Form: (quarter/year) (for banks) Pursuant to Par. 57 sec. 2 and Par. 58 sec. 1 of the Cuncil of Ministers Regulation dated 16 October 2001. - Journal of Laws (Dz.U.) No. 139, item 1569 and of 2002, No. 31 item 280 The Management Board of Bank Przemysłowo-Handlowy PBK SA announces this consolidated quarterly report for the 1st quarter of the 2002 financial year. dated 15-05-02 (submission date) SELECTED FINANCIAL DATA 1st quarter PLN'000 1st quarter EUR'000 01.01.2002 to 31.03.2002 01.01.2001 to 31.03.2001 01.01.2002 to 31.03.2002 01.01.2001 to 31.03.2001 I. Interest income 877 686 1 367 318 242 958 367 164 II. Fee and commission income 164 544 161 760 45 548 43 437 III. Result on banking operations 662 702 660 639 183 447 177 400 IV. Result on operations 88 223 137 313 24 422 36 872 V. Gross profit (loss) 88 083 137 083 24 383 36 811 VI. Net profit (loss) 61 697 91 942 17 079 24 689 VII. Net operating cash flow 1 991 196-941 525 551 196-252 826 VIII. Net cash flow investment activity 768 013 192 093 212 599 51 582 IX. Net cash flow financing activity -84 702 66 432 23 447 17 839 X. Total net cash flow 2 674 507-580 072 740 348-155 766 XI. Total assets 44 508 852 43 440 983 12 351 219 12 010 225 XII. Dues to the central bank 229 619 381 879 63 719 105 579 XIII. Dues to the financial sector 5 069 672 5 269 480 1 406 835 1 456 865 XIV. Dues to the non-financial and public sectors 30 660 095 29 763 561 8 508 185 8 228 798 XV. Shareholders' funds 5 123 096 4 949 286 1 421 661 1 368 340 XVI. Initial capital 143 581 216 925 39 844 59 974 XVII. Number of shares 28 716 230 28 716 230 28 716 230 28 716 230 XVIII. Book value per share (PLN/EUR) 178,40 172,35 49,51 47,65 XIX. Diluted book value per share (PLN/EUR) 176,51 170,53 48,98 47,15 XX. Capital adequacy ratio 14,19 15,70 3,94 15,70 XXI. Profit (loss) per ordinary share (PLN/EUR) 11,22 16,86 3,11 4,66 XXII. Diluted profit (loss) per ordinary share (PLN/EUR) 11,10 16,68 3,08 4,61 XXIII. Dividend declared or paid per ordinary share (PLN/EUR) 3,80 4,92 1,05 1,36 Komisja Papierów Wartościowych i Giełd 1
CONSOLIDATED BALANCE SHEET as at as at as at as at 31.12.2001 31.03.2001 end end of previous of quarter quarter 31.03.2002 end of quarter 31.12.2000 end of previous quarter Assets I. Cash, transactions with the Central Bank 1 605 434 2 016 516 1 408 578 2 068 952 II. Debt securities eligible for rediscounting at the Central Bank 162 381 250 120 317 067 364 280 III. Dues the financial sector 10 505 370 11 714 751 9 523 248 8 235 607 1. Short-term dues 10 205 728 11 322 627 9 030 273 7 559 858 a) current account 1 927 832 584 998 233 327 118 739 b) other short-term dues 8 277 896 10 737 629 8 796 946 7 441 119 2. Long-term dues 299 642 392 124 492 975 675 749 IV. Dues the non-financial sector 18 786 847 18 770 281 19 741 629 19 650 837 1. Short-term dues 9 115 964 9 533 770 11 273 329 9 827 990 a) current account 3 328 932 2 621 768 2 793 562 2 517 607 b) other short-term dues 5 787 032 6 912 002 8 479 767 7 310 383 2. Long-term dues 9 670 883 9 236 511 8 468 300 9 822 847 V. Dues the public sector 599 498 606 924 473 407 867 118 1. Short-term dues 187 599 177 118 99 164 437 105 a) current account 58 698 20 401 9 898 29 474 b) other short-term dues 128 901 156 717 89 266 407 631 2. Long-term dues 411 899 429 806 374 243 430 013 VI. Receivables securities purchased under repurchase agreements 49 916 - - - VII. Debt securities 8 160 838 8 415 238 8 120 730 8 095 124 VIII. Dues subsidiaries priced by equity accounting 448 155 422 698 336 989 337 628 1. Subsidiaries 399 315 382 338 304 443 300 456 2. Inter-related - - - - 3. Affiliated 48 840 40 360 32 546 37 172 IX. Shares of subsidiary companies priced by equity accounting 359 247 304 034 503 421 490 402 X. Shares of inter-related companies priced by equity accounting - - - - XI. Shares of affiliated companies priced by equity accounting 10 275 12 958 22 840 35 830 XII. Shares of other companies 37 179 40 871 70 591 236 334 XIII. Other securities and financial assets 129 467 126 113 126 807 30 040 XIV. Intangible assets, including: 542 992 599 207 615 967 630 449 - company goodwill 385 610 399 223 445 011 460 274 XV. Goodwill of subsidiaries 2 302 2 669 3 422 3 671 XVI. Tangible fixed assets 1 171 374 1 182 826 1 170 922 1 187 156 XV. Other assets 1 191 376 1 041 037 696 968 698 032 1. Assets acquired for disposal 3 478 5 651 6 745 5 612 2. Inventory 10 157 8 637 8 499 6 292 3. Other 1 177 741 1 026 749 681 724 686 128 XVI. Prepayments and accrued income 746 201 627 504 308 397 350 719 1. Deferred corporate income tax 645 540 554 899 256 953 230 071 2. Other prepayments and accrued income 100 661 72 605 51 444 120 648 Total assets 44 508 852 46 133 747 43 440 983 43 282 179 Komisja Papierów Wartościowych i Giełd 2
Liabilities I. Dues to the central bank 229 619 229 619 381 879 717 615 II. Dues to the financial sector 5 069 672 6 982 189 5 269 480 5 274 713 1. Short-term dues 2 666 249 4 817 786 3 127 802 3 206 292 a) current account 749 738 1 290 131 562 983 974 774 b) other short-term dues 1 916 511 3 527 655 2 564 819 2 231 518 2. Long-term dues 2 403 423 2 164 403 2 141 678 2 068 421 III. Dues to the non-financial sector 26 987 553 28 175 573 26 606 443 26 189 012 1. Short-term dues 26 121 710 26 298 590 26 306 224 25 892 072 a) in the current account, including: 6 044 798 6 907 525 5 800 540 6 510 513 - savings 27 27 32 32 b) other short-term dues, including: 20 076 912 19 391 065 20 505 684 19 381 559 - savings 342 371 442 501 2. Long-term dues, including: 865 843 1 876 983 300 219 296 940 - savings - - - - IV. Dues to the public sector 3 672 542 2 864 677 3 157 118 3 193 813 1. Short-term dues 3 597 929 2 825 317 3 099 778 3 135 333 a) current account 1 698 740 1 276 197 1 490 427 1 739 212 b) other short-term dues 1 899 189 1 549 120 1 609 351 1 396 121 2. Long-term dues 74 613 39 360 57 340 58 480 V. Liabilities arising securities sold under repurchase agreements 100 888 - - - VI. Liabilities debt securities issued 167 166 166 235 159 089 161 990 1. short-term 161 075 160 272 70 516 73 045 2. Long-term 6 091 5 963 88 573 88 945 VII. Other liabilities