Toyota Motor Finance (Netherlands) B.V. ( TMF or the Company )

Transcription

1 29 November Toyota Motor Finance (Netherlands) B.V. ( TMF or the Company ) Half-Yearly Financial Report for the six months ended TMF was incorporated as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) under the laws of the Netherlands on 3 August 1987 and registered in the Trade Register of the Dutch Chamber of Commerce under number TMF is a wholly-owned subsidiary of Toyota Financial Services Corporation ( TFS ), which is a wholly-owned subsidiary of Toyota Motor Corporation ( TMC ). TMF presents its half-yearly financial report for the six months ended. 1. Management Report (A) Summary of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements The principal activity of the Company is to act as a group finance company for some of TMC s consolidated subsidiaries. The Company raises funds by issuing bonds and notes in the international capital markets and from other sources and on-lends to other Toyota companies. The Company also issues guarantees for debt issuances of certain other Toyota companies. In addition, the Company generates income from other investments and deposits incidental to its primary funding activities. As a group finance company, the Company is dependent on the performance of the subsidiaries and affiliates of TMC and TFS to which it grants loans. At the balance sheet date, a total equivalent amount of 6.31 billion has been lent to group companies, compared to 6.29 billion at 31 March. Other assets comprise bank deposits, derivative financial instruments, collateral deposits and various less significant assets. In the six months ended, the results were affected by profits arising from changes in the fair value of derivatives caused by changes in interest rates. Financing operations reported a net profit of 6.6 million for the six months ended, compared to a net loss of 6.4 million for the six months ended The increase in net profit resulted mainly from profits arising from changes in the fair value of derivatives in the six months ended, compared to losses on the fair value of derivatives in the six months ended Current assets decreased by 5.3% from 31 March to. This decrease is due mainly to a decrease in loans to group companies due to mature within one year and a decrease in derivative assets.

2 Current liabilities increased by 8.0% from 31 March to, due mainly to increases in derivative liabilities and collateral received. The Company maintains an Euro Medium Term Note ( EMTN ) programme together with its affiliates Toyota Credit Canada Inc., Toyota Finance Australia Limited and Toyota Motor Credit Corporation (the Company and such affiliates, the EMTN Issuers ), providing for the issuance of debt securities in the international capital markets. In September, the EMTN Issuers renewed the EMTN programme for a one year period. The maximum aggregate principal amount of debt securities that may be issued by the EMTN Issuers and outstanding under the EMTN programme at any time is 50 billion, or the equivalent in other currencies, of which 26.9 billion was available for issuance at. Bilateral 364 Day, Three Year and Five Year Revolving Credit Agreements On 24 March, the Company entered into a 175 million 364 day bilateral bank credit facility pursuant to a bilateral 364 Day Revolving Credit Agreement, a 175 million three year bilateral bank credit facility pursuant to a bilateral Three Year Revolving Credit Agreement and a 150 million five year bilateral bank credit facility pursuant to a bilateral Five Year Revolving Credit Agreement. The ability to make drawdowns under the bilateral 364 Day Revolving Credit Agreement, the bilateral Three Year Revolving Credit Agreement and the bilateral Five Year Revolving Credit Agreement is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross default provisions and limitations on consolidations, mergers and sales of assets. The bilateral 364 Day Revolving Credit Agreement, the bilateral Three Year Revolving Credit Agreement and the bilateral Five Year Revolving Credit Agreement may be used for general corporate purposes and were not drawn upon as of 29 November. The 364 Day Revolving Credit Agreement, the Three Year Revolving Credit Agreement and the Five Year Revolving Credit Agreement, each dated as of 30 March 2015, terminated (in the case of the 364 Day Revolving Credit Agreement) or were terminated (in the case of the Three Year Revolving Credit Agreement and the Five Year Revolving Credit Agreement) on 28 March. Bilateral 364 Day Facility Agreement On 6 July, the Company entered into a 200 million 364 day bilateral bank credit facility pursuant to a bilateral 364 day facility agreement. The bilateral 364 day facility agreement was not drawn upon as of 29 November. 364 Day, Three Year and Five Year Credit Agreements On 15 November, the Company and other Toyota affiliates entered into a US$ 5.0 billion 364 day syndicated bank credit facility pursuant to a 364 Day Credit Agreement, a US$ 5.0 billion three year syndicated bank credit facility pursuant to a Three Year Credit Agreement and a US$ 5.0 billion five year syndicated bank credit facility pursuant to a Five Year Credit Agreement. The ability to make drawdowns under the 364 Day Credit Agreement, the Three Year Credit Agreement and the Five Year Credit Agreement is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross default Page 2

