NOTES TO THE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2015

Transcription

1 NOTES TO THE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2015 (Amounts expressed in Euro ) (Translation of a report originally issued in Portuguese Note 49) Introduction BNP Paribas Factor Instituição Financeira de Créditos, S.A. (Company) was incorporated in November 2, 1987 with the denomination BNP FACTOR Companhia Internacional de Aquisição de Créditos, S.A. On 01/10/2007 the Company assumed the legal nature of IFIC Instituição Financeira de Crédito, structurally widening the range of the business in which it can operate. However, BNP Paribas Factor continues to develop exclusively factoring operations in its different configurations. The Company operates both in the national and the international markets (import and export), being integrated in an international association of factoring companies (FCI) having uniform rules and work methodologies and through which are performed the international market operations. The Company is held in 99,98% by the BNP Paribas, S.A. (Group BNP Paribas - Note 29) and, consequently, its operations and transactions are influenced by the Group decisions. Note 1 Adjustments in the Financial Statements of the Previous Year There were no adjustments to the financial statements published in the previous year. Note 2 Accounting Rules Presentation Support of the Financial and Accounting Statements The financial statements were prepared on the presumption of the operations continuity, based on the Company s accounting records and respective documental support, in accordance to the Rules of Adjusted Accounting (NCA), as defined by the Bank of Portugal, per Accordance 1/2005 and 4/2005. Note 3 Main Accounting Criterions Used The main accounting principles used in the preparation of the financial statements were the following: a) Overdue credit and interests This caption includes overdue values for more than thirty days, distributed by the respective aging classes

2 b) Foreign currency accounts The foreign currency balances were adjusted to the exchange rates of according to the Fixing of the Bank of Portugal, as mentioned below: c) Intangible fixed assets Currency Value USD 1,08929 GBP 0,73530 JPY 131,07000 The Company registers in this caption the costs related to software programs acquisition, when its expected use deflects beyond the financial year of its acquisition. The intangible fixed assets are amortized by the constant depreciation quote method and twelfths, through the expected life use, which usually corresponds to 3 years. The maintenance software contracts are recognized as cost according to its temporal validity. d) Tangible fixed assets The tangible fixed assets are assets used by the Company for the development of its activity and are registered at acquisition cost, including expenses which are directly attributed to it, deducted of accumulated depreciation and impairment losses. The tangible fixed assets were never object of a revaluation. The tangible fixed assets amortizations are calculated according to the constant depreciation quote method, to the following amortization rates, which reflect the life use of the assets: Year of life use Furniture and material 8 Machines and tools 4 5 Hardware 4 Interior facilities 8 10 Security equipment 10 Other material 8 e) Recognition of expenses and income Income and expenses are recognised on an accrual basis of the financial year, recorded over the period to which they relate independently of its collection and payment, as follows: - Interests on bank loans are calculated on a daily basis over the financed amounts and charged to the expenses of the exercise for the period already elapsed. - Commissions on factoring services are specialized according to the period elapsed between the assignment and the due date of the credit

3 - For the factoring operations the interests are charged and registered as profits, normally on a monthly basis, on the amount advanced and always incurred to its respective period. - On the option purchase of definitive credits the bonus received for the payment advance is specialised as profit according to the elapsed period until the maturity of the credits acquired. - For the credits considered of doubtful collection the interests are not charged, being considered as profits only when charged. f) Provisions for credits of doubtful collection, overdue credit and interests and for risks and costs. Provision for credits of doubtful collection The constitution of provision for credits of doubtful collection is determined by the Bank of Portugal who considers the rendered service concept, mentioned in the number 4º - 1, line b) of the Notice 3/95, is also applicable to the factoring activity. In this case we can include the falling due credits on a same debtor if according to its reclassification foreseen in paragraph a), the overdue credit and interests of all the operations related to that specific client exceed 25% of the total credit, added of overdue interests. These credits are provisioned according to application of half of the provision rates applicable to the overdue credits, with exception of the first grade in which is applied the same rate. Provision for overdue credit and interests This provision is created to cover the non collection of overdue credits taken and overdue interests for more than 30 days. The amount to be provisioned is in accordance with the time elapsed after the corresponding due date, in accordance with the Notice 3/95, of 30 th of June, of the Bank of Portugal, with the revision given by the Notice 8/2003 of 28 of February, being the corresponding provision reflected as a decrease of the asset. Provision for general credit risk It is a provision of general nature destined to face up credit risks not specifically identified, being recorded as a liability in accordance with the provision for risks and charges (Note 9), calculated by the application of a percentage of 1% over the totality of the credit granted by the Company (factoring without recourse) and of over the totality of the advances (factoring with recourse advanced), excluding the considered in the scope of the provision for overdue credits and interests and credits related to the debtors of the Central Administration universe as defined by the Bank of Portugal. Other provisions In 2015 it was created a provision to meet a potential loss and consequent contribution to the Resolution Fund in the scope of the outcome of the sale of the Novo Banco SA. Another provision was created in order to face up to eventual general costs

4 Impairment for non Financial Assets This amount is used to face a possible depreciation of the lands received as settlement of defaulting loans of Turreal, registered as a reduction of the asset. g) Vacation payment and vacation bonus It is considered in the caption Expenses payable staff costs the amount correspondent to vacation payment and vacation bonus due and payable in h) Register of Factoring operations Factoring without recourse The invoices and other documents received for collection from clients or associates abroad, are recorded as assets in the caption Loans and advances to customers by a corresponding entry into the caption Debtors per Factoring Contract. Factoring with recourse In accordance with Bank of Portugal Instruction 2/98, of February 16th, of the Bank of Portugal, the advances to clients in factoring operations with recourse are recorded in the asset caption Loans and advances to customers, being the amounts not advanced recorded as off balance sheet accounts. The Company performs contractual advances to clients over the amount of the credits taken in the factoring operations subjected to advances, this means, net of interests and commissions and of a percentage of the assigned invoices not allowed to be advanced. i) Credit risk The involved credit risk in the factoring operations may be entirely assumed by the Company, in the case were the operations are designated without recourse. However, the Company reassurances on an Insurance Company the non-recourse portfolio, with exception of the Public Sector, dividing the risk of the corresponding operations, including the export. The operations in which the credit risk is assumed by the client (domestic operations) or by the associate abroad (import operations) are considered as with recourse. j) Deferred taxes The Corporate Income Tax accounted on the Statement of Profit and Loss as of 31 of December 2015 is adjusted as a result of the deferred taxes. The amounts details and the nature of the assets by deferred taxes registered as of 31 December 2014 and the movement occurred in the financial year is summarised as follows: Statement of Profit and Loss Balance as of Balance as of 31 of Increase of Decrease of 31 of Assets by differed taxes December 2014 the exercise the exercise December 2015 Provisions and impairment and temporary differences

5 Liabilities per differed taxes: The Company does not have liabilities due to differed taxes. k) Assets received as settlement of defaulting loans This caption corresponds to 2 properties received as settlement of defaulting loans and are recorded under the caption Other assets. Note 4 Securities Portfolio The Company registers its securities portfolio in the Assets, as per the attached Appendix III. Note 5 Movement and Balances of Tangible and Intangible Fixed Assets Shown in the attached Appendix IV Note 6 Interests Income and Similar Costs These captions have the following distribution: 31/12/ /12/2014 Interests and Similar Incomes Interests of Deposits at Sight Interests of Financial Investments Interests of Internal Credit With Recourse Without Recourse Interests and Similar Costs Interests of Other Resources Interests of Deposits at Sight Interbank Money Market Subordinated Loans Others Loans Financial Margin Note 7 Commissions This caption has the following distribution: 31/12/ /12/2014 Commissions Received per factoring operations Others commissions received Commissions paid Commissions for Bank Services Rendered

6 Note 8 Costs with Employees This caption has the following distribution: 31/12/ /12/2014 Wages of the Management and Supervisory Board Wages of the Employees Compulsory Social Costs Others costs with the Employees Note 9 General and Administrative Expenses This caption has the following distribution: 31/12/ /12/2014 Water, Energy and Fuel Consumables Rents and Hires Communications Travelling and Staying Publicity and Publication Preservation and Repairing Formation Insurances Specialized Services External Services (ACE) Others Expenses Note 10 Others Operational Income and Expense This caption has the following distribution: 31/12/ /12/2014 Others Operational Income Gains in Financial Operations Expenses Reimbursement Credit Recover Gains for Services Rendered Others Operational Profits Others Operational Expenses Indirect Taxes Stamp Duty 250 Tax on Road Transports Direct Taxes Local Taxes on Properties Contribution on the Bank Sector Default reserve fund at Bank of Portugal BdP Payment under Operating Leases Donations Effective losses Penalties, Delay and Compensatory Interests 565 Others Operational Expenses

7 The caption Others Operational Profits refers to the discount obtained on the purchase of definitive credits. This premium is divided according to the average delay of the due date of the credits acquired. Note 11 Credit to Customers As of 31 December 2015, this caption is made up as follows: Short term credit taken: With Without recourse recourse Total - Credit not overdue Credits of Doubtful Collection < 3 months Between 3 and 6 months Between 6 and 9 months 0 Between 9 and 12 months 0 Between 12 and 15 months 0 Between 15 and 18 months 0 Between 18 and 24 months 0 Between 24 and 30 months ========== Provision for credits of doubtful collection ( ) Overdue credit and interests Credit granted to the Central and Local Administration Credit granted to other entities: < 3 months From 3 to 6 months From 6 to 9 months From 9 to 12 months > 12 months ========== Provision for overdue credit and interests ( ) ========== - 7 -

8 According to the article 15º nº 1.1 of the Notice 3/95, of 30 th June, updated with the Notice 8/2003, of 28 th of February, the credits given to entities of the Portuguese Administrative Public Sector and to entities having its credits granted by the Portuguese Government are not subjected to the constitution of provisions for specific and general credit risks, so the Company made no provision for those credits. As of 31 December 2015, the amount of the invoices assigned related to contracts with recourse and not advanced ascended to ,82 has been recorded in the off balance sheet account Contracts with recourse Invoices not financed. Thirty days after the maturity of the invoices or others documents, the Company transfers the respective amounts to overdue credit. Additionally, in the factoring operations with recourse the amounts due may be returned to the clients after 90 days of the due date (with exception of the Administrative Public Sector). As of 31 December 2015, the breakdown of the overdue credit was as follows: Up to 90 days From 90 to 180 days From 180 to 270 days From 270 days to 1 year Up to 1 year Litigation ========= As of 31 December 2015, the advances made to customers of the Company, amounted to approximately 68,44% of the total of the credits assigned on that date. Its breakdown is as follows: Advances. Without recourse With recourse In order to face up problems related to the credit assigned, as of 31 December 2015 the Company has a provision for general credit risks, for credit not due, amounting to ,08, recorded under the caption of the provisions for risks and charges, according to the provision rules of the Bank of Portugal. Risk Management BNP Paribas Factor has implemented a risk management allowing the assurance of the evaluation of the expositions and corresponding impairment policies as per the IAS 39 (Appendix V). Mensuration of the credit portfolio (Appendix V): The letter nº 2/2014/DSP brings new demands at the level of the mensuration of the impairment of the portfolio and corresponding publications. In regards to the BNP Paribas Factor estimated the portfolio impairment (i) primarily based on the BdP rules and (ii) then through an individual analysis (using the watchlist through impairment evidences as published in the Appending V). Additionally the BNP Paribas Factor does a collective analysis of the impairment based on the historical efficiency of the litigation (last 10 years) which is substantially inferior to the impairments and provisions of the credit portfolio accounted in 2015 (specific and general credit risk)

9 Note 12 Amounts owed to credit institutions As of 31 December 2015, this caption is made up as follows: Demand Overdraft facilities Short term Hot moneys Discounted bills The amounts owed to credit institutions bear interests at marketable rates ========== The debits amounts correspondent to the Resources of Others Credit Institutions unfolded in terms of its residual term to maturity, according to the following delays: Amounts owed to credit institutions - Up to 3 months From 3 months to 1 year From 1 year to 5 years More than 5 years Undefined - Note 13 Transactions with entities of the BNP Paribas Group As of 31 December 2015, the main balances and transactions maintained with entities of the BNP Paribas Group were as follows: BALANCE SHEET Assets:. Availabilities at others credit institutions Financial investments held at others credit institutions Interests of financial Investments on other financial entities Liabilities. Resources of others credit institutions Others liabilities Subordinated debt The caption Financial investments held at others credit institutions refers to an investment of macro coverage amounting EUR at 10 years, made in 2007, with payment of interests and reimbursement of EUR per year. The payment will occur at 2017/07/

10 STATEMENT OF PROFIT AND LOSS. Interests of investments Interests and similar costs Others commissions paid Others costs and operational expenses Debits to related companies included in the caption of Resources of Others Credit Institutions: - At sight Up to 3 months From 3 months to 1 year Up to 1 year - Note 14 Subordinated Loans This caption corresponds to two non-titled loans amounting to and , with a subordination clause, granted by BNP Paribas, within the terms of the Notice 12/92, of 29 December Amortizations: It can only be reimbursed by initiative of the borrower and with previous agreement of the Bank of Portugal. This loan pays quarterly interests calculated at EURIBOR - 90 days added with a spread of 0,4%. As a subordinated debt with undetermined due date these loans are considered for determination of the own funds of the Company, in accordance with the program established by the Bank of Portugal. Note 15 Provisions and impairment Provisions: The movement in the provisions during the year 2015 was as follows: Beginning Ending Balances Increases Replacements Utilizations balances Credits of doubtful collection Overdue credit General credit risks Other provisions ========= ======== ======== ======= =========

11 Impairment Initial Ending Balance Increases Reversions Balance Impairment Other Applications holded to be sold ======= ======== ========= ======== As of 31 December 2015, the existent Accumulated Impairment related to Other Applications refers to the depreciation estimated by the Board of Directors, equal to the amount of the assets received as settlement of defaulting loans. As of 31 December 2015 it was created a provision of euros in order to face an eventual loss and consequent extraordinary contribution to the Resolution Fund (created by the Decree-Law 31- A/2012, of the 10 th of February) in the scope of the outcome of the sale of the Novo Banco SA. This estimate decided by the BNPP Group for the entities operating in Portugal and integrated on the Resolution Fund, reflects the best estimate possible based on conservative principles and criteria and the best information available at the time. Note 16 Accruals, deferrals and others - This caption is made up as follows: - Debtors and other applications Accrued income Deferred expenses Other accruals and deferrals Assets ======== - Accrued expenses: Resources with Credit Institutions Personnel Other Deferred income Other accruals and deferrals Liabilities: Collections Sundry items =========

12 As of 31 December 2015, the caption Other accruals and deferrals Assets, includes as more relevant values the amount of of interests to be charged to the Adherents related to the advancements of December, of stamp duties on the mentioned interests, of estimated stamp duties for the credit used during the same period, referring to bonus to be received from Coface for the absence of incidents in 2015, related to several expenses for the lotting of Turreal property, and to be debited to the Adherents in January related to the services rendered in December. As of 31 December 2014, the caption Collections relates to cheques and transfers received from the debtors in the last days of the month, which were held to be allocated to the corresponding invoices. Most of this amount was allocated in the first days of January of 2016, by a corresponding entry into the caption Loans and advances to customers. The account Others Accruals and Deferrals - Liabilities includes of cheques and transfers received in 31th of December allocated in the first days of January, related to collections and interests not allocated due to a divergence of interpretation of the amounts received (the Company considered a part of the payment as interests for the delay and the debtor considered that the payment of the capital was made), of estimated commissions to be paid to the correspondents. Note 17 Capital On of 31 December 2015, the share capital of the Company of was represented by shares with a nominal value of 5 each being fully subscribed and paid up. The subscribed capital is held 99,98% by BNP Paribas, S.A. Note 18 Non Current Assets for Sale and other Liabilities Nature and amount of the main items which are included in the captions Non current assets for sale and Other Liabilities : Other assets - Non Current Assets for Sale: - Properties Other Liabilities - Others Suppliers Creditors by Factoring Contracts Public Administrative Sector ========= The amount recorded in the caption Non current assets for sale corresponds to: - a property received from a debtor (Turreal Imobiliária, S.A.), which was valued, in September 2015, by an independent company for and recorded in this caption by an accounting net amount of a property acquired as a result of a debtor s seizure (Frutas Sobrinho, SA by and valued in June 2014 for

13 Note 19 Average number of employees by function - Board / Management Sub-management Other functions Total 32 Note 20 Remunerations granted to the management and supervisory - Board of Directors Audit Board There are no retirement pension liabilities, loans or advances granted to members of the Board of Directors. Note 21 Foreign currency converted in the currency Foreign currency converted in the currency in which the annual accounts are established: - Assets Liabilities Note 22 Details from the Statement of Profit and Loss and the Balance Sheet expressed in business and geographical markets lines As the Factoring activity, factoring only for companies, is developed exclusively in Portugal, all profits generated are a result of the operations here developed although a part is the result of import and export operations. Note 23 Subordinated Loans Added Interests 2014 (1) Note 24 Income Taxes Interests Charged (2) Added Interests 2015 (3) Interests Paid (4) = (1) + (2) - (3) The Company is subject to Corporate Income Tax to the usual tax. In accordance with the terms of the Art. 88º of the Code of Corporate Income Tax the Company is subjected to independent taxation over an assemblage of charges at the foreseen taxes in the mentioned Article. In accordance with the tax legislation in force, the tax authorities may review and correct the fiscal statements over a period of four years (ten years for Social Security till 2002 including, 5 years after that date) and therefore the fiscal statements of the Company regarding the years 2012 to 2015 may still be reviewed. The Company s Board of Directors defends that possible corrections resulting from revisions or inspections assessments by the tax authorities will not have a significant impact in the annexed Financial Statements

14 Note 25 Company s Consolidated Accounts The Company s financial statements are part of the consolidated financial statements of BNP Paribas, with head-office located in 16, bd des Italiens, Paris, France. Note 26 Movement in the Shareholders Equity The movement in shareholders equity in 2015 was as follows: Reserves and Retained Earnings Retained Net profit Capital Legal Free Earnings Total of the year Balances at 31/12/ Appropriation of the net profit for ( ) Dividends ( ) Net profit Balances at 31/12/ ======== ======== ========= ======== ========= ========= In accordance with Decree-Law 171/95 of 18 of July, the Company must appropriate 10% of its annual net profit to a legal reserve until this equals the amount of its share capital. This reserve can only be used to offset losses in certain circumstances or to increase share capital. Note 27 Administrative Public Sector At 31 st of December 2015 the caption Administrative Public Sector is as follows: Creditor Balance Value Added Tax (IVA) payable IRC Royalties Retentions of Income Tax Retentions of stamp duty Social Security Social Security Independent employees Note 28 - Engagements with others and not included in the Balance Sheet As of 31 st December 2015 the Company had revocable engagements related to credit lines not used by their clients in the total amount of EUR ,

15 Note added for translation The accompanying financial statements are a translation of financial statements originally issued in Portuguese in accordance with generally accepted accounting principles in Portugal and the disclosures required by the Chart of Accounts for the banking system in Portugal, some of which may not conform with or be required by generally accepted accounting principles in other countries. In the event of discrepancies the Portuguese language version prevails