A strong small and medium-sized business sector based on sound corporate financing is the backbone of the German economy. In order to ensure this,

Transcription

1 Annual Financial Statement and Management Report 2012

2 A strong small and medium-sized business sector based on sound corporate financing is the backbone of the German economy. In order to ensure this, the Deutsche Factoring Bank has focussed its efforts over the last four decades on the provision of tailor-made financing solutions: working closely together with the German Sparkassen, we offer our service to more than 50 industries of the economy located throughout Germany. 02

3 Solution diversity the driving force behind growth It is not by chance that factoring is the financial services sector that has grown the most strongly in Germany in recent years. This is because enterprises, no matter how big or small or line of business, have recognised the advantages provided by this innovative instrument, and thus use factoring to an ever greater extent to give them the additional financial leeway necessary for growth, investment and daily operations. The Deutsche Factoring Bank provides solutions to problems faced by the small and medium-sized business sector. These may range from financing the growth of a dynamic fashion company to the management buyout of a trading company to the complete financing of an established motor industry supplier. The Deutsche Factoring Bank s sophisticated and highly developed services portfolio places it in a position to provide its clients with a precise and flexible service. In fact, it was due in part to this, that the Bank was able to grow more strongly than the German factoring market as a whole in Despite the increased implementation of technology, our Bank is still dedicated to understanding its clients needs as an indispensable basis for mutual trust. Furthermore, we also focus our efforts on enhancing the quality of on-site consultation as part of the daily service. These factors, together with our decades-long expertise, are the decisive criteria for success not only today but also in future. Partners: Unlimited partner Deutsche Factoring Gesellschaft mit beschränkter Haftung, Bremen 1% Limited partners Freie Sparkassen Beteiligungsgesellschaft mbh, Bremen 33% Bayerische Landesbank, Munich 11% Bremer Landesbank Kreditanstalt Oldenburg Girozentrale, Bremen 16.5% SaarLB-Bankenbeteiligungsgesellschaft mbh, Saarbrücken 16.5% Nord-Ostdeutsche Bankbeteiligungs GmbH, Hanover 11% Landesbank Berlin AG, Berlin 11% Membership in other organisations: Deutscher Factoring-Verband e. V. (DFV), Berlin Deutscher Sparkassen- und Giroverband, Berlin Entschädigungseinrichtung deutscher Banken GmbH, Berlin Factors Chain International (FCI), Amsterdam, Netherlands Contents Page 04 Development of the Factoring Market Page 06 Management Report Page 13 Report of the Supervisory Board Page 14 Balance Sheet and Income Statement Page 18 Notes to the Financial Statements 03

4 Development of the Factoring Market THE GLOBAL MARKET FOR FACTORING SERVICES IN THE YEAR 2012 In 2012, global factoring revenues grew to EUR 2,132 bn, a figure representing a 5.8% increase over the previous year. Domestic factoring accounted for the lion s share of the factoring business with revenues of EUR 1,779 bn, i.e. a growth of 1.6% compared to On the other hand, international business revenue increased disproportionally by 33.4% to EUR bn. Factoring services were provided in 74 countries throughout the world by some 2,270 organisations. In 2012, four of the five biggest markets for factoring services were to be found in Europe. As in 2011, China was once again the biggest single market with a 25% increase in revenue to EUR bn. China was followed by the United Kingdom with an overall volume of business amounting to EUR 291 bn an increase of 8.6% on the previous year, France with a turnover of EUR bn (a growth of 6.0% compared to 2011), Italy with factoring turnover increasing by 4% to EUR bn and Germany with bn. The European factoring market accounted for just under 60% of the global market. China was once again able to defend its leading position in the field of international factoring with a turnover of EUR 71 bn. China was followed by Taiwan with EUR 40 bn and Italy with EUR 38.5 bn. Germany ranked fourth with EUR 37.1 bn, and France took the fifth position with EUR 33.8 bn. FACTORS CHAIN INTERNATIONAL (FCI) To date, the world s leading organisation of factoring providers is represented in 73 countries throughout the world. In total, 263 organisations are members of Factors Chain International. In 2012, the total volume of business conducted by all FCI member organisations rose by 13.4% to EUR 1,303 bn. The FCI s share of the global factoring market saw a 4% increase to 61%. Once again, international business grew disproportionally by 28.3% to EUR 314 bn and, as in 2011, accounted for an 89% share of the international market. FACTORING IN EUROPe In Europe, some 730 organisations provided factoring services, and European providers recorded a combined turnover amounting to EUR 1,298.7 bn. This figure represents an increase of 6.6% compared to the previous year and, as in 2011, accounts for approximately 60% of the overall volume of factoring business worldwide. 04

5 Global factoring turnover (EUR bn) ,200 2,000 1,800 2,015 2,132 1,600 Factors Chain International s (FCI) share in ,400 Total turnover International turnover 1,200 1, FCI share 61% FCI share 89% International business accounted for some EUR bn of the total revenue, which translates into an almost 15% share of the total volume of factoring business conducted by European countries and a 55% share of the overall volume of international factoring business worldwide. FACTORING IN GERMANY The revenues generated by the 24 leading factoring institutes belonging to the Deutsche Factoring Verband (German Factoring Association) amounted to a total of EUR bn in the 2012 business year compared to EUR bn in The market was, thus, unable to achieve the average growth rate of 17.9% recorded in the five previous years. This situation is a reflection of the fact that German gross domestic product (GDP) posted a relatively low growth rate of 0.7% in 2012 compared to 3.0% in The factoring supply side in Germany continues to be highly heterogeneously structured. In 2012, the six largest factoring organisations accounted for some 90% of the overall revenue generated by those organisations belonging to the Deutsche Factoring-Verband. The so-called factoring quota, i.e. the ratio of the purchased volume of receivables to GDP, was 5.95% compared to 6.12% in The Deutsche Factoring Verband classified the following five branches as being the most important for the factoring industry in 2012: trade, services, production of metalware and hardware as well as mechanical engineering products, foodstuffs and beverages, production and processing of metals and metal products. Against the background of the sovereign debt crisis, in particular in Southern European countries, it proved to be difficult for international factoring to continue to develop positively in The export business suffered a decline of 1.08% to EUR 34.2 bn, whilst the import business recorded an even greater drop of 15.87% to EUR 3.07 bn. The total volume of international factoring business amounted to EUR 37.2 bn, a figure corresponding to a 2.55% decline. 05

6 Management Report The Development of our Business The economic upturn in Germany experienced a significant slowdown in Consequently, even though new business continued to remain buoyant, there was a considerable decline in the growth of business generated by our existing clients. In the case of new clients acquired in 2011 and 2012, the volume of business posted a growth of EUR 1,212 m, whilst business generated by our existing clients and correspondents saw growth increase by only EUR 162 m. Revenue losses amounting to EUR 332 m resulted from factoring clients either cancelling their agreements or filing for insolvency. In total, the Deutsche Factoring Bank posted an 11.8%, or EUR bn, increase in the volume of business to EUR bn. As a member of the Sparkassen Group, Germany s largest financial group, we complement the financial services package offered by the Sparkassen to the small and medium-sized business sector. Last year, our cooperation with the Sparkassen proved once again to be the most important source of new business for us. As can be seen below, the Deutsche Factoring Bank s volume of business arising from domestic and export factoring developed quite strongly, whereas on the other hand, the import business only posted a relatively low increase. Domestic factoring EUR m 7, % Export factoring EUR m 1, % Import factoring EUR m % In 2012, the share of international business amounted to 24.5% of total turnover, compared with the previous year s value of 24.9%. Our cooperation with our partners in Factors Chain International (FCI) represents the backbone of our import business activities. The main focus of our activities was on non-recourse factoring which accounted for some 98% of our total volume of business. A total of 5.5 m invoices/outstanding receivables were factored by our organisation, a figure representing a 6.8% increase over the previous year. The average values of the accounts receivable purchased by the Deutsche Factoring Bank were as follows: Domestic factoring EUR 1, % Export factoring EUR 3, % Import factoring EUR 15, % 06

7 Turnover of Deutsche Factoring Bank (EUR bn) Share of each branch of business in the turnover of Deutsche Factoring Bank Domestic factoring 76% Export factoring 19% Import factoring 5% Our branch and credit risks continue to be very well spread (in this context, please refer to the report below dealing with the risks). We continue to provide our services to clients drawn from more than 50 different branches of the economy. We had granted total credit lines amounting to EUR 6.2 bn for the invoices issued to the customers of our clients at 31 December 2012, of which 16.6% had been utilised. This relatively low utilisation is typical for factoring, as clients do not have direct access to the credit lines, instead they can only use credits corresponding to invoices issued. The average collection periods of the receivables we purchased were as follows: Days Days Days Domestic factoring Export factoring Import factoring Weighted average Earnings Despite the positive growth in the volume of business generated by existing clients and new business, the surplus resulting from fees and interest remained more or less stagnant at EUR m. The background behind this development was a combination of both the competition-related adaption of our conditions, in particular in the case of our existing clients, as well as the steep fall in money market interest rates. Personnel expenses rose by 3.8%, or EUR 297 m, in 2012, thus totalling EUR m, and other administrative expenses recorded a EUR 332 m increase to EUR m. As a whole, the general administrative costs rose by 5.8%, or EUR 629 m, to EUR m. The cost income ratio was 27.6%, or 1% above the value of the previous year. The earnings before risk provisioning and taxes amounted to EUR m, and were thus of a similar magnitude to the previous year s value of EUR m. 07

8 Compared to the previous year, the overall risk costs, i.e. depreciation of receivables and allocations for risk provisioning for receivables and factoring clients, as well as expenses for default insurance, rose by EUR 321 m in 2012 to EUR m. Moreover, the EUR m still remaining in the provisions for general bank risks will be withdrawn, and it is planned to transfer this EUR m completely to the retained earnings in accordance with 340f HGB. This is due to the fact that as of 1 January 2013, under the terms of 340f HGB, the reserves can no longer be counted as supplementary capital. In 2012, the annual net profit after trade tax amounted to EUR m compared to the previous year s figure of EUR m. The Bank s Assets and Financial Position For the first time in the history of the Bank, the balance sheet total of the Bank exceeded the one billion euro mark at the balance sheet date. The assets structure is characterised by the accounts receivable which affect 97% of the balance sheet total, whereas in the previous year the share was 99%. In 2012, the accounts receivable rose by 14.5% to EUR 1, m. In general, the accounts receivable are subject to interest rate variations, and are almost without exception due within three months. Risks pertaining to accounts receivable are covered to a large extent by our own credit insurance or through client credit insurance (in this context, refer to the Risk Report below). The Deutsche Factoring Bank had at all times sufficient means of refinance. Time deposits from financial institutes with a maturity term of three months are our main sources of refinance. Additional sources are blocked accounts, billing accounts and credit accounts of the factoring client. Due to the growth of the Bank, the liabilities due to banks increased by 17.6% to EUR m, and their share of the balance sheet total remained unchanged at 58%. The liabilities due to clients rose by 17.8% to EUR m, and their share of the balance sheet total also remained unchanged at 30%. The principles of proper accounting in accordance with 10 and 11 Kreditwesengesetz (KWG German Banking Act) pertaining to equity and liquidity were adhered to. Personnel Matters, Organisation and Sales Structure At 31 December 2012, we employed a total staff of 104 persons, comprising 49 female and 55 male employees. This figure includes 14 part-time employees as well as 4 trainees. The Bank pays its employees on the basis of the collective pay agreement for the German private banking sector. The Deutsche Factoring Bank provides its staff with the possibility to participate in a company pension scheme. In this respect, the Bank is a member of the BVV Versicherungsverein des Bankgewerbes a. G. and pays the required contributions. At 31 December 2012, we provided a total of 4 apprentices (2011: 4) with vocational training as office administrators. Last year, apart from our normal daily business, our organisational activities were mainly dedicated to the optimisation of internal business operations and the exchange of information with our clients. New software provided by PASS Multibank was implemented in the Accounting Department. The Deutsche Factoring Bank has a decentralised sales structure with headquarters in Bremen and sales offices in Berlin, Bielefeld, Frankfurt/Main, Munich, Solingen and Stuttgart. RISK REPORT Factoring involves various risks, which we minimise through systematic audits, limitation of individual risks, observation of branch-related risks and continuous monitoring. In this context, a comprehensive set of guidelines has been set out in writing in the business and risk strategy guidelines, and has been implemented in the corresponding business and organisation procedures as well as in a risk management manual. These guidelines are continually revised in order to take into account the increasing demands placed on risk management, and also to achieve the highest possible degree of effectiveness. Risk management is a key element of all internal management, controlling and monitoring processes of the Deutsche Factoring Bank. As part of risk management development and improvement, appropriate measures are adopted with the aim of countering any business risks (rules of procedure and organisation etc.). In addition, the risk management system is monitored on a continuous basis 08

9 by means of a newly implemented risk control system as well as by the risk manager. The risk assessment is concluded with a calculation of the risk bearing capacity of the Deutsche Factoring Bank. This indicates the highest aggregated risk management benchmark and, at the same time, a risk limit for unexpected losses. The implementation of the stress tests and the calculation of the risk bearing capacity are performed at the end of each respective quarter year period as part of the risk reporting or, in the case of serious changes, ad-hoc reports. The system is critically assessed and adapted on a continuous basis. In addition, a risk report is compiled on a quarterly basis. The report contains statements pertaining to the development of factoring, concentration and foreign risks, the extent and development of the financing framework (advance payments to factoring clients), the development of new business, termination of contracts and newly acquired clients, debtor risks, liquidity risks, operational risks, risk cost development (depreciation of accounts receivable, allowances and provisions for general risks and specific risks), liquidity and refinancing risks as well as, if necessary, concentration risks in compliance with 13, sec. 3 KWG or 13 GroMiKV (German Large Exposure Regulation). Furthermore, all departments are obliged to submit an ad-hoc report in the case of any serious changes. For example, these include the threat of losses, insolvencies or fundamental market changes. The members of the Supervisory Board are informed in writing at the end of each quarter about the business development of the Deutsche Factoring Bank. Credit Risks The risk of a client defaulting involves the danger of a partial or complete failure to perform on the part of the contractual partner. Our organisation has specified in detail guidelines for entering such risks. Decisions pertaining to risks of a greater magnitude are the responsibility of our credit committee, or the Supervisory Board of our Bank. Our credit risk comprises three different types of risk, namely: A) Verity Risks Such risks arise through a lack of, or limited, legal validity of accounts receivable acquired by our clients as well as failure to pass on payments or cheques. Countermeasures A standardised risk classification system (rating) serves as the basis for client assessment. The purpose of the rating system is to protect the Bank against avoidable risks connected with new business and, in the case of follow-up ratings, to recognise as objectively as possible any client-related negative developments. The Management is to be notified of each newly prepared rating. Financial statements, financial forecasts, liquidity plans, branch-related information, credit agency information and bank references, management assessment and the special risks involved in factoring as well as daily business experience all act as a basis for the assessment. In order to minimise risks, the following additional measures have been introduced: External setting of upper limits when purchasing accounts receivable Risk-oriented field audit or internal client audit Regular auditing of customer exposure with respect to risk changes (if necessary, reduction of the reporting interval, cancellation of limits in the case of so-called incorrect payers etc.) Random requests to debtors for confirmation of balances Use of legally tested standard contracts Guarantees by partners/managing directors, or third parties 09

10 B) Counterparty Risks Credit worthiness risks stem from an inability to settle accounts on the part of the debtors Countermeasures Limitation by means of debtor credit lines which take into consideration possible debtor affiliations Checking and monitoring of the financial standing by means of analysing relevant information, experiences pertaining to the settlement of payments as well as a partial reduction of risks involved through taking out lending insurance and payment bonds by correspondents Cancellation of agreed credits for accounts receivable after exceeding a certain dunning level. Such accounts receivable, or accounts receivable deemed as negative, are handed over to our legal department C) Correspondent Risks Correspondent risks arise from the acceptance of payment guarantees and collection obligations in export factoring. Countermeasures Selection and monitoring of the correspondents, taking into account reasonable credit worthiness criteria, as well as country risks, in particular by means of the evaluation of financial statements and credit agency reports Market Risks Market risks include all possible losses of revenue, which may result from changes of the market prices for securities, currencies and derivatives, as well as changes of interest rates and interest rate structures. We do not engage in any kind of business involving securities or precious metals. Interest rates and currency risks are of secondary importance since, with the exception of subordinated loans, we do not enter into any mismatched interest rate commitments. Furthermore we do not bear any exchange rate risks which result from the purchase of foreign currency receivables. Such risks are borne by the factoring clients. Time deposits in the same currency as the purchased foreign receivables are used to avoid internal currency risk (natural hedge). Liquidity Risks Liquidity risks involve the fulfilment of payment obligations at the due date, and include refinancing and market liquidity risks. In order to ensure liquidity as well as refinancing risk handling, our partner banks, other banks and Sparkassen provide sufficient lines of time deposits. Excess liquidity is deposited exclusively with the banks of our shareholders taking into account short-term money requirements. The currency planning is subject to appropriate controlling and monitoring. Securities and deposit transactions, proprietary trading in securities and derivative trading are prohibited. Transactions carried out are reported on a daily basis to the trading and monitoring management together with a compa rison of the forecast cash inflows and outflows. In addition, as part of the risk report, it is required that the management is informed in writing on a quarterly basis. In the case of a liquidity shortfall, the liquidity management is required to provide an emergency plan. Operational Risks Operational risks involve all risks of losses that occur as a result of the inappropriateness, or failure, of internal procedures, persons and systems, or as a result of external events. The rules of the Deutsche Factoring Bank set down in writing serve primarily to avoid operational risks, and these are supplemented by an effective, efficient and continuously updated internal control system. Due to the significant role played by operational risks, they are explicitly taken into account in the Deutsche Factoring Bank s risk management manual. Information technology, in particular, is a significant production factor for the Deutsche Factoring Bank, and is thus susceptible to major internal and external risks. An appropriate IT security policy (ISP) has been implemented which, taking into account the specific Bank requirements, stipulates the level of IT security as well as the resulting security objectives. In addition, based on a risk analysis, an emergency manual has been compiled which stipulates the measures to be taken following the occurrence of major system failures or other disruptions, in order to, in particular, restore IT system availability within a reasonable period of time. 10

11 Legal risks are also of particular importance for the Deutsche Factoring Bank. Such risks may arise as a result of contractual deficiencies or other obligations that the Bank inadvertently entered. We counter legal risks by the use of modularly designed standard contracts co-developed and examined by our legal department. If necessary, external lawyers are consulted in the case of any agreements that differ from the standard contracts. The German Bundesbank forecasts that GDP will grow by 1.9% in This forecast assumes that there will be no further deterioration of the sovereign debt crisis, that consumer and investor uncertainty will fall and that inflation will slow down. Miscellaneous Risks Miscellaneous risks (for example, business risks, damage to the Bank s image, failure to recognise market developments) are monitored by appropriate means such as, for example, surveying both correspondent and client satisfaction, systematic process controls, etc. The Management implements the Bank s strategic policy in order to control the business risks. As an integral part of their tasks, individual departments are responsible for operational procedures and risk management. To achieve this end, they conduct analyses and continually monitor the respective risks. Regular monitoring of individual client-related profitability serves as a basis for effective cost and income management. Risks pertaining to the future development Based on a combination of the ongoing weakness of the global economy and the unresolved sovereign debt crisis in the eurozone, the German Bundesbank forecasts a further economic slowdown. It predicts a GDP growth of only 0.4%. The effect of the economic slowdown on the Deutsche Factoring Bank s business will be, on average, a reduction in the growth of sales generated by our existing clients compared to the previous years. Revenue losses due to bankruptcies in our client portfolio cannot be excluded. Successful new business will continue to be the driving force behind growth in Numerous small and medium-sized enterprises are looking for financing alternatives in order to broaden their financing basis. This is also to be seen against the background of increasing equity requirements for the banking sector, which may in turn lead to higher credit financing requirements. Furthermore, we expect a growth in revenue from clients we acquired in 2012 as they only factored a part of their annual business through the Deutsche Factoring Bank in that year. 11

12 The Management: Deutsche Factoring Gesellschaft mit beschränkter Haftung, Bremen, represented by its Managing Directors: Hendrik Harms, Bremen Uwe Müller, Bremen Outlook In the light of the above-mentioned points, we expect our earnings to only moderately grow in 2013, however the growth in profits should accelerate somewhat in In this respect we assume risk costs in 2013 will amount to the above-average figures compared to recent years. The expected results will allow us to continue to both strengthen the capital base of the Deutsche Factoring Bank and to meet the capital requirements stipulated under Basle III, as well as to ensure a reasonable dividend for our shareholders. We wish to express our sincere thanks to the members of the Supervisory Board for their professional advice and support. We would also like to thank our business partners and, in par ticular, our clients for placing their trust in our organisation. Bremen, 28 March 2013 Deutsche Factoring Gesellschaft mit beschränkter Haftung Supplementary report To date, there have been no incidents of special significance in the current operating year. Hendrik Harms Uwe Müller We would like to take this opportunity to thank all members of our staff for their continued valuable efforts which have made a decisive contribution to the success of our Bank. Furthermore, we would like to extend our thanks to the staff council for their constructive cooperation. 12

13 Report of the Supervisory Board During the business year 2012, the Supervisory Board of the Deutsche Factoring Bank was informed on a continuous basis on the business development, as well as on all important business matters. Regular written and verbal reports served to provide the Supervisory Board with detailed information on the business development throughout the year. There were three Supervisory Board meetings during the 2012 business year. In addition to such meetings, a meeting is held on a regular basis between the Chairman of the Supervisory Board and the Management in those quarterly periods in which no regular Supervisory Board meeting takes place. The external auditor and the head of internal auditing also attend these meetings. These meetings are, in particular, dedicated to the monitoring of the Bank s accounting process, the effectiveness of the internal control system, the internal auditing system as well as the financial statements. Such meetings took place twice in The financial statements for the year ending 31 December 2012, prepared by the Management, were audited by BDO AG Wirtschaftsprüfungsgesellschaft, and were certified without reservations. The audit took both the bookkeeping and Management Report for the Business Year into account. The Supervisory Board was informed of the results of the audit, and gave its approval after conducting its own examination of the financial statements and Management Report for the Business Year. The Supervisory Board approved the financial statements for the year 2012 at its meeting of 17 May 2013, and this was recorded in accordance with 11, sec. 3 of the Articles of Partnership. It was proposed to pay a dividend of EUR 10,948, to the shareholders from the annual net profit of EUR 24,197, for the year 2012, and to add the remaining amount of EUR 13,248, to the revenue reserves. Mr Jörg Wohlers retired from the Supervisory Board on 7 May 2012, and was succeeded by Mr Frank Brockmann, Member of the Management Board of the Hamburger Sparkasse AG. The Management Spokesman of the Deutsche Factoring Bank, Dr Karl-Joachim Lubitz, passed away suddenly and unexpectedly in February 2012, and the Supervisory Board appointed Mr Uwe Müller as Managing Director as of 1 September Managing Director Hendrik Harms was appointed Management Spokesman at the meeting of the Supervisory Board on 19 December Bremen, 17 May 2013 The Supervisory Board: Dr Max Häring (Chairman of the Supervisory Board) Retired Chairman of the Management Board, Landesbank Saar, Saarbrücken Dr Harald Vogelsang (Deputy Chairman of the Supervisory Board) Spokesman of the Management Board, Hamburger Sparkasse AG and HASPA Finanzholding, Hamburg Frank Brockmann (as of 8 May 2012) Member of the Management Board Hamburger Sparkasse AG, Hamburg Dr Guido Brune Member of the Management Board, Bremer Landesbank Kreditanstalt Oldenburg Girozentrale, Bremen Jan-Christian Dreesen Member of the Management Board, Bayerische Landesbank, Munich Eckhard Forst Member of the Management Board, Norddeutsche Landesbank Girozentrale, Hanover/Braunschweig/Magdeburg/Schwerin Dr Stephan-Andreas Kaulvers Chairman of the Management Board, Bremer Landesbank Kreditanstalt Oldenburg Girozentrale, Bremen Hans Jürgen Kulartz Member of the Management Board, Landesbank Berlin AG, Berlin Dr Tim Nesemann Chairman of the Management Board Sparkasse Bremen AG, Bremen The Supervisory Board of the Deutsche Factoring Bank Dr Max Häring (Chairman) Jörg Wohlers (up to 7 May 2012) Member of the Management Board, Hamburger Sparkasse AG, Hamburg 13

14 Deutsche Factoring Bank Assets EUR EUR EUR Cash reserves a) Cash in hand 8, b) Balances at central banks of which at Deutsche Bundesbank EUR 2,943, (previous year: EUR 4,776,000) 2,943, ,776 2,951, , Amounts payable from banks a) daily 28,740, ,711 b) other demands 2,192, Amounts due from non-bank customers of which secured by mortgages EUR 0.00 (previous year: EUR 0.00) municipal loans EUR 0.00 (previous year: EUR 0.00) 04 Shareholdings of which in banks EUR 0.00 (previous year: EUR 0.00) in financial services institutes EUR 0.00 (previous year: EUR 0.00) 1,020,100, ,952 2, Intangible assets 111, Tangible fixed assets 1,832, , Other assets 94, Assets arising from overfunding of pension obligations 199, Total assets 1,056,225, ,465 14

15 Balance Sheet Liabilities Amounts due to banks EUR EUR EUR 000 a) Payable on demand 17,084, ,938 b) With agreed terms or periods of notice 597,223, , Other amounts due to non-bank customers 614,308, ,552 a) Payable on demand 104,754, ,100 b) With agreed terms or periods of notice 210,164, , ,919, , Other liabilities 1,181, , Deferred income 2,421, , Provisions a) Provisions for pensions and similar obligations b) Provisions for taxes 1,886 c) Other provisions 4,192, ,977 4,192, , Subordinated liabilities 16,837, , Equity a) Subscribed capital 5,752, ,752 b) Capital reserves 1,533, ,534 c) Revenue reserves ca) other revenue reserves 84,131, ,883 d) Balance sheet profit 10,948, , ,366, ,369 Total liabilities 1,056,225, , Contingent liabilities Liabilities arising from guarantees 1, Other obligations Irrevocable credit commitments 9,723, ,375 15

16 Deutsche Factoring Bank Expenses EUR EUR EUR EUR Interest payments 8,659, , Expenses for commissions 2,278, , General administration costs a) Personnel costs aa) Wages and salaries 6,823, ,595 ab) Social security contributions and contributions towards pensions and other benefits of which EUR 201, for pensions (previous year: EUR 166,000) 1,203, ,135 8,027, ,730 b) Other administration costs 3,394, ,063 11,421, , Depreciation of intangibles and tangible fixed assets 192, Other operating expenses 219, Depreciation and discounts on accounts receivable and provisions for possible loan losses 2,427, , Taxes on corporate ncome 3,763, , Other taxes, if not already included under item 5 31, Net income for the year 24,197, ,200 Total expenses 53,191, ,895 16

17 Income Statement Income EUR EUR Interest from loans and money market transactions 49,603, , Income from commissions 2,968, , Other operating income 619, Total income 53,191, , Net income for the year 24,197, , Transfers to other reserves 13,248, , Balance sheet profit for the year 10,948, ,200 17

18 Notes to the Financial Statements GENERAL The financial statements for the business year 2012 have been drawn up in accordance with German Commercial Code ( Handelsgesetzbuch HGB) regulations, insofar as they are applicable for banks, as well as German Accounting Ordinance for Banks (RechKredV). A statement of account form was chosen for the presentation of the income statement. ACOUNTING POLICIES AND VALUATION METHODS OF THE BALANCE SHEET The methods of valuation and preparation of the balance sheet remained unchanged apart from the following exception: the difference resulting from asset compensation does not appear under miscellaneous assets, but instead under a separate balance sheet item. Cash reserves as well as amounts due from banks are shown at their nominal value. All receivables are shown as nominal values. Appropriate bad debt provisions were made for all recognisable risks in the credit business. Latent credit risks (including the risk of the possibility of there being no legal claim to a receivable) were taken into consideration by a general bad-debt provision. Correct compensation of pension plan assets with corresponding pension obligations at 31 December 2012 resulted in an excess of pension plan assets over pension liabilities. Liabilities are shown as those amounts which have to be repaid. The other provisions are those amounts, based on a reasonable commercial assessment, necessary to settle obligations. Provisions for pensions are calculated in accordance with actuarial principles. The projected unit credit method, in accordance with International Accounting Standards, was used as a basis for determining the valuation under the terms stipulated by BilMoG (German Accounting Law Modernisation Act). An interest rate of 5.05% was used as a basis up to 31 December Future pension increases of 1.5% or 1% were assumed. Receivables and liabilities in other currencies were translated into euro using the average exchange rate at the balance sheet date. As contractually agreed, losses, or income, from currency translation were either included in the balance sheet as amounts due from, or due to, clients. Use was made of balancing possibilities in the profit and loss account in accordance with 340f, sec. 3 HGB. Participating interests and shares in affiliated companies were valued at their acquisition costs. With the exception of real estate as well as works of art acquired in 1985, intangible assets as well as fixed assets were valued by taking the cost of acquisition and deducting linearly from this the permissible tax rules rates for the forecast period of utili sation. Low value assets up to EUR 410 are written off in full in accordance with tax regulations 6, sec. 2a EstG (German Income Tax Act). Other assets were valued at their nominal values. 18

19 EXPLANATORY NOTES PERTAINING TO THE BALANCE SHEET AND income statement (in EUR 000) Terms of balance sheet items ( 9 RechKredV) Assets Amounts due from clients Term to maturity up to three months 1,013, ,252 more than three months up to one year 6,821 18,700 Liabilities Obligations to banks Term to maturity up to three months 597, ,552 Other obligations to clients Term to maturity up to three months 210, ,135 Fixed assets The development of the fixed assets is shown in the attachment to these notes to the financial statements. Excess of pension plan assets over pension liabilities At the balance sheet date, the excess of pension plan assets over pension liabilities amounted to EUR 200,000, compared to EUR 234,000 in the previous year. The pension plan assets amounting to EUR 764,000, compared to the 2011 value of EUR 758,000, were offset against pension obligations amounting to EUR 564,000 (the previous year s value was EUR 524,000). Explanatory notes on balance sheet items relating to companies linked by virtue of participating interests ( 3 RechKredV) Amounts due from banks 26,620 1,937 of which from shareholders 25,947 1,890 Obligations to banks 156, ,883 of which to shareholders 71, ,179 Explanatory notes on balance sheet items relating to affiliated companies ( 3 RechKredV) Miscellaneous liabilities 2 37 Details of currency items The total sum of currency assets 28,819 29,860 The total sum of currency liabilities 28,733 29,807 19

20 Provisions These consist mainly of provisions for financial incentive payments, commissions and legal costs. Subordinated liabilities The individual subordinated liabilities are as follows: Amount Interest rate Maturity EUR 000 % p. a. 1, July , September , June June , June , June 2017 The creditors are three banks and two insurance companies. The conditions of the subordination are in accordance with the regulation stipulated under 10, sec. 5a KWG. A reorganisation, or conversion, into another type of debt is not planned. Furthermore, the creditors are not entitled to give notice before the date of maturity. The subordinated liabilities incurred expenses (i.e. interest) amounting to EUR 800,000 (the previous year s figure was also 800,000). Taxes on income and profit All taxes on corporate income attributable to ordinary business activities. MISCELLANEOUS Other financial obligations Financial obligations arising from service contracts etc. amount to some EUR 2,994,000. Loss-free valuation of the interest ledger A periodic-based approach is used to determine the loss-free valuation of the interest ledger. Taking into account risk and administration costs, valuation was determined on the basis of the results for a one-year period. This is due to the fact that the purchased receivables have, on average, a short 41-day maturity and are refinanced with matching maturities. At the balance sheet date, there was, in total, a substantial surplus. Management The unlimited partner, Deutsche Factoring Gesellschaft mit beschränkter Haftung, Bremen, with a subscribed capital of EUR 58,000 is responsible for the management, and is represented by its Managing Directors: Hendrik Harms, Bremen (Spokesman since 19 December 2012) Uwe Müller, Bremen (as of 1 September 2012) Dr Karl-Joachim Lubitz, Bremen (up to 5 February 2012) The Managing Directors are engaged on a full-time basis for the Deutsche Factoring Bank. In accordance with 286, sec. 4 HGB, no details will be given pertaining to the remunerations paid to the Managing Directors. 20

21 Investments in affiliated companies The Bank is a 100% shareholder of Deutsche Verkehrs-Factoring Service GmbH, Bremen. The share capital of Deutsche Verkehrs- Factoring Service GmbH is EUR 25,000 which corresponds to the equity at 31 December A balanced result was recorded in the business year Currently, this company is not involved in any operational business. The investment has been written off. As a general rule, the Bank is obliged to prepare consolidated financial statements. However, as there is only one participating interest, and this is relatively small, it is not necessary, under 296, sec. 2 HGB, to prepare consolidated financial statements. Staff The average number of persons employed over the year was: Female Part-time female Male Total Auditors fee The auditors fee for the business year amounted to EUR 85,000. This fee is related exclusively to the auditing services. Remunerations of the Supervisory Board Remunerations amounting to EUR 167,000 were paid to members of the Supervisory Board. 21

22 Development of fixed assets (all amounts are given in EUR 000) Purchase/ manufacturing cost Additions Changes Disposals Cumulative depreciation Residual book value Depreciation for the business year Intangible assets Tangible fixed assets Land and buildings 2, ,243 1, Fittings and fixtures Leasehold improvements Furniture and equipment 2, , , ,845 1, Financial assets Affiliates Total 5, ,136 2,850 1, The tangible fixed assets are solely used for business activities. Bremen, 28 March 2013 Deutsche Factoring Gesellschaft mit beschränkter Haftung Hendrik Harms Uwe Müller 22

23 AUDITORS REPORT We have audited the annual financial statements, comprising the balance sheet, income statement and notes to the financial statements, together with the accounting system and the Management Report for the business year of DEUTSCHE FACTORING BANK Deutsche Factoring GmbH & Co. KG, Bremen, for the business year from 1 January 2012 to 31 December In accordance with German commercial law and the supplementary pro visions in the Articles of Partnership, the maintenance of the books and records and the preparation of the annual financial statements and Management Report for the business year, are the responsibility of the Bank s Management. On the basis of our audit, it is our responsibility to appraise the annual financial statements, taking into account both the accounting system and the Management Report for the business year. We have conducted our audit of the annual financial statements in accordance with 317 HGB and the generally accepted standards for the auditing of financial statements stipulated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany). Those standards require the audit to be planned and performed in such a manner that any inaccuracies and violations materially affecting the presentation of the assets, the financial position and the profitability as described in the annual financial statements, drawn up in accordance with (German) principles of proper accounting, as well as the Management Report for the business year, are detected with a reasonable degree of certainty. Knowledge of the business activities and the economic and legal environment of the company as well as expectations of possible errors are taken into account in the determination of audit procedures. The effectiveness of the internal controlling system relating to the rendering of accounts and the evidence supporting the disclosures in the books and records, and in the annual financial statements and Management Report for the business year, was examined primarily on a random spot-check basis within the framework of the audit. The audit includes an assessment of both the accounting principles applied and significant estimates made by the legal representatives as well as the evaluation of the overall presentation of the annual financial statements and Management Report for the business year. We believe that our audit provides a reasonably sound basis for our assessment. Our audit did not lead to any reservations. In our opinion, our audit showed that the annual financial statements are in accordance with both the legal regulations and the supplementary provisions of the Articles of Partnership and take into account (German) principles of proper accounting. The financial statements give a true and fair view of the assets, the financial position and profitability of the company. The Management Report for the business year is consistent with the finan cial statements and, generally, provides an accurate re presentation of the position of the company as well as the opportunities and risks involved in future developments. Bremen, 28 March 2013 BDO AG Wirtschaftsprüfungsgesellschaft Dr Zemke Auditor ppa. Dr Lütke-Uhlenbrock Auditor Market data Factors Chain International, Amsterdam, Deutscher Factoring-Verband e. V., Berlin Layout and design moskito, Bremen Translation G. Parker, Bremen Printing Zertani GmbH & Co. Die Druckerei KG, Bremen 23

24 DEUTSCHE FACTORING BANK Deutsche Factoring GmbH & Co. KG Langenstraße Bremen, Germany PO Box Bremen, Germany Telephone Fax GB-E-06-13