financial instruments - - - - VIII. Liabilities to controlled companies priced by equity accounting 233 937 271 205 432 572 353 328 1. Subsidiaries 232 946 269 715 422 216 323 814 2. Inter-related - - - - 3. Affiliated 991 1 490 10 356 29 514 IX. Special funds and other liabilities 1 495 566 1 006 413 1 140 373 1 234 710 X. Accrued costs and deferred income including suspended items 771 054 779 524 710 397 697 412 1. Accrued costs 177 393 111 395 148 030 71 040 2. Negative goodwill 918 - - - 3. Other deferred income and suspended items 592 743 668 129 562 367 626 372 XI. Negative goodwill of subsidiaries - - - - XII. Reserves 600 320 600 018 585 634 555 717 1. Deferred corporate income tax reserve 308 407 294 262 367 455 341 632 2. Other reserves 291 913 305 756 218 179 214 085 a) short-term 81 394 116 684 53 482 51 942 b) long-term 210 519 189 072 164 697 162 143 XIII. Subordinated liabilities 2 997 3 039 3 036 3 057 XIV. Minority shareholders' capital 54 442 51 314 45 676 43 469 XV. Share capital 143 581 143 581 216 925 216 925 XVI. Payments due for share capital (negative amount) - - - - XVII. Own shares (negative amount) - - - - XVIII. Supplementary capital 1 483 542 1 483 542 1 483 463 1 483 341 XIX. Revaluation reserve 78 681 72 455 73 324 73 445 XX. Other reserve capital 2 921 243 2 921 243 2 509 007 2 509 007 XXI. Exchange differences re-pricing subsidiaries - - - - 1. Positive exchange differences - - - - 2. Negative exchange differences - - - - XXII. Retained earnings or uncovered loss brought 434 352 30 778 574 625 12 961 XXIII. Net profit (loss) 61 697 352 342 91 942 561 664 Total liabilities 44 508 852 46 133 747 43 440 983 43 282 179 Capital adequacy ratio 14,19 17,36 15,70 15,81 Book value 5 123 096 000 5 003 941 000 4 949 286 000 4 857 343 000 Number of shares 28 716 230 28 716 230 28 716 230 28 716 230 Book value per share (PLN) 178,40 174,25 172,35 169,15 Expected number of shares 29 023 747 29 023 747 29 023 747 29 023 747 Diluted book value per share (PLN) 176,51 172,40 170,53 167,36 Komisja Papierów Wartościowych i Giełd 3
OFF-BALANCE SHEET ITEMS 31.03.2002 end of quarter as at as at as at as at 31.12.2001 31.03.2001 end end of previous of quarter quarter 31.12.2000 end of previous quarter I. Off-balance contingencies and commitments 12 409 576 12 559 767 11 371 085 12 165 589 1. Commitments undertaken: 7 439 707 8 031 429 7 328 852 7 606 728 a) financing 6 281 942 6 783 051 6 248 839 6 454 963 b) guarantees 1 157 765 1 248 378 1 080 013 1 151 765 2. Commitments received: 4 969 869 4 528 338 4 042 233 4 558 861 a) financing 1 589 629 1 110 781 509 679 597 023 b) guarantees 3 380 240 3 417 557 3 532 554 3 961 838 II. Commitments under buy/sell transactions 67 628 997 33 157 731 39 440 526 19 588 423 III. Other: 44 908 754 13 297 138 10 667 897 7 217 271 - assets swapped for debt or as a result of restructuring 80 601 81 206 76 638 75 419 - securities provided as guarantees 370 374 69 508 89 367 98 599 - securities received as guarantees and other collateral reducing risk-weighed assets 7 334 029 7 087 762 6 630 610 5 632 626 - transactions in securities 147 230 180 422 675 422 423 726 - liabilities under transactions in derivatives 36 976 520 5 878 240 3 195 860 981 384 - other commitments - - 5 517 Total off-balance items 124 947 327 59 014 636 61 479 508 38 971 283... quarter CONSOLIDATED PROFIT AND LOSS ACCOUNT... to... 01.01.2002 to 31.03.2002... quarter... to... 01.01.2001 to 31.03.2001 I. Interest income 877 686 1 367 318 II. Interest expense 583 942 1 055 432 III. Result on interest (I-II) 293 744 311 886 IV. Commission income 164 544 161 760 V. Commission expense 19 240 21 872 VI. Result on commission (IV-V) 145 304 139 888 VII. Net sales of products, goods and materials - - VIII. Cost of products, goods and materials sold - - IX. Selling costs - - X. Result on sales (VII-VIII-IX) - - XI. Income shares, interests, other variable-income securities and property rights - 1 110 1. From subsidiaries - 1 110 2. From inter-related companies - - 3. From affiliates - - 4. From other companies - - XII. Result on financial operations 5 934-13 482 XIII. Foreign exchange result 217 720 221 237 XIV. Result on banking operations 662 702 660 639 XV. Other operating income 11 065 10 760 XVI. Other operating expense 23 168 9 863 XVII. Bank operating costs and overheads 363 946 346 614 XVIII. Depreciation of fixed assets and amortisation of intangible assets 58 800 74 560 XIX. Charges to provisions and adjustments 351 278 314 491 1. Charges to specific provisions and general risk 351 168 314 491 provision 2. Financial asset re-pricing 110 - XX. Release of provisions and adjustment-related decrease 211 648 211 442 1. Release of specific provisions and general risk provision 211 648 211 442 2. Financial asset re-pricing - - XXI. Difference between provisions and adjustments (XIX- -139 630-103 049 XX) XXII. Operating result 88 223 137 313 XXIII. Result on extraordinary activities 95 9 1. Extraordinary profit 96 51 2. Extraordinary losses 1 42 XXIV. Write-down of subsidiaries' goodwill -235-239 XXV. Write-down of negative subsidiaries' goodwill - - XXVI. Gross profit (loss) 88 083 137 083 Komisja Papierów Wartościowych i Giełd 4
XXVII. Corporate income tax -25 179-42 891 1. Current -95 450-43 890 2. Deferred 70 271 999 XXVIII. Other obligatory decrease of profit (increase in loss) - - XXIX. Share of net profits (losses) of subsidiaries priced by equity accounting 2 179 - XXX. Minority shareholders' profit (loss) -3 386-2 250 XXXI. Net profit (loss) 61 697 91 942 Net profit (loss) (per annum) 322 097 000 470 722 000 Weighed average number of ordinary shares 28 716 230 27 918 447 Profit (loss) per ordinary share (PLN) 11,22 16,86 Average weighed diluted number of ordinary shares 29 023 747 28 225 964 Diluted profit (loss) per ordinary share (PLN) 11,10 16,68... quarter... quarter CHANGES IN CONSOLIDATED SHAREHOLDERS' FUNDS... to... 01.01.2002 to 31.03.2002... to... 01.01.2001 to 31.03.2001 I. Shareholders' funds at beginning of period (opening 5 003 941 4 857 343 a) changes in accounting policies 51 230 b) correction of material errors