Founded on 19 October, 2000

Transcription

1 Founded on 19 October, 2000 Annual reports and consolidated financial statements 2006

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3 Registered Office: San Severo (Foggia), via Tiberio Solis no. 40 Operating Office: San Severo (Foggia), via Magenta no. 48 Representative Office: Rome, via di San Basilio no. 41 Share capital: 236,000,000 fully paidup Economic Administrative Index No., Foggia Chamber of Commerce: no Tax identification code, VAT account and Foggia Business Registry number: Company belonging to the bancapulia Banking Group no Management and coordination in accordance with articles 2497 et seq. of the Italian Civil Code: bancapulia Registered with the General Registry of Financial Brokers as per Art. 106 of Legislative Decree no. 385/93: no Registered with the Special Registry of Financial Brokers as per Art. 107 of Legislative Decree no. 385/ Annual reports and consolidated financial statements th FY Founded on 19 October, Consolidated Financial Statements Apulia prontoprestito p. 1

4 2006 Consolidated Financial Statements Apulia prontoprestito p. 2

5 2006 Consolidated Financial Statements Apulia prontoprestito p. 3

6 Contents Consolidated companies p. 5 Corporate Bodies and Independent Auditing Firm p. 6 Report on Operations p. 8 Report of the Auditing Firm p. 25 Balance Sheet p. 27 Income Statement p. 29 Changes in Net Equity p. 31 Cash Flow Statement p. 35 Notes: p. 38 Part A Accounting Policies p. 40 Part B the Balance Sheet p. 51 Part C Income Statement p. 73 Part D Other Information p. 86 Part E Enclosures p Consolidated Financial Statements Apulia prontoprestito p. 4

7 Consolidated companies Apulia prontoprestito spa, with head offices in San Severo, Italy, operates in the sector of loans secured by onefifth of salary and loans with direct deduction of payments from salary, is registered in the general ledger indicated in article 106 of Italian Legislative Decree No. 385/93 and in the special ledger of financial intermediaries set forth in article 107 of Italian Legislative Decree no. 385/93, and is part of the bancapulia banking group, with a 73.85% stake held by bancapulia. Apulia Finance 5 Cessioni srl, with head offices in Conegliano, Italy, was established in accordance with Italian Law No. 130/99 and operates exclusively in the sector of first securitisation of loans secured by onefifth of salary and loans with direct deduction of payments from salary. It is registered in the general ledger indicated in article 106 of Italian Legislative Decree No. 385/93 and in the special ledger of financial intermediaries set forth in article 107 of Italian Legislative Decree no. 385/93, and is 10% held by Apulia prontoprestito spa and 90% by SVM Securitisation Vehicles Management spa Consolidated Financial Statements Apulia prontoprestito p. 5

8 Board of Directors 2006 Financial Statements Chairman Vincenzo Chirò * Vice Chairman Fabio Pica * CEO Tommaso Gozzetti* Directors Niccolò Abriani Raffaele Basile* Aldo Bompani Gerardo Chirò Luciano Conti Giuseppe Mascetti Adriano Salvemini Edoardo Segre* * Members of the Executive Committee Board of Auditors Chairman Statutory Auditors Giuseppe Liuni Roberto Efrati Giorgio Sannoner Alternate Auditors Michele Cicerale Stefano Mariani General Management General Manager Nunzio De Canio Auditing Firm Deloitte & Touche S.p.A Consolidated Financial Statements Apulia prontoprestito p. 6

9 Board of Directors as of 4 May 2007 Chairman Vice Chairman Vincenzo Chirò Fabio Pica CEO Tommaso Gozzetti Directors Niccolò Abriani Raffaele Basile Aldo Bompani Giuseppe Pasquale Roberto Catalano Gerardo Chirò Roberto Efrati Giuseppe Mascetti Edoardo Segre Board of Auditors Chairman Statutory Auditors Giuseppe Liuni Fulvio Schettino Giorgio Sannoner Alternate Auditors Michele Cicerale Stefano Mariani General Management General Manager Nunzio De Canio Auditing Firm Deloitte & Touche S.p.A Consolidated Financial Statements Apulia prontoprestito p. 7

10 BOARD OF DIRECTORS REPORT ON OPERATIONS 2006 Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 8

11 Dear Shareholders, We hereby submit to you the company s consolidated financial statements as at 31 December 2006, which were prepared according to IASs/IFRSs and audited by the firm Deloitte & Touche S.p.A. Apulia prontoprestito prepared consolidated financial statements as a consequence of its first securitisation operation and the acquisition of 10% stake in the capital stock of the special purpose vehicle Apulia Finance 5 Cessioni srl. The document SIC 12 for IASs/IFRSs, entitled "Consolidation Special Purpose Entities, specifically establishes an obligation to consolidate special purpose vehicles when they engage in activity on behalf of another company that is responsible for their decisionmaking, reaps most of the benefits, incurs the most significant costs, and, most importantly, bears the bulk of the residual risks related to the operation. Furthermore, Apulia prontoprestito may not benefit from the exemption from the obligation to prepare consolidated financial statements established by article 27 of Italian Legislative Decree No. 87/92 since it is an issuer of securities listed on the stock exchange. The consolidated financial statements were drawn up in accordance with the linebyline method. The key figures are given below: 2006 Total consolidated assets 756,536 Consolidated net equity (net profit included) 243,302 Consolidated net profit 7,270 Management of consolidated companies Apulia prontoprestito loans secured by onefifth of salary A company belonging to the bancapulia banking group, 73.85% owned by bancapulia, and operating in the field of loans secured by onefifth of salary (CQS) and loans with direct deduction of payment from salary (DP). Key figures from the 2006 financial statements: 31/12/ /12/2005 Assets 756, ,758 Liabilities 513, ,321 Equity 236, ,469 Net profits 7,270 5, Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 9

12 Apulia Finance 5 Cessioni securitisation 10% owned by Apulia prontoprestito established in accordance with Italian Law 130/99, it operates solely in the sector of first securitisation of CQS and DP loans issued by Apulia prontoprestito. Key figures from the 2006 financial statements: 31/12/ /12/2005 Assets 39 Liabilities 29 Equity 10 Net profits The Company was established on 17 November It initially secured a registration in the general ledger of finance companies set forth in article 106 of Italian Legislative Decree No. 385/93 at number 37523, and then, in May 2006, requested and obtained registration in the special ledger set forth in article 107 of said decree. As is clear from the key figures from the 2006 financial statements, the Company, which began operations in 2006 with the launch on 25 July 2006 of the securitisation operation of receivables against CQS and DP loans transferred by Apulia prontoprestito, posted figures without great significance, more or less breaking even for the year in terms of net profit. Due to the lack of significance of the financial statement figures of Apulia Finance 5 Cessioni, the analysis of the figures and main events that occurred during the reporting period, as well as the market s performance, is related in essence to Apulia prontoprestito. Apulia prontoprestito Relevant Company activity in 2006 Production and market share Loan production stood at million, more than twice the million posted in 2005 ( %), with national market share of approximately 11.0%, against 7.5% in 2005, according to Assofin figures. Development of activity was further confirmed in the first two months of 2007, with disbursement of 82 million compared to 60 million for the same period of Interest rate risk hedges In the first half of 2006 Apulia prontoprestito concluded an interest rate risk hedging operation by entering into a derivative contract (interestrate swap) in consideration of the performance of market rates and provisioning policy. As at 31 December 2006, the notional value of the amortising swap was million Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 10

13 The cost of the hedging operation for all of 2006 is 0.9 million; the operation resulted in a reduction of the Company s interest rate risk. Securitisation On 25 July 2006 Apulia prontoprestito entered into a revolving securitisation agreement with the special purpose vehicle Apulia Finance 5 Cessioni S.r.l. for 500 million (against an initial forecast of 400 million) in accordance with Italian Law No. 130/99. The first tranche of the transfer, totalling million, was concluded on 29 September 2006, followed on 5 February 2007 by a second tranche of million, bringing the total amount transferred to million. Securities were issued for a total amount equalling the value of the transfers, of which million were class A (89% of the total issue), underwritten by institutional investors, with a Moody's rating of "Aaa", and 35 million were class B, underwritten by Apulia prontoprestito. The third and final tranche of the transfer, reaching the ceiling of 500 million, will take place in the first half of As part of the above securitisation operation, Apulia prontoprestito purchased a 10% stake ( 10 thousand) in the capital stock of the special purpose vehicle Apulia Finance 5 Cessioni S.r.l. Project to transform Apulia prontoprestito into a bank It has been resolved to submit a project to transform Apulia prontoprestito into a bank to the Supervisory Bodies, following the introduction of new company bylaws to be approved by an extraordinary meeting of the Company s shareholders by the end of September Said transformation is part of the process of increasing the Company's visibility on the market, allowing it to play a leading role in the consumer lending sector and achieve ever increasing development of its activities. Moreover, the Company will reintroduce itself to the market with increased solidity and structural and capital adequacy, in part through easier and more convenient access to provisioning on national and international markets. Expansion of the free float of Apulia prontoprestito The majority shareholder of bancapulia, after having been granted a partial waiver of the lockup agreement (set to expire on 7 June 2006) from the underwriters (Banca Finnat, Efibanca and Centrosim) for 10,500,000 shares of Apulia prontoprestito, sold them on the block market as follows: on 24 March 2006 no. 7,700,000 shares; on 17 November 2006 no. 1,500,000 shares. Both of the above sales were concluded in order to increase the Company's free float, given that favourable market conditions presented themselves on said dates. Subsequent to these operations, the Company s share capital as at 31 December 2006 may be broken down as follows: 2006 Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 11

