2009
Annual Report
SG Finans AS
We support. You succeed.
ANNUAL REPORT 2009 innledning
xx
Lysaker (head office)
The pictures on the cover page are from the company’s staff conference which took place January 2010. At the conference the employees of the year are selected by vote. The voting is based on the company values; Sales and relations, enthusiasm, team spirit and know how. Also at the conference there is a voting for the 4 best sellers.
Contents
5 8
5
SUMMARY
5
customer satisfaction
6
KEY FIGURES
7
REPORT OF THE BOARD OF DIRECTO RS
8
THE COMPANY
8
ACTIVITIES
8 COMPANY DEVELOPMENT 8
MARKET CONDITIONS
9
FINANCIAL RESULTS
10 RISK MANAGEMENT 10 ORGANISATION 11
FUTURE PROSPECTS
12 ORGANISATION
12
12 SG FINANS AS 12 VISion and valu es 12 BRANDS AND IMAGE
13 SG Equipment finance
13 14
14 O RGANISATION 17 SG FINANs NORWAY 18 SG FINANs DENMARK 19 SG FINANs SWEDEN
21
21 ANNUAL ACCOUNTS 21 PROFIT AND LOSS ACCOUNT 22 BALANCE SHEET 24 CASH FLOW STATEMENT 25 STATEMENT OF CHANGES IN EQUITY 26 NOTES 45 AUDITO R´S REPORT 45 CONTROL COMMITTEE ’S STATEMENT
46 EMPLOYEE REPRESENTATIVES AND MANAGEMENT
47 ADDRESSES
“In a difficult and unpredictable period we concentrate our efforts in maintaining the good relationship we have with our customers. Not at least we will behave as an predictable and reliable financial partner for Scandinavian businesses who believe in the future”. Carsten Thorne CEO SG Finans AS
45
ANNUAL REPORT 2009 SUMMARY
Customer satisfaction It is during times as those we experienced in 2009 that we must live up to our business concept of satisfying Scandinavian customers needs for equipment, liquidity and administrative services. Customer satisfaction in this respect is an important condition for us in reaching our current and future targets. 2009 was characterized by a shortage of capital and liquidity,
Customer satisfaction – an important premise
in addition to a reduced willingness to invest in a difficult
Our last KTI (Customer Satisfaction Survey 2009) shows
market for Scandinavian enterprises. The consequence for
that we have a very good standing in the market. We also
us was an increase in credit losses. This has also had
recognise the importance of standing side by side with loyal
serious consequences for a large number of customers and
customers and cooperative partners during a difficult period
cooperative partners we have worked with over a long time.
for many. I have the backing of all our employees when I say
In contrast to continued high private consumption,
that in the future we will not only contribute good financial
especially in Norway, enterprises’ demand for credit has led
concepts, but we will also offer our knowledge, enthusiasm
to a strong fall in new sales volume compared to 2008. At
and team spirit. To the benefit of all.
the same time it is a pleasure to be able to announce that we have, in this situation, managed to maintain and actually
I thank our customers and cooperative partners for the faith
increase the company's market share.
they have shown in us, and also give credit to our staff and representatives for their efforts in 2009.
“We are looking for those who believe in the future" We also expect 2010 to be characterized by difficulties for businesses in every Scandinavian country. As result of this, we will probably see a large number of bankruptcies and credit losses for the second year in a row. For us, this means stricter following-up of exposed accounts, while we continue to maintain the very good relationships we have with our customers and cooperative partners. In a difficult and unpredictable market we will concentrate on maintaining the good relationships we have with our customers. Not least, we will in this regard show that we are a predictable and reliable partner for business customers that have faith in the future.
Carsten Thorne
Key figures
Amounts in NOK thousands
2009
2008
Profit & Loss Net operating income Operating expenses
1 144 530
930 691
-440 142
-436 164
Operating profit before losses
704 388
494 527
Losses on loans
-460 080
-103 909
Net profit before tax
244 307
390 618
16 530 316
17 624 509
Loans outstanding NORWAY Equipment Transport
3 979 228
4 158 471
Factoring
1 724 358
2 432 296
Øvrig
2 834 473
2 553 023
25 068 375
26 768 299
Equipment Denmark
2 144 056
2 622 457
Equipment Sweden
3 357 335
3 387 083
Sum Danmark/Sverige
5 501 392
6 009 540
Total loans
30 569 767
32 777 839
Risk weighted assets
Total Norway SWEDEN/DENMARK
24 293 548
26 841 418
Total regulatory capital
2 896 818
2 717 756
Capital adequacy ratio
11,20 %
9,64 %
67
Annual Report 2009 DIRECTORS‘ REPORT
Report of The Board of Directors At the start of 2009 the uncertainty was high and the signals indicated that it would still be difficult times for Scandinavian businesses in large parts of the year. The financial crisis culminated in many ways in the autumn of 2008, and we could expect that the ripple effects of the crisis in the world economy would result in continued lack of capital and liquidity, reduced willingness to invest and an increasing number of bankruptcies. Governments introduced measures to dampen the effects of the crisis and to stimulate further growth, while central banks were cutting interest rates down to historical low levels at unforeseen pace. Still the year has been marked by an ever-increasing number of bankruptcies, and for SG Finans this has unfortunately hit also a large number of large and smaller customers we have been working with for many years. An increasing number of bankruptcies in the portfolio has
increase in pricing of credit risk, which also resulted in
naturally also resulted in a significant increase of
increased funding costs for banks and a strong change in the
repossessed assets and credit losses for the company.
pricing of credit and liquidity to businesses, the businesses
In this period it has been important to have a solid owner,
preparedness to invest and their demand for new credit was
backing the activities with continued access to liquidity in
strongly dampened. The new business volume was thus
order to ensure that we maintain and further expand our
strongly reduced from 2008. The company maintains its
position as an important and stable collaboration partner
market leading position and wins market shares within
for Scandinavian businesses. With this basis, SG Finans
financing of high-tech equipment as well as in Sweden and
launched in the second half of 2009 a campaign with the
Denmark. Reduced new business volumes and increased
message “We are looking for those who believe in the
credit losses also resulted in a falling trend in funded assets
future!”
in the second part of 2009. In total the volume of funded
In many ways 2009 has marked the continuation of international
assets fell with 6,7 % from the start of the year. The branch
turbulence, after a period of increased uncertainty for the future
in Sweden was able to maintain its position, with good
development. In the beginning of the year the Central Bank of
growth in new business volumes and funded assets. In the
Norway cut dramatically lead interest rates. This resulted in a
period we have also observed a change in the competition
6 % drop in the Norwegian money market rates over a
as several international institutions have reduced their
6 months period from autumn 2008 to spring 2009.
activities or phased out their business in the Scandinavian market. Access to capital and liquidity has not been a
The financial crisis and increased uncertainty has resulted in
constraint for SG Finans, and the company has continued its
a significant reduction in the willingness to take risk and thus
strategy to develop and maintain long-term relationships to
an increase in the pricing of risk. Further to a general strong
customers and partners in the local market.
In 2009 we have seen the results of a number of internal
COMPANY DEVELOPMENT
projects for the continued development of the company. SG
2009 has been an eventful year largely marked by the
Finans has implemented a new factoring system, developed
financial situation of Scandinavian businesses. After several
new solutions to cover our customers’ requirements and
years of continuous growth in total loans as well as number
needs, and carried a number of internal improvements
of financed contracts, the development turned in 2009 and
related to new regulatory requirements. A milestone was
total loans fell by 6,7% during the year. A direct cause for
reached when the company presented to Finanstilsynet its
this is the reduction in business investments, and therefore
application to use internal models for the calculation of the
lower demand for capital equipment in most sectors. The
regulatory capital requirement for operational risk and for
company established new financing for a total of NOK 9,2
segments of the credit portfolio.
billion, which is a reduction of 18% compared to 2008. This
In spite of tight labour market conditions with increasing
must still be considered satisfactory in a market where the
competition for highly skilled staff, the organisation has
demand has decreased by more than 25%. Within some
managed the situation in an effective manner. A strong
segments, and particularly the financing of high-tech
focus on sales and market activities characterises the
equipment, the company has achieved good growth. We
organisation, and thanks to our skilled and motivated
see that financing of high-tech equipment now represents
employees in addition to the good relations with our
about 20% of new financing. Furthermore, we have
customers and partners, the company has also delivered in
managed to maintain the new business volumes in Sweden
2009 a good result. (All the following figures are for SG
at the same level as in 2008, in spite of a general drop in
Finans AS).
the market. SG Finans maintains its position as the market leader of equipment finance in Norway. The company is
The company’s operating profit before tax came to MNOK
also market leader in ordinary factoring. It is our objective to
244,3. Total loans at year-end amounted to NOK 30,6 billion
continually develop products and systems within the areas
which represents a reduction in loans of 6,7 %.
of factoring and equipment leasing.
THE COMPANY
As an important part of the company's focus on relationship-
SG Finans AS is a wholly owned company of the Société
strengthening activities, a number of market initiatives and
Générale Group. The company is part of the SG Equipment
events were carried out in 2009. The primary objective of
Finance business line which is Europe’s leading player for
these activities has been to strengthen relations with the
equipment leasing. Factoring is an important focus area.
company's most important customers and partners. A goal
Société Générale is a leading financial group in the euro
for the future is to continue to develop the company’s
zone. The head office is located in Paris. At year-end the
Scandinavian corporate culture and further strengthen its
group had 163.000 employees.
brands, i.e. SG Equipment Finance and SG Factoring.
ACTIVITIES
MARKET CONDITIONS
With a local presence and a European network, SG Finans
For several years the Norwegian finance companies have
AS aims to satisfy the requirements of Scandinavian trade
enjoyed favourable growth as a result of the strong
and industry for capital-intensive equipment, liquidity and
development in the Norwegian economy. The development
administrative services. The company is a Scandinavian
turned in 2009 further to the change in the business cycle.
finance company, and its business is carried out through a
This has also impacted SG Finans. Scarcity of capital and
broad, Scandinavian distribution network with 16 regional
increasing prices on liquidity have lead to changes in the
and sales offices in Norway, 5 offices in Sweden and 2 in
pricing of credit. The general economic outlook for 2010
Denmark. The company's head office is located in Lysaker.
indicates a further dampening of overall economic growth,
At the end of the year the company had 358 employees.
albeit not to the same extent as in 2009.
The activities of SG Finans do not pollute the external
SG Finans enjoys a very strong market position for its
environment; however, some leasing objects may cause
products in the Norwegian market. Based on figures provided
pollution when they are used.
89
Annual Report 2009 DIRECTORS‘ REPORT
by the Association of Norwegian Finance Houses as at 31.12.
future losses must still be assessed as larger than normal.
2009, the company's market shares are as follows:
The Board asses that the write-downs for credit losses
• Equipment leasing
31,7 %
represent a satisfactory estimate of expected losses in the
• Factoring (turnover)
40,0 %
portfolio by year end 2009. Going into 2010 most indicators
SG Finans thereby retains its position as a market leader in
predict that we must expect still high credit losses in the
Norway within both product areas. The company has also
current year.
strengthened its position in Sweden and Denmark with increased market shares. The company is thus one of
Assets that are repossessed as a result of defaulted leasing
Scandinavia’s leading finance companies.
and loan contracts amounted at year end to MNOK 246,6
FINANCIAL RESULTS
94,5 during the year. Turnover during the year for
For 2009 the operating profit before taxes for SG Finans AS
repossessed assets amounts to MNOK 700,1, which is an
was MNOK 244,3 compared to MNOK 390,6 in 2008.
increase from 2008 when the turnover was MNOK 455,0.
from in total 795 contracts. This is an increase of MNOK
The company’s total income was in 2009 MNOK 1.144,5
Net loans outstanding has fallen from NOK 32,8 billion to
compared to MNOK 930,7 in 2008. The increase in income
NOK 30,6 billion. This is a decrease of 6,7 % during the
is mainly linked to increased interest margin on loans. The
year. The branches in Sweden and Denmark represented 18
operating expenses amounted to MNOK 440,1 compared
% of the net loans outstanding at year end.
to MNOK 436,2 the previous year. Staff expenses represent approximately 59 % of the total expenses in
The company’s equity was MNOK 2.923,7 including the
2009, which is at the same level as previous year. Further
result of the year at end 2009. Regulatory capital for the
to the change from a defined benefit to a defined
calculation of the capital coverage amounted to MNOK
contribution retirement scheme for employees in Norway,
2.896,8 as of 31.12.09 including the result of the year. The
the company has recognised an accounting income of
capital coverage by the year end 2009 was 11,20 %. The
MNOK 35,4.
company has presented in 2009 its application to the regulator to use internal models for the calculation of the
In 2009 the company, as the market in general, has
regulatory capital requirement for credit risk for a number of
experienced again a large increase in bankruptcies, after an
clients segments as well as the advanced method for the
increase which started in 2008 from a comparably low level
calculation of the regulatory capital requirement for
in 2007. As a result of this the total cost of risk increased to
operational risk. The application is not yet finally assessed
MNOK 460,1 compared to MNOK 103,9 in 2008. This
by the regulator, and the capital requirement and capital
represents 1,58 % of average loans outstanding, up from
coverage for 2009 is calculated based on the Basel II capital
0,37 % of average loans outstanding in 2008.
directive’s using the standard method for credit risk and the basic indicator approach for operational risk. Total risk-
Total write-downs for credit risk was at year end MNOK
weighted assets was MNOK 24.293,6 at the end of 2009,
371,6, corresponding to 1,22 % of total loans outstanding.
and the regulatory capital requirement for credit risk was
This is an increase of MNOK 207,6 during the year. In
MNOK 1.943,5. The regulatory capital requirement for
comparison, at the end of 2008, total write-downs for
operational risk was MNOK 125,6. The company does not
credit risk represented MNOK 164,0 or 0,5 % of total loans
take market risk and the regulatory capital requirement for
outstanding. Gross doubtful loans were MNOK 984,1
market risk was zero. The total capital requirement was
compared to MNOK 928,1 the previous year. This
therefore MNOK 2.069,1. The capital coverage is
represents 3,2 % of total loans outstanding, which is an
satisfactory compared to regulatory minimum requirements
increase from 2,8 % in 2008. Because of the magnitude of
and the company’s internal requirements and guidelines for
the financial crisis and the consequences for the
solidity and capital adequacy. As part of the company’s
Scandinavian business sector, the uncertainty in relation to
capital management procedures, stress testing of all
relevant risks is performed and the change in the capital
As part of the company’s policy and procedures for capital
requirement under various stress scenarios is evaluated.
management, the company regularly performs assessment
The capital adequacy is considered satisfactory also
of the capital situation and capital adequacy in given stress
considering the results of the performed stress tests.
tests for various scenarios and relevant types of risk. This has
Disposable equity after performed stress tests and
been carried out in accordance with the regulatory
additional capital requirement (pillar 2 requirements) is
requirements for internal processes for the assessment of
MNOK 643,0 inclusive net result of the year, compared to
capital adequacy (Internal Capital Adequacy Assessment
MNOK 277,9 at the end of 2008.
Process or ICAAP). The analysis demonstrates that the company’s capital adequacy and solidity is satisfactory in
The net income after tax is MNOK 170,2 for the company.
respect of expected future growth and also following the
This is proposed transferred to other equity.
stress tests that have been performed.
The Board considers that the financial statements give a
In 2007 and 2008 the company has implemented the
true and fair view of the company’s financial position. Other
central elements in Société Générale group’s methods and
than what is stated in the accounts there have not been any
procedures for operational risk management. As a part of
events after balance-sheet date that may have any
this, the company has implemented monitoring and
significant impact on the financial statements. Based on the
reporting of key risk indicators for operational risk and
results of the year, the Board concludes that there are
scenario analysis of different stress scenarios, in addition to
grounds for continuing operations, and this forms the basis
the existing event and loss reporting and the group’s
for the preparation of the financial statements for 2009.
framework for self-assessment of risks and controls. SG Finans thus complies with the Société Générale group’s
RISK MANAGEMENT
requirements for the use of the advanced measurement
The company’s principles for risk management have been
approach (AMA according to the Basel II capital directive)
presented in more detail in note 18 Risk management.
for the calculation of the capital requirement for operational risk. The company has in 2009 applied for the approval
Since the second half of 2007 capital markets have been
from regulatory authorities to use the AMA method in the
marked by financial crisis, lack of confidence and a sharp
calculation of capital adequacy and reporting to regulatory
reduction in liquidity in the interbank market followed by an
authorities and the public.
increase in funding costs and general increase in credit spreads. In 2009 interbank markets have still been volatile
As part of Société Générale group, the company has
with large changes in lead interest rates from the
worked in line with the group’s principles and framework
Scandinavia central banks. SG Finans gets its funding from
for internal control and corporate governance. Assessments
the parent company and we have in the entire period
are made of relevant risks and the efficiency of internal
maintained a close contact with our parent. In total we can
controls. The results of these assessments are considered
conclude that the company at all times has had access to
satisfactory.
satisfactory levels of funding and liquidity, in spite of the general financial crisis and the extraordinary turbulence in
ORGANISATION
the markets. A central element in the company’s
At the end of the year the company had 358 employees,
management of the financial crisis has been the possibility
whereof 295 in the Norwegian operations, 34 in Sweden and
to incorporate increased cost of funding in the pricing of
29 in Denmark. During the year there have been some
financing to clients.
changes in the company management. Anders Holmgren has
The company is subject to internal and external capital
been nominated as new head of the branch in Sweden, Sverre
adequacy requirements. The internal guidelines compel the
Edin took over the responsibility of the ICT function and
company always to comply with the internal requirements
Armand Taillandier replaced Odd Sørensen as head of risk. The
which are stricter than the regulatory minimum requirements.
Board welcomes all new employees joining SG Finans in 2009.
10 11
Annual Report 2009 DIRECTORS‘ REPORT
SG Finans focuses on ensuring that its employees
follow up of doubtful exposures. In the meantime it is
experience equal opportunities, and work designed to
important for SG Finans, in these times of economic slow-
achieve this has been incorporated into the company’s
down, to continue to maintain and develop the good relations
strategy plan. Furthermore, the company has established
with customers and the collaboration with partners. The
functions and procedures to prevent any form of
organisation is well prepared to meet the challenges. The
discrimination. This includes the Remuneration and
company has employees with a high degree of competence
Recruitment Committee and the Work Environment
and experience and the organisation has both the capacity and
Committee, whose members are equally staff
will for adjustment and change.
representatives and company management, anonymous whistle-blower protection procedures for employees, periodic staff appraisal reviews as well as staff satisfaction surveys where any potential discrimination shall be identified and avoided. As a result of the extremely tight labour market and the strong demand for employees with expertise in the finance sector, the year 2009 has also been marked by a relatively high turn-over, although somewhat lower than previous years. The rate of absence due to illness has increased somewhat compared to 2008 but is still at an acceptable level with in total 4.131 absence days. This represents 4,8 % absence. The Board is not aware of any personal injuries occurred at work during 2009. The working environment at SG Finans is considered to be good. This was also confirmed in the company’s staff satisfaction survey. The company has
Lysaker 2 March 2010
a Work Environment Committee and a Cooperation Committee. Legally required meetings have been held. Various cultural and expertise-building measures were implemented in 2009, both at local (regional and branch) and central level. Emphasis has also been placed on continuing to build up a common Scandinavian culture while
Jean-Marc Mignerey
simultaneously promoting the advantages of being a part of
Styrets formann
one of Europe’s largest banking groups to the company’s employees. Being part of Société Générale group is also actively marketed in recruitment of new staff. Jacques Bensen
Gérard Pignatel
Tommy Pedersen
Kjell Vegard Opheim
Christine B. Meyer
Carsten Thorne
FUTURE PROSPECTS The world economy has improved significantly in 2009 compared to 2008. Still we must expect that the economic slow-down we are currently in will continue throughout 2010. We must expect still a high number of bankruptcies and credit losses. For SG Finans the development in 2010 will largely follow the same development as the rest of the business. 2010 will therefore be a challenging year, and the changed economic cycle demands a strong cost control and tight
Administrerende direktør
Organisation 2009 SG Finans AS – a Scandinavian player in the Société Générale Group SG Finans AS is a wholly owned company in the Société
• sales and relationships
Générale Group. The company operates through 15 regional
• knowledge
and sales offices in Norway, five offices in Sweden and two
• enthusiasm and team spirit
in Denmark. It has a total of 358 employees and its head office is in L ysaker, near Oslo.
Brands and image The core activities in Norway, Sweden and Denmark are
It is part of the SG Equipment Finance business area, which
equipment finance (mainly leasing) and factoring (for the
is Europe’s leading player in equipment leasing. Société
time being only in Norway). The product areas are marketed
Générale is among the leading suppliers of financial
under the SG Equipment Finance and SG Factoring brands.
services in the Eurozone. The group has 165 000 employees
SG Equipment Finance is used as the logo at company level.
and is represented in 82 countries.
This is in line with the image for the combined leasing and factoring activities in the other finance companies in the
Vision and values
Société Générale Group, which are also marketed under the
SG Finans wants to be seen as a leading Nordic player who
SG Equipment Finance brand.
creates value through teamwork and knowledge. This vision is based on the following core values:
CEO
Carsten Thorne Group coordinator Kjell Brevik
Credit Armand Taillandier
HR/Personal
Credit Adviser Odd Sørensen
Maria Ulla Internal Auditing
Finance
Carl Gunnar Lunde
Hans Einar Herzog IT
Sverre Edin
Region Oslo/Akershus og South
Arne Hodnefjell
Sales and Development Equipment
Sales and Development Factoring
Sweden
Finn Mathisen
Jan Juliussen
Anders Holmgren
Region East
Denmark
Finn Kristiansen
Lars Rasmussen
Region West
Espen Brochmann Region North
Stig-Are Eriksen
12 13
annual report 2009 SG Equipment finance
SG Equipment Finance 2009 SG Equipment Finance, European market leader, operating in 25 countries worldwide, proves its resilience in the current economic conditions. In 2009, the leasing market fell by 35% in the equipment
In a year 2010 with little visibility, we will continue to
leasing sector, according to Leaseurope estimates. In this
demonstrate that our business model can prosper even in
context, SG Equipment Finance gained market shares and
difficult economic conditions. We will continue to focus on
succeeded in offsetting the adverse consequences of the
our vendors and clients, develop our core business and
economic slowdown and the growing rate of defaults, by
assets and provide value – added services.
offering new services to its clients and improving operational efficiency.
• 23 Billion Euros End Managed Assets • 2800 Employees
SG Equipment Finance originated new business worth €
• No. 1 in Europe in Equipment & Vendor Finance
8,5 Billion in 2009 which is well spread across a wide range
• 8.5 Billion Euros New Business Volume
of products. The volume of managed assets had grown to
• 140 000 Customers
over € 23 Billion by the end of 2009. Thanks to the sustained
• More than 100 branches
development of our Vendor business, new key Vendor partnerships and the robust growth of our activity in emerging countries like Brazil and China, we have proved our resilience in a changing economic environment. Besides, our latest acquisition, PEMA offers a great opportunity to our clients to gain flexibility and reduce fixed costs in a still fragile economic recovery. In a context of scarce funding, our position as a subsidiary of Société Générale Group is giving us a clear competitive advantage. Société Générale bank ranks 10th in Europe in terms of market capitalisation as of December 31st 2009, posted a Net Income of EUR 0.68 Billion for the financial year 2009 with a solid Tier one ratio (Basel II) of 10.7% and Core Tier One of 8.4%. Société Générale is one of the market's leading providers of specialised financial services. It has established specialised financial services in 47 countries worldwide - with a workforce of about 30 000 people. As a core business of Société Générale, SG Equipment Finance benefits from the Group’s support to implement its strategy and support its customers.
SG Finans AS – Organisation and management The business activities of SG Finans are organized into regions (Norway) and branch offices (Sweden and Denmark). Key corporate sections which support the distribution of the company’s products and services are: Credit, Finance and IT – together with the Departments of Sales- & Business Development Equipment (SOFE), and Sales- & Business Development Factoring (SOFF).
Carsten Thorne
Hans Einar Herzog
CEO
Finance
Lysaker
Lysaker
Armand Taillandier
Odd Sørensen
Credit
Credit Adviser
Lysaker
Lysaker
Sverre Edin IT Lysaker
14 15
annual report 2009 Organisation
Finn Mathisen
Jan Juliussen
SOFE
SOFF
Lysaker
Lysaker
Arne Hodnefjell
Stig-Are Eriksen
Espen Brochmann
Region South and Oslo/
Region North
Region West
Akershus, Lysaker/Kr.sand
Trondheim
Bergen
Finn Kristiansen
Lars Rasmussen
Anders Holmgren
Region East
Copenhagen
Stockholm
Hamar
Denmark
Sweden
Den Norske Opera, Oslo
annual report 2009 SG EQUIPMENT FINANCE in norway
16 17
SG Finans – Norway The fabulous growth in the Norwegian businesses more or less died out in 2008 and difficulties escalated for most branches throughout 2009. A large number of companies, large as well as small, found out overnight that they had to shut down or, in the best case scenario, start downsizing, with serious effects on employees and various partners. As an important financial partner for a broad range of Norwegian companies, SG Finans Norway was also affected by these difficult times. The result is, therefore, severely marked by loss. Despite this, the Norwegian company has maintained its position as market leader in both leasing and factoring. The Norwegian operations constitute the backbone of SG
There are ongoing processes of improvement and efficiency
Finans AS. Prospects are somewhat more optimistic for
taking place in several important areas of the company.
2010, although Norwegian business and industry cannot yet
These are operational and IT related, or processes linked
claim a clean bill of health. There is, therefore, good reason
with provision of credit and risk management.
to assume that we will experience bankruptcies and credit losses far above the norm for the second year in a row. Awareness directed at cost-reduction measures will
Leasing market leader in a difficult year
continue to be on the agenda, at the same time as
New sales in 2009 were at the same level as the previous
relationships with the company's customer groups must be
year. This means that the company has maintained its market
further reinforced.
leading position of 31.7% in a difficult year. ICT is showing strong progress, while such traditional industries, such as
Norway's competition situation is virtually unchanged from
construction and transport, have struggled heavily in 2009.
2008. This applies to both of our main products, leasing and
The same trend is expected to continue in 2010.
factoring. If the Norwegian activities are the backbone of SG Finans,
Factoring in a market-leading position
the current regional structure represents the underlying
Standard factoring is the company's main product. Its
reason for the close and good relationships that have been
market share of 40% makes the company the market
established with Norwegian companies. Maintenance of
leader. We are registering increased interest and demand
this structure is significant for our continued success. The
for the product. In 2009, the company developed a
regional results for 2009 also show that value creation in
competitive new factoring system.
Norway is distributed fairly evenly across the entire country.
SG Finans Denmark Among the Scandinavian countries, Denmark was hardest hit by the financial crisis. Because of increasing provisions for losses, the operating profit was not satisfactory. By increasing sales efforts and competitiveness, market share was increased in 2009. The financial crisis of 2009 has negatively impacted financial
increased our market share in a difficult market.
markets and we have experienced a sharp decline in
Liquidity became a scarce and expensive factor in 2009. The
business investment financing activity in Denmark. Strong
markets experienced several banks that could not provide
decline in businesses’ turnover, decreased production and
liquidity and which demanded very large increases in
scarce liquidity has led to a record number of bankruptcies
charges. Because of Societe Generale’s strong ownership of
and bankrupt-threatened companies in Denmark.
SG Finans, we have been fully able to offer liquidity and at competitive prices.
The difficult conditions for the business community have naturally fuelled a greater need for financial flexibility, and
Our customers and partners are experiencing falling
we have helped companies through periods of difficult
demand and thus less need for leasing, but in relation to the
adjustments and changes where this has been necessary.
companies' levels of activity and the overall financing structure, the share of leasing is expected to increase. Our
Despite our broad differentiation within sectors, geography
level of activity in the current market also creates future
and equipment types, as well as a predominantly strong
potential.
customer composition, we have observed a sharply increasing need for provisions for losses. The leasing market
It is expected that 2010 will be
for business equipment, e.g. cars has fallen in 2009 by
another difficult year. As a
approx. 35 %.
financing company with considerable expertise in
Our ambition is to be known as the most attractive leasing
finance, and a company that is
company by our customers, partners and employees, so we
independent from the other
place a lot of importance on feedback from these interested
Danish players and banks, we
parties. Our customer and employee satisfaction surveys
have a solid basis for the
have confirmed that SG Finans Denmark has an extremely
continued expansion and
high level of customer and employee satisfaction, which is a
development of SG Finans
strong basis for further growth and development.
Denmark.
Despite this period of downturn in the Danish economy and business community, we have set a target for continued growth. We create value by working with our customers and partners, providing specialised leasing solutions, flexibility and superior service. On this basis, we have proportionally increased our sales efforts in the leasing market, and
Lars Rasmussen
annual report 2009 SG EQUIPMENT FINANCE In denmark and sweden
18 19
SG Finans Sweden Although 2009 was a challenging year, it provided excellent opportunities for us to strengthen our position in the market. Increased credit losses and a lack of liquidity in the credit market were key factors in our work in 2009. Our secure stakeholders have enabled us to offer both access to liquidity and competitive terms over the year, which has consolidated our position in the market. New sales on the total finance company market fell by 17%
our commitment to a local presence, skilled staff and high
over the first three quarters of 2009 compared with 2008.
quality.
Despite a much lower rate of investment, we succeeded in maintaining our new sales volume from 2008, thus
Considering the foundations
increasing our market share from 4.1% to 5.04%. Over the
that have been laid over the
third quarter of 2009, our market share of the total finance
years, we are cautiously
company market amounted to 7.4%, compared with 5% for
optimistic about 2010. A
the third quarter of 2008.
growing willingness to invest and lower credit losses ought
During the year, we established a number of new
to enable us to continue
partnerships with both national and international suppliers.
consolidating our market position.
Just as in the market at large, we were affected by increased credit losses. A sharper focus on and consolidation of this part of the business process means that we now have a good grip on this issue. The division of our sales organisation into three regions, which took place in late 2008, has proven a great success. Through our regional presence, we have managed to combine closeness to our partners and clients with the strength of belonging to one of Europe’s leading finance companies, bringing the benefits of a global network and considerable expertise in many areas. Staff turnover remains low, as in previous years, and there has been a strong focus on the professional development of employees and managers. This year’s supplier and client surveys produced excellent results once again, cementing
Anders Holmgren
Lysaker (head office)
20 21
annual report 2009 annual accounts
Profit and loss account 2009
Amounts in NOK thousand
Interest and similar income
Notes
31.12.09
31.12.08
Total interest and similar income
3
1 865 856
2 453 970
Total interest and similar expenses
3
-891 302
-1 717 602
974 554
736 368
Net interest margin Total commission and fees income
4
196 956
185 990
Total commission and fees expenses
4
-103 517
-98 431
93 438
87 559
-3 999
-2 265
Net fees income Net gain on financial instruments at fair value
5
Net change in value and gains on foreign currency
1 626
977
78 912
108 053
1 144 530
930 691
6,7
-257 673
-260 960
6
-182 469
-175 204
704 388
494 527
-460 080
-103 909
244 307
390 618
-74 102
-105 112
170 205
285 506
-383
3 600
169 822
289 106
Equity holder of the parent
169 822
289 106
Total allocations
169 822
289 106
Income on other activity
4,13
Net banking income Payroll, fees and other staff costs Other operating expenses Gross operating proft Net cost of risk
8
Operating profit Taxes Profit for the year
9
Other compregensive income Exchange differences on translation of foreign operations Other comprehensive income for the year. Total comprehensive income of the year Attributable to:
Balance sheet
Amounts in NOK thousand
Assets
Notes
Cash and deposits with central banks
31.12.09
31.12.08
5
7
Deposits with financial institutions
14,22,23
271 041
529 336
Loans to financial institutions
22,23,26
2 834 473
2 553 023
10,15
0
0
2 702 031
2 786 702
Financial derivatives Loans to customers Repayment loans Factoring receivables Factoring loans Financial lease agreements
11
Total loans before allowances
152 900
531 210
1 508 560
1 838 857
23 371 803
25 068 046
27 735 294
30 224 816
8,20
(371 631)
(163 961)
19,22,23,24
27 363 663
30 060 855
Repossessed assets
21
246 589
152 101
Shares and primary capital certificates
13
216
55
Other intangible assets
12
26 880
36 120
Machinery, tools and equipment, means of transport
12
Allowances on doubtful loans Net loans to customers
9 249
9 195
Other assets
5 278
27 883
Prepayments and accrued income
7 280
8 088
30 764 673
33 376 663
Total assets
22 23
annual report 2009 annual accounts
Amounts in NOK thousand
Liabilities Loans and deposits from financial institutions with agreed maturity Deposits from and debt to customers with termination rights
Notes
31.12.09
31.12.08
16,22,23,24
26 343 771
28 882 187
24
305 445
394 300
10,15
134 302
150 116
Retention of margin and other customer accounts
24
22 762
15 746
Other liabilities
17
542 456
741 045
Financial derivatives
Accruals and deferred income
85 578
76 504
Pension liabilites
7
41 378
68 082
Deferred tax
9
365 283
294 807
27 840 976
30 622 787
Share capital
945 436
945 436
Share premium account
240 639
240 639
1 737 623
1 567 801
Total liabilities Equity
Other equity including profit for the year 25
Total equity Total liabilities and equity
2 923 698
2 753 876
30 764 673
33 376 663
58 867
57 380
Contingent liabilities Guarantee liabilities
28,29
Lysaker 2 March 2010
Jean-Marc Mignerey Styrets formann
Jacques Bensen
Gérard Pignatel
Christine B. Meyer
Tommy Pedersen
Kjell Vegard Opheim
Carsten Thorne Administrerende direktør
Cash flow statement
Amounts in NOK thousand
2009
2008
Operations Interest income Interest costs
1 716 617
2 378 646
-503 909
-1 311 635
Other receipts
275 868
269 412
Operating expenses
-537 668
-546 210
Receipts on previous losses Paid taxes Net cash flow from operations
17 996
8 365
0
-2 277
968 904
796 301
-7 642 298
-11 024 726
Proceeds from sale og leasing
2 158 588
2 065 947
Decrease in loans ( net )
7 444 119
4 770 601
-72 427
-86 707
-29
1
1 887 953
-4 274 884
( Increase) in tangible assets
-6 310
-23 045
Decrease of fixed assets
9 033
464
Net cash flow from investment activity
2 723
-22 581
-88 855
28 271
New investments leasing
( Increase ) in other receivables ( Increase ) in advance payments Net cash flow from current financial activity
Increase (decrease) in deposits from customers Increase (decrease) in equity Increase (decrease) in loans from credit institutions
-383
3 599
-2 815 034
3 265 710
-184 819
356 102
-28 786
-204 965
-3 117 877
3 448 717
Net cash flow
-258 297
-52 447
Cash at the 1st of January
529 343
581 790
Cash at the 31st of December
271 046
529 343
Increase (decrease) in debt Accrued costs Net cash flow from long term financial activity
Reconciliation cash, 31st of December 5
7
Deposits with financial institutions
271 041
529 336
Cash at the 31st of December
271 046
529 343
Cash and deposits with central banks
24 25
annual report 2009 annual accounts
Statement of changes in equity
Amounts in NOK thousand
SG FINANS AS Total equity 01.01.08
Share capital
Share premium a/c
Other equity
Total
945 436
240 639
1 278 695
2 464 770
289 106
289 106
Profit for the year Total equity 31.12.08
945 436
240 639
1 567 801
2 753 876
Total equity 01.01.09
945 436
240 639
1 567 801
2 753 876
169 822
169 822
1 737 623
2 923 698
Profit for the year Total equity 31.12.09
945 436
240 639
Notes to the accounts Accounting principles
Note 1
p. 26
Important accounting estimates and discretionary evaluation
Note 2
p. 27
Net interest income
Note 3
p. 28
Net fees and income on other activity
Note 4
p. 28
Net gains on financial instruments at fair value
Note 5
p. 28
Operating expenses
Note 6
p. 28
Pensions
Note 7
p. 29
Losses and allowances recognised in the Profit and Loss accounts
Note 8
p. 30
Taxes
Note 9
p. 31
Information on fair value
Note 10
p. 31
Leasing (financial leasing assets)
Note 11
p. 32
Tangible fixed assets and intangible assets
Note 12
p. 33
Share ownership
Note 13
p. 33
Restricted deposits
Note 14
p. 34
Financial derivatives
Note 15
p. 34
Funding / interest expenses
Note 16
p. 35
Other liabilities
Note 17
p. 35
Note 18
p. 36
Risk classification
Note 19
p. 36
Doubtful loans
Note 20
p. 37
Repossessed assets
Note 21
p. 37
Note 22
p. 38
Note 23
p. 39
Note 24
p. 39
Ownership
Note 25
p. 40
Information on related parties and remunerations
Note 26
p. 40
Capital adequacy
Note 27
p. 42
Guarantee liabilities and loan commitments
Note 28
p. 42
Contingencies
Note 29
p. 42
Number of employees
Note 30
p. 42
New standards
Note 31
p. 43
Income statement
Balance sheet
Information on risk Risk management Credit risk
Interest rate sensitivity Interest risk and interest rate adjustment period Liquidity risk Liquidity risk, remaining maturity on balance sheet items Currency risk Net position per currency Additional information
annual report 2009 annual accounts – notes
26 27
Notes 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES SG Finans AS is a Scandinavian finance company, and its business is carried out through a broad, Scandinavian distribution network with 16 regional and sales offices in Norway, 5 offices in Sweden and 2 in Denmark.SG Finans AS forms part of Société Générale SA, a group listed on the stock exchange with headoffice in Paris, France. The Group consolidated financial statement is prepared by Société Générale SA, and is available on www.socgen.com The company is a limited company incorporated and domiciled in Norway. Its registrered office is in Strandveien 18, Lysaker. The financial statements for the year ended 31 December 2009 were authorised for issue by board of directors and annual shareholders meeting on 02 March 2010 The basis of preparation of the financial statements SG Finans AS financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), which have been approved by the E.U. The financial statements are set up on an historic cost basis, with the exception of the specific recognition criteria for financial instruments as described below. Branches and subsidiary company The financial statements show the figures for SG Finans AS (“the company”), i.e. the business operations in Norway and the branches in Denmark and Sweden. The financial statements are presented in Norwegian Kroner and all values are rounded to the nearest thousand Kroner, except when otherwise indicated. The branches in Denmark and Sweden are subject to a separate accounting treatment. The branch accounts are included in the company's accounts and notes. When translating foreign currency the mid-rate in effect as at 31.12 is used for all balance sheet items. Revenues and expenses are translated at the rate of exchange in effect at the time of the transaction. . The subsidiary DC Service AB has been exempted from consolidation as the company’s profit before taxes and balance both represent less than 0.1% of the profit and balance for SG Finans AS, as well as the criteria’s in IAS 27.10 are met .See note 13. Comparable figures Comparable figures are prepared for profit and loss, balance, cash flow statement and notes. The use of estimates The preparation of financial statements in accordance with IFRS includes assessments, estimates and assumptions that affect both which accounting principle is applied and the reported amounts for assets, liabilities, revenues and expenses. The actual amounts can vary from estimated figures. Estimates and underlying assumptions are reviewed and assessed on an ongoing basis. Changes in accounting estimates are applied in the period in which the estimates are changed, and in all future periods which are affected. Note 2 provide further information on significant estimates and assumptions. Assets and liabilities in foreign currencies Monies in foreign currencies in the balance sheet are translated at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the exchange rate in effect at the time of the transaction. Non-current and current liabilities are valued at face value. Accrual accounting for interest income, sales gains, commissions and fees Interests are carried at amortised cost in accordance with the effective interest rate method. Commissions received and paid, fees and other related amounts are included in the calculation of the effective interest rate. The expected maturity of the contracts is used as the basis for calculating the effective interest rate for loans, whereas the contractually fixed maturities in the agreements are used for financial leases. When contracts are terminated during the period, the outstanding balance is posted to the income statement as revenue or expense. Loans, loans that are in default or at risk of default and individual/group write-downs Loans are valued at amortised cost with the exception of loans that are at risk of default or in default where there are objective indications of impairment in value.