I.a.Shareholders' funds at beginning of period (opening 5 055 171 4 857 343 balance sheet) after adjustment to comparable data 1. Share capital at beginning of period 143 581 216 925 1.1. Changes in share capital - - a) Increase: - - - issue of shares - - b) Decrease - - '- share redemption - - 1.2. Share capital at period end 143 581 216 925 2. Due payments for initial capital at beginning of period - - 2.1. Change in due payments for initial capital - - a) increase - - b) decrease - - 2.2. Due payments for initial capital at period end - - 3. Own shares at beginning of period - - a) increase - - b) decrease - - 3.1. Own shares at period end - - 4. Supplementary capital at beginning of period 1 483 542 1 483 341 4.1. Changes in supplementary capital - 122 a) increase - 140 - fixed asset sales - 140 b) decrease - 18 - fixed asset sales - 18 4.2. Supplementary capital at period end 1 483 542 1 483 463 5. Revaluation reserve at beginning of period 72 455 73 445 5.1. Changes in revaluation reserve 6 226-121 a) increase 6 334 19 - reserve for anniversary awards, old-age and disability 6 228 - retirement severance pay for Bank employees calculated using the actuarial method - charge to reserve for deferred corporate income tax in connection with accounting policy changes 106 - - fixed asset sales - 19 b) decrease 108 140 - charge to reserve for deferred corporate income tax in connection with accounting policy changes 108 - - fixed asset sales - 140 5.2. Revaluation reserve at period end 78 681 73 324 6. General banking risk fund at beginning of period 627 547 450 761 6.1. Change in general banking risk fund - - a) increase - - b) decrease - - 6.2. General banking risk fund at period end 627 547 450 761 7. Other reserve capital at beginning of period 2 293 696 2 058 246 7.1. Change in other reserve capital - - a) increase - - b) decrease - - 7.2. Other reserve capital at period end 2 293 696 2 058 246 Komisja Papierów Wartościowych i Giełd 5
8. Exchange difference pricing subsidiaries - 9. Retained earnings (uncovered loss) brought forward at 383 120 574 625 9.1. Retained earnings brought forward at beginning of 383 120 574 625 a) accounting policy changes 51 232 b) material error correction - 9.2. Retained earnings brought forward at beginning of period, adjusted to comparable data 434 352 574 625 9.3. Change in retained earnings brought forward a) increase - previous years' profit distribution b) decrease 9.4. Retained earnings brought forward at period end 434 352 574 625 9.5. Uncovered loss brought forward at beginning of - - a) accounting policy changes - b) material error correction - 9.6. Uncovered loss brought forward at beginning of - period, adjusted to comparable data 9.7. Change in uncovered loss brought forward - a) increase - b) decrease - 9.8. Uncovered loss brought forward at period end - 9.9. Retained earnings or uncovered loss brought 434 352 574 625 10. Net result 61 697 91 942 a) net profit 61 697 91 942 b) net loss II. Shareholders' funds at period end (closing balance) 5 123 096 4 949 286 III. Shareholders' funds after proposed profit distribution (loss covering) 5 004 974 4 752 903 CONSOLIDATED CASH FLOW... quarter STATEMENT... to... 01.01.2002 to 31.03.2002... quarter... to... 01.01.2001 to 31.03.2001 A. Operating cash flow - indirect method I. Net profit (loss) 61 697 91 942 II. Total adjustments 1 929 499-930 539 1. Minority shareholders' profit (loss) 3 386 2 250 2. Share of net profit (loss) of subsidiaries priced by equity - - accounting 3. Write-down 60 542 76 410 - write-down of subsidiaries' goodwill and negative 235 239 subsidiaries' goodwill 4. Foreign exchange (profit) loss - -83 5. Interest and profit sharing (dividend) 21 633-73 122 6. (Profit) loss on investment activities -220-3 332 7. Change in reserves 4 199 2 751 8. Change in inventories -1 520-2 207 9. Change in debt securities -523 009-58 543 10. Change in dues the financial sector 4 298 678-1 054 235 11. Change in dues the non-financial and public 71 499 339 875 sector 12. Change in receivables securities bought under -49 916 - repurchase agreements 13. Change in shares, other securities and financial assets 4 314 59 670-1 896 519-519 811 14. Change in dues to the financial sector -389 376 381 056 15. Change in dues to the non-financial and public sector 16. Change in liabilities securities sold under 100 888 - repurchase agreements 17. Change in liabilities securities 931-372 18. Change in other liabilities 488 021 102 114 19. Change in accrued costs -121 548 26 276 20. Change in deferred income and suspended items -8 780 24 898 21. Other adjustments -133 704-234 134 III. Net operating cash flow (I+/-II) - indirect method 1 991 196-838 597 B. Cash flow investment activities I. Income 1 150 337 1 588 933 1. Sales of subsidiaries' shares - - - - 2. Sales of shares of inter-related companies 3. Sales of shares of affiliated companies - - 4. Sales of shares of other companies, other securities and 1 149 866 1 576 153 financial assets 471 1 074 5. Sales of intangible and tangible fixed assets Komisja Papierów Wartościowych i Giełd 6
- - 6. Sales of investments in real-estate and intangible assets 7. Other investment income - 11 706 II. Expense -382 324-1 396 840 1. Purchase of shares of subsidiaries -1 626-1 500 2. Purchase of shares of inter-related companies - 3. Purchase of shares of affiliated companies - -340 789-1 360 721 4. Purchase of other shares, securities and financial assets -39 909-32 195 5. Purchase of intangible assets and tangible fixed assets 6. Investment in real estate and intangible assets - - 7. Other investment expense - -2 424 III. Net cash flow investment activities (I-II) 768 013 192 093 C. Cash flow financing activities I. Income 5 170 273 160 1. Long-term loans banks 5 170 261 312 2. Long-term loans other financial institutions - - 3. Issues of debt securities - - 4. Increase in subordinated loans - - capital payments - - 6. Other financing income - 11 848 II. Expense -89 872-206 728-62 555-175 385 1. Repayment of long-term loans extended by banks 2. Repayment of long-term loans extended by other -230-230 financial institutions 3. Debt securities redemption - - 4. On account of other financial liabilities - - 5. Financial leasing rent payment -36-6. Decrease in subordinated debt - -21 7. Dividend and other payments to shareholders - - shareholders - - 9. Profit distribution expense other than payments to - - shareholders 10. Own share buy-back - - 11. Other financial expense -27 051-31 092-84 702 66 432 III. Net cash flow financing activities (I-II) D. Total net cash flow (A.III+/-B.III+/-C.III) 2 674 507-580 072 E. Balance-sheet change in cash, including: 2 674 507-580 072 - change in cash related to foreign exchange differences 184 895 F. Cash at beginning of period 2 575 918 2 174 934 G. Cash at period end (F+/- D), including: 5 250 425 1 594 862 - limited availability cash - Komisja Papierów Wartościowych i Giełd 7
ABBREVIATED QUARTERLY FINANCIAL REPORT BALANCE SHEET 31.03.2002 end of quarter as at as at as at as at 31.12.2001 31.03.2001 end end of previous of quarter quarter 31.12.2000 end of previous quarter Assets I. Cash, transactions with the Central Bank 1 482 018 1 933 528 1 244 208 2 008 357 II. Debt securities eligible for rediscounting at the Central Bank 156 365 245 486 310 326 345 046 III. Dues the financial sector 10 357 499 11 497 281 9 232 355 8 029 041 1. Current account 1 949 052 592 647 230 610 118 747 2. Term 8 408 447 10 904 634 9 001 745 7 910 294 IV. Dues the non-financial sector 17 708 691 17 739 925 18 677 497 18 590 019 1. Current account 3 267 853 2 562 807 2 725 086 2 453 216 2. Term 14 440 838 15 177 118 15 952 411 16 136 803 V. Dues the public sector 561 912 568 988 448 735 842 270 1. Current account 51 607 20 400 9 898 29 497 2. Term 510 305 548 588 438 837 812 773 VI. Receivables securities purchased under repurchase agreements 49 916 - - - VII. Debt securities 7 170 094 7 470 935 7 415 747 7 627 078 VIII. Shares of subsidiary companies 406 863 355 649 546 513 532 982 IX. Shares of inter-related companies - - - - X. Shares of affiliated companies 10 275 12 958 22 840 35 830 XI. Shares of other companies 34 327 37 909 60 785 226 528 XII. Other securities and financial assets 129 467 126 113 126 807 30 040 XIII. Intangible assets, including 537 175 593 220 615 377 629 692 - goodwill 385 610 399 223 445 011 460 274 XIV. Tangible fixed assets 1 116 674 1 126 469 1 116 735 1 132 075 XV. Other assets 1 242 686 1 090 368 701 168 711 795 1. Assets acquired for disposal 3 284 5 238 5 874 4 449 2. Other 1 239 402 1 085 130 695 294 707 346 XVI. Prepayments and accrued income 709 113 592 576 289 804 334 043 1. Deferred corporate income tax 610 384 520 922 240 233 214 027 2. Other prepayments and accrued income 98 729 71 654 49 571 120 016 Total assets 41 673 075 43 391 405 40 808 897 41 074 796 Komisja Papierów Wartościowych i Giełd 8
Liabilities I. Dues to the central bank 229 619 229 619 326 879 717 615 II. Dues to the financial sector 5 230 110 7 132 168 5 663 527 5 670 366 1. Current account 854 652 1 295 684 574 156 978 038 2. Term 4 375 458 5 836 484 5 089 371 4 692 328 III. Dues to the non-financial sector 24 820 614 25 934 044 24 594 678 24 286 923 1. Savings accounts, including: 369 371 426 501 a) current 27 27 32 32 b) term 342 344 394 469 2. Other, including: 24 820 245 25 933 673 24 594 252 24 286 422 a) current 5 821 809 6 619 619 5 533 658 6 285 887 b) term 18 998 436 19 314 054 19 060 594 18 000 535 IV. Dues to the public sector 3 363 474 2 732 618 2 845 474 3 061 754 1. Current account 1 439 420 1 189 535 1 219 000 1 652 550 2. Term 1 924 054 1 543 083 1 626 474 1 409 204 V. Liabilities arising securities sold under repurchase agreements 100 888 - - - VI. Liabilities debt securities issued 167 166 166 235 159 089 161 990 1. short-term 161 075 160 272 70 516 73 045 2. Long-term 6 091 5 963 88 573 88 945 VII. Other liabilities financial instruments - - - - VIII. Special funds and other liabilities 1 440 556 981 979 1 113 135 1 197 251 IX. Accrued costs and deferred income including 722 241 728 354 666 488 657 241 1. Accrued costs 169 783 104 093 143 264 67 081 2. Negative goodwill 918 - - - 3. Other deferred income and suspended items 551 540 624 261 523 224 590 160 X. Reserves 541 280 541 154 546 373 515 622 1. Deferred corporate income tax reserve 279 850 261 335 346 037 319 451 2. Other reserves 261 430 279 819 200 336 196 171 a) short-term 80 062 115 451 52 343 50 803 b) long-term 181 368 164 368 147 993 145 368 XI. Subordinated liabilities - - - - XII. Initial capital 143 581 143 581 216 925 216 925 XIII. Payments due for initial capital (negative amount) - - - - XIV. Own shares (negative amount) - - - - XV. Supplementary capital 1 457 571 1 457 571 1 456 932 1 456 810 XVI. Revaluation reserve 79 349 73 123 73 763 73 884 XVII. Other reserve capital 2 907 168 2 907 168 2 500 418 2 500 418 XVIII. Retained earnings (uncovered loss) brought 415 023 28 208 557 997 9 225 XIX. Net profit (loss) 54 435 335 583 87 219 548 772 Total liabilities 41 673 075 43 391 405 40 808 897 41 074 796 Capital adequacy ratio 14,19 17,36 15,70 15,81 Book value 5 057 127 000 4 945 234 000 4 893 254 000 4 806 034 000 Number of shares 28 716 230 28 716 230 28 716 230 28 716 230 Book value per share (PLN) 176,11 172,21 170,40 167,36 Expected number of shares 29 023 747 29 023 747 29 023 747 29 023 747 Diluted book value per share (PLN) 174,24 170,39 168,59 165,59 Komisja Papierów Wartościowych i Giełd 9
