SG FINANS AS 2015 QUARTERLY REPORT FIRST QUARTER

Transcription

1 SG FINANS AS 2015 QUARTERLY REPORT FIRST QUARTER

2 CONTENTS REPORT OF THE BOARD OF DIRECTORS 3 INTERIM FINANCIAL STATEMENT INCOME STATEMENT 5 ASSETS 6 LIABILITIES & 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 INCOME 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 CONTINGENCIES ASSETS PLEDGED AND RECEIVED AS SECURITY EVENTS AFTER THE REPORTING PERIOD 19 ADDRESSES 20

3 Report of the Board of Directors as of March 31 st, 2015 Business activities In the first three months of 2015 SG Finans has established new financing in Scandinavia of MNOK compared to MNOK for the same period in This is an increase of 5,7%. Margins for new financing are in average higher compared to The market share within Equipment finance in Norway is 23,9% at March 31 st, which is a decrease compared to year end The decrease is in in hightech and transportation. SG Finans remains market leader in equipment finance in Norway. Within Factoring, SG Finans is market leader in Norway with a market share of 40,0%. In Equipment Finance in Denmark the company maintains its market shares, while the market share in Sweden is increasing. Total assets are at March 31 st MNOK ,9 which is 7,7% higher than MNOK ,1 in the same period in people were employed in SG Finans at the end of first quarter. Since year end 2014 the number of employees is at same level. Results Conditions in capital markets stabilised through 2014, and SG Finans has strengthened Net Interest Margin and Net Banking Income in Q For the period ending March 31 st, Net Banking Income is MNOK 370,6 compared to MNOK 305,0 in the same period in Decreased costs of funding and increased sales gains have contributed to the growth in income. Operating expenses amount to MNOK 142,4 in the period ending March 31 st 2015, compared to MNOK 137,1 in the same period in The increase in operating expenses is mainly due to an increase in staff cost. Total loan losses year to date amount to MNOK 13,0. This represents 0,19% of average funded assets. Total loan losses for the same period in 2014 were MNOK 32,0 and 0,48% of average funded assets. Increased Net Banking Income, particularly from sales gains, and lower loan losses contribute to the MNOK 79,3 improvement from last year in operating result before tax, in spite of higher operating expenses. Net result after tax of SG Finans AS from January 1 st to March 31 st, 2015 amounted to MNOK 159,0 compared to MNOK 75,6 in Q Risk management and Capital adequacy The Board considers that the entity has a satisfactory capital situation and access to funding from its parent company. With effect from 1 January 2014, SG Finans has been validated to calculate capital requirements and capital adequacy according to Advanced Internal Rating Based Approach for the major portfolios. The capital adequacy calculations are consequently based on SG Finans internal parameters for PD ("Probability of Default"), LGD ("Loss given Default"), M ("Maturity) for these portfolios. According to the transition rule, the capital requirement shall not be reduced below 80% of the level calculated using the Basel II Standard method. The impact of the transition rule adjustment factor is presented in the note on capital adequacy. 3

4 The regulatory capital as of 31 st of March is 4 532,6. The regulatory capital consists of MNOK 3 432,6 tier one capital, and MNOK 1 100,0 tier two capital. The basis for the calculation of capital requirements and adequacy at the end of March, was MNOK ,3 The capital adequacy at end of March 2015 was 19,58%. 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 requirement under various stress scenarios is evaluated. The capital adequacy is considered satisfactory also considering the results of the performed stress tests. Lysaker, May 15 th, 2015 Marie-Christine Ducholet Chairman Karin Cecilie Kullmann Five Board Member Tommy Pedersen Board Member Jacques Bensen Board Member Torbjørn Nilsen Staff representative Philippe Dairien Board Member Carsten Thorne Managing Director 4

5 INCOME STATEMENT Amounts in NOK thousand Notes Total interest income 3, Total interest expenses 3, Net interest income Commission and fees income Commission and fees expenses Net commission and fee income Net gains/losses on financial instruments at fair value Net change in value and gains on foreign currency Total income on other activity Net banking income Total payroll, fees and other staff costs Total 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 Taxes Items that cannot be reclassified Actuarial gains and losses Taxes Other comprehensive income for the period Attributable to: Equity holder of the parent Total comprehensive income of the period

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 Liabilities 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 Current tax liability Subordinated debt Total Liabilities Equity Share capital Share premium account Other equity including profit for the year Total equity Total liabilities and equity Lysaker, May 15th,

7 STATEMENT OF CHANGES IN EQUITY Amounts in NOK thousand Share capital Share premium Retained earnings Translation differences Actuarial gains and losses Total Equity Profit for the period Other comprehensive income Dividends 0 Total equity Equity Profit for the period Other comprehensive income Dividends Total equity

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 ) Decrease ( increase ) in other receivables Decrease ( increase ) in advance payments Net cash flow from current financial activity Decrease ( increase) in tangible assets Decrease ( increase ) of fixed assets 0 0 Net cash flow from investment activity Increase (decrease) in deposits from customers Payment of dividends Increase (decrease) in loans from credit institutions Increase (decrease) in debt Increase (decrease) accrued costs Currency exchange 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 at end of period Cash and deposits with central banks 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 15 regional and sales offices in Norway, 5 offices in Sweden and 2 in Denmark. SG Finans AS forms a part of 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 financial statements for the period ended March 31st, 2015 were authorised for issue by the Board of directors on May 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 financial statements for SG Finans AS for the 3 month period ending March 31st, 2015 are prepared and presented in accordance with the revised IAS 34 Interim Financial Reporting. The interim 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, 2015 Adoption date by the Accounting standards, amendments or interpretation European Union Effective date IFRIC 21 Levies 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 March 31, These accounting standards and interpretations are required to be applied from annual periods beginning on January 1, 2015 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 March Accounting standards, Amendments or interpretation adopted by the European Union on March 31, 2015 Accounting standards, amendments or interpretations Adoption date by the European Union Effective date 9

10 Accounting standards, amendments or interpretations not yet adopted by the European Union on March 31, 2015 Adoption date by the IASB Effective date Accounting standards, amendments or interpretations IFRS 9 Financial Instruments IFRS 14 Regulatory Deferral Accounts IFRS 15 Revenue from Contracts with Customers Annual Improvements to IFRSs Cycle Amendments to IAS 1: Disclosure Initiative Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation SG Finans consider possible effects on the financial statements of changes in existing standards and future standards as not material. Regarding IFRS 9 SG Finans has not yet considered possible effects on the financial statement as the standard is not yet adopted by EU. 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. 10

11 3. NET INTEREST INCOME Interest income from financial institutions, valued at amortised cost Interest income from customers financial leases and loans, valued at amortised cost 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 expenses on subordinated debt Other interest expenses Total interest expenses Net interest income NET FEES AND INCOME ON OTHER ACTIVITY Commission and fees income from loans and similar to customers Commission and fees income Commission and fees expenses from loans and similar to customers Other commission and fees expenses Commission and fees expenses Net commission and fees 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/losses on financial derivatives, trading Change in fair value on financial derivatives, hedging Change in fair value on hedged fixed interest contracts Net gains/losses on financial instruments at fair value through P&L

12 6. OPERATING EXPENSES Payroll Pensions Social security costs Other staff cost Total payroll, fees and other staff costs Rent and other office costs Fees and temporary staff Travel and marketing Other operating costs Intragroup services Depreciation and gain/loss 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 0 0 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 Future minimum finance lease rental Average interest 4,33 % 4,79 % 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 2014 the effective tax rate was 19,4 % at year end and the expected effectiv tax rate for 2014 was 38 %. For 2015 this is expected to be 26 %. 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 25 % for the period ending 31 March The main contributer to the fluctuation in effective tax rate is exchange rate effects from the portfolio. Current income tax expense Gross deferred tax expense Income tax expense for the period

15 12. INFORMATION ON RELATED PARTIES Assets/interest income Loans to Group companies Interest income Liability/interest expense Loans from Group companies Other liabilities Interest expense Subordinated debt Interest expense on subordinated debt Funding is primarily provided by the parent company Société Générale, on the basis of a framework agreement and limits. All transactions are made on market terms. 13. EMPLOYEE BENEFITS For the period ending 31 March 2015, it is not obtained a new actuary estimate. It is therefore not presented any effect of actuarial gains and losses in other comprehensive income. The company considers the possible effect of actuarial gains and losses as immaterial for the assessment of the financial position for the 3 month period ending 31 March At year end 2014 the actuarial gains and losses recognised in other comprehensive income was MNOK , giving a negative effect on the equity of MNOK

16 14. CAPITAL ADEQUACY * Common Equity Tier 1 capital Share capital Share premium account Other equity including profit for the year Independently reviewed interim profits net of any foreseeable charge and dividend Common Equity Tier 1 capital before regulatory adjustment Common equity Tier 1 capital: Regulatory adjustment Deferred tax assets Intangible assets (net of related tax liability) Negative amounts resulting from the calculation of expected loss Total regulatory adjustments to Common Equity Tier Common Equity Tier 1 capital Additional Tier 1 capital 0 0 Tier 1 capital Tier 2 capital: instrument and provision Subordinated debt Tier 2 capital before regulatory adjustment Tier 2 capital: regulatory adjustment Total regulatory adjustment to Tier 2 capital Tier 2 capital Total capital Total risk weighted assets

17 Capital ratios and buffers Common Equity Tier 1 14,83 % 12,65 % Tier 1 14,83 % 12,65 % Total capital 19,58 % 16,39 % Institution specific buffer requirement 10,00 % 10,00 % of which: capital conservation buffer 2,50 % 2,50 % of which: countercyclical buffer 0,00 % 0,00 % of which: systemic risk buffer 3,00 % 3,00 %...of which: systemically important institution buffer 0,00 % 0,00 % Common Equity Tier 1 above minimum capital requirements and capital buffers 4,83 % 2,67 % Tier 1 capital above minimum capital requirements and capital buffers 3,33 % 1,15 % Total capital above minimum capital requirements and capital buffers 6,08 % 2,89 % Capital ratios and buffers, Nominal amounts Institution specific buffer requirement of which: capital conservation buffer of which: countercyclical buffer 0 0 of which: systemic risk buffer of which: systemically important institution buffer 0 0 Common Equity Tier 1 above minimum capital requirements and capital buffers Tier 1 capital above minimum capital requirements and capital buffers Total capital above minimum capital requirements and capital buffers Amount below the thresholds for deductions Deferred tax assets arsing from temporary differences SG Finans has been validated to calculate capital requirements and capital adequacy according to Advanced Internal Rating Based Approach for the major portfolios. The capital adequacy calculations are consequently based on SG Finans internal parameters a.o. for PD ("Probability of Default"), LGD ("Loss given Default"), M ("Maturity) for these portfolios. According to the transition rule, the capital requirement shall not be reduced below 80% of the level calculated using the Basel II Standard method. The impact of the transition rule adjustment factor is presented in the note on capital adequacy. The capital requirement for Operational Risk is calculated according to the Basic Indicator / Standard Approach for operational risk. The entity does not take Market Risk positions, and the capital requirement for market risk is nil. * Capital adequacy as of end Q is calculated according to standard method as the approval for use of IRB-A method was obtained after reporting date. 17

18 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 *Financial derivatives are transferred from level 1 to level 2. There are no changes in circumstances causing the transfer, but interpretation of the standard. SG Finans does not have any financial instruments classified in level 3. 18

19 16. OFFSETTING The company has established CSA agreements (collateral security agreement) with its main counterparts.the agreements involve a mutual commitment to provide collateral for derivatives trading between the parties. Financial derivatives -assets Gross amount Amounts that are offset 0 0 Net amount in financial position Financial instruments on balance sheet Cash collateral in the balance sheet Net position Financial derivatives -liabilities Gross amount Amounts that are offset 0 0 Net amount in financial position Financial instruments on balance sheet Cash collateral in the balance sheet 0 0 Net position 0 0 SG Finans has set-off rights for leasing agreements where customers also have entered into factoring arrangements with the company. 17. CONTINGENCIES SG Finans AS had no major legal disputes pending at the end of the reporting period. SG Finans AS has a minor commercial dispute estimated at MNOK 3,3, primarily to cover expenses to lawyers. 18. ASSETS PLEDGED AND RECEIVED AS SECURITY In June 2014 SG Finans signed a collateral secured loan drawn over a 2 and 4 year funding period with an aggregate value of 250 MEUR. The lender holds encumbrance, MEUR 335 in our transport portfolio. 19. EVENTS AFTER THE REPORTING PERIOD The company is at the date of issue,15 May 2015, not familiar with matters that are likely to change the assessment of the financial position as at 31 March

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 Societe Generale Equipment Finance and Societe Generale 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 20