Annual Report

Transcription

1 20 14 Annual Report

2 Introduction The Central Bank of Hungary established MARK Magyar Reorganizációs és Követeléskezelő Zrt. (MARK Hungarian Restructuring and Debt Management Private Company Limited by Shares, MARK Ltd.) in November 2014 with the aim of reducing risks inherent in the Hungarian financial system and enhancing lending willingness and capacity through the purification of bank portfolios in order to ensure that the banking system can contribute to Hungary s sustainable economic growth more effectively than at present. Our mission is to provide an exemplary solution to the situation that has evolved as a result of the previous years economic depression and the irresponsible financial practices applied before the crisis. Our responsibility is to make sure that the vast majority of large, non-performing property loans can be removed from the domestic bank portfolios and the collaterals covering them can be utilised at an acceptable rate. In the course of our operation we strive for the utmost transparency, fairness, and equity. This is how we intend to find and maintain our market position. We choose modern forms of operation that are most appropriate in a sustainable world. We take responsibility for the most efficient utilisation of the properties entrusted to us, and we feel responsible for the market operators, our colleagues, and our environment. Our performance is based on continuous progress, progress; therefore, we put special emphasis on creativity and innovation, while cooperation with our partners is also a key to our success. This is another reason why we strive for straightforward dialogue with fellow participants in the banking market as well as with our key clients, i.e. the companies we lend to. Mark Ltd. closed the year 2014 successfully. In the first months of operation the Company s internal work processes, business strategy and methodology were developed upon consultation with members of the profession. Introduction of MARK Ltd. Name of the Company: MARK Magyar Reorganizációs és Követeléskezelő Zártkörűen Működő Részvénytársaság MARK Zrt. / MARK Hungarian Restructuring and Debt Management Private Company Limited by Shares MARK Ltd. Seat of the Company: 1054 Budapest, Szabadság tér 8-9. Date of the Company s foundation deed: 30 September 2014 Date of registration and start of operation of the Company: 12 November 2014 Activities of the Company: 6499 Financial intermediary services not listed elsewhere 6492 Other credit operations 6820 Rental and operation of own or rented property MARK Ltd. intends to acquire domestic problematic assets that meet certain criteria (receivables from loans and property) from EU institutions with the aim of managing the acquired problematic assets for a maximum life cycle of 10 years. Financial institutions can participate in the asset acquisition program on a voluntary basis. It is expected that significant capital and liquid assets will be freed up as a result of the transfer of problematic assets, and the percentage of non-performing loans will considerably decrease. This will have a beneficial effect on the lending capacity and willingness of the participating financial institutions, which will improve the transmission mechanism. This in turn will serve as a driving force for economic growth through the expansion of the credit market. 2

3 Some of the planned activities registered at the time of the foundation of the Company, such as the acquisition, management and resale of property, will be implemented with the involvement of the property management company (companies) to be set up by MARK Ltd. in accordance with the relevant legal regulations. Company registration No: Tax ID: Statistical code: Equity of the Company: THUF 200,000 which consists of one MARK common share with a par value of THUF 200,000. Shareholders of the Company, ownership (%) Central Bank of Hungary: 100 % Seat: 1054 Budapest, Szabadság tér 8-9. Pursuant to the legal regulations, audits at MARK Ltd. are mandatory. Executive officials, Board members responsible for signing the annual report and having joint representation rights: Dr. Csaba István Kandrács Andrea Bártfai-Mager Dr. György Csaba Kocziszky Entity responsible for bookkeeping services: Bookkeeping services are performed by GIRO Zrt. on the basis of a contract. Management of MARK Ltd. Date Board of Directors Date Supervisory Board dr. Csaba István Kandrács Andrea Bártfai-Mager Márton István Nagy dr. Péter Kohári dr. György Csaba Kocziszky Kornél Kisgergely The management tasks were performed by one chief executive officer and three deputy CEOs. Auditor: MAZARS Könyvszakértő és Tanácsadói Korlátolt Felelősségű Társaság (MAZARS Auditing and Consulting Limited Liability Company) 1123 Budapest, Nagyenyed utca Company registration number: Natural person authorised to sign the audit: Gabriella Gábor Membership number in the Chamber of Auditors: Residential address: 1115 Budapest, Tétényi út 20. III. em. 12. Legal representative: dr. Géza Gálfalvi, legal counsel Account keeping bank: OTP Bank Nyrt. 3

4 Bookkeeping and reporting, valuation methods ARK Hungarian Restructuring and Debt Management Private Company Limited by Shares (hereinafter: the Company) operates as a financial enterprise specified in Section 9 of Act CCXXXVII of 2013 on Credit Institutions and Financial Enterprises (hereinafter: Credit Institutions Act), and performs the following financial services: Section 3 (1) l) of the Credit Institutions Act: purchasing receivables Section 3 (1) b) of the Credit Institutions Act: credit and loan operations The activities indicated above determine the accounting system of the Company. The Accounting Policy comprises of tools, methods and procedures required for the practical implementation of Act C of 2000 on Accounting (hereinafter: Accounting Act) and Government Decree 250/2000 on the annual reporting obligations of credit institutions and financial enterprises (hereinafter: Government Decree), and serves the establishment of the most suitable accounting system depending on the Company s characteristics and circumstances. Starting out from the principle of going concern, the Company ensures the implementation of the principles of full disclosure, clarity, authenticity, matching, continuity, consistency, prudence, gross accounting, discrete valuation, accrual/deferral, substance over form, materiality and cost-benefit. Pursuant to the Accounting Act and the Government Decree the Company prepares annual reports that include: the Balance Sheet, the Profit and Loss Sstatement, and the Supplementary Notes. In compliance with the provisions of the Accounting Act, a business report is also prepared concurrently with the annual report. Pursuant to the Accounting Act and the Government Decree the annual report must be supported by doubleentry bookkeeping. The Company must prepare a balance sheet specified in Annex 1, and a profit and loss statement specified in Annex 2 to the Government Decree within the framework of the annual report. The balance sheet date is 31 December. The deadline for the preparation of the balance sheet is 15 January. Within the individual groups of assets or liabilities the items can be consolidated if they are not significant in terms or value and for the reliable and authentic profile, their consolidation promotes the implementation of the principle of clarity, the details of the consolidated items and the reason for consolidation are shown in the Supplementary Notes. In terms of consolidation the Company regards items of less than HUF 5 million as not significant. Consolidation may not affect items related to affiliated companies. It is not necessary to include in the balance sheet items (lines) for which figures are indicated neither for the previous business year, nor for the subject year. In the annual report the figures must be given in HUF thousand. If the total assets in the balance sheet exceed HUF 100 billion, the figures must be given in HUF million. The Company intends to use the opportunity provided by the Accounting Act, according to which new items can be included in the balance sheet if their contents specified by law are not covered by any of legally prescribed items in terms of description or content. The Company does not intend to use the method of valuation at real value, an opportunity provided by the Accounting Act. It accounts its assets and liabilities at their acquisition costs. New items can be included in the balance sheet and in the profit or loss statement if their contents specified by law are not covered by any of legally prescribed items in terms of description or content. 4

5 The establishment of MARK Ltd. was approved by the supervisory authority on 20 October It was registered at the Court of Registration on 12 November Currently, preparations are under way for the acquisition of receivables, as well as for the development of the necessary infrastructure and operating system. While being a preliminary company the Company did not pursue any income-generating activities, wherefore no separate report was written on that period. This report covers the period from the date of countersigning of the Foundation Deed (30 September) to the accounting date of the business year (31 December) and consists of one column. The valuation of items listed in the balance sheet and in the profit and loss statement was carried out with regard to the general principles of the Accounting Act and the Government Decree. Due to the content of the balance sheet and the profit and loss statement no itemised list has been prepared. Supplements related to the balance sheet Changes in the value and stock of assets In 2014 the composition of assets was the following: Figures are shown in HUF thousand Description TOTAL ASSETS 21,765, LIQUID ASSETS GOVERNMENT SECURITIES 0 3.RECEIVABLES FROM CREDIT INSTITUTIONS 21,746,291 a) receivables on demand 46,291 b ) other receivables for financial services 21,700,000 ba) receivables maturing within a year 21,700, RECEIVABLES FROM CUSTOMERS 0 5. SHARES AND OTHER VARIABLE INCOME SEC SHARES AND STAKES IN AFFILIATED COMP-IES 0 7. INTANGIBLE ASSETS 1,670 a) intangible assets 1, TANGIBLE ASSETS 1,892 a) tangible assets for financial and investment services 1,892 ac) assets in course of construction 1, OTHER ASSETS 36 a) stocks 0 b ) other receivables PREPAYMENTS AND ACCRUED INCOME 15,516 a) accrued income 11,388 b ) deferred costs, expenses 4,128 5

6 Current assets Liquid assets The balance of cash accounts kept by credit institutions is shown as receivables, wherefore the THUF 124 in the Liquid assets line represents the balance of the cash on hand on the balance sheet date. Receivables Figures are shown in HUF thousand Description Receivables from credit institutions 21,746,291 a) receivables on demand 46,291 b) other receivables from financial services 21,700,000 On-demand receivables from credit institutions totalled THUF 46,291. This amount represented the balance of the cash accounts on the balance sheet date. Receivables from credit institutions for other financial services equalled THUF 21,700,000, which represented a term deposit kept in OTP Bank. Other assets On the balance sheet date other receivables totalled THUF 36, including THUF 19 in advanced payments to vendors and THUF 17 in other receivables from employees. Fixed Assets Figures are shown in HUF thousand Description Increase Decrease Closing Intangible assets 1,670 Gross value 1, ,670 Depreciation 0 Net value 0 0 1,670 Tangible assets 1,892 Gross value Depreciation In progress 1, ,892 Net value 0 0 1,892 Total net value 3,562 Among intangible assets the Company s logo to be registered was shown. Tangible assets include works performed on the rented property in connection with the new seat. Prepayments and accrued income From prepayments and accrued income the amount of accrued interest affecting the subject period totals THUF 10,969. Other income totalled THUF 419, while costs affecting the periods after the subject quarter totalled THUF 4,128, which included the rent and the costs of occupational health services. 6

7 Changes in the value and stock of liabilities Figures are shown in HUF thousand Description TOTAL LIABILITIES 21,765, OTHER LIABILITIES 41,413 a) maturing within a year 41,413 b ) maturing over a year 0 5. ACCRUALS AND DEFERRED INCOME 5,071 a) deferred income 0 b ) accrued costs and expenditures 5, ISSUED CAPITAL 200, CAPITAL RESERVE 21,500,000 a) difference between the par value and the issue price of the shares 21,500, PROFIT RESERVE COMMITTED PROFIT RESERVE BALANCE SHEET PROFIT/LOSS 19,045 Equity Figures are shown in HUF thousand Description Issued capital 200,000 Capital reserve 21,500,000 Profit reserve 0 Balance sheet profit/loss 19,045 Total equity 21,719,045 The Company s equity totals THUF 200,000, all of which consists of contribution in cash, which was paid by the founder concurrently with the foundation of the Company. The issue price of the Company s equity is THUF 21,700,000. Other liabilities All of the other liabilities (THUF 41,413) mature within a year. Trade accounts payable in the ordinary course of business totalled THUF 7,690. The salaries payable for December 2014 totalled THUF 15,259, while contributions and taxes payable in January 2015 on salaries equalled THUF 13,946. Liabilities to the tax authority and the central funds totalled THUF 4,518. Accruals and deferred income On the balance sheet date the accruals and deferred income totalled THUF 5,071. Costs accounted for the subject period consist of the following items: value of IT services THUF 2,875, rent THUF 1,404, audit fee THUF 610, fuel costs THUF 124, other personal allocations and the taxes involved THUF 58. 7

8 Detailed Profit and Loss Statement Interest received and similar income On liquid assets placed at financial institutions an interest of THUF 76,168 was accounted. This amount included THUF 218 interest on current account and other interest, and THUF 75,950 interest on term deposits Interest paid and similar payments In the subject year no interest was paid. Other income As other income the report includes THUF 436, which pertains to income required to be allocated from the budget after the subject year. General administrative costs In the period of establishing the Company costs were typically incurred in connection with securing the personal and material conditions for starting the activities. Such costs comprised of the following the items: Description (HUF thou) Percentage - % Material expenditures 12, % Payroll and related expenditure 40, % Expenses of other financial services 53, % Material expenditures include THUF 179 in costs of raw materials, THUF 12,469 in services used (rents, IT services, postal services, telephone costs, lawyers fees, other experts ) and THUF 27 in banking costs. Payroll and related expenditure include the salaries of employees and officials (THUF 30,991), employee benefits (THUF 429) and payroll related costs (social contribution tax, healthcare contribution, contribution to vocational training) equalling THUF 8,946. All payroll and related expenditure was incurred solely in connection with white collar employees. Other expenditures on business activities Other expenditures The Company accounted THUF 2,402 as other expenditures, which consisted of THUF 1,520 payable as local business tax, and THUF 882 payable as supervisory fee. Tax and balance sheet profit and loss In connection with the subject year the tax base was not modified by any item, therefore the payable tax totalled THUF 2,116. No dividend was paid from the after-tax profit, wherefore the Company s balance sheet profit was THUF 19,045, which increases the profit reserve. 8

9 Key financial indicators Since the Company was established only towards the end of 2014, the presentation of key financial indicators as required by the accounting policy is not relevant, its content cannot be interpreted and therefore they are not shown in the Supplementary Notes for Cash flow statement Cash sources Pre-tax profit 21,161 Increase in liabilities 41,413 Increase in accruals and deferred income 5,071 Issuance of shares 21,700,000 Total liabilities 21,767,645 Use of money Corporate income tax payable for the subject year 2,116 Increase in receivables 36 Increase in assets in course of construction (including advance payments for such purposes) 1,892 Increase in intangible assets 1,670 Increase in prepayments and accrued income 15,516 Change in cash amount, if positive 124 Change in bank money, if positive 21,746,291 Total use 21,767,645 Informative data Officials remuneration In the year of the Annual Report the executive officials of MARK Ltd. and the members of the Supervisory Board received the following remuneration in total in each group: Board of Directors (3 persons) THUF 6,171 Supervisory Board (3 persons) THUF 1,786 No loans or advance payments were made to the officials in the subject year. HR data On the balance sheet day the Company employed 15 people. The average annual statistical headcount was

10 Auditor s fee The books of MARK Ltd. were audited by Mazars Ltd. The annual gross audit fee was THUF 610. Transactions with affiliated companies With its parent company, the Central Bank of Hungary, MARK Ltd. concluded the following transactions in 2014: Office rental THUF 5,588 IT services THUF 2,724 On the balance sheet day there were no outstanding trade accounts payable to the affiliated company. Dated in Budapest on 24 March Dr. Csaba István Kandrács Board member Andrea Bártfai-Mager Board member 10

11 This is an English translation of the Independent Auditor s Report on the 2014 statutory Annual Report of the Company issued in Hungarian. If there are any differences, the Hungarian language original prevails. This report should be read in conjunction with the complete statutory Annual Report it refers to. Independent Auditor s Report To the shareholder of MARK Restructuring and Debt Management Private Company Limited by Shares, Report on the Annual Report We have audited the accompanying 2014 Annual Report of MARK Ltd. (hereinafter referred to as the Company ), which comprises the balance sheet as at 31 December 2014, which shows Total Assets of THUF 21,765,529 and retained profit for the year of THUF 19,045 and the Income Statement for the year then ended, and the Supplementary Notes, comprising a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Annual Report Management is responsible for the preparation and fair presentation of the Annual Report in accordance with the provisions of the Act on Accounting and for such internal control as management determines is necessary to enable the preparation of Annual Report are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on the Annual Report based on the audit. We conducted our audit in accordance with the Hungarian National Standards on Auditing. Those standards require that we comply with certain ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Annual Report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Annual Report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the Annual Report, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the Annual Report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the Annual Report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

12 Opinion In our opinion, the Annual Report gives a true and fair view of the financial position of MARK Ltd. as of 31 December 2014, and of its financial performance and of the result of its operations for the year then ended in accordance with the provisions of the Act on Accounting. Emphasis of matter Without qualifying our opinion, we would like to draw your attention to 8.4 Prevailing of going concern principle in the Notes to Financial Statements. Based on the Business Plan approved by the shareholder for 2015, the Company s actual equity will cover 2015 year s operating expenses. The Company s future operation as a going concern depends on the financial support of the shareholder. If the going concern principle does not prevail, the book value of assets, liabilities and contingent liabilities may have to be changed. This Annual Report does not present the effect of such eventual modifications. Other report on the Business Report We have audited the accompanying 2014 Business Report of MARK Ltd. Management is responsible for the preparation of the Business Report in accordance with the provisions of the Act on Accounting. Our responsibility is to assess whether this Business Report is consistent with the Annual Report. Our work with respect to the Business Report was limited to the assessment of the consistency of the Business Report with the Annual Report and did not include a review of any information other than drawn from the audited accounting records of the Company. In our opinion the 2014 Business Report of MARK Ltd. is consistent with the data included in the 2014 Annual Report of MARK Ltd. Budapest, 24 th March 2015 Mazars Kft Budapest, Nagyenyed utca Chamber registration number: Bohus Zoltánné Partner, Managing director Szmicsek Sándor Partner, Director Gábor Gabriella Member of Chamber of Hungarian Auditors Registration number: