In accordance with the Company's Articles and Memorandum of Association, the Management Board is authorised to increase the share capital of Zavarovalnica Triglav by up to EUR 11,055,208.77 through new shares issued for cash. The issue of new shares, the amount of share capital increases, the rights attached to new shares and the conditions for issuing new shares are decided by the Company's Management Board with the approval of the Supervisory Board.
To date, Zavarovalnica Triglav has not yet exercised the right to increase its share capital from said authorisation.
Reserves from profit
In addition to legal and treasury share reserves, reserves from profit also comprise credit risk equalisation reserves and other profit reserves.
According to the Companies Act, the Management Board of Zavarovalnica Triglav may allocate net profit for the year to other profit reserves, i.e. up to one half of the net profit remaining after statutory allocations. In addition to prudent risk management, strategic capital needs are considered when forming these profit reserves.
Credit risk equalisation reserves in Slovenia are formed and calculated in line with the Insurance Act. The calculation of these reserves is also stipulated by local legislation in Montenegro and Serbia. The abovementioned legal requirements treat these equalisation reserves as insurance technical provisions. Any change in these reserves should be recognised through the income statement. Since the above mentioned requirements do not comply with IFRS, insurance companies in compliance with IFRS disclose equalisation provisions in reserves from profit. Any changes in these reserves are also recognised as an increase or decrease in the net profit/loss for the year in the statement of changes in equity.
Had the financial statements been prepared in line with the provisions of the Insurance Act, the result for the current year would be lower by EUR 936,144 (in 2010: EUR 574,316). Profit for the current year would thus equal EUR 46,561,097 (in 2010: EUR 26,075,492). In compliance with the Insurance Act, the amount of the abovementioned reserves would have been disclosed among the insurance technical provisions and as at 31 December 2011 these would have amounted to EUR 2,269,008,810 (in 2010: EUR 2,304,352,114 EUR).
Reserves from treasury shares and treasury shares (as a deductible item)
In 2008, Slovenijales d.d. acquired 24,312 shares of Zavarovalnica Triglav d.d. worth EUR 364,680. In the consolidated statement of financial position, they are disclosed as a deductible equity item of the same amount. Equivalent reserves for treasury shares are formed for these shares in the consolidated statement of financial position (from profit from previous years).
Fair value reserve
The fair value reserve represents changes in the fair value of available-for-sale financial assets. The fair value reserve is reduced by the deferred tax liabilities. Changes in the fair value reserve are specified in more detail in the statement of comprehensive income in Chapter III – Consolidated Financial Statements (Consolidated Statement of Comprehensive Income).
Currency translation adjustment
Currency translation differences arise from foreign exchange differences in consolidation procedures. In 2011, the currency translation adjustment totalled EUR 567,604 (vs. EUR 538,760 in 2010), primarily due to the decrease in the Serbian dinar (RSD).
Notes to the statement of changes in equity
- The statement of changes in equity for the year 2011 discloses the increase in share capital of Zavarovalnica Triglav. Share capital was increased by the transfer of EUR 50 million from the retained earning, following the resolution adopted by the General Meeting of Shareholders on 21 June 2011. The increase in share capital was entered in the Court Register on 28 June 2011.
- Following the resolution on the distribution of accumulated profit for 2010, adopted by the General Meeting of Shareholders on 21 June 2011, EUR 160 million was allocated to other profit reserves, while EUR 9 million was allocated for payment of dividends to shareholders. The decrease in the capital of non-controlling interest holders resulting from the payment of dividends in the amount of EUR 22 thousand relates to the dividends paid by Pozavarovalnica Triglav RE to non-controlling shareholders.
- Credit risk equalisation reserves increased by EUR 1.4 million, allocated from the net profit for the year which totalled EUR 936,000 (EUR 885,000 of net profit attributable to the controlling interest holders and EUR 51,000 to the non-controlling interest holders). The difference in the amount of EUR 494 thousand was carried over directly from other insurance technical provisions made in previous years. Credit risk equalisation reserves have been created in Zavarovalnica Triglav, Pozavarovalnica Triglav RE, Triglav Osiguranje Beograd and Lovćen Osiguranje.
- The share premium decrease arises from the acquisition of shares from non-controlling interest holders of Triglav Naložbe in the amount of EUR 675 thousand, Triglav Osiguruvanje Skopje in the amount of EUR 520 thousand and Triglav Osiguranje Banja Luka in the amount of EUR 2 thousand. Said changes in interest holdings also affected the decrease in capital of non-controlling interest holders as described in Section 1.6 General Information/Basis for consolidation.
- At the same time share premium increased by EUR 745 thousand on account of real estate recognition in Triglav Osiguranje Zagreb. The recognition followed the entry of the real estate in the Court Register on the basis of a separation balance sheet between Zavarovalnica Triglav and Triglav Osiguranje in 1993. Considering the above, share premium decreased by EUR 451 thousand in total.