yearly basis. Internal Audit reviews the risk mitigation processes to ensure that these meet the organisation s current needs and are being properly implemented and controlled. G Capital Adequacy Risk Controls are in place to constantly monitor the level of capital to ensure the Bank is able to meet its regulatory obligation on a daily basis. In doing so the Board of Directors believe that the interest of all stakeholders including customers and shareholders are fully protected. Account is taken of all potential events that could have an impact on capital. Management have stress tested the Bank s capital requirements. This stress testing takes into account reasonably likely developments in all of the above risks, the Board s balance sheet management strategy and the deteriorating market conditions. This stress testing has demonstrated that the Bank is adequately capitalised to support the existing business and future plans. H Credit Risk The Bank uses a formal credit process to quantify and evaluate the risk of proposed credits, and to ensure appropriate returns for assuming risks. Relationship Managers undertake a full financial review of each client at least annually, so that the Bank remains aware of counterparties risk profiles. This analysis includes a review of previous historical financial data, future projections, industry reviews, broker reports and credit analysis techniques. Securities, Letters of Credit, Guarantees and OffBalance Sheet instruments are managed by the same process. Settlement and any other credit risks are restricted through product limits and counterparty netting agreements. From time to time the Bank takes collateral to mitigate credit or transactional risks. The taking of collateral as security is governed by detailed policies and procedures and where necessary the security is registered and perfected in the relevant jurisdictions using legal counsel. 723 RISK MANAGEMENT [Cont d] The table below shows the maximum exposure to credit risk for the components of the balance sheet, including derivatives. The maximum exposure is shown gross, before the effect of mitigation through use of master netting and collateral agreements. Notes Gross Maximum exposure Gross Maximum exposure Net Maximum exposure Net Maximum exposure Cash and money at call and deposits with central banks Loans and advances to banks Loans and advances to customers Debt securities Other assets prepayments and accrued income [09] [10] [11] [13] 36,068 45, ,107 40,146 1,784 31,598 12, ,929 50,779 4,994 36,068 45, ,157 40,146 1,784 31,598 12, ,421 50,779 4,994 Total 237, , , ,410 Contingent Liabilities [22] 3,986 8,545 3,986 8,545 28

30 for the year ended 31 st December 723 RISK MANAGEMENT [Cont d] Risk concentrations of the maximum exposure to credit risk Concentration of risk is managed by client/counterparty, by geographical region and industry sector. The maximum credit exposure to any nonbank client during has been within our prescribed LECB by the FSA of US$17.9 million before taking into account of collateral or other credit enhancements. The Bank s financial assets, before talking into account any collateral held or other credit enhancements can be analysed by the following geographical regions: United Kingdom Europe Asia North America Total 85,931 1,429 99,510 50, , ,152 13, ,500 24, ,918 An industry sector analysis of the Bank s financial assets, before taking into account collateral held or other credit enhancements, is as follows: Bank Intergroup Corporate Finance Foodstuffs Metals Other Pharmaceutical Shipping Sovereign debt Total 109,142 12,053 23,534 14,576 16,583 7,886 41,905 11, ,105 72,833 22,162 28,075 66,783 28,511 8,537 55,325 14, ,918 29

31 for the year ended 31 st December 723 RISK MANAGEMENT [Cont d] Credit Quality per class of financial assets: Neither past due nor impaired Current Special Mention Past due or individually impaired Sub Standard Doubtful Loss Total As at 31 st December Due from Banks Loans and Advances Intergroup 109, ,304 18,001 2, , ,963 Total 215,446 18,001 2, ,105 As at 31 st December Due from Banks Loans and Advances Other 72, , , , ,085 Total 291, , , HEDGE ACCOUNTING (Cash Flow Hedges) Fair Value Fair Value Fair value of forward exchange contracts (Note 13) 52 (771) Future sterling expenses in 2010 and the corresponding hedge instruments mature in. Fair value of hedge instruments committed and completed in was US$492k included in Administrative Expenses (Note 6). 30

