SG FINANS AS 2013 QUARTERLY REPORT SECOND QUARTER

Transcription

1 SG FINANS AS 2013 QUARTERLY REPORT SECOND QUARTER

2 CONTENTS REPORT OF THE BOARDS OF DIRECTORS 3 INTERIM FINANCIAL STATEMENT INCOME STATEMENT 5 ASSETS 6 LIABILITY & EQUITY 6 STATEMENT OF CHANGES IN EQUITY 7 CASH FLOW STATEMENT 8 NOTES 1. ACCOUNTING PRINCIPLES 9 2. IMPORTANT ACCOUNTING ESTIMATES AND DISCRETIONARY EVALUATION NET INTEREST MARGIN NET FEES AND INCOME ON OTHER ACTIVITY NET GAINS ON FINANCIAL INSTRUMENTS AT FAIR VALUE OPERATING EXPENSES LOSSES AND ALLOWANCES RECOGNISED IN THE PROFIT AND LOSS ACCOUNTS LEASING (FINANCIAL LEASING ASSETS) RISK CLASSIFICATION DOUBTFUL LOANS INCOME TAX INFORMATION ON RELATED PARTIES EMPLOYEE BENEFITS CAPITAL ADEQUACY METHOD FOR CALCULATION OF FAIR VALUE OF FINANCIAL INSTRUMENTS OFFSETTING EVENTS AFTER THE REPORTING PERIOD 18 AUDITOR'S REPORT 19 ADDRESSES 20

3 Report by the Board of Directors as of June 30 th, 2013 Business activities SG Finans has in Scandinavia established new financing in the period of MNOK 4 567,3 compared to MNOK 5 203,9 for the same period in Margins for new financing are increasing compared to Market share within Equipment leasing in Norway is 28,6% at June 30 th, which is an increase compared to year end For Factoring the market share is around 37%, and in Denmark SG Finans is maintaining its market share while decreasing in Sweden. Total assets are at June 30 th MNOK ,5, a decrease from MNOK ,1 compared to the same period in people were employed in SG Finans at the end of the quarter. Since year end 2012 the number of employees has decreased by 9. Results Through the international turbulence in the financial sector and capital markets the price on credit risk and liquidity has increased strongly. Accordingly we have also increased our prices. Net banking income for the period ending June 30 th is MNOK 578,1 compared to MNOK 533,3 June 30 th Increasing margins due to decreased cost of funding has contributed to this, despite decreasing provision income and lower income on other activity. Operating expenses amount to MNOK 248,5 in the period ending June 30 th 2013, compared to MNOK 254,1 in the same period in The decrease in operating expenses is due to a reduction in administrative expenses. Total loan losses year to date amount to MNOK 61,4. Compared with the same period in 2012 total loan losses has increased slightly. Total loan losses for the same period in 2012 were MNOK 58,2. Increased prices and reduced administrative expense contribute to the MNOK 28,0 improvement in result after tax compared to the same period last year. The results after tax of SG Finans AS from January 1 st to June 30 th, 2013 amounted to MNOK 193,0 compared to MNOK 165,0 in Risk management and Capital adequacy The Board considers that the entity has a satisfactory capital situation and access to funding from its parent company. The regulatory capital as of June 30 th, 2013 was MNOK 3 971,6. The company issued in June 2013 a subordinated loan of MNOK with 10-year maturity. The loan qualifies as supplementary ("tier 2") capital. The basis for the calculation of capital requirements and adequacy at the end of June, was MNOK ,8. The requirement was thus MNOK 2 367,7 (9%). The company had MNOK 1 603,9 in capital over regulatory minimum requirements (pillar 1). At July 1 st 2013 new rules on capital requirements and capital buffers entered into force. The company has presented capital buffers and coverage according to the new rules in the note on capital adequacy. The capital adequacy at end of June 2013 was 15,10 %. The capital coverage is satisfactory compared to regulatory minimum requirements and the company s internal requirements and guidelines for solidity and capital adequacy. As part of the company s capital management procedures, stress testing of all relevant risks is performed and the change in the capital

4 requirement under various stress scenarios is evaluated. The capital adequacy is considered satisfactory also considering the results of the performed stress tests. Lysaker, August 15 th, 2013 Marie-Christine Ducholet (chairman) Karin Cecilie Kullmann Five Tommy Pedersen Jacques Bensen Håkon Schei Jean-Marc Mignerey Carsten Thorne Managing Director

5 INCOME STATEMENT Amounts in NOK thousand Note Interest and similar income Total interest and similar income 3, Total interest and similar expenses 3, Net interest margin Commission and fees income Total commission and fee income Total commission and fee expenses Net commission and fee income Net gain on financial instruments at fair value Net change in value and gains on foreign currency Income on other activity Net banking income Payroll, fees and other staff costs Other operating expenses Gross operating proft Losses on loans Operating profit Taxes Profit for the period Other comprehensive income Items that could be reclassified Exchange differences on translation of foreign operations Items that can not be reclassified Actuarial gains and losses Other comprehensive income for the period Attributable to: Equity holder of the parent Total comprehensive income of the period Comparative figures have been restated retrospectively and will not match the interim financial statement for the 30 of June 2012 and the financial statements for Further information is given in Note 1.

6 STATEMENT OF FINANCIAL POSITION Amounts in NOK thousand Notes Assets Cash and deposits with central banks Deposits with financial institutions Loans to financial institutions Financial derivatives 15, Loans to customers Repayment loans Factoring receivables Factoring loans Financial lease agreements 8, Total loans before allowances Allowances on doubtful loans 7, Net loans to customers Repossessed assets Shares and primary capital certificates Deferred tax asset Other intangible assets Machinery, tools and equipment, means of transport Other assets Prepayments and accrued income Total assets Amounts in NOK thousand Notes Liability Loans and deposits from financial institutions with agreed maturity Deposits from and debt to customers with termination rights Financial derivatives 15, Retention of margin and other customer accounts Other liabilities Accruals and deferred income Pension liabilites Deferred tax Current tax Subordinated debt Total Liabilities Equity Share capital Share premium account Other equity including profit for the year Total equity Total liabilities and equity Comparative figures have been restated retrospectively and will not match the interim financial statement for the 30 of June 2012 and the financial statements for Further information is given in Note 1. Lysaker, August 15th, 2013.

7 STATEMENT OF CHANGES IN EQUITY Amounts in NOK thousand Share capital Share premium Other equity Dividend/ Group contribution Total comprehensive income of the period Total equity Certain amounts in the statement are not in accordance with the interim financial statements for the period ending 31 March 2012 and the financial statements for 2012 and reflect adjustments as discussed in note 1.

8 CASH FLOW STATEMENT Operations Interest income Interest costs Other receipts Operating expenses Receipts on previous losses Paid taxes Net cash flow from operations New investments leasing Proceeds from sale of leasing Decrease in loans ( net ) ( Increase ) in other receivables ( Increase ) in advance payments Net cash flow from current financial activity ( Increase) in tangible assets Decrease of fixed assets Net cash flow from investment activity Increase (decrease) in deposits from customers Dividend payment Group contribution paid Group contribution received 0 0 Increase (decrease) in equity -0 0 Subordinated debt Increase (decrease) in loans from credit institutions Increase (decrease) in debt Accrued costs Currency conversion without cash effect Net cash flow from long term financial activity Net cash flow Cash at the 1st of January Cash at end of period Reconciliation cash Cash and deposits with central banks 20 6 Deposits with financial institutions Cash at end of period

9 NOTES 1. ACCOUNTING PRINCIPLES SG Finans AS is a Scandinavian finance company and its business is carried out through a broad, Scandinavian distribution network with 16 regional and sales offices in Norway, 5 offices in Sweden and 2 in Denmark. SG Finans AS is a wholly owned subsidiary of Société Générale SA, a group listed on the stock exchange with head office in Paris, France. The Group consolidated financial statement is prepared by Société Générale SA, and is available on The company is a limited company incorporated and domiciled in Norway. Its registered office is in Strandveien 18, Lysaker. The interim condensed financial statements for the period ended June 30th, 2013 were authorised for issue by the Board of directors on August 15th, SG Finans AS's activities are neither seasonal nor cyclical in nature, its period results were not affected by any seasonal or cyclical factors. The interim condensed financial statements for SG Finans AS for the 6 month period ending June 30th, 2013 were prepared and are presented in accordance with the revised IAS 34 Interim Financial Reporting. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statement, and should be read in conjunction with the financial statement as at 31 December IFRS, IFRIC interpretation and amendments applied by SG Finans AS as at Januar 1st, 2013 Adoption date by the European Union Effective date Accounting standards, amendments or interpretation Amendments IAS 1, Presentation other comprehensive income Amendments IAS 19, Employee benefits IFRS 13, Fair value measurement Amendments IFRS 7, Disclosures - Offsetting Amendments IAS 12, Deferred Tax: Recovery of Underlying Assets Improvements to IFRS ( ) The transition to IAS 19R had an impact on the financial position. Comparative figures have been restated retrospectively. The effect of the adoption of IAS 19R is explained in Note 13. The other adoptions have not material effect on the financial positon. Accounting standards, Amendments or interpretation to be applied in the future Not all of the accounting standards and interpretations published by the IASB (International Accounting Standards Board) have been adopted by the European Union at June 30, These accounting standards and interpretations are required to be applied from annual periods beginning on January 1, 2014 at the earliest or on the date of their adoption by the European Union. Accordingly, they were not applied by SG Finans AS as of June 30, 2013.

10 Accounting standards, Amendments or interpretation adopted by the European Union on June 30, 2013 Adoption date by the European Union Effective date Accounting standards, amendments or interpretations Amendments to IAS 32 "Offsetting Financial Assets and Financial Liabilities" IFRS 10 "Consolidated Financial Statement" IFRS 11 "Joint Arrangements" IFRS 12 "Disclosure of Interest in Other Entities" Amendments to IAS 27 "Seperate Financial Statements" Amendments to IAS 28 "Investment in Assiciates and Joint Venture" Transition guidance (Amendments to IFRS 10,11 and 12) Accounting standards, amendments or interpretations not yet adopted by the European Union on June 30, 2013 Accounting standards, amendments or interpretations Adoption date by the IASB Effective date IFRS 9 "Financial Instruments" (Phase 1: Classification and Measurement) Investement Entities (Amendments to IFRS 10,12 and IAS 27) IFRISC 21 "Levies" Amendments to IAS 36 "Recoverable Amount Disclosures for Non-Financial Assets" Amendments to IAS 39 "Novation of Derivatives and Continuation of Hedge Accounting" SG Finans consider possible effects on the financial statements of changes in existing standards and future standards as not material. 2. IMPORTANT ACCOUNTING ESTIMATES AND DISCRETIONARY EVALUATION The preparation of interim financial statements in conformity with generally accepted accounting principles requires that occasionally management must make estimates and assumptions. Estimates and discretionary evaluations are regularly assessed and are based on historic experience and other factors, including the expectations of future events that are considered to be probable under the current circumstances. The company prepares estimates and makes presumptions and assumptions connected to the future. The accounting estimates that are based on this will seldom be entirely in accordance with the final outcome. Some accounting principles are considered to be especially important to enlighten the company s financial position because they require the management to make difficult or subjective assessments and determine estimates that are, for the most part, uncertain at the time the estimates are made.

11 3. NET INTEREST MARGIN Interest income from financial institutions, valued at amortised cost Interest income from customers financial leases and loans, valued at amortised cost Other interest income 19 3 Total interest income Interest expenses to financial institutions, valued at amortised cost Interest expenses on deposits and debt to customers, valued at amortised cost Interest expence on subordinated debt Other interest expenses Total interest expenses Net interest margin NET FEES AND INCOME ON OTHER ACTIVITY Commission and fee income from loans and similar to customers Other commission and fee income 0 0 Commission and fee income Commission and fee expenses from loans and similar to customers Other commission and fee expenses Commission and fee expenses Net commission and fee income Sales gains Income from extension of leasing contracts Other income Total income other activity NET GAINS ON FINANCIAL INSTRUMENTS AT FAIR VALUE Net gains on financial derivatives, trading Change in fair value on financial derivatives, hedging Change in fair value on hedged fixed interest contracts Net gains on financial instruments at fair value through P&L

12 6. OPERATING EXPENSES Payroll Pensions Social security expenses Total payroll, fees and other staff expenses Administrative expenses Rent and other operating expenses on leased property Other operating expenses Ordinary depreciation Total other operating expenses Total operating expenses LOSSES AND ALLOWANCES RECOGNISED IN THE PROFIT AND LOSS ACCOUNTS Allowances on doubtful loans Allowances on doubtful loans as of Exchange rate adjustments (opening balance) Actual losses that are covered by previous allowances Reclassification of previous allowances Allowances on doubtful loans in the period = Allowances on doubtful loans at end of period Losses on loans Write-downs for loan losses at end of period Exchange rate adjustments (opening balance) Write-downs for loan losses as at Total actual losses Income on actual losses = Losses on loans

13 8. LEASING (FINANCIAL LEASING ASSETS) Purchase cost Exchange rate difference (opening balance) Inflow during the year Outflow during the year Purchase costs at end of period Accumulated ordinary depreciation Exchange rate difference Ordinary depreciation during the year Reversed depreciation sold assets Accumulated depreciation at end of period Book value leasing assets at end of period Customer receivables Goodwill/badwill Other accruals Book value in the balance sheet at end of period Customer receivables are ordinary leasing receivables and advancement on leasing rent. Up front fees constitute other accruals. Overview of future minimum finance lease rental: Within 1 year to 5 years After 5 years 0 0 Future minimum finance lease rental Average interest 4,95 % 5,40 % Present value of minimum lease payments Unearned finance income

14 9. RISK CLASSIFICATION Amounts in NOK thousand Days outstanding status Net loans to customers Whereof past due, nondoubtful Not past due > > 1 year Total Amounts in NOK thousand Days outstanding status Net loans to customers Whereof past due, nondoubtful Not past due > > 1 year Total Credit exposure: Net loans to customers Positive market value derivatives Guarantee liabilities and loan commitments Total credit exposure DOUBTFUL LOANS Gross doubtful loans Write-downs on impaired assets Net doubtful loans INCOME TAX The Company calculates the tax payable based on an estimated effective tax rate. For the 2012 effective tax rate was 40.9%. For 2013 this is expected to be 28%. Deferred tax assets are for interim based on an estimate for the year. The estimate is prepared based on previous years' development in the leasing portfolio, adjusted for year acquisitions and disposals. Expected changes in the deferred tax is recognized by 50% for the period ending 30 June Current income tax expense Gross deferred tax expense Income tax expense for the period

15 12. INFORMATION ON RELATED PARTIES Assets/interest Loans to Group companies Interest Liability/interest Loans from Group companies Other liabilities Interest Subordinated debt Interest expense on subordinated debt EMPLOYEE BENEFITS The main consequence of amendments to IAS 19 Employee Benefits will consist in the immediate recognition of actuarial gains and losses on post-employment defined benefit plans in other comprehensive income (OCI). Impact on interim statement of financial position Increase in the defined benefit plan obligation Increase in deferred tax asset Net impact on equity The net impact on equity as at 1 January, 2012 was TNOK 8.384, and at December 31, 2012 TNOK For the period ending 30 June 2013, it is not obtained new actuary estimate. It is therefore not presented effect of actuarial gains and losses in other comprehensive income. The company consider the possible effect of actuarial gain and losses as immaterial for the assessment of the financial position for the 6 month period ending 30 June 2013.

16 14. CAPITAL ADEQUACY Core capital Deductions: Other intangible assets Deferred tax assets Profit for the year Common Equity Hybrid capital tier one 0 0 Tier one capital Tier two capital (subordinated debt) Total regulatory capital Risk weighted assets -credit Risk weighted volume op risk Risk weighted volume market risk 0 0 Basis of calculation Capital requirement -common equity tier one Capital requirement - tier one Capital requirement - total regulatory capital Capital conservation buffer System risk buffer Countercyclical buffer 0 Capital requirement Core tier one capital Tier one capital Total regulatory capital Capital buffer to minimum regulatory capital Pilar II additional capital requirement Capital buffer after Pillar two Capital adequacy ratio Common Equity 10,92 % 11,15 % Tier one capital 10,92 % 11,15 % Total regulatory capital 15,10 % 11,15 % The calculation of capital requirement and capital adequacy has been done following the Standard Method for Credit Risk and the Basic Indicator Approach for Operational Risk. The entity does not take Market Risk positions and the capital requirement for Market Risk is nil.

17 15. METHOD FOR CALCULATION OF FAIR VALUE OF FINANCIAL INSTRUMENTS Regarding financial instruments recorded at fair value, see description in note 1 Accounting Principles. Lending (loans and financial leasing) to and receivables on customers: The pricing of lending (loans and financial leasing) is based on market prices. Stipulated prices include additions to cover credit risk. The value of impaired engagements is determined by discounting expected future cash flows. We therefore assess that the recorded value is a fair estimate of fair value for loans and receivables valued at amortised cost. Loans from financial institutions and deposits from customers: Fair value is determined to be equal recorded value for loans from financial institutions and deposits from customers valued at amortised cost. SG Finans uses the following hierarchy related to determining and disclosing the fair value of financial instruments: 1) Quoted (unadjusted) prices in active markeds for identical assets or liabilities (level 1) 2) Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly (level 2) 3) Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (level 3) Amounts in NOK thousand Financial assets Level 1 Level 2 Financial derivatives Financial lease agreements Total assets Amounts in NOK thousand Financial liabilities Level 1 Level 2 Financial derivatives Total liabilities Amounts in NOK thousand Financial assets Level 1 Level 2 Financial derivatives Financial lease agreements Total assets Amounts in NOK thousand Financial liabilities Level 1 Level 2 Financial derivatives Total liabilities SG Finans has no financial instruments recorded at fair value in level 3.

18 16. OFFSETTING The company has established CSA agreements. The agreements involve a mutual commitment to provide collateral for derivatives trading between the parties. Financial derivatives -assets Gross amount Amounts that are offsett 0 0 Net amount in financial position Netting agreements Net amount 0 0 Financial derivatives -liabilities Gross amount Amounts that are offsett 0 0 Net amount in financial position Netting agreements Net amount 0 0 SG Finans has set-off rights for leasing agreements where customers also have entered into factoring arrangements with the company. 17.EVENTS AFTER THE REPORTING PERIOD The company is at the date of issue,15 August 2013, not familiar with matters that are likely to change the assessment of the financial position as at 30 June 2013.

19 Til SG Finans AS J ERNST &YOUNG Statsautoriserte revisorer Ernst &Young AS Dronning Fufemias gate 6, NO.0191 Uslo Qslo Atrium. P.O.Box 20, NO 0051 ~sio Foretaksregisteret: NO 97f 38E1 387 MVA T If.: +b7 L4 UU 24 DU Fax: QO Medlemmer av Den norske Rewscrforening Uttalelse om forenklet revisorkontroll av delårsregnskap Innledning Vi har foretatt en forenklet revisorkontroll av vedlagte balanse for SG Finans AS pr. 30. juni 2013 og tilhørende resultatregnskap og oppstilling over endringer i egenkapital og kontantstrømoppstilling for seksmånedersperioden 1. januar 2013 til 30. juni 2013 som da ble avsluttet og av beskrivelsen av regnskapsprinsipper og andre noter. Ledelsen er ansvarlig for utarbeidelsen og fremstillingen av delårsregnskapet isamsvar med International Financial Reporting Standards som fastsatt av EU (IAS 34). Vår oppgave er å avgi en uttalelse om delårsregnskapet basert på vår forenklede revisorkontroll. Omfanget av den forenklede revisorkontrollen Vi har utført vår forenklede revisorkontroll isamsvar med internasjonal standard for forenklet revisorkontroll 2410 "Forenklet revisorkontroll av et delårsregnskap, utført av foretakets valgte revisor". En forenklet revisorkontroll av et delårsregnskap består i å rette forespørsler, primært til personer med ansvar for økonomi og regnskap, og å gjennomføre analytiske og andre kontrollhandlinger. En forenklet revisorkontroll har et betydelig mindre omfang enn en revisjon utført i samsvar med International Standards on Auditing, og gjør oss følgelig ikke i stand til å oppnå sikkerhet for at vi er blitt oppmerksomme på alle vesentlige forhold som kunne ha blitt avdekket i en revisjon. Vi avgir derfor ikke revisjonsberetning. Konklusjon Vi har ved vår forenklede revisorkontroll ikke blitt oppmerksomme på noe som gir oss grunn til å tro at det vedlagte delårsregnskapet idet alt vesentlige ikke er utarbeidet i samsvar med International Financial Reporting Standards som fastsatt av EU (IAS 34). Oslo, 15. august 2013 ERNST & YOUNG AS Eirik Larsson statsautorisert revisor

20 SG FINANS AS SG Finans AS is Norway s leading finance company within equipment leasing and factoring. The company s products are marketed under the trademarks SG Equipment Finance and SG Factoring. The company is a part of the French Societe Generale Group, one of Europe s largest financial corporations. SG Finans has a strong local presence with 50 years history and 22 offices in Norway, Sweden and Denmark. The head office for the Scandinavian businesses is located at Lysaker (Oslo/Norway). The company has total managed assets of NOK 30 billion and 360 skilled employees, all working to provide our customers and partners with solutions for their business. HEAD OFFICE SCANDINAVIA SG FINANS AS STRANDVEIEN 18 POST BOX LYSAKER TELEPHONE: OFFICES IN NORWAY BERGEN - BODØ - DRAMMEN - FREDRIKSTAD - HAMAR - HARSTAD HAUGESUND - KRISTIANSAND - OSLO/LYSAKER (HEAD OFFICE) SANDEFJORD - SKIEN - STAVANGER - TROMSØ - TRONDHEIM - ÅLESUND OFFICES IN SWEDEN GOTHENBURG - MALMØ - SKELLEFTEÅ - STOCKHOLM - SUNDSVALL OFFICES IN DENMARK COPENHAGEN - VEJLE