Fund Reserves Profit Equity Capital Share Consolidated Profit Equity Total for general attributable attributable attributable (1) premium reserves attributable attributable consolidated banking risks to minority to minority to minority account (excl. FGBR) to group to group equity €m interests interests interests (excl. FGBR) (incl. FGBR)
2001 dividend in respect of 2000 profit (55.61) Other variations 0.15 (94.15)
Note 15 Income and expenses on transactions with credit institutions 31/12/2002 31/12/2001
Interest on current account overdrafts 2 0 Interest on loans 497 798 Interest on securities received under repurchase agreements 859 1 047 Income from premiums/discounts 27 44 Other interest and equivalent income 241 62
Interest on borrowing from customers Interest on repurchase agreements (75.99) (100.09)
Note 17 Income from bonds and other fixed-income securities 31/12/2002 31/12/2001
Gain on trading securities 932.37 664.39 Gain on currency instruments 254.08 120.39 Gain on financial instruments 31.48 678.11
Rebilled expenses, retroceded income and reallocated expenses 0.05 0.71 Other operating income and expenses 19.89 (23.64) 24.61 (9.67)
(1) The members of the Executive Board received compensation of €2,047,000 during 2002 in exchange for the responsibilities and functions carried out within CDC IXIS Capital Markets. The members of the Supervisory Board received compensation of €29,000 during 2002 in exchange for the responsibilities and functions carried out within CDC IXIS Capital Markets.
Gain or loss on divestment of tangible and intangible fixed assets 1.50 (0.03) Net provisions on equity investments or advances (0.08) (0.79) Provisions for risk on equity investments - 0.35 Gain or loss on divestment of investment securities (1.40) 3.94
(1) €12.2m of the 2002 figure concerns provisions for identified risks and charges, including a demand for €5.2m of back-tax notified in 2002 and a retroactive demand for €1.6m of additional social security charges in 2002, both of which are contested.
≤3 months >3 months >1 year >5 years €m and ≤1 year and ≤5 years Total
Non-euro currencies to be received against euros to be delivered - non-euro currencies to be received 58,310 59,336 - euros to be delivered 61,091 56,239
Premium/discount on forward - to be received 445 1,323 - to be delivered 478 1,322
Banking regulations require CDC IXIS Capital Markets to submit its overall risk cover ratio to France's Commission Bancaire and in June 1997 it was granted approval to use its own internal model, Scénarisk, to calculate the market-risk component of this ratio.
In accordance with these regulations, total counterparty risk is calculated by adding the following items: • the positive replacement value of the instruments caculated on the basis of their market value; •potential credit risk, this being measured based on add-ons according to the nature and residual life of the instrument, as defined by the French Banking Commission.
This equivalent gross credit risk is then reduced to reflect: •netting agreements entered into in accordance with market conventions allowing netting of positive and negative replacement values at counterparty level; • collateralisation guarantees received in the form of cash.
The resulting net credit risk is then weighted by category depending on the regulatory clas of counterparty (governments, financial institutions, or other and using weightings of 0%, 20% or 50%, respectively ), as set forth in regulation N°91-05 of the French Banking Regulation Committee and Appendix III of regulation N°96-06 governing solvency ratio requirements.
Gross credit risk equivalent Gross positive replacement cost (market value) 2,256 24,441 3,009 29,706 13,488
Net credit risk equivalent before weighting 1,306 9,093 3,823 14,222 7,858
Geographic breakdown of counterparties USA and Canada 16.20% France 34.94% Other euro-zone countries 28.49% Other countries 20.37%
CDC IXIS Capital Markets' commitments do not include proven credit risk on identified counterparties. No specific provisions have been allocated in this respect. There have been no instances of defaults involving credit derivatives counterparties calling for specific provisions.
Note 30 Breakdown of balance sheet items by residual term 31/12/2002
Investment securities 937 36 774 2,685 4,432 Public securities and equivalents 33 - 109 3 145 Bonds and other fixed-income securities 904 36 665 2,682 4,287
Debts represented by securities 4,245 494 2,310 6,574 13,623 Bonds 275 36 399 521 1,231 Other fixed-income securities 3,970 458 1,911 6,053 12,392
Non-operating income and expenses (3) (10) (13) 14 4 18 to FGBR
The transactions summarised in the table above represent CDC IXIS Capital Markets’ main relations with its parent company.