OFF-BALANCE SHEET ITEMS 31.03.2002 end of quarter as at as at as at as at 31.12.2001 31.03.2001 end end of previous of quarter quarter 31.12.2000 end of previous quarter I. Off-balance contingencies and commitments 12 051 580 12 309 528 11 132 884 11 937 268 1. Commitments undertaken: 7 355 156 7 950 426 7 262 847 7 541 734 a) financing 6 198 619 6 703 521 6 188 228 6 393 786 b) guarantees 1 156 537 1 246 905 1 074 619 1 147 948 2. Commitments received: 4 696 424 4 359 102 3 870 037 4 395 534 a) financing 1 509 629 1 110 781 473 509 534 344 b) guarantees 3 186 795 3 248 321 3 396 528 3 861 190 II. Commitments under buy/sell transactions 67 615 236 33 097 916 39 408 659 19 573 117 III. Other: 44 741 263 13 167 760 10 667 897 7 152 271 - assets swapped for debt or as a result of restructuring 80 601 81 206 76 638 75 419 - debt securities issued as guarantees 370 374 69 508 89 367 98 599 - securities received as guarantees and other collateral reducing risk-weighed assets 7 334 029 7 087 762 6 630 610 5 632 626 - transactions in securities 67 230 180 422 675 422 358 726 - liabilities under transactions in derivatives 36 889 029 5 748 862 3 195 860 981 384 - other commitments - - - 5 517 Total off-balance items 124 408 079 58 575 204 61 209 440 38 662 656 PROFIT AND LOSS ACCOUNT... quarter... to... 01.01.2002 to 31.03.2002... quarter... to... 01.01.2001 to 31.03.2001 I. Interest income 786 635 1 261 567 II. Interest expense 533 958 980 372 III. Result on interest (I-II) 252 677 281 195 IV. Commission income 152 255 150 017 V. Commission expense 14 962 18 275 VI. Result on commission (IV-V) 137 293 131 742 VII. Income shares, interests, other variable-income securities and property rights - 1 110 1. From subsidiaries - 1 110 2. From inter-related companies - - 3. From affiliates - - 4. From other companies - - VIII. Result on financial operations 6 503-13 735 IX. Foreign exchange result 214 914 219 239 X. Result on banking operations 611 387 619 551 XI. Other operating income 8 270 8 492 XII. Other operating expense 20 057 6 973 XIII. Bank operating costs 339 875 327 151 XIV. Depreciation of fixed assets and amortisation of intangible assets 56 635 72 762 XV. Charges to provisions and adjustments 327 185 290 804 1. Charges to specific provisions and general risk 327 185 290 804 provision 2. Financial asset re-pricing - XVI. Release of provisions and adjustment-related decrease 196 238 194 655 1. Release of specific provisions and general risk provision 196 238 194 655 2. Financial asset re-pricing - 0 XVII. Difference between provisions and adjustments (XV- -130 947-96 149 XVI) XVIII. Operating result 72 143 125 008 XIX. Result on extraordinary activities 95 9 1. Extraordinary profit 96 51 2. Extraordinary losses 1 42 XX. Gross profit (loss) 72 238 125 017 XXI. Corporate income tax 19 982 37 798 1. Current -84 703-37 418 2. Deferred 64 721-380 XXII. Other obligatory decrease of profit (increase in loss) - - XXIII. Share of net profits (losses) of subsidiaries priced by equity accounting 2 179 XXIV. Net profit (loss) 54 435 87 219 Net profit (loss) (per annum) 302 799 000 453 107 000 Weighed average number of ordinary shares 28 716 230 27 918 447 Profit (loss) per ordinary share (PLN) 10,54 16,23 Average weighed diluted number of ordinary shares 29 023 747 28 225 964 Diluted profit (loss) per ordinary share (PLN) 10,43 16,05 Komisja Papierów Wartościowych i Giełd 10
1st quarter CHANGES IN SHAREHOLDERS' FUNDS... to... 01.01.2002 to 31.03.2002 1st quarter... to... 01.01.2001 to 31.03.2001 I. Shareholders' funds at beginning of period (opening 4 945 234 4 806 034 a) changes in accounting policies 51 230 b) correction of material errors I.a. Shareholders' funds at beginning of period (opening 4 996 464 4 806 034 balance sheet) after adjustment to comparable data 1. Share capital at beginning of period 143 581 216 925 1.1. Changes in share capital - - a) Increase: - - - issue of shares - - b) Decrease - - '- share redemption - - 1.2. Share capital at period end 143 581 216 925 4. Supplementary capital at beginning of period 1 457 571 1 456 810 4.1. Changes in supplementary capital - 121 a) increase - 140 - fixed asset sales - 140 b) decrease - 19 - fixed asset sales - 19 4.2. Supplementary capital at period end 1 457 571 1 456 931 5. Revaluation reserve at beginning of period 73 123 73 884 5.1. Changes in revaluation reserve 6 226-121 a) increase 6 334 19 - reserve for anniversary awards, old-age and disability retirement severance pay for Bank employees calculated using the actuarial method 6 228 - charge to reserve for deferred corporate income tax in connection with accounting policy changes 106 - - fixed asset sales - 19 b) decrease 108 140 - fixed asset sales - 140 - charge to reserve for deferred corporate income tax in 108 - connection with accounting policy changes 5.2. Revaluation reserve at period end 79 349 73 763 6. General banking risk fund at beginning of period 613 472 442 172 6.1. Change in general banking risk fund - - a) increase - - b) decrease - - 6.2. General banking risk fund at period end 613 472 442 172 7. Other reserve capital at beginning of period 2 293 696 2 058 246 7.1. Change in other reserve capital - - a) increase - - b) decrease - - 7.2. Other reserve capital at period end 2 293 696 2 058 246 8. Retained earnings brought forward at beginning of 363 791 557 997 8.1. Retained earnings brought forward at beginning of 363 791 557 997 a) accounting policy changes 51 232 b) material error correction - 8.2. Retained earnings brought forward at beginning of period, adjusted to comparable data 415 023 557 997 8.3. Change in retained earnings brought forward 415 023 557 997 a) increase - - - previous years' profit distribution - - b) decrease - - 8.4. Retained earnings brought forward at period end 415 023 557 997 8.5. Uncovered loss brought forward at beginning of a) accounting policy changes b) material error correction 8.6. Uncovered loss brought forward at beginning of period, adjusted to comparable data 8.7. Change in uncovered loss brought forward a) increase - uncovered loss brought forward b) decrease 8.8. Uncovered loss brought forward at period end 8.9. Retained earnings or uncovered loss brought 415 023 557 997 9. Net result 54 435 87 219 a) net profit 54 435 87 219 b) net loss II. Shareholders' funds at period end (closing balance) 5 057 127 4 893 253 III. Shareholders' funds after proposed profit distribution (loss covering) 4 939 005 4 696 870 Komisja Papierów Wartościowych i Giełd 11
