Annual report 2006 Binck’s 2005 annual report and accounts related to the Retail, Wholesale and Trading business units. Since 1 January 2006, the activities of the Wholesale business unit and the services provided for professional clients by the Retail business unit have been transferred to a new business unit, Professional Services. The comparative figures at business unit level for 2005 given in this annual report therefore differ from those given in the 2005 annual report.
In 2006 Binck N.V. and BinckBank N.V. merged and the name was changed to BinckBanck N.V. Where reference is made in this annual report to ‘BinckBank’, it refers to BinckBank N.V.
This document is a translation of the Dutch original and is provided as a courtesy only. In the event of any disparity, the Dutch version shall prevail. No rights may be derived from the translated document. Other information Financial statements 2006BinckBankN.V...... BinckBank’s organisational structure ...... In-control statement ...... Risk management Corporate Governance...... Board the Supervisory of Report ...... Board BoardManagement andSupervisory ...... Boardthe Management of Report ...... eventsImportant of2006 Shareholder information ...... Chairman’s...... letter ...... Key figures 2006 ...... Results inbrief Profile,...... missionandstrategy Contents rpslfraporaino h eut ...... 119 Proposal for appropriation the result of ...... 1 ofAssociation) the Articles 32of (article Statutory provisions ofappropriation inrespect ofprofit ...... 118 ofAssociation) the Articles 15and21of (articles Statutory provisions ofpriorityshares inrespect ...... Auditors’ report ...... 105 the companyto Notes balancesheet the companyto Notes financialstatements...... 104 Company statement ofchangesinequity...... 103 Company income statement...... Company balancesheet Company Financial Statements ...... Financial riskmanagement ...... 87 the consolidatedto Notes income statement ...... 70 the consolidatedto Notes balancesheet the consolidatedto Notes financialstatements...... 59 Consolidated statement ofchangesinequity...... 58 ...... 5 Consolidated cashflowstatement Consolidated income statement...... Consolidated balancesheet...... Consolidated Financial Statements ...... 4 ...... 8 ...... 5 ...... 41 ...... 45 ...... 34 ...... 10 ...... 2 ...... 13 ...... 26 ...... 116 ...... 48 ...... 16 ...... 101 ...... 54 .....97 .....24 .102 .55 18 6
Annual report 2006 1 Profile, mission and strategy
Profile Vision BinckBank is an online bank for investors. We offer The internet provides an opportunity for new our clients fast, low-cost access to the leading players to set up businesses with relatively little financial markets around the world, accurate capital and as such compete with existing market administrative processing of securities and cash participants. The internet also makes it easy for transactions and extensive market information. consumers to find and compare the products and services offered by new and existing players. Now BinckBank a listed independent online bank with that they can choose products and services via offices in the Netherlands and Belgium, and will comparison websites and discuss them in shortly open an office in France. It employs around newsgroups, consumers are able to make rational 250 people (year-end 2006). choices based on price, quality or a combination of the two, rather than relying on a brand name. BinckBank’s activities are split into three business One conclusion we can draw is that a company’s units: Retail, Professional Services and Trading. successful product sales is increasingly being determined by the perception formed by the Retail consumer via the internet, rather than its own Retail provides services for independent private marketing campaigns. Customer satisfaction will investors via a comprehensive investment website, therefore increasingly be a factor in the future the functions of which include real-time streaming growth of businesses. prices and news, order book depth, research, advice and analysis. BinckBank was announced ‘best Mission internet broker in the Netherlands’ for the second BinckBank seeks to maximise shareholder value by 2 year in succession in the ‘Dutch Brokersurvey 2006’. maximising customer satisfaction.
Professional Services Business strategy Professional Services provides services for BinckBank’s business strategy is to provide professional clients such as asset managers and professional and institutional investors with fast, banks, including an online product which handles low-cost access to all the world’s leading financial the processing of securities and cash transactions markets, accurate administrative processing of cash and the entire securities-related administration and securities transactions and very comprehensive process. Professional clients of this business unit market information. have the option of entering into a service agreement with BinckBank or purchasing the Our aim is to amaze clients with our combination software needed to execute these processes of a high quality product, low prices and intensive themselves. client focus, thus recruiting them as ambassadors for our services. We create shareholder value for Trading investors in BinckBank by concentrating on
Annual report 2006 The Trading business unit trades solely for its own growing our customer base and maximising account and risk. Using automated systems and customer satisfaction. quantitative analysis software, the business unit seeks to maintain an edge over the average player. Trading’s activities are subject to a system of internally set limits. We aim to limit the total investment in trading activities to 33% of BinckBank’s shareholders’ equity. outsourcing). payments (BPO, orbusinessprocessing securities administration andsecurities-related insourcing ofexecution ofsecuritiesorders, our range for ofservices banksthe additionof with expansion ofallBinckBank’s activities, broadening Our businessstrategy envisages international
Annual report 2006 3 Results in brief
Total net profit rose 78% to € 24.0 million in 2006, Distribution of pre-tax profit € from 13.5 million in 2005. The profit includes a Professional non-recurring tax asset of € 2.9 million in respect Trading Services 3% of a tax loss in Belgium of approximately € 21 10% million (as at year-end 2006) and non-recurring income of € 0.2 million released from a provision for loss-making contracts and € 0.2 million released from a tax provision which had been Retail 87% overestimated in the past. Since the 2005 figures include non-recurring net income of approximately € 1.3 million, the profit growth adjusted for non- Total revenues rose to € 55.7 million in 2006, from recurring items amounted to 68%. € 44.1 million in 2005 (+26%). Total expenses showed little change, at € 26.8 million compared The Retail business unit contributed the lion’s with € 26.3 million in 2005 (+2%). The modest share of the result, posting a pre-tax profit of increase in the expenses reflects our strong focus € 25.4 million (+87%). The pre-tax profit generated on cost control and high-level IT. The net effect in by the Professional Services business unit rose 2006 was to improve the cost/income ratio to 48% steeply to € 2.8 million, accounting for 10% of the (2005: 60%). total pre-tax operating result. Trading’s result declined to € 0.8 million in 2006, reflecting the 60,000 Revenue changing market conditions, which meant that a Expenses 4 50,000 number of the trading strategies that had been Net profit profitable in the past no longer contributed to the 40,000 result, and the sale of the activities of Hills 30,000 Independent Traders Ltd., which were profitable. 20,000 10,000
0 2002 2003 2004 2005 2006 –10,000
Income statement 2006 2005 2004 2003 2002 (€ 1,000,-) Revenue 55,682 44,113 39,965 24,556 27,412 Expenses (26,752) (26,322) (35,051) (39,186) (44,072)
Profit before tax 28,930 17,791 4,914 (14,630) (16,660) Annual report 2006 Tax (5,120) (4,879) (1,606) 5,259 7,793
Profit on continuing operations 23,810 12,912 3,308 (9,371) (8,867) Profit on discontinued operations 199616--- Minority interests - 81 (500) (906) (566)
Net profit 24,009 13,528 2,808 (10,277) (9,433)
Employees at year end 223 170 187 272 289
When comparing the results for the years 2002–2006, it should be noted that the figures for 2002 and 2003 have not been prepared in accordance with IFRS. ) Thepayment of 1) Financial information (x bybusinessunit Key figures2006 ) Acorrectionthe prior-year wasto made figures in2005for overstatementtax liabilities. of 3) Otherrevenues relateto revenue generated bysubsidiarySyntel B.V.,2) whichwas acquired in2006. operations oncontinuingProfit Operating before profit tax Total expenses Total revenues transactions onfinancial Profit Commission Revenues from otherinvestments Interest Tax ofotherinvestmentsImpairment Depreciation andamortisation Other administrative expenses Staff costs Other revenues Retail 50%, Professional 10%and Services Trading 40%. A deferred wastax asset recognisedtax lossof ofa in2006respect 3) 2) € 580,000 received fromthe Amsterdam StockExchange Association hasbeenallocated asfollows overthreethe businessunits: 1) € 1,3)(,9)(,7)(,8)(,4)(198 736 526 3,8)(31,528) (34,085) (5,206) (7,306) (11,948) (7,841) (4,881) (4,974) (9,492) (13,937) 1,000) 0231,8 ,8 ,8 58122,569 35,801 – – 0 0 4,285 5,588 18,284 30,213 9272,0 ,9 ,2 ,0 5217516066,7 50,199 63,273 6,086 29,215 25,350 7,591 18,671 880 13,908 2,820 540 760 15,291 3,343 285 8,601 5,421 7,794 23,401 39,287 106 86 49 43 37 26 6)(1 192 (1,636) (1,962) (61) (60) (9,210) (246) (10,633) (20,674) (327) (1,083) (21,394) (1,044) (4,062) (483) (6,202) (2,162) (1,379) (489) (9,532) (6,135) (1,267) (846) (1,153) (3,131) (1,086) (3,263) (4,698) (7,057) (3,949) (5,794) 0620 0620 0620 0620 062005 2006 2005 2006 2005 2006 2005 2006 2005 2006 ,7 ,2 ,1 9 9 0 0756,025 10,785 – – 103 393 995 1,318 4,927 9,074 0033700––337 5 5 0 855 – – 21,598 0 15,799 6,086 0 7,591 15,188 0 8,208 134 855 0 0 190 0 0 6)0 8 6)(8) (69) – – 0 (8) 0 0 (69) ealPoesoa rdn icniudTotal Discontinued Professional Trading Retail € 2.9 millioninBinckBelgiëN.V. . evcsactivities Services 8)(6)(,0)(5,143) (5,206) (264) (86) 24,009 13,528
Annual report 2006 5 Annual report 2006 6 Shareholder information Important eventsImportant 2006 Chairman’s letter
Annual report 2006 7 Chairman’s letter
Dear shareholder, costs and to ensure that it is well equipped to provide the best possible support for future On behalf of the Management Board of BinckBank, growth. For that reason, we decided in mid-year to I hereby present our report on the 2006 financial undertake a merger between Binck N.V. and year, which was an interesting year for our BinckBank N.V. and change the name to BinckBank organisation in many respects. N.V. The merger serves to create a stronger capital base for the banking activities. Many positive results have flowed from the revised strategy which we formulated in early 2006, We are delighted to report that the combined based on our belief in the quality of the services effect of all these developments in 2006 was we provide and vindicated by the large number of explosive profit growth, which has convinced us investors choosing BinckBank every day and our that our business strategy is achieving results. We high client satisfaction scores. That has are accordingly looking forward to healthy growth strengthened our determination to further expand in the coming years in our principal activities in the our online investment services and roll them out Netherlands and Belgium and those we are internationally. Our revised strategy is supported planning to start up in France. by a new organisation and control model, which is discussed at greater length elsewhere in this Recently, BinckBank has unfortunately had to deal annual report. with a possible insider trading issue involving Mr. Langereis, a former Supervisory Board member. 2006 saw the opening of the bank’s first We have discovered that, although strict rules have international office in Belgium and the expansion been laid down for the management of price- 8 of our range with the addition of BPO services. sensitive information, it is not possible to prevent These ventures are developing well. BinckBank in their infringement at the individual level. We Belgium has witnessed explosive growth and the regret that this incident has threatened to first letter of intent has been signed with Friesland compromise BinckBank’s reputation for integrity. Bank for PBO services. We also announced our Looking back on this incident, we can confirm that plans to enter the French market in the second half the Management Board acted swiftly to report the of 2007. We expect our international activities to premature disclosure of price-sensitive information provide solid support for the growth of our to the Netherlands Authority for the Financial organisation in the coming years. Markets (AFM). We should point out that BinckBank is not the subject of investigation and Since the merger between Effectenbank Binck and that Mr. Langereis has personally taken full AOT in 2004, the organisation has undergone a responsibility for this incident. metamorphosis. All the international trading activities of the former AOT have been disposed of We expect 2007 to bring sustained growth. We and the last of our operations in London was sold have high hopes of both our home market and our
Annual report 2006 in 2006. As a result of the explosive growth of the international operations. We shall be faced in 2007 Retail and Professional Services businesses and the with a multitude of new regulations, including the reorganisation of the Trading business unit in Markets in Financial Instruments Directive (MiFID) recent years, the latter now represents only a small and Basel 2. Although they will demand substantial part of our total operation: the strategic focus is effort on our part, we are optimistic about the emphatically on our online investment services for advantages and opportunities which the new private and professional investors. In 2007, having legislation will bring. downsized these activities, we shall investigate the possibility of hiving-off the Trading business unit. Our good result in 2006 was due first and foremost to the confidence our clients place in us and in no Our objective is an organisation which operates at small measure to our employees, whose energy maximum possible efficiency, both to minimise and commitment have been instrumental in achieving our high level of customer satisfaction and have thus contributed to BinckBank’s success. The Management Board owes them a sincere debt of gratitude. We would also take this opportunity to thank our shareholders for their confidence in and loyalty to BinckBank.