14 Shareholders Number of Shares % Share Capital bancapulia S.p.A. 174,280, % HDI Assicurazioni S.p.A. 25,020, % Float 36,700, % Total 236,000, % The shareholders bancapulia and HDI Assicurazioni entered into a shareholders agreement on 8 September 2005 governing Apulia prontoprestito shares. Financial instruments covered by the shareholders agreement totalled 199,300,000 on 31 December 2006, equating to 84.45% of capital stock. Stipulation of agreements between Apulia prontoprestito and its Agents In FY 2006, power of attorney was granted to 14 new Agents (Financial Brokers registered with the lists indicated in articles 106 or 107 of the Italian Unified Banking Law), resulting in 33 total agents authorised to operate on the market in the consumer lending sector and charged with promoting and concluding loans in the technical form of cessioni del quinto (loans secured by onefifth of salary, hereinafter referred to as CQS) and delegazioni di pagamento (loans with direct deduction of payments from salary, hereinafter referred to as DP) in the name and on behalf of the Company. Relationships with each individual Agent are governed by a specific agreement and notarised power of attorney that sets out and regulates the parties obligations to one another. Update to the regulations governing the internal control system Subsequent to Consob's amendments of the Issuer Regulations and Market Regulations in order to apply Community legislation regarding market abuse, which entered into effect on 1 April 2006, Apulia prontoprestito updated its Internal Dealing Code and prepared Internal Regulations for the Management of Privileged Information by creating a list of persons with access thereto (the insider register ) within the time limits established by said legislation. Business Continuity Management The parent company, bancapulia, met the deadline of 31 December 2006 set by the Bank of Italy for the implementation of the Business Continuity Management Project required by the Supervisory Body, consulting with Cedacri and Nolan Norton Italia for this purpose. This project, which was also extended to Apulia prontoprestito, includes all initiatives (whether relating to organisation or infrastructure) aimed at reducing to a level deemed acceptable potential damage from an emergency, accident or serious disaster that may befall the Company, directly or indirectly, putting its capacity to operate at risk Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 12

15 The reference market at 31 December The Italian consumer credit market posted further growth in 2006, rising 11.9% over 2005 to reach 52.8 billion. In this context, the CQS and DP loan segment, in which Apulia prontoprestito operates, posted significant growth in the reporting period both in absolute terms, with a total of 3.8 million in loans issued, and in percent terms, showing an increase of 30.5%. In 2006, as in FY 2005, demand for credit by families underwent brisk development buoyed by the performance of the main macroeconomic and financial determinants and continuation of the structural phenomenon of the increased propensity to make recourse to credit. More specifically, the continuing growth of credit for families was characterised by generalpurpose loans, i.e. not intended for a particular use: personal loans were up (+24.8%), along with revolving credit cards (+39.9%) and CQS loans (+30.5%). Nonetheless, if total funds disbursed at 31 December 2006 are examined, specialpurpose loans still account for 49.4% of the total (54.3% a the end of 2005), although the percentage of generalpurpose loans, including CQS loans, increased by 28.6% in 2005 and 32.9% in Loans in the cessione del quinto (CQS) and delegazione di pagamento (DP) technical formats represent a moderate portion of the consumer credit market that is on the rise compared to the reference market. The Italian market for CQS and DP loans Year Share of total Yearonyear consumer credit change % 30.5% % 37.9% % 25.5% Domestic market composition: 2006 loans Amount financed Type of loan 2006 loans Percentage of Yearonyear total change Personal loans 13,594, % 24.8% Specialpurpose loans 26,114, % 3.6% Revolving 644, % 39.9% Credit cards 8,668, % 12.4% Loans backed by onefifth of salary (CQS) 3,826, % 30.5% Overall total 52,847, % 11.9% 1 The reference market at 30 June Assofin Italian association of the main financial operators active in the consumer credit and realestate financing sectors Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 13

16 The broadening of the categories of recipients of loans backed by onefifth of salary Italian Law no. 80/2005 amended Presidential Decree No. 180 of 5 January 1950 by extending the possibility of taking out loans backed by onefifth of salary (CQS) to recipients of pensions deriving from previous employment in the public and private sector. The relative Decree of implementation, which was signed by the Italian Minister of Economy and Finance and published in issue no. 32 of the Official Journal on 8 February 2007, states that Social Security Entities must enter into specific agreements with lenders in order to ensure that pensioners enjoy more favourable contractual conditions than those offered on average to the market at large. The establishment of regulations governing loans backed by onefifth of salary to pensioners may result in improving the activity and economic results of the market in general and Apulia prontoprestito in particular. Indeed, the persons affected represent a vast market of more than 10 million pensioners, excluding those over 80 years of age and those who draw noncontributory pensions. In the light of these prospects, and in anticipation of the issue of the above Decree (the indications provided in the aforementioned Italian Law No. 80/2005 being deemed sufficient), in 2006 Apulia prontoprestito disbursed a total of approximately 20 million in loans to pensioners (equating to 4.6% of loans disbursed and 2.8% of the total amount), all of which possessed the characteristics of CQS loans (lifeinsurance policy and obligation to advance uncollected payments with the guarantee of employment risk excluded, of course). The performance of Apulia prontoprestito stock in 2006 From the start of trading (7 December 2005) to the present, Company stock, which is listed on the Expandi Market of Borsa Italiana, has successfully performed as follows: : I.P.O.: 1.28; Official minimum price from to : 1.383; Average price from to : 2.004; Volume traded from to : 252,808,607 shares; At the end of December 2006, Apulia prontoprestito shares were trading at 1.805, up 34.80% from the end of 2005, against an increase of 19.09% in MIBTEL over the same period. Based on trading prices on 22 March 2007, the Company s market capitalisation was million Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 14