CASH FLOW STATEMENT... quarter... to... 01.01.2002 to 31.03.2002... quarter... to... 01.01.2001 to 31.03.2001 A. Operating cash flow - indirect method I. Net profit (loss) 54 435 87 219 II. Total adjustments 1 797 698-1 221 720 1. Share of net profit (loss) of subsidiaries priced by - - equity accounting 2. Depreciation 56 635 72 762 3. Foreign exchange (profit) loss - -83 4. Interest and profit sharing (dividend) 27 051-73 122 5. (Profit) loss on investment activities 5-3 309 6. Change in reserves 126 2 882 7. Change in debt securities -607 757-31 402 8. Change in dues the financial sector 4 234 738-1 014 440 9. Change in dues the non-financial and public 124 131 340 777 sector 10. Change in receivables securities bought under -49 916 - repurchase agreements 11. Change in shares, other securities and financial assets 4 314 59 670 12.Change in dues to the financial sector -1 844 443-587 799-482 573 91 476 13. Change in dues to the non-financial and public sector 14. Change in liabilities securities sold under 100 888 - repurchase agreements 931-372 15. Change in liabilities securities 16. Change in other liabilities 458 577 105 007 17. Change in accrued costs -116 538 26 650 18. Change in deferred income and suspended items -6 114 22 237 19. Other adjustments -102 357-232 654 III. Net operating cash flow (I+/-II) - indirect method 1 852 133-1 134 501 B. Cash flow investment activities I. Income 912 290 1 067 548 1. Sales of subsidiaries' shares - - 2. Sales of shares of inter-related companies - - 3. Sales of shares of affiliated companies - - 4. Sales of shares of other companies, other securities and financial assets 912 123 1 054 808 5. Sales of intangible and tangible fixed assets 167 1 034 - - 6. Sales of investments in real-estate and intangible assets 7. Other investment income - 11 706 II. Expense -39 611-684 278 1. Purchase of shares of subsidiaries -1 626-1 533 2. Purchase of shares of inter-related companies - - 3. Purchase of shares of affiliated companies - - - -651 929 4. Purchase of other shares, securities and financial assets 5. Purchase of intangible assets and tangible fixed assets -37 985-29 202 6. Investment in real estate and intangible assets - - 7. Other investment expense - -1 614 III. Net cash flow investment activities (I-II) 872 679 383 270 Komisja Papierów Wartościowych i Giełd 12
C. Cash flow financing activities I. Income 5 170 273 160 1. Long-term loans banks 5 170 261 312 2. Long-term loans other financial institutions - - 3. Issues of debt securities - - 4. Increase in subordinated loans - - capital payments - - 6. Other financing income - 11 848 II. Expense -89 836-206 707 1. Repayment of long-term loans extended by banks -62 555-175 385 2. Repayment of long-term loans extended by other financial institutions -230-230 3. Debt securities redemption - - 4. On account of other financial liabilities - - 5. Financial leasing rent payment - - 6. Decrease in subordinated debt - - 7. Dividend and other payments to shareholders - - 8. Profit distribution expense other than payments to - - shareholders 9. Own share buy-back - - 10. Other financial expense -27 051-31 092-84 666 66 453 III. Net cash flow financing activities (I-II) 2 640 146-684 778 D. Total net cash flow (A.III+/-B.III+/-C.III) E. Balance-sheet change in cash, including: 2 640 146-684 778 - change in cash related to foreign exchange differences 1 165 F. Cash at beginning of period 2 483 787 2 111 323 G. Cash at period end (F+/- D), including: 5 123 933 1 426 545 - limited availability cash Komisja Papierów Wartościowych i Giełd 13
PRINCIPLES ADOPTED IN PREPARATION OF THE CONSOLIDATED QUARTERLY REPORT The Consolidated Report for Q1 2002 is based on the continuous consolidation documentation involving principles and methods of accounting. That included asset and liabilities assessment and financial result measurement as at the balance-sheet date. The Consolidated Report includes the balance sheet, profit and loss account, summary of equity changes and a cash flow statement. Detailed description of the principles of accounting was presented in the annual report as at 31 December 2001, and published on 24 April 2002. NEW PRINCIPLES OF ACCOUNTING AS OF 1 JANUARY 2002 1. New principles of accounting adopted on 1 January 2002 r. are based on the following applicable acts and regulations: Accounting Law of 29 September 1994 as last amended on 9 November 2001 (Official Journal of Laws, Dz. U. No. 113, item 1186); Ordinance of the Ministry of Finance of 10 December 2001 laying down detailed principles of accounting in banking (Official Journal of Laws, Dz. U. No. 149, item 1673); Ordinance of the Ministry of Finance of 12 December 2001 on the principles of consolidated financial reporting in banking and consolidated reporting of financial holdings (Official Journal of Laws, Dz. U. No. 152, item 1728); Ordinance of the Ministry of Finance of 10 December 2001 on principles of risk provisioning in banking (Official Journal of Laws, Dz. U. No. 149, item 1672); Ordinance of the Ministry of Finance of 12 December 2001 laying down a model chart of accounts for banks (Official Journal of Laws, Dz.U. No. 152, item 1727); Ordinance of the Ministry of Finance of 12 December 2001 on detailed principles of crediting, methods of valuation, scope of disclosure and presentation of financial instruments (Official Journal of Laws, Dz. U. No. 149, item 1674); The following basic accounting principles are used in the ledgers: going concern concept, concept, commensurability concept, prudence concept, continuity concept. 2. The regulatory changes have the following particular results: 2.1. A new financial asset breakdown has been introduced with four categories. It has a bearing on the presentation of the financial statement and on the valuation of each asset category. Asset category Valuation method Asset Category Tradable assets (as well as liabilities) the category of these assets cannot be changed Granted credits and own loans and claims Assets kept till their maturity date these assets cannot be sold nor transferred to another category Marketable assets Valuation Method Valuation based on fair value, and its effects are recognised respectively in costs or revenues financial operations. Prior to the changes in regulations, only decreases in asset value due to valuation were recorded. Valuation based on depreciated cost Valuation based on depreciated cost Valuation based on fair value, and its effects are recognised respectively in costs or revenues financial operations.