Kind regards,
Thierry Schaap Chairman of the Management Board
Amsterdam, 1 March 2007 9 Annual report 2006 Annual report 2006 10 been exercised. stock optionplan. Nostaff stockoptionshave yet sharesto operate willbeusedinter alia the staff 2,000 repurchased anaverage at priceof shares initsowncapitalwhichhadbeen On 31December2006, BinckBankheld253,145 Share capital listed. not are priorityshares of 50 AOTPrioriteit priorityshareholder’) (‘the holds 30,837,403. The share capital isfullypaid. Stichting issue on31December2006remained unchangedat issued in2006,the numberofordinary shares in Euronext Amsterdam. Sincenonewshares were BinckBank N.V. ordinary shares are listedon Binck.AS. Bloomberg: BinckNA). (Reuters:wasto inNL0000335578 changed wasto BinckBankN.V. changed code the ISIN and change ofcompany name,the sharethe nameof Binck N.V. andBinckBankN.V. andsubsequent 2006,In October the merger between of asaresult Year-end pricein Daily shareturnover 1,000 BinckBank sharesin2006 Shareholder information 2,500 1,000 1,500 500 1 January 1 January 10 16 18 14 12 6 8 4 2 0 0 € € 0.10 nominal value, which 1 July 1 July € 3.78. These 31 December 31 December 2004 Year-end price2006 ero xrieN.Exercise No. 2003 Exercise Year of on 31December2006: The following staff stockoptionshadbeenissued Repurchased Issued Authorised Priority shares Issued Year-end 2005 Year-end 2006 Authorised Ordinary shares Year-end price2005 Share price-high(12-04) Change % Share price-low(10-01) Earnings pershare 2006 Market capitalisation ( Averageturnover daily Turnover -low (23-11) Turnover -high(31-01) Share turnover Change % AScI year-end 2005 AScI year-end 2006 Earnings pershare 2005 Dividend 2006 EPS (%) growth Dividend 2005 Dividend growth (%) Dividend growth € rc until € price .525,000 3.15 .4100,000 2.24 0,0,0 100,000,000 100,000,000 € 0874330,837,403 30,837,403 million) 5,4 296,855 253,145 050 50 50 50 December 2009 October 2007 October 94,480,425 2,322,616 370,511 € € 40,399 531.40 700.02 € € € € € € 14.66 17.50 9.15 8.60 0.79 0.45 0.40 0.22 60% 32% 76% 82% 452 Listing Dividend BinckBank N.V. shares are traded continuously on Under the company’s dividend policy, 6% of the Euronext Amsterdam. The active investor relations nominal value is paid on the priority shares policy adopted by BinckBank in 2006 resulted in (50 x € 0.10 x 6%). The priority shareholder then more extensive coverage of its shares by analysts determines what proportion of the profit is to be and leading financial institutions. The combination retained. This sum is not distributed to the of good results and better coverage translated into shareholders, but is added to the company’s a sharp increase in turnover in BinckBank shares on reserves. Euronext. Average daily turnover increased from 214,121 in 2005 to 370,511 in 2006. Due to the The remainder of the profit is placed at the increase in price and turnover, BinckBank N.V. disposal of the General Meeting of Shareholders, shares will be included in the Amsterdam SmallCap which means that it can choose whether to Index (AscX) as from 2 March 2007. distribute the remaining profit, add it to reserves or a combination of the two. Distributions may,
250,000 18 according to the provisions of the Articles of Turnover Association, be paid in cash or entirely or partially Share price BinckBank 16 200,000 14 in ordinary shares.
12 150,000 10 The priority shareholder will place the remainder of
8 the profit at the disposal of the General Meeting 100,000 6 only if the total net annual profit exceeds 5% of 4 BinckBank’s shareholders’ equity and only if doing 50,000 2 so would not, in the priority shareholder’s view,
0 0 reduce the company’s liquidity and capital 11 1 January 2006 1 July 2006 31 December 2006 adequacy to insufficient levels. If, with due observance of these conditions, a proportion of the profit is placed at the disposal of the General The performance benchmark for BinckBank’s share Meeting, the priority shareholder will aim in price is an index composed of a number of principle for a payout ratio of 50% of the net international competitors which engage in more or earnings per share. less comparable activities. These are Ameritrade, E-Trade, Comdirect, Swissquote and Boursarama. On the above basis, an interim dividend of € 0.11 (net of 15% (2005: 25%) dividend tax) was declared
200 in 2006 as a charge on that year’s profit. This 180 interim dividend amounted to approximately 30% 160 of the earnings per share for the first half of 2006. 140 The shareholders will be invited to approve a final 120 dividend of € 0.29. 100 80
60 Annual report 2006 Binck 40 SCAP Index 20 Binck Peer Group Index 0 Dividend EPS % of EPS 2-1-2006 2-7-2006 30-12-2006
2006* € 0.40 € 0.79 50.6% 2005 € 0.22 € 0.45 48.9% 2004 € 0.05 € 0.10 50.0% 2003 € 0.00 (€ 0.42) 0.0% 2002 € 0.00 (€ 0.39) 0.0%
* Subject to the approval of the General Meeting of Shareholders. Major shareholders Financial calendar 2007 Since balance sheet date, three shareholders have disclosed interests of over 5% pursuant to the Act 3 April 2007 Publication of 2006 on the Disclosure of Major Holdings and Capital annual report Interests in Securities-Issuing Institutions (Wet 19 April 2007 15:00 General Meeting of melding zeggenschap en kapitaalbelang in Shareholders effectenuitgevende instellingen 2006). These are 19 April 2007 08:00 First-quarter 2007 Vereniging Friesland Bank (15.09%), Boron figures Investments (9.73%) and J. Kluft (6.11%). 27 July 2007 08:00 First-half 2007 figures As announced in the prospectus of 21 April 2004, 24 October 2007 08:00 Third-quarter 2007 the shareholdings of Messrs. Bagijn and Schaap are figures subject to lock-up arrangements. Pursuant to the provisions of the Act on the Disclosure of Major Investor Relations Holdings and Capital Interests in Securities-Issuing Telephone: +31 20 522 0372 Institutions as applicable to Management Board Fax: + 31 20 320 4176 and Supervisory Board members and in accordance E-mail: [email protected] with those arrangements, the personal holding Internet: www.binck.com companies of Kalo Bagijn and Thierry Schaap gave notification of a sales transaction on 8 November 2005, relating to all the 650,000 Binck N.V. shares which had been released for sale. The sale was effected after consultation with the company. The shares were placed directly with a major investor. 12 The remaining holding of the two Management Board members under the lock-up arrangements of 21 April 2004 amounts to 1,306,502 shares (4.2%).
Figures per share
Figures per share 2006 2005 2004 2003 2002 Annual report 2006 Earnings in € 1) 4) 0.79 0.45 0.10 (0.42) (0.39) Dividend in € 0.40 0.22 0.05 - - Dividend yield in % 2.7 2.4 1.6 Net asset value in € 2) 3) 2.31 1.81 1.50 1.89 2.22 Year-end share price in € 14.66 9.15 3.20 1.37 1.70 Year-end price/earnings ratio 18.6 20.3 29.1 - -
1) Based on the average number of shares in issue during the year 2) Based on the average number of shares in issue at year-end, before proposed dividend 3) The decrease in net asset value in 2004 reflects the purchase of the minority interest in BinckBank 4) The figures for 2002 and 2003 have not been prepared under IFRS Important events of2006 Important 5Nvme Friesland BankandBinckBanksignaletter ofintent concerningto BinckBank of the outsourcing 15 November figures, profit third-quarter BinckBankannouncessharply higher the launchofProfessional 1 November BinckBankisnamed broker internet the Netherlands’‘Best in inBeursbulletin’s 2006survey, 27 October BinckBank makes astrategicthe purchase ofSyntel acquisitionwith BeheerB.V. (Syntel). Syntel is 19 October the basisofitsresearch On into international expansion,to intends it that BinckBankannounces 13 October Thelegalmerger betweenBinckBank N.V. andBinckN.V. isapprovedthe shareholders by and 12 October BinckBankintroducestariffs. structure withnewlower asimplifiedproduct The newstructure is 1 October BinckBankpublishes substantially higherinterim figures andannouncesplansfor further 1 August tops Netprofiler’s BinckBank broker 2006internet broker internet surveythe the best in as ofHillsIndependent the activities BinckBanksells Traders Ltd. July broker internet Cashthe best of2006, namesBinckBankas withanaverage reader rating of8.8. 25 July April concerning Inresponseto reports AMRO’s ABN tariff new structure, BinckBankrevises itsown 21 April in the activities BinckBankpublishesdramatically that figures andreports higherquarterly 18 April BinckBank’s office inBelgiumopensfor business, offering for services Belgianinvestors. The 7 March Board,the Management to isappointed Pieter Aartsen withresponsibility forthe Professional 1 February and for improvedto Friesland Bank’s services clients. (BPO). there confirm isasoundbasisforthat The parties long-termcooperationthem between the execution ofsecuritiesorders, securitiesadministration andsecurities-related payments inBelgiumanddramatic base.Services the Belgianclient in growth scoresthe highest achieving for allattributes. administrationtransactions. ofsecurities the Netherlandsinsoftwarethe market leaderin for financialinstitutions for processing and country,propositionthat in investorthe largest oneof markets inEurope. open aFrench office. Franceto offer ischosenbecauseBinckBankwillbeable adistinctive Binck N.V.to BinckBankN.V. changesitsname suggestions andwishes. ofongoinginnovationthe result inBinckBank’s products, inresponseto clients’ partly international expansion. Netherlands; witharating of7.9, BinckBankscoresthe otherproviders.than significantly higher tariffsthe Netherlands. in to remainthe lowest among Belgium are developing well. to Belgianinvestors’ needs. Belgian operationthe Dutchbusinessmodelandinfrastructure, isbasedon tailored isfully but businessunit. Services
Annual report 2006 13 Annual report 2006 14 Report of the Management Boardthe Management of Report
Annual report 2006 15 Report of the Management Board
Review of 2006 This strategy has proved successful in Belgium and 2006 was an exceptionally good year for will be adopted when BinckBank starts operating BinckBank. Despite increased competition, in France, which is scheduled for the second half of especially on our home market, BinckBank posted 2007. explosive growth in profit, which rose from to € 24.0 million, compared with € 13.5 million in Consistent with its revised strategy, BinckBank 2005. The increase in the number of clients and the acquired Syntel Beheer B.V. (‘Syntel’) in October transactions they generate, combined with the 2006, at a price of between € 10.5 million and € 12 growth in client accounts and the related interest million, depending on Syntel’s gross margin in the margin, were the main drivers of BinckBank’s next two years. BinckBank will fund the full revenue growth, to which all the business units purchase price from its own resources. This made a positive contribution. The profit includes a strategic acquisition has greatly strengthened non-recurring tax asset of € 2.9 million in respect BinckBank’s position in the market for BPO of a tax loss in Belgium (totalling approximately services, because it gives BinckBank access to the € 21 million as at year-end 2006) and non- technology which lies at the heart of its services recurring income of € 0.2 million released from a and thus helps to assure their continuity. The first provision for loss-making contracts and € 0.2 BPO letter of intent was signed with Friesland million released from a tax provision which had Bank. BinckBank aims to generate another stable been overestimated in the past. Since the 2005 revenue stream with its BPO service. Because BPO- figures included non-recurring net income of related securities transactions are processed using approximately € 1.3 million, the profit growth the same technology platform as the services for adjusted for non-recurring items amounted to other client groups, this will help to reduce the 16 68%. overall cost per securities transaction. Syntel’s revenue is accounted for in the Professional A revised strategy was implemented early in the Services business unit. year which envisages international expansion of BinckBank’s total service package and extension of To ensure that it is able to respond swiftly and the product range to include insourcing of the effectively to changes in the market, BinckBank execution of securities orders, securities aims to make its organisation as efficient as administration and securities-related payments possible. It was therefore decided in October 2006 (BPO) for banks. The services for private and to merge Binck N.V. and BinckBank N.V. and change professional clients were split between two the name to BinckBank N.V. As well as bringing separate business units, Retail and Professional efficiency gains, the merger also made it possible Services, under the management responsibility of to consolidate the shareholders’ equity of the two Kalo Bagijn and Pieter Aartsen, respectively. entities within BinckBank N.V., thus strengthening Consistent with BinckBank’s withdrawal from BinckBank’s capital base. This helped to raise trading activities which started in 2004, the BinckBank’s solvency ratio from around 15% as at
Annual report 2006 activities of Hills Independent Traders Ltd. year-end 2005 to approximately 25% as at year-end (derivatives trading for own account based in 2006. London) were sold in July 2006. Because cost control and high-level IT are among BinckBank took its first steps towards international BinckBank’s policy priorities, the revenues expansion of its services in 2006 with the opening generated by the increase in the number of clients of its office in Belgium and the announcement of and the number of transactions grew faster than its plans for a new office in France. When the related expenses, making a substantial BinckBank opens a new office in another country, contribution to the explosive profit growth. Total its services will be tailored to the needs of local revenues rose to € 55.7 million from € 44.1 million investors, starting with Retail activities and adding in 2005. Total expenses were only marginally Professional Services activities in the second phase. higher, rising to € 26.8 million compared with € 26.3 million in 2005. This improved the Retail: online brokerage for cost/income ratio in 2006 to 48% (2005: 60%). private investors The deferred tax asset of € 2.9 million formed in The Retail business unit operates under the the third quarter in respect of the tax loss in Binck BinckBank label as an internet broker for private Belgium N.V. is included in the tax item. investors. To safeguard service continuity, BinckBank invested heavily in 2006 in system availability and Retail, which enjoyed explosive growth in 2006, scalability. Investments in 2006 totalled € 2.7 again made the largest contribution to profit. With million, compared with € 1.6 million in 2005. many more investors choosing BinckBank, there was dramatic growth in the number of clients, the There was also explosive growth in the total number of transactions and in client accounts. number of clients, which increased from 32,800 in 2005 to 54,100 in 2006 (+64.9%). BinckBank’s BinckBank’s services are continuously being tested clients together generated 2.1 million transactions, and refined to suit clients’ needs and market as against 1.2 million in 2005. Total transaction conditions. Having developed the Belgian volume for Dutch private investors in 2006 is investment website in the first and second estimated at around 14.5 million, of which quarters, BinckBank focused in the third quarter on BinckBank’s share was about 14 %. extending the existing product. Among the added functionalities is the option of placing advance Total client accounts (in cash and securities) orders, whereby the investor defines conditions increased to € 2.7 billion in 2006, from € 1.6 billion that are monitored by BinckBank. A new mobile in 2005 (+68.8%). The sustained growth in client investment site has been set up, coverage has been accounts translated into an increase in the interest extended to all the European stock exchanges and margin to € 10.8 million, compared with € 6.0 technical and fundamental analysis is provided on 17 million in 2005 (+80%). practically all stocks.