3 provisions and limitations on consolidations, mergers and sales of assets. The 364 Day Credit Agreement, the Three Year Credit Agreement and the Five Year Credit Agreement may be used for general corporate purposes and were not drawn upon as of 29 November. The 364 Day Credit Agreement, the Three Year Credit Agreement and the Five Year Credit Agreement, each dated as of 18 November 2015, were terminated on 15 November. It is expected that the nature of the activities of the Company will remain unchanged during the remaining six months of the financial year. Future financial performance is expected to be profitable and will depend largely on the net interest margin earned on loans and investments, funded by existing and possible further issues of medium-term notes, commercial paper and funds from other sources. (B) Risks and uncertainties for the remaining six months of the financial year Unless otherwise specified in this section, TFS group means TFS and its subsidiaries and affiliates and Toyota means TMC and its consolidated subsidiaries. The TFS group (including the Company) may be exposed to certain risks and uncertainties, summarised below, that could have a material adverse impact directly or indirectly on its financial condition and results of operations. The Company s role as a financing vehicle exposes it to a variety of financial risks that include credit risk, liquidity risk, interest rate risk and foreign currency exchange rate risk. The TFS group s business, through its financial subsidiaries (including the Company) and affiliates is substantially dependent upon the sale of Toyota and Lexus vehicles and its ability to offer competitive financing. Factors in relation to the sale of such vehicles which would impact the level of financing volume and the TFS group s results of operations, include changes resulting from governmental action, changes in consumer demand, recalls, the actual or perceived quality, safety or reliability of Toyota and Lexus vehicles, changes in economic conditions, increased competition, changes in pricing of imported units due to currency fluctuations or other reasons, a significant and sustained increase in fuel prices, decreased or delayed vehicle production due to natural disasters, supply chain interruptions or other events and changes in the level of sponsored subvention programmes. For the Company, a decrease in the level of sales will have primarily a negative impact on the level of the Company s financing volume. The Company has no control over how the other Toyota companies to which the Company on-lends funds source their financing. The Company competes with other providers of finance to such Toyota companies and any increases in competitive pressures, such as cost of funding, could have an adverse impact on the Company s financing volume, revenues and margins. Further, the financial condition of the Toyota companies to which the Company on-lends funds or provides guarantees in respect of their borrowings, may have an impact on the financial services the Company provides to such Toyota companies. Further risks include changes to the senior long-term debt credit ratings of TMC and certain of its affiliates (including the Company) which may result in higher borrowing Page 3

4 costs as well as reduced access to capital markets. The failure of any of the financial institutions and other counterparties in the finance industry to perform their contractual obligations may affect the Company s liquidity, financial condition and results of operations. Liquidity risk arising from the inability of the TFS group (including the Company) to maintain the capacity to fund assets and repay liabilities in a timely and cost-effective manner would have a negative impact on the Company s ability to refinance maturing debt and fund new asset growth. Changes in market interest rates, foreign currency exchange rates and other relevant market parameters or prices cause volatility in the TFS group s (including the Company s) financial condition and/or results of operations and/or cash flow and the value of the investment portfolio of the TFS group could decline. Inadequate or failed processes, systems or internal controls, the failure to perfect collateral, theft, fraud, cybersecurity breaches, earthquakes, other natural disasters or other catastrophes could have an adverse impact on the Company s financial condition and results of operations. The worldwide automotive market is highly competitive and volatile and the worldwide financial services industry is also highly competitive. Toyota s future success depends on its ability to offer new, innovative and competitively priced products that meet customer demand on a timely basis. In addition, changes to the laws, regulations or to the policies of governments (federal, state or local) of the Netherlands or of any other national governments (federal, state or local) of any other jurisdiction in which the Company conducts its business or international organisations (and the actions flowing from such changes to policies) may have a negative impact on the Company s business or require significant expenditure by the Company, or significant changes to its processes and procedures, to ensure compliance with those laws, regulations or policies so that it can effectively carry on its business. Changes to the application or interpretation of tax laws may adversely impact the Company s financial condition and results of operations. Toyota may also become subject to various legal proceedings. The Company s principal risks and uncertainties for the remaining six months of the financial year have not changed since the issuance of the Company s Annual Financial Report. The detailed discussion of these risks and uncertainties and the Company s objectives, policies and processes for managing these risks and uncertainties were disclosed in the Management Report, as well as Note 31 in the Notes to the Financial Statements, in the Annual Financial Report of the Company for the financial year ended 31 March. Page 4

5 2. Condensed Interim Financial Statements for the six month-period ended Condensed Interim Financial Statements for the six month-period ended

6 Contents Condensed interim income statement and statement of comprehensive income...3 Condensed interim statement of financial position...4 Condensed interim statement of changes in equity...5 Condensed interim statement of cash f!ow...6 Notes to the condensed interim financial statements General information...,? 2. Basis of preparation and significant accounting poiicies Segment information Income taxes,...,,,...,...,...,,,,,,,..., Dividends...^ 6. Derivative financial instruments...,...,,,,.,...^ 7. Borrowings Related party transactions...,.,.,,...,,...,...,,,,...,,.,.,...,.., Contingent liabilities Financial assets and liabilities at fair value in the condensed interim statement of financial position Share capitai Other information...12 BOARD OF MANAGEMENT Yoriyuki Hirayama Katsunobu Katayama

7 Condensed interim income statement and statement of comprehensive income Note Unaudited Six monthperiod ended Unaudited Six monthperiod ended 2015 Interest income Guarantee fee income 40,205 1,240 44,545 1,224 Revenue 41,445 45,769 interest expense Fee expenses (31,159) (3,506) (34,881) (3,590) Cost of funding (34,665) (38,471) Gross profit 6,780 7,298 Administration expenses Net gains on financial instruments Dividend income (2.096) 3, (2,069) (13,303) 29 Profit / (loss) before lax Taxation 8,498 (1,918) (8,045) 1,636 Profit / (loss) for the period 6,580 (6,409) Other comprehensive income for the period, net of tax: Fair value gains / (losses) on available for sale investments 57 (141) Total comprehensive income for the period 6,637 (6,550) Attributable to; Owners of the parent 6,637 (6,550) The notes on pages 7 to 12 are an integral part of these condensed interim financial statements

8 TOYOTA MOTOR FINANCE (NETHERLANDS) B,V, Condensed interim statement of financial position Note Unaudited Audited 31 March Assets Current assets Loans to related companies Other receivables Current tax assets Derivative financial instruments Cash and cash equivalents 2,801, , ,864 3,021 2,906, , ,611 2,071 Total current assets 2,996,206 3,164,284 Non-current assets Loans to related companies Derivative financial instruments Available-for-sale investment- related company Property, plant and equipment 3,509, ,384 1,005 3,385, , Total non-current assets 3,880, ,608 Liabilities Current liabilities Borrowings Derivative financial instruments Financial guarantee iiabiiity Current tax liabilities Other liabiiitses and accrued expenses 7 6 2, ,672 2,211,178 64,084 4, ,028 Total current liabilities 2.720,433 2,519,162 Net current assets / (liabilities) 275, ,122 Non-current liabilities Borrowings Derivative financial instruments Deferred tax liabilities 7 6 3,905,279 77,404 9, , ,843 8,123 Totai non-current iiabilities 3,991, ,428 Net assets 164, ,302 Shareholder's equity Equity attributable to owners of the parent Share capital Retained earnings Fair value reserve , , Total shareholder's equity 164, ,302 The notes on pages 7 to 12 are an integral part of these condensed interim financial statements

9 Condensed interim statement of changes in equity Share capital Retained earnings Fair value reserve Total Balance at 31 March , ,717 Fair value gains / (losses) (141) (141) Profit / (loss) for the period (6,409) (6,409) Total comprehensive income (6,409) (141) (6,550) Balance at 2015 (unaudited) , ,167 Share capital Retained earnings Fair value reserve Total Balance at 31 March , ,302 Fair value gains / (losses) Profit / (loss) for the period 6,580 6,580 Total comprehensive income 6, ,637 Balance at (unaudited) , ,939 The notes on pages 7 to 12 are an integral part of these condensed interim financial statements

10 Condensed interim statement of cash flow Unaudited Six monthperiod ended Unaudited Six mcmthperiod ended Cash flow from operating activities Cash generated from / (used in) operations 64,274 63,148 Interest received Interest paid Tax paid 41,993 (29,055) (1,648) (36,174) : (1,303) Net cash generated from / (used in) operating activities 75,564 72,106 Cash flow from investing activities Purchase of other financial assets Dividends received 45 (2) 29 Net cash generated from / (used In) investing activities Cash ffow from financing activities Proceeds from borrowings Repayment of borrowengs 9,573,995 (9.647,430) 13,231,183 (13,377,251) Net cash generated from / (used in) financing activities (73,435) (146,068) Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Exchange gains / (losses) on cash and cash equivalents 2,174 2,071 (1,224) (73,935) 78,089 : (1,667) Cash and cash equivalents at 3,021 2,487 The notes on pages 7 to 12 are an integral part of these condensed interim financial statements

11 Notes to the condensed interim financial statements 1. General information Toyota Motor Finance (Netheriands) B.V. ('the Company') is a wholly-owned subsidiary oftoyofa Financial Services Corporation, The principal activity of the Company is to act as a group finance company. The Company raises funds by issuing bonds and notes in the international capital markets and from other sources and on-lends them to other Toyota companies. The Company also issues guarantees for debt issuances of other Toyota companies. The Company is Incorporated and domiciled in the Netherlands. The address of its registered office is World Trade Center, Tower H, Level 10, Zuidpiein 90, 1077 XV Amsterdam, the Netherlands. The ultimate holding company and controlling party and the largest undertaking into which the Company's results are consolidated is Toyota Motor Corporation, which is incorporated in Japan. The smallest undertaking into which the Company's results are consoiidated is Toyota Financial Services Corporation, which is incorporated in Japan. The latest financial statements oftoyota Motor Corporation can be obtained from hup://www,tovo{a-ciiobsl,cqm. This report does not constitute the Company's statutory accounts and has not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information, The audited financial statements of the Company for the year ended 31 March are fi!ed with the Chamber of Commerce In Amsterdam, and the independent auditor's report is unqualified. The condensed interim financial statements were approved for issue on 28 November. 2. Basis of preparation and significant accounting policies These condensed interim financial statements for the six month-period ended have been prepared in accordance with [AS 34, 'Interim financial reporting'. The condensed interim financial statements should be read in conjunction with the annuai financial statements for the year ended 31 March, which have been prepared in accordance with IFRS. The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied in the annual financial statements for the year ended 31 March. The corporate income tax rate for the calendar year is 25% (calendar year 2015; 25%). The Company has no subsidiary, joint venture or associated company investments and is therefore not required to produce condensed consolidated interim financial statements. Critical accounting estimates and judgements The notes to the condensed interim finandai statements set out areas where significant judgement, complex calculations or assumptions have been used to arrive at the financial statements presented. Areas of significant Judgement or complexity wil! include the fair valuation of financial instruments, loans and fair value of guarantees. Fair value estimation of financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses a variety of methods and market assumptions that are based on market conditions existing at each balance sheet date. Other techniques, such as estimated discounted cash flows, are used to determine the fair value for the remaining financial instruments. The fair value of interest rate swaps, cross currency swaps and forward foreign exchange contracts is calculated as the present value of the estimated future cash flows.

12 The nominal values less impairment provision of other receivables and payables, normally maturing within 30 days, are assumed to approximate their fair vaiues. The fair value of financial iiabilities for desdosure purposes is estimated by discounting the future contractual cash fiows at the current market Interest rate that is available to the Company for similar financial instruments, Risk management The Board of Management utilises a risk management policy and receives regular reports from the business to enable prompt identification of financial risks so that appropriate actions may be taken. The Company employs written policies and procedures that set out specific guidelines to manage foreign exchange risk, interest rate risk, credit risk and the use of financial instruments to manage these risks. The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the group's annual financial statements as at 31 March. There have been no changes in the risk management department or in any risk management policies since the year-end, 3. Segment information The Company consists of a single operating reporting segment as defined under IFRS 8. The single operating segment is reported in a manner consistent with the internal reporting provided to management. Income generation is principally from lending to related companies, with other income generation from guarantees of related companies and from other investment and deposit income incidental to the primary funding activities. Income can be categorized geographically as follows: income by area Six monthperiod ended Sixmonthperiod ended 2015 Russia (group) UK (group) Norway (group) Other countries (group) Interest received from others 12, ,425 12, ,439 12,482 5,227 13, Total, 41,445 45,769 Segments are not shown by customer as the income, apart from third-party interest, is derived from within the group of companies which is controlled by Toyota Motor Corporation. 4. Income taxes The income tax expense for the period is based on the estimated average annual effective income tax rate of 25% (six month-period ended 2015: 25%). 5. Dividends No dividends were paid or proposed in the current or comparative periods. 6. Derivative financial instruments The derivative financial instruments are categorised as held for trading and are carried at fair value through profit or ioss. The fair values of derivative contracts are shown in the table below. Additionai disclosures are set out in the accounting policies relating to risk management,

13 Derivative financial instruments - Current assets 31 March Interest swaps Cross-currency swaps Forward foreign currency contracts 30 76,426 2, ,602 5 Total current assets 78, ,611 Derivative financial instruments - Non-current assets 31 March interest swaps Cross-currency swaps , ,057 Total non-current assets 370, ,603 Total derivative financial instruments - assets 449, ,214 Derivative financial instruments - Current liabilities 31 IVIarch Interest swaps Cross-currency swaps Forward foreign currency contracts 1, ,507 1,818 2,175 55,023 6,886 Total current liabilities 164,843 64,084 Derivative financial instruments - Non-current liabilities 31 March Interest swaps Cross-currency swaps 7,861 69,543 9, ,471 Total non-current liabilities 77, ,843 Total derivative financial instruments - liabilities 242, ,927 Derivative assets and liabilities are recognised at fair value through the Condensed interim income statement and statement of comprehensive income. Up and until the finanda! year 2015 derivative assets and liabilities were shown as short term in the Statement of financial position irrespective of when the contracts matured. Current interpretation of IAS 1 has led the Company to decide to show derivative assets and!iabi!ities as current or non-current. Derivative assets of 370,384,000 and derivative liabilities of 77,404,000 for periods to September 30 are shown as non-current whereas iast year the amounts would have been included in the current-assets and current-liabllities,

14 In accordance with IAS 39, "Finandai instruments: Recognition and measurement", the Company has reviewed al! contracts for embedded derivatives and found there are none. Derivative assets and liabilities are recognised at fair value through the Statement of comprehensive income. The majority of derivative contracts have collaterai agreements attached. Therefore, the debit/credlt valuation adjustment is not considered material and is not considered in determining the fair value of derivative assets and iiabiiitles. 7. Borrowings The Company's principal borrowings are from a short-term Euro commercial paper programme, re!ated company borrowings, bank borrowings and from a long-term Euro medium term note programme. Euro commercial paper is a short-term debt instrument normally issued at a discount and repaid at face value. The Company can issue commerciai paper with maturities between 1 day and 364 days. Euro commerciai paper, related company loans, bank borrowings and plain vanilla Euro medium term notes are held at amortised cost, Borrowings March Current Noncurrent Current Noncurrent Euro commercial paper 1,247, ,312 Medium term notes Loans group companies Loans bank , ,759,809 1,145, , , ,150 3,040, ,764 Total 2,236,209 3,905,279 2,211,178 3,899,462 Interest rates on group and bank borrowings are floating and based on the relevant three months Libor plus spread. The interest range for group and bank borrowings on was between 0.99% and 1.35% per annum, 8. Related party transactions The Company Is a who!ly-owned subsidiary of Toyota Financial Services Corporation (TFSC), a company incorporated in Japan. The ultimate holding company and controlling party is Toyota Motor Corporation (TMC), a company incorporated in Japan. Transactions with parent companies: TMC provides credit support to TFSC in respect of the Company's debt issuance in the capita! markets and related party guarantees. TFSC provides credit support to the Company in respect of debt issuance in the capital markets and related party guarantees, 10

15 Loans to related companies: The Company lends to other TMC subsidiaries on both a fixed rate and a floating rate basis. A!l fixed rate lending Is swapped into floating rate, three month basis in line with the Company's risk management policy, Amounts receivable from related parties are not impaired. The loans to related companies have increased by 0.31% from 31 March to ( 6,291,307,000 at 31 March, 6,310,904,000 at ). Loans from related companies: The Company has borrowed 57,212,000 at ( 544,710,000 at 31 March ) from related companies. Cost of funding includes interest expense on related party borrowing from related companies of 2.026, Contingent liabilities The Company issues guarantees to debt holders of other TMC subsidiaries. The Company receives guarantee fees from TMC subsidiaries In respect of the guaranteed debt in issuance. No provisions have been required against contingent liabilities in either the current or prior flsca! years. The nature of the guarantees is that they are unconditional guarantees issued to the debt holders, If for any reason the issuer is unable to pay as and when the debt falls due, the Company may be required to repay the debt on behalf of the issuer. The guarantees are for bills of exchange, commercjai paper, medium term notes and bank loans. The contingent liability for the guarantees at was 1,489,596,000 ( 1,478,952,000 at 31 March ). 10. Financial assets and liabilities at fair value in the condensed interim statement of financial position The tabie below analyses financial instruments carried at fairvaiue, by the valuation method. The different levels have been defined as foliows: Leve! 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities; Levei 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectiy (that is, derived from prices); Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservabie inputs). Level 2 trading and hedging derivatives comprise forward exchange contracts and interest rate swaps. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair vsiiued using forward interest rates from observabie yield curves. Level 2 debt investments are fair valued using a discounted cash flow approach, which discounts the contractual cash flows using discount rates derived from observable market prices of quoted debt instruments of the counterparties. Fair value is obtained by calculating the amount at which an asset or iiabnity could be exchanged in an arm's length transaction between informed and wiiling parties other than in a forced liquidation. 11

16 TOYOTA MOTOR FINANCE (NETHERLANDS) B.V, 31 March Level Level Level Total Level 1 Level 2 Level 3 Total Financial assets Investment in affiliated company 1,005 1, Derivative financial instruments 449, , ,214 Guarantee fee receivable 4,709 4,709 4,358 4,358 Financial liabilities Derivative financial instruments , ,927 Related party guarantee 4,709 4,709 4,358 4,358 There have been no reclassifications in the fair value hierarchy at as compared to 31 March, There were no transfers between the levels and there were no changes in valuation techniques during the period. 11. Share capital Share capital 31 March >000 Authorised 10,000 (2015:10,000) ordinary shares of Euro 454 each ,540 Issued and fully paid up 2,000 (2015: 2,000) ordinary shares of Euro 454 each % of the share capita! of the Company is owned by Toyota Financial Services Corporation (see note 1). Other information Events occurring after the reporting period There are no events after the reporting period to disclose. 12

17 3. Responsibility Statement The members of the Company s Board of Management confirm that to the best of their knowledge: (a) (b) the condensed interim financial statements for the six months ended, which have been prepared in accordance with IAS 34 as adopted by the European Union give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company as required by DTR 4.2.4; and the interim management report includes a fair review of the information required by DTR LON /