Objective evidence of impairment for credit risk on loans includes significant financial problems at the debtor, defaulted payments or other material breaches of contract, instances where it is considered probable that the debtor will initiate debt settlement negotiations or other specific circumstances that have occurred. Write-downs will be made if objective evidence of a decline in value can be identified. If there is objective evidence that an impairment in value has occurred, the loss is measured as the difference between the asset’s value in the balance sheet and the net present value of estimated future cash flows (excluding future credit losses which have not occurred), discounted with the financial asset’s original effective interest rate (i.e. the effective interest rate calculated at inception). The asset’s balance sheet is reduced using a separate provision account. The loss amount is included in the Profit and Loss statement. Loans are defined as being in default when the delay in payment exceeds 90 days and the delay is not due to accidental circumstances at the customer. If a customer has several contracts, but only one is in default, the entire customer engagement is reported as being in default. Loans that are at risk of default are not necessarily in default, however the customer’s financial standing and the value of the securities indicate a risk of default. The recovery of loans in default takes place with a new assessment when the applicable payment plans have been followed for a period of time and the loan is no longer deemed to be at risk of default. Write-downs for credit losses are made for loans on an individual basis. In accordance with the group’s guidelines and documentation requirements for write-downs on group’s of assets, we have not written down groups of loans. Losses that have been incurred but not reported (IBNR write-downs) have not been written down. When the company collects assets for realisation of a security interest or sells leased objects, and this is due to customer default, the lease object is classified as a repossessed asset and temporarily valued at the assumed net realisable value. Actual losses on realisation are recorded to losses on loans in the income statement. Financial assets When financial assets and liabilities are first entered into the accounts, they are classified in one of the following categories for the purposes of assessing value: • Loans and receivables, • Fair value with changes in value through profit or loss (“trading”), • Other liabilities.
Loans and receivables This category includes financial leases and loans that are not listed in an active market and are not defined as assets valued at fair value with changes in value recognised in the income statement. The classification also includes loan factoring, receivables factoring and loans to the parent company. This group is carried at amortised cost. Fair value with changes in value recognised in the income statement The classification includes derivates that cannot be classified as hedging instruments. Interest income and expenses are recorded directly into the accounts. See separate note on hedging. Other financial obligations The classification includes borrowings from the parent company and is recorded at amortised cost. Hedging, foreign currency and interest rate instruments Hedging the interest rate risk from fixed interest rate contracts is implemented through swap contracts where we pay fixed and receive variable interest. This enables us to hedge our financial risk against changes in interest rates, and the loans outstanding match the funding.
In compliance with IAS 39 changes in the market value of the fixed interest rate portfolio to fair value are measured and presented as part of the loan and market value of the hedging instruments for accounting purposes in line with financial derivatives. The net difference is recorded in “Net gains on financial instruments at fair value”.The connection is verified in the form of quarterly tests of the effectiveness of the hedge. A hedging efficiency of 80-125% is expected.
Intangible assets Capitalised software is recorded as an intangible asset and depreciated using the straight line method based on the estimated lifetime, 3-7 years, from when the software is operational. Capitalisation occurs when the circumstances in accordance with IAS 38 have been met. The costs associated with maintaining the economic value of IT systems are expensed directly.
The hedge accounting is discontinued if it does not meet the abovementioned hedge requirements, the hedging instrument expires or is terminated, exercised or sold, or the company chooses to discontinue hedge accounting.
Property, plant and equipment Property, plant and equipment are stated at cost less an adjustment for straight-line depreciation, based on the estimated lifetime, 3-10 years, from when the assset is operational, see note 12.
Interest rate swaps that do not qualify as hedging instruments are classified as trading and presented in the balance sheet in the line item for financial derivates and changes in value are included in “Net gains on financial instruments at fair value”. Currency risk is managed by borrowing in the same currency and with the same maturity as assets in the foreign currency. The net result from the contracts in foreign currencies is exchanged into NOK or other local currency on realisation. Valuation of financial instruments Financial instruments are included in the balance sheet at fair value at the date of trade. On subsequent measurement the value in the accounts of financial instruments as defined above is set to either fair value or amortised cost. Refer to Note 10 for further information about fair value. Leasing SG Finans’ leasing activities comprise financial lease agreements. Financial leasing is classified as leasing and for accounting purposes is treated as loans. Contracts with residual value are written off to the residual value over the duration of the contract. The interest component of the lease payments is recorded as interest income in accordance with the principles described in the point for loans, while the principal component reduces the lease loan. Revenue from lease payment is recorded in accordance with the annuity principle. For tax purposes, the leasing objects are depreciated using the declining balance method.
2. IMPORTANT ACCOUNTING ESTIMATES AND DISCRETIONARY EVALUATIONS The preparation of annual financial statements in conformity with generally accepted accounting principles requires that on occasion management must make estimates and assumptions. Estimates and discretionary evaluations are regularly assessed and are based on historic experience and other factors, including the expectations of future events that are considered to be probable under the current circumstances. The company prepares estimates and makes presumptions and assumptions connected to the future. The accounting estimates that are based on this will seldom be entirely in accordance with the final outcome. Some accounting principles are considered to be especially important to enlighten the company’s financial position because they require the management to make difficult or subjective assessments and determine estimates that are, for the most part, uncertain at the time the estimates are made. Further information on these types of assessments and estimates is provided below. Loan write-downs When evaluating the need for write-downs the most important assessment is related to estimating the most probable future cash flows from the customer. In principle, all cash flows from the loan shall be identified, and an evaluation must be made as to which cash flows are deferred. With the large number of loans which are subject to assessment, these types of calculations must be made based on approximations and experience.
Direct marginal revenues and costs when first calculated and the expected gains on sale are included in net interest income. Other leasing gains on sale are posted under other revenues.
For further information about the procedure used for the write-downs, refer to Note 1 Accounting principles.
Factoring Factoring is recorded in accordance with the net method, i.e. the loan to the user of the factoring service is recorded in the balance sheet. This loan is classified as loan factoring. If SG Finans has assumed the credit risk for the receivables then this loan is classified as receivables factoring. Retention of margin and other customer accounts is classified as such when prepayment to customer is lower than factoring receivables.
Expected sales gain As part of the equipment leasing activity, SG Finans may obtain sales gains from disposal of leased assets. Based on historic observations, tendencies and development in the second-hand market, estimated sales gains from disposal of leased assets further to the contract coming to end of term are included in interest income, see also note 1.
Pension obligations Pensions are recorded in accordance with IAS 19 – Employee Benefits. A distinction is made between insured and uninsured schemes. From 31st of December 2009, the benefit plan in Norway is replaced with a defined contribution schemes. The Swedish and Danish branches only operate defined contribution schemes. The pension calculations are undertaken by actuaries on the basis of assumptions that can change in the future. Actuarial gains and losses as a consequence of changes in assumptions or differences between expected and actual returns on pension plan assets are not directly recognised in the balance sheet, instead they are accrued over the expected contribution time of total participants’ if the total amount exceeds 10% of the greater of total pension obligations or pension funds in the previous year. Refer to note 7.
Repossessed assets Assets which are repossessed further to the clients’ default, are transferred as to Repossessed Assets based on expected market value, hence reflecting expected impairment of the objects.
Deferred taxes Deferred taxes / tax benefit is calculated based on temporary differences between the accounting and tax values at the end of the financial year. Tax rate of 28% is used in the calculations. Deferred tax are recognised at their nominal value and classified as long-term liabilities in the balance sheet. Equity securities Equities held are securities in the subsidiary company DC Service AB, refer to Note 13. The cost method is used in the company accounts. Provisions Provisions are recorded when the company has an obligation (legally or self-imposed) relating to a prior event, it is probable (more probable than not) that a financial settlement will take place as a result of the obligation and the actual amount can be reliably measured. Refer to Note 17.
Pension obligations The present value of pension obligations is calculated by an external actuary (Watson Wyatt), which bases its assessments on demographic assumptions about the population. A number of actuarial and financial parameters are used in the calculations. The most important financial parameter is the discount rate which is determined based on the interest rate on government bonds with an obligatory duration margin at the balance sheet date, and an addition to take account of the relevant maturity of the obligations. The expected return on pension plan assets is determined based on how the plan assets are invested and from historical returns. Other fundamental assumptions for the pension plan obligations are the annual rate of salary increase, the annual regulation of pensions, the expected G regulation (a base amount annually approved by the Norwegian parliament) and the withdrawal propensity in respect of the early retirement scheme. These are based on the recommendations from The Norwegian Accounting Standards Board (NASB) and the management’s expectations. Refer to note 7 and note 1. Contingencies Within the scope of its ordinary operations SG Finans AS will be regularly involved in legal disputes. Any effects on the financial statements are assessed on a case by case basis. Refer to Note 30.
annual report 2009 annual accounts – notes
3. NET INTEREST MARGIN
Interest income fra financial institutions, valued at amortised cost Interest income from customers financial leases and loans, valued at amortised cost
28 29 Amounts in NOK thousand
2009
2008
127 777
123 576
1 737 837
2 330 219
Other interest income
242
175
Total interest income
1 865 856
2 453 970
Interest expenses to financial institutions, valued at amortised cost
876 933
1 692 326
Interest expenses on deposits and debt to customers, valued at amortised cost
9 706
17 687
Other interest expenses
4 663
7 589
Total interest expenses
891 302
1 717 602
Net interest margin
974 554
736 368
4. NET FEES AND INCOME ON OTHER ACTIVITY
Commission and fees income from loans and similar to customers Other commission and fees income Commission and fees expenses from loans and similar to customers
Amounts in NOK thousand
2009
2008
196 928
185 966
27
24
(101 871)
(96 416)
Other commission and fees expenses
(1 646)
(2 015)
Net commission and fees income
93 438
87 559
Sales gains
58 123
72 185
Income from extension of leasing contracts
16 268
14 442
4 521
21 426
78 912
108 053
Other income Total income other activity 5. NET GAINS ON FINANCIAL INSTRUMENTS AT FAIR VALUE
NetNet gains on financial derivatives, trading Change in fair value on financial derivatives, hedging Change in fair value on hedged fixed interest loans Net gains on financial instruments at fair value through P&L 6. OPERATING EXPENSES
Payroll Pensions Social security costs
Amounts in NOK thousand
2009
2008
(16)
(1 323)
16 826
(124 768)
(20 809)
123 826
(3 999)
(2 265)
Amounts in NOK thousand
2009
2008
200 080
185 652
7 354
25 421
50 239
49 887
257 673
260 960
Administrative expenses
94 208
110 335
Rent and other operating expenses on leased property
20 098
19 882
Other operating expenses
53 026
34 703
Total payroll, fees and other staff costs
Ordinary depreciation
15 137
10 283
Total other operating expenses
182 469
175 204
Total operating expenses
440 142
436 164
Employee share ownership program Employees were offered to participate in the global employee share ownership program of Société Générale SA. SG Finans contributed to the purchase, limited to 1.000 Euro for each employee. Expenditure for this contribution has been classified as payroll, fees and other staff costs. Amounts in NOK thousand
Fees paid to Ernst & Young AS and cooperating companies are made up as follows (excl VAT): Statutory audit
2009
2008*
922
1023
Other attestation services
0
0
Tax advice
0
185
Other non-audit services Total *Deloitte AS
0
126
922
1334
7. PENSIONS SG Finans is obligated to follow the Act on Mandatory company
salary in excess of 12 G (G = National Insurance basic amount), which
pensions. The company's pension scheme follows the requirement as
are unfunded.The economic assumptions used in the collective scheme
included in the Act.
are specified below. Contribution to the AFP plan are included in the column ""unfunded"".
The defined benefit scheme for employees in Norway is from 31st of December 2009 replaced with a defined contribution scheme with
The branches of SG Finans AS, in Sweden and Denmark, have defined
Storebrand, which will issue the paid-up policy (fripolise). Employees in
contribution plans. The defined contribution plans cover full-time employees
Norway can also apply for an early retirement pension (AFP) at 62 years
and contributions comprise between 4,5 % and 11 % of salaries. As at 31
of age. The agreement also covers invalidity pension, spouse's pension
December 2009, 63 members were covered by the plans.
and children's pension. There are also pension obligations to individual employees over and above the ordinary collective agreement. This
The contributions recognised as expenses equalled TNOK 7.190 and
applies to employees with a lower retirement age and employees with
TNOK 4.018 in 2009 and 2008 respectively. Percentage
Economic assumptions:
2009
2008
Discount rate:
4,40 %
4,23 %
Expected return on assets
5,00 %
5,00 %
Growth in salary
2,93 %
4,00 %
Inflation
2,50 %
2,50 %
G - regulation
3,73 %
3,75 %
Growth in current pensions
3,00 %
3,00 %
0%
0%
Withdrawal tendency AFP
Amounts in NOK thousand
Funded
Unfunded
Total 2009
Funded
Unfunded
Total 2008
Present value of pensions earned during the year
21 212
4 116
25 327
13 160
2 802
15 962
Interest cost of accrued pension liabilities
10 652
1 890
12 542
8 730
1 944
10 674
Expected return on plan assets
-5 296
0
-5 296
-5 444
0
-5 444
0
0
0
0
0
0
2 722
272
2 994
0
211
211
29 290
6 278
35 567
16 446
4 957
21 404
Pensions costs:
Plan change, curtailments Difference between actual and estimated values Net pension costs
Pension cost for 2009 amount to TNOK 35.567 from the defined benefit plan and TNOK 7.109 from the contribution plan, in total TNOK 42.757. The equivalent for 2008 is TNOK 21.403 and TNOK 4.018 respectively, in total TNOK 25.421.The effect of the settlement of the defined benefit plan is a gain of TNOK 35.403, hence the net pension cost for 2009 is TNOK 7.354. Amounts in NOK thousand
Pension liabilities in balance sheet:
Funded
Unfunded
Total 2009
Funded
Unfunded
PPlan assets at market value
135 706
0
135 706
106 291
0
106 291
Estimated pension liabilities
244 877
47 098
291 975
215 299
44 951
260 250
Net pension liability
109 171
47 098
156 269
109 008
44 951
153 959
Actuarial gains -)/losses
-73 768
-6 206
-79 974
-76 490
-8 875
-85 365
0
-512
-512
0
-512
-512
-35 403
0
-35 403
0
0
0
-0
40 380
40 380
32 517
35 565
68 082
Plan change, curtailment Settlement Recognised pension liability
Total 2008
Amounts in NOK thousand
Pension liability:
2009
2008
2007
2006
Opening balance
260 735
174 026
175 749
158 855
Total service cost
25 327
15 962
13 388
13 911
Interest cost
12 542
10 674
8 624
7 606
Payments from plan assets
-4 087
-3 676
-7 551
-2 665
Settlement, curtailment
-135 706
0
-8 763
2 262
Actuarial gains/l(loss)
-110 573
63 748
-7 428
-4 221
48 238
260 735
174 019
175 749
Ending balance
30 31
annual report 2009 annual accounts – notes
7. PENSIONS (cont) Plan assets: Opening balance Expected return on plan assets Employee contributions Payment from plan assets
Amounts in NOK thousand
2009
2008
2007
2006
106 291
109 165
114 455
67 599
5 296
5 444
5 224
3 369
24 118
17 748
16 362
18 900 0
0
0
-7 551
-135 706
0
-12 435
0
Actuarial gain/(loss)
0
-26 066
-6 888
24 587
Ending balance
0
106 291
109 165
114 455
Settlement, curtailment
Amounts in NOK thousand
Historical disclosure information: Gross pension liability:
2009
2008
2007
2006
48 238
260 735
174 019
175 749
0
106 291
109 165
114 455
48 238
154 444
64 853
61 294
0
-26 066
-6 888
24 587
Experience adjustment expressed as percentage of plan
0,0 %
2,2 %
-1,5 %
-3,1 %
liability
0,0 %
24,5 %
7,2 %
-24,3 %
Plan assets, fair value Net pension liability: Actuarial gain/(loss)
Percentage
2009
2008
2007
Cash
0%
12 %
8%
6%
Equity
0%
6%
30 %
26 %
Bond
0%
61 %
45 %
53 %
Real estate
0%
17 %
15 %
13 %
Other
0%
4%
3%
2%
Total
0%
100 %
100 %
100 %
Plan asset information:
2006
Percentage
2009
2008
2007
2006
Booked
4,80 %
2,20 %
11,80 %
7,50 %
Value adjusted
5,50 %
0,50 %
9,50 %
8,10 %
Return on asset:
The expected return on assets is based on activa allocation and estimates from the insurance company based on long term expectations.
8. LOSSES AND ALLOWANCES RECOGNISED IN THE PROFIT AND LOSS ACCOUNTS Allowances on doubtful loans Allowances on doubtful loans as of 01.01 - Exchange rate adjustments (opening balance) -
Actual losses that are covered by previous allowances
- Reclassification of previous allowances
Amounts in NOK thousand
2009
2008
163 961
163 202
6 472
(6 641)
68 687
46 745
48 387
73 589
+ Allowances on doubtful loans in the period
331 216
114 452
= Allowances on doubtful loans 31.12
371 631
163 961
371 631
163 961
Losses on loans Write-downs for loan losses as at 31.12 + Exchange rate adjustment (opening balance)
11 487
(6 641)
- Write-downs for loan losses as at 01.01
163 961
163 202
+ Total actual losses
258 919
118 156
- Income on actual losses = Losses on loans
17 996
8 365
460 080
103 909
9. TAXES Taxes payable are made up as follows: Profit on ordinary activities before tax expense Permanent differences Change in temporary differences Basis for taxes payable
Amounts in NOK
2009
2008
244 307 413
390 617 974
20 173 748
(7 461 795)
261 516 496)
(691 863 779)
2 964 665
(308 707 600)
Tax 28%
-
-
Taxes payable on profit for the year
-
-
0
0
The tax expense for the year is made up as follows: Taxes payable on profit for the year Too much allocated prior years
47 541
0
Gross change in deferred tax
74 054 725
105 111 832
Total tax expense for the year
74 102 266
105 111 832
Spesification of basis for deferred tax/deferred tax assets Differences to be offset: Financial leasing assets Gain and loss account
31.12.2009
31.12.2008
2 120 940 557
1 920 833 125
36 747 779
19 483 435
(41 378 086)
(68 081 925)
Financial instruments
9 608 594
(3 635 789)
Accounting allowances
7 696 499
3 500 000
2 133 615 343
1 872 098 846
Net pension liability
Total basis, change in temporary differences Loss carried forward
(822 030 459)
(825 164 840)
Total temporary differences
1 311 584 883
1 046 934 006
Differences not included in the calculation of deferred tax Deferred tax (+) / Deferred tax asset (-)
(1 960 597)
1 665 317
365 283 170
294 806 839
At the end of 2009 recorded net deferred tax liability for the company amounted to TNOK 365.283 compared with TNOK 294.807 in 2008. Tall i hele kroner
Reconciliation from nominal to actual tax rate: Net profit before taxes Expected income tax with nominal tax rates (28%)
2009
2008
244 307 413
390 617 974
68 406 076
109 373 033
5 648 649
(2 089 303)
The tax effect of following items ; Not deductible costs Other entries related to allowances previous years Tax expense Effective tax rate
47 541
(2 171 899)
74 102 266
105 111 831
30,3 %
26,9 %
10. INFORMATION ON FAIR VALUE Method to calculate fair value of financial instruments Regarding financial instruments recorded at fair value, see description in note 1 Accounting Principles. Lending (loans and financial leasing) to and receivables on customers The pricing of lending (loans and financial leasing) is based on market prices. Stipulated prices include additions to cover credit risk. The value of impaired engagements is determined by discounting expected future cash flows. We therefore assess that the recorded value is a fair estimate of fair value for loans and receivables valued at amortised cost. Loans from financial institutions and deposits from customers Fair value is determined to be equal recorded value for loans from financial institutions and deposits from customers valued at amortised cost.
32 33
annual report 2009 annual accounts – notes
10. INFORMATION ON FAIR VALUE (cont)
Amounts in NOK thousand
31.12.09
31.12.08
Bokført Amortisert kost
Virkelig verdi
Bokført Amortisert kost
Virkelig verdi
Financial assets 5
5
5
7
7
7
271 041
271 041
271 041
529 336
529 336
529 336
2 815 240
2 815 240
2 815 240
2 553 023
2 553 023
2 553 023
0
0
0
0
0
0
Net loans to customers
27 382 896
27 257 624
27 382 896
30 060 855
29 910 298
30 060 855
Total assets
30 469 182
30 343 910
30 469 182
33 143 221
32 992 663
33 143 221
Loans and deposits from financial institutions with agreed maturity
26 343 771
26 343 771
26 343 771
28 882 187
28 882 187
28 882 187
Deposits from and debt to customers with termination rights
305 445
305 445
305 445
394 300
394 300
394 300
Financial derivatives
134 302
0
134 302
150 116
0
150 116
22 762
22 762
22 762
0
0
0
26 806 281
26 671 978
26 806 281
29 426 603
29 276 487
29 426 603
Cash and deposits with central banks Deposits with financial institutions Loans to financial institutions Financial derivatives
Financial liabilities
Retention of margin and other customer accounts Total liabilities
From January 1st 2009, the revision in IFRS related to determining and disclosing the fair value of financial instruments has been implemented. SG Finans uses the following hierarchy: 1) Quoted (unajusted) prices in active markeds for identical assets or liabilities (level 1) 2) Other techniques for which all inputs whcih have a significant effect on the recorded fair value are observable, either directly or indirectly (level 2) 3) Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (level 3)" Amounts in NOK thousand
31.12.09
31.12.08
Nivå 1
Nivå 2
Nivå 3
Nivå 1
Nivå 2
Nivå 3
Net loans to customers
0
2 937 179
0
0
2 902 271
0
Total assets
0
2 937 179
0
0
2 902 271
0
Financial derivatives
134 302
0
0
150 116
0
0
Total liabilities
134 302
0
0
150 116
0
0
Financial assets
Financial liabilities
11. LEASING (FINANCIAL LEASING ASSETS)
Amounts in NOK thousand
31.12.2009
31.12.2008
Purchase costs 01.01
38 771 409
33 963 137
Exchange rate difference (opening balance)
(1 024 844)
904 845
7 642 298
11 024 726
Inflow during the year Outflow during the year
6 389 993
7 121 299
Purchase costs 31.12
38 998 870
38 771 409
Accumulated ordinary depreciation 01.01
12 612 841
11 370 534
Exchange rate difference 01.01
(318 620)
300 242
Ordinary depreciation during the year
6 337 100
5 912 107
Reversed depreciation sold assets
4 177 400
4 970 041
Accumulated depreciation 31.12
14 453 921
12 612 841
Book value leasing assets 31.12
24 544 946
26 158 565
Customer receivables
(1 279 158)
(1 208 342)
106 016
117 823
23 371 803
25 068 046
Other accruals Book value in the balance sheet 31.12
11. LEASING (FINANCIAL LEASING ASSETS) (CONT) Customer receivables is ordinary leasing receivable and advansement on leasing rent. Establishing fee constitute other accruals. Amounts in NOK thousand
OveOverview of future minimum finance lease rental:
31.12.2009
IWithin 1 year
31.12.2008
6 364 723
7 119 462
1 to 5 years
20 154 957
22 544 961
Future minimum finance lease rental
26 519 680
29 664 423
Average interest Present value of minimum lease payments Unearned finance income
6,34 %
8,14 %
23 254 469
25 086 898
3 265 211
4 577 525
Unearned finance income consist of interest, fees and future estimated sales gain. The company uses standard leasing agreements prepared in cooperation with the Association of Scandinavian Finance Houses, and similar in Denmark and Sweden. The company offers leasing of a broad range of equipment to Norwegian businesses and public sector entities where the material leasing arrangements consist of equipment that fall within: Industry: Construction machinery, production machinery, graphic machinery, forestry machinery, fish farming installations, furnishing etc. Technology: ICT-equipment, copy machines, office machines, medical equipment etc. Transport: Vans, trailers, buses, tractors, farming equipment, trucks, mobile cranes, automobiles, containers, helicopters, airplanes, ships etc. 12. TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS
Amounts in NOK thousand
Machines, fixtures,
Machines, fixtures,
transportation equipment
Intangible assets
transportation equipment
Intangible assets
31.12.09
31.12.09
31.12.08
31.12.08
25 600
79 656
20 225
62 160
Change in value - opening balance
(663)
(50)
752
61
Purchases
3 948
2 362
5 610
17 435
Purchase costs 01.01
(585)
-
(988)
-
Purchase costs 31.12
28 299
81 968
25 600
79 656
Accumulated ordinary depreciation 01.01
35 613
Sales
16 405
43 536
13 888
Change in value - opening balance
(577)
(50)
619
61
Ordinary depreciation of the year
3 535
11 602
2 421
7 862 -
Change in value - during the year Reversed sold Accumulated depreciation 31.12. Book value 31.12.
(10)
-
64
(302)
-
(587)
-
19 051
55 088
16 405
43 536
9 249
26 880
9 195
36 120
13. SHARE OWNERSHIP SG Finans AS owns 100% of the shares in DC Service AB. The company is not consolidated, see note 1. All issued shares have equal voting rights and the same right to receive dividend. The headoffice is Solna Torg 3, Solna, Sverige. There has been no activity in DC Service AB in 2009. Amounts in NOK thousand
DC Service AB Total share capital - SEK thousand
31.12.2009
31.12.2008
100
100
1 000
1 000
100 %
100 %
90
90
Book value in NOK thousands
216
55
Equity
202
26
12
67
Number of shares (nominal value SEK 100) Ownership Share capital in NOK thousands
Total comprehensive income
34 35
annual report 2009 annual accounts – notes
14. RESTRICTED DEPOSITS Deposits with financial institutions include restricted deposits for withholding tax of NOK 8.698.886. 15. FINANCIAL DERIVATIVES Financial derivatives are contracts stipulating financial values in the form of interest rate terms for fixed periods of time. Derivatives used by SG Finans AS include interest rate swaps (IRS) and forward rate agreements (FRA). Financial derivatives are used to manage interest rate risk from the company's ordinary operations. The table below shows nominal values as well as positive and negative market values of the interest rate swaps. The company does not have any outstanding forward rate agreements at year end. Amounts in NOK thousand
31.12.09
31.12.08
Nominal
Positive
Negative
Nominal
Positive
Negative
values total
market value
market value
values total
market value0
market value
Interest rate swaps NOK
1 470 629
0
96 128
1 471 148
0
126 529
Interest rate swaps DKK
877 033
0
31 528
1 143 681
0
22 451
Interest rate swaps SEK
162 609
0
1 346
82 309
0
1 136
Currency swaps
690 800
0
5 301
0
0 0
TOTAL
3 201 071
0
134 302
2 697 138
150 116
At year end 2009, the company had one interest rate swap in NOK, and two in DKK which were classified as held for trading. Nominal value on these were TNOK 51.849 and the negative market value was TNOK 3.630 . Year end 2008 the nominal value was TNOK 52.289 and the negative market value was TNOK 400.
Specification of financial derivatives in nominal values – 2009 1 month
Amounts in NOK thousand
from 1 from 3 months
from 1 year
month
to 1 year
to 5 years
> 5 år.
No maturity
TOTAL
Maturity profile, fixed rate loans - NOK
0
74 491
354 920
757 858
468 796
1 656 065
Maturity profile, fixed rate loans - DKK
0
63 723
166 701
620 557
103 268
954 249
Maturity profile, fixed rate loans - SEK
0
17 547
56 002
127 911
133
201 593
Maturity profile, fixed rate loans
0
0
690 800
0
0
690 800
Sum fixed rate loans
0
155 761
1 268 423
1 506 326
572 197
3 502 707
0
6 655
277 365
720 320
466 289
1 470 629
Maturity profile, interest rate swaps - NOK
0
7 640
164 601
605 897
98 895
877 033
Maturity profile, interest rate swaps - DKK
0
0
48 540
114 069
0
162 609
Maturity profile, interest rate swaps - SEK
0
0
690 800
0
0
690 800
Sum swaps
0
14 295
1 181 306
1 440 286
565 184
3 201 071
Net position
0
141 466
87 117
66 040
7 013
301 636
Maturity profile, currency rate swaps
In order to measure the company's interest risk, the effect of a parallel change of 1% (100bp) over the whole interest curve is measured on the company's unsecured interest positions. As at 31.12.2009 the company's interest sensitivity was corresponding to TNOK 2.060 impact on operating result before tax, with an impact of TNOK 1.483 on equity and net income.
15. FINANCIAL DERIVATIVES (cont) Specification of financial derivatives in nominal values – 2008 1 month
Amounts in NOK thousand
from 1 from 3 months month
from 1 year
to 1 year
to 5 years
> 5 år.
No maturity
TOTAL
Maturity profile, fixed rate loans - NOK
21 689
43 377
98 513
871 726
488 861
1 524 166
Maturity profile, fixed rate loans - DKK
11 041
22 081
197 863
721 498
178 331
1 130 814
Maturity profile, fixed rate loans - SEK
5 062
10 124
40 409
40 719
221
96 535
37 792
75 582
336 785
1 633 943
667 413
2 751 515
0
50 434
79 084
855 274
486 356
1 471 148
0
69 166
185 467
714 503
174 545
1 143 681
0
8 140
36 180
37 989
0
82 309
0
127 740
300 731
1 607 766
660 901
2 697 138
37 792
-52 158
36 054
26 177
6 512
54 377
Maturity profile, fixed rate loans Sum fixed rate loans
Maturity profile, interest rate swaps - NOK Maturity profile, interest rate swaps - DKK Maturity profile, interest rate swaps - SEK Maturity profile, currency rate swaps Sum swaps
In order to measure the company's interest risk, the effect of a parallel change of 1% (100bp) over the whole interest curve is measured on the company's unsecured interest positions. As at 31.12.2008 the company's interest sensitivity was corresponding to TNOK 1.184 impact on operating result before tax, with an impact of TNOK 853 on equity and net income.
16. FUNDING/INTEREST EXPENSES Funding from Société Générale SG Finans AS' total interest expenses to Société Générale amounted to TNOK 751.188 in 2009. Interest expenses are distributed on the following currencies (all figures in currency): Amounts in NOK thousand (valuta)
Amounts in NOK thousand (valuta)
2009
Currency
Interest
Average
expense
interest rate
2008 End balance
Average balance
Interest
Average
expense
interest rate
CAD
357
4,60 %
0
7 745
Currency
End balance
Average balance
CHF
37
0,68 %
8 658
5 475
CHF
142
2,90 %
3 623
4 893
DKK
53 409
2,91 %
1 756 321
1 837 700
DKK
90 284
5,09 %
1 855 054
1 772 257
EUR
1 819
1,70 %
106 492
106 938
EUR
5 578
4,96 %
88 249
112 446
GBP
74
1,61 %
4 732
4 584
GBP
278
5,97 %
5 166
4 660
JPY
4 975
1,46 %
0
341 339
JPY
6 662
1,08 %
913 316
619 026
NOK
612 084
3,05 %
19 354 395
20 061 857
NOK
1 298 156
6,54 %
20 399 498
19 836 563
SEK
46 177
1,35 %
3 636 489
3 425 612
SEK
152 578
5,18 %
3 241 839
2 945 848
USD
3 143
1,43 %
180 238
219 080
USD
9 087
3,69 %
251 929
246 029
17. OTHER LIABILITIES
Amounts in NOK thousand
31.12.2009
31.12.2008
234 077
254 001
Excise duty
97 945
89 387
Other liabilites
21 550
11 723
Prepayment from customers
188 883
385 934
Sum other liabilities
542 456
741 045
Accounts payable
Payments received not yet allocated to a contract on the balance sheet date are included in prepayment from customers.
36 37
annual report 2009 annual accounts – notes
18. RISK MANAGEMENT Credit risk In the business of financing assets (equipment leasing) and receivables (factoring) credit risk is the most important risk for the company. Effectively managing credit risk is therefore very important. The company has implemented a credit policy, organising procedures and regulations as well as models which address this need. SG Finans has developed classification models for risk assessment and management of business credits, which provide a good view of the risk profile of the portfolio. The classification builds on debtor solidity and market value assessments of the assets. Of greatest importance is that the provided credit is secured by direct ownership (leasing) or security (loans). The value development of the financed objects is therefore critical in assessing and controlling the risk profile of the portfolio, and knowledge about the object’s second-hand value, liquidity and markets is therefore fundamental for the credit quality and total loss in the portfolio. In those cases where a customer defaults on the payment terms in the leasing contract, SG Finans may have to terminate the contract and repossess the asset. The company works to ensure rapid sale of repossessed assets in order to hold the total quantity of assets in storage at an acceptable level. Operational risk The company has implemented the Société Générale group’s procedures for identification, assessment and reporting of losses caused by operational risk events. Reported events are used in calculating and allocating capital requirements from the group to cover operational risk. Furthermore the company has established monitoring and reporting of a number of key risk indicators for operational risk. The company also performs scenario analysis and stress testing of operational risk scenarios. Selfassessment of risks and controls is a central element in the identification and management of operational risk. Observed losses caused by failures in internal routines, system failures, internal/ external fraud and other operational events are very limited. Of the observed events, attempts of external fraud and execution errors are the most common. We assess that the existing control measures are satisfactory for uncovering and preventing this type of fraud and errors. Financial risk management The company is subject to the group’s guidelines for financial risk management (defined as interest rates, currency, liquidity and funding) as well as guidelines from the Board incorporated into the company's finance policy and liquidity policy. Management and control of financial risk are carried out centrally in the finance division, the “treasury” at the company’s headquarters. The treasury attends to the needs for financing, financial risk management, together with banking relations for the whole company i.e. the operations in all the countries. The treasury is organised as a service centre whose main purpose is to facilitate financing and hold the financial risk within defined limits. The boundaries for financial risk are relatively limited and adjusted to the size and needs of the operation. The financial risk is reported to the company’s assets and liabilities committee (ALCO) and the group’s unit for monitoring and control of financial risk. ALCO has responsibility for the limits, measurement principles and monitoring of financial risk (interest rates, currency, funding and liquidity), managing assets and liabilities, capital requirements and capital structure. Interest rate risk management We have continued the company policy to macro hedge fixed interest rate contracts, with the objective of ensuring that the economic and accounting effects of changes in interest rate markets are held at a limited level. Our economic risk at the end of the year was almost fully hedged against changes in interest rates and loans outstanding matches the funding. Due to small differences in the maturity profile between fixed interest rate contracts and hedging swaps, a small number of swaps do not meet the hedge accounting requirements. These interest rate swaps are classified as for trading purposes and the change in market value is posted directly to the income statement. The efficiency of new hedges is tested prospectively prior to entering new hedging contracts and thereafter on a quarterly basis for existing hedging relationships. The efficiency is measured based on accumulated changes in the market value for hedging instruments and hedged contracts using the “dollaroffset” method. Please refer to the notes for a closer description of accounting effects and interest rate sensitivity. Currency risk management Currency risk is managed by borrowing in the same currency and with the same maturity as assets in the foreign currency. The net result from contracts in foreign currencies is exchanged into NOK or other local currency on realisation. Moreover, the result from the branches in Sweden and Denmark is exchanged into Norwegian Kroner. As a general rule, the company does not use currency contracts for hedging
purposes, but can use short-term forward contracts to lock the exchange rate for a known quantity of cash flows in connection with financing new objects or receivables. Liquidity management / funding The company's funding is entirely provided by the Société Générale group. Funding from the group is based on a frame agreement for funding as well as funding limits according to our funding needs over time, based on budgeted and expected growth. Planning and managing liquidity and funding thus occur in close collaboration with the group unit for financing of subsidiaries and operating businesses. Since the second half of 2007 capital markets have been marked by financial crisis, lack of confidence and a sharp reduction in liquidity in the interbank market followed by an increase in funding costs and general increase in credit spreads. Interbank markets were very volatile in 2008, with a peak in turbulence in September / October further to the collapse of Lehman Brothers. In the spring and throughout 2009 we have experienced a general improvement in the markets. SG Finans gets its funding from the parent company and we have in the entire period maintained a close contact with our parent. In total we can conclude that the company at all times has had access to satisfactory levels of funding and liquidity, in spite of the general financial crisis and the extraordinary turbulence in the market marking 2008 and the first part of 2009. A central element in the management of the financial crisis has been the possibility to incorporate increased cost of funding in the pricing of financing to clients. Solidity / Capital Adequacy / Capital Management The company's policy for capital management defines the applicable principles and guidelines for capital planning and management. Moreover, the company is subject to the group's guidelines for capital management. The internal guidelines compel the company always to comply with the internal requirements which are stricter than the local regulatory minimum requirements. A central part of the policy for capital management is regular assessment of the capital situation and capital adequacy under stress tests for various scenarios and relevant types of risk. This has been carried out in accordance with the regulatory requirements for internal processes for the assessment of capital adequacy (Internal Capital Adequacy Assessment Process or ICAAP). The analysis demonstrates that the company’s capital adequacy and solidity is satisfactory in respect of expected future growth and also following the stress tests that have been carried out. At the end of 2009 the company had not issued other subordinated debt or other forms of tier 2 capital. Corporate Governance / Internal control As part of the Société Générale group, the company has continued the development of its principles and framework for internal control and corporate governance to the standards of the group. The main risks and the efficiency of internal controls are assessed on a regular basis. The results of these assessments are satisfactory.
19. RISIK classification The company uses a risk classification system for customers and exposures. The classification is based on objective criteria and consists of two parameters, the customer's creditworthiness and the object's security coverage. Counterparty classification is based on available financial information, as well as other information. The combination of these parameters determines how the exposure is classified. The company is working on adjustments to its models for calculating credit risk (probability of default), loss given default and other parameters that are decisive in estimating the risk of an exposure and the level of capital needed to cover future expected and unexpected losses. Exposures are classified in categories in accordance with capital adequacy regulations for banks and finance houses. The company therefore classifies customers into categories based on the customer's nature, size, exposure size and type. Low (0,03%), medium/low (0,0894%), medium (3,8774%), high (17,1134%) are the classes used along with non-performing and unclassified. The values in bracket present the cut-off probability of default for the class. Maximal credit exposure is calculated based on net loan to customer (not considering third-party guarantees), contingent liabilities like guarantees, loan commitments, and positive market value on derivatives or fixed interest loans. SG Finans AS has collateral through right of ownership for leased objects. Other loans and factoring are generally secured by pledge, notification or third-party guarantees.
19. RISK CLASSIFICATION (cont)
Amounts in NOK thousand
Low
Medium/low
Medium
High
Doubtful
Unclassified
Total
2 838 846
16 498 924
4 459 032
1 094 859
984 058
1 859 575
27 735 294
10,24 %
59,49 %
16,08 %
3,95 %
3,55 %
6,70 %
100,00 %
31.12.09 Gross loans Percentage share 2009 Maturity analysis – age of loans
Amounts in NOK thousand
Past due, days outstanding Not past due
1-29
30-59
60-89
90-179
> 180
> 1 year
SUM TOTAL
23 869 576
612 872
1 679 539
439 883
358 067
339 188
64 540
27 363 663
87,23 %
2,24 %
6,14 %
1,61 %
1,31 %
1,24 %
0,24 %
100,0 %
Loans Percentage rate
Amounts in NOK thousand
Past due, non-doubtful Loans
1-29
30-59
60-89
90-179
> 180
> 1 year
SUM TOTAL
476 723
1 641 516
364 743
99 414
36 200
27 931
2 646 526
Amounts in NOK thousand
Low
Medium/low
4 122 665
16 560 177
13,64 %
54,79 %
31.12.08 Gross loans
Medium
High
Doubtful
Unclassified
Total
1 000 441
928 106
3 542 144
30 224 816
3,31 %
3,07 %
11,72 %
100,00 %
4 071 283 Percentage share 2008
Forfallsanalyse – aldersfordeling på utlån:
Amounts in NOK thousand
Past due, days outstanding Not past due
1-29
30-59
60-89
90-179
> 180
> 1 year
SUM TOTAL
27 220 012
760 687
792 328
522 691
505 953
221 714
37 469
30 060 855
90,55 %
2,53 %
2,64 %
1,74 %
1,68 %
0,74 %
0,12 %
100,0 %
Loans Percentage rate
Amounts in NOK thousand
Past due, non-doubtful Loans
1-29
30-59
60-89
90-179
> 180
> 1 year
SUM TOTAL
740 910
761 430
451 912
223 982
62 939
5 177
2 246 351
Amounts in NOK thousand
Credit exposure:
31.12.2009
31.12.2008
Net loans to customers
27 363 663
30 060 855
Positive marketvalue derivatives
0
0
Guarantee liabilities and loan commitments
353 184
307 755
Sum maksimal kreditteksponering 31.12
27 716 847
30 368 610
20. DOUBTFUL LOANS
Amounts in NOK thousand
31.12.2009
31.12.2008
Gross doubtful loans
984 058
928 106
– Write-downs on impaired assets
371 631
163 961
Net doubtful loans
612 427
764 145
Please also refer to note 8 and note 21. Gross doubtful loans are total engagements for customers were one or more of the contracts are considered to be doubtful, see notes 1 and 2. Gross doubtful loans are mainly engagements in default, see notes 8 and 19. 21. REPOSSESSED ASSETS Repossessed assets at 31.12.2009 amounted to TNOK 246.589 against TNOK 152.100 in 2008, consisting of 795 contracts against 529 contracts at end 2008. This is an increase of TNOK 94.489 during the year, from TNOK 99.600 in 2008. The turnover from disposal of repossessed assets amounted to TNOK 700.116 compared to TNOK 455.000 in 2008. Repossessed assets consist of 10% high tech, 45% industrial and 45% transport equipment. SG Finans has an objective of quickly realizing repossessed assets, and maintaining stock at a reasonable level. The company does not use repossessed assets, but sells the objects to third-parties. In 2009 the number of repossessed assets has increased substantially due to an increased number of nonperforming loans. SG Finans AS has in general obtained acceptable prices for repossesed assets in 2009, even though the second hand market is difficult due to a downswing in the macroeconomics. This applies especially to certain types of equipment, although prices are in general down.
38 39
annual report 2009 annual accounts – notes
22. INTEREST RISK AND INTEREST RATE ADJUSTMENT PERIOD Interest rate risk arise from loan and leasing engagements were SG Finans receives fixed interest rate payments from the client. The interest rate can be fixed for different maturities, and in order to manage interest rate exposure, SG Finans AS applies different methods for interest rate hedging. See notes 1 and 18 for a description of hedging. Amounts in NOK thousand
from 1 month from 3 months
2009:
from 1 year
No agreed
1 month
to 3 months
to 1 year
to 5 years
> 5 år.
271 046
0
0
0
0
271 046
Loans to financial institutions
0
163 344
176 704
1 100 085
1 375 107
2 815 240
Financial derivatives
0
0
0
0
0
0
Loans to customers
24 570 989
155 761
577 623
1 506 326
572 197
27 382 896
5 934 035
81 270
222 703
748 468
103 402
7 089 878
295 491
0
0
0
0
25 137 526
319 105
754 327
2 606 411
1 947 304
Debt to banks
9 250 923
16 897 107
146 806
48 935
0
26 343 771
- hereof foreign currency
2 747 341
3 981 706
146 806
48 935
0
6 924 788
Period until next interest rate adjustment Receivables, bank
- hereof foreign currency Other assets Total assets 31.12.2009
fixed rate
Total
295 491 0
30 764 673
Customer deposits
305 445
305 445
Financial derivatives
134 302
134 302
Retention of margin
22 762
22 762
1 034 695
1 034 695
Other liabilities
2 923 698
2 923 698
48 935
0
2 923 698
30 764 673
Equity Total liabilities and equity 31.12.2009
10 748 127
16 897 107
Total balance sheet items
146 806
14 389 399
-16 578 002
607 521
2 557 476
1 947 304
-2 923 698
0
Interest rate swaps - nominal values
0
-14 295
-490 507
-1 440 287
-565 182
0
-2 510 271
- hereof foreign currency
0
-7 640
-213 141
-719 967
-98 895
0
-1 039 643
Guarantees - given
-58 867
Guarantees - received
39 329
Total balance sheet and off-balance sheet items
14 389 399
-16 592 297
117 014
1 117 189
1 382 122
-2 943 236
Amounts in NOK thousand
from 1 month from 3 months
2008: Period until next interest rate adjustment Receivables, bank
from 1 year
No agreed
1 month
to 3 months
to 1 year
to 5 years
> 5 år.
529 336
0
0
0
0
529 336 2 553 023
fixed rate
Total
6 469
139 886
177 015
990 956
1 238 697
Financial derivatives
0
0
0
0
0
0
Loans to customers
27 309 341
113 374
336 785
1 633 942
667 413
30 060 855
7 369 332
48 307
238 272
762 217
178 552
8 596 680
233 449
0
0
0
0
233 449
Total assets 31.12.2008
28 078 595
253 260
513 800
2 624 898
1 906 110
33 376 663
Debt to banks
13 190 585
15 625 110
3 500
17 498
45 494
28 882 187
2 766 423
5 727 039
3 500
17 498
45 494
8 559 954
Loans to financial institutions
- hereof foreign currency Other assets
- hereof foreign currency Customer deposits
394 300
394 300
Financial derivatives
150 116
150 116
Retention of margin
15 746
15 746
1 180 438
1 180 438
Other liabilities
2 753 876
2 753 876
17 498
45 494
2 753 876
33 376 663
510 300
2 607 400
1 860 616
-2 753 876
0
-300 732
-1 607 765
-660 901
0
-2 697 139
-752 492
-174 545
0
-1 225 991
Equity Total liabilities and equity 31.12.2008
14 931 185
15 625 110
3 500
Total balance sheet items
13 147 410
-15 371 850
Interest rate swaps - nominal values
0
-127 741
- hereof foreign currency
0
-77 307
-221 647
Guarantees - given
-57 380
Guarantees - received
84 980
Total balance sheet and off-balance sheet items
13 147 410
-15 499 591
209 568
999 635
1 199 715
-2 726 276
23. LIQUIDITY RISK AND REMAINING MATURITY ON BALANCE SHEET ITEMS Funding is provided by the parent company Société Générale, on the basis of a framework agreement and limits. The company's liquidity risk is therefore linked to the owner, and refinancing is organised in close collaboration with the group treasury departement. The table below shows due date for assets and liabilities in nominal values. Amounts in NOK thousand
2009:
from 1 month from 3 months
from 1 year
Without
1 month
to 3 months
to 1 year
to 5 years
> 5 år.
271 046
0
0
0
0
271 046
Loans to financial institutions
0
163 344
176 704
1 100 085
1 375 107
2 815 240
Financial derivatives
0
0
0
0
0
0
Loans to customers
2 567 103
2 407 495
6 159 029
14 779 077
1 470 192
27 382 896
- hereof foreign currency
751 936
527 503
1 674 302
3 849 599
286 538
7 089 878
Other assets
295 491
0
0
0
0
Total assets 31.12.2009
3 133 640
2 570 839
6 335 733
15 879 162
2 845 299
Debt to banks
5 757 034
11 290 629
1 824 099
6 375 243
1 096 766
- hereof foreign currency
1 254 373
2 288 588
1 095 547
2 286 280
0
Loans / receivables, banks
maturity
295 491 0
30 764 673 26 343 771 6 924 788
305 445
Customer deposits
Total
305 445
Financial derivatives
134 302
Retention of margin
22 762
22 762
1 034 695
1 034 695
Other liabilities
134 302
Equity Total liabilities and equity 31.12.2009
6 948 793
11 290 629
1 824 099
6 375 243
from 1 month from 3 months
from 1 year
1 096 766
2 923 698
2 923 698
3 229 143
30 764 673
Amounts in NOK thousand
2008: Loans / receivables, banks
Without
1 month
to 3 months
to 1 year0
to 5 years
> 5 år.
529 336
0
177 015
0
0
529 336 2 553 023
maturity
Total
6 469
139 886
0
990 956
1 238 697
Financial derivatives
0
0
5 499 609
0
0
0
Loans to customers
1 529 801
2 644 398
1 644 622
18 383 457
2 003 590
30 060 855
- hereof foreign currency
543 956
737 917
0
5 185 984
484 201
8 596 680
Other assets
233 449
0
5 676 624
0
0
2 299 055
2 784 284
19 374 413
3 242 287
13 470 353
9 908 368
3 677 447
853 069
2 788 592
2 848 074
1 597 612
45 494
Loans to financial institutions
Total assets 31.12.2008
233 449 0
33 376 663
972 950 Debt to banks - hereof foreign currency
945 318
28 882 187 8 225 090 394 300
Customer deposits
394 300
Financial derivatives
150 116
Retention of margin
15 746
15 746
1 180 438
1 180 438
Other liabilities
150 116
Equity Total liabilities and equity 31.12.2008
972 950 14 816 653
9 908 368
3 677 447
853 069
2 753 876
2 753 876
3 148 176
33 376 663
24. NET POSITION PER CURRENCY Foreign currency positions arise from contracts in foreign currencies, and from the activities in the branches in Demark and Sweden. Net foreign currency position at year end 2009 was TNOK 7.726. Hence giving a foreign currency sensitivity of TNOK 772,6 with a 10% shift in exchange rates between NOK and other foreign currencies. The impact on net result and equity would be equivalent to TNOK 556,3. For 2008, a shift of 10% in exchange rates would have resulted in an impact of TNOK 1 613,2 before tax, and TNOK 1 161,5 on net profit and equity.
40 41
annual report 2009 annual accounts – notes
24. NET POSITION PER CURRENCY (cont) Assets 2009:
Amounts in currency thousand
USD
EUR
SEK
JPY
CHF
GBP
DKK
CAD
Norway
156 987
79 869
27 532
2 669
8 661
5 050
3 926
79
Sweden
24 269
18 668
181 256
109 899
27 532
2 669
8 661
5 050
3 926
79
Norway
156 473
82 267
28 440
1 363
8 661
5 005
1 284
34
Sweden
24 220
18 631
180 693
111 577
28 440
1 363
8 661
5 005
1 284
34
563
-1 678
-908
1 306
0
45
2 642
45
3 241
-13 925
-735
82
0
418
2 946
247
Denmark Sum of assets 31.12.2009
11 362
Debt :
Denmark Sum of debt 31.12.2009 Net balance sheet items Converted to NOK
10 679
Foreign currency sensitivity (10% shift) before tax
324
-1 393
-74
8
0
42
295
25
Foreign currency sensitivity (10% shift) after tax
23
-1 003
-53
6
0
30
212
18
Amounts in currency thousand
Assets 2008:
USD
EUR
SEK
JPY
CHF
GBP
DKK
CAD
Norway
229 864
81 753
39 727
927 291
3 592
5 620
4 338
64
Sweden
28 536
5 040
258 400
88 857
39 727
927 291
3 592
5 620
4 338
64
Norway
229 057
82 329
37 961
920 659
3 624
5 301
46
38
Sweden
28 441
5 014
257 498
88 973
37 961
920 659
3 624
5 301
46
38
Denmark Sum of assets 31.12.2008
2 064
Debt :
Denmark Sum of debt 31.12.2008
1 630
902
-116
1 766
6 632
-32
319
4 292
26
6 313
-1 145
1 597
515
-212
3 231
5 683
150
Foreign currency sensitivity (10% shift) before tax
631
-115
160
52
-21
323
568
15
Foreign currency sensitivity (10% shift) after tax
455
-82
115
37
-15
233
409
11
Net balance sheet items Converted to NOK
25. OWNERSHIP The share capital of SG Finans AS is constituted of 101 shares, with a nominal value of 9.360.750 NOK per share. All issued shares have equal voting rights and the same right to receive dividend. All shares are held by SG Equipment Finance SA & Co KG, Wuppertal, Germany, which is 100% owned by Société Générale SA, Paris, France. Amounts
Ordenary shares Issued and fully paid:
2009
2008
January the 1st
101
101
December 31st
101
101
26. INFORMATION ON RELATED PARTIES AND REMUNERATIONS Receivables from and debt to Group companies (Société Générale) amounted to:
Amounts in NOK thousand
31.12.09
Renter i 2009
31.12.08
Renter i 2008
2 815 241
119 315
2 533 616
104 356
Assets Loans to Group companies Other loans (outside the Group) Sum of Loans to financial institutions
19 232
19 407
2 834 473
2 553 023
Liabilities Loans from Group companies
26 336 238
751 188
28 874 733
1 632 742
Funding is provided by the parent company Société Générale, on the basis of a framework agreement and limits. All transactions are made on market terms.
26. INFORMATION ON RELATED PARTIES AND REMUNERATIONS (cont)
Amounts in NOK thousand
Pension
Other
Share
Total
Totalt
cost remuneration
options
2009
2008
Pay
Bonus
Carsten Thorne, CEO
1 783
553
801
215
92
3 444
3 371
Odd Sørensen, Chief Credit Officer
1 156
147
325
190
0
1 818
1 759
Hans Einar Herzog, CFO
1 189
221
165
176
65
1 817
1 761
Total remuneration of senior management
4 128
920
1 291
582
157
7 078
6 892
Remuneration of senior management
Senior managers are persons with authority to commit the company by virtue of their position (power of procuration). Bonus payments are dependant on the results achieved in relation to agreed targets. An early retirement pension plan is established for the CEO, entitling him to receive an early retirement pension of 60 % of pensionable salary from the age of 62 years. Share options are issued from Société Générale SA, and give the right of purchase of shares in Société Générale SA. The options have a 3 year lock-in period, and the following conditions are defined for the exercise; – the employee must be employed at the date of exercise. – for 50% of options issued in 2008, EPS for Société Générale SA must exceed EUR 15 in 2010. – for 50% of options issued in 2009, EPS for Société Générale SA must exceed EUR 3,5 / EUR 7,5 in average for the financial years 2009-2012. Options 2009
Received in the
Excercised
Balance
760
0
5 148
0
0
0
543
0
2 052
financial year Carsten Thorne, CEO Odd Sørensen, Chief Credit Officer Hans Einar Herzog, CFO Strike price per share option Issue year
2006
2007
2008
2009
Number of options recceived
1 429
847
3 621
1 303
Strike price per share option Exercise date (start)
105,65
130,30
67,08
24,45
31.03.09
31.03.10
31.03.11
31.03.12
Carrsten Thorne, CEO, and Hans Einar Herzog, CFO, have received in the financial year 947 and 677 deferred shares respectively, in total 1.624 deferred shares. The total amount of deferred shares received is 947 for Carsten Thorne, CEO, and 677 for Hans Einar Herzog, CFO, in total 1.624 deferred shares. The performance conditions for deferred shares are the same as for share options, and the vesting period is until 31 March 2013. The fair value of deferred shares is presented with the fair value of share options in the presentation of remuneration to senior management above, with TNOK 72 for Carsten Thorne, CEO, and TNOK 51,5 for Hans Einar Herzog, CFO. Amounts in NOK thousand
Other
Total
Total
Pay / Fees
Bonus
remuneration
2009
2008
Jean-Marc Mignerey, chairman
0
0
0
0
0
Jacques Bensen, board member
0
0
0
0
0
Tommy Pedersen, board member
125
0
0
125
125
Christine B. Meyer, board member
Remuneration to the Board of Directors
110
0
0
110
100
Gérard Pignatel, board member
0
0
0
0
0
Kjell Vegard Opheim, employee
12
0
0
12
0
4
0
0
4
100
251
0
0
251
325
representative Members resigned from the Board of
Amounts in NOK thousand
Total
Totalt
Pay / Fees
Bonus
remuneration
2009
2008
116
0
0
116
98
Karl Anton Nilsen
16
0
0
16
20
Anders Aavatsmark
20
0
0
20
20
152
0
0
152
138
Remuneration to the Control Committee Stephen Knudtzon, chairman
Total remuneration to the Control
Other
Fees of TNOK 52,5 were paid to the Committee of Representatives, with the Chairman receiving TNOK 25 and the other members TNOK 2,5 each. No loans or guarantees have been granted to senior managers in the Company. Nor have any loans or guarantees been granted to related members of the Board of Directors, Committee of Representatives or the Control Committee.
42 43
annual report 2009 annual accounts – notes
27. CAPITAL ADEQUACY The calculation of capital requirement and capital adequacy has been done following the Standard Method for Credit Risk and the Basic Indicator Approach for Operational Risk. The entity does not take Market Risk positions and the capital requirement for Market Risk is nil. Amounts in NOK thousand
Sum of equity
31.12.2009
31.12.2008
2 923 698
2 753 876
-26 880
-36 120
Deductions: Other intangible assets Deferred tax asset Overfinancing of pension liabilities (after tax) Core capital
2 896 818
2 717 756
Total capital base
2 896 818
2 717 756
24 293 548
26 841 418
1 943 484
2 147 313
125 617
107 822
Risk-weighted assets Capital adequacy ratio Capital requirement credit risk Capital requirement operational risk Capital requirement market risk
0
0
Total capital requirement
2 069 101
2 255 135
Capital adequacy ratio
11,20 %
9,64 %
28. GUARANTEE LIABILITIES AND LOAN COMMITMENTS
Amounts in NOK thousand
31.12.09
31.12.08
Endorser's liability
5 963
4 115
Guarantee liability
52 903
53 266
Total pr. 31.12
58 867
57 380
SG Finans AS has at year end 2009 given loan commitments of TNOK 294.317. The commitments are related to agreed financing of equipment where the contracts have not yet been established. By the end of 2008, the corresponding amount was TNOK 250.400.
29. CONTINGENCIES SG Finans AS had no major legal disputes pending or contingencies at the end of 2009.
30. NUMBER OF EMPLOYEES Totalt
Norway
Sweden
Denmark
357
295
34
28
Recruitment
28
22
5
1
Departures
27
22
5
0
358
295
34
29
Number of employees 01.01.09
Number of employees 31.12.09
31. NEW ACCOUNTING STANDARDS ISSUED IFRSs and IFRICs issued but not yet effective Amendments to IFRS 2 Share-based Payments – Group Cash-settled Sharebased payment Transactions The amendment to IFRS 2 provides more guidance on the accounting for group cashsettled share-based payment transactions. In addition, the definition of share based payment is somewhat modified. This amendment supersedes IFRIC 8 and IFRIC 11. This amendment is effective for annual periods beginning on or after 1 January 2010, but the amendment is not yet approved by the EU. The Group expects to apply the amendment as of 1 January 2010. IFRS 9 Financial Instruments IFRS 9 replaces the classification and measurement rules in IAS 39 Financial Instruments- Recognition and measurement for financial instruments. According to IFRS 9 financial assets with basic loan features shall be measured at amortised cost, unless one opts to measure these assets at fair value. All other financial assets shall be measured at fair value. IFRS 9 is effective for annual periods beginning on or after 1 January 2013, but the standard is not yet approved by the EU. The Group expects to apply IFRS 9 as of 1 January 2013. IAS 24 (revised) Related Party Disclosures The revised IAS 24 clarifies and simplifies the definition of a related party, compared to the current IAS 24. The revised standard also provides some relief for governmentrelated entities to disclose details of all transactions with other government-related entities (as well as with the government itself). IAS 24 (R) is effective for annual periods beginning on or after 1 January 2011, but the revised standard is not yet approved by the EU. The Group expects to implement IAS 24 (R) as of 1 January 2011. IAS 27 (revised) Consolidated and Separate Financial Statements The revised IAS 27 provides more guidance on accounting for changes in ownership interest in a subsidiary and the disposal of a subsidiary, compared to the current IAS 27. According to the revised standard the entity measures the interest retained in a former subsidiary at fair value upon loss of control of the subsidiary, and the corresponding gain or loss is recognised through profit and loss. The revised standard also includes a change in the requirements relating to the allocation of losses in a loss-making subsidiary. IAS 27 (R) requires total comprehensive income to be allocated between the controlling and the non-controlling party, even if this results in the non-controlling interest having a deficit balance. IAS 27 (R) is effective for annual periods beginning on or after 1 July 2009. The Group plans to implement IAS 27 (R) as of 1 January 2010. Amendments to IAS 39 Financial instruments – Recognition and measurement - Eligible Hedged Items The amended IAS 39 clarifies the principles for determining whether a hedged risk or portion of cash flows is eligible for designation for certain risks or components of the cash flow. The approved changes gives primarily additional guidance for hedging a one-sided risk (hedging with options) and hedging of inflation risk, but also clarifies that designated risks and cash flows must be identifiable and can be reliable measured. The amendment is effective for annual periods beginning on or after 1 July 2009. The Group plans to implement the amendments as of 1 January 2010. IFRIC 16 Hedges of a net investment in a foreign operation The interpretation addresses issues relating to the accounting of a hedge of the foreign currency exposure arising from a net investment in a foreign entity. The interpretation clarifies what types of hedges that might qualify for hedge accounting and what types of foreign currency risks that might be hedged. The interpretation is effective for annual periods beginning on or after 1 July 2009. The Group plans to implement IFRIC 16 as of 1 January 2010. IFRIC 17 Distributions of Non-cash Assets to Owners The interpretation provides guidance on how to account for distributions of non-cash assets to its owners and distributions that give owners a choice of receiving either non-cash assets or a cash alternative. The interpretation applies prospectively and is applicable for annual periods beginning on or after 1 July 2009. The Group plans to implement IFRIC 17 as of 1 January 2010.
IFRIC 18 Transfers of Assets from Customers The interpretation provides guidance on accounting for transfers of assets which an entity receives from a customer for the acquisition or construction of such items. These items of plant, property and equipment must then be used to connect the customer to a network, or provide the customer ongoing access to a supply of goods and services, or both. The interpretation is effective for annual periods beginning on or after 1 November 2009. The Group plans to implement IFRIC 18 as of 1 January 2010. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments The interpretation clarifies the accounting treatment of financial liabilities that, as a result of a renegotiation of the terms of the financial liability, are fully, or partially, extinguished with equity instruments. The interpretation is effective for annual periods beginning on or after 1 July 2010, but the interpretation is not yet approved by the EU. The Group expects to implement IFRIC 18 as of 1 January 2011. Annual improvements project The IASB issued amendments to its standards and the related Basis for Conclusions in its annual “improvements to IFRSs”. The improvement project is an annual project that provides a mechanism for making necessary but non-urgent amendments. These amendments are not yet approved by the EU. • IFRS 2 Share-based Payment: Clarifies that the contribution of a business on formation of a joint venture and combinations under common control are not within the scope of IFRS 2 even though they are outside of scope of IFRS 3 (R). • IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: Clarifies that the disclosures required in respect of non-current assets or disposal groups classified as held for sale or discontinued operations are only those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specifically required for such non-current assets or discontinued operations. • IAS 7 Statement of Cash Flow: Explicitly states that only expenditure that results in a recognised asset can be classified as a cash flow from investing activities. • IAS 18 Revenue: More guidance is added to determine whether an entity is acting as a principal or as an agent. • IAS 36 Impairment of Assets: Clarifies that the largest unit permitted for allocating goodwill acquired in a business combination is the operating segment, as defined in IFRS 8 before aggregation for reporting purposes. • IAS 38 Intangible Assets: Clarifies that if an intangible asset acquired in a business combination is identifiable only with another intangible asset, the acquirer may recognise the group of intangible assets as a single asset provided the individual assets have similar useful lives. • IAS 39 Financial Instruments – Recognition and Measurement: o Clarifies that a prepayment option is considered closely related to the host contract when the exercise price of a prepayment option reimburses the lender up to the approximate present value of lost interest for the remaining term of the host contract. o Clarifies that the scope exemption for contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date, applies only to binding forward contracts, and not derivative contracts where future actions by either party are still to be taken. o Clarifies that gains or losses on cash flow hedges of a forecast transaction that subsequently results in the recognition of a financial instrument or on cash flow hedges of recognised financial instruments should be reclassified in the period that the hedged forecast cash flows affect profit or loss. • IFRIC 9 Reassessment of Embedded Derivatives: The scope paragraph is amended to clarify that the interpretation does not apply to possible reassessment, at the date of acquisition, to embedded derivatives in contracts acquired in a combination between entities or businesses under common control or the formation of a joint venture. • IFRIC 16 Hedges of a Net Investment in a Foreign Operation: The amendment states that, in a hedge of a net investment in a foreign operation, qualifying hedging instruments may be held by any entity or entities within the group, including the foreign operation itself, as long as the designation, documentation and effectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied. SG Finans does not expect that implementation of the amendments listed above will have a material effect on the financial statements of the company on the date of implementation.
ANNUAL REPORT 2009 Auditor’s report/Control Committee’s statement
44 45
Employee representatives and management in 2009 BOARD OF DIRECTO RS Chairman Jean-Marc Mignerey Jaques Bensen Gérard Pignatel Christine Benedikte Meyer Tommy Pedersen Employee representative Kjell Vegard Opheim Carsten Thorne
Employer Chief Executive Officer, SG Equipment Finance Supervisor DSFS, Paris Chief Country Officer, Société Général, Oslo Health commisssioner, Bergen CEO, Augustinus Fonden Head of Sales/Operations, Region East CEO, SG Finans AS
COMMITTEE OF REPRESENTATIVES Chairman Kjersti Tröbråten, Oslo Tommy Eriksen, Grålum Inge Jan Thorsen, Stavanger Finn Corwin, Oslo Tom Erik Eriksen, Oslo Øyvind Nossum, Bergen Leif Finsveen, Bodø Ivar Vallestrand, Torp Håvard Brynjulvsrud, Skarnes Substitute Gunnar Thorud, Oslo Substitute Dag Swanstrøm, Oslo Substitute Erik Hansen, Oslo Employee representative Grethe Hoel, Drammen Finn Arne Graabak, Trondheim Line Karlgren, Fredrikstad
CONTROL COMMITTEE Chairman Stephen Knudtzon, Oslo Deputy Chairman Karl Anton Nilsen, Brumunddal Anders Aavatsmark, Oslo Substitute Gérard Pignatel, Bærum MANAGEMENT TEAM SG FINANS AS Employment Carsten Thorne CEO Odd Sørensen Credit Adviser Sverre Edin IT Hans Einar Herzog Finance Armand Taillandier Credit Finn Mathisen Sales and Business Development Equipment Finance Jan Juliussen Sales and Business Development Factoring Stig-Are Eriksen Region North Espen Brochmann Region West Arne Hodnefjell Region Oslo/Akershus and South Finn Kristiansen Region East Anders Holmgren Sweden Lars Rasmussen Denmark Auditor Ernst & Young AS, represented by Eirik Larsson, state authorised public acccountant
Addresses Scandinavia Norway
TEL. +47 21 63 20 00
Oslo (head office)
Fredrikstad
Kristiansand
Tromsø
Strandveien 18
Stortorvet 1
Kjøita 40
Grønnegata 27-29
1366 Lysaker
1607 Fredrikstad
4630 Kristiansand
9251 Tromsø
Bergen
Hamar
Porsgrunn
Trondheim
Sandviksbodene 66
Fredvang Allé 10, Briskeby stadion
Dokkvegen 10
Klæbuveien 194
5035 Bergen
2307 Hamar
3920 Porsgrunn
7037 Trondheim
Bodø
Harstad
Sandefjord
Ålesund
Storgaten 8
Rikard Kaarbøesplass 3B
Framnesveien 7
Kipervikgaten 13
8006 Bodø
9405 Harstad
3222 Sandefjord
6003 Ålesund
Drammen
Haugesund
Stavanger
Tårnkvartalet, Hauges gate 2
Haraldsgate 115
Kongsgårdbakken 3
3019 Drammen
5527 Haugesund
4005 Stavanger
Sweden
TEL. + 46 8 470 9530
Stockholm (head office)
Malmø
Skellefteå
Sundsvall
Solna Torg 3, 4 trappa 171 29
Kungsgatan 6
Kanalgatan 43
Östra Långgatan 14 Nb
Solna
221 49 Malmø
031 32 Skellefteå
852 36 Sundsvall
Göteborg Drakegatan 6 412 59 Göteborg
Denmark
TEL. + 45 70 22 90 33
Copenhagen (head office)
Vejle
Roskildevej 342 B
Havneparken 14 B 1 sal
2630 Taastrup
7100 Vejle
SG Equipment Finance Head office International Visit adress
Postal adress
SG Equipment Finance
SG Equipment Finance - DSFS/SGE
Chassagne Tower, 17 cours Valmy
Tour Société Générale
Paris - La Défense 7
75886 PARIS Cedex 18
France
France
sgfinans.no • sgfians.se • sgfinans.dk