The new accounting policy involves the application of the effective interest rate to the pricing by the depreciated cost of loans granted and taken, assets kept until maturity, financial liabilities not intended for trading, nonderivative instruments and for the settlement of revenues debt securities. In practice, however, in the face of the need for deep systemic changes necessary to implement effective interest rate-based pricing, the policy is not currently applied. Shares and interest in subsidiaries are priced under the ownership rights method. In the past the purchase price was used corrected for depreciation under durable reduction in value. Financial assets whose credible fair price cannot be determined are priced according to the depreciated cost (e.g. stakes in housing co-operatives). The impact of the new accounting policy on GBG SA is shown in April 2002 in the opening balance sheet of own assets as at 1 January 2002, under the result of previous periods (excluding capitalised interest under performing loans). As a result of the modified principles of valuation of securities, shares and interests in subsidiaries, the result of BPH PBK SA in previous periods has been increased by PLN 94,624,000 and increased by PLN 39,260,000. At GBG SA, the new method of securities valuation resulted in adding PLN 2,917,000 and deducting PLN 1,350,000 the result of previous periods. 2.2. Under the new policy, interest on watch category loans are shown as deferred income and booked as suspended interest until paid, just as interest under non performing loans. In the past, the watch-category interest was shown under the financial result. The result of the parent company under interest watchcategory loans was reduced by PLN 8,559,000. The corresponding correction in GBG SA resulted in a reduction by PLN 352,000. 2.3. Capitalised interest performing loans, previously shown as suspended interest, have been included in the revenues and shown in the financial result. The result of previous periods under capitalised interest interest performing loans was increased by PLN 7,961,000. The equivalent correction under capitalised interest on loans taken will be reduced by PLN 8,000 once IT systems are modified accordingly. The corresponding correction in GBG SA resulted in an increase by PLN 28,000. 2.4. The beginning of the year also saw a change in booking of exchange rate differences resulting the recalculation of the structural balances of currency positions, which were included in the financial result; the parent company s result previous periods was increased by PLN 385,000 and reduced by PLN 378,000. The consolidated company does not have any structural currency positions. 2.5. The following changes in the classification of fixed assets were introduced on 1 January 2002: - perpetual usufruct of land and the co-operative ownership title have been shifted intangible assets to fixed assets; - expenditure made on the organisation and further expansion of the company have been rebooked into the account; - in the profit and loss account, amortisation of goodwill is presented under other operating costs, while previously it was presented under depreciation costs; on 31 March 2002 it stood at PLN 14,613,000; - depreciation has been split into taxation and balance-sheet related; - a single write-down practice, as consumption of materials in the month when introduced to use, has been applied to objects matching the definition of fixed assets but worth PLN 1,000 or less. Pursuant to the Accountancy Law, provisions and assets under deferred corporate income tax and related to operations settled with own capital, have also a bearing on equity. The fiscal result of the changes made to the principles of booking exchange rate differences arising recalculation of structural currency positions balances caused a reduction at BPH PBK of benefits under deferred
corporate tax by PLN 108,000 but also an increase of those benefits into assets under the same tax by 106,000. As a result, taxable income was increased by PLN 2,000. Additionally, a provision charged to capital for jubilee bonuses and severance pay, calculated with the actuarial method, increased an amount charged into assets under deferred income tax by PLN 6,228,000. This amount will reduce the taxable income in the future periods. Selected items of assets and liabilities were converted into euros at the average central bank rate applicable on 31 March 2002, i.e. PLN 3.6036 (for comparable data: PLN 3.6170), while items of the Q1 profit and loss account and cash flow statement were converted at rate calculated as an average of the average NBP rates applicable on the last day of each of the three months of the first quarter in the 2002 accounting year, i.e. PLN 3.6125 (for comparable data PLN 3.7240). Structure of the BPH PBK SA Group Bank Przemysłowo-Handlowy PBK SA is the parent of the BPH PBK SA Group. The Q1 2002 Consolidated Financial Report includes Górnośląski Bank Gospodarczy SA w Katowicach. Full method consolidation was applied. Subsidiaries and associated companies listed below have not been consolidated to the extent permitted by the Accounting Law (Art.58), in view of the insignificant magnitude of the selected financial data shown in financial statements of those companies in comparison to the values shown by Bank Przemysłowo-Handlowy PBK SA as at 31 March 2002. Company Parent company Bank Przemysłowo-Handlowy PBK SA* Share of equity Consolidated subsidiary Górnośląski Bank Gospodarczy SA w Katowicach 68.97 Non-consolidated companies Subsidiaries PBK Leasing SA 100.00 PBK Ochrona SA 100.00 PBK Asset Management SA 99.94 PBK Property Sp. z o. o. 100.00 PBK Inwestycje SA 100.00 Dom Maklerski PBK SA 100.00 PBK Doradztwo Finansowe Sp. z o. o. 100.00 PBK ATUT TFI SA 93.79 HypoVereinsbank Bank Hipoteczny SA 100.00 SBR Samopomoc Chłopska w Warszawie 74.90 BPH Finance B.V. 100.00 Bankowe Towarzystwo Leasingowe SA 100.00 Centrum Bankowości Bezpośredniej Sp. z o. o. 98.00 Międzybankowe Centrum Gotówki Sp. z o. o. 100.00 Centrum Promocji Inicjatyw Gospodarczych S.A.- ceased business 100.00 operations Associate companies AKTYN Sp. z o. o. 47.00 TUnŻ Royal PBK S.A. 31.18 BA-CA Leasing Polska Sp. z o. o. 24.15 PolCard S.A. 19.80 Przedsiębiorstwo Produkcyjno-Usługowe Budpress Sp. z o. o. in 36.20 liquidation
Polish Banking System S.A. in liquidation 48.90 Indirect subsidiaries (GBG S.A. subsidiaries) GBG Serwis Sp. z o. o. 68.97 Górnośląskie Centrum Gospodarcze S.A. w Katowicach 68.96 Indirect associates (GBG S.A. associates) Katowicki Hurt Towarowy S.A. w Katowicach 23.42 DEVELOPMENTS AND RELATED EVENTS During Q1, BPH SA and PBK S.A. continued the process of adapting the structures of their respective groups to the circumstances and requirements that would arise after their merger. Consolidation of brokerage operations was an important component of this process. During Q1, the Board decided to merge Bank Przemysłowo-Handlowy PBK Spółka Akcyjna, which was carrying out brokerage business through the separated Biuro Maklerskie with Dom Maklerski PBK Spółka Akcyjna, Warszawa (company wholly owned by the Bank). To attain this goal, the Board adopted, on 26 March, a Merger Plan for the two companies, pursuant to Articles 498 and 499 of the Code of Commercial Companies. It envisaged the completion of the legal merger by the end of Q2. In pursuing its development strategy for the BPH PBK Group, the Bank injected equity into selected subsidiaries. On 25 January, the courts registered an increase of initial capital at PBK Doradztwo Finansowe Sp. z o.o. The resulting capital amounted to PLN 6,500,000 divided into 13,000 stakes worth PLN 500 each at face value and equivalent to 13,000 AGM votes. The company also registered its changed name, i.e. BPH PBK Doradztwo Finansowe Sp. z o. o. The Bank holds 100 per cent of BPH PBK Doradztwo Finansowe Sp. z o. o. The Bank was also working on its new strategy vis a vis the members of the BPH PBK Group. This involved a continuation of the review of strategies adopted by the major subsidiaries with the aim to align them with the objectives pursued by BPH PBK. The review will be followed by decisions on possible changes in the Group s composition to be effected by selling, integration or liquidation of certain companies. FACTORS AND EVENTS WITH A CONSIDERABLE IMPACT ON THE FINANCIAL PERFORMANCE The table below summarises interest revenues and expenses the BPH PBK Group, as at 31 March 2002, together with fx swap interest as compared to the previous corresponding period. PLN m 31 March 2002 31 March 2001 Revenues 1 134.6 1 622.4 Expenses 645.4 1 131.9 Net interest income 489.2 490.6 Exchange position result adjusted for fx swap interest 22.2 42.5 Net interest income, together with swap points stood at PLN 489.2 m, i.e. close to the previous year s level. Interest margin on total assets was 4.3%. Fees and commissions income increased by 3.9%. This was chiefly a result of fees on payments and loans, as well as of a new table of fees and commissions introduced on 1 January 2002. Following the shift of the fx swap interest income, the result on the exchange rate position was lower than a year before, at PLN 22.2 m. The consolidated result on banking operations was 0.3 % higher than one year earlier.
Operating costs were slightly lower than 12 months before. The Bank made PLN 58.2-m provisions, as part of general costs, for costs that would be borne in the future and chiefly related to the restructuring process. During the period, the Group made PLN 36.6-m provisions more than in Q1 2001. The largest items of the provisions were related to loans to large corporations. No significant changes occurred in the area of retail loans. In Q1 2002, the Group generated the consolidated gross profit of PLN 90.3 m (including the proportion of net profits of subsidiaries, assessed with the ownership rights principle); net profit stood at PLN 61.7 m, i.e. 67.1 % of the Q1 2001 net profit. BPH PBK generated a gross profit of PLN 74.4 m (including the proportion of net profits of subsidiaries, assessed with the ownership rights principle); net profit stood at PLN 54.4 m. Loans and provisions The table below shows the Group s gross loan quality structure as at 31 March 2002, compared to 31 December 2001. Loan category Value in PLN m Structure in % Value in PLN m Structure in % as at 31 Mar. 2002 as at 31 Dec. 2001 Performing 14 680.5 67.1 14 965.6 68.7 watch 2 367.6 10.8 2 392.3 11.0 Non-performing 4 838.3 22.1 4 416.1 20.3 including: Substandard 1 326.0 6.0 1 014.4 4.7 Doubtful 1 070.3 4.9 1 091.3 5.0 Loss 2 442.0 11.2 2 310.4 10.6 TOTAL 21 886.4 100.0 21 774.0 100.0 The provisions to loans ratio improved 8% at the end of 2001 to 8.5% at the end of Q1. Balance sheet At the end of March 2002, the balance sheet total was slightly lower than at the end of 2001, i.e. by 3.5%, but higher than at the end of Q1 2001. On the liabilities side, interest obligations dropped by 5.7 % in comparison to the end of 2001. The reduction was true for obligations vis-à-vis both the financial and non-financial sectors, where the latter remained slightly higher than at the end of Q1 2001. Payables to the public sector increased. On the assets side, there was a reduction in the receivables, principally the financial sector. The gross value of loans at the end of March stood at PLN 21.9 bn, i.e. was 0.5% higher than at he end of 2001. A tighter lending policy and the sales network reorganisation caused the slim growth in loans. Impact of the new Accounting Law On 1 January 2002, the BPH PBK Group showed on its ledgers the changes resulting the introduction of the newly amended Accounting Law. This resulted in a PLN 51.2-m increase in profits previous year as compared to the end of 2001. This was mainly caused by the pricing of shares and stakes, as well as securities, a change in the watch category interest and by capitalised interest re-classification.
A newly introduced rule whereby positive results of valuation of tradable assets are shown on the P&L account was a factor that contributed to the increased result on financial operations recorded by the BPH PBK Group (until then, the result on financial operations included the value of such assets up to their net purchase price). Depreciation write-downs was affected by the reduction in the unit value of objects meeting the definition of a fixed asset and written down into the consumption of materials in one go, as well as the shifting of the goodwill amortisation, PLN 14.6 m, to the other operating expenses. EVENTS AFTER THE QUARTERLY REPORT DATE WITH A POTENTIAL IMPACT FOR FUTURE FINANCIAL PERFORMANCE On 16 April, BPH PBK announced that the President issued Rules on procedures and duties of the Employer to the employees of BPH PBK SA in relation to the continued employment restructuring process during 2002-2003. The Rules are a result of decisions taken following negotiations of the Employer with an overwhelming majority of trade union organisations active at the Bank. The protective measures adopted are equally beneficial to the employees, as the solutions applied by the two Banks during the course of their respective restructuring programmes before they were integrated. It was also decided that the employment restructuring process would involve a smaller number of staff than originally envisaged and would affect up to 2,300 persons by the end of 2003. Between 31 March and the publishing date, there were no events which might materially impact the Group s future results. ADJUSTMENT FOR PROVISIONS 1. Provisions and value update Provisions made and released in relation to the Group s operations during the first quarter of 2002 showed a negative balance at PLN 139,630,000. PLN 000 Q1 2002 Write-downs for receivables, off-balance sheet liabilities -119,570 Updated value of financial assets -110 General risk provisions -19,950-139,630 2. Provision for assets and deferred tax On 31 March 2002, deferred tax provisions stood at PLN 308,407,000 and assets stood at PLN 645,540,000. As compared to the end of previous year, the provision had increased by PLN 14,145,000 and assets by PLN 90,641,000. The change in the provision was mainly a result of the revenues collection and interest on securities higher by PLN 14,403,000. The main items, which contributed to the assets, were related to interest on financial instruments, increase by PLN 39,668,000, and specific provisioning and security increased by PLN 28,136,000. WRITE-DOWNS AND THE VALUE OF ASSETS The Bank classified under fixed assets and intangible assets items determined in accordance with the Accounting Law of 29 September 1994 (Official Journal of Laws, Dz. U. No 121, item 591 as amended). In Q1 2002, Bank Przemysłowo-Handlowy PBK SA made no write-downs that would update the value of fixed assets.