17 Organisational and operating structure Apulia prontoprestito has adopted an Internal Control System according to guidelines laid down by the Parent Bank, bancapulia, consisting of a set of rules, procedures and organisational structures. These rules, which preserve the necessary separation between operating and control functions, aim to ensure that company strategies are followed, the effectiveness and efficiency of the main processes are pursued, operations comply with supervisory and internal regulations, and that management and accounting information is complete and reliable. In order to protect against the risks inherent in each process, a controloriented culture has been developed at all levels of the Company with strict evaluation and training of staff, which, along with high standards of moral integrity, is essential to achieving a suitable level of control. Apulia prontoprestito outsources the monitoring of activities that may lead to risk of loss due to errors and/or the inadequacy of main internal processes, resources and procedures, or deriving from external events, as well as oversight aimed at preventing risk of fraud and employee disloyalty to the Parent Bank s bancapulia Inspection Service. The Inspection Service is in close contact with the Board of Statutory Auditors and the Internal Control Committee; it reports to the Chief Executive Officer and interacts with the Administrative Body. In the interest of rationalising the Company s organisational structure, in addition to the Inspection Service, other activities relating to internal management governed by specific contracts have been outsourced to the Parent Bank bancapulia: the General Secretary s Office, Personnel, Management Control, Organisation, Legal Affairs, IT Systems, Marketing, Supervisory Reports, Finance, BackOffice Finance, Loan Control, and the Internal Supply Service. Risk management The main risks to which Apulia prontoprestito is exposed are credit risk, interest rate risk and duration gap risk. The characteristics of the activity of providing financing in the form of loans backed by onefifth of salary and salarydeduction loans, which are protected against employment and life risk, along with specific agreements with agents, result in substantially zero credit risk in relation to exposures to customers. The exposure to interest rate risk, which is due to the unbalance between fixedrate asset items and variablerate liability items, is constantly monitored in order to achieve an optimal balance for the interest margin. Apulia prontoprestito carries out this control through its ALM (Asset Liability Management) procedure managed by the Risk Management department of the Parent Bank, bancapulia Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 15

18 FY 2006 FY 2006 closed with a net profit of 7.2 million, after entering all costs and revenues for the period and allocating 4.5 million to the tax provision. Moving on to an examination of the main items in the consolidated financial statements and taking into account that, as previously mentioned, the scope of consolidation only includes Apulia prontoprestito and Apulia Finance 5 Cessioni, the circumstance for which the receivables involved in the securitisation transaction described were already included in Apulia prontoprestito s financial statements ended as at 31 December 2005 is noted in particular, and this is consequently immaterial in financial and equity terms in the consolidation. Accordingly, the comparative figures taken from the individual financial statements of Apulia prontoprestito as at 31 December 2005 are given at the end of this Report for information purposes only. Balance Sheet Total assets stood at million against million as at (+65.63%). A discussion of the most significant Balance Sheet figures is provided below. Accounts Receivable This item, made up from trade receivables and receivables from banks and financial institutions, totalled million, compared to million as at (+65.79%). Trade Receivables Trade receivables, considered at their par value according to the amortisation schedule, stood at million ( million on 31/12/2005), up 73.42% from the previous year. Outstanding loans are governed by Italian law no. 180/50, as amended, and by law no. 80/2005 (pensioners); they are protected by a clause forcing agents to advance payment of uncollected sums. On the basis of Contracts under management by agents, customers in the employ of the Italian Government, Public Entities, and Municipalities make up 74.86% of the total (81.65% at the end of 2005), whereas the remainder are employed by private enterprises. The average residual time to maturity of loans is 84 months (81 months at the end of 2005), which drops to 68 months due to the impact of early redemption. The Parent Bank, bancapulia, transferred its remaining loan portfolio of 0.2 million to Apulia prontoprestito in the first few months of 2006 in accordance with article 58 of the Italian Unified Banking Law. There are no loans with instalments that are past due, in litigation, problem loans or defaulted loans Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 16

19 The following section contains statistics relating to funds disbursed in 2006 exclusively referred to Apulia prontoprestito and their total at year end to facilitate a rapid, effective discussion on loans. Loans disbursed/acquired in FY 2006 Average amount of loan The average amount of loan stood at 19,010 in the reporting period, against 18,437 in 2005, slightly above the Italian average ( 17,100). Remaining exposure to the top customer was 143,166, representing % of funds disbursed. The other residual exposures represent more moderate sums; indeed, the hundredthlargest position totals 70,000, the thousandth approximately 47,000, the threethousandth customer does not exceed 35,000, and the fivethousandth loan is less than 30,000; the other 37,000 customers represent sums less than 30,000. (amounts in units of ) C.Q.S. D.P. Total Year Number of Average Number of Average Number of Average contracts amount contracts amount contracts amount ,900 19,210 7,178 18,595 22,078 19, ,528 19,156 3,557 16,914 11,085 18,437 Loan amount by type Loans backed by onefifth of salary represented 68.20% of the total for the year against 70.56% for C.Q.S. D.P. Total Year Number of Amount Number of Amount Number of contracts contracts contracts Amount , ,230 7, ,474 22, , , ,207 3,557 60,167 11, ,375 Loans by geographical area The geographical breakdown of loans points to a growth of loans to customers residing in Southern Italy to reach 62.28% of the total, compared to 54.52% for Year Number of contracts North Center South Total Amount Number Amount Number Amount Number Amount of of of contracts contracts contracts ,711 73,952 4,336 84,378 13, ,374 22, , ,121 50,167 2,238 42,780 5, ,428 11, , Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 17

20 Loans by region With 120 million in loans, or 28.60% of the total production for 2006, Campania ranked first among Italian regions, followed by Sicily with 75 million and Latium with 45 million. Region Abruzzo 10,292 4,483 Basilicata 5,108 2,976 Calabria 30,077 11,502 Campania 120,054 54,547 Emilia Romagna 12,100 7,711 Friuli Venezia Giulia 4,464 1,698 Latium 45,087 23,372 Liguria 4,578 3,577 Lombardy 27,365 19,709 Marche 4,139 2,338 Molise 3,452 1,797 Piedmont 14,799 13,260 Puglia 31,230 10,546 Sardinia 11,323 3,543 Sicily 74,905 31,855 Tuscany 8,089 5,760 Trentino Alto Adige 1, Umbria 1,995 1,488 Valle d Aosta Veneto 9,132 3,280 GRAND TOTAL 419, ,375 Loans by duration Loans with a duration of more than five years represented 88.79% of the total compared to 88.18% for Customers are pleased with the tenyear duration, considering that in the consumer credit sector, only CQS and DP loans have this payment schedule. Type Up to 5 years Over 5 years Total Year Number of Amount Number of Amount Number of Amount contracts contracts contracts 2006 C.Q.S. 3,772 32,277 11, ,953 14, ,230 D.P. 1,623 14,766 5, ,708 7, ,474 Total 5,395 47,043 16, ,661 22, , C.Q.S. 1,881 16,364 5, ,844 7, ,208 D.P ,780 2,631 52,387 3,557 60,167 Total 2,807 24,144 8, ,231 11, , Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 18

21 Composition of loans at the end of FY 2006 Average amount of loan The average amount per loan, based on the loan portfolio in 2006, was very low, standing at 16,541, despite showing growth of 955 compared to (amounts in units of ) C.Q.S. D.P. Total Year Number of Average Number of Average Number of Average contracts amount contracts amount contracts amount ,008 17,055 15,328 15,635 42,336 16, ,353 16,127 10,555 14,798 25,908 15,586 Loan amount by type C.Q.S loans represented 65.78% of the total, compared to 61.31% in C.Q.S. D.P. Total Year Number of Amount Number of Amount Number of Amount contracts contracts contracts , ,613 15, ,656 42, , , ,598 10, ,198 25, ,796 Loans by geographical area Southern Italy represented 59.23% of total loans, compared to 54.94% in North Center South Total Year Number of Amount Number of Amount Number of Amount Number of Amount contracts contracts contracts contracts , ,526 8, ,979 23, ,764 42, , ,820 96,337 5,377 85,599 13, ,860 25, ,796 Loans by duration Loans of more than five years in duration comprised 90.99% of the sector as a whole, up from 89.13% in Up to 5 years Over 5 years Total Year Type Number of Amount Number of Amount Number of Amount contracts contracts contracts C.Q.S. 6,197 41,662 20, ,951 27, , D.P. 3,394 21,399 11, ,257 15, ,656 Total 9,591 63,061 32, ,208 42, ,269 C.Q.S. 4,054 26,664 11, ,934 15, , D.P. 2,745 17,214 7, ,984 10, ,198 Total 6,799 43,878 19, ,918 25, , Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 19

22 Receivables from Banks Receivables from banks stood at 65.1 million, compared to 53.9 million at the end of The sums in question are cash deposits to be used in disbursing loans to customers, in addition to residual cash generated by the collection of securitised receivables. Receivables from financial institutions Receivables from financial institutions, which stood at 9.0 million (against 1.9 million at the end of 2005), refer to payments collected in December 2006 by agents and paid to Apulia prontoprestito in the first ten days of January Hedging derivatives This item refers to derivatives hedging against interest rate risk, as commented upon above, the fair value of which as at 31 December 2006 stood at 1.0 million. Accounts payable This item, which consists of accounts payable to banks, totalled million, compared to million as at 31/12/2005 (+71.60%). Outstanding securities This item, which consists of securities issued as part of the securitisation operation and held by third parties, stood at million (against a zero value at the end of 2005). For the reason previously stated, the comparative figures taken from the individual financial statements of Apulia prontoprestito as at 31 December 2005 are given at the end of this Report for information purposes and trends only. Income Statement figures Net profit for the year reached 7.2 million ( 5.9 million as at ), an increase by 21.83%, after the 4.5 million allocation to the provision for taxes. The following section contains an illustration of the main items on the income statement. The interest margin stood at 12.9 million ( 10.0 million as at ). The 28.70% increase is due to the expansion of loan volumes. In this regard, it should be noted that the Company engaged in a hedging operation to protect itself against upwards fluctuations in interest rates that cut the interest margin by 0.9 million. Furthermore, the Company held its interest rates steady despite a general rise in the same in order to ensure growth of its loan volumes, which 2006 Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 20

23 further reduced said margin. The brokerage margin reached 13.4 million ( 10.4 million as at ), an increase by 28.71%, comprising essentially the interest margin, plus commission income, largely on insurance, less commission expenses on sureties issued by bancapulia for other banks and less the net result from the interest rate risk hedging transaction. The result from operations totalled 11.7 million ( 9.6 million as at ). The 22.24% increase was affected by the positive effect of the brokerage margin, which allowed the absorption of operating costs incurred to increase personnel and administrative expenses related to development of Apulia prontoprestito activity. Staff costs totalled 0.8 million ( 0.4 million as at 31/12/2005) and refer to: 13 Apulia prontoprestito employees for 0.5 million (11 employees as at 31/12/2005), and remuneration to directors for 0.3 million. Other administrative expenses totalled 1.2 million ( 0.5 million as at ) and referred mainly to: stamp duty on loan agreements paid electronically ( 324 thousand); Professional fees for technical advice ( 187 thousand); auditing fees for Apulia prontoprestito ( 75 thousand) regarding the midyear report, individual financial statements, consolidated financial statements, and reports concerning securitisation, as well as Apulia Finance 5 Cessioni ( 11 thousand) relative to the midyear report and the financial statements; duties paid for obligations to Borsa Italiana and Consob supervisory contributions ( 62 thousand); expenses for the use of bancapulia personnel, as per agreement ( 52 thousand). Gross profit for the period totalled 11.7 million ( 9.6 million as at ) and corresponded with the result from operations. Transactions with related parties Transactions as at 31 December 2006 between Apulia prontoprestito Apulia Finance 5 Cessioni and related parties as identified by the Internal Code on Related Parties adopted by the Company in compliance with the provisions of Italian legislative decree no. 58/98 (the Unified Finance Law), Consob Ruling No /1999 governing issuers, other related Consob bulletins and internal provisions regarding corporate governance are indicated below. Please see section 4 of the notes for further details. A. Atypical or unusual transactions No significant atypical or unusual transactions were engaged in Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 21

24 B. Ordinary or recurring transactions Transactions conducted with related parties under standard conditions fall into the category of ordinary operations of the consolidated companies and are usually conducted under market conditions and always on the basis of mutual economic expedience and in compliance with the internal procedures cited above. C. Transactions with significant shareholders, company representatives, and other related parties Dealings with other related parties are part of ordinary operations of the consolidated companies and are conducted under market conditions. During the reporting period no atypical or unusual transactions or transactions with the potential to have a significant impact on the consolidated companies balance sheets, income statements, or cash flow situations were conducted. Shareholdings of Directors, Auditors, and the General Manager The following table contains a breakdown of the shareholdings of members of administrative and control bodies and General Manager of Apulia prontoprestito, as required by art. 79 of the Issuer Regulations. Surname and first name Company shares held No. of shares held at the end of 2005 No. of shares purchased No. of shares sold No. of shares held at the end of 2006 Chirò Vincenzo Apulia prontoprestito 0 65, ,000 Mascetti Giuseppe Apulia prontoprestito 25,000 15, ,000 Gozzetti Tommaso Apulia prontoprestito 17,500 19, ,000 Segre Edoardo Apulia prontoprestito 0 10, ,000 Bompani Aldo Apulia prontoprestito 2, ,500 De Canio Nunzio Apulia prontoprestito 3,000 33,000 36,000 0 New prudential regulatory provisions Following the changes in international regulations, the Bank of Italy issued its New prudential provisions for banks (Circular no. 263 of ), governing risk management by banks and regulating supervision by the Bank of Italy. The Parent Bank, bancapulia, formed a work group and launched a project to comply with the above provisions that will involve all group companies, including Apulia prontoprestito. This project provides an analytic description of the action to be taken and the timeline for implementation of all measures Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 22

25 Privacy The Security Planning Document drafted by Apulia prontoprestito in accordance with article 34, paragraph 1, section g) of Italian Legislative Decree No. 196 of 30 June 2003, the Personal Data Protection Code, was updated as required by rule 19 of the Technical Regulations in schedule B to said decree. Business outlook Overall Apulia prontoprestito s operations continued to register high loan performance in the first months of In January and February 2007, in fact, it issued a total of 82 million in loans, compared to 60 million in the same period of The 2007 budget predicts that the Company will continue to grow both product lines (CQS and DP loans) and achieve increased net profits. Research and development During FY 2006 Apulia prontoprestito did not incur costs for research and development. Significant events subsequent to year end On 14 February 2007, Mr. Adriano Salvemini submitted his resignation from the office of Vice Chairman of the Bank, and from his positions in its subsidiaries, namely Vice Chairman of Apulia Service and nonexecutive director of Apulia prontoprestito. The Parent Bank, bancapulia, and all group companies would like to express their most heartfelt thanks to Mr. Adriano Salvemini for the excellent contribution that he made to the group's growth over more than ten years. The significant events that occurred after the end of financial year 2006 for Apulia prontoprestito include: the approval of the 2007 budget guidelines, which emphasised, among other factors, growth of loan volumes, partly considering new opportunities created by legislation extending CQS loans to pensioners as well; the resolution to apply for a growth loan of 100 million, in order to obtain the resources needed to finance the Company s development and increase its visibility on international markets. The maturity from six to twelve months is tied to the launch of the second securitisation operation, which is scheduled for conclusion in the second half of Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 23

26 Conclusions Dear Shareholders, The positive results we have achieved in this second year of activity of Apulia prontoprestito have rewarded our strategic decisions and the unbending commitment by the entire company to reach its goals. Apulia prontoprestio properly read all of the market's signals, allowing it to post highly significant income statement and balance sheet figures. We would like to take this opportunity to express our particular appreciation of the work of the Chief Executive Officer, Tommaso Gozzetti, for his strong resolve and the professionalism he showed in reaching the Company's targets, along with General Manager Nunzio De Canio and the rest of the Company's employees. Our especial thanks go out to the General Management of bancapulia and HDI Assicurazioni, and to the top managers, middle managers, and the rest of the staff of all of the companies that showed their ability to combine experience and skill in carrying out their activities. We would also like to express our sincere appreciation to the members of the Board of Auditors for the professional manner in which they performed their duties. We would also like to thank the independent auditing firm for the intense collaboration they provided during their engagement. We would further like to express our gratitude to all of the Agents for their valuable contributions. Particular thanks are due to the representatives of the Bank of Italy, Borsa Italiana, and Consob, for their aid and assistance during the year. Lastly, we would like to thank the more than 6,500 shareholders of Apulia prontoprestito who have entrusted us with supporting the Company s development. San Severo, 23 March 2007 The Board of Directors the Chairman (Vincenzo Chirò) 2006 Consolidated Financial Statements Apulia prontoprestito Report on Operations p. 24

27 REPORT OF THE EXTERNAL AUDITING FIRM 2006 Consolidated Financial Statements Apulia prontoprestito Report of the external Auditing Firm p. 25

28 2006 Consolidated Financial Statements Apulia prontoprestito Report of the external Auditing Firm p. 26

29 CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2006 BALANCE SHEET 2006 Consolidated Financial Statements Apulia prontoprestito Balance Sheet p. 27

30 Balance Sheet (amounts shown in Euros) Assets Accounts Receivable 753,617, Hedging derivatives 977, Tangible assets 68, Intangible assets 218, Tax assets 1,003,531 a) current 50,358 b) prepaid 953, Other assets 651,075 TOTAL ASSETS 756,535,980 (amounts shown in Euros) Liabilities and net equity Accounts payable 360,679, Outstanding securities 151,329, Tax liabilities a) current b) deferred 689, , Other liabilities 509, Employee severance indemnity 26, Share capital 236,000, Share premium 5,055, Reserves (5,031,824) 180. Profit for the year 7,270, Minority interest 9,000 TOTAL LIABILITIES AND NET EQUITY 756,535, Consolidated Financial Statements Apulia prontoprestito Balance Sheet p. 28

31 CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2006 INCOME STATEMENT 2006 Consolidated Financial Statements Apulia prontoprestito Income Statement p. 29

32 Income Statement Items (amounts shown in Euros) Interest and similar income 24,706, Interest and similar expenses (11,822,432) INTEREST MARGIN 12,883, Commission income 767, Commission expenses (100,394) NET COMMISSIONS 667, Net income on hedging activity (142,054) BROKERAGE MARGIN 13,408, Administrative expenses: a) staff expenses b) other administrative expenses (1,965,204) (805,336) (1,159,868) 130. Adjustment of net value of tangible assets (11,950) 140. Adjustment of net value of intangible assets (55,324) 170. Other operating expenses (10,478) 180. Other operating income 369,232 RESULT FROM OPERATIONS 11,734,891 BEFORETAX PROFIT FROM CURRENT OPERATIONS 11,734, Income taxes on current operations (4,464,891) PROFIT FOR THE YEAR 7,270,000 BASIC PROFIT AND DILUTED PROFIT PER SHARE 0, Consolidated Financial Statements Apulia prontoprestito Income Statement p. 30

33 CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2006 CHANGES IN NET EQUITY 2006 Consolidated Financial Statements Apulia prontoprestito Changes in Net Equity p. 31

34 CHANGES IN OVERALL NET EQUITY (amounts shown in Euros) Balance as at Allocation of profit from previous year Reserves Dividends and other allocations Changes in reserves Issue of new shares Changes for the period Net equity transactions Own shares purchased Dividend extraordinary distribution Changes in capital instruments Other changes Profit FY 2006 Net equity as at Share capital 236,000, ,000,000 Share price premium 5,055,037 5,055,037 Reserves: a) profits b) other (1) (6,586,150) 98,724 (6,684,874) 1,554,326 1,554,326 9,000 (5,022,824) 1,653,050 (6,675,874) Valuation reserves Capital instruments Own shares Profits / losses for the period 5,967,526 (1,554,326) (4,413,200) 7,270,000 7,270,00 Consolidated net equity 240,436,413 (4,413,200) 9,000 7,270, ,302,213 (1) The other changes in consolidated net equity are related to the minorityinterest share. Said amount represents the capital stock (Euro 10,000) of Apulia Finance 5 Cessioni S.r.l., a special purpose vehicle formed in accordance with Italian Law No. 130/99 and consolidated according to the linebyline method, net of the 10% stake (Euro 1,000) underwritten by Apulia prontoprestito in Consolidated Financial Statements Apulia prontoprestito Changes in Net Equity p. 32

35 CHANGE IN GROUP SHARE OF NET EQUITY (amounts shown in Euros) Balance as at Allocation of profit from previous year Reserves Dividends and other allocations Changes in reserves Issue of new shares Own shares purchased Changes for the period Net equity transactions Dividend extraordinary distribution Changes in capital instruments Other changes Profit FY 2006 Net equity as at Share capital 236,000, ,000,000 Share price premium 5,055,037 5,055,037 Reserves: a) profits b) other (6,586,150) 98,724 (6,684,874) 1,554,326 1,554,326 (5,031,824) 1,653,050 (6,684,874) Valuation reserves Capital instruments Own shares Profits / losses for the period 5,967,526 (1,554,326) (4,413,200) 7,270,000 7,270,00 Net equity 240,436,413 (4,413,200) 7,270, ,293, Consolidated Financial Statements Apulia prontoprestito Changes in Net Equity p. 33

36 CHANGE IN MINORITYINTEREST SHARE OF NET EQUITY (amounts shown in Euros) Balance as at Allocation of profit from previous year Reserves Dividends and other allocations Changes in reserves Issue of new shares Changes for the period Net equity transactions Own shares purchased Dividend extraordinary distribution Changes in capital instruments Other changes Profit FY 2006 Net equity as at Share capital 9,000 9,000 Share price premium Reserves: a) profits b) other Valuation reserves Capital instruments Own shares Profits / losses for the period Net equity 9,000 9, Consolidated Financial Statements Apulia prontoprestito Changes in Net Equity p. 34

37 CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2006 CASH FLOW STATEMENT 2006 Consolidated Financial Statements Apulia prontoprestito Cash Flow Statement p. 35

38 Cash Flow Statement (amounts shown in Euros) A. OPERATIONS Fiscal year OPERATIONS 7,337,274 Interest and similar income 24,706,098 Interest and similar expenses (11,822,432) dividend and similar income commission income 767,397 commission expenses (100,394) net income on hedging activity (142,054) staff expenses (805,336) other costs (1,170,346) other income 369,232 taxes (4,464,891) 2. LIQUIDITY GENERATED BY THE DECREASE IN FINANCIAL ASSETS 3. LIQUIDITY ABSORBED BY THE INCREASE IN FINANCIAL ASSETS (288,672,598) financial assets held for trading financial assets measured at fair value financial assets available for sale accounts receivable (287,934,041) other assets (738,557) 4. LIQUIDITY GENERATED BY THE INCREASE IN FINANCIAL LIABILITIES 301,817,577 accounts payable 150,488,573 outstanding securities 151,329,004 financial liabilities held for trading financial liabilities at fair value other liabilities 5. LIQUIDITY ABSORBED BY THE REDEMPTION/REPURCHASE OF FINANCIAL LIABILITIES (4,905,488) accounts payable outstanding securities financial liabilities held for trading financial liabilities at fair value other liabilities (4,905,488) NET LIQUIDITY ABSORBED BY OPERATIONS 15,576,765 B. INVESTMENT ACTIVITIES 1. LIQUIDITY GENERATED BY THE DECREASE IN 2. LIQUIDITY ABSORBED BY THE INCREASE IN (51,948) Shareholdings financial assets held to maturity tangible assets (29,989) intangible assets (21,959) other assets NET LIQUIDITY ABSORBED BY INVESTMENT (51,948) C. FINANCING ACTIVITIES issue/purchase of own shares value adjustments to shareholder s equity issue/purchase of capital instruments distribution of dividends and other aims Loss coverage 9,000 (4,413,200) NET LIQUIDITY GENERATED BY FINANCING (4,404,200) NET LIQUIDITY GENERATED IN THE FISCAL YEAR 11,120, Consolidated Financial Statements Apulia prontoprestito Cash Flow Statement p. 36

39 Reconciliation of the Cash Flow Statement (amounts shown in Euros) Items Fiscal year 2006 Opening liquidity 53,932,596 Total net liquidity generated for the period 11,120,617 Closing liquidity 65,053, Consolidated Financial Statements Apulia prontoprestito Cash Flow Statement p. 37

40 CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2006 NOTES TO THE FINANCIAL STATEMENTS 2006 Consolidated Financial Statements Apulia prontoprestito Notes p. 38

41 INTRODUCTION The notes are divided into the following parts: Part A Accounting Policies Part B Information on the Balance Sheet Part C Information on the Income Statement Part D Other Information Part E Enclosures 2006 Consolidated Financial Statements Apulia prontoprestito Notes p. 39

42 PART A ACCOUNTING POLICIES A.1 GENERAL SECTION Section 1 Statement of compliance with International Accounting Standards Apulia prontoprestito SpA hereby states that these Consolidated Financial Statements as at 31 December 2006 have been prepared in full compliance with all IAS/IFRS issued by the International Accounting Standards Board and the relative interpretations by the International Financial Reporting Interpretation Committee in force as at 31 December Section 2 General drafting principles This report, the figures of which are given in thousands of euro, was prepared according to the following general principles: Business continuity All the items have been measured according to the company's operating values in as much as they are expected to continue over time. Accrual principle Costs and revenues have been recognised according to the accrual principle and the matching concept. Consistency of presentation The presentation and classification of items have been kept consistent over time in the interest of ensuring the comparability of information, except as changes have been required by International Accounting Standards or an Interpretation, or when changes have made the representation of values more appropriate in terms of significance and reliability. When presentation or classification criteria are modified, changes are applied retroactively, if possible, with an indication of the nature and reason for the change and the affected items Consolidated Financial Statements Apulia prontoprestito Notes p. 40

43 Prohibition of offsetting Assets and liabilities, costs and revenues are not set off against one another, except as required or allowed by International Accounting Standards or Interpretations or by the financial statement formats prepared by the Bank of Italy for financial brokers. Section 3 Events subsequent to the reporting period On 5 February 2007 the second tranche of the securitisation operation was concluded with the assistance of Deustche Bank Ag London in the capacity of Arranger. The transferred portfolio, worth 147 million, along with that of the first tranche, transferred in July 2006 and worth 170 million, brings the total amount of transferred securitised assets up to 317 million. Moody s confirmed its Aaa rating of the outstanding senior Class A notes, which make up 89% of the portfolio of transferred assets. Section 4 Other issues These Consolidated Financial Statements have been drafted in accordance with the instructions for Financial Intermediaries issued by the Bank of Italy on 14 February Consolidated Financial Statements Apulia prontoprestito Notes p. 41