Company Announcement No. 15 / 2007 7 November 2007 Executive Board: Carsten Roth Tel: + 45 59 57 60 00 Interim financial report1 January - 30 September 2007 Disclaimer: This document is an unauthorised translation of the Danish original. In the event of any inconsistencies the Danish version shall apply. Interim financial report - in headlines Performance for the period 1 January - 30 September 2007Profit before tax amounts to DKK 44m against DKK 32.8m last year, corresponding to an increase of 34% Net interest and fee income has gone up by DKK 1.6m, corresponding to an increase of 1.6%Price adjustment of securities amounts to DKK 21.4m against DKK 6.7m for the same period last yearStaff costs and administrative expenses amount to DKK 67.2m, constituting an increase of 1.3% on the same period last yearImpairment losses on loans and receivables, etc amount to DKK 8.4m compared with DKK 7.0m in the same period last yearLoans are up by 21%Deposits have dropped by 1%Guarantees have increased by 7.2%Pre-tax profit expectations are adjusted upwardly with 8m to DKK 50-55m. Key figures - Group Income statement -------------------------------------------------------------------------------- | DKK'm | Q3 | Q3 | FY | | | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- | Interest income - net | 64.6 | 60.1 | 81.6 | -------------------------------------------------------------------------------- | Fee and commission income, etc - net | 33.9 | 36.8 | 48.1 | -------------------------------------------------------------------------------- | Net interest and fee income | 98.5 | 96.9 | 129.7 | -------------------------------------------------------------------------------- | Staff costs and administrative expenses | -67.2 | -66.4 | -89.0 | -------------------------------------------------------------------------------- | Other operating expenses - net | -0.3 | 2.6 | 1.3 | -------------------------------------------------------------------------------- | Impairment losses on loans and receivables, | -8.4 | -7.0 | -8.8 | | etc | | | | -------------------------------------------------------------------------------- | Core earnings | 22.6 | 26.1 | 33.2 | -------------------------------------------------------------------------------- | Value adjustments | 21.4 | 6.7 | 16.5 | -------------------------------------------------------------------------------- | Profit before tax | 44.0 | 32.8 | 49.7 | -------------------------------------------------------------------------------- | Income taxes | -9.9 | -8.8 | -11.3 | -------------------------------------------------------------------------------- | Profit for the period | 34.1 | 24.0 | 38.4 | -------------------------------------------------------------------------------- Balance sheet -------------------------------------------------------------------------------- | Loans and other receivables at amortised cost | 1,798 | 1,485 | 1,528 | | Deposits and other payables | 1,424 | 1,436 | 1,374 | | Guarantees, etc | 1,550 | 1,445 | 1,541 | -------------------------------------------------------------------------------- | Bonds and shares | 354 | 334 | 315 | -------------------------------------------------------------------------------- | Equity including profit | 294 | 262 | 277 | -------------------------------------------------------------------------------- | Total assets | 2,408 | 2,101 | 2,110 | -------------------------------------------------------------------------------- Ratios -------------------------------------------------------------------------------- | Capital adequacy ratio | 10.9 | 10.3 | 11.6 | -------------------------------------------------------------------------------- | Share price | 241 | 258 | 287 | -------------------------------------------------------------------------------- Comments on the interim financial report for Q3 2007 Management's review Skælskør Bank has in the first three quarters of 2007 continued the favourable development. The Bank's aggregate business volume - measured by the sum of loans, deposits and guarantees - is up by 9% and amounts to DKK 4,771m compared to DKK 4,366m at 30 September 2006. The Bank's value adjustments remain positive at a very high level in relation to last year. The pre-tax profit for the period amounts to DKK 44.0m compared with DKK 32.8m for the same period last year. Based on the positive business and profit development, the profit before tax for FY 2007 is expected in the range of DKK 50-55m, compared with DKK 42-46m before. Net interest and fee income Net interest and fee income amounts to DKK 98.5m against DKK 96.9m for the same period of 2006. Net interest income amounts to DKK 64.6m compared to DKK 60.1m last year. Fee and commission income, etc has decreased from DKK 36.8m to DKK 33.9m. The decline is attributable to a cessation of fee and commission income of DKK 7.3m relating to one of the Bank's subsidiaries which was sold effective from 1 October 2006. Taking this into account, fee and commission income is up by DKK 4.4m. The increase is distributed on guarantee commission, commission from foreign business and commission income relating to investment funds. Value adjustments Value adjustments amount to DKK 21.4m against DKK 6.7m in 2006. The significant positive deviation is attributable to capital gains of DKK 22.1m on the Bank's portfolio of shares, a capital loss of DKK 2.4m on bonds and a capital gain of DKK 1.7m on other instruments. Staff costs and administrative expenses Staff costs and administrative expenses total DKK 67.2m against DKK 66.4m in 2006. Staff costs and administrative expenses are in line with budget. Disregarding staff costs and administrative expenses in the subsidiary sold by the Bank, staff costs have gone up by DKK 6.8m whereas administrative expenses have increased by DKK 4.6m. As stated, this is a budgeted increase and reflects the current development of the Bank. The number of staff has gone up from 99.1 to 112.2 in the period. In full-time jobs that constitutes an increase of 13%. Several of the Bank's branches have been subject to reconstruction/refurbishment in 2007. Impairment losses on loans and receivables, etc The Bank's impairment losses on loans and receivables, etc amount to DKK 8.4m against DKK 7.0m in 2006. Of this, one single customer accounts for the major part of the impairment losses. Balance sheet Loans are up by 21% from DKK 1,485m to DKK 1,798m. Deposits have gone down by 1% from DKK 1,436m to DKK 1,424m. Guarantees have gone up by 7% from DKK 1,445m to DKK 1,550m. The Bank's equity is up from DKK 262m to DKK 294m. Cash flows The credit crisis in the US has implied that the time it takes to raise a long-term loan has been extended. We have also observed a considerable price increase on long-term loans. This has as yet not had any significant impact on the day-to-day operations of Skælskør Bank. Since the end of the financial period, no events have occurred which would influence the Bank's financial position and its financial performance in the period under review. Outlook for all of 2007 The outlook for all of 2007 in the annual report for 2006 was that performance would produce a result in the range of DKK 42-46m. But based on the positive business and profit development in Q1-Q3 of 2007, a profit before tax in the range of DKK 50-55m is expected for FY 2007. Statement by Management on the interim financial report The Supervisory and Executive Boards have today approved the interim financial report of Skælskør Bank A/S for the period 1 January - 30 September 2007. We consider the applied accounting policies appropriate and the estimates made reasonable for the interim financial report to provide a true and fair view of the Group's financial position at 30 September 2007 as well as of the Bank's activities for the period 1 January to 30 September 2007. The interim financial report has not been audited or reviewed by the Bank's auditors. Please note that this interim financial report does not follow the CSE rules on publication of interim financial reports. Skælskør, 7 November 2007 Carsten Roth Peter Melchior Chief Executive Officer Chairman of the Supervisory Board Income statement 1 January - 30 September 2007 -------------------------------------------------------------------------------- | Group | Note | Q1-Q3 | Q1-Q3 | FY | | | | 2007 | 2006 | 2006 | | | | DKK'000 | DKK'000 | DKK'000 | -------------------------------------------------------------------------------- | Interest income | 1 | 107,810 | 82,624 | 114,021 | -------------------------------------------------------------------------------- | Interest expenses | 2 | -43,206 | -22,539 | -32,424 | -------------------------------------------------------------------------------- | Net interest income | | 64,604 | 60,085 | 81,597 | -------------------------------------------------------------------------------- | Dividends from shares, etc | | 1,482 | 630 | 654 | -------------------------------------------------------------------------------- | Fee and commission income | 3 | 35,593 | 38,480 | 50,825 | -------------------------------------------------------------------------------- | Ceded fee and commission expenses | | -3,209 | -2,294 | -3,390 | -------------------------------------------------------------------------------- | Net interest and fee income | | 98,470 | 96,901 | 129,686 | -------------------------------------------------------------------------------- | Value adjustments | 4 | 21,399 | 6,723 | 16,459 | -------------------------------------------------------------------------------- | Other operating income | | 2,547 | 4,697 | 4,940 | -------------------------------------------------------------------------------- | Staff costs and administrative | 5 | -67,231 | -66,400 | -88,970 | | expenses | | | | | -------------------------------------------------------------------------------- | Depreciation, amortisation and | | -2,806 | -2,156 | -3,692 | | impairment losses relating to | | | | | | intangible assets and property, | | | | | | plant and equipment | | | | | -------------------------------------------------------------------------------- | Other operating expenses | | 0 | -1 | 0 | -------------------------------------------------------------------------------- | Impairment losses on loans and | | -8,411 | -6,987 | -8,770 | | receivables, etc | | | | | -------------------------------------------------------------------------------- | Profit before tax | | 43,968 | 32,777 | 49,653 | -------------------------------------------------------------------------------- | Tax on profit for the period | | -9,834 | -8,735 | -11,223 | -------------------------------------------------------------------------------- | Profit for the period | | 34,134 | 24,042 | 38,430 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Balance sheet at 30 September 2007 -------------------------------------------------------------------------------- | Group | Note | 30 Sep | 30 Sep | 31 Dec | | | | 2007 | 2006 | 2006 | | | | DKK'000 | DKK'000 | DKK'000 | -------------------------------------------------------------------------------- | Cash and demand deposits with | | 60,368 | 38,871 | 29,586 | | central banks | | | | | -------------------------------------------------------------------------------- | Receivables from credit | | 106,327 | 154,942 | 149,956 | | institutions and central banks | | | | | -------------------------------------------------------------------------------- | Loans and other receivables at | | 1,797,59 | 1,484,713 | 1,527,899 | | amortised cost | | 1 | | | -------------------------------------------------------------------------------- | Bonds at fair value | | 186,956 | 237,463 | 214,417 | -------------------------------------------------------------------------------- | Shares, etc | | 166,840 | 96,715 | 103,302 | -------------------------------------------------------------------------------- | Intangible assets | | 0 | 2,000 | 0 | -------------------------------------------------------------------------------- | Total land and buildings | | 55,567 | 55,179 | 55,261 | -------------------------------------------------------------------------------- | Investment property | | 22,203 | 28,649 | 13,171 | -------------------------------------------------------------------------------- | Owner-occupied property | | 33,364 | 26,530 | 42,090 | -------------------------------------------------------------------------------- | Other property, plant and | | 11,795 | 6,260 | 5,467 | | equipment | | | | | -------------------------------------------------------------------------------- | Current tax assets | | 0 | 0 | 691 | -------------------------------------------------------------------------------- | Deferred tax assets | | 1,527 | 1,519 | 1,323 | -------------------------------------------------------------------------------- | Other assets | | 20,696 | 22,997 | 22,329 | -------------------------------------------------------------------------------- | Prepayments | | 313 | 376 | 76 | -------------------------------------------------------------------------------- | Total assets | | 2,407,98 | 2,101,035 | 2,110,307 | | | | 0 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Balance sheet at 30 September 2007 -------------------------------------------------------------------------------- | Group | Note | 30 Sep | 30 Sep | 31 Dec | | | | 2007 | 2006 | 2006 | | | | DKK'000 | DKK'000 | DKK'000 | -------------------------------------------------------------------------------- | Debt to credit institutions and | | 485,624 | 252,660 | 321,659 | | central banks | | | | | -------------------------------------------------------------------------------- | Deposits and other payables | | 1,423,95 | 1,435,698 | 1,374,119 | | | | 3 | | | -------------------------------------------------------------------------------- | Current tax payable | | 7,186 | 8,400 | 0 | -------------------------------------------------------------------------------- | Other liabilities | | 44,744 | 51,873 | 30,189 | -------------------------------------------------------------------------------- | Deferred income | | 627 | 1,518 | 1,525 | -------------------------------------------------------------------------------- | Total payables | | 1,962,13 | 1,750,149 | 1,727,492 | | | | 4 | | | -------------------------------------------------------------------------------- | Provisions | | | | | -------------------------------------------------------------------------------- | Provisions for pensions and | | 1,427 | 1,427 | 1,427 | | similar liabilities | | | | | -------------------------------------------------------------------------------- | Provisions for deferred tax | | 0 | 177 | 0 | -------------------------------------------------------------------------------- | Provisions for loss on guarantees | | 333 | 1,518 | 1,992 | -------------------------------------------------------------------------------- | Other provisions | | 713 | 1,658 | 2,393 | -------------------------------------------------------------------------------- | Total provisions | | 2,473 | 4,780 | 5,812 | -------------------------------------------------------------------------------- | Subordinated debt | | | | | -------------------------------------------------------------------------------- | Subordinated debt | | 149,544 | 84,576 | 99,560 | -------------------------------------------------------------------------------- | Total subordinated debt | | 149,544 | 84,576 | 99,560 | -------------------------------------------------------------------------------- | Equity | | | | | -------------------------------------------------------------------------------- | Share capital | | 37,000 | 37,000 | 37,000 | -------------------------------------------------------------------------------- | Revaluation reserve | | 1,471 | 1,471 | 1,471 | -------------------------------------------------------------------------------- | Retained earnings | | 255,358 | 223,059 | 238,972 | -------------------------------------------------------------------------------- | Total equity | | 293,829 | 261,530 | 277,443 | -------------------------------------------------------------------------------- | Total equity and liabilities | | 2,407,98 | 2,101,035 | 2,110,307 | | | | 0 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes - Group -------------------------------------------------------------------------------- | | Q1-Q3 | Q1-Q3 | FY | | | 2007 | 2006 | 2006 | | | DKK'000 | DKK'000 | DKK'000 | -------------------------------------------------------------------------------- | 1. Interest income | | | | -------------------------------------------------------------------------------- | Receivables from credit institutions and | 3,059 | 2,705 | 4,456 | | central banks | | | | -------------------------------------------------------------------------------- | Loans and other receivables | 97,142 | 73,330 | 100,171 | -------------------------------------------------------------------------------- | Bonds | 6,374 | 6,896 | 9,517 | -------------------------------------------------------------------------------- | Total derivative financial instruments | -3 | -427 | -427 | -------------------------------------------------------------------------------- | Of these | | | | -------------------------------------------------------------------------------- | Foreign exchange contracts | -3 | -427 | -427 | -------------------------------------------------------------------------------- | Other interest income | 1,238 | 120 | 304 | -------------------------------------------------------------------------------- | Total interest income | 107,810 | 82,624 | 114,021 | -------------------------------------------------------------------------------- | The Group has no income from genuine | | | | | purchase | | | | | and sell-back transactions. | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 2. Interest expenses | | | | -------------------------------------------------------------------------------- | Credit institutions and central banks | 9,254 | 4,210 | 6,074 | -------------------------------------------------------------------------------- | Deposits and other payables | 28,739 | 15,363 | 22,194 | -------------------------------------------------------------------------------- | Subordinated debt | 5,166 | 2,852 | 4,079 | -------------------------------------------------------------------------------- | Other interest expenses | 47 | 114 | 77 | -------------------------------------------------------------------------------- | Total interest expenses | 43,206 | 22,539 | 32,424 | -------------------------------------------------------------------------------- | The Group has no expenses for genuine | | | | | purchase | | | | | and sell-back transactions. | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 3. Fee and commission income | | | | -------------------------------------------------------------------------------- | Securities trading and custody accounts | 13,703 | 13,461 | 19,091 | -------------------------------------------------------------------------------- | Payments handling | 1,728 | 1,769 | 2,350 | -------------------------------------------------------------------------------- | Loan case fees | 2,478 | 2,884 | 4,041 | -------------------------------------------------------------------------------- | Guarantee commission | 8,856 | 7,731 | 10,015 | -------------------------------------------------------------------------------- | Other fee and commission income | 8,828 | 12,635 | 15,328 | -------------------------------------------------------------------------------- | Total fee and commission income | 35,593 | 38,480 | 50,825 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes - Group -------------------------------------------------------------------------------- | | Q1-Q3 | Q1-Q3 | FY | | | 2007 | 2006 | 2006 | | | DKK'000 | DKK'000 | DKK'000 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 4. Value adjustments | | | | -------------------------------------------------------------------------------- | Bonds | -2.378 | -2,161 | -2,349 | -------------------------------------------------------------------------------- | Shares | 22,078 | 7,122 | 15,570 | -------------------------------------------------------------------------------- | Investment property | 0 | 0 | 418 | -------------------------------------------------------------------------------- | Total currency, interest, etc | 1,193 | 765 | 1,070 | -------------------------------------------------------------------------------- | Derivative financial instruments | 543 | 1,028 | 1,764 | -------------------------------------------------------------------------------- | Other assets | -37 | -31 | -14 | -------------------------------------------------------------------------------- | Total value adjustments | 21,399 | 6,723 | 16,459 | -------------------------------------------------------------------------------- | Skælskør Bank has no collective pool | | | | | schemes. | | | | -------------------------------------------------------------------------------- | 5. Staff costs and administrative | | | | | expenses | | | | -------------------------------------------------------------------------------- | Salaries and remuneration to the | | | | | Supervisory and Executive Boards as well | | | | | as the Committee of Representatives | | | | -------------------------------------------------------------------------------- | Executive Board | 1,086 | 1,449 | 2,158 | -------------------------------------------------------------------------------- | - Pension, etc to the Executive Board | 305 | 300 | 419 | -------------------------------------------------------------------------------- | - Supervisory Board | 431 | 423 | 569 | -------------------------------------------------------------------------------- | - Committee of Representatives | 0 | 0 | 115 | -------------------------------------------------------------------------------- | Staff costs | | | | -------------------------------------------------------------------------------- | - Wages and salaries | 31,262 | 30,341 | 40,626 | -------------------------------------------------------------------------------- | - Pensions | 3,848 | 3,544 | 4,702 | -------------------------------------------------------------------------------- | - Social security costs | 3,329 | 2,621 | 3,573 | -------------------------------------------------------------------------------- | Other administrative expenses | 26,970 | 27,722 | 36,808 | -------------------------------------------------------------------------------- | Total staff costs and administrative | 67,231 | 66,400 | 88,970 | | expenses | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes - Group -------------------------------------------------------------------------------- | 6. Contingent assets and liabilities | | | | -------------------------------------------------------------------------------- | Financing guarantees | 1,087,563 | 1,014,679 | 1,092,556 | -------------------------------------------------------------------------------- | Other guarantees | 461,940 | 430,507 | 448,085 | -------------------------------------------------------------------------------- | Total guarantees, etc | 1,549,503 | 1,445,186 | 1,540,641 | -------------------------------------------------------------------------------- | Other contingent liabilities | | | | -------------------------------------------------------------------------------- | Irrevocable credit guarantees | 0 | 0 | 75,800 | -------------------------------------------------------------------------------- | Other obligations | 46,505 | 46,338 | 46,338 | -------------------------------------------------------------------------------- | Total other liabilities | 46,505 | 46,338 | 122,138 | --------------------------------------------------------------------------------
Skælskør Bank Aktieselskab. Interim financial report. 1 January - 30 September 2007
| Source: Skælskør Bank Aktieselskab
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