Interim / Quarterly Report • Jan 26, 2015
Interim / Quarterly Report
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Interim Group Management Report for the Period from 1 January - 30 June 2014
DF Group (the collective name "DF Group" denotes DF Deutsche Forfait AG ("DF AG" or "company"), its subsidiaries as well as its offices and representations), specializes in foreign trade financing with a focus on the emerging markets. The company acts as an intermediary between exporters/importers, forfaiting companies or banks (as the seller of the receivable) on the one hand and investors (as the buyer of the receivable) on the other hand. On the purchasing side, DF Group acquires foreign trade receivables (hereinafter briefly also referred to as "receivables") either directly from the exporter or importer (primary market) or from banks or other forfaiting companies (secondary market) which have previously acquired the receivables from an exporter or importer. On the placement side, specific receivables are resold to investors who primarily include banks as well as, to an increasing degree, institutional investors from the non-bank segment. In its trading activities, DF Group takes advantage of the lack of transparency of the market and relies on its long-standing global network. This way, the company generates attractive margins. These are based on the different risk assessments of individual receivables by the market participants in the various geographic regions as well as on the fact that DF Group structures the receivables (e.g. by arranging credit insurance or a third-party guarantee or by splitting receivables into tranches with specific maturities) before reselling them. In addition, DF Group benefits from its long-standing market knowledge, its ability to bridge finance the trade receivables (i.e. the shortterm provision of liquidity for the seller of the receivable without having placed the respective receivable) as well as from efficient examination and settlement of the documentation.
DF›s business model is based on forfaiting, which is a classical export financing instrument. In the forfaiting business, receivables are acquired at a discount from the nominal value. This discount on the market value is calculated on the basis of the money and capital market interest rate for the equivalent term and at matching exchange rates (e.g. 6-month or 1-year LIBOR or 2-year swap rate) plus risk margin. The risk margin takes the individual risk of each transaction into account, which mainly depends on country and counterparty risks of the primary debtor (importer) and the secondary debtor (e.g. credit insurance, guaranteeing bank). The discount on the market value is additionally influenced by the complexity of the transaction including the documentation.
What makes forfaiting interesting to export-oriented companies? In view of the market saturation tendencies in the developed countries – especially the industrialized countries – the development of new markets in the world's growth regions is of high strategic relevance for enterprises. When selling products to developing and emerging countries, exporters typically have to grant longer payment terms to importers than is usually the case with domestic buyers. This is primarily due to the fact that developing and emerging countries have developed financial systems in which financing of capital goods with instruments such as leasing are available only to a limited extent or not at all. In particular in the case of durable capital goods, importers tend to require short to medium-term financing of the purchase price to bridge the period until they have procured long-term financing, or they can generate the required cash flows and profits for paying the purchase price only through the long-term use of the capital good. As a result, exporters typically find themselves holding (at least short-term) trade receivables until the importer has secured a financing solution. If the importer is unable to arrange financing, the exporter is often forced to offer a long-term financing solution covering the economic life of the capital good. In these cases, a competitive advantage can be obtained by those exporters who can offer vendor financing either from their own resources or through a third-party such as a forfaiting company. Without a forfaiting-based refinancing solution, the receivable created through the granting of a (short-term) payment term or through the arrangement of (medium to long-term) vendor financing would remain on the exporter's balance sheet. Even though receivables arising from exports to developing and emerging countries are typically secured by a local bank in the importing country, they tie up exporters liquidity and force them to take and manage specific risks outside of their core business, which requires specific expertise. DF Group assumes these specific risks and tasks through the non-recourse purchase of the receivable. The exporter receives liquidity quickly and removes the risks from the balance sheet.
Apart from forfaiting, DF Group takes over risks from its customers under purchase commitments. Unlike forfaiting, purchase commitments only involve the assumption of country and counterparty risks without providing liquidity. Purchase commitments are secured by bank guarantees, third-party counter-guarantees or credit insurance in favor of DF Group, which means that the risks are placed. DF Group also purchases lease and loan receivables, which are usually sold or hedged by purchase commitments.
Investors buy foreign trade receivables because these, unlike synthetic financial instruments, are based on the physical shipment of goods. The (primary) debtors are usually companies whose risk has been rated as attractive since the financial crisis. Moreover, in the case of export receivables from (primary) debtors in developing and emerging countries, the credit risk of the importer (forfaiting debtor) is usually covered by a guarantee from a bank in the country of the importer or by private or government credit insurance (secondary debtor). Also, the L/C and note receivables often used in foreign trade represent abstract payment obligations and are thus unrelated to the underlying transactions and potential claims resulting from them. This makes foreign trade receivables attractive to investors under risk/return aspects.
Besides Cologne-based DF AG as the ultimate parent company, DF Group comprises five wholly-owned subsidiaries. These are headquartered in Brazil (São Paulo), the Czech Republic (Prague), the USA (Miami), Pakistan (Lahore) and UAE (Dubai). The international network is complemented by branches in France (Paris) and the UK (London) as well as a partner in Italy.
In addition to this broad international network of subsidiaries and branches, DF Group cooperates with external intermedia ries (collectively referred to as the "sales organization"). This sales organization ensures that DF Group has direct access to the various regional markets and allows it to perform its func tion as a global intermediary between the purchasing side and the placement side. It is not important for DF Group to have a presence in each individual country but to have the local mar kets covered by a sales organization with a regional presence. This gives DF Group the flexibility to respond to changing con ditions in the individual local markets and to (temporarily) exit markets or develop or enter attractive markets quickly. The employees at the company's branches and the intermediaries have their own networks in the individual regional markets.
With the exception of the subsidiary in Prague, which is in volved in back office tasks for individual transactions as and when required, the foreign subsidiaries and offices as well as the intermediaries focus exclusively on marketing and sales activities. They are responsible for preparing the purchase as well as the placement of the foreign trade receivables. However, the decentralized sales organization is not authorized to close transactions autonomously. Thanks to this clear focus and the allocation of tasks between the sales organization and the parent company, new markets can be developed rela tively quickly and without major financial expense.
The parent company, DF AG, coordinates the sales organiza tion and is in charge of DF Group's refinancing activities, risk management, contract management and documentation as well as the final outplacement of transactions.
On 6 February 2014, the US Office of Foreign Assets Control ("OFAC") placed DF AG on the Specially Designated Nationals and Blocked Persons List ("SDN list") due to alleged violations of Iran sanctions. Due to the SDN listing, the company was not allowed and unable to write USD-denominated business anywhere in the world. The company's possibilities to make payments in currencies other than the USD (including the EUR) were restricted considerably, as many banks refused to make payments to or on behalf of an SDN-listed company. The company was virtually unable to sign up or execute new business. In view of the uncertainty regarding the duration of the SDN listing on the one hand and the constraints on the company's ability to make or receive payments (which is key to acquiring receivables and reselling them), the management did not consider it appropriate to invest liquidity in (new) receivables, even if those receivables would not have been denominated in USD. Also, the company was unable to, or restricted in its ability to, resell the receivables held in its books at the time of the SDN listing - in particular to the extent that they were denominated in USD.
The collection of the receivables held by the company at the time of their contractual maturity was possible only with a considerable extra effort.
The implementation of the trade finance fund and the asset backed securities (ABS) / asset backed commercial paper (ABCP) programs has been delayed significantly by the company's SDN listing. The original plan was to implement these projects in the first half of 2014. DF Group and a renowned bank had agreed the terms and conditions for the implementation of the ABCP program as well as the criteria of the export receivables to be sold to the ABCP program. The respective term sheet had been signed, and the first utilization under the ABCP program would normally have taken place in the first quarter of 2014 if DF Group had not been put on the OFAC's SDN list on 6 February 2014. We now expect the ABCP program to be implemented in the second half of 2015.
As a consequence of its SDN listing, DF AG has revised its Group-wide compliance system. In March 2014 the enhanced compliance system was approved by the Supervisory Board. The compliance system includes (i) the appointment of a Compliance Officer, who reports directly to the Board of Management; (ii) adjustment of the IT system, which now automatically checks whether a client - both new and existing client - features on the EU and US sanctions lists. Regular updates of our database ensure that the (new) listing of a party involved in the underlying transaction on a sanctions list will be detected also during the holding period of a receivable. This will enable DF Group to take the necessary steps. For those service providers with whom companies of the DF Group work regularly, the Compliance Officer keeps a "White List", which is updated regularly. Signing contracts and working with parties on the White List is possible without individual checks being required.
Besides the following information on the business performance and the result of operations in H1 2014, we explicitly mention the disclosures under paragraph 3 "Postbalance sheet events" and the consequences of the OFAC listing in 2014 which occurred after the balance sheet date, due to which the financial situation of DF Group deteriorated materially.
In the first half of 2014, DF Group posted a consolidated net loss of EUR 6.9 million (comparative period 2013: consolidated net income of EUR 1.0 million). This resulted from the naming of the company in the SDN list, which, as already discussed above, caused its Group-wide day-to-day operations to come to an almost complete standstill in early February 2014. In the first half of 2014, the business volume amounted to EUR 28.2 million (comparative period: EUR 309.5 million) and the gross result including financial results declined from EUR 6.4 million in the first half of 2013 to EUR -1.0 million. Administrative expenses, comprised of personnel expenses, other operating expenses and writedowns, amounted to EUR 6.0 million. This represents a 22% increase on the EUR 4.9 million posted in the comparative period. This increase was caused by higher personnel expenses (+EUR 0.1 million) as well as higher other operating expenses (+ EUR 1.0 million). Personnel expenses failed to benefit from the full effect of the cost-cutting measures in the second quarter of 2014 and were additionally affected by the changes on the Board of Management. The rise in other operating expenses is attributable to higher legal counsel expenses. Financing costs increased chiefly as a result of the bond issue in May 2013, rising from EUR 0.8 million in the comparative period 2013 to EUR 1.9 million.
DF Group generated negative operating cash flow of EUR 1.2 million (comparative period 2013: EUR -13.2 million) in the first half of 2014. The reduction in trade receivables failed to offset the consolidated net loss as well as the decline in trade accounts payable and other liabilities. The negative cash flow of the prior year period was due to an increase in trade receivables.
As a result of the consolidated net loss, DF Group's equity capital declined from EUR 10.2 million at the end of 2013 to EUR 3.3 million (-67%). Total assets amounted to EUR 91.4 million as of 30 June 2014 (balance sheet date 31 December 2013: EUR 107.9 million), which led to an equity ratio of 4% (balance sheet date 31 December 2013: 9%). Liabilities to banks amounted to EUR 49.1 million, which represents a moderate reduction compared to EUR 51.3 million at the end of 2013. Trade accounts payable declined from EUR 12.8 million at the end of 2013 to EUR 8.9 million on 30 June 2014 because certain payments received for forwarding in a prior period were paid out in the course of the first half of 2014.
With regard to the changes which occurred after the balance sheet date, please refer to "Post-balance sheet events".
Trade receivables stood at EUR 74.7 million on 30 June 2014, compared to EUR 85.8 million on 31 December 2013. Cash and cash equivalents declined from EUR 20.6 million at year-end 2013 to EUR 15.6 million.
In terms of their nominal value, 67% (previous year: 74%), of the forfaiting transactions which represent most of the trade receivables, are secured. Security normally takes the form of irrevocable obligations by a buyer to acquire the respective receivable, credit insurance or a bank guarantee. Cash security is also provided in certain cases.
The DF share exhibited a clearly negative performance in the first three months of 2014. Having started the year at EUR 4.05, the paper marked a 3-month high of EUR 4.32 on 13 January. The price then dropped sharply in February to a first-half low of EUR 1.30. This was caused by the publication of the preliminary consolidated net loss for the financial year 2013 as well as the naming of the company in the US OFAC sanctions list. The DF share recovered only slightly from this loss and closed at EUR 1.50 on 30 June 2014. This meant that the share price lost 61.7% during the first half of 2014. The relevant stock market indices, the SDAX and the DAXsector Financial Services, rose by 8.8% and 7.1%, respectively, during the same period.
A total of 2,160,037 DF shares were traded (XETRA) during the first six months of 2014, which is equivalent to an average daily turnover of 18,000 shares. This means that the daily trading volume rose by 196% compared to the prior-year period.
The DF AG share is currently covered by research houses equinet Bank AG and Edison Research.
The performance of DF Deutsche Forfait AG's corporate bond during the first half of 2014 was marked by the publication of the preliminary consolidated net loss for the financial year 2013 and the naming of the company in the US OFAC sanctions list. Having traded clearly above par following its May 2013 issue, the 7-year paper with a volume totaling EUR 30 million slumped in February 2014 and closed at 32.00% on 21 March. This was the lowest price in the first half of the year, from which the DF bond clearly recovered in the following months. The DF bond closed at 59.00% on 30 June 2014. The Entry Corporate Bond Index, which includes the DF bond, closed the first six months of 2014 at 100.79%. All told, DF bonds with a volume of EUR 23.31 million (nominal) were traded on the Frankfurt Stock Exchange during the first six months of 2014, which is equivalent to an average trading volume of EUR 189,471 per day.
DF AG was removed from the SDN list by the OFAC on 16 October 2014. The removal from the SDN list without being fined confirms the company's opinion that it did not violate US sanctions law. After the removal from the sanctions list, the company is allowed to resume writing USD-denominated business. It may also fully resume its suspended business subject to compliance with US sanctions law.
Due to the considerable constraints on the operational capabilities resulting from the 249-day SDN listing, DF Group incurred high operational losses. In addition, there were extraordinary expenses related to consulting services sourced by DF Group in order to be removed from the SDN list. As a result of these burdens, DF Group is experiencing considerable financial distress at the time of the preparation of the interim consolidated financial statements.
Due to the SDN listing, DF Group was not allowed and unable to write USD-denominated business anywhere in the world between 6 February 2014 and 16 October 2014. In the 2013 financial year, such transactions accounted for about 70% of DF Group's business. Moreover, the possibilities of DF Group to make payments in other currencies than the USD (including the EUR) were restricted considerably, as many banks refused to make payments to or on behalf of an SDN-listed company. Between 6 February 2014 and 16 October 2014, DF Group
The collection of the receivables held by DF Group at the time of their contractual maturity was possible only with a considerable extra time input. DF Group was able, however, to collect the receivables due without any additional discount.
Due to DF AG's listing on the SDN list in February 2014 and the resulting uncertainty, 16 employees terminated their employment relationships. Three employees were made redundant as part of cost-cutting measures – 2 of them back in November 2013 and 1 in August 2014. Some of the departed employees will be replaced. Changes to the work processes and efficiency increases, e.g. resulting from the introduction of a database-protected IT and work-flow management system, are designed to help DF Group achieve its strategic and operational targets in terms of volume and profitability with a reduced headcount. It is positive to see that even after the terminations, DF Group continues to have a presence in all of the markets it considers to be of strategic importance.
The considerable constraints on the operational capabilities resulting from the 249-day OFAC listing led to losses of approx. EUR 9.0 million at Group level during the first nine months of 2014 (according to preliminary computations as of October 2014). Of this total amount, EUR 1.5 million relates to legal and consulting costs incurred as one-time expenses in conjunction with the SDN listing.
In view of the removal from the SDN list, DF AG has started talks with its lending banks about the continuation and/or reopening of the credit lines in the amount granted prior to the SDN listing. Due to the SDN listing of the ultimate parent company, DF AG, the credit lines granted to DF Deutsche Forfait s.r.o., Prague, were also terminated or not renewed by the lending banks. These credit lines have been taken over by an investor. The lending banks of DF AG have limited the utilization of the credit lines to the utilization at the time of the SDN listing. Some credit agreements have expired but are currently being continued. Due to the characteristics of the business model, it will be impossible for the company, its subsidiaries as well as its offices and representations to resume their business operations and to return to operational profitability unless the credit lines are continued and/or re-opened.
On 19 August 2014, DF AG asked an auditing firm to prepare an "IDW S6" expert opinion. According to this expert opinion, the following measures will be required to restructure the company:
In a final expert opinion issued on 26 November 2014, the auditors confirmed that DF Group is objectively capable of capital reorganization and that the measures launched are objectively suitable to thoroughly reorganize and restructure DF Group within a manageable timeframe.
A detailed presentation of the individual restructuring measures is provided in the Group management report for the financial year 2013.
Primrose Energy S.A., Panama City/Republic of Panama, informed us, pursuant to Sec. 21 (1) of the German Securities Trading Act (WpHG) on 13 October 2014 that its voting interest in DF Deutsche Forfait AG, Cologne, fell below the thresholds of 3%, 5%, 10%, 15% and 20% on 8 October 2014 and amounted to 0% (0 voting rights) on that date.
Mr Mark West, Great Britain, informed us, pursuant to Sec. 21 (1) of the German Securities Trading Act (WpHG) on 13 October 2014 that his voting interest in DF Deutsche Forfait AG, Cologne, Germany, exceeded the thresholds of 3%, 5%, 10%, 15% and 20% of the voting rights on 8 October 2014 and amounted to 23.26% (which corresponds to 1,581,705 voting rights) on that date.
BayernInvest Kapitalverwaltungsgesellschaft mbH, Munich, Germany, informed us, pursuant to Sec. 21 (1) of the German Securities Trading Act (WpHG) on 22 December 2014 that its voting interest in DF Deutsche Forfait AG, Cologne, fell below the thresholds of 5% and 3% on 19 December 2014 and amounted to 2.83% on that date.
Due to the losses incurred in 2014 as a result of the SDN listing and the resulting reduction in equity, DF Group's riskbearing capacity has been reduced significantly. This should be taken into account with regard to the classification of the risks in the following opportunity and risk report.
A detailed presentation of the relevant opportunities and risks is provided in the Group management report for the period ended 31 December 2013.
In the 2013 financial year, 67% of DF Group's business volume was denominated in USD. To avoid exchange rate risks, DF Group usually funds itself at matching currencies, i.e. purchases of USD receivables are matched by bank loans in USD. This means that only the income from the transactions is subject to an exchange rate risk. This risk is regularly monitored with the help of currency accounts. Open currency items are closed by means of spot transactions. As a result of being named in the SDN list as of early February 2014, the company was no longer able to hedge its foreign currency exposure by engaging in forward currency transactions.
Risks are classified depending on DF Group's riskbearing capacity, which is determined by the amount of the Group's equity capital. To classify the risks, they are allocated to one of the following three categories: (i) going concern risk (ii) material risk (iii) relevant risk. A going concern risk is assumed to exist if a loss/damage amounting to 50% of the Group's equity capital arises. A material risk is assumed to exist if a loss/damage amounting to 50% of the going concern risk arises. A relevant risk is assumed to exist if a loss/damage amounting to 50% of the material risk arises. The following matrix shows DF Group's risk assessment:
Loss potential in EUR million
Relevant risk Very low Low 1,25 0% 1% 5% 2,5 5,0 Medium High Probability of occurrence Material risk Going concern risk Counterparty risk • Credit insurance • Providers if security (Bank) Compliance • Violation of KYC money loundering rules Counterparty risk • Transfer risk • Conversion risk Financial risk • Foreign exchange losses Earnings risk • Loss of personnel in key positions Legal risk • Receivables • Counter-guarantee Legal risk • Credit insurance Fiancial risk • Loss of majority of credit lines 20%
Due to the events after the balance sheet date described under "Post-balance sheet events", DF Group's risk-bearing capacity has been reduced substantially after 31 December 2013. In addition to the risks shown in the matrix as of 31 December 2013, the number of going concern risks has increased. In particular, DF Group's future as a going concern is jeopardized if the following risks materialize:
| (Primary) debtor | Carrying amount of the receivable after valuation allowance |
DF Group risk assessment |
|---|---|---|
| Trading firm in Dubai, UAE | 5.7 EUR million | The nominal value of DF Group's receivable (EUR 11 million) exceeds the carrying amount by far. The legal proceedings launched against the debtor and guarantor have so far been deci ded in favor of DF Group by the competent courts. The debtor is a diversified trading firm which holds a leading position in the region. |
| Asian central bank | 4.2 EUR million | The legal proceedings have turned out to be lengthy; the legal validity of the claim as such is guaranteed by a renowned European bank of excellent standing. |
| Automotive supplier, Germany | 2.8 EUR million | The nominal value of the receivables (EUR 4.5 million) exceeds the carrying amount by far. DF Group's claims for recovery of the receivables are substantiated by various covenants, e.g. assignment of receivables. |
| Service provider, oil exploration, Mexico |
20.7 EUR million thereof 1.7 EUR million unsecured* |
Most of the receivables are credit-insured. The nominal value of the unsecured receivables exceeds the carrying amount by far. The debtor filed for insolvency in May 2014. Based on an assumed insolvency ratio of 10%, the carrying amount of the unsecured receivables would be fully covered by risk provisions. Should substantiated information show that the insolvency ratio is lower, additional valuation allowances may be required. |
* In the Q1 2014 report, only the carrying amount after valuation allowances of the unsecured receivables was stated by mistake.
In addition, DF Group has claims against various credit insurance firms, which also represent a going concern risk in case of failure of the insurance cover. Without preempting the outcome of the pending proceedings, DF Group is convinced that the risk has been mitigated sufficiently even if no individual valuation allowances have been established.
The ultimate parent company, DF Deutsche Forfait AG, is currently overindebted. According to the restructuring concept described in the management report, there is no risk of imminent insolvency. The ultimate parent company has received letters of intent from shareholders, bondholders and its lending banks, which are conditional on the implementation of the restructuring concept. The ultimate parent company's Board of Management is of the opinion that the going concern assumption is sufficiently substantiated. Should the capital measures described under "Post-balance sheet events" not be implemented, the ultimate parent company would no longer be able to continue as a going concern.
If the restructuring concept is implemented successfully, DF Group's risk-bearing capacity will increase again.
The restoration of DF Group's operational profitability hinges on the restructuring measures outlined in the "Sanierungsgutachten" report and described in detail under "Post-balance sheet events". The successful implementation of these measures forms the basis for the restoration of the business volume. After the removal from the sanctions list, this restoration will take several months. Even though DF Group has taken various cost-cutting measures, the typical forfaiting income is unlikely to be sufficient to cover DF Group's expenses during this time. The ultimate parent company's Board of Management assumes that it will take at least until the third quarter of 2015 before DF Group realizes a business volume that leads to a profit or at least to a balanced result. Until the restructuring concept is fully implemented in the second quarter of 2015, the operational possibilities of DF Group will primarily be restricted by the limited financial resources. The low equity capital will limit DF Group's risk-bearing capacity during this phase. As a result, DF Group will execute less complex and lower-risk transactions, which are easier to place. This will have a corresponding negative effect on the margin. The Board of Management assumes that DF Group will generate margins similar to those generated prior to the SDN listing once the (debt and equity) capitalization reaches a sufficient level. Based on our estimates and the market feedback received so far, DF Group does not foresee any negative consequences of the SDN listing over the medium and long term.
As outlined in the interim Group management report for the first quarter of 2014, management expects the business volume for the full year to amount to less than EUR 40 million and anticipates reporting a significant loss in the region of EUR 14 million for 2014 as a result of the ultimate parent company, DF AG, being named on the SDN list for a large part of the financial year 2014.
To the best of our knowledge and in accordance with the applicable accounting principles, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and the profit or loss of the Group. The interim Group management report includes a fair review of the business development and the position of the Group together with the principal opportunities and risks associated with the expected development of the Group.
Cologne, 19 January 2015 The Board of Management
Consolidated Balance Sheet – Assets Consolidated Balance Sheet – Equity and Liabilities Consolidated Income Statement Consolidated Income Statement –Comparison Consolidated Statement of Recognized Result Consolidated Cash Flow Statement Consolidated Statement of Equity Changes
| Notes Assets No. |
30-06-2014 in EUR |
31-12-2013 in EUR |
|---|---|---|
| Long-term assets | ||
| Intangible assets | 32,238.66 | 32,082.45 |
| Tangible assets | 336,365.56 | 516,818.97 |
| Financial assets | ||
| Investments in affiliated companies | 174,972.20 | 174,972.34 |
| Other long-term assets | 33,773.32 | 33,555.20 |
| Deferred taxes | 0.00 | 0.00 |
| 577,349.74 | 757,428.96 | |
| Short-term assets | ||
| Trade accounts and other receivables (11) |
74,664,649.36 | 85,759,087.63 |
| Tax receivables | 293,242.51 | 455,557.44 |
| Other short-term assets | 286,498.10 | 295,919.62 |
| L iquid funds (12) |
15,619,252.18 | 20,603,046.98 |
| 90,863,642.15 | 107,113,611.67 | |
| Total assets | 91,440,991.89 | 107,871,040.63 |
| Notes Equity and Liabilities No. |
30-06-2014 in EUR |
31-12-2013 in EUR |
|---|---|---|
| Equity (13) |
||
| S ubscribed capital |
6,800,000.00 | 6,800,000.00 |
| C apital reserve |
7,359,044.50 | 7,359,044.50 |
| Revenue reserves | ||
| Statutory reserve | 500,000.00 | 500,000.00 |
| Other reserves | -4,056,792.68 | 8,500,710.36 |
| Adjustment item from the currency conversion | -408,353.12 | -432,335.63 |
| C onsolidated balance sheet profit |
-6,882,714.92 | -12,557,503.04 |
| 3,311,183.78 | 10,169,916.19 | |
| Long-term liabilities | ||
| Bond (14) |
28,802,656.46 | 28,727,537.85 |
| Liabilities to banks | 0.00 | 9,045,754.48 |
| 28,802,656.46 | 37,773,292.33 | |
| Short-term liabilities | ||
| Liabilities to banks (15) |
49,143,945.44 | 42,213,277.53 |
| Short-term provisions | 299,030.00 | 299,030.00 |
| Tax liabilities | 0.00 | 103,105.00 |
| Trade accounts and other payables | 8,879,777.76 | 12,754,812.83 |
| Other short-term liabilities | 1,004,398.45 | 4,557,606.75 |
| 59,327,151.65 | 59,927,832.11 | |
| Total equity and liabilities | 91,440,991.89 | 107,871,040.63 |
| Notes No. |
01-01 to 30-06-2014 in EUR |
01-01 to 30-06-2013 in EUR |
|---|---|---|
| Typical forfaiting income (6) a) Forfaiting income b) Commission income c) Income from additional interest charged d) Exchange profits e) Income from the reduction of value adjustments on receivables and from the writing back of provisions |
1,242,317.90 483,897.96 1,534.24 643,143.82 |
6,674,930.07 1,258,679.81 196,333.14 2,456,976.66 |
| for forfaiting and purchase commitments | 0.00 | 0.00 |
| 2,370,893.92 | 10,586,919.68 | |
| Typical forfaiting expenditure (7) a) Expenditure from forfaiting b) Commissions paid c) Later interest payments d) Exchange losses e) Credit insurance premiums f) Depreciation and value adjustments on receivables as well as additions to provisions for forfaiting |
0.00 324,221.29 2,971.44 640,687.13 10,456.53 |
6,548.96 705,815.57 0.00 2,481,601.28 0.00 |
| and purchase commitments | 492,454.20 | 150,000.00 |
| 1,470,790.59 | 3,343,965.81 | |
| Gross result (8) |
900,103.33 | 7,242,953.87 |
| Other operating income | 156,381.38 | 35,941.08 |
| Personnel expenses a) Wages and salaries b) Social security contributions and expenditure for pensions and social welfare |
2,030,431.60 225,711.00 |
1,913,694.98 244,760.11 |
| 2,256,142.60 | 2,158,455.09 | |
| Depreciation on tangible and intangible assets | 67,034.96 | 62,512.38 |
| Other operating expenditure (9) |
3,689,995.42 | 2,725,291.34 |
| Interest income (10) |
19,368.68 | 39,542.30 |
| Interest paid (10) |
1,924,317.93 | 848,331.46 |
| Profit before income tax | -6,861,637.52 | 1,523,846.98 |
| Income tax a) Income and earnings tax b) Deferred taxes |
21,077.40 0.00 |
18,128.18 544,271.00 |
| 21,077.40 | 562,399.18 | |
| Consolidated profit | -6,882,714.92 | 961,447.80 |
| Average number of shares | 6,800,000 | 6,800,000 |
| Earnings per share (diluted/undiluted) | -1.01 | 0.14 |
| Notes No. |
01-04 to 30-06-2014 in EUR |
01-04 to 30-06-2013 in EUR |
|---|---|---|
| Typical forfaiting income (6) a) Forfaiting income b) Commission income c) Income from additional interest charged d) Exchange profits e) Income from the reduction of value adjustments on receivables and from the writing back of provisions for forfaiting and purchase commitments |
68,249.36 257,906.71 0.33 499,909.72 0.00 |
3,594,872.85 752,953.82 194,322.09 686,176.77 0.00 |
| 826,066.12 | 5,228,325.53 | |
| Typical forfaiting expenditure (7) a) Expenditure from forfaiting b) Commissions paid c) Exchange losses d) Credit insurance premiums e) Depreciation and value adjustments on receivables as well as additions to provisions for forfaiting and purchase commitments |
0.00 133,783.47 409,651.20 0.00 417,454.20 |
6,548.96 284,392.40 765,430.28 0.00 75,000.00 |
| Gross result (8) |
960,888.87 -134,822.75 |
1,131,371.64 4,096,953.89 |
| Other operating income | 19,141.10 | 22,942.91 |
| Personnel expenses a) Wages and salaries b) Social security contributions and expenditure for pensions and social welfare |
776,687.29 108,801.36 |
1,042,409.53 118,481.01 |
| 885,488.65 | 1,160,890.54 | |
| Depreciation on tangible and intangible assets | 34,844.70 | 32,512.38 |
| Other operating expenditure (9) |
2,150,672.78 | 1,558,052.52 |
| Interest income (10) |
8,345.68 | 465.50 |
| Interest paid (10) |
981,515.00 | 557,085.84 |
| Profit before income tax | -4,159,857.10 | 811,821.02 |
| Income tax a) Income and earnings tax b) Deferred taxes |
21,077.40 0.00 |
4,534.97 318,125.00 |
| 21,077.40 | 322,659.97 | |
| Consolidated profit | -4,180,934.50 | 489,161.05 |
| Average number of shares | 6,800,000 | 6,800,000 |
| Earnings per share (diluted/undiluted) | -0.61 | 0.07 |
| Consolidated statement of recognized result (in EUR) |
01-01 - 30-06- 2014 |
01-01 - 30-06- 2013 |
01-04 - 30-06- 2014 |
01-04 - 30-06- 2013 |
|---|---|---|---|---|
| I. Consolidated loss/income |
-6,882,714.92 | 961,447.80 | -4,180,934.50 | 489,161.05 |
| II. Other income Items that will not be reclassified to the income statement in the future |
||||
| Currency translation differences from the inclusion of foreign subsidiaries |
23,982.51 | -197,147.74 | 2,373.71 | -51,064.75 |
| 23,982.51 | -197,147.74 | 2,373.71 | -51,064.75 | |
| III. Recognized result | -6,858,732.41 | 764,300.06 | -4,178,560.79 | 438,096.30 |
| Consolidated Cash flow Statement | 01-01 - 30-06-2014 in kEUR |
01-01 - 30-06-2013 in kEUR |
|
|---|---|---|---|
| Cash flow | |||
| Consolidated profit / loss | -6,883 | 961 | |
| + | Depreciation on tangible and intangible assets | 67 | 63 |
| +/- | Expenses for income tax | 21 | 562 |
| + | Interest paid | 1,924 | 848 |
| - | Interest income | -19 | -40 |
| +/- | Result from disposal of non-current assets | 113 | 0 |
| +/- | Other transactions not affecting payments | -129 | -468 |
| +/- | Change to trade accounts receivable | 11,094 | -16,015 |
| +/- | Change to other assets (working capital) | 172 | 1,141 |
| +/- | Change in provisions | 0 | 25 |
| +/- | Change to trade accounts payable | -3,875 | -12 |
| +/- | Change to other liabilities (working capital) | -3,632 | 56 |
| - | Paid taxes on profits | -91 | -321 |
| = | Operative cash flow | -1,238 | -13,200 |
| - | Paid interest | -1,651 | -621 |
| + | Received interest | 19 | 39 |
| = | Outflow from current business (Total 1) | -2,870 | -13,782 |
| - | Payments for investments in long-term assets | -22 | -23 |
| + | Incoming payments from disposals of long-term assets | 23 | 0 |
| Outflow from investment activity (Total 2) | 1 | -23 | |
| +/- | Change to financial liabilities | -2,115 | -5,360 |
| - | Payment of dividend | 0 | -1,224 |
| + | Incoming payments from capital market transactions | 0 | 28,652 |
| = | Outflow from finance activity (Total 3) | -2,115 | 22,068 |
| Change in financial resources affecting payments | -4,984 | 8,263 | |
| + | Liquid funds at the start of the period | 20,603 | 17,435 |
| +/- | Effects from the currency conversion | 0 | -197 |
| = | Liquid funds at the end of the period | 15,619 | 25,501 |
| - | Pledged deposits | -1,158 | -1,158 |
| = | Free liquid funds at the end of the period | 14,461 | 24,343 |
| (in EUR) | Notes No. |
Subscibed capital |
Capital reserves |
Statutory reserves |
Revenue reserves |
Differene from currency conversion |
Total |
|---|---|---|---|---|---|---|---|
| Balance 01-01-2013 (as reported before) |
6,800,000.00 7,359,044.50 | 500,000.00 | 11,787,062.42 | 163,240.35 | 26,609,347.27 | ||
| Adjustments in accordance with IAS 8 |
(2) | (2,062,352.06) | (2,062,352.06) | ||||
| Balance 01-01-2013 (after adjustments) |
6,800,000.00 7,359,044.50 | 500,000.00 | 9,724,710.36 | 163,240.35 | 24,546,995.21 | ||
| Consolidated profit | 961,447.80 | 961,447.80 | |||||
| Other result | (196,608.55) | (196,608.55) | |||||
| Consolidated total result | 961,447.80 | (196,608.55) | 764,839.25 | ||||
| Change of consolidated subsidiaries |
(539.19) | (539.19) | |||||
| Dividend payment | (1,224,000.00) | (1,224,000.00) | |||||
| Balance 30-06-2014 | 6,800,000.00 7,359,044.50 | 500,000.00 | 9,462,158.16 | (33,907.39) | 24,087,295.27 |
| (in EUR) | Notes No. |
Subscibed capital |
Capital reserves |
Statutory reserves |
Revenue reserves |
Differene from currency conversion |
Total |
|---|---|---|---|---|---|---|---|
| Balance 01-01-2014 | 6,800,000.00 7,359,044.50 | 500,000.00 | (4,056,792.68) | (432,335.63) | 10,169,916.19 | ||
| Consolidated profit | (6,882,714.92) | (6,882,714.92) | |||||
| Other result | 23,982.51 | 23,982.51 | |||||
| Consolidated total result | (6,882,714.92) | 23,982.51 | (6,858,732.41) | ||||
| Dividend payment | |||||||
| Balance 30-06-2014 | (13) | 6,800,000.00 7,359,044.50 | 500,000.00 (10,939,507.60) | (408,353.12) | 3,311,183.78 |
The condensed interim consolidated financial statements were prepared in accordance with the regulations of IAS 34 ("Interim Financial Reporting"); they are not as detailed as the consolidated financial statements published on 31 December 2013. The consolidated interim financial statements dated 30 June 2014 follow the same accounting and valuation methods as the consolidated financial statements for the financial year 2013. They are consistent with the International Financial Reporting Standards ("IFRS") as endorsed by the European Union. They have been reviewed and, in the opinion of the Board of Management, fairly represent the company's assets, financial and income situation. The functional currency of the Group is the euro. All figures are presented in thousands of euros (kEUR) unless otherwise stated.
The legal form of DF Deutsche Forfait AG is that of an "Aktiengesellschaft" and it is registered at Cologne Local Court (Amtsgericht) under HRB 32949. The registered office of the company is Cologne, Germany. The company's address is Kattenbug 18-24, 50667 Köln. DF Deutsche Forfait AG is a forfaiting company and, as such, is a financial enterprise within the definition of Section 1 (3) No. 2 KWG (German Banking Act).
The consolidated income statement is prepared according to the total expenditure method. Income and expenses are grouped by category and income and expense totals are presented to reflect the particular characteristics of a forfaiting company. The consolidated financial statements follow the structure guidelines set out in IAS 1.
On 6 February 2014, DF AG, DF Deutsche Forfait Americas Inc. and Mr Ulrich Wippermann as Special Designated Nationals ("SDN") were listed on the sanctions list of the OFAC (Office of Foreign Assets Control), an agency of the US Department of Treasury. The designation was based on the allegation that DF AG, DF Deutsche Forfait Americas Inc. and Mr Ulrich Wippermann violated trade sanctions against Iran as they "provide or attempt to provide financial or material support for and/or act or purport to act for or on behalf of National Iranian Oil Company".
Due to the considerable constraints on the operational capabilities resulting from the SDN listing, the company incurred high operational losses. In addition, there were extraordinary expenses related to consulting services sourced by the company in order to be removed from the SDN list. As a result of these burdens, the company is in financial trouble at the time of the preparation of the balance sheet. For more information on this aspect, see the interim Group management report for the period ended 30 June 2014 as well as paragraph 17 of these consolidated notes.
Deferred tax assets from temporary differences may not be recognized if it is not sufficiently probable that taxable results will be available against which the deductible temporary differences can be utilized (IAS 12.27). For this reason, no deferred tax assets are recognized for the loss incurred in the reporting period (IAS 12.34 et seq.).
On 12 February 2014, DF AG filed tax returns for value-added tax for the period from 2007 to 2013 with the Cologne tax office. The insight about the company's VAT obligation with regard to individual services/goods sourced from foreign companies was gained in conjunction with the examination of the value-added tax treatment of a debt collection performed for the first time in 2013 for a domestic customer. On the occasion of this transaction, DF AG decided to review all transactions which do not form part of the VAT-exempt forfaiting business for their VAT obligation. The result of the analyses, which were initially carried out internally and which have since November 2013 been conducted with external assistance, is that DF AG failed to declare and pay value-added tax for certain services sourced abroad in accordance with applicable VAT regulations ("reverse charge procedure"). In this context, the company had to make a retroactive payment of value-added tax in the amount of EUR 2.2 million plus interest on the value-added tax of EUR 0.2 million.
In accordance with IAS 8.41 f, this accounting error was retrospectively corrected in the consolidated financial statements for the period ended 31 December 2013. In the consolidated statement of changes in equity for the comparative period from 1 January 2013 to 30 June 2013, the correction is shown as an adjustment effective 1 January 2013.
The following standards and interpretations have to be applied as of 1 January 2014:
To the extent that these new or amended standards are relevant at all, they have no material or qualitative implications on the reporting for the interim consolidated financial statements as of 30 June 2014.
The interim consolidated financial statements include the subsidiaries DF Deutsche Forfait s.r.o., Prague/Czech Republic, and Deutsche Kapital Ltd., Dubai/United Arab Emirates. Deutsche Kapital Ltd. was founded by the company in April 2013 and was initially consolidated with effect from 30 June 2013.
DF Deutsche Forfait Americas, Inc., Miami /USA, DF Deutsche Forfait do Brasil Ltda, São Paulo/Brazil, DF Deutsche Forfait Pakistan (Private) Limited, Lahore/Pakistan, and Deutsche Forfait West Africa Limited, Accra/Ghana, are not included in the interim consolidated financial statements. The non-consolidated subsidiaries are of secondary importance for the interim consolidated financial statements as of 30 June 2014, both individually and collectively, and do not influence the true and fair view of the assets, liabilities, financial position and the profit or loss presented in the consolidated financial statements.
The interim financial statements of the consolidated companies presented in a foreign currency are translated on the basis of functional currency (IAS 21 "The Effects of Changes in Foreign Exchange Rates") using the modified closing rate procedure.
The functional currency of the subsidiaries is essentially identical to the company's local currency. Therefore, in the interim consolidated financial statements, the income and expenses from the financial statements of the subsidiaries which are prepared in a foreign currency are translated at the annual average rate; assets and liabilities are translated at the closing rate.
The exchange rates on which translation into euros is based correspond to the euro reference rates published by the European Central Bank and are as follows:
| Closing rate | Average rate | ||||
|---|---|---|---|---|---|
| 30-06-2014 | 31-12-2013 | 01-01 - 30-06 2014 |
01-01 - 30-06 2013 |
||
| Czech Koruna | 27.4530 | 27.4270 | 27.4440 | 25.7000 | |
| US Dollar | 1.3658 | 1.3791 | 1.3705 | 1.3135 |
Portfolio income earned in each period and trading income generated at the time of sale (the difference between the carrying amount and the market value of a receivable) are recorded as forfaiting income. Forfaiting expenses are only incurred if the market value calculated at the time of sale falls below the carrying amount.
| Typical forfaiting income in kEUR | 01-01 - 30-06-2014 | 01-01 - 30-06-2013 |
|---|---|---|
| Forfaiting income | 1,242 | 6,675 |
| Commission Income | 484 | 1,259 |
| Income from additional interest charged | 2 | 196 |
| Exchange rate gains | 643 | 2,457 |
| Total | 2,371 | 10,587 |
The amount of typical forfaiting income generated in the first half of 2014 reflects the fact that, due to the SDN listing, the company was not allowed and unable to write USD-denominated business anywhere in the world after 6 February 2014. In the 2013 financial year, such transactions accounted for about 70% of the company's business. The company's possibilities to make payments in other currencies than the USD (including the EUR) were restricted considerably, as many banks refused to make payments to or on behalf of an SDN-listed company. The company was effectively unable to sign up or execute any new business. Moreover, in view of the uncertainty regarding the duration of the SDN listing, it did not seem advisable to engage in new transactions, which would tie up the company's liquidity. There was a risk, among other things, that the banks involved in these payments would freeze or reject payments associated with new trans-actions. Also, the company was unable to, or restricted in its ability to, resell the receivables held in its books at the time of the SDN listing - in particular to the extent that they were denominated in USD.
Exchange gains – and, correspondingly, exchange losses − declined due to low exchange rate volatility and the reduced number of foreign currency transactions in the reporting period. Total income and expenses from exchange differences had little impact on the gross result.
Typical forfaiting expenses break down as follows:
| Typical forfaiting expenses in kEUR | 01-01 - 30-06-2014 | 01-01 - 30-06-2013 |
|---|---|---|
| Forfaiting expenses | - | 7 |
| Commission expenses | 324 | 706 |
| Expenses from additional interest charged | 3 | - |
| Exchange losses | 641 | 2,481 |
| Credit insurance premiums | 11 | - |
| Depreciation and value adjustments on receivables as well as additions to provisions for forfaiting and purchase |
492 | 150 |
| Total | 1,471 | 3,344 |
The decrease in typical forfaiting income caused by the circumstances discussed above also entailed a substantial decline in expenses in the reporting period. Exchange losses declined due to low exchange rate volatility and the reduced number of foreign currency transactions; exchange gains decreased substantially at the same time.
Gross result is the difference between typical forfaiting income and expenses.
| Gross result in kEUR | 01-01 - 30-06-2014 | 01-01 - 30-06-2013 |
|---|---|---|
| Net forfaiting | 1,242 | 6,668 |
| Net commission | 160 | 553 |
| Income from additional interest charged | (1) | 196 |
| Profit (loss) on exchange rate gains and losses | 2 | (24) |
| Net valuation in forfaiting business | (492) | (150) |
| 911 | 7,243 | |
| Less credit insurance premiums | (11) | - |
| Total | 900 | 7,243 |
Since they are almost exclusively based on refinancing for forfaiting transactions, the financial results have to be considered in order to evaluate the success of a forfaiting company (see note 10).
Other operating expenses break down as follows:
| Other operating expenses in kEUR | 01-01 - 30-06-2013 | 01-01 - 30-06-2012 |
|---|---|---|
| Legal and consultation fees, costs of preparing statements | 2,008 | 807 |
| Administrative expenses cooperation partners | 700 | 914 |
| Cost of premise (rental and cleaning costs) | 213 | 204 |
| Travel expenses | 80 | 189 |
| Payment transaction fees | 47 | 55 |
| Telephone, postage and Internet connection charges | 42 | 63 |
| Vehicle costs | 17 | 41 |
| Insurances, fees | 85 | 42 |
| Miscellaneous other expenses | 498 | 410 |
| Total | 3,690 | 2,725 |
The rise in legal and consulting expenses mainly reflects the additional expenses incurred in connection with the OFAC listing. Administrative expenses for cooperation partners also include expenses for the office in London and for the subsidiaries in São Paulo and Lahore.
The financial results break down as follows:
| Financial results in KEUR | 01-01 - 30-06-2014 | 01-01 - 30-06-2013 |
|---|---|---|
| Interest income from banks | - | 1 |
| Interest income from receivables | 19 | 39 |
| Total interest income | 19 | 40 |
| Interest expense payable to banks | 659 | 604 |
| Other interest expense | 1,265 | 244 |
| Total interest expense | 1,924 | 848 |
| Net interest = financial results | (1,905) | (808) |
Other interest expenses include interest in the amount of kEUR 1,247 (previous year: kEUR 234) accrued until 30 June 2014 for the bond issued in May 2013.
Trade receivables comprise the receivables purchased in the context of the forfaiting business as well as other receivables. The total amount also includes excesses of receivables covered by credit insurance which cannot be sold under the terms of insurance. Receivables decreased from kEUR 85,759 on 31 December 2013 to kEUR 74,665 on 30 June 2014.
The maximum default risk on the purchased trade receivables at the respective reporting dates was as follows:
| In kEUR | 30-06-2014 | 31-12-2013 |
|---|---|---|
| Nominal value of trade receivables | 79,586 | 92,134 |
| – Discount deduction | (649) | (1,367) |
| + Other receivables | 6,377 | 5,491 |
| = Gross book value before adjustments | 85,314 | 96,258 |
| – Value adjustments | (10,649) | (10,499) |
| = Book Vaule = maximum default risk | 74,665 | 85,759 |
| – Sold receivables | (3,660) | (19,580) |
| – Receivables / Partial payment was made | - | (1,000) |
| – Bank securities (e.g. guarantees) | (11,340) | (12,120) |
| – Cash securities | (5,130) | (5,097) |
| – Credit insurances | (33,142) | (33,108) |
| + Twin securities | 325 | 1,352 |
| = Securities | (52,947) | (69,553) |
| = Unsecured maximum default risk | 21,718 | 16,206 |
Default risk is actively controlled as part of the risk management activities. DF Group limits this risk by means of a limit system that includes country and counterparty limits.
Financial instruments in the "loans and receivables" category are non-derivative financial assets with fixed or determinable payments which are not listed in an active market. The carrying amounts of trade receivables (loans and receivables ("LaR"), measured at amortized cost using the effective interest rate method less potential impairments) have short remaining maturities and approximate the fair value. Financial assets recognized at fair value through profit/loss comprise financial assets held for trading ("HfT"). Gains and losses are recognized in the result for the period at the time of derecognition or impairment of loans and receivables.
| Book value of financial instruments in KEUR | Measurement category |
Book value | Fair Value | Book value | Fair Value |
|---|---|---|---|---|---|
| under IAS 39 | 30-06-2014 | 30-06-2014 | 31-12-2013 | 31-12-2013 | |
| Trade accounts receivables | LaR | 71,004 | 71,004 | 66,179 | 66,179 |
| Trade accounts receivables | HfT | 3,661 | 3,661 | 19,580 | 19,580 |
The item exclusively concerns bank deposits with a maturity of up to three months. DF Group's cash and cash equivalents decreased from kEUR 20,603 on 31 December 2013 by kEUR 4,984 to kEUR 15,619 on 30 June 2014. Part of the cash and cash equivalents is denominated in euros and cannot be used to pay off short-term liabilities to banks in foreign currencies, as these liabilities are mainly used to refinance USD receivables in the same currency.
Changes in equity are reported in the consolidated statement of changes in equity. Equity declined by kEUR 6,859 to kEUR 3,311 on 30 June 2014. The equity ratio decreased from 9.4% on 31 December 2013 to 3.6% on 30 June 2014.
The bond issued by DF Deutsche Forfait AG is shown as "other liability" under non-current liabilities (IAS 32.11). The 7-year bond has a nominal amount of EUR 30 million, which is equivalent to the repayment amount, and carries a nominal coupon of 7.875% p.a.
The bond was initially recognized at the time of addition and net of transaction expenses (IAS 39.9, 39.A13) at the fair value (IAS 39.43). As of 30 June 2014, the financial liability was measured at amortized cost in the amount of kEUR 28,803 using the effective interest rate method (IAS 39.47). Total interest expenses in the reporting period amounted to kEUR 1,247 and are recognized in the income statement under interest expenses.
Liabilities to banks declined from kEUR 51,259 as of 31 December 2013 to kEUR 49,144 as of 30 June 2014. Liabilities to banks shown under non-current liabilities as of 31 December 2013 are also included in this amount.
DF Group controls its business by using risk groups based on forfaiting volume. They are assigned according to the original debtor of each receivable. Countries are assigned to a risk group according to their external ratings. Risk group I is for countries with the highest credit rating and risk group V for countries with the lowest credit rating.
| Forfaiting volume in EUR million | 01-01 - 30-06-2014 | 01-01 - 30-06-2013 |
|---|---|---|
| Risk group I | 8.2 | 78.3 |
| Risk group II | 0.0 | 13.0 |
| Risk group III | 7.8 | 63.8 |
| Risk group IV | 0.0 | 34.9 |
| Risk group V | 12.2 | 119.5 |
| Total | 28.2 | 309.5 |
In addition, the forfaiting volume is divided by region:
| Forfaiting volume in EUR million | 01-01 - 30-06-2014 | 01-01 - 30-06-2013 |
|---|---|---|
| Africa | 13.4 | 26.2 |
| Asia | 2.6 | 110.2 |
| Europe | 10.5 | 149.7 |
| North America | - | - |
| South- and Central America | 1.7 | 23.4 |
| Total | 28.2 | 309.5 |
In addition to liabilities, provisions and contingent liabilities, there are other financial obligations, particularly from forfaiting and purchase commitments. Other financial obligations are as follows:
| Other financial obligations in kEUR | 30-06-2014 | 31-12-2013 |
|---|---|---|
| From forfaiting commitments | 2,516 | 30,039 |
| From purchase commitments | 1,317 | 2,246 |
| Total | 3,833 | 32,285 |
As the business activity came to a virtual standstill, purchasing and forfaiting commitments declined significantly. The other financial obligations resulting from these commitments as of 30 June 2014 are partly secured. The following is a comparison of securities, at nominal value, with other financial obligations, also at nominal value:
| Securities in kEUR | 30-06-2014 | 31-12-2013 |
|---|---|---|
| Other financial obligations | 3,833 | 32,285 |
| – Receivable sold: the receivable is resold after it is purchased by the DF Group. The purchaser is already legally obliged vis-à-vis the DF Group to purchase the reseivable. |
- | 15,556 |
| – Underlying receivable paid or the sale invoiced | - | 1,912 |
| – Deal was cancelled | - | - |
| – Bank securities (e.g. guarantees) | 506 | - |
| – Cash collateralisation | - | - |
| – Credit securities | - | 11,410 |
| – Party providing security is a company (e.g. counterguarantees of forfaiting companies) |
- | - |
| – Other securities | - | - |
| = Securities | 506 | 28,878 |
| Other financial obligations after deduction of securities | 3,327 | 3,407 |
Primrose Energy S.A., Panama City/Republic of Panama, is considered a company with significant influence on DF Group for the reporting period as defined in IAS 24.
No transactions between DF Group and Primrose Energy S.A. as well as Dr. Shahab Manzouri occurred during the reporting period.
On 16 October 2014, DF AG and DF Deutsche Forfait Americas Inc. were removed from the sanctions list without having to pay a fine. No violations of US sanctions law were identified. In conjunction with the OFAC listing, legal and consultation expenses of about EUR 1.7 million were incurred in the first eleven months of the 2014 financial year.
Florian Becker resigned from the Supervisory Board of DF Deutsche Forfait AG with effect from 12 June 2014.
After 31 December 2013, the Group's headcount declined from 61 to 41 in December 2014. 17 people work in Trade/Sales, 9 in Contract Management, 7 in Controlling/Accounting and 8 in Internal Administration.
Mr Ulrich Wippermann, Bonn, notified us in accordance with Sec. 21 (1) of the Securities Trading Act (WpHG) on 15 August 2014 that his voting interest in DF Deutsche Forfait AG, Cologne, Germany, fell below the threshold of 3% of the voting rights on 13 March 2014 and amounted to 2.99% (which corresponds to 203,900 voting rights) on that date. Pursuant to Sec. 22 (1) sentence 1 no. 1 of the Securities Trading Act (WpHG), 2.99% of the voting rights (which corresponds to 203,900 voting rights) are attributable to Mr Wippermann.
Primrose Energy S.A., Panama City, Republic of Panama, notified us in accordance with Sec. 21 (1) of the Securities Trading Act (WpHG) on 13 October 2014 that its voting interest in DF Deutsche Forfait AG, Cologne, Germany, fell below the thresholds of 20%, 15%, 10%, 5% and 3% of the voting rights on 8 October 2014 and amounted to 0% (which corresponds to 0 voting rights) on that date.
In a correction to a previous publication of 13 October 2014, Dr. Shahab Manzouri, Great Britain, notified us in accordance with Sec. 21 (1) of the Securities Trading Act (WpHG) on 16 October 2014 that his voting interest in DF Deutsche Forfait AG, Cologne, Germany, fell below the thresholds of 20%, 15%, 10%, 5% and 3% of the voting rights on 8 October 2014 and amounted to 0% (which corresponds to 0 voting rights) on that date.
Mr Mark West, Great Britain, notified us in accordance with Sec. 21 (1) of the Securities Trading Act (WpHG) on 13 October 2014 that his voting interest in DF Deutsche Forfait AG, Cologne, Germany, exceeded the thresholds of 3%, 5%, 10%, 15% and 20% of the voting rights on 8 October 2014 and amounted to 23.62% (which corresponds to 1,581,705 voting rights) on that date.
BayernInvest Kapitalverwaltungsgesellschaft mbH, Munich, Germany, informed us, pursuant to Sec. 21 (1) of the German Securities Trading Act (WpHG) on 22 December 2014 that its voting interest in DF Deutsche Forfait AG, Cologne, fell below the thresholds of 5% and 3% on 19 December 2014 and amounted to 2.83% on that date.
In an ad-hoc announcement pursuant to Sec. 15 WpHG dated 22 August 2014, DF Deutsche Forfait AG announced that it had been informed by its auditor, BDO AG Wirtschaftsprüfungsgesellschaft, on 22 August 2014 that an adverse opinion was issued by the auditor in respect of the company's consolidated and separate financial statements for the financial year from 1 January to 31 December 2013.
In an ad-hoc announcement pursuant to Sec. 15 WpHG dated 29 August 2014, DF Deutsche Forfait AG announced that, during the preparation of the monthly balance sheet for July 2014 and the extrapolation of the monthly result for August 2014, the Board of Management noticed that DF Deutsche Forfait AG had incurred a loss in the amount of half of the company's share capital. The company's separate financial statements, which are prepared in accordance with the German Commercial Code (HGB), form the relevant basis for the calculation of the loss.
On 5 September 2014, DF Deutsche Forfait Aktiengesellschaft announced the convening of an extraordinary Annual General Meeting on 14 October 2014 in order to report a loss in the amount of half of the share capital pursuant to Sec. 92 (1) of the German Stock Corporation Act (AktG).
The revised consolidated financial statements for the period ended 31 December 2013 were prepared and endorsed for publication by the Board of Management on 4 December 2014 and were submitted to the Supervisory Board for approval.
On 16 December 2014, DF Deutsche Forfait AG published the announcement of the convening of the ordinary Annual General Meeting on 22 January 2015.
Cologne, 19 January 2015
The Board of Management
We have reviewed the condensed interim consolidated financial statements – comprising the balance sheet, the income statement and statement of comprehensive income, the statement of changes in equity, the statement of cash flows and selected explanatory notes – and the interim group management report of DF Deutsche Forfait AG, Köln, for the period from 1 January to 30 June 2014 which are part of the half-year financial reporting in accordance with section 37w German Securities Trading Act (Wertpapierhandelsgesetz – WpHG). The preparation of the condensed interim consolidated financial statements in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, and of the interim group management report in accordance with the requirements of the German Securities Trading Act applicable to interim group management reports, is the responsibility of the Company›s management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim group management report based on our review.
We conducted our review of the condensed interim consolidated financial statements and the interim group management report in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). This standard requires that we plan and perform the review so that we can preclude through critical evaluation, with a certain level of assurance, that the condensed interim consolidated financial statements have not been prepared, in material aspects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, and that the interim group management report has not been prepared, in material aspects, in accordance with the regulations of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company employees and analytical assessments and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor´s report.
Based on our review no matters have come to our attention that cause us to persume that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, or that the interim group management report has not been prepared, in material respects, in accordance with the regulations of the German Securities Trading Act applicable to interim group management reports.
Without qualifiying this opinion, we point out that the ability to continue as a going concern of the parent company, DF Deutsche Forfait AG, Cologne, and, hence, of DF Deutsche Forfait AG Group is jeopardized by risks which are described in the interim Group management report under "Classification of risks and summary risk assessment". The information provided there shows that the ultimate parent company is currently overindebted and that the ability to continue as a going concern of the parent company DF Deutsche Forfait AG, Cologne, and, hence, of the DF Deutsche Forfait AG Group will depend on the full implementation of the planned restructuring concept. The information provided in this section also points to existing counterparty risks in relation to overdue receivables as well as risks relating to the legal enforceability of claims against credit insurance companies which may jeopardize the ability to continue as a going concern of the parent company as well as the Group.
Munich, 19 January 2015
Warth & Klein Grant Thornton AG Wirtschaftsprüfungsgesellschaft
| Mauermeier | Schuster |
|---|---|
| Auditor | Auditor |
| DF www.dfag.de |
Deutsche Forfait AG | |
|---|---|---|
| Deutsche Forfait AG DF Kattenbug 18-24 50667 Köln Postal address: Postfach 10 08 53 50448 Köln Phone Fax |
+49 221 973760 +49 221 9737676 [email protected] |
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| Images DF | Deutsche Forfait AG, Eiffage Group, IR.on AG photo archive, Rheinland-Pfalz photo archive, United Nations |
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| Disclaimer The present text is a translation. In case of doubt, the German version shall prevail. |
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