Interim report H1 2014

opportunity to be informed about any planned termination of their employment as a result of the winding-up process. The interim financial statements f...

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Interim report H1 2014

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Contents Management’s review Highlights 

3

Results of winding-up activities

4

Financial review

7

Interim financial statements Financial statements

12

▪▪Income statement

13

▪▪Comprehensive income statement

13

▪▪Balance sheet

14

▪▪Statement of changes in equity

16

▪▪Cash flow statement

17

▪▪Notes to the parent company and consolidated financial statements

18

Financial highlights and financial ratios

24

Statement by Management

25

Company details

26

Finansiel Stabilitet

Contents │ Interim report H1 2014

2

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Highlights ▪▪ Finansiel Stabilitet reported a profit of DKK 383 million in H1 2014, against a loss of DKK 193 million in the same period of last year.

▪▪ In H1 2014, Finansiel Stabilitet reduced the number of individual customers by approximately 500 and the number of principal customers by approximately 300.

▪▪ The profit largely reflects a better-than-expected winding-up performance and lower salary costs and administrative expenses.

▪▪ At 30 June 2014, Finansiel Stabilitet's total outstanding individual government guarantees provided to credit institutions amounted to DKK 3.1 billion. Early redemptions of guaranteed issues amounted to DKK 2 billion in aggregate in H1.

▪▪ The Group's total assets were reduced by DKK 4.2 billion in H1. Total assets stood at DKK 25 billion at 30 June 2014. ▪▪ Finansiel Stabilitet wound up loans and guarantees of DKK 2.8 billion (net) and financial assets and properties of DKK 0.2 billion in H1 2014.

Balance sheet

DKKm

70

1,400

64.6

60

54.5

49.9

50

1,109

1,200 50.0

1,000 800

40 29.2

30

25.0

1,037 838

906 546

600 400

20 0

▪▪ The financial results for 2014 remain subject to considerable uncertainty. The uncertainty is primarily related to the winding up of activities taken over under the Bank Package and the outcomes of lawsuits and disputes.

Staff costs and admin. expenses

DKKbn

10

▪▪ As planned, FS Bank deposited its banking licence effective 30 June 2014.

10.0

2008

207

200 2009

2010

2011

2012

2013

H1 2014

0

2009*

2010

2011

2012

2013

H1 2014

* 2009 covers the period from 13 October 2008 to 31 December 2009

Finansiel Stabilitet

Highlights │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Results of winding-up activities Finansiel Stabilitet winds up exposures and activities taken over from distressed banks. This activity comprises customer exposures, financial assets, physical assets, different types of obligations and employees. For a more detailed description of Finansiel Stabilitet's activities and strategy, see the Annual Report 2013. Finansiel Stabilitet reduced the Group's total assets by an aggregate of DKK 4.2 billion in H1 2014. At 30 June 2014, total assets amounted to DKK 25 billion. This reduction of total assets was mainly achieved by winding up loans and guarantees of DKK 2.8 billion. In addition, total assets were reduced through a DKK 27 million (net) divestment of financial assets, a DKK 199 million (net) divestment of properties and a reduction of cash funds by around DKK 1 billion. Cash funds were reduced in connection with early redemption of re-lending, among other things. The number of customers was reduced in step with the winding up of loans and guarantees. Accordingly, Finansiel Stabilitet reduced the number of individual customers by approximately 500 and the number of principal customers by approximately 300 in H1 2014. At 30 June 2014, Finansiel Stabilitet thus had 2,577 individual customers and 1,637 principal customers with exposures of DKK 9.9 billion.

At 30 June 2014, Finansiel Stabilitet had total exposures and activities for winding up of DKK 13.4 billion, distributed on customer exposures of DKK 9.9 billion, properties of DKK 1.7 billion and financial assets of DKK 1.8 billion. The number of employees in continuing employment was reduced by 52 FTEs in the first half of 2014. At 30 June 2014, Finansiel Stabilitet had 155 FTEs, 94 of whom were in continuing employment. The reduction was achieved through the conclusion of severance agreements and ordinary employee turnover. In accordance with Finansiel Stabilitet's policy on openness about the gradual headcount reduction, all employees have since the second quarter of 2014 had the opportunity to be informed about any planned termination of their employment as a result of the winding-up process. The interim financial statements for the six months ended 30 June 2014 include a provision for severance pay etc. in an equivalent amount. Winding up of loans and guarantees Finansiel Stabilitet disposes of exposures and other activities taken over by way of “segmented winding up” and “individual winding up”. Focus is on winding up these activities as quickly as possible, in a financially prudent manner and with due consideration for the Group’s corporate values.

Winding up of activities in H1 2014 No. of principal customers No. of individual customers Net loans and guarantees (DKKm) Properties (DKKm) Financial assets (DKKm) No. of employees in continuing employment (FTEs)

Status, 31 Dec 2013* 1,929 3,059 12,754 1,919 1,838 146

Winding up H1 2014

Status, 30 June 2014

292 482 2,808 199 27 52

1,637 2,577 9,946 1,720 1,811 94

* Data at 31 December 2012 changed due to reclassification.

Finansiel Stabilitet

Results of winding-up activities │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

In the first half of 2014, segmented winding-up activities with balance sheet impact amounted to approximately DKK 0.9 billion, and individual winding-up activities amounted to approximately DKK 1.9 billion.

In H1 2014, financial assets representing a net carrying amount of DKK 27 billion were wound up. At 30 June 2014, the total carrying amount of financial assets was DKK 1.8 billion.

The segmented winding-up was completed through the divestment of a customer portfolio consisting of exposures with 75 property companies with loans and credit agreements in a total amount of approximately DKK 909 million to LMN Finance Ltd, which in July 2013 acquired a similar loan portfolio from Finansiel Stabilitet.

For an overview of Finansiel Stabilitet's current holding and bid processes, go to: www.finansielstabilitet.dk

Winding up of properties The property portfolio consists mainly of commercial and residential properties. The individual assets of the property portfolio are predominantly offered for sale through real estate agents. In H1 2014, Finansiel Stabilitet sold 48 properties for a total of DKK 194 million.

Moreover, FS Bank's banking licence was deposited with the Danish FSA at the end of June 2014. The company will proceed with the remaining winding up as a payment institution under the name of FS Finansselskabet A/S. In spring, FS Finansselskabet A/S terminated a number of products and services that will not be offered to the company's customers in future. In that connection, efforts have been made to ensure that no customer is left without a banker as a result of the closure of the bank.

During the same period, the winding up of exposures resulted in an inflow of seven properties representing a total value of DKK 11 million, bringing the net result of winding-up activities to DKK 183 million. At 30 June 2014, Finansiel Stabilitet had 200 properties representing a total value of DKK 1.7 billion. Properties for sale are listed at: www.finansielstabilitet.dk Winding up of financial assets Financial assets comprise mortgage deeds, shares, guarantee certificates and cooperative share certificates, subordinated capital, bonds and other securities. Financial assets are wound up by way of gradual divestment of individual assets and minor portfolios. In addition, there are also assets subject to ordinary run-off on a current basis.

Finansiel Stabilitet

Other winding-up activities As part of its other winding-up activities, Finansiel Stabilitet sold a portfolio consisting of approximately 11,000 exposures with a total residual debt of approximately DKK 2.5 billion to Lindorff Danmark A/S. The exposures were originally transferred to Finansiel Stabilitet under Bank Packages I, III and IV.

After the closure, the Finansiel Stabilitet Group no longer has a banking licence, which marks an important step in the winding up of the banking activities taken over by Finansiel Stabilitet under the bank packages from 2008 to 2012. Lawsuits and disputes Finansiel Stabilitet is processing a substantial portfolio of lawsuits, complaints, cases before the Appeals Board and claims from creditors, which have arisen in connection with the takeover of distressed banks. Finansiel Stabilitet is party to lawsuits and disputes (including liability claims) representing a total amount of

Results of winding-up activities │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

approximately DKK 6.5 billion. An aggregate provision of DKK 0.9 billion has been made on the case portfolio. The legal enquiry into Sparekassen Østjylland was completed in May 2014 with the conclusion that there are no grounds for holding either the management board or the board of directors liable for damages. Finansiel Stabilitet concurs with this assessment. Individual government guarantees By adopting appropriation of funds no. 5 in March 2012, the Finance Committee of the Danish parliament extended the original scheme for individual guarantees under the Credit Package to the effect that, on certain conditions, Danish banks could extend or issue debt based on individual government guarantees until 31 December 2013 to expire on or before 31 December 2016.

Finansiel Stabilitet

Guarantees for a total amount of DKK 5.9 billion were provided under the extended scheme. The guarantees were provided to Vestjysk Bank and Den Jyske Sparekasse in the amount of DKK 4.5 billion and DKK 1.4 billion, respectively. At 30 June 2014, the guarantees were reduced to a total amount of DKK 3.1 billion due to early redemption. Of the DKK 194 billion originally provided in individual government guarantees, which have now expired, the Danish State has incurred losses under the Credit Package on four institutions with individual government guarantees of DKK 22 billion in aggregate. At 30 June 2014, this loss was provisionally calculated at DKK 3.5 billion. The loss may be adjusted if the final winding up of the individual institutions, which are currently subsidiaries of Finansiel Stabilitet, results in a revision of the purchase price adjustment.

Results of winding-up activities │ Interim report H1 2014

6

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Financial review Performance Finansiel Stabilitet reported a profit of DKK 383 million in H1 2014, against a loss of DKK 193 million in the same period of last year. The profit was substantially attributable to a better-than-expected winding-up performance and generally lower salary costs and administrative expenses. Areas of activity of Finansiel Stabilitet Finansiel Stabilitet's areas of activity are different from those of a conventional financial business in a number of important areas. Each area of activity is characterised in being anchored in a specific statute, and the financial statements reflect the different regulatory framework and mechanisms applicable. Only activities taken over under the Bank Package and income from Finansiel Stabilitet's funding of FS Property Finance have an earnings impact for Finansiel Stabilitet. The other areas have no impact on the performance of Finansiel Stabilitet. The Bank Package The Bank Package segment posted a profit of DKK 383 million after tax in H1, equivalent to the overall profit reported by the Group. FS Finansselskabet contributed a profit of DKK 61 million to the net profit and income from the funding of FS Property Finance contributed a profit of DKK 20 million. The remaining part of the results was attributable to the parent company. The most significant income statement items in H1 were net interest income of DKK 88 million, salary costs and

administrative expenses of DKK 104 million and reversed impairment charges of DKK 363 million. The Exit and Consolidation Packages Finansiel Stabilitet assumes no direct risk in connection with the winding up of companies under the Exit and Consolidation Packages, but efforts are made to wind up the companies as efficiently as possible with due consideration for the unsecured creditors that have not obtained full coverage of their claims, including the Guarantee Fund and the Danish State. The contribution from the Exit and Consolidation Packages to Finansiel Stabilitet's results was nil. For further specification of income statement items for the segment, see note 2 to the financial statements. Exit Package – FS Finans III and IV In Amagerbanken (FS Finans III) and Fjordbank Mors (FS Finans IV), no unsecured creditors incurred any losses as a result of the transfer to Finansiel Stabilitet, as the transfer took place under the Exit Package. Under this model, unsecured creditors are not fully reimbursed, except for the cover for cash deposits within certain limits determined by the Guarantee Fund. After the expert valuers' review, the dividend (initial dividend) was fixed at 84.4% for Amagerbanken and 86.0% for Fjordbank Mors. If the winding up of these banks produces a better result than anticipated, the unsecured creditors may receive additional distributions. If the winding up produces a loss which had not been

Income statement, Bank Package (DKKm)

H1 2014

H1 2013

Net interest income 88 92 Guarantee commission, government guarantees 0 (8) Other net fee income and market value adjustments (15) (322) Other operating income/(expenses), net 9 (20) Operating expenses 104 164 Impairment losses on loans, advances, guarantees etc. (363) (218) Profit/(loss) from investments 52 11 Tax 10 0 Profit/(loss) for the period 383 (193)

Finansiel Stabilitet

Financial review │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

anticipated at the time of fixing of the initial dividend, such loss will be covered by the Winding-up Department of the Guarantee Fund. FS Finans III FS Finans III reported a profit for H1 2014 of DKK 26 thousand after tax, equal to the statutory return requirement to Finansiel Stabilitet on contributed equity. Calculated before purchase price adjustment, the profit amounted to DKK 221 million as a result of a better-thanexpected winding-up performance, reversed provisions for lawsuits and generally lower operating expenses. Against this background, the purchase price adjustment was adjusted by DKK 205 million in H1 2014 to DKK 1,243 million at 30 June. FS Finans III had total assets of DKK 1.7 billion at 30 June 2014. By comparison, total assets stood at DKK

3.5 billion at 30 June 2012 and DKK 2.2 billion at 31 December 2013. Loans and advances after impairment losses declined by DKK 668 million in H1 2014 to stand at DKK 1,057 million at 30 June. The decline covers a real cash reduction of loans and advances of DKK 632 million. FS Finans IV FS Finans posted a profit of DKK 148 million after tax in H1 2014. The performance was substantially attributable to a better-than-expected winding-up performance, positive market value adjustments of DKK 63 million and generally lower operating expenses. FS Finans IV had total assets of DKK 0.7 billion at 30 June 2014. By comparison, total assets stood at DKK 1.8 billion at 30 June 2013 and DKK 1.0 billion at 31 December 2013.

Financial highlights FS Finans III and IV (Group) (DKKm)

FS Finans III H1 2014 H1 2013

FS Finans IV H1 2014 H1 2013

Income statement Profit/(loss) before purchase price adjustment and tax 221 180 145 (63) Movements in purchase price adjustment 205 158 0 0 Tax 16 5 (3) 5 Profit/(loss) for the period 0 17 148 (68) Balance sheet Cash in hand and demand deposits with credit institutions and central banks 0 377 0 287 Loans and advances 1,057 2,235 248 925 Other assets 689 866 477 543 Total assets 1,746 3,478 725 1,755 Purchase price adjustment 1,243 1,023 0 0 Other provisions 195 0 101 151 Other liabilities 307 2,338 300 1,337 Equity 1 117 324 267 Total equity and liabilities 1,746 3,478 725 1,755

Finansiel Stabilitet

Financial review │ Interim report H1 2014

8

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Loans and advances after impairment losses declined by DKK 231 million in H1 2014 to stand at DKK 248 million at 30 June. The decline covers a real cash reduction of loans and advances of DKK 318 million. Consolidation Package – FS Finans I and II Except for the Guarantee Fund and the Danish State, no unsecured creditors incurred any losses as a result of the transfer of Max Bank (FS Finans II) and Sparekassen Østjylland (FS Finans I) to Finansiel Stabilitet, as the transfers took place under Model 2 of the Consolidation Package. Both the Guarantee Fund and Finansiel Stabilitet contributed a dowry to both banks, as sufficient assets were not available to fully reimburse all creditors, including the Danish State and the Guarantee Fund. The dowry was calculated at DKK 1.7 billion in Max Bank and DKK 1.2 billion in Sparekassen Østjylland.

If the winding up of these banks produces a better result than expected, the dowry may be reduced by way of a pro rata distribution, i.e. according to the Guarantee Fund's and Finansiel Stabilitet's respective shares of the contributed dowry. However, the final dividend, which is not fixed until the winding-up process has been concluded, is subject to substantial uncertainty. If the winding up produces a loss resulting in a lower dividend than the initially fixed dividend, such loss will be covered by the Winding-up Department of the Guarantee Fund. FS Finans I FS Finans I reported a profit for H1 2014 of DKK 27 thousand after tax, equal to the statutory return requirement to Finansiel Stabilitet on contributed equity. Calculated before purchase price adjustment, the profit amounted to DKK 50 million as a result of an improvement

Financial highlights FS Finans I and II (Group) (DKKm)

FS Finans I H1 2014 H1 2013

FS Finans II H1 2014 H1 2013

Income statement Profit/(loss) before purchase price adjustment and tax 50 122 19 (33) Movements in purchase price adjustment/dowry adjustment* 50 97 15 (85) Tax 0 6 1 13 Profit/(loss) for the period 0 19 3 39 Balance sheet Cash in hand and demand deposits with credit institutions and central banks 0 67 0 260 Loans and advances 33 257 176 577 Other assets 289 266 926 779 Total assets 322 590 1,102 1,616 Deposits and other payables 0 0 60 142 Purchase price adjustment 190 74 0 0 Other provisions 58 115 136 227 Other liabilities 73 32 868 478 Equity 1 369 38 769 Total equity and liabilities 322 590 1,102 1,616 * In FS Finans II the dowry adjustment in 1H 2014 was reduced by DKK 15 million.

Finansiel Stabilitet

Financial review │ Interim report H1 2014

9

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

of the exposures' financial standing of DKK 38 million and reduced operating expenses. Against this background, the purchase price adjustment was adjusted by DKK 50 million in H1 2014 to DKK 843 million at 30 June. DKK 653 million of this amount was dowry previously distributed. FS Finans I had total assets of DKK 0.3 billion at 30 June 2014. By comparison, total assets stood at DKK 0.6 billion at 30 June 2013 and DKK 0.3 billion at 31 December 2013. Loans and advances after impairment losses declined by DKK 175 million in H1 2014 to stand at DKK 33 million at 30 June. The decline covers a real cash reduction of loans and advances of DKK 232 million. FS Finans II FS Finans II reported a profit for H1 2014 of DKK 3 million after tax, equal to the statutory return requirement to Finansiel Stabilitet on contributed equity. Calculated before purchase price adjustment (dowry adjustment), the profit amounted to DKK 19 million as a result of a better-than-expected winding-up performance and reduced operating expenses. Accordingly, Finansiel Stabilitet's and the Guarantee Fund's dowry was reduced by DKK 15 million.

FS Finans II had total assets of DKK 1.1 billion at 30 June 2014. By comparison, total assets stood at DKK 1.6 billion at 30 June 2013 and DKK 1.3 billion at 31 December 2013. Loans and advances after impairment losses declined by DKK 137 million in H1 2014 to stand at DKK 176 million at the end of the period. The decline covers a real cash reduction of loans and advances of DKK 261 million. Development Package – FS Property Finance In March 2012, Finansiel Stabilitet concluded an agreement with FIH Erhvervsbank A/S and FIH Holding A/S for the takeover of a substantial portfolio of property exposures with a view to winding up. The takeover was completed on 2 July 2012 by FIH Erhvervsbank A/S and FIH Kapital Bank A/S spinning off the business unit Property Finance to a new independent company – FS Property Finance A/S – with Finansiel Stabilitet as the sole shareholder. Concurrently with the takeover, FIH Holding provided a loss guarantee to Finansiel Stabilitet covering any loss in the company during the period until the loss is calculated. The loss guarantee will become effective if the loss-absorbing loan of DKK 1.65 billion provided by FIH Erhvervsbank on takeover proves insufficient to cover a potential loss in FS Property Finance.

Selected balance sheet data, FS Property Finance (DKKm) 30.06.2014 30.06.2013 Balance sheet Cash in hand and demand deposits with credit institutions and central banks 172 471 Loans and advances 5,300 6,399 Receivable from FIH 0 770 Other assets 767 1,459 Total assets 6,239 9,099 Other debt 4,239 7,099 Equity 2,000 2,000 Total equity and liabilities 6,239 9,099

Finansiel Stabilitet

Financial review │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

FS Property Finance was consolidated with Finansiel Stabilitet with effect from 2 July 2012. The loss-absorbing loan of DKK 1.65 billion has been used due to substantial impairment losses and fair value adjustments of DKK 1.5 billion in 2012 and the concurrent recognition of a receivable from FIH Holding. The recognised receivable was reversed in 2013 due to a positive development in results. The company's activities will terminate at the calculation date, which has initially been agreed for 31 December 2016, but the timing may be deferred for up to two years at the request of FIH Holding and for another 12 months subject to mutual agreement (that is, 31 December 2019 at the latest). The calculation date may also be moved forward upon mutual agreement until 31 December 2015. In December 2013, the European Commission approved the transaction subject to modification of certain elements of the transaction structure, including FIH's additional payment of DKK 310 million to Finansiel Stabilitet. The amount has been provisionally deposited with Finansiel Stabilitet as FIH has decided to appeal the European Commission's ruling. In light of the uncertainty as to the outcome of the case, the amount has not yet been recognised. FS Property Finance posted a profit of DKK 0 million in H1 2014. This was achieved through a reversal of fair value adjustment, offset by a revaluation of the loss-absorbing loan by DKK 620 million. Finansiel Stabilitet's funding of FS Property Finance contributed total revenue of DKK 20 million to Finansiel Stabilitet's profit (recognised under the Bank Package).

Significant risks As discussed in the annual report for 2013, Finansiel Stabilitet's principal operational risks are significantly affected by the special tasks involved in taking over and winding up distressed banks. Most of Finansiel Stabilitet’s risks remain related to the risk of losses on nonperforming exposures and the risk of losses in connection with lawsuits and disputes. For further information on risks and risk management, see the annual report for 2013.

Events after the balance sheet date After the end of the reporting period, 21 agricultural exposures have been sold to Sparekassen Sjælland. With this sale and previously signed agreements with Landbrugets FinansieringsBank concerning referral of loans, Finansiel Stabilitet is close to having handled the entire agricultural portfolio. No other significant events have occurred after the end of the reporting period.

Outlook for 2014 Despite a satisfactory performance in H1 2014, a number of risks and uncertainties remain in relation to factors such as changes in the value of lending exposures, the winding-up process and the outcomes of lawsuits and disputes under the Bank Package. As a result, the financial results for the remainder of 2014 are subject to considerable uncertainty.

During the period from the takeover to 30 June 2014, FS Property Finance has reduced loans and advances by DKK 6.1 billion. As a result, loans and advances totalled DKK 5.3 billion at 30 June 2014.

Finansiel Stabilitet

Financial review │ Interim report H1 2014

11

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪ NOTES

Financial statements

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

12

REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪ NOTES

Income statement and comprehensive income statement Group Parent H1 H1 H1 H1 (DKKm) Note 2014 2013 2014 2013 Interest and fees Interest income 3 311 667 112 198 Interest expense 4 43 243 29 139 Net interest income 268 424 83 59 Share dividends etc. 4 1 2 0 Fees and commissions received 59 215 52 221 Fees and commissions paid 41 291 39 287 Net interest and fee income 290 349 98 (7) Market value adjustments 5 (628) (322) (27) (208) Other operating income 394 821 107 229 Staff costs and administrative expenses 6 207 353 173 233 Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 0 2 0 0 Other operating expenses 435 572 96 318 Impairment losses on loans, advances and receivables, etc. 7 (1,000) 145 (297) (188) Profit/(loss) from investments in associates and subsidiaries 27 (4) 197 119 Loss guarantee from the Danish State re. individual government guarantees (7) 37 (7) 37 Profit/(loss) for the period before tax 434 (191) 396 (193) Tax 51 2 13 0 Profit/(loss) for the period 383 (193) 383 (193) Comprehensive income statement Profit/(loss) for the period 383 (193) 383 (193) Other comprehensive income after tax 0 0 0 0 Total comprehensive income 383 (193) 383 (193)

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪ NOTES

Balance sheet Group Parent 30.06. 31.12. 30.06. 30.06. 31.12. 30.06. (DKKm) Note 2014 2013 2013 2014 2013 2013 ASSETS Cash in hand and demand deposits with central banks 1,642 2,845 7,146 1,705 2,555 6,960 Due from credit institutions and central banks 1,292 1,170 1,522 142 178 251 Loans, advances and other receivables at fair value 61 55 878 61 53 807 Loans, advances and other receivables at amortised cost 8,475 11,144 14,049 6,201 9,036 10,569 Bonds at fair value 405 374 23 139 148 13 Shares, etc. 996 1,070 1,156 725 718 822 Investments in associates 349 339 323 336 327 301 Investments in subsidiaries 0 0 0 3,139 3,191 3,678 Intangible assets 0 0 0 0 0 0 Total land and buildings 1,411 1,439 2,524 37 37 93   Investment properties 1,411 1,439 2,522 37 37 93   Domicile properties 0 0 2 0 0 0 Other property, plant and equipment 4 5 9 0 0 3 Assets held temporarily 309 480 853 0 9 0 Receivable re. loss guarantee from the Danish State relating to Roskilde Bank 4,331 4,331 4,331 4,331 4,331 4,331 Receivable re. loss guarantee from the Danish State relating to individual government guarantees 3,542 3,549 3,547 3,542 3,549 3,547 Other assets 2,186 2,439 3,481 1,564 2,176 3,313 Prepayments 8 0 16 8 0 14 Total assets 25,011 29,240 39,858 21,930 26,308 34,702

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪ NOTES

Balance sheet Group Parent 30.06. 31.12. 30.06. 30.06. 31.12. 30.06. (DKKm) Note 2014 2013 2013 2014 2013 2013 EQUITY AND LIABILITIES Liabilities Due to credit institutions and central banks 980 318 884 289 370 659 Deposits and other payables 55 868 710 374 420 775 Loans through the state-funded re-lending scheme 9,050 13,572 20,666 9,050 13,572 20,666 Issued bonds at amortised cost 2 2 2,060 0 0 2 Liabilities relating to assets held temporarily 0 0 236 0 0 0 Due to mortgage credit institutions 204 288 285 0 0 0 Other liabilities 1,235 1,156 2,063 907 806 1,509 Deferred income 2 1 5 0 0 0 Total liabilities 11,528 16,205 26,909 10,620 15,168 23,611 Provisions Provision for losses on guarantees 491 494 615 190 223 293 Purchase price adjustment (Earn-out) 1,433 1,183 1,097 0 0 0 Other provisions 8 1,425 1,607 1,840 986 1,166 1,401 Total provisions 3,349 3,284 3,552 1,176 1,389 1,694 Total liabilities 14,877 19,489 30,461 11,796 16,557 25,305 Equity Share capital 1 1 1 1 1 1 Retained earnings 9,750 9,750 9,589 9,750 9,750 9,589 Profit/(loss) for the period 383 - (193) 383 - (193) Total equity 10,134 9,751 9,397 10,134 9,751 9,397 Total equity and liabilities 25,011 29,240 39,858 21,930 26,308 34,702

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪ NOTES

Statement of changes in equity Group

H1 2014

Share Retained (DKKm) capital earnings

Total equity

2013

Equity as at 1 January 1 9,750 9,751 9,590 Changes in equity during the period Dividend paid - 0 0 0 Comprehensive income for the period - 383 383 161 Equity as at 30 June 1 10,133 10,134 9,751

Parent

H1 2014

Share Retained (DKKm) capital earnings

Total equity

2013

Equity at 1 January 1 9,750 9,751 9,590 Changes in equity during the period Dividend paid - 0 0 0 Comprehensive income for the period - 383 383 161 Equity as at 30 June

1

10,133

10,134

9,751

The DKK 0.5 million share capital consists of 500 shares of DKK 1,000 each. All shares confer equal rights on their holders.

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪ NOTES

Cash flow statement Group H1 H1 (DKKm) 2014 2013 Cash flows from operating activities Profit/(loss) for the period after tax Adjustment for non-cash operating items Loss guarantee from the Private Contingency Association/the Danish State Cash flows from operating capital Cash flows from operating activities

383 (808) 7 3,685 3,267

(193) 359 (37) (10,504) (10,375)

Cash flows from investing activities Net investment in subsidiaries - Purchase/sale of property, plant and equipment 29 (329) Cash flows from investing activities 29 (329) Cash flows from financing activities Loans through the state-funded re-lending scheme (4,400) 6,284 Dividend - Cash flows from financing activities (4,400) 6,284 Change in cash and cash equivalents Cash and cash equivalents at the beginning of the period 3,793 12,730 Change during the period (1,104) (4,420) Cash and cash equivalents at the end of the period 2,689 8,310

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes 1 Accounting policies The interim report is presented in accordance with IAS 34, Interim Financial Reporting as adopted by the EU in respect of the Group and the Danish Financial Business Act in respect of the parent company and in accordance with additional Danish disclosure requirements for interim reports of financial enterprises. Apart from the below changes, the accounting polices are consistent with those of the consolidated and parent company financial statements for 2013, which give a comprehensive description of the accounting policies applied. Accounting policy changes Financiel Stabilitet has implemented the IFRS standards and interpretations taking effect for 2014. None of these have affected recognition and measurement in the first half of 2014 or are expected to affect Finansiel Stabilitet. Standards and interpretations not yet in force The International Accounting Standards Board (IASB) has issued a number of international financial reporting standards and the International Financial Reporting Interpretations Committee (IFRIC) has issued a number of interpretations that have not yet come into force. None of these are expected to materially affect the future financial reporting of Finansiel Stabilitet.

Finansiel Stabilitet

Accounting estimates and judgments The determination of the carrying amounts of certain assets and liabilities relies on judgments, estimates and assumptions about future events. The estimates and assumptions applied are based on historical experience and other factors that Management considers reasonable under the circumstances, but which are inherently uncertain and unpredictable. Such assumptions may be incomplete or inaccurate, and unexpected events or circumstances may occur. In addition, the Group and the parent company are subject to risks and uncertainties that may cause actual outcomes to deviate from these estimates. It may be necessary to change previous estimates as a result of changes to the assumptions on which the estimates were based or of new information or subsequent events. The accounting estimates and the related uncertainty concern the same issues as those prevailing at the preparation of the consolidated and parent company financial statements for 2013.

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes 2 Segment information for the Group Activities for the six months Exit and Con- Develended 30 June 2014 Bank Credit solidation opment Elimina(DKKm) package package packages package tions

Total

Net interest income 88 0 52 128 - 268 Guarantee commission on government guarantees 0 48 0 - - 48 Other net interest and fee income and market value adjustments (15) (48) 96 (687) - (654) Movements in purchase price adjustment - - (270) - - (270) Other operating income/expenses, net 26 0 61 245 7 339 Operating expenses 121 0 96 7 - 224 Impairment losses on loans, advances, guarantees etc. (363) (7) (316) (321) 7 (1,000) Profit/(loss) from investments in subsidiaries and associates 52 - (25) - - 27 Loss guarantee from the Danish State re. individual government guarantees - (7) 0 - - (7) Loss guarantee from the Guarantee Fund - - (93) - - (93) Profit/(loss) for the period before tax 393 0 41 0 434 Tax 10 0 41 0 51 Profit/(loss) for the period 383 0 0 0 383 Total segment assets at 30 June 2014 11,002 3,542 4,228 6,239 25,011 Total segment assets at 31 December 2013 13,166 3,549 5,414 7,111 29,240 The Bank Package comprises interest income from the funding of the Development Package segment in the amount of DKK 20 million.

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes 2 Segment information for the Group – continued Activities for the six months Exit and Con- Develended 30 June 2013 Bank Credit solidation opment Elimina(DKKm) package package packages package tions

Total

Net interest income 92 (2) 98 236 - 424 Guarantee commission on government guarantees (8) 212 (18) - - 186 Other net interest and fee income and market value adjustments (322) (212) (40) (9) - (583) Movements in purchase price adjustment - (232) - - (232) Other operating income/expenses, net (57) 4 521 (41) - 427 Operating expenses 164 2 147 42 - 355 Impairment losses on loans, advances, guarantees etc. (255) 37 219 144 - 145 Profit/(loss) from investments in subsidiaries and associates 11 0 (4) - (11) (4) Loss guarantee from the Danish State re. individual government guarantees - 37 - - - 37 Loss guarantee from the Guarantee Fund - - 54 - - 54 Profit/(loss) for the period before tax (193) 0 13 0 (11) (191) Tax 0 0 13 0 (11) 2 Profit/(loss) for the period (193) 0 0 0 (193) Total segment assets 18,946 3,587 8,226 9,099 39,858

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes Group Parent H1 H1 H1 H1 (DKKm) 2014 2013 2014 2013

3 Interest income Due from credit institutions and central banks 17 19 2 6 Loans, advances and other receivables at amortised cost 234 515 93 130 Loans, advances and other receivables at fair value 3 53 3 51 Bonds 8 1 6 0 Total derivative financial instruments 47 75 0 (2)   Foreign exchange contracts 4 (3) 0 (2)   Interest rate contracts 43 78 0 0 Other interest income 2 4 8 13 Total 311 667 112 198

4 Interest expense Credit institutions and central banks 13 96 0 6 Deposits and other payables 0 6 0 1 Issued bonds 0 8 0 0 Loans through the state-funded re-lending scheme 29 130 29 130 Other interest expense 1 3 0 2 Total 43 243 29 139

5 Market value adjustments Adjustment for credit risk for loans and advances at fair value (547) (248) (15) (244) Other adjustment for loans and advances at fair value (1) (3) 0 Bonds 34 (3) (8) 2 Shares, etc. 62 61 4 21 Investment properties (16) (76) (2) 16 Currency (11) (33) (4) (5) Foreign exchange, interest, share, commodity and other contracts and derivative financial instruments (67) (19) (1) 2 Other assets and liabilities (82) (1) (1) Total (628) (332) (27) (208)

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes Group Parent H1 H1 H1 H1 (DKKm) 2014 2013 2014 2013

6 Staff costs and administrative expenses Salaries and remuneration to Board of Directors and Management Board: Management Board 2 4 2 4 Board of Directors 1 1 1 1 Total 3 5 3 5 Staff costs Salaries 62 93 61 81 Provisions for salaries during release period 33 13 33 13 Pensions 6 9 6 8 Social security costs (16) 12 (16) 10 Total 85 127 84 112 Other administrative expenses 119 221 86 116 Total 207 353 173 233 Impair- Change in Impair- Impact ment impair- ment on losses at ment losses at income (DKKm) 1 Jan. losses 30 June statement

7 Impairment losses on loans, advances and receivables, etc. Loans and advances at amortised cost 15,761 (293) 15,468 Guarantees 494 (3) 491 Impairment for H1 2014 16,255 (296) 15,959 (1,000) Impairment for H1 2013 15,611 865

16,476

145

Group Parent H1 H1 H1 H1 (DKKm) 2014 2013 2014 2013

8 Other provisions Litigation Other provisions Total

Finansiel Stabilitet

941 484 1,425

1,233 607 1,840

847 139 986

1,090 311 1,401

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes (DKKm)

9 Contingent assets and liabilities Tax The Group has a significant deferred tax asset. Due to the uncertainty as to whether this can be utilised, the tax asset has not been recognised in the balance sheet. FIH In March 2012, Finansiel Stabilitet concluded an agreement with FIH for the takeover of a significant portfolio of property exposures with a view to winding up. In connection with the preliminary approval of the transaction, the European Commission announced in December 2013 that it found the transaction to be compatible with its rules on state aid, provided that certain elements of the transaction structure were modified, including that FIH paid DKK 310 million to Finansiel Stabilitet. FIH has deposited a total amount, including interest, of DKK 316 million with Finansiel Stabilitet. In the spring of 2014, FIH decided to appeal the European Commission's ruling. Against that background, the DKK 316 million has not impacted Finansiel Stabilitet's profit for 2014. Individual government guarantees In addition, pursuant to the Act to amend the Act on Financial Stability of 4 February 2009, the Company’s object is to enter into agreements for the provision of

individual government guarantees for existing and new unsubordinated, unsecured debt with a maturity of up to three years. At 30 June 2014, guarantees representing DKK 3.1 billion had been issued. The Danish State guarantees the Company’s guarantee commitments under the scheme.

Roskilde Bank Roskilde Bank was transferred from Danmarks Nationalbank to Finansiel Stabilitet on 10 August 2009. Roskilde Bank was not covered by the general government guarantee under the Act on Financial Stability. The Danish State has issued a separate guarantee to Finansiel Stabilitet to cover the winding up of the bank. In connection with this, the Company has a receivable of DKK 4,331 million. Other contingent liabilities The subsidiaries are parties to legal disputes in relation to ordinary operations. In recent years, a considerable number of complaints have been brought before the Danish Financial Institutions’ Complaints Board by customers of banks acquired by Finansiel Stabilitet.

10 Related parties Related parties comprise the Danish State, including companies/institutions over which the Danish State exercises control. As a general rule, transactions with related parties are entered into and settled on market terms or on a costrecovery basis. The settlement prices for individual types of transaction are set out by law.

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

INCOME STATEMENT  ▪  COMPREHENSIVE INCOME STATEMENT  ▪  BALANCE SHEET  ▪  STATEMENT OF CHANGES IN EQUITY  ▪  CASH FLOW STATEMENT  ▪  NOTES

Notes Financial highlights and financial ratios for Finansiel Stabilitet A/S H1 H1 (DKKm) 2014 2013 Financial highlights Other interest and fee income, net 98 (7) Market value adjustments (27) (208) Other operating income 107 229 Costs 173 233 Other operating expenses 96 318 Impairment losses on loans and advances (297) (188) Profit/(loss) from investments in subsidiaries and associates 197 119 Loss guarantee from the Danish State re. individual government guarantees (7) 37 Profit/(loss) for the period 383 (193) Equity 10,134 9,397 Total assets 21,930 34,702 Financial ratios Return on equity before tax p.a. 8% (4)% Return on equity after tax p.a. 8% (4)% Income/cost ratio (13.14) 0.47 The financial ratios are in accordance with the Danish FSA’s executive order on financial reports presented by credit institutions, etc. The financial ratios relevant to Finansiel Stabilitet are included. The income/cost ratio for H1 2014 has been calculated at (13,14). The negative ratio is explained by the reversed impairment losses of DKK 297 million for the period being included as an expense in the ratio's denominator. If (contrary to the FSA's definition) amounts of reversed impairment losses were included in the numerator under income instead, the ratio would be 2.47 for the period.

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Statement by Management The Board of Directors and the Management Board have today considered and adopted the interim report of Finansiel Stabilitet A/S for the six months ended 30 June 2014. The interim report is presented in accordance with IAS 34, Interim Financial Reporting as adopted by the EU in respect of the Group and the Danish Financial Business Act in respect of the parent company and in accordance with additional Danish disclosure requirements for interim reports of financial enterprises. The interim report has been neither audited nor reviewed.

In our opinion, the interim report gives a true and fair view of the Group’s and the parent company’s assets, liabilities and financial position at 30 June 2014 and of the results of the Group’s and the parent company’s operations and the Group’s cash flows for the six months ended 30 June 2014. Moreover, in our opinion, the management’s review includes a fair review of the development and performance of the business and the financial position of the Group and the parent company, the results for the period and of the financial position of the Group as a whole, together with a description of the principal risks and uncertainties that the Group and the parent company face.

Copenhagen, 26 August 2014

Management Board

Henrik Bjerre-Nielsen CEO

Board of Directors

Jakob Brogaard Chairman

Bent Naur Deputy Chairman

Anette Eberhard

Birgitte Nielsen

Erik Sevaldsen

Cecilia Lysemose

Michael Mikkelsen

Finansiel Stabilitet

Financial statements │ Interim report H1 2014

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REVIEW  ▪  FINANCIAL STATEMENTS  ▪  STATEMENT BY MANAGEMENT

Company details Finansiel Stabilitet A/S Kalvebod Brygge 43 DK-1560 Copenhagen V Phone: +45 70 27 87 47 Fax: +45 33 93 13 33 Website: www.finansielstabilitet.dk E-mail: [email protected] CVR no.:

+45 30 51 51 45

Established: 13 October 2008 Municipality of registered office: Copenhagen

Finansiel Stabilitet

Board of Directors Jakob Brogaard (Chairman) Bent Naur (Deputy Chairman) Anette Eberhard Birgitte Nielsen Erik Sevaldsen Cecilia Lysemose (employee representative) Michael Mikkelsen (employee representative) Management Board Henrik Bjerre-Nielsen Auditors Ernst & Young Godkendt Revisionspartnerselskab Osvald Helmuths Vej 4 DK-2000 Frederiksberg

Financial statements │ Interim report H1 2014

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Finansiel Stabilitet A/S Kalvebod Brygge 43 DK-1560 Copenhagen V Phone: +45 70 27 87 47 Fax: +45 33 93 13 33 Website:www.finansielstabilitet.dk E-mail: [email protected]