AI assistant
ageas SA/NV Interim / Quarterly Report 2014
3905_ir_2014-09-03_2d35bb59-e647-41b1-b02e-bbdf3e22b267.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
KPMG
KPMG Audit
Financial Services
P.O. Box 43004
3540 AA Utrecht
The Netherlands
Rijnzathe 14
3454 PV De Meern
The Netherlands
Telephone +31 (0)30 658 2300
Fax +31 (0)30 658 3010
REGISTERED
Ageas Finance N.V.
Mr. J. Brugman
Archimedeslaan 6
3584 BA UTRECHT
Our ref 39075/14X00126511DMR/WT/HS/mb
Utrecht, 28 August 2014
Dear Mr. Brugman,
Interim Financial Statements for the first half-year 2014
We confirm our agreement for you to include the review report below in the half-year report 2014 of Ageas Finance N.V., Utrecht. This half-year report should be issued in accordance with the final printing proof including the indicated changes, of which an initialled copy is enclosed.
“Review report
To: the General Meeting of Shareholders of Ageas Finance N.V.
Introduction
We have reviewed the accompanying interim financial information as at 30 June 2014 of Ageas Finance N.V., Utrecht, which comprises the statement of financial position as at 30 June 2014, the statements of comprehensive income, changes in net equity, and cash flows for the period of six months ended 30 June 2014, and the notes. Management of the Entity is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope
We conducted our review in accordance with Dutch law including standard 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
KPMG Accountants N.V., registered with the trade register in the Netherlands under number 33263683, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ('KPMG International'), a Swiss entity.
All our services are subject to our general conditions, which are filed at the Amsterdam District Court under number 21/2012, and which we will send to you on request.
KPMG
Ageas Finance N.V.
Interim Financial Statements for the first half-year 2014
Utrecht, 28 August 2014
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information as at 30 June 2014 is not prepared, in all material respects, in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union.
Utrecht, 28 August 2014
KPMG Accountants N.V.
W. Teeuwissen RA”
We also confirm our permission to publish the text of our review report. If you present the half-year report and the review report on the internet, you should ensure that the half-year report is properly separated from other information on the internet site. Separation can be achieved, for example, by presenting the half-year report in an unchangeable format, stored as a separate file or by issuing a warning if the reader switches from the half-year report (“you are leaving the secured zone of the reviewed half-year report”).
We will be pleased to provide any further information you may require.
Yours faithfully,
KPMG Accountants N.V.
W. Teeuwissen RA
Initials for identification purposes: mB
Enslocure(s):
Initialed Interim Financial Statements for the first half-year 2014
Signed Review report
39075/14X00126511DMR
KPMG
Review report
To: the General Meeting of Shareholders of Ageas Finance N.V.
Introduction
We have reviewed the accompanying interim financial information as at 30 June 2014 of Ageas Finance N.V., Utrecht, which comprises the statement of financial position as at 30 June 2014, the statements of comprehensive income, changes in net equity, and cash flows for the period of six months ended 30 June 2014, and the notes. Management of the Entity is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope
We conducted our review in accordance with Dutch law including standard 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information as at 30 June 2014 is not prepared, in all material respects, in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union.
Utrecht, 28 August 2014
KPMG Accountants N.V.
W. Teeuwissen RA
KPMG Accountants N.V., registered with the trade register in the Netherlands under number 33363683, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ('KPMG International'), a Swiss entity.
39075/14X00126511DMR
Interim Financial Statements for the first half-year 2014 Ageas Finance N.V.
Ageas Finance N.V.
Archimedeslaan 6
3584 BA Utrecht (the Netherlands)
Tel. +31 (0)30 252 53 04
Fax +31 (0)30 252 53 10
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
also refers.
In the for identification purposes
KPMG Accountants N.V.