In accordance with the assignment entrusted to us by the Annual General Meeting of Shareholders, we hereby present our report for the financial year ended 31 December 2002, concerning our audit of the consolidated financial statements of CDC IXIS Capital Markets prepared in euros and as attached to this report. The consolidated financial statements were prepared by the Executive Board. It is our responsibility to express an opinion on these financial statements, based on our audit.
It also includes an assessment of the accounting policies used and the significant estimates made in preparing the financial statements, together with an evaluation of the overall adequacy of the presentation of these statements. We believe that our audit provides a reasonable basis for the opinion expressed below. We certify that the consolidated financial statements have been prepared in accordance with French generally accepted accounting principles. In our opinion they give a true and fair view of the assets, liabilities, financial position and results of the Company as at 31 December 2002. We have also verified the information provided in the Group Management Report, in accordance with prevailing professional standards in France. We have no comment to make on the truth and fairness of the information contained in the report or its consistency with the consolidated financial statements.
This chapter contains the most significant extracts from CDC IXIS Capital Markets’ 2002 parent company financial statements. The full 2002 parent company financial statements have been certified without qualification by the Company’s auditors and may be obtained on request from the headquarters of the Company.
Bonds and other fixed-income securities 44,222 34,321 36,452 Equities and other variable-income securities 3,956 3,799 3,267
INTERBANK AND EQUIVALENT TRANSACTIONS Central banks, giro accounts Amounts due to credit institutions 82,182 71,938 66,375
+ Interest and equivalent income on customer transactions 160 214 156 + Interest and equivalent income on bonds and other fixed-income securities 542 485 484 + Other interest and equivalent income 1,488 1,524 1,094 - INTEREST AND EQUIVALENT EXPENSES
- Interest and equivalent expenses on transactions with credit institutions (2,514) (3,176) (3,266)
DEPRECIATION, AMORTISATION AND PROVISIONS (11) (10) (10) ON TANGIBLE AND INTANGIBLE FIXED ASSETS
FINANCING COMMITMENTS Commitments granted to credit institutions 6,206 15 140 Commitments to customers - - -
GUARANTEE COMMITMENTS Commitments to credit institutions 11,616 11,204 10,869 Commitments to customers - - -
COMMITMENTS ON SECURITIES Securities purchased with a repurchase or transfer option - - Other commitments received 745 833 984
2 – Accounting and valuation principles 2.1 Foreign-exchange transactions In accordance with CRB regulation 89-01 on foreignexchange accounting, assets, liabilities and off-balance sheet commitments are translated at the spot rate on the last day of the accounting period.
Loans and borrowings Loans and borrowings are stated at their nominal value. Corresponding interest amounts are recorded in the profit & loss statement on a pro-rata temporis basis.
Securities purchased under resale agreements are included under other loans to financial institutions or loans to customers in accordance with regulation 8907 of the French Banking Regulation Committee. Securities sold under repurchase agreements are booked as debt.
The revenues and expenses on repurchase and resale agreement are recorded on a pro-rata temporis basis in the profit & loss statement.
Securities are marked to market. Marked-to-market gains and losses are recorded in the profit & loss statement.
Whenever CDC IXIS Capital Markets acts as marketmaker and the security is traded in sufficient volumes, these securities may be held in the portfolio for longer than the six-month maximum period as stipulated by the regulations. This also applies to securities held as specialised hedges of instruments that are markedto -market.
Variable-income securities Variable-income securities are stated at cost, excluding accrued interest. At period-end, the securities are valued at their closing price. Provision is made for unrealised losses on a line-by- line basis.
Negotiated loan notes and other interbank instruments These securities and other stocks are recorded at nominal value and the difference between the purchase price and the nominal value is amortised based on the yield-to-maturity method over the residual life of the security.
Interest on loaned and borrowed securities is recorded in the profit & loss statement on a pro-rata temporis basis.
2.4 Futures and options CDC IXIS Capital Markets performs transactions using the entire spectrum of financial futures instruments on fixed income, foreign exchange and equity markets, in order to: • hedge transactions, • or employ specialised trading portfolio management techniques.
Other transactions Other transactions relate mainly to futures and options contracts regulated by CRB 88-02.
2.8 Credit derivatives Credit derivatives are instruments designed to transfer the existing credit risk on assets from one counterparty to another, generally in exchange for the payment of a premium settled at the origin or timeapportioned. In the event of a default (i.e. “a credit event”) that is predefined in the credit derivative contract, the seller of the protection is called upon to pay the cost of the default as defined in the contract.
There are three categories of credit derivatives: Credit Default Swaps, Total Rate of Return Swaps and Credit Linked Notes which are deemed equivalent to options, swaps and securities, respectively.
In the absence of a specific accounting text, credit derivatives have been accounted for by analogy with the transactions with which they share similar risk characteristics (options, swaps and securities) and based on management intention: •Transactions carried out for hedging purposes are valued in the same way as the hedged item.
•The results of isolated open position transactions which are executed in the context of a long-term holding, are valued pro-rata temporis with provision for possible unrealised losses. In the case of operations deemed equivalent to options, possible provisions for unrealised losses are determined with respect to the non-apportioned premium amount.
Long-term equity investments are recorded at book value. At the end of the period, they are valued individually at book value or going concern, whichever is lower. Provision for depreciation is made in the event of a permanent impairment of value.
2.14 Pension commitments Pension commitments are estimated using the actuarial method and give rise to provisions; details are provided in the notes.
The non-contested part of the demand for back-tax received in 2002 is booked as tax expense, whereas all the other related provisions are recorded as exceptional items.
Companies in which CDC IXIS Capital Markets holds a net investment exceeding €15.24m (FF100m)
Profit before tax, profit sharing, depreciation/amortisation and provisions 103,847,390 165,641,746 188,507,300 105,484,611 181,929,851
Social charges (social security and social welfare projects etc.) 19,388,995 23,359,331 28,871,205 30,385,471 32,854,968
1. General information on the issuer 1.1. Corporate name and registered office: CDC IXIS Capital Markets Registered office: 51, rue de Lille – 75007 PARIS
1.2. Legal form Société anonyme (French limited corporation) with Executive and Supervisory Boards in accordance with article L210-1 and subsequent articles of the French Companies Act. The Company has the status of credit institution authorised as a financial company, in accordance with book V of France’s Monetary and Financial Code.
1.4. Purpose (article 2 of statutes) The Company’s purpose is to carry out for its own account and on behalf of its national and international clients: • receipt of funds in connection with its role as a provider of investment services; • issuance of guarantees, endorsements or independent commitments, including guarantees issued for mutual funds and securitised loan funds or for holders of units in such funds, in relation to the provision of investment or financial engineering services, together with the issuance of guarantees for placements, issues of securities or transactions on financial instruments; • all interbank and foreign exchange transactions; • the issuance of loans or the purchase or sale of debt in the course of its intermediation activities, notably for credit derivatives, securitisation and capital market debt transactions, including those involving clients and all operations required for its activity as clearer in forward markets; •provision of all primary and ancillary investment services on regulated and over-thecounter markets relating to French or foreign financial instruments, and in particular: - receipt and transmission of orders on behalf of third parties, - order execution for third parties, - trading for its own account, - portfolio management for third parties and the provision of management advice concerning financial instruments, - underwriting or placement of issues, or in relation to financial transactions, the provision of placement guarantees and all services linked to placement and underwriting; • custody and administration services for financial instruments; • issuance of marketable securities, negotiable debt instruments and all other financial instruments; •provision of advice to companies concerning their capital structure, industrial strategy and related issues, together with mergers and acquisitions services; • compiling, distribution and marketing of all varieties of reports in all formats, covering technical considerations, research, analysis and information systems in the financial and economic sector; • acquisition of holdings in any existing or future French or foreign company, whose activities are related directly or indirectly to the Company’s purpose; •and generally, undertaking all commercial, financial or administrative transactions which may be related directly or indirectly to the Company’s purpose, in order to promote the expansion and development of the Company.
1.5. French company registration number (RCS) RCS : Paris 340 706 407 Code APE : 671 E
After approving the financial statements and the distributable profit, the Shareholders’ Meeting decides either to allocate this profit to one or several reserves over which it has control and use, to carry it over as retained earnings or to distribute it. The Shareholders’ Meeting may decide to distribute any amounts held in reserves over which it has control, indicating the reserves from which these sums are to be levied. However, no distributions from reserves will be made unless the distributable profit during the year is distributed in full.
For all or part of the dividend, or the instalments of the dividend to be distributed, the Shareholders’ Meeting may grant each shareholder the option of receiving the dividend in full or in instalments, and in the form of cash or shares.
Dividends not claimed within five years of their distribution date are rendered void.
1.8. Shareholders’ Meetings Shareholders’ Meetings are convened in accordance with the law.
Ordinary and Extraordinary Shareholders’ Meetings, held in quorum and respecting the majority defined by law, have the powers vested in them by law.
There are currently no exceptional events or claims liable to significantly affect the business, results or the financial situation of CDC IXIS Capital Markets or of its Group.
The amounts of profit-sharing allocated in respect of the last five financial years (and paid in the following financial years), are as follows: ADDITIONAL INFORMATION
Regulatory profit-sharing CDC IXIS Capital Markets concluded a voluntary fixed-term regulatory profit-sharing agreement on 20 December 2001, in respect of the 2000 financial year. This agreement provides for the application of the common law formula for calculating the special reserve for regulatory profit-sharing. The Company paid out the sum of €6.09m in 2001 in respect of regulatory profit-sharing for the 2000 financial year. In an endorsement to this agreement, CDC IXIS Capital Markets paid out the remaining €1.052m available for regulatory profit-sharing in 2002.
In our capacity of Auditors of CDC IXIS Capital Markets, pursuant to COB regulation 98-01 and in accordance with the professional standards applicable in France, we have verified the information on the financial position and the historic accounts presented in this document.
This document was prepared under the responsibility of the Chairman of the Executive Board of CDC IXIS Capital Markets. The role with which we have been assigned is to issue an opinion on the faithfulness of the information contained herein on the financial situation and the accounts.
We conducted our audit in accordance with the professional standards applicable in France. These standards require us to plan and perform the audit so as to obtain reasonable assurance that the financial statements are free from material mis-statement, and that they are consistent with the accounts on which the report has been based. We also read other information contained in the reference document to identify any material inconsistencies in the information relating to the financial position and statements and to highlight any manifestly erroneous information which we might detect based on the knowledge of the company that we acquire in the course of the audit. This reference document does not contain any isolated forecast resulting from a structured forecasting process.
We have audited the annual and consolidated financial statements for the years 2002 and 2001 as prepared by the Executive Board, according to the professional standards applying in France and have certified them without qualification.
In accordance with the professional standards applicable in France, we have audited the annual and consolidated financial statements for the financial year 2000 approved by the Executive Board, and have certified them without qualification with the following observations: - an observation contained in our report on the consolidated financial statements relating to note 1 and which describes the changes in method resulting from the application of new rules for presenting summary consolidated documents, as defined in CRC regulation n°2000-04 of 4 July 2000, - an observation contained in our general report relating to note 1, which describes the changes in method resulting from the application of new rules for presenting summary individual documents, as defined in CRC regulation n°2000-03 of 4 July 2000.
This is a free translation of the original text for information purposes only.
4.1. Description of Company and Group p1 and 2 4.2. Dependence N.A.
6.1. Composition of management and supervisory bodies p8 and 38 to 44 6.2. Directors’ interests in the issuer’s capital, regulated agreements p9 and 38 6.3. Profit-sharing schemes p85 and 86 7.1. Recent developments p4 7.2. Outlook p37
FINANCIAL REPORT 53 Corporate governance 55 Management report 65 Financial information 88 Legal information 153 Additional information 163 COB Cross-reference table 173
The Natexis Banques Populaires Annual Report comprises two sections. In the first section, corresponding to the Activity Report, subsidiaries are referred to by their new names, as approved or to be approved by their Extraordinary Shareholders' Meetings. In the second section, corresponding to the Financial Report, they are referred to by the names used in 2002.