|financial report 2007
kbc international finance n.v.
curaÇao, netherlands antilles
Directors’ report 1
Balance sheet as at December 31, 2007 2
Profit and loss account for the year ended December 31, 2007 3
Cash flow statement for the year ended December 31, 2007 4
Notes to the financial statements 2007 5
Other information 11
Auditors’ report 12
KBC International Finance N.V. did not launch any new issues, bonds or other financing programme during the financial year ending December 31, 2007 and, in line with the group policy, the company will not do so in the future.
The net profit after tax for 2007 amounted to € 1,248,681.
There have been no further important events, material or financial, relating to the company since December 31st 2007.
The interest income of the company amounted to € 26,686,650 compared to € 55,563,129 in 2006.
The solvency ratio was 0.46% at 31st December 2007 (2006: 0.14%).
The liquidity ratio (current assets to current liabilities) was 1.2 at 31st December 2007
The structure and organisation of the company is such that risks to the company are strictly limited.
Rotterdam, 20th March, 2008
J.G. Heffernan J.J.M. Sluijter
balance sheet as at december 31, 2007
(before profit appropriation)
€ € € €
Financial fixed assets (2) 357,634,948 364,664,296
Loans falling due within one year (2) 6,006,599 197,488,768
Interest receivable and accrued
expenses (3) 14,309,000 54,200,404
Cash 3,769,168 4,522,248
Total assets 381,719,715 620,875,716
Capital and reserves
Paid-in and called-up share capital (4) 84,012 84,012
Retained earnings (5) 406,628 404,726
Net profit for the year (5) 1,248,681 351,902
Long term liabilities (6) 359,923,998 367,032,638
Issued bonds falling due
within one year (6) 6,040,723 199,135,223
Other current liabilities (7) 14,015,673 53,867,215
Total liabilities 381,719,715 620,875,716
profit and loss account for the year ended december 31, 2007
€ € € €
Interest income (9) 26,831,053 55,715,361
Interest and issue expense (9) (25,119,255) (55,181,001)
Gross margin 1,711,798 534,360
General and administrative
expenses (10) (23,052) (30,133)
Exchange rate differences (12,664) (5,687)
Profit before taxation 1,676,082 498,540
Corporation tax (11) (427,401) (146,638)
Net profit for the year 1,248,681 351,902
cash flow statement for the year ended december 31, 2007
Net profit 1,248,681 351,902
Change in other assets and liabilities 39,862 (295,931)
Net cash flow from operational activities 1,288,543 55,971
Financial fixed assets 198,511,517 396,940,055
Net cash flow from investment activities 198,511,517 396,940,055
Bonds issued (200,203,140) (399,461,229)
Dividends paid (350,000) -
Repayment of share capital - -
Net cash flow from financing activities (200,553,140) (399,461,229)
Net cash flow ( 753,080) ( 2,465,203)
Cash balance as at January 1 4,522,248 6,987,451
Cash balance as at December 31 3,769,168 4,522,248
Net cash flow ( 753,080) (2,465,203)
notes to the financial statements 2007
1 Accounting principles
The company is a wholly-owned subsidiary of KBC Internationale Financieringsmaatschappij N.V., Rotterdam and is legally incorporated according to the applicable laws of Curaçao, The Netherlands Antilles. The main activity of the company is to assist in financing the activities of KBC Bank N.V., its subsidiaries and associated companies. The address of the company is Watermanweg 92, 3067 GG Rotterdam, The Netherlands.
The financial statements have been prepared in accordance with Dutch generally accepted accounting principles. Unless stated otherwise, all assets and liabilities are stated at face value.
Assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rates ruling at the dates of the transactions. Resulting translation differences are taken to the profit and loss account.
Financial fixed assets
The bonds issued are stated at face value. The differences with the proceeds (issue expenses, premiums or discounts) are included as ‘current assets’ and ‘current liabilities’ and are taken to the profit and loss account over the remaining term of the bonds concerned on a straight-line basis.
Interest receivable and accrued expenses
Interest receivable and accrued expenses are stated at face value.
Profit and loss account
Income and expenses are recognized in the financial year to which they relate.
Interest is accrued based on the contractual interest level in the financial year. Both loans granted to group companies and bonds issued have been treated in the same way.
Tax charges are based on the income for the year.
Notes to the balance sheet
2 Financial fixed assets
The financial fixed assets consist of loans to group companies.
Balance as at January 1, over 1 year 364,664,296 566,569,772
Balance as at January 1, less than one year 197,488,768 392,523,347
Repayments (211,210,143) (396,292,192)
Translation differences 12,698,626 (647,863)
Falling due within one year (6,006,599) (197,488,768)
Balance as at December 31, over 1 year 357,634,948 364,664,296
Early redemption under specified conditions, is possible.
Loans to group companies are at arms-length basis.
The maturity breakdown of the loans to group companies as at 31 December is as follows:
Total < 1 year 1 < 5 years > 5 years
As of December 31, 2007 363,641,547 6,006,599 357,634,948 -
As of December 31, 2006 562,153,064 197,488,768 359,255,167 5,409,129
3 Interest receivable and accrued expenses
Accrued interest receivable 12,903,292 40,934,209
Prepaid issue expenses 1,383,109 13,239,657
Receivable from parent company in respect of tax 22,599 26,538
The interest on bonds issued and loans granted to group companies is calculated using a straight-line method.
4 Paid-in and called-up share capital
10,000 ordinary shares of USD 10,- USD 100,000
Paid-in and called-up share capital € 84,012
The movements in paid-in and called-up share capital were as follows:
Balance at January 1
Reduction of paid-in share capital
Balance at December 31
The paid-in and called-up share capital is fully held by KBC Internationale Financieringsmaatschappij N.V., Rotterdam.
The share capital is valued in euros, using the original exchange rate of USD 1.1903/€ 1.000
5 Retained earnings
Balance as at January 1 756,628 404,726
Distributable profit for the financial year 1,248,681 351,902
Dividends paid (350,000) -
Balance as at December 31 1,655,309 756,628
6 Long term liabilities 2007 2006
Bonds issued as at January 1, over 1 year 367,032,638 570,643,347
Bonds issued as at January 1, less than 1 year 199,135,223 394,985,743
Repayments (212,848,557) (398,707,800)
Translation differences 12,645,417 (753,429)
Falling within one year (6,040,723) (199,135,223)
Issued bonds as at 31 December 359,923,998 367,032,638
The maturity breakdown of the bonds issued as at December 31 is as follows:
Total < 1 year 1 < 5 years > 5 years
As of December 31, 2007 365,964,721 6,040,723 359,923,998 -
As of December 31, 2006 566,167,861 199,135,223 361,452,060 5,580,578
All bonds are guaranteed by KBC Bank NV, Brussels, Belgium.
7 Other current liabilities
Accrual interest 12,798,414 40,676,664
Deferred income 1,211,071 13,181,295
Sundries 6,188 9,256
8 Fair value of financial instruments
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties at an arm’s length transaction.
The assets and liabilities of the company mainly consist of financial instruments. For most of the financial instruments fair values, such as market values, are not available and can only be estimated using certain calculation models. The proceeds of the bonds issued are used for intercompany financing of the KBC group, in particular of KBC Bank NV. The contracts for intercompany financing do not differ other than an interest margin, where applicable, from the structuring of the bonds in terms of maturity, currency, interest terms and fixings.
The fair value of the financial instruments at December, 31st is as follows:
Financial assets 363,660,833 563,557,570
Financial liabilities 365,964,721 566,167,861
Notes to the profit and loss account
9 Interest income and expense
The interest receivable mainly results from the loans granted by the company to KBC Bank NV, Brussels, Belgium. The interest payable relates to bonds issued.
10 General and administrative expenses
Management fees 16,109 22,939
Audit fee and legal fees 4,554 5,227
Sundries 1,441 142
Bank charges 948 1,825
The company has no employees. The members of the Supervisory Board did not receive any remuneration.
11 Corporation tax
Taxation is calculated based on the profit before taxation at the applicable tax rate in The Netherlands (2007: 25.5%). The minimum tax charge is based on an agreement with the tax authorities whereby a spread on the loans is the main factor. KBC International Finance N.V., KBC Internationale Financieringsmaatschappij N.V. and Cerinvest N.V. (liquidated during 2007) form a fiscal unity.
The company has not entered into any commitments.
13 Risk management
The structure and organisation of the company are such that interest, exchange, market and operational risks to the company are strictly limited, notes issued being on-lent within the group for the same currency, amount and tenor. The interest margins on the loans where applicable, have been set in conjunction with KBC Bank NV and take account of the company’s obligations under an Advance Pricing Agreement entered into with the Dutch authorities.
The loans of the company are extended exclusively to group companies and interest income on loans is earned entirely from group companies. A management fee amounting to € 14,227
(2006: € 20,336) has been paid to the KBC Internationale Financieringsmaatschappij N.V.
NOTES TO THE CASH FLOW STATEMENT
15 Cash flow statement
The Cash Flow Statement is compiled according to the indirect method. Net cash flow from operational activities includes Interest Received amounting to € 54,717,567 (2006: € 56,540,615) and Interest Paid amounting to € 52,036,949 (2006: € 54,214,779).
The cash balances of the company are free of encumbrance.
Rotterdam, 20th March 2008
Board of Directors:
J.G. Heffernan J.J.M. Sluijter
R. Lejaeghere P. Roppe G. Segers
Statutory rules concerning appropriation of profit
The net profit has been added to retained earnings.
In accordance with the company’s Articles of Association, the net profit is at the disposal of the annual General Meeting of Shareholders.
A dividend of € 350,000 was paid on January 3rd, 2007.
To: Board of Directors of KBC International Finance N.V.
Report on the financial statements
We have audited the accompanying financial statements 2007 of KBC KBC International Finance N.V., Curacao, which comprise the balance sheet as at December 31, 2007, the profit and loss account for the year then ended and the notes.
Management is responsible for the preparation and fair presentation of the financial statements and for the preparation of the directors’ report, both in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements give a true and fair view of the financial position of KBC International Finance N.V. as at December 31, 2007, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
Report on other legal and regulatory requirements
Pursuant to the legal requirement under 2:393 sub 5 part e of the Netherlands Civil Code, we report, to the extent of our competence, that the directors’ report is consistent with the financial statements as required by 2:391 sub 4 of the Netherlands Civil Code.
Amsterdam, March 20, 2008
for Ernst & Young Accountants
sgd C.G.J. de Lange