F.3. Investments
F.3.1. Investment properties
| (CZK million) | 2014 | 2013 |
|---|---|---|
| Carrying amount as at 1 January | 5,227 | 2,409 |
| Foreign currency translation effects | 23 | 3 |
| Increases | 32 | 50 |
| Acquisitions | 2,120 | 2,553 |
| Reclassifications | – | (1) |
| Revaluation and other changes | 52 | 213 |
| Impairment | – | – |
| Carrying amount as at end of reporting period | 7,454 | 5,227 |
Acquisitions into the Group in 2014 of CZK 2,120 million represent property acquired by purchase of Palác Křižík a.s. The transaction is considered to be a acquisition of group of assets.
Acquisitions into the Group in 2013 of CZK 2,553 million represent property acquired by purchase of Apollo business centers IV a.s. and Pařížská 26. The transactions are considered to be a acquisition of group of assets.
The fair value of investment properties is based on the valuation of an independent valuator who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
Investment properties are mainly valuated on the basis of inputs of similar assets in active markets or of discounted cash flows of future income and expenses of the rental considered as part of the higher and best use by a market participant.
Based on the analysis of inputs used for valuations, considering the limited cases where the inputs would be observable in active markets, the Group proceeded to classify the whole category at level 3.
For investment income see note F.19., for investment expense see note F.23.
F.3.2. Investments in subsidiaries and associates
| (CZK million) | 31. 12. 2014 | 31. 12. 2013 restated |
|---|---|---|
| Investments in non-consolidated subsidiaries | 36 | 11 |
| Nadace České pojišťovny | 6 | 6 |
| ČP Asistence s.r.o. | – | 5 |
| Europ Assistance s.r.o. | 30 | – |
| Investments in associated companies | 427 | 376 |
| Fond nemovitostních akciíí | 380 | 331 |
| Fond živé planety | 47 | 45 |
The Group has investment in REFICOR s.r.o. and Russian company Fynansovyj servis o.o.o.. Both investments have immaterial value.
F.3.2.1. Summarized financial information for associates
| (CZK million) | Fond nemovitostních akcií | Fond živé planety | Total | |||
|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| Total assets | 1,497 | 1,310 | 216 | 173 | 1,713 | 1,483 |
| Investments | 1,461 | 1,209 | 203 | 144 | 1,664 | 1,353 |
| Other assets | 8 | 6 | – | 1 | 8 | 7 |
| Cash and cash equivalents | 28 | 95 | 13 | 28 | 41 | 123 |
| Current assets | 1,497 | 1,310 | 216 | 173 | 1,713 | 1,483 |
| Non-current assets | – | – | – | – | – | – |
| Total liabilities | 23 | 2 | 5 | 1 | 28 | 3 |
| Payables | 4 | 2 | 1 | 1 | 5 | 3 |
| Other liabilities | 19 | – | 4 | – | 23 | – |
| Current liabilities | 23 | 2 | 5 | 1 | 28 | 3 |
| Non-current liabilities | – | – | – | – | – | – |
| Net assets | 1,474 | 1,308 | 211 | 172 | 1,685 | 1,480 |
Financial result of both investment funds is from Group point of view immaterial, therefore not disclosed.
F.3.3. Loans and receivables
| 31. 12. 2014 | 31. 12. 2013 | |||
|---|---|---|---|---|
| (CZK million) | book value | fair value | book value | fair value |
| Unquoted bonds | 885 | 1,096 | 866 | 1,006 |
| Other loans and receivables | 5,057 | 5,057 | 2,185 | 2,185 |
| Term deposit with credit institutions | 100 | 100 | 1,416 | 1,416 |
| Buy-sell transactions | 4,900 | 4,900 | 711 | 711 |
| Other loans | 57 | 57 | 58 | 58 |
| Loans and receivables total | 5,942 | 6,153 | 3,051 | 3,191 |
| Current portion | 4,999 | – | 2,127 | – |
| Non-current portion | 943 | – | 924 | – |
Of which relates to Transformed fund
| 31. 12. 2014 | 31. 12. 2013 | |||
|---|---|---|---|---|
| (CZK million) | book value | fair value | book value | fair value |
| Other loans and receivables | 300 | 300 | 1,001 | 1,001 |
| Term deposit with credit institutions | – | – | 1,001 | 1,001 |
| Buy-sell transactions | 300 | 300 | – | – |
| Loans and receivables total | 300 | 300 | 1001 | 1,001 |
| Current portion | 300 | – | 1001 | – |
| Non-current portion | – | – | – | – |
Fair value measurement as at the end of the reporting period:
| 31. 12. 2014 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level3 | Total |
| Unquoted bonds | – | 1,096 | – | 1,096 |
| Other loans and receivables | – | 5,000 | 57 | 5,057 |
| Term deposit with credit institutions | – | 100 | – | 100 |
| Buy-sell transactions | – | 4,900 | – | 4,900 |
| Other loans | – | — | 57 | 57 |
| Total | – | 6,096 | 57 | 6,153 |
| 31. 12. 2013 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level3 | Total |
| Unquoted bonds | – | 1,006 | – | 1,006 |
| Other loans and receivables | – | 2,127 | 58 | 2,185 |
| Term deposit with credit institutions | – | 1,416 | – | 1,416 |
| Buy-sell transactions | – | 711 | – | 711 |
| Other loans | – | – | 58 | 58 |
| Total | – | 3,133 | 58 | 3,191 |
Of which relates to Transformed fund
| 31. 12. 2014 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Other loans and receivables | – | 300 | – | 300 |
| Buy-sell transactions | – | 300 | – | 300 |
| Total | – | 300 | – | 300 |
| 31. 12. 2013 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Other loans and receivables | – | 1,001 | – | 1,001 |
| Term deposit with credit institutions | – | 1,001 | – | 1,001 |
| Total | – | 1,001 | – | 1,001 |
Generally, if available and if the market is defined as active, fair value is equal to the market price. In the opposite case, the fair value is determined using the market and income approach. Primary inputs to the market approach are quoted prices for identical or comparable assets in active markets where the comparability between security and benchmark defines the fair value level. The income approach in most cases means a discounted cash flow method where either the cash flow or the discount curve is adjusted to reflect credit risk and liquidity risk, using interest rates and yiels curves commonly observable at frequent intervals. Depending on observability of these parameters, the security is classified in level 2 or level 3.
F.3.4. Available-for-sale
| (CZK million) | 31. 12. 2014 | 31. 12. 2013 restated |
|---|---|---|
| Unquoted equities at cost | 4 | 4 |
| Equities at fair value | 2,315 | 2,592 |
Quoted | 2,315 | 2,592 |
| Bonds | 138,097 | 124,843 |
Quoted | 121,865 | 104,907 |
Unquoted | 16,232 | 19,936 |
| Investments in fund units and other AFS assets | 5,453 | 5,738 |
| Total | 145,869 | 133,177 |
| Current portion | 16,213 | 13,494 |
| Non-current portion | 129,656 | 119,683 |
Of which relates to Transformed fund
| (CZK million) | 31. 12. 2014 | 31. 12. 2013 |
|---|---|---|
| Equities at fair value | 82 | 103 |
Quoted | 82 | 103 |
| Bonds | 79,675 | 67,742 |
Quoted | 79,675 | 67,742 |
| Investments in fund units and other AFS assets | 1,811 | 1,042 |
| Total | 81,568 | 68,887 |
| Current portion | 6,956 | 4,802 |
| Non-current portion | 74,612 | 64,085 |
Fair value measurement as at the end of the reporting period:
| 31. 12. 2014 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Unquoted equities at cost | – | – | 4 | 4 |
| Equities at fair value | 2,315 | – | – | 2,315 |
Quoted | 2,315 | – | – | 2,315 |
| Bonds | 116,342 | 16,018 | 5,737 | 138,097 |
Quoted | 116,342 | 5,523 | – | 121,865 |
Unquoted | – | 10,495 | 5,737 | 16,232 |
| Investments in fund units and other AFS assets | 5,453 | – | – | 5,453 |
| Total | 124,110 | 16,018 | 5,741 | 145,869 |
| 31. 12. 2013 restated | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Unquoted equities at cost | – | – | 4 | 4 |
| Equities at fair value | 2,592 | – | – | 2,592 |
Quoted | 2,592 | – | – | 2,592 |
| Bonds | 98,312 | 26,531 | – | 124,843 |
Quoted | 98,312 | 6,595 | – | 104,907 |
Unquoted | – | 19,936 | – | 19,936 |
| Investments in fund units and other AFS assets | 5,738 | – | – | 5,738 |
| Total | 106,642 | 26,531 | 4 | 133,177 |
Of which relates to Transformed fund
| 31. 12. 2014 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities at fair value | 82 | – | – | 82 |
Quoted | 82 | – | – | 82 |
| Bonds | 74,597 | 5,078 | – | 79,675 |
Quoted | 74,597 | 5,078 | – | 79,675 |
| Investments in fund units and other AFS assets | 1,811 | – | – | 1,811 |
Investment fund units | 1,811 | – | – | 1,811 |
| Total | 76,490 | 5,078 | – | 81,568 |
| 31. 12. 2013 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities at fair value | 103 | – | – | 103 |
Quoted | 103 | – | – | 103 |
| Bonds | 62,082 | 5,660 | – | 67,742 |
Quoted | 62,082 | 5,660 | – | 67,742 |
| Investments in fund units and other AFS assets | 1,042 | – | – | 1,042 |
Investment fund units | 1,042 | – | – | 1,042 |
| Total | 63,227 | 5,660 | – | 68,887 |
The following table represents the transfers between the fair value levels during the reporting periods:
| (CZK million) | 2014 | 2013 |
|---|---|---|
| Transfers into Level 1 from Level 2 | 183 | 159 |
| Transfers into Level 1 from Level 3 | – | – |
| Transfers into Level 2 from Level 1 | – | – |
| Transfers into Level 2 from Level 3 | – | – |
| Transfers into Level 3 from Level 1 | – | – |
| Transfers into Level 3 from Level 2 | 5,137 | – |
In 2014 corporate bonds in the amount of CZK 4,309 million were reclassified from level 2 to Level 3 in connection with the situation when a stress in the financial makrets had an impact on availability of observable market inputs, namely level of credit spreads.
Further analyses was carried out in order to better harmonize the criteria for pricing and levelling. As a result, government bonds in the amount of CZK 828 million were reclassified from level 2 to Level 3 as a result of unavailable market information about its yields.
There were no transfer between the fair value hierarchy levels for Transformed fund in 2013 and 2014.
The following table presents the changes in level 3 instruments in the reporting periods:
| (CZK million) | 2014 | 2013 |
|---|---|---|
| Balance as at 1 January | 4 | 51 |
| Transfers into Level 3 | 5,137 | – |
| Decreases and maturities | – | (1) |
| Fair value gains/losses recorded in other comprehensive income | 564 | – |
| Impairment | – | (46) |
| Amortization | 36 | – |
| Balance as at 31 December | 5,741 | 4 |
| Realized gains/losses and impairment losses for the period included in income statement for assets held at the end of the reporting period | – | (46) |
In 2013 an impairment on level 3 available-for-sale financial assets has been booked. The impairment reflects the changes of inputs for fair value measurement of a specific impaired asset.
Maturity of available-for-sale financial assets – bonds (fair value)
| (CZK million) | Fair Value 2014 | Fair Value 2013 restated |
|---|---|---|
| Up to 1 year | 16,213 | 13,494 |
| Between 1 and 5 years | 52,935 | 50,464 |
| Between 5 and 10 years | 44,822 | 38,452 |
| More than 10 years | 24,127 | 22,433 |
| Total | 138,097 | 124,843 |
Of which relates to Transformed fund:
| (CZK million) | Fair Value 2014 | Fair Value 2013 |
|---|---|---|
| Up to 1 year | 6,956 | 4,802 |
| Between 1 and 5 years | 31,057 | 26,525 |
| Between 5 and 10 years | 31,088 | 28,551 |
| More than 10 years | 10,574 | 7,864 |
| Total | 79,675 | 67,742 |
Realised gains and losses, and impairment losses on available-for-sale financial assets2
| 2014 | |||
|---|---|---|---|
| (CZK million) | Realised gains * | Realised losses ** | Impairment losses |
| Equities | 196 | (209) | (90) |
| Bonds | 404 | (148) | – |
| Investments in fund units and other AFS assets | 724 | (17) | (50) |
| Total | 1,324 | (374) | (140) |
| 2013 restated | |||
|---|---|---|---|
| (CZK million) | Realised gains * | Realised losses ** | Impairment losses |
| Equities | 357 | (455) | (194) |
| Bonds | 910 | (194) | – |
| Investments in fund units and other AFS assets | 501 | (584) | (96) |
| Total | 1,768 | (1,233) | (290) |
Of which relates to Transformed fund:3
| 2014 | |||
|---|---|---|---|
| (CZK million) | Realised gains * | Realised losses ** | Impairment losses |
| Equities | 5 | (18) | (6) |
| Bonds | 58 | (29) | – |
| Total | 63 | (47) | (6) |
| 2013 | |||
|---|---|---|---|
| (CZK million) | Realised gains * | Realised losses ** | Impairment losses |
| Equities | 7 | – | – |
| Bonds | 229 | (7) | – |
| Total | 236 | (7) | – |
2 * Realized gains include unrealised gains on hedged instruments in the amount of CZK 378 million (2013: CZK 18 million)
** Realized losses include unrealised gains on hedged instruments in the amount of CZK 15 million (2013 CZK 453 million)
3 * Realized gains of Transformed fund include unrealised gains on hedged instruments in the amount of CZK million 0 (2013: CZK 0 million)
** Realized losses of Transformed fund include unrealised gains on hedged instruments in the amount of CZK 0 million (2013 CZK 0 million)
F.3.5. Financial assets at fair value through profit or loss
| Financial assets held-for-trading | Financial assets designated as at fair value through profit and loss | Total financial assets at fair value through profit and loss | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (CZK million) | 31. 12. 2014 | 31. 12. 2013 restated | 1. 1. 2013 restated | 31. 12. 2014 | 31. 12. 2013 restated | 1. 1. 2013 restated | 31. 12. 2014 | 31. 12. 2013 restated | 1. 1. 2013 restated |
| Equities | – | – | – | 228 | 393 | 36 | 228 | 393 | 36 |
Quoted | – | – | – | 228 | 393 | 36 | 228 | 393 | 36 |
| Bonds | – | – | 223 | 11,168 | 12,040 | 14,803 | 11168 | 12,040 | 15,026 |
Quoted | – | – | 223 | 6,631 | 6,595 | 7,468 | 6,631 | 6,595 | 7,691 |
Unquoted | – | – | – | 4,537 | 5,445 | 7,335 | 4,537 | 5,445 | 7,335 |
| Investments in fund units | 102 | 113 | – | 4,124 | 3,462 | 1,795 | 4226 | 3,575 | 1,795 |
| Derivatives | 78 | 120 | 420 | 141 | 365 | 129 | 219 | 485 | 549 |
| Unit-linked investments | – | – | – | 7,404 | 11,188 | 10,559 | 7404 | 11,188 | 10,559 |
| Total | 180 | 233 | 643 | 23,065 | 27,448 | 27,322 | 23245 | 27,681 | 27,965 |
| Current portion | – | – | – | – | – | – | 3854 | 1,058 | 2,632 |
| Non-current portion | – | – | – | – | – | – | 19391 | 26,623 | 25,333 |
Of which relates to Transformed fund:
| Financial assets held-for-trading | Financial assets designated as at fair value through profit and loss | Total financial assets at fair value through profit and loss | ||||
|---|---|---|---|---|---|---|
| (CZK million) | 31. 12. 2014 | 31. 12. 2013 | 31. 12. 2014 | 31. 12. 2013 | 31. 12. 2014 | 31. 12. 2013 |
Equities | – | – | 223 | 385 | 223 | 385 |
Quoted | – | – | 223 | 385 | 223 | 385 |
| Bonds | – | – | 4,124 | 3,908 | 4,124 | 3,908 |
Quoted | – | – | 4,124 | 3,908 | 4,124 | 3,908 |
| Investments in fund units | – | – | 560 | 527 | 560 | 527 |
| Derivatives | – | – | 53 | 196 | 53 | 196 |
| Total | – | – | 4,960 | 5,016 | 4,960 | 5,016 |
| Current portion | – | – | – | – | 23 | – |
| Non-current portion | – | – | – | – | 4,937 | 5,016 |
Fair value measurement as at the end of the reporting period:
| 31. 12. 2014 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities | 228 | – | – | 228 |
Quoted | 228 | – | – | 228 |
| Bonds | 6,631 | 4,537 | – | 11,168 |
Quoted | 6,631 | – | – | 6,631 |
Unquoted | – | 4,537 | – | 4,537 |
| Investments in fund units | 4,226 | – | – | 4,226 |
| Derivates | – | 219 | – | 219 |
| Unit-linked investments | 7,373 | 31 | – | 7,404 |
| Total | 18,458 | 4,787 | – | 23,245 |
| 31. 12. 2013 restated | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities | 393 | – | – | 393 |
Quoted | 393 | – | – | 393 |
| Bonds | 6,595 | 5,445 | — | 12,040 |
Quoted | 6,595 | – | – | 6,595 |
Unquoted | – | 5,445 | – | 5,445 |
| Investments in fund units | 3,462 | 113 | – | 3,575 |
| Derivates | 18 | 467 | – | 485 |
| Unit-linked investments | 11,182 | 6 | – | 11,188 |
| Total | 21,650 | 6,031 | – | 27,681 |
| 1. 1. 2013 restated | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities | 36 | – | – | 36 |
Quoted | 36 | – | – | 36 |
| Bonds | 5,680 | 9,346 | – | 15,026 |
Quoted | 5,680 | 2,011 | – | 7,691 |
Unquoted | – | 7,335 | – | 7,335 |
| Investments in fund units | 1,795 | – | – | 1,795 |
| Derivates | 4 | 545 | – | 549 |
| Unit-linked investments | 10,553 | 5 | – | 10,559 |
| Total | 18,068 | 9,896 | – | 27,965 |
Of which relates to Transformed fund:
| 31. 12. 2014 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities | 223 | – | – | 223 |
Quoted | 223 | – | – | 223 |
| Bonds | 4,124 | – | – | 4,124 |
Quoted | 4,124 | – | – | 4,124 |
| Investments in fund units | 560 | – | – | 560 |
| Derivates | – | 53 | – | 53 |
| Total | 4,907 | 53 | – | 4,960 |
| 31. 12. 2013 | ||||
|---|---|---|---|---|
| (CZK million) | Level 1 | Level 2 | Level 3 | Total |
| Equities | 385 | – | – | 385 |
Quoted | 385 | – | – | 385 |
| Bonds | 3,908 | – | – | 3,908 |
Quoted | 3,908 | – | – | 3,908 |
| Investments in fund units | 527 | – | – | 527 |
| Derivates | – | 196 | – | 196 |
| Total | 4,820 | 196 | – | 5,016 |
The following table represents the transfers between the fair value levels during the reporting periods:
| (CZK million) | 2014 | 2013 restated |
|---|---|---|
| Transfers into Level 1 from Level 2 | 23 | – |
| Transfers into Level 1 from Level 3 | – | – |
| Transfers into Level 2 from Level 1 | – | – |
| Transfers into Level 2 from Level 3 | – | – |
| Transfers into Level 3 from Level 1 | – | – |
| Transfers into Level 3 from Level 2 | – | – |
There were no significant transfers between Level 1 and Level 2 fair value measurement categories in 2014 and 2013 both for the Group and also for Transformed fund.
All instruments in level 3 were settled and transferred out of level 3 in the year 2012.