Your partner in Insurance
Utrecht
ageas
Contents
Report of the Board of Directors of Ageas Finance N.V. on the 2014 first half financial year. 4
Interim Financial statements for the first half-year 2014 7
Statement of Financial position 8
Statement of Comprehensive Income 9
Statement of changes in net equity 10
Statement of cash flows 11
General notes 13
Accounting policies 13
General 13
Notes to the financial statements 17
1. Due from group companies 18
2. Derivatives and other receivables 18
3. Cash and cash equivalents 18
4. Capital and reserves 19
5. Interest-bearing loans and borrowings 20
6. Accrued interest and other payables 21
7. Financial Margin 21
8. Operating expenses 22
9. Income tax 22
10. Risk management 24
11. Related parties 24
12. Operating segments 25
13. Off-balance sheet items 25
14. Management remuneration 25
15. Contingent liabilities 26
16. Post-balance sheet date events 26
Other information 27
Provisions of the articles of association concerning profit appropriation 27
Review report 28
1.1. Introduction 28
1.2. Scope 28
1.3. Conclusion 28
All amounts in the tables of these Financial Statements are denominated in thousands of euros, unless stated otherwise.
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
Report of the Board of Directors of Ageas Finance N.V. on the 2014 financial first half year
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
ageas Finance N.V. interim Financial Statements 2014
also refers
Initials of identification purposes
KPMG Accountants N.V.
ageas
Report of the Board of Directors of Ageas Finance N.V. on the 2014 first half financial year.
General
In the past Ageas Finance N.V. operated as the window to the financial markets for Ageas entities by issuing both short-term and long-term debt securities under a Belgian/Dutch Commercial Paper program and a Euro Medium Term Note (EMTN) program. Proceeds were primarily on-lent to Ageas holding entities, to finance leverage that existed at this level in the group.
Confronted with the international financial crisis, Ageas (former Fortis) has undergone a complete metamorphosis. Its Dutch banking and insurance activities has been sold to the Dutch State, while the other banking activities have been sold to the Belgian State, which in turn sold 75% of Fortis Bank NV/SA to BNP Paribas.
The sale of a number of material group companies stated above implied that a default was triggered under the EMTN program, which could not be cured. As a result, holders of Ageas Finance N.V. bonds are at all times entitled to demand the early redemption of their bonds in accordance with Conditions 7(a)(vii) and 7(a)(ix) of the Terms and Conditions. For all bonds other than structured notes, such redemption takes place at par value plus accrued interest until the date of effective early redemption. To enable Ageas Finance N.V. to early redeem the external bondholders, Ageas Finance N.V. has concluded agreements with its borrowers, that lead to the early redemption of the amounts due from borrowers at par.
Most bonds were redeemed as result of received early redemption requests in the first half-year of 2009. In November 2009 Ageas Finance N.V. launched a public bid on the remaining outstanding notes at par, to assure that all note holders were informed about the ability to turn in their notes at par value (custodians need to inform their clients of any public bid). The appetite to participate to the bid was low: only 5% of the remaining note holders reacted on the offer.
Given the low appetite, Ageas Finance N.V. changed the introduced early redemption request procedure from monthly to quarterly in 2010. Furthermore, Ageas Finance N.V. decided to use its available cash to grant a new loan to Ageas Insurance International N.V.; the return that is realized on this loan is higher than the return that can be realized on holding cash at current accounts at banks. To avoid liquidity risks, the loan includes options for Ageas Finance N.V. to ask for early redemption at par, in case early redemption requests on the outstanding bonds emerge. During the first half year 2014 Ageas Finance N.V. asked for a total of EUR 87 million early redemption and the loan has been redeemed totally per the end of June 2014.
On 30 June 2014 EUR 2 million of the EMTN notes remained outstanding, versus EUR 68 million at year end 2013 and EUR 187 million at year end 2012.
The debt issued by Ageas Finance N.V. was issued under a joint and several guarantee of the Dutch ageas N.V. and of the Belgian ageas SA/NV. On 7 August 2012 these entities merged, ageas SA/NV being the surviving entity and now the sole parent company of the Ageas group, and also the indirect holder of the shares of Ageas Finance N.V. via Ageas Insurance International N.V.
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers
Initials by identification purposes
KPMG Accountants N.V.
ageas.
International Financial Reporting Standards
The Ageas Finance N.V. interim Financial Statements for the first half year 2014, including the 2013 and 2012 comparative figures, are prepared in accordance with IFRS – including International Accounting Standards ('IAS') and Interpretations – and as adopted by the European Union. For IAS 39, Financial Instruments: Recognition and Measurement, the execution regarding hedge accounting (the so-called 'carve out') decreed by the European Union on 19 November 2004 is taken into account.
Where accounting policies are not specifically mentioned below, reference should be made to the IFRS as adopted by the European Union.
The accounting policies used to prepare the interim Financial Statements for 2014 are consistent with those applied in the Financial Statements for the year ended 31 December 2013.
According to the accounting policies Ageas opted to fair value part of its assets and liabilities, while other parts are valued at amortised cost. With a view at the early redemption process described above, whereby the EMTN debt is redeemable at par value, Ageas Finance N.V. assumed that this par value represents the best estimate of their fair value, except if trades in the publicly listed notes is observed on the Luxembourg stock exchange above 100%; in these cases the listed trade value is used.
Results and appropriation of profit
In the first half of 2014 Ageas Finance N.V. realised a net loss after tax of EUR 0.2 million compared to a net loss of EUR 3.4 million recorded in 2013 and a loss of EUR 6.9 million in 2012. The recorded losses are predominantly due to the loss in value of Interest Rate Swaps (IRS). These IRS are used to hedge the interest position of the company, and they lose value due to the fact that these IRS get closer to their maturity date. Ageas Finance N.V. is part of the corporate income tax unity 'Ageas Insurance International N.V.' in the Netherlands. Due to the overall loss position of the tax unity and the lack of future tax basis, no compensation was possible.
On 16 June 2014 Ageas Finance N.V. decided to pay a dividend of EUR 18 million to its shareholder Ageas Insurance International N.V. This dividend is actually paid in July 2014.
Risk management
Exposure to credit, interest rate and currency risks arise in the normal course of Ageas Finance N.V. business. The board decided to use derivative financial instruments to economically hedge exposure to fluctuations in foreign exchanges rates, interest rates and other risk on a deal by deal basis. The board monitors these risks on a day by day basis and minimises the open positions if and when economically possible.
Prospects
The interim financial accounts are prepared based on the going concern assumption.
The outstanding debt of Ageas Finance N.V. is in default. Due to cross default language in the terms and conditions of the EMTN programme, any new issued loan would immediately default; Ageas Finance N.V. therefore will not issue new bonds until the last defaulted bond is redeemed, which could take up to 2015. After the last redemption, management will review the future for the company. The results for the coming years will mainly consist of the interest on the outstanding
Ageas Finance N.V. interim Financial Statements 2014
28 AUG 2014
also refers.
Initial for identification purposes
KPMG Accountants N.V.
ageas
loans. The interest margin is expected to be insignificant. The company therefore does not expect it has to rely on capital support that the sole shareholder Ageas Insurance International N.V. has provided for an amount up to EUR 20 million, in case losses would reduce the capital of the company below zero.
Employees
Ageas Finance N.V. has no employees of its own. Its activities are performed by employees of Ageas group companies.
Corporate Governance Statement
Given the size of the company, the board members of the company are directly involved with the day to day management of the company, while at least two Board members are required to sign for agreements or contracts that legally bind or commit the company. Governance therefore fully relies on the four eye principle.
Reporting is very much focussed on the management of liquidity, as well as managing interest and foreign exchange positions arising from the decreasing asset and liability portfolio. The liquidity is monitored daily, while interest and foreign exchange positions are reported during each board meeting. The company grants loans only to other entities within the Ageas Group. Internal financial reports are produced on a monthly basis and reported in this frequency to the board, that in principle meets on a quarterly basis. Bi-annually the company publishes its financial statements, to comply with the transparency guidelines that apply for issuers of listed securities on regulated markets with notes with a par value below EUR 50.000. These half year and annual reports are respectively reviewed and audited by the external auditors. Issues are discussed between auditors and board.
Management representation
Management declares that, to the best of their knowledge, the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and that the management report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.
For the purpose of best practice provision II.1.5 in the Dutch Corporate Governance Code the Board considers that to the best of its knowledge, the internal risk management and control systems relating to financial reporting risks worked properly in the year under review and provide a reasonable assurance that the Ageas Finance N.V. interim financial Statements for 2014 do not contain errors of material importance. This statement cannot be construed as a statement in accordance with the requirements of Section 404 of the US Sarbanes-Oxley Act, which is not applicable to Ageas Finance N.V. The Board will continue its commitment to keep in place the internal risk management and control systems in line with the limited activities performed.
Utrecht (NL), 28 August, 2014
The Board of Directors:
C.A.H. Boizard
J.H. Brugman
C.F. Oosterloo
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
Interim Financial statements for the first half-year 2014
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014 17
ageas Finance N.V. interim Financial Statements 2014
also refers
Initials for identification purposes
KPMG Accountants N.V.
ageas
Statement of Financial position
(before appropriation of profit)
| In thousands of euro | Note | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|---|
| Assets | ||||
| Current assets | ||||
| Due from group companies | 1 | - | 87,000 | 200,000 |
| Derivatives and other receivables | 2 | - | 3,254 | 10,598 |
| Cash and cash equivalents | 3 | 21,471 | 82 | 3,713 |
| Total assets | 21,471 | 98,336 | 214,311 | |
| Equity | ||||
| Issued capital | 125 | 125 | 125 | |
| Retained earnings | 1,123 | 22,520 | 29,408 | |
| Result for the year | (182) | (3,397) | (6,888) | |
| Total equity | 4 | 1,066 | 19,248 | 22,648 |
| Liabilities | ||||
| Current liabilities | ||||
| Interest-bearing loans and borrowings | 5 | 2,185 | 69,436 | 106,807 |
| Bank overdrafts | - | 200 | - | |
| Accrued interest and other payables | 6 | 18,220 | 2,452 | 4,859 |
| Total liabilities | 20,466 | 71,668 | 191,666 | |
| Total equity and liabilities | 21,471 | 98,336 | 214,311 |
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
Ageas Finance N.V. interim Financial Statements 2014
ageas
Statement of Comprehensive Income
| In thousands of euro | Note | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|---|
| Income | ||||
| Financial income | 7 | 1,927 | 5,105 | 7,815 |
| Financial expenses | 7 | (2,057) | (7,045) | (10,857) |
| Net financial margin | (130) | (1,840) | (3,042) | |
| Operating expenses | 8 | (52) | (51) | (77) |
| Operating result before tax | (182) | (1,991) | (3,119) | |
| Income tax | 9 | - | 19 | 58 |
| Result for the year | (182) | (1,972) | (3,061) | |
| Other comprehensive income | - | - | ||
| Total comprehensive income | (182) | (1,972) | (3,061) | |
| Total result for the year attributable to shareholders | (182) | (1,972) | (3,061) | |
| Total comprehensive income attributable to shareholders | (182) | (1,972) | (3,061) |
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers. 9
Initials & Identification purposes
KPMG Accountants N.V.
ageas.
Statement of changes in net equity
| Balance beginning of year | 2014 | 2013 | 2012 |
|---|---|---|---|
| In thousands of euro | |||
| Balance beginning of year | 19,248 | 22,645 | 29,533 |
| Profit or loss for the 1^{st} half-year | (182) | (1,872) | (3,061) |
| Interim dividend | (18,000) | - | - |
| Balance per the end of June | 1,866 | 20,673 | 26,472 |
| Profit or loss for the 2nd half-year | - | (1,425) | (3,827) |
| Balance end of December | - | 19,248 | 22,645 |
KPMG
KPMG Audit
Document to which our report dated
Ageas Finance N.V. interim Financial Statements 2014
26 AUG 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
Statement of cash flows
| For the first half-year 2013 | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|
| In thousands of euro | |||
| Cash and cash equivalents – Balance at 1 January | 82 | 3,713 | 545 |
| Bank Overdrafts – Balance at 1 January | (200) | - | (1,673) |
| Total cash and cash equivalents/ bank overdrafts at 1 January | (118) | 3,713 | (1,128) |
| Cash flows from operating activities | |||
| Net result | (182) | (1,972) | (3,061) |
| Adjustments to non-cash items included in profit before taxation | |||
| (Un)realised gains (losses) | 3,083 | 3,330 | |
| Net changes in operating assets and liabilities | 1,021 | (42) | 3,028 |
| Net cash from operating activities | 839 | 1,869 | 3,297 |
| Cash flows from investing activities | |||
| Payments to customers or cash receipt from customers (deposits, long term loans) | 87,000 | 60,000 | 70,100 |
| Cash flows from financing activities | |||
| Cash receipt or repayment of borrowings (subordinated, debt certificates, long term liabilities, straight loans) | (66,250) | (63,154) | (70,272) |
| Net cash from financing activities | (66,250) | (63,154) | (70,272) |
| Total cash and cash equivalents / bank overdrafts at 30 June | 21,471 | 1,628 | 1,997 |
KPMG
KPMG Audit Document to which our report dated
28 AUG 2014
also refers. Initials for identification purposes KPMG Accountants N.V.
Ageas Finance N.V. interim Financial Statements 2014
ageas
General Notes
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. Interim Financial Statements 2014
also refers.
Initials of identification purposes
KPMG Accountants N.V.
ageas.
General notes
Ageas Finance N.V. is a company domiciled in The Netherlands. The address is Archimedeslaan 6, 3584 BA Utrecht.
The company is registered with the chamber of Commerce in Utrecht under number 30055940.
The shares of Ageas Finance N.V. are indirectly held by ageas SA/NV via Ageas Insurance International N.V. The latter is the direct and sole shareholder of Ageas Finance N.V.
The main activity of Ageas Finance N.V. is to provide funding to companies within the Ageas group. Funds borrowed in the market are either held in cash at current accounts at banks or lend-on to Ageas companies. Ageas Finance N.V. has relatively low exposure to interest and foreign currency risks.
Ageas Finance N.V. does not employ any personnel; all activities are performed by employees of other Ageas entities.
These interim financial statements were authorised for issue by the Board of Directors on 28 August, 2014.
Accounting policies
General
The interim annual accounts are prepared based on the going concern assumption.
a) Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the entity as at and for the year ended 31 December 2013.
b) Basis of preparation
The financial statements are presented in euro, rounded to the nearest thousand. They are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, and certain interest-bearing loans and borrowings.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates are especially used in establishing the fair value of non market quoted financial instruments.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
Ageas Finance N.V. interim Financial Statements 2014
28 AUG 2014
also refers
Initials for identification purposes
KPMG Accounting N.V.
ageas
Ageas Finance N.V. structured deals in such a way that only limited interest rate or foreign currency risks remain on the books of Ageas Finance N.V. In certain deals derivatives are used to eliminate the interest or foreign currency risk.
Ageas Finance N.V. does not apply hedge accounting. To limit the volatility in income and equity, Ageas Finance N.V. applies the fair value option, for deals in which derivatives are involved. This results in a situation that the funding, the on-lending and the derivative are fair valued through the income statement.
c) Changes in accounting principles
The accounting policies applied by the entity in these Interim Financial Statements 2014 are the same as those applied by the entity in its financial statements as at and for the year ended 31 December 2013.
d) Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
e) Financial instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition non-derivative financial instruments are measured as described below.
A financial instrument is recognised if the company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the company's contractual rights to the cash flows from the financial assets expire or if the company transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the company's obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the company's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Accounting for finance income and expense is discussed in note g (Financial income and expenses).
KPMG Audit
Document to which our report dated
14 | Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
Investments at fair value through profit or loss
An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the company manages such investments and makes purchase and sale decisions based on their fair value. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.
Other
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.
(ii) Derivative financial instruments
The company holds derivative financial instruments to hedge its foreign currency, credit risk, equity risk and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised immediately in profit or loss.
f) Impairment
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in the Statement of Comprehensive Income.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.
g) Financial income and expenses
Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss. Interest income is
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the company's right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, dividends on preference shares classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method.
h) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
i) Fair Value Calculations
A number of the company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Derivatives
The fair value of interest rate swaps is the estimated amount that Ageas Finance N.V. would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The estimate is based on the expected cash flows and the swap interest curve applicable at the moment of valuation. The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.
Non-derivative financial instruments
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
Notes to the financial statements
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014 | 17
ages Finance N.V. interim Financial Statements 2014
also refers
initials for identification purposes
KPMG Accountants N.V.
ageas
1. Due from group companies
| In thousands of euro | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| Loans with group companies | - | 87,000 | 200,000 |
| Total | - | 87,000 | 200,000 |
The floating rate loan to Ageas Insurance International N.V. matures on 15 december 2015 and can be called partially with a two days notice by the lender and the loan bears an interest of 1 month euribor + 0.4%. The loan was totally called in the first half year of 2014 and no balance is outstanding per 30 June 2014.
2. Derivatives and other receivables
| In thousands of euro | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| Accrued interest | - | 2,135 | 4,312 |
| Other receivables and pre-payments | - | - | - |
| Fair value derivatives | - | 1,119 | 6,286 |
| Total | - | 3,254 | 10,596 |
During the first half of 2014 all the remaining Interest rate swaps reached their maturity date and no further Interest rate swaps are outstanding per 30 June 2014.
3. Cash and cash equivalents
| In thousands of euro | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| Bank balances | 21,471 | 82 | 3,713 |
| Total | 21,471 | 82 | 3,713 |
Bank balances are held at BNP Paribas Fortis SA/NV, ABN Amro Bank N.V. and ING Bank N.V. Other Ageas group entities entrusted cash at accounts at the same banks, and these accounts jointly form a cash pool. In case of defaults of these group companies BNP Paribas Fortis SA/NV and ABN Amro Bank N.V. are entitled to compensate the cash balances of these entities.
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas.
4. Capital and reserves
The movements in capital and reserves for the years ended 2012, 2013 and Half-year 2014 are as follows:
| In thousands of euro | Share capital | Retained earnings | Result for the year | Total |
|---|---|---|---|---|
| Balance at 31 December 2012 | 125 | 29,458 | (6,888) | 22,648 |
| Allocation of loss | (6,888) | 6,888 | ||
| Total recognised income and expense | ||||
| 1st half-year 2013 | (1,972) | (1,972) | ||
| Balance at 30 June 2013 | 125 | 22,520 | (1,972) | 20,673 |
| Total recognised income and expense | ||||
| 2nd half-year 2013 | (1,425) | (1,425) | ||
| Balance at 31 December 2013 | 125 | 22,520 | (3,397) | 19,248 |
| Allocation of loss | (3,397) | 3,397 | ||
| Total recognised income and expense | ||||
| 1st half-year 2014 | (182) | (182) | ||
| Interim dividend | (18,000) | (18,000) | ||
| Balance at 30 June 2014 | 125 | 1,123 | (182) | 1,066 |
The authorised share capital comprised 1,000 ordinary shares, par value of EUR 500; 250 shares were issued and fully paid up. During the first half-year 2014, 2013 and 2012 no new shares were issued nor bought back by the company.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are held by Ageas Insurance International N.V.
In the first half of 2014 it was decided to pay out a dividend of EUR 18 million. The dividend is actually paid in July 2014.
KPMG
KPMG Audit
Document to which our report dated
Ageas Finance N.V. interim Financial Statements 2014
28 AUG 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
5. Interest-bearing loans and borrowings
The loans and borrowings can be analysed as follows:
| In thousands of euro | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| Loans and borrowings | 2,185 | 68,436 | 186,807 |
| Total interest bearing loans and borrowing | 2,185 | 68,436 | 186,807 |
The split of total loans and borrowings by measurement principle is as follows:
| In thousands of euro | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| Loans and borrowings at fair value | 2,185 | 33,536 | 89,542 |
| Loans and borrowings at amortised cost | - | 34,900 | 97,265 |
| 2,185 | 68,436 | 186,807 | |
| Total loans and borrowings |
The interest bearing loans and borrowings as at 30 June 2014 can be detailed as follows:
| Loans and borrowings (by ISIN code) | Legal Maturity date | Nominal amount | Book value | Fair value |
|---|---|---|---|---|
| X50181100834 | 22-12-2015 | 1,808 | 2,185 | 2,185 |
| Securities at fair value, according to a level 2 valuation | 1,808 | 2,185 | 2,185 | |
| Total interest bearing loans and borrowings | 1,808 | 2,185 | 2,185 |
The sale of material group companies by the Fortis Group in 2008 implied that a default was triggered under the EMTN program which could not be cured. As a result, holders of Ageas Finance N.V. bonds are at all times entitled to demand the early redemption of their bonds in accordance with Conditions 7(a)(vii) and 7(a)(ix) of the Terms and Conditions. Such redemption takes place at par value plus accrued interest until the date of effective early redemption. It is assumed that these redemption values represent the proper amortised cost value or best estimate of the fair value, if applicable. However, all notes recorded at fair value trade above their redemption values; in these cases the observed trading value at the reporting date was used.
The average interest paid on the loans and borrowings was 4.58% in first half of 2014 (2013: 3.91%; 2012: 3.71%).
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials in identification purposes
KPMG Accountants N.V.
ageas.
6. Accrued interest and other payables
| In thousands of euro | 30 June 2014 | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| Accrued interest | 28 | 2,395 | 4,801 |
| Payables to group companies | 73 | 23 | 5 |
| Dividend payable | 18,000 | - | - |
| Other payables and Past prescriptions | 119 | 34 | 53 |
| Total | 18,220 | 2,462 | 4,859 |
The dividend was paid to Ageas Insurance International N.V. in July 2014.
7. Financial Margin
| In thousands of euro | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|
| Interest income loans | 151 | 429 | 2,058 |
| Interest income derivatives | 1,318 | 3,446 | 5,713 |
| Interest income cash and cash equivalents | 1 | 0 | 4 |
| Net gain on re-measurement from loans at fair value | 488 | 1,147 | - |
| Past prescriptions | (33) | 83 | - |
| Financial income | 1,525 | 5,105 | 7,815 |
| Interest expenses loans and borrowings | (720) | (3,506) | (4,988) |
| Interest expenses subordinated loans | - | - | (273) |
| Interest expenses derivatives | (216) | (456) | (2,266) |
| (Un) realised loss on derivatives | (1,119) | (3,083) | (2,016) |
| Net loss on re-measurement from loans at fair value | - | - | (1,314) |
| Financial expenses | (2,055) | (7,045) | (10,057) |
| Net financial margin | (139) | (1,949) | (3,042) |
KPMG
KPMG Audit
Document to which our report dated
Ageas Finance N.V. interim Financial Statements 2014
28 AUG 2014 | 21
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
8. Operating expenses
| In thousands of euro | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|
| Accounting office fees charged by group companies | 35 | 35 | 50 |
| Audit costs | 15 | 15 | 26 |
| Bank costs | 2 | 1 | 1 |
| Total | 52 | 51 | 77 |
The audit costs relate to the fees charged by KPMG Accountants N.V. for the audit of the annual accounts (including half year review) and related matters. The accounting costs are not directly charged to Ageas Finance N.V. but charged via Ageas B.V.
9. Income tax
Ageas Finance N.V. is part of the tax unity for corporation tax Ageas Insurance International N.V. together with Ageas B.V. Ageas Insurance International N.V. acts as the head of this tax unity. Due to the fact that it is not expected that the fiscal unity will end with a taxable profit in the coming years, no deferred tax asset has been recorded for unused tax losses. Within the tax unity, entities making profit, account for the full tax charge and this amount is allocated based on the taxable losses of the entities recording losses.
The differences on which deferred tax should be recognised when the fiscal unity was in a profit situation can be summarised as follows:
| In thousands of euro | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|
| Unrealised part of derivatives | - | 3,203 | 9,208 |
| Unrealised revaluation of loans | (393) | (1,460) | (2,820) |
| (393) | 1,743 | 6,388 |
Recognised in the income statement
| In thousands of euro | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|
| Current tax | |||
| Current year tax income (expense) | - | 19 | 58 |
| Total income tax in income statement | - | 19 | 58 |
KPMG
KPMG Audit
Document to which our report dated
Ageas Finance N.V. interim Financial Statements 2014
26 AUG 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
Reconciliation of effective tax rate
| In thousands of euro | 1 st HY 2014 | 1 st HY 2013 | 1 st HY 2012 |
|---|---|---|---|
| Profit before tax(minus = loss) | (182) | (1,991) | (3,120) |
| Domestic corporate tax rate | 25.0% | 25.0% | 25.0% |
| Income tax using the domestic corporate tax rate | 45 | 498 | 780 |
| Effect of total result in fiscal unity | (45) | (479) | (722) |
| Total income tax expense in income statement | - | 19 | 58 |
| Effective corporate tax rate | 0% | 0.95% | 1.86% |
Due to the fact that the tax unity made an overall tax loss in the first half of 2014, no tax benefit could be recognised.
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers
Initials for identification purposes
KPMG Accountants N.V.
23
ageas
10. Risk management
Exposure to credit, interest rate and currency risks arises in the normal course of Ageas Finance N.V. business. The board decided to use derivative financial instruments to economically hedge exposure to fluctuations in foreign exchanges rates and interest rates on a deal by deal basis. The early redemption of notes leads to open currency and interest positions. The open positions are minimised if and when economically possible.
Other aspects of Ageas Finance N.V.'s financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 31 December 2013.
Due to the redemption of the loan granted to Ageas Finance N.V. during the first half of 2014 the exposure to credit risk is minimised.
11. Related parties
Parties related to Ageas Finance N.V. include Ageas group companies, Board Members, Executive Managers, close family members of any individual referred to above and other related entities.
In 2010 one new loan was granted to Ageas insurance International N.V. on the same commercial and market terms that apply to non-related parties. The loan granted to Ageas Insurance International N.V. is totally repaid per 30 June 2014 and EUR 0.2 mio interest was received.
Ageas Finance N.V. has no employees of its own; all operational and management activities are performed by employees of other Ageas entities. The activities are charged to Ageas Finance N.V. based on Service level agreements.
KPMG
KPMG Audit Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers. Initials of identification purposes KPMG Accountants N.V.
ageas.
12. Operating segments
Ageas Finance N.V., being an issuing vehicle of the Ageas Group, operated as one segment: it tapped the financial market for funding, that was on-lent to internal group entities. Given the default of the bonds that Ageas Finance N.V. issued, all internal clients redeemed their on-loans, although one new loan was granted. Besides paying coupons on debt outstanding, redeeming the principal of debt at maturity or earlier when bondholders request this and reducing the granted loan in function of these redemptions, the company is in-active.
13. Off-balance sheet items
Capital support
Ageas Insurance International N.V. has provided capital support for an amount up to EUR 20 million at the moment that losses reduce the capital of the company below zero.
Taxation unities
Ageas Finance N.V. is part of the tax unity for corporation tax Ageas Insurance International N.V. together with Ageas B.V. Ageas Insurance International N.V. acts as the head of this tax unity. Each of the companies is, in accordance with the standard conditions, jointly and severally liable for debts arising out of corporation tax on the part of the group tax unity as a whole.
Ageas Finance N.V. is part of the “fiscale eenheid voor de omzetbelasting Ageas Insurance International N.V. c.s.”, a fiscal unity for VAT (Value Added Tax) in the Netherlands.
14. Management remuneration
The board of directors receives their remuneration from other Ageas Group companies. No remunerations are charged directly to Ageas Finance N.V.
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials of identification purposes
KPMG Accountants N.V.
ageas
15. Contingent liabilities
We have taken notice of the disclosure on Contingent Liabilities in the 2014 Consolidated Financial Half-year Statements of Ageas in which is mentioned that Ageas is or can be involved in a number of legal procedures as well as administrative and criminal investigations in Belgium and The Netherlands. Ageas Finance N.V. is of the opinion that these procedures are not likely to lead to a substantial claim liability for Ageas Finance N.V.
16. Post-balance sheet date events
There have been no material events after balance sheet date that would require adjustments to the financial statements as of 30 June 2014.
Utrecht (NL), 28 August, 2014.
The Board of Directors:
C.A.H. Boizard
J.H. Brugman
C.F. Oosterloo
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
Ageas Finance N.V. interim Financial Statements 2014
also refers.
Initials for identification purposes
KPMG Accountants N.V.
ageas
Other information
Provisions of the articles of association concerning profit appropriation
Article 18, subsection 1 and 2, of the Articles of Association reads:
The company may make distributions to the shareholders and other persons entitled to the profit available for distribution only in so far as the equity capital of the company exceeds the aggregate of the paid-up and called-up part of the capital of the company and the reserves that have to be kept by law.
Profits may be distributed only after adoption of the annual accounts showing that such distribution is permissible. The profit shown in the adopted annual accounts may be disposed of by the general meeting of shareholders as it sees fit.
KPMG
KPMG Audit Document to which our report dated
28 AUG 2014
also refers Initials for identification purposes KPMG Accountants N.V.
Ageas Finance N.V. interim Financial Statements 2014
ageas
Review report
To: the General Meeting of Shareholders of Ageas Finance N.V.
1.1. Introduction
We have reviewed the accompanying interim financial information as at 30 June 2014 of Ageas Finance N.V., Utrecht, which comprises the statement of financial position as at 30 June 2014, the statements of comprehensive income, changes in net equity, and cash flows for the period of six months ended 30 June 2014, and the notes. Management of the Entity is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial information based on our review.
1.2. Scope
We conducted our review in accordance with Dutch law including standard 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
1.3. Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information as at 30 June 2014 is not prepared, in all material respects, in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union..
Amstelveen, 28 August 2014
KPMG ACCOUNTANTS N.V.
W. Teeuwissen RA
KPMG
KPMG Audit
Document to which our report dated
28 AUG 2014
also refers
Initials for identification purposes
KPMG Accountants N.V.
Ageas Finance N.V. interim Financial Statements 2014