32 for the year ended 31 st December 725 NON TRADING BOOK INTEREST RATE RISK The Bank does not have a trading book. However, interest rate exposure exists within its nontrading book. Instruments have been allocated to time bands by reference to the earlier of their next contractual interest rate repricing date and their maturity date. As at 31 st December, interest rate risk comprised: Less than 3 months 3 months to 6 months 6 months to 1 year 1 year to 5 years Non Int. bearing Total Category of Asset/Liability Loans and advances to banks Loans and advances to customers Debt securities Other assets 45, ,821 17,863 1,336 10,446 12,000 (163) 38,058 45, ,157 40,146 38,058 Total assets 172,684 11,782 12,000 37, ,361 Deposits by banks Customer accounts Shareholder s funds Other liabilities 106,303 39,722 14,043 72,474 1, ,346 39,722 72,474 1,819 Total Liabilities & Shareholder s Funds 146,025 14,043 74, ,361 Gap 26,559 (2,261) 12,000 (36,398) Cumulative gap 26,659 24,398 24,398 36,398 The above figures do not provide the exposure of the Bank to particular interest rates as they have been consolidated across all currencies. The majority of the Bank s balance sheet is denominated in US Dollars, with only a minor element of currencies regarded as volatile. The Directors therefore consider that a further currency analysis of interest rate risk is not required. 31

33 for the year ended 31 st December 25 NON TRADING BOOK INTEREST RATE RISK [Cont d] As at 31 st December, interest rate risk comprised: Less than 3 months 3 months to 6 months 6 months to 1 year 1 year to 5 years Non Int. bearing Total Category of Asset/Liability Loans and advances to banks Loans and advances to customers Debt securities Other assets 12, ,488 25,145 12,933 1,899 1,991 22,000 (256) 36,910 12, ,421 50,779 36,910 Total Assets 221,251 14,832 1,991 22,000 36, ,728 Deposits by banks Customer accounts Shareholder s funds Other liabilities 150,343 49,561 21,005 70,504 5, ,348 49,561 70,504 5,315 Total Liabilities & Shareholder s Funds 199,904 21,005 75, ,728 Gap 21,347 (6,173) 1,991 22,000 (39,165) Cumulative gap 21,347 15,174 17,165 39, ULTIMATE PARENT COMPANY PT Bank Mandiri (Persero) Tbk, a part government owned bank incorporated in the Republic of Indonesia, is the immediate and ultimate parent, and the ultimate controlling party of the Bank. The registered address is: Plaza Mandiri JL. Gatot Subroto Kav Jakarta Indonesia The smallest and largest group in which the results of the Bank are consolidated is that headed by PT Bank Mandiri (Persero) Tbk. The consolidated financial statements of the group are available to the public at the Bank s registered office. POST BALANCE SHEET EVENT A borrower went into Administration on 19 th February The amount due from this borrower as at the date of the signing of the financial statements is US$ million. Due to complexity surrounding the matter, lack of information and the short period of time since the appointment of the Administrator, the directors at the present time are unable to estimate an appropriate provision for the amount due as at 31 st December. It is however likely that a significant provision will be required in

34 Notes

35 Bank Mandiri Network Bank Mandiri: Head Office, Jakarta PT BANK MANDIRI (PERSERO) TBK HEAD OFFICE Plaza Mandiri Jl. Jend. Gatot Subroto, Kay Jakarta 12190, Indonesia Tel : , Fax : , SWIFT : BMRIIDJA Website : SINGAPORE BRANCH 3 Anson Road #1201/02 Springleaf Tower Singapore Tel : (65) Fax : (65) SWIFT : BMRISGSG Website : SHANGHAI REPRESENTATIVE OFFICE 3401, Bank of China Tower 200 Yin Cheng (M) Road Pudong New Area, Shanghai, People s Republic of China Tel : Fax : HONG KONG BRANCH 7th Fl, Far East Finance Centre 16 Harcourt Road, Queensway Hong Kong Tel : Fax : SWIFT : BMRIHKHH Website : CAYMAN ISLANDS BRANCH Cardinal Plaza, 3rd Floor #30 Cardinal Avenue P0 Box APO Grand Cayman, Cayman Islands Tel : Fax : SWIFT : BMRIKYKY DILI BRANCH Ave Presidente Nicolau Lobato No. 12, Colmera, Dili Timor Leste Tel : or Fax : or SWIFT : BMRIIDJA