The remuneration of the members of BinckBank’s In response to the changing market conditions, Management Board is dealt with in greater detail BinckBank introduced a revised tariff and product in the discussion of remuneration policy on page structure in the fourth quarter. This also made 28 of this annual report. heavy demands on development time, particularly in regard to the DayTrader component of the new Given its exposure to various risks in the course of product package. Research having indicated a need its operations, Binck performs an annual risk in the market for a single, easily understandable analysis to gain a better understanding of these product with a uniform tariff, BinckBank risks and to monitor their development. Identifying launched a single-tariff product in October under risks and implementing and revising relevant risk the name BinckCompleet. This product, which gives control measures is a continuous process within clients an extra discount on the standard tariffs BinckBank. This aspect is discussed in the section depending on the level of activity, is supplemented on risk management on page 41 and the in-control with several additional applications at no extra
statement on page 45. charge. Annual report 2006
In accordance with the company’s dividend policy, BinckBank again came out on top in several the forthcoming General Meeting of Shareholders independent surveys in 2006, with Beursbulletin, on 19 April 2007 will be invited to approve the Cash and Netprofiler naming it as the best internet distribution of a final dividend of € 0.29 in cash. broker in the Netherlands. A surprising finding in Assuming that this proposal is approved by the the Netprofiler survey was that a high proportion meeting, the dividend, net of 15% dividend tax, will of online investors who are currently investing via be paid to holders of BinckBank N.V. shares on one of the major banks are considering switching Thursday, 3 May 2007. BinckBank N.V. shares will be to another provider. The survey found that, of quoted ex-dividend as from 23 April 2007. these, 55% would choose BinckBank. The survey by TNS NIPO which is commissioned happen in the second half of 2007. The office in annually by BinckBank showed that its name Paris will use the Dutch infrastructure, which will recognition score had improved significantly keep the cost base low. compared with the year before.1 The annual internal survey found that 97% of BinckBank’s BinckBank stopped offering the Rendement - clients are satisfied to very satisfied with rekening product, which included investment BinckBank’s services. From 2007, BinckBank will advice, at the end of the year because it did not measure client satisfaction using the net promoter fully meet the needs of clients and prospects. score method, which asks a single question: would Clients prefer to outsource the management of you recommend BinckBank to friends and their portfolios. Since BinckBank does not now colleagues? The difference between the percentage provide this service itself, clients have been offered of promoters (satisfied clients) and the percentage the option of placing their portfolios with one of of detractors (unsatisfied clients) gives the net Professional Services’ asset management clients. promoter score. If the score is positive, the As a consequence, the number of Retail clients as company has more satisfied clients (ambassadors) at year-end 2006 decreased by around 800 and the than unsatisfied clients. This method is consistent number of Professional Services clients increased with BinckBank’s objective of a high degree of by app. 600. customer satisfaction. Results The launch of BinckBank in Belgium in March 2006 Reflecting the explosive growth in the number of was a direct consequence of the revised strategy clients and the number of transactions they for international expansion of BinckBank’s services. generate, the Retail business unit again To ensure that the services meet the needs of the contributed the lion’s share of the result, posting Belgian investor and comply with the Belgian pre-tax profit of € 25.4 million, compared with 18 legislation and regulations, product development € 13.9 million in 2005 (+82.3%). effort was focused, especially in the first quarter of 2006, on setting up the Belgian operation. Much of Total revenues rose to € 39.3 million, from € 23.4 the second quarter was spent on fine-tuning the million in 2005 (+67.9%), while expenses increased Belgian investment site. With the number of clients to € 13.9 million in 2006, compared with € 9.5 in Belgium growing faster than expected, it is safe million in 2005 (+46.8%). Client accounts of the to conclude that the BinckBank product is proving Retail business unit rose in 2006 rose to € 1.9 popular on the Belgian market. billion, from € 1.1 billion in 2005 (+72.7%). The interest margin was € 9.1 million in 2006, as In the light of this success in Belgium, it has been against € 4.9 million in 2005, an increase of 85.7%. decided to roll out the Retail services in France. Research has shown that French investors see The total number of Retail clients grew to 48,700, BinckBank’s proposition as distinctive. In terms of from 29,200 as at year-end 2005 (+66.8%). the number of transactions and private investors, Together they generated 1.9 million transactions, the French investor market is among the largest in compared with 1.0 million in 2005 (+85.8%).
Annual report 2006 Europe. Although many French investors are still As at year-end 2006, BinckBank in Belgium had using the traditional channels, such as the major 5,200 clients who together generated 78,200 banks, a growing proportion are switching to transactions. Client accounts in Belgium as at year- investing online. Given the nature of its end 2006 amounted to € 141 million. proposition, the size of the French market and the behaviour of French investors, BinckBank expects to secure a good position in the French market. The timing of the launch of the French operation depends to some extent on when permission is granted by the French regulator, but it is likely to
1 TNS NIPO, 5 January 2007 Professional Services: services for brokerage services for professional investors who professional clients do not have an account with BinckBank were Professional Services provides fully automated introduced in Belgium in 2006 via the subsidiary online banking, securities order execution and Binck België N.V. comprehensive securities administration services for asset managers and banks. Results Professional Services enjoyed explosive growth in As Professional Services’ reputation for quality has pre-tax profit to € 2.8 million, compared with € 0.5 become more widely known, the number of clients, million in 2005 (+422.2%). The 2005 figure includes the number of transactions and the client accounts a negative result of approximately € 1.2 million have grown. To concentrate more specifically on before tax in respect of the termination of the growing the services to professional clients, at the wholesale activities, compared with approximately beginning of 2006 this activity was placed under a € 0.5 million in 2006. Syntel pre-tax profit in the new Professional Services business unit, headed by fourth quarter was approximately € 100,000. Pieter Aartsen, who was appointed to the Management Board at the same time. Total revenues rose to € 7.8 million in 2006, from € 5.4 million in 2005 (+43.8%). Expenses showed The acquisition of Syntel in October 2006 is to be little change on 2005, at € 4.9 million. viewed in the context of expansion of the range of products offered by Professional Services with the Client accounts (cash and securities) increased in addition of BPO services for banks. Combining 2006 to € 0.8 billion, from € 0.5 billion in 2005 BinckBank’s experience in high-volume processing (+60%). The interest margin in 2006 amounted to of securities-related transactions and Syntel’s € 1.3 million, compared with € 1.0 million in 2005. software makes it possible to develop distinctive 19 products offering high quality at very attractive The total number of private individuals investing tariffs, because this acquisition gives BinckBank full with BinckBank via our professional clients control over broker activities, the operational (external asset managers) grew to 5,400, from processing and the software. 3,600 as at year-end 2005 (+50%). Together these clients generated 222,000 transactions, compared Shortly after the acquisition of Syntel, BinckBank with 144,700 in 2005 (+53.4%). Professional and Friesland Bank N.V. signed a letter of intent Services commenced operations in Belgium at the relating to BPO services, as the basis for a definitive end of the fourth quarter with a small number of five-year outsourcing agreement. BinckBank will be clients. In the fourth quarter 2006, app. 600 fully responsible for the migration of Friesland Rendementrekening clients who were previously Bank’s existing securities-related business included in Retail were transferred to Professional processes to BinckBank’s multi-bank web-based Services. environment. Once the migration has been completed, which is scheduled for October 2007, Trading: trading for own account in Friesland Bank’s securities administration will be shares and bonds
channelled via BinckBank. This service is expected Trading made a modest contribution to profit in Annual report 2006 to generate annual revenue of approximately 2006. Due to changing market conditions, a € 1 million and to make a positive contribution number of trading strategies which were highly BinckBank’s profit from the start. profitable in 2004 and 2005 were no longer successful and HIT’s activities, which were In view of the satisfactory results achieved by the profitable, were sold in the course of 2006. The sale Professional Services pilot project in Belgium, of HIT’s operations, which reflects the increasing which was announced earlier, Professional Services focus on our brokerage activities in Retail and started offering services for Belgian asset Professional Services, has lowered Trading’s risk managers in the the second halfyear. To profile still further and enabled BinckBank to meet supplement the services to asset managers who its target of a maximum capital requirement for have an account with BinckBank, institutional Trading of 33% of the available capital. A more ambitious target of 20% of shareholders’ equity however, until BinckBank has started operating in has been set for 2007 and subsequent years. France, which is scheduled for the second half of 2007. The start-up costs and marketing expenditure As Retail and Professional Services continue to for the French activities are expected to amount to grow, the Trading business unit represents an ever- around € 3 million before tax in 2007, with smaller part of the organisation. Trading has marketing expenditure falling to some € 2 million synergy benefits for the organisation because the a year in subsequent years. same support services are used and it contributes to the organisation’s combined buying power. To We expect further positive growth in our take maximum advantage of these synergy Professional Services operations in both the benefits, trading activities similar to those in Netherlands and Belgium. Syntel’s contribution to Amsterdam have been set up in Belgium in early profit is expected to increase to € 0.75 million in 2007. 2007. The BPO services for Friesland Bank N.V. are scheduled to start in October 2007. Notwithstanding these synergy benefits, BinckBank will investigate the possibility of hiving off the BinckBank lowers its target for Trading’s maximum Trading business unit. In that eventuality, capital requirement from 33% of shareholders’ BinckBank will if possible structure the transaction equity to 20% for 2007. The possibility of hiving-off so that some of the synergy benefits are retained. the Trading business unit will be investigated in 2007. If it is hived off, it is likely that annual Results expenses – which will then be borne by Retail and Total revenues decreased from € 15.3 million to Professional Services – will increase by a maximum € 8.6 million in 2006 (–44%). Expenses were also of € 2.0 million. lower, falling from € 11.9 million to € 7.8 million 20 (–34%), mainly reflecting a reduction in At the more general level, BinckBank will have to performance-related bonuses. HIT’s contribution of cope with a multitude of new legislation and € 0.2 million to profit in 2006 is accounted for in regulations in the coming year. The new Basel 2 profit on discontinued operations. banking directive imposes revised capital requirements on banks with the aim of improving Outlook the management of banking risks. The directive Despite intensifying price competition in online came into force on 1 January 2007 and will be brokerage, BinckBank posted exceptionally good implemented by BinckBank in phases, starting on 1 profit figures in 2006. The Professional Services January 2008. While the new directive will mean business unit achieved healthy growth and the more onerous requirements for many banks, it will Trading business unit continued to make a positive benefit BinckBank’s solvency ratio: although more contribution to profit. These encouraging trends capital will be required to cover operating risk, the underpin our confidence in the future, while noting capital requirements for securities-related lending that our performance will of course depend in part to BinckBank’s clients (credit risk) will be relaxed. on market developments.
Annual report 2006 The new Markets in Financial Instruments Directive We raise our previously announced target for (MiFID), which is expected to come into force in the Retail’s share of Dutch private investor transaction Netherlands in November 2007, requires inter alia volume, to be achieved within the next few years, greater transparency in securities transactions, from 15–20% to 20%. Judging by the vigorous both prospective and retrospective. BinckBank growth of our operations in Belgium, this target takes the view that the MiFID regulations on in- should also be achievable on the Belgian market in house matching could change the market the medium term. The Belgian operations are structure, one possible effect of which may be expected to break even within a few years. increased international competition.
Given the size of the French market, the target for BinckBank will take steps in 2007 to bring its France will be less ambitious. It cannot be set, organisation, services and systems into line with the new legislation and regulations, which will require substantial effort but only limited capital expenditure. The capital expenditure on the implementation of the new legislation is included in the total investments for 2007.
BinckBank has proved its ability to achieve healthy organic growth and international expansion based on its good reputation and high-quality services and intends to continue on this course in 2007. Depending on the success of the French venture, BinckBank will consider undertaking further international expansion.
Reflecting the expected growth in our activities, a net increase of around 20% in the number of employees is expected in 2007.
BinckBank seeks constantly to amaze all its clients by providing the best quality at the lowest cost. To ensure that it can guarantee that quality of service in the future, BinckBank will continue to make investments in plant and equipment, which are expected to total around € 3.8 million in 2007. 21 Given BinckBank’s strong financial position, we expect to be able to fund all developments in 2007 from our own resources and will not need to have recourse to external finance.
Amsterdam, 1 March 2007
Thierry Schaap, Chairman of the Management Board Kalo Bagijn, member of the Management Board Pieter Aartsen, member of the Management Board Annual report 2006
Management Board
Thierry Schaap, Pieter Aartsen, member of the Management Board Chairman of the Management Board (1964 – Dutch nationality) (1971 – Dutch nationality) Pieter has been a member of the Management Thierry has been Chairman of BinckBank’s Board of BinckBank N.V. since 2006. Management Board since 1 January 2006. From 2004 to year-end 2005 he served as Chief Financial Pieter worked for KAS BANK from 1990 to 2004, Officer for BinckBank. in various posts within the Institutional Banking division, and in 1996 was appointed Head of Thierry was one of the founders of Binck Brokers Benelux Sales & Relationship Management. In 2001 N.V. (later BinckBank N.V.) and was its first General he moved to London as Head of Sales & Manager. He is now Chairman of the Management Relationship Management UK, before joining Board of BinckBank, with responsibility for Finance, Deutsche Bank AG in London as Head of European Trading, Operations, IT, Risk Management, IAD, Securities Clearing and Vice President with Human Resources, Legal and Investor Relations. responsibility for product development and sales. As a member of the Management Board of Holding of BinckBank N.V. shares as at year-end BinckBank, Pieter is responsible for Professional 2006: 659,696 Services.
Kalo Bagijn, member of the Management Board Holding of BinckBank N.V. shares as at year-end (1971 – Dutch nationality) 2006: 0 Kalo has been a member of the Management Board of BinckBank N.V. since 2004. 24
From 1996 to 2000, he was employed by IMG Holland, ending his career with that company as Head of Private & Institutional Relations. In 2000 he was jointly responsible for the formation of Binck Brokers N.V. (later BinckBank). He is currently a member of the Management Board of BinckBank, with responsibility for Retail, Communication and Public Relations. Other posts: member of the Advisory Committee of Antaurus Capital Management B.V.
Holding of BinckBank N.V. shares as at year-end 2006: 659,696 Annual report 2006
Photo page 22 and 23 from the left to the right: Pieter Aartsen (Member of the Management Board), Kees Scholtes (Chairman of the Supervisory Board), Thierry Schaap (Chairman of the Management Board), Hans Brouwer (Member of the Supervisory Board), Kalo Bagijn (Member of the Management Board), Fons van Westerloo (Member of the Supervisory Board). Supervisory Board
Hans Brouwer, member Supervisory Board Investor Services Netherlands N.V.) and a member (1944 - Dutch nationality) of the Executive Committees of the Amsterdam Mr. Brouwer was appointed to the Supervisory Board Stock Exchange and European Options Exchange of BinckBank N.V., for a term of three years, at the (now Euronext). Mr. Scholtes also acted as project General Meeting of Shareholders on 6 May 2004. manager in the formation of the Dutch Securities Institute. Mr. Brouwer represents NPM-Capital on the Supervisory Boards of Keesing International BinckBank N.V. shares held: 0. Publishers, Koninklijke JPC and Van Meijel Automatisering. He is Chairman of the Supervisory Fons van Westerloo, member Supervisory Board Board of Koninklijke Hauseman & Hötte and a (1946 - Dutch nationality) member of the Supervisory Board of Nobel van Dijk Mr. Van Westerloo was appointed to the Supervisory & Partners. Mr. Brouwer is also a member of the Board of BinckBank N.V., for a term of three years, at Executive Committees of Stichting Leerstoel the General Meeting of Shareholders on 6 May Effectenrecht (Chair of Securities Law Foundation) 2004. at the University of Groningen and Stichting Vereniging voor de Effectenhandel (Amsterdam Mr. Van Westerloo is CEO of RTL Nederland and a Stock Exchange Association). He is Chairman of member of the Operational Management Stichting Amindho and Stichting Jazzorchestra of Committee of RTL Group. He is also a member of the Concertgebouw and a member of the Advisory the Board of Directors of CLT-UFA, Chairman of the Committee of Professional Vision. Mr. Brouwer is a Bertelsmann Synergy Committee Benelux, a former General Manager of Amsterdam Exchanges member of the Advisory Council of DDB 25 (Euronext). Amsterdam/Result, Chairman of the Broadcast Business Club, a member of the General Council of Binck N.V. shares held:0 the Netherlands Institute for Classification of Audiovisual Media, a member of the Executive Kees Scholtes, Chairman Committee of Media Academie, a member of the (1945 - Dutch nationality) Advisory Council of Entertainment Studies Mr. Scholtes was appointed to the Supervisory Board Hogeschool in Holland and a member of the of BinckBank N.V., for a term of three years, at the Executive Committee of IP Nederland. Mr. Van General Meeting of Shareholders on 6 May 2004. Westerloo has been CEO of SBS Broadcasting B.V., The Supervisory Board has appointed Mr. Scholtes as General Manager of RTL 5 and Deputy General its Chairman. Manager of AVRO.
Mr. Scholtes is currently a member of the Binck N.V. shares held: 0. Supervisory Board of IBUS Company N.V., a member of the Executive Board of finance house Colonade
B.V. and Chairman of the Investment Committee of Annual report 2006 Kunst- en Cultuur Pensioen- en Levensverzekerings - maatschappij. Mr. Scholtes has been a member of the Executive Boards of Postbank N.V., NMB Postbank N.V. and ING Bank N.V., a member of the Executive Committee of ING Asset Management and a member of the Supervisory Boards of several Postbank N.V., NMB Postbank N.V. and ING Bank N.V. investment funds. Mr. Scholtes has also been a member of the Supervisory Boards of Parcom N.V., Barings Private Equity Holding, Necigef and NIEC CDC Labouchere Securities Services (now RBC Dexia Report of the Supervisory Board
In a highly competitive environment, BinckBank company and its stakeholders, in both the short delivered another good performance last year, and long term. sustaining the rising trend which started in 2004. Several surveys have found that BinckBank is still Here we report on the activities of the Supervisory perceived as having greater client focus and a Board in the past year and provide the information higher level of product development than other prescribed by the Code. players. Composition of the Management As a consequence of the merger, the banking Board and Supervisory Board licence now applies at the highest level within the The members of BinckBank’s Management Board group, which has made the organisation even more and Supervisory Board are appointed by the efficient. This organisational change, combined General Meeting of Shareholders on the basis of a with the commitment, involvement and quality of non-binding list of candidates drawn up by the the management and staff, creates a sound basis priority shareholder. At the 2006 Annual General for the achievement of BinckBank’s objectives. Meeting, Mr. P. Aartsen was appointed to the Management Board. At the 2007 Annual General The good results posted by Retail were not Meeting, Messrs. C.J.M. Scholtes, A.M. van confined to the Netherlands. Encouraged by the Westerloo and J.K. Brouwer will be proposed for strong performance of Retail’s office in Belgium, reappointment until the date of the Annual BinckBank is embarking on further international General Meeting in 2008, 2010 and 2011, expansion and hopes to open an office in France in respectively. In the light of his involvement in an 2007. Depending on the success of that venture, it investigation into a possible infringement of the 26 will consider moving into other countries. insider trading rules in respect of BinckBank shares, Mr. Ch. J. Langereis decided to relinquish his seat on In organising the Business Process Outsourcing BinckBank’s Supervisory Board with effect from 25 activity under the Professional Services business January 2007. The appointment of a new unit, BinckBank has again demonstrated its ability Supervisory Board member to replace Mr. Langereis to respond swiftly to opportunities as they arise. is currently under consideration. The acquisition of software house Syntel provides a solid foundation not only for these specific services The Supervisory Board is composed such that the for professional clients, but also for the platform on members are able to act independently, both of which much of BinckBank’s own operation is based. one another and of the Management Board or any Syntel also has a strong market position in the other particular or partial interest, within the Netherlands in banking and securities IT systems framework imposed by the Supervisory Board’s and related services. Syntel has similar ambitions profile. The Supervisory Board considers that the to venture into foreign markets. independence criteria defined in best-practice provision III.2.1 of the Code have been met.
Annual report 2006 Another significant event last year was the disposal by BinckBank of its interest in HIT. These The members of the Supervisory Board again trading activities in the UK no longer fitted with achieved an almost 100% attendance record last BinckBank’s strategy and HIT was sold at a fair year, a good habit which is applauded by the price. The possibility of hiving-off the trading Chairman, who takes the view that force majeure is activities in the Netherlands will be investigated. the only acceptable reason for missing a meeting. Access to the members of the Management Board The Supervisory Board is responsible for overseeing and Supervisory Board for consultation between the policy pursued by the Management Board and meetings was excellent and is indicative of their the operations under its direction. It is also the commitment to the company. duty of the Supervisory Board to advise the Management Board, in the best interests of the Mr. Schaap, who has been Chairman of the market with its banking and securities IT systems Management Board since 1 January 2006, has and related services. The possibility of winding- performed his duties in an exemplary manner. The down or hiving-off Trading’s activities, completely Management Board again consists of three or in phases, will be investigated. members, namely Messrs. Schaap, Bagijn and Aartsen, and is currently assisted by two General The papers produced for the meetings of the Managers who, with the Board, form the Supervisory Board and its joint meetings with the Management Committee. Management Board were circulated in good time and were of a good standard. The papers provided Activities in 2006 the basis for efficient, well-informed and The Supervisory Board’s close involvement with the substantive discussion, which is essential to company’s business is evidenced by the fact that it prudent and reasoned decision-making. held eight regular meetings in 2006 and the Chairman and individual members of the In the absence of the Management Board, the Supervisory Board held many informal meetings Supervisory Board discussed the functioning of the with the Chairman of the Management Board. The Supervisory Board itself and of its individual Audit Committee also held five meetings. The members and the conclusions to be drawn. Taking Supervisory Board’s schedule in 2007 will be the above considerations into account and essentially similar. The members of the Supervisory exercising the necessary discretion, this Board insist on being kept informed of the examination addressed the profile, composition company’s activities. and competence of the Supervisory Board and that of its individual members. The agendas of the Supervisory Board meetings covered all aspects of the company’s operations Likewise in the absence of the Management Board, 27 and included strategic, operational and the Supervisory Board discussed the functioning of organisational issues. The company’s strategy and the Management Board and of its individual risk exposure were discussed on several occasions, members, again taking the above considerations as were the findings of the Management Board’s into account. The Supervisory Board came to the evaluation of the structure and operation of the unanimous conclusion that the Management internal risk management and control systems and Board as a whole and its individual members had any significant changes. again performed well in the past year.
The joint meetings of the Supervisory Board and Functioning of the Management the Management Board were conducted in an open Board and collegial atmosphere, allowing ample scope for The Management Board functioned last year as a constructive criticism, which was helpful to the close-knit professional team whose individual Supervisory Board in properly discharging its members performed their tasks to an extremely supervisory and advisory responsibilities. The high standard and were able to focus particular Chairman’s conduct of the meetings was attention on the specific areas allocated to them
considered satisfactory by those attending them. while discharging their broader responsibilities. Annual report 2006 The exchange of specific information on these The joint meetings discussed the strategy for 2007 areas between the individual members of the and subsequent years. To sustain its growth, Management Board and between the Management BinckBank will undertake international expansion Board and Supervisory Board was prompt and of of Retail’s operations, initially in Belgium and good quality, enabling those concerned to perform France. The Professional Services business unit will their tasks satisfactorily. The allocation of focus on product innovation and expansion of its responsibilities among the members of the activities initially into Belgium, while developing Management Board was found to be balanced and its new business process outsourcing operation, in effective. By exchanging expertise and experience which the Syntel software will play a significant intensively and proactively, the members of the role. Syntel will also venture onto the international Management Board were able, each from the perspective of their individual backgrounds, to put meeting short-term (one year) targets, consisting the collegial principle of management into of an annual bonus paid in cash or at least 25% and practice. at most 50% in ‘optional shares’, and c) a variable element, as a reward for achieving medium/long- Key features of 2006 remuneration term (three year) targets, in the form of free policy BinckBank shares.
General Fixed remuneration In accordance with the principles of the Code The fixed annual remuneration of the members of concerning the adoption and disclosure of the Management Board is set at a level which is remuneration policy and the provisions of Section appropriate to the size of the organisation and the 135 of Book 2 of the Netherlands Civil Code, the responsibilities associated with managing a listed revised remuneration policy for the Management company. The fixed remuneration represents Board and the related rules on remuneration in the adequate recompense for the effort invested in and form of shares (hereinafter referred to as the ‘2006 responsibilities assumed by the members of the remuneration policy’) were adopted and approved, Management Board which is appropriate to the respectively, by the Annual General Meeting on 27 level of their positions. March 2006. The 2006 remuneration policy and the remuneration report for the 2006 financial year Other regular elements such as health insurance do have been posted on the company’s website not in principle form part of the remuneration (www.binck.com). package. Members of the Management Board are eligible for a company-car scheme on similar terms The 2007 Annual General Meeting of Shareholders to those applying to the company’s commercial will be invited to adopt a revision of the 2006 staff. Members of the Management Board are in 28 remuneration policy (the revision hereinafter principle eligible for a pension plan which is similar referred to as the ‘2007 remuneration policy’). in terms of the cost to the company to that Under the revised policy, in a change to item 12 of applying to the majority of the other staff of the 2006 remuneration policy document, members BinckBank and its subsidiaries in the Netherlands. of the Management Board will join a defined- contribution pension plan into which the company Variable remuneration will pay an annual contribution of 20% of their General basic annual salary. This will bring their pension The purpose of the variable remuneration is to benefits more closely into line with the market. reward the members of the Management Board for exceptional performance and reinforce their The Supervisory Board considers that the growth commitment to BinckBank and the achievement of percentages stated in the 2006 remuneration its short and medium/long-term targets. The policy (and to be stated in the 2007 remuneration variable element therefore serves as a significant policy) as criteria for qualifying for free shares are incentive to grow shareholder value in the short still realistic. and medium/long term. Annual report 2006 The key features of the 2006 remuneration policy The variable element is calculated as follows. If the and its implementation in 2006 are outlined members of the Management Board meet the below. annual budgets approved by the Supervisory Board in the light of the short-term targets, they qualify 2006 remuneration policy for annual variable remuneration approximately equal to half of their fixed annual salary. General BinckBank’s Supervisory Board has discretionary The remuneration received by the members of powers to vary this amount by 25%. If they achieve BinckBank’s Management Board consists of a) a the medium/long-term targets, they may also competitive fixed basic salary which is paid qualify for free shares. monthly, b) a variable element, as a reward for Short-term target and remuneration refunded immediately to the company by the The short-term target is to meet the annual Management Board member concerned. budget set by the Supervisory Board for profit after tax, expressed as earnings per BinckBank share, Medium/long-term target and remuneration a quantifiable and measurable performance The medium/long-term target is set by the criterion. Supervisory Board in terms of profit after tax, expressed as earnings per share, a quantifiable and The reward for achieving the short-term target is measurable performance criterion. a bonus. The bonus is reduced on a pro rata basis if the individual was a member of the Management The reward for achieving the medium/long-term Board for less than the full year. Qualification for target takes the form of an award of shares for nil and award and payment of the bonus are also consideration of (‘free shares’). subject to any additional restrictions under the contract of employment. The medium/long-term target is growth of at least 50% in earnings per BinckBank share over a rolling The Supervisory Board may, at its discretion, apply three-year period, starting from the first financial a maximum uplift of 25% to the bonus if justified year after that in which the individual was by the results. appointed to the Management Board (and was awarded optional shares). If the short-term target is not fully achieved, due for example to external circumstances beyond the The growth in earnings per share is initially Management Board’s control, the Supervisory calculated relative to the profit as shown by the Board may, at its discretion, award the Management adopted financial statements for the first year of Board members a bonus of a maximum of 25% of membership of the Management Board and 29 their fixed annual salary. subsequently relative to each succeeding financial year. Members of the Management Board may opt to receive at least 25% and at most 50% of their total Whether the growth in earnings per share for the cash bonus in shares (‘optional shares’). These third financial year has been achieved and thus shares cannot be sold for three years. The number whether free shares are to be awarded is decided of shares they receive depends on the closing price on the basis of the press release announcing the on the date of award. The date of award is the date results for the third financial year. when the company publishes a press release announcing the results for the previous financial Free shares are awarded only for the optional year. shares awarded three years previously to and still held by members of the Management Board. The Additional shares (‘free shares’) may be awarded if date of award of the free shares is the date when longer-term targets are achieved. The 2005 the company publishes a press release announcing remuneration policy states that, for the period the results for the previous financial year.
2005–2007 and each three-year period thereafter, Annual report 2006 one free share will be awarded for every two Pursuant to the foregoing, one free share will be optional shares held if earnings per share grow by awarded for every two optional shares held if more than 50% and one free share will be awarded earnings per share grow by 50% or more and one for each optional share held if earnings per share free share will be awarded for each optional share grow by more than 100%. held if earnings per share grow by 100% or more. Half shares are rounded downwards. Income tax on The income tax due on the part of the cash bonus free shares thus awarded is for the Management paid in optional shares will be paid by the Board member’s account and risk. company. If some or all of these shares are sold within three years, the income tax paid will be Given the company’s present stage of development, the targets can be considered ambitious and challenging. The Supervisory Board checks each the internal audit department. Supervision of the year that the growth percentages required to company’s financial reporting is the responsibility qualify for an award of free shares are realistic and of the Supervisory Board. submits any proposed changes which may be necessary to the approval of the Annual General The Audit Committee met five times in 2006. All Meeting. meetings are attended by a member of BinckBank’s Management Board. A member of the Management Board only qualifies for an award of free shares if he is in post at the The Internal Audit department performed several end of the third year. The free shares must be held internal audits. The meetings of the Audit for five years or until termination of employment if Committee were attended by both members of earlier, failing which the Management Board staff of this department, Messrs. R.J.H. Stappers member is obliged to return the relevant free and B.A. Nederlof. At the end of 2006, the team shares immediately to the company. was strengthened with the appointment of Mr. B. van Meegeren as Head of Internal Audit. Implementation of 2006 remuneration policy Mr. Meegeren, who is eminently qualified for the The remuneration of the members of BinckBank’s post, has a wealth of relevant auditing experience. Management Board for the period 1 January – 31 December 2006 was determined with reference The work of the Internal Audit department is based to the remuneration policy. The gross annual salary on a risk analysis and audit schedule compiled by received by the Management Board members was the Internal Audit department and approved by the unchanged at € 210,600. As a reward for meeting Audit Committee. The audits performed by the the predetermined annual budget, the variable Internal Audit department and the findings and remuneration was set at € 105,300, to which the recommendations were discussed at the meetings 30 maximum 25% uplift was applied by the of the Audit Committee. The general conclusion Supervisory Board in recognition of the good was that the internal control measures and the results. The members of the Management Board organisational safeguards in respect of the risks are members, on a defined-contribution basis, of covered by the analysis were adequate. Specific the pension plan in which the majority of the other comments and recommendations by the Audit BinckBank staff participate. In the case of Mr. Committee are discussed in the section entitled Aartsen, however, it was decided to pay 20% of his ‘Risk management’. basic annual salary into a defined-contribution pension plan, which was closer to the market The Audit Committee also discussed compliance terms. The variable remuneration received by with the recommendations made by the external Mr. Aartsen was calculated as if he had joined auditors in their long-form report on the 2005 BinckBank on 1 January 2006. audit.
Committees In conclusion The Supervisory Board has appointed an Audit 2006 was another successful year for BinckBank.
Annual report 2006 Committee from among its members. In 2006, the Working in a highly competitive environment, it committee consisted of Messrs. J.K Brouwer sustained the positive trend on which it embarked (Chairman), Ch.J. Langereis and C.J.M. Scholtes. Mr. in 2004. Thanks to the excellent leadership Langereis resigned both from the Supervisory provided by the Management Board and the other Board and the Audit Committee on 25 January managers and the commitment and expertise of all 2007. the staff, the main commercial targets were met. The year saw the international expansion of its The Audit Committee is responsible for overseeing successful existing activities, the launch of the implementation and operation of the system of promising new activities and the disposal of internal control and risk management and businesses that were no longer conducive to its monitoring the implementation of the external strategy. auditors’ recommendations and the functioning of All that remains is for us to thank the Management Board and all the staff for their effort and involvement.
Supervisory Board
Amsterdam, 1 March 2007
C.J.M. Scholtes (Chairman) J.K. Brouwer A.M. van Westerloo 31 Annual report 2006 Annual report 2006 32 Corporate Governance In-control statement Risk management
Annual report 2006 33 Corporate Governance
Introduction Best-practice provision 1.2 of the Code requires that Corporate governance was a frequent subject of each substantial change in the company’s debate again last year, on several occasions corporate governance structure or its compliance straining relations between the various with the Code be submitted to the General stakeholders in listed companies. In many cases, Meeting of Shareholders for discussion under a the debate centred on the principles of good separate agenda item. governance expounded in the Dutch Corporate Governance Code (the ‘Code’). The end of the As a modern and innovative company, BinckBank evolving corporate governance story is not yet in endorses in large measure the principles sight. expounded in the Code, which have received broad support. The proposed procedure for adoption of The Code has assumed the status of law, in the the Code by BinckBank was discussed at the sense that all listed companies are now required to Annual General Meeting of Shareholders on include in their annual reports a statement of 21 April 2005 and was implemented in the course compliance with the Code’s principles and best- of 2005, inter alia via amendment of the Articles of practice provisions as they apply to their Association. There has been no substantial change management and supervisory boards. If they have in BinckBank’s corporate governance structure not complied with those principles or best-practice and/or compliance with the Code since then. provisions and/or do not intend to do so in the Best-practice provision 1.2 of the Code is therefore current or next financial year, they are required to not applicable. state the reasons in their annual report (the ‘comply or explain’ principle). The main features of BinckBank’s corporate 34 governance structure are explained below, giving The way in which Dutch listed companies the reasons for any departure from the Code’s implement an effective and transparent system of provisions and in some cases explaining how the checks and balances is influenced by evolving Code’s provisions are implemented, adopting the social values and developments on the capital same classification of the principles and best- market. The Corporate Governance Code practice provisions as that employed in the Code. Monitoring Committee has been set up to address this issue. Its responsibilities include ensuring that A more detailed description of BinckBank’s the Code is kept up-to-date and operable, thereby application of the Code is given in a separate maintaining a high standard of corporate annex. This has been posted on the company’s governance. In December 2006, the Corporate website (www.binck.com), to give BinckBank’s Governance Code Monitoring Committee published shareholders and other stakeholders access to a report on compliance with the Code and made a information on how the company puts into number of recommendations. practice the standards of good corporate governance embodied by the Code.
Annual report 2006 According to best-practice provision 1.1 of the Code, the broad outline of the corporate governance Legal structure structure of the company must be explained in a separate chapter of the annual report, partly by General reference to the principles set forth in the Code. In BinckBank is a public limited liability company this chapter, the company must also expressly state which is listed on Euronext Amsterdam. BinckBank the extent to which it applies the best-practice has several Dutch subsidiaries and one foreign provisions of the Code and, if it does not, why and subsidiary. BinckBank also has an office in Belgium to what extent it does not apply them. As and is planning to open an office in France. mentioned above, the ‘comply or explain’ principle BinckBank is subject to supervision by both the has been enshrined in law. Nederlandsche Bank (‘DNB’) and the Authority for the Financial Markets (‘AFM’). One subsidiary, Binck Securities B.V., is licensed as an investment General Meeting on a motion by the priority institution. The foreign subsidiary Binck België N.V. shareholder. is subject to supervision by local securities regulators and holds the requisite licence. Voting rights Each BinckBank share confers the right to cast one At central level, BinckBank has a Compliance vote. Resolutions are adopted on a simple majority Officer who is responsible for monitoring of the votes cast, except where a larger majority is compliance with the applicable codes of conduct prescribed by law or the Articles of Association. and related securities legislation and regulations. For example, BinckBank’s Articles of Association These codes of conduct reflect the values, such as state that a resolution to amend the Articles of integrity and trustworthiness, to which BinckBank Association requires a majority of at least two- attaches great importance. thirds of the votes cast.
Shares Subject to the Supervisory Board’s approval, BinckBank’s authorised capital consists of listed BinckBank’s Management Board may, pursuant to ordinary shares and 50 priority shares, each with a the Articles of Association, resolve to set a nominal value of € 0.10. The priority shares, which registration date when convening meetings of are registered, are not listed on the stock exchange shareholders. BinckBank sets registration dates and and are held by Stichting Prioriteit AOT (the thus complies with best-practice provision IV.1.7 of ‘priority shareholder’). Further information on the the Code. position of the priority shareholder is given below. No depositary receipts have been issued for Shareholder structure BinckBank shares. The shareholders who have given notification of their holdings in BinckBank pursuant to the new 35 Issue of shares Act on the Disclosure of Major Holdings and The issue of shares requires a resolution of the Capital Interests in Securities-Issuing Institutions General Meeting of Shareholders, which may are listed on page 12 of this annual report. assign this authority to another corporate body for BinckBank is not aware of any other shareholder a maximum of five years. Save as provided with a holding of 5% or more. No shareholder otherwise by law, each shareholder will have a contracts exist between BinckBank and the major pre-emptive right to issues of ordinary shares in shareholders. proportion to the total amount of his shares. A total of 1,303,251 BinckBank shares were issued to Shareholders have no pre-emptive right to shares the personal holding companies of Messrs. T.C.V. which are issued a) to employees of the company Schaap and K.J. Bagijn, who are now members of or a group company or b) for payment other than BinckBank’s Management Board . These shares in cash. The pre-emptive right may be restricted or were issued in connection with the sale to suspended by a resolution of the General Meeting. BinckBank in May 2004 of their shares in Pre-emptive rights can also be restricted or BinckBank N.V. and are subject to a phased lock-up
suspended by the corporate body referred to above, arrangement. Under this arrangement Messrs. Annual report 2006 if it has been designated by resolution of the Schaap and Bagijn, via their personal holding General Meeting, for a maximum of five years, as companies, may sell up to a maximum of 25%, 50% authorised to restrict or suspend pre-emptive rights. and 75% of the shares in the first, second and third years, respectively, after the date of the If less than half of the issued capital is represented transaction. In the fourth year after the date of the at the General Meeting, a resolution by the General transaction, Messrs. Schaap and Bagijn are allowed Meeting to restrict or suspend pre-emptive rights, to sell, via their personal holding companies, up to to designate another corporate body as authorised 100% of the shares they hold. Messrs. Schaap and to do so or to withdraw such designation requires a Bagijn have sold, via their personal holding majority of at least two-thirds of the votes cast. companies, 650,000 BinckBank shares, Such resolutions may only be adopted by the representing the 50% of the shares issued to them in connection with that transaction which were In accordance with the principles of the Code released in 2005 and 2006. concerning the adoption and disclosure of remuneration policy and the provisions of Section Management Board 135 of Book 2 of the Netherlands Civil Code, the revised remuneration policy for the Management Two-tier management structure Board and the related rules on remuneration in the BinckBank has a two-tier management structure, form of shares (hereinafter referred to as the ‘2006 which means that the executive and supervisory remuneration policy’) were adopted and approved, functions are assigned to different corporate respectively, by the Annual General Meeting on 27 bodies – the Management Board and the March 2006. The 2006 remuneration policy and the Supervisory Board. BinckBank believes that this remuneration report for the 2006 financial year structure ensures an adequate system of checks have been posted on the company’s website and balances, whereby the Management Board is (www.binck.com). responsible for the day-to-day running of the company and its short-term, medium-term and The 2007 Annual General Meeting of Shareholders long-term strategy, while the Supervisory Board will be invited to adopt a revision of the 2006 oversees and advises the Management Board. The remuneration policy (the revision hereinafter being Management Board is assisted by two General referred to as the ‘2007 remuneration policy’). Managers who, with the members of the Under the revised policy, in a change to item 12 of Management Board, constitute the Management the 2006 remuneration policy document, members Committee. of the Management Board will join a defined- contribution pension plan into which the company Shared membership will pay an annual contribution of 20% of their The Management Boards of BinckBank and the basic annual salary. This will bring their pension 36 majority of its subsidiaries share a common benefits more closely into line with the market. membership, i.e. the majority of the members of BinckBank’s Management Board are also members By retrospectively evaluating the outcome of the of the Management Boards of BinckBank’s remuneration policy for the individual members of subsidiaries. This arrangement is conducive to the Management Board, the shareholders and consistent corporate policy and strategy. other stakeholders in BinckBank are well placed to reach an informed opinion on remuneration, both Remuneration collective and individual. This will ensure a practical Principle II.2 and the related best-practice provisions and balanced result, with the shareholders being of the Code recommend that the remuneration able to exert significant influence on the received by members of the company’s Management remuneration of Management Board members, Board should be sufficient to enable the company to without shareholders’ meetings turning into recruit and retain qualified and expert individuals. debates on the pay received by individuals. This is achieved by developing a system of objective measurement criteria, which are defined in a Best-practice provision II.2.10 of the Code specifies
Annual report 2006 remuneration policy adopted by the General the information to be provided by the Supervisory Meeting. Board in its overview of the remuneration policy planned for the next financial year and subsequent The remuneration report drawn up and published years. by the Supervisory Board explains how the remuneration policy has been implemented in the BinckBank complies with this best-practice past financial year. This report, or at any event the provision if and to the extent that it does not remuneration policy which it embodies, will for the relate to information which relates to the time being guide the Supervisory Board when company’s competitive position, such as financial determining the various components of the pay and commercial objectives. The Management Board packages of individual members. and Supervisory Board do not consider it to be in the interests of the company or its stakeholders to disclose such information. The same reservation challenging targets. Because they receive part of applies to publication of the main elements of their cash bonuses in shares, they are effectively contracts between Management Board members buying their optional shares out of their bonuses. and the company immediately they are signed, as The targets are not disclosed because they involve required by best-practice provision II.2.11 of the information which relates to the company’s Code, if and to the extent that this relates to competitive position, such as financial and market-sensitive information. commercial objectives, and disclosure would not be in the interests of the company or its stakeholders. Stock options/shares Shares are awarded for no financial consideration Best-practice provision II.2.3 of the Code treats the in the event of a specified percentage rate of allocation of shares for no financial consideration as growth in net earnings per share being achieved. a form of variable remuneration. According to the These shares must be retained for at least five Code, the purpose of a variable element should be to years or until termination of employment if earlier. reinforce the Management Board members’ long- term commitment to the company and the Regulations embodying rules on the ownership of furtherance of its interests. According to the Code, and transactions in securities by Management this can be achieved by requiring Management Board members other than those issued by their Board members who are allocated shares for no ‘own’ company financial consideration to undertake to retain them One of the recommendations of best-practice for at least five years or until termination of their provision II.2.6 of the Code is that the Supervisory employment. Since these shares are allocated for no Board should adopt regulations embodying rules on financial consideration, the best-practice provision the ownership of and transactions in securities by requires that allocation be dependent on the Management Board members other than those achievement of clearly quantifiable and challenging issued by their ‘own’ company. These regulations 37 targets, which have been defined in advance. The should be posted on the company’s website. performance criteria must be stated in the remuneration report. BinckBank complies with this best-practice provision, but for practical reasons has integrated Under the remuneration policy embodied in the these regulations into the Management Board remuneration report, members of the Management regulations. After approval by the Supervisory Board may opt to receive at least 25% and at most Board, the latter regulations were adopted by the 50% of their cash bonus in shares, which must be Management Board at the end of 2004 and posted retained for three years. Depending on the on the company’s website (www.binck.com) in achievement of a specified percentage rate of 2005. The regulations have therefore been adopted growth in net earnings per share, additional shares indirectly by the Supervisory Board and the may be awarded for no financial consideration, at requirements of best-practice provision II.2.6 of the the rate of one BinckBank share for every one Code have been met. The Management Board BinckBank share or every two BinckBank shares members are also bound by the company’s current thus acquired and retained. These shares must be regulations, which they have agreed to observe, on
held for a period of five years or until termination insider trading, price-sensitive information and Annual report 2006 of employment if earlier. personal investment transactions.
In the opinion of the Supervisory Board, this Suspension/dismissal method of remuneration adequately reinforces the Pursuant to BinckBank’s Articles of Association, Management Board members’ long-term a resolution of the General Meeting to suspend or commitment to the company and the furtherance dismiss a member of the Management Board or of its interests. By giving Management Board Supervisory Board requires a majority of at least members the choice of receiving part of their cash two-thirds of the votes cast, representing more bonus in shares, the allocation of shares (for a than half of the issued capital. financial consideration) is – indirectly – linked to the achievement of clearly quantifiable and According to best-practice provision IV.1.1 of the been assigned to the Supervisory Board as a whole Code, it must be possible for a resolution to dismiss and are thus included in the Supervisory Board a member of the Management Board or Supervisory regulations. Board to be adopted by an absolute majority of the votes cast, but it may be made a condition that this Independence majority represents a given proportion of the issued Principle III.2 of the Code states that members of the capital, which may not exceed one-third. Supervisory Board must be able to act critically and independently of one another, of the Management Best-practice provision IV.1.1 of the Code will be Board and its members and of any particular and implemented when the Articles of Association are partial interests. According to best-practice provision next amended. In the interim, as the members of III.2.1, the Supervisory Board must not include more BinckBank’s Management Board and Supervisory than one member who is not independent within Board have adopted this best-practice provision the meaning of best-practice provision III.2.2. compliance is thus assured. The members of These independence criteria are satisfied. BinckBank’s Management Board and Supervisory Board also, on a purely voluntary basis, complied Regulations embodying rules on the ownership of with the majority and quorum requirements of this and transactions in securities by Supervisory Board best-practice provision in respect of any resolution members other than those issued by their ‘own’ of the General Meeting to suspend them. company One of the recommendations of best-practice Supervisory Board provision III.7.3 of the Code is that the Supervisory Board should adopt regulations embodying rules on Committees the ownership of and transactions in securities by Principle III.5 of the Code recommends that all Supervisory Board members other than those issued 38 Supervisory Boards appoint an audit committee, a by their ‘own’ company. These regulations have been remuneration committee and a selection and posted on the company’s website. appointments committee to perform certain tasks on behalf of and under the responsibility of the BinckBank complies with this best-practice Supervisory Board. If the Supervisory Board is too provision, but for practical reasons has integrated small, the appointment of committees may be these regulations into the Supervisory Board dispensed with, in which case the entire Supervisory regulations. These regulations were adopted by the Board is responsible for performing the tasks and Supervisory Board in 2004 and have been posted functions of those committees as referred to in the on the company’s website (www.binck.com). Apart best-practice provisions. from the fact that the Supervisory Board has not adopted separate regulations, the requirements of Because its Supervisory Board consists of no more best-practice provision III.7.3 of the Code have been than four members, BinckBank has only appointed met. The Supervisory Board members are also an audit committee in accordance with the bound by the company’s current regulations, which recommendation in principle III.5 of the Code. The they have agreed to observe, on insider trading,
Annual report 2006 tasks and functions of the remuneration and price-sensitive information and personal selection and appointments committees described investment transactions. in the best-practice provisions are applicable in full, are performed by the entire Supervisory Board and Minutes are included as such in the Supervisory Board’s According to best-practice provision IV.3.8 of the regulations. Code, the minutes of the General Meeting of Shareholders must be made available on request to Best-practice provision III.5.4 refers to a number of shareholders within three months of the meeting, areas on which the audit committee should focus after which the shareholders must be given three in supervising the Management Board. BinckBank months to comment on the minutes. The minutes applies this best-practice provision, but some of must then be adopted in the manner prescribed by these supervisory tasks have, for practical reasons, the Articles of Association. This best-practice provision only applies to governance of its affairs. The Executive Committee BinckBank if the Chairman of the Management of the priority shareholder has three members. Board and/or the Management Board does not Member A is appointed by BinckBank’s Supervisory decide to have a notarial record made of the Board, member B by BinckBank’s Management meeting, or at least of the resolutions adopted by Board and member C by members A and B the meeting, in which case BinckBank will comply together. The incumbent members A, B and C of with the best-practice provision. If it is decided to the priority shareholder’s Executive Committee are have a notarial record made of the meeting, or at Messrs. C.J.M. Scholtes (Chairman of BinckBank’s least of the resolutions adopted by the meeting, Supervisory Board), T.C.V Schaap (Chairman of that record will have absolute evidential force. In BinckBank’s Management Board) and J.K. Brouwer the absence of evidence to the contrary, it will be (member of BinckBank’s Supervisory Board), accepted by all as an accurate representation of the respectively. proceedings of the meeting. It is permitted in that case not to include responses by shareholders in The question whether it was appropriate for the the record. priority shareholder to continue to hold the powers vested in it by the Articles of Association was External auditors addressed by the Management Board and Ernst & Young Accountants were appointed to Supervisory Board. They took the view that the audit the 2006 annual accounts by an decision on the future position of the priority extraordinary Meeting of Shareholders on 12 shareholder was closely linked with how the October 2006. In accordance with best-practice provisions relating to public offers contained in the provision V.2.3 of the Code, the Management Board EC 13th Directive, which was adopted on 21 April and the Audit Committee make a thorough 2004, is implemented in Netherlands law. assessment of the functioning of the external 39 auditors at least once every four years. The main Among other things, the directive requires member findings are communicated to the General Meeting states to introduce a mandatory public offer rule, to assist in considering the nomination for which will apply, for example, in situations where a appointment of the external auditors. To ensure natural person or legal entity acquires securities the independence of the external auditors, that, directly or indirectly, confer a given BinckBank required in 2004 that one partner be percentage of the voting rights in a listed company rotated, which was duly done. and thereby acquires control.
Anti-takeover defences One purpose served by the mandatory public offer Stichting Prioriteit AOT (the ‘priority shareholder’) is to ensure that the remaining shareholders also holds 50 priority shares in BinckBank N.V. Under receive the additional amount paid for each the Articles of Association, the priority shareholder security over and above market price, because it has a central role in many important decisions. obliges the bidder to pay the remaining Management Board and Supervisory Board shareholders the same price as was paid to acquire members, for example, are appointed from a non- control.
binding list of candidates drawn up by the priority Annual report 2006 shareholder. A resolution to amend the Articles of Another reason for introducing a mandatory offer Association can only be adopted on a proposal of rule is to protect the remaining shareholders the priority shareholder, and the priority against abuse of power by the controlling shareholder determines what part of the shareholder. There are various ways in which the (remaining) profits is to be added to reserves. remaining shareholders might be disadvantaged. The controlling shareholder might, for example, In essence, the purpose of the priority shareholder oppose the payment of a dividend, against the will is to counter any influence over BinckBank’s of the other shareholders. Control might also be management or operations which might be acquired by one of the company’s competitors, prejudicial to the independence of the company which could then close down the company’s and its related enterprise and to promote good operations in order to increase its own market share.
The Upper House of the Netherlands Parliament is expected to approve the bill to implement the European directive unchanged in around April 2007. According to the bill, the mandatory offer will relate to 30% of the voting rights in the general meeting. The bill originally contained a number of restrictions relating to anti-takeover measures, but this part of the bill was dropped in the face of opposition from the Lower House. The legislature has therefore elected to introduce a mandatory offer requirement but still allow anti-takeover measures.
BinckBank’s Management Board and Supervisory Board see no justification at present for rescinding or restricting the priority shareholder’s powers as maintaining the priority shareholder’s position helps to maintain the continuity of BinckBank N.V. and its short-term and long-term policy by ensuring that due consideration is given to the interests of all stakeholders in the company. 40
Conclusion The corporate governance structure and the proposed application of the Code were among the items on the agenda of the Annual General Meeting of Shareholders on 21 April 2005. There has been no substantial change in the company’s corporate governance structure or its application of the Code since then, other than the amendments to the Articles of Association which were adopted by the Extraordinary General Meeting on 19 October 2005 to bring them into line with the Large-Company Regime Amendment Act (Wet aanpassing structuurregeling), which came into effect on 1 October 2005, and the Code. The
Annual report 2006 opportunity was also taken to make a number of editorial and/or technical amendments to the Articles of Association. BinckBank complies with the Code’s best-practice provisions, except as explained in this chapter. Risk management
Given its exposure to various risks in the course of in over-the-counter (OTC) transactions, which are its operations, BinckBank performs an annual risk chiefly in equities and bonds. This risk is controlled analysis to gain a better understanding of these by procedural monitoring of settlements (position risks and to monitor their development. How well and transaction reconciliation). we monitor and control risk depends on our organisational structure and the control measures Market risk we employ. Risk analysis and risk control measures Market risk is the risk of movements in interest are subjected to internal audit, the results of which rates and prices of financial instruments. are discussed in the meetings of the Management Board and the Audit Committee and the meetings BinckBank has a trading portfolio and an with the Supervisory Board. The risks are described investment portfolio. The trading portfolio in broad outline below. Identifying risks and comprises equities, bonds and a very minor implementing and modifying relevant risk control position in derivatives. Movements in interest rates measures are ongoing processes within BinckBank. and prices of financial instruments have a direct effect on its value and hence on BinckBank’s Credit risk financial position and results. To control the market Credit risk is the risk of a counterparty in a trade in risks on the trading portfolio, BinckBank operates a and/or an institution issuing a financial instrument system of internal limits, which are monitored by failing to honour its obligations, as a result of the Risk Management department. The Risk which BinckBank incurs a financial loss. Committee meets regularly to discuss the limit system and the risks relating to the existing In its retail operations, BinckBank only lends positions and limits and to consider and adopt 41 against readily liquidated collateral, such as proposals for new trading strategies. If the set financial instruments and bank guarantees. Given limits are exceeded, Risk Management takes action the nature of its lending activities and the immediately and reports to the responsible collateral required, the credit risk is limited. The Management Board member. In its role as liquidity bulk of BinckBank’s lending is to natural persons provider as part of its trading activities, BinckBank and legal entities in the Netherlands. Where may be committed in some cases to buy or sell BinckBank lends against the collateral of financial financial instruments. The average haircut (a risk instruments, the lending limit depends on the measure based on a theoretical model and past liquidity and market value of the financial events used to calculate the maximum theoretical instruments concerned. Lending is monitored by overnight loss) was approximately € 2.8 million for the Risk Management department using all of Trading’s activities. automated systems, based on real-time prices. The risk on lending operations can therefore relate to BinckBank’s investment portfolio consists of fixed- changes in the value of the collateral (financial income securities, which are selected by the instruments), system malfunctions (operational Management Board. The value of the investment
risk) and malfunctions in credit monitoring portfolio may fluctuate due to movements in Annual report 2006 procedures (operational risk). interest rates and changes in the issuer’s creditworthiness. BinckBank invests only in fixed- BinckBank also lends to banks and manufacturing income securities rated at least single-A by industry as a vehicle for investing client accounts. Standard & Poor’s. It is estimated that, as at year- This lending is subject to internal counterparty end 2006, the value of the investment portfolio limits on both amount and duration. Credit risk is would fall by approximately € 550,000 for an reviewed periodically. absolute rise of one percentage point in the relevant interest rate. In its institutional brokerage and trading activities, BinckBank is exposed to credit risk in respect of The collateral (margin) required by BinckBank for counterparties failing to honour their obligations liabilities in respect of uncovered derivatives positions affords a reasonable degree of protection BinckBank is exposed to currency risk in respect of against unexpected price movements but provides the activities of its associate based outside the no guarantee against possible future losses on eurozone. Exchange rate movements affect the these positions. The Risk Management department revenue in euros reported in the profit and loss checks constantly that the margin is consistent account and the financial position shown in the with current market conditions and adjusts the balance sheet. It is BinckBank’s policy not to hedge margin requirements where necessary. these risks. The investment in HIT in the UK as at year-end 2006 was limited (around GBP 1.1 million) Interest-rate risk and will be liquidated in the course of 2007. Interest-rate risk is the risk of movements in interest rates which might adversely affect future Currency risks on trading and brokerage activities profitability. are hedged as soon as possible in accordance with internal guidelines, unless a currency position is BinckBank manages this risk, as it relates to taken as part of a trading strategy approved by the BinckBank’s banking operations, by matching the Risk Committee. durations of client accounts and investments within set limits. The investment portfolio is The currency position is monitored on a daily basis accordingly spread over a range of durations and to ensure that it stays within the set limits. includes floating-rate bonds. Operational risk Liquidity risk Operational risk is the risk of loss due to Liquidity risk is the current and future risk of inadequate systems, processes and procedures. The BinckBank’s financial position and results not being term covers general operational risks, IT risks, risks sufficient to enable the company to meet its short- relating to outsourcing of business processes and 42 term commitments without incurring excessive integrity risks. costs and/or losses. Operational risk is generally the result of: BinckBank’s liquidity position as at year-end 2006 • deficiencies in the daily processing and was satisfactory. BinckBank also has credit facilities settlement of transactions with clients or other with other banks. Given the nature of BinckBank’s parties or in the procedures and actions activities, there is some risk of liquidity shortage, designed to ensure prompt detection of defects; for example when running maximum trading • quantitative or qualitative deficiencies or positions or in the event of incorrect settlement of limitations in human resources; transactions in financial instruments for • deficient decision-making due to inadequate professional clients, a high volume of lending to management information; Retail and Professional Services clients and a • incorrect application of internal control decrease in Retail and Professional Services client procedures. accounts. Operational risk is managed on a structural basis
Annual report 2006 Fluctuations in the volume of client accounts are throughout the organisation, via a series of managed by restricting the investment of these internal monitoring procedures including: funds to short-term vehicles (mainly call loans). • transaction and position reconciliation, including management reporting; Liquidity risk is monitored by computing the • automated recording and execution of liquidity position on a daily basis, covering all transactions and related audit trails; activities. • procedures for staff recruitment and mentoring and functional segregation and job descriptions Currency risk for all employees and departments; Currency risk is the risk of movements in the value • clear reporting lines, recording of required of items denominated in foreign currencies due to management information and periodic internal movements in exchange rates. consultation; • internal control and internal audit procedures, and regulations. BinckBank has procedures in place mandatory application of the four-eyes principle for whistleblowers and mandatory reporting of to powers of attorney and authority to enter into suspicious transactions and has a security officer binding contracts on behalf of the company; and a privacy officer. • reporting structures. Strategic risk IT risk is the current and future risk to BinckBank’s Strategic risk is the current and future risk to financial position and results posed by deficiencies BinckBank’s financial position and results due to in the technology employed. misjudged business decisions, poor execution of business decisions or inadequate response to BinckBank is heavily dependent on IT in general changes in the business climate in general and the and deficiencies in this area pose a significant markets which are relevant to the company in threat to BinckBank’s financial position and results. particular. The IT organisation is designed to manage that risk and incorporates a series of internal monitoring International economic conditions affect financial procedures covering IT policy, security policy, markets around the world and hence the results on incident management, change management and BinckBank’s operations. Reduced trading volumes availability and performance management. can translate into reduced revenue from financial BinckBank also has a fallback facility which it can transactions and interest and commission income. use in emergencies. Each year, BinckBank BinckBank operates in a highly competitive commissions external agencies to audit and report environment in which its competitors, often very on specific areas of its IT operations. large financial institutions, have well established brands and ample financial resources. Retaining Risks relating to outsourcing of business processes existing clients and attracting new ones is a high 43 are current and future risks to the company’s priority for BinckBank, and one in which it makes financial position and results posed by third-party substantial investments. provision on a structural basis of services which are part of BinckBank’s business processes. Against the background of its long-term strategy, BinckBank measures all its business units against BinckBank has not outsourced any business such criteria as strategic fit, profitability and processes, but various associates take services from synergy. In a rapidly changing environment, this is one other, under internal service level agreements. an ongoing process.
Integrity risk General Integrity risk is the risk of harm to the company’s BinckBank’s Internal Audit department performs reputation and/or its financial position and results regular risk analyses and internal audits of the due to inadequate compliance with applicable implementation and functioning of the internal legislation and regulations and internal standards, control and risk management procedures. The rules or codes of conduct. Internal Audit department reports its findings to
the responsible manager, the Management Board, Annual report 2006 To control this risk, BinckBank imposes clear the Audit Committee and the Supervisory Board. internal standards and codes of conduct which are On the basis of the risk analysis, an internal audit clearly communicated within the organisation. plan is prepared and submitted to the Audit BinckBank has a compliance officer, for whom clear Committee for adoption. The plan provides for all reporting lines have been defined and a clear identified areas of risk in all business units to escalation procedure has been implemented. undergo an internal audit over a two-year period. Together with the Legal department, the The plan also provides for follow-up audits by the compliance officer is responsible for notifying Internal Audit department to verify that managers and the Management Board promptly appropriate action has been taken with regard to and accurately, in order to ensure that BinckBank’s deficiencies or areas identified in previous audits activities comply with the applicable legislation as requiring attention. The Internal Audit department updates the risk analysis annually to reflect new activities, procedures and findings.
A number of internal audits were performed in 2006 with the broad aim of making an informed judgment of the internal management procedures and organisation in the identified areas of risk within BinckBank. These audits identified several deficiencies, mostly relating to documention of policy, which require attention in the short term.
At a more general level, it should be noted that keeping pace with BinckBank’s growth represents a significant challenge for system support, and this involves some risk. Several major system modification projects, designed to facilitate future growth, are currently in hand.
BinckBank has a fall-back facility, at which the appropriate trading systems are installed, for use by Trading in the event of an emergency. Functional testing has not yet been performed on all the trading systems and further fall-back testing is planned in 2007. 44
The business processes are audited by the external auditors. The procedure employed by BinckBank is based on an internal cascade system, whereby a statement regarding the functioning of the local internal risk-management procedures and organisation is issued by the local management. Annual report 2006 In-control statement
Closely monitoring the company’s internal risk However well our internal risk management and management and control systems during 2006 has control system is designed, it can never give helped us to identify significant risks relating absolute assurance that we shall always be able to specifically to BinckBank. meet our objectives in terms of strategy, operations, reporting and compliance with all We are provided with periodic internal control applicable legislation and regulations. The reality is reports, including reports on positions held for own that human error is always an element in decision- account and risk in relation to internally set making and the cost always has to be balanced maximum position limits (market risk), lending in against the benefits when accepting risks and relation to the value of the collateral (credit risk), implementing controls. Even minor mistakes due to transaction and position reconciliation (operational human error may have significant results, risk), client complaints and comments (operational employees may conspire to circumvent internal risk) and availability of IT systems (operational controls and responsible managers may ignore risk). We also receive numerous regular reports on internal agreements. the progress of our business, such as financial reports (including profit and loss accounts, balance Given these limitations, which are inherent in all sheets, debtors, solvency and liquidity positions internal risk management and control systems, and and related analyses) and reports on the given the areas for improvement which have been development of our client base. We also receive identified, our assessment is that the internal risk annual statements by the local management of our management and control systems provide a foreign operations on the functioning of the local reasonable degree of assurance that: internal risk management and control systems. The 45 Internal Audit department submits periodic reports • we are able to keep track of our progress presenting the findings of the internal audits it has towards BinckBank’s strategic and operational performed on the basis of the audit plan adopted goals; by the Audit Committee. One or more specific • BinckBank complies with the applicable audits are also performed by external agencies legislation and regulations; each year on specific areas such as the IT environment. All these reports are discussed in the and, with regard to financial reporting risks: meetings of the Management Board, other internal bodies such as the Audit Committee, and the • the risk management and control systems Supervisory Board. The purpose of these meetings provide a reasonable degree of assurance that is to monitor the correct functioning of the the financial statements contain no material internal controls during the financial year, so that misstatements; action can be taken where necessary. • the risk management and control systems have functioned properly in the past financial year. These risks and the related control measures are
described in the ‘Risk management’ section of this Annual report 2006 annual report. We now have a fall-back facility for our trading activities, but there are still a number of issues to be addressed. We have not yet been able to carry out an independent risk assessment on Syntel’s activities and there are several mainly legal issues which have arisen from the legal due diligence investigation in connection with the acquisition. Action is being taken on these issues to enhance control of potential risks. Annual report 2006 46 BinckBank’s organisational structure BinckBank’s organisational structure
In early 2006, the services for professional clients Also in October, BinckBank made a strategic were transferred from the Retail business unit to a acquisition with the takeover of Syntel, which gave new Professional Services business unit. This it access to the technology which lies at the heart restructuring was prompted by the rapid growth in of its services. The acquisition will also mean faster BinckBank’s services for both private and progress towards BinckBank’s objective of professional clients. In the new structure, international expansion and make it easier to add management focus can be directed specifically at BPO services to the range of services. growing the services for each client group. Kalo Bagijn is responsible for the Retail activities as Following these organisational changes, before, while responsibility for the Professional BinckBank’s corporate structure and principal Services business unit has been assumed by Pieter subsidiaries are as shown below. This structure Aartsen, who was appointed to the Management show BinckBank’s most important subsidiairies. Board on 1 February. The former Wholesale business unit has been downsized and integrated into the Professional Services business unit to provide supplementary services for professional clients.
Action was taken in 2006 to further simplify the organisation. The activities of Hills Independent Traders Ltd. (HIT) were sold in July and the merger between Binck N.V. and BinckBank N.V. was 48 completed in October, accompanied by a change of name from Binck N.V. to BinckBank N.V.
Syntel Bewaarbedrijf Stichting Binck België N.V. Binck Beheer B.V. BinckBank B.V. Effectengiro Binck Securities B.V.
Retail / Professional Services Trading Annual report 2006 N.V.the responsibility is ofaManagement The day-to-day ofBinckBankBelgië management Board, form Committee.the Management Veerkamp, who,the Management together with two General Managers, Rene SchipperandRene BoardThe Management was assisted in2006by Kalo Bagijn (35), • (42), Pieter Aartsen • ThierrySchaap(35), • Boardthe Management are:The membersof Boardandpersonnel Management V.L.n.r.: Kalo Bagijn, Thierry Schaap enPieter Aartsen Public Relations. Retail (Netherlands, BelgiumandFrance) and services).BPO for Professional (professional Services clients and Finance, Operations andIT. Human Resources, Investor Relations, Legal, for Trading, IAD, RiskManagement, Secretariat, member member chairman with responsibility for with responsibility with responsibility managers. the responsiblethe localmanagersand functional matrix organisationto both inwhichstaff report manager.one businessunit BinckBankoperates a Professional and Services Trading are managedby Manager andaPrivate Clients Manager. Retail betweenaMarketing issplit &Sales for operations. businessunit Responsibility for General Managersineachcountry are responsible ofAssociation. Articles office inBelgium, are accorded but nostatusthe by forthe day-to-day ofBinckBank’s management Messrs. andGermijnsare alsoresponsible Bortot Vincent Germyns. are Thierry Schaap, Kalo Bagijn, and NickBortot Boardthe Management ofBinckBankBelgiëN.V. (Chairman) and Vincent Germijns. The membersof Committee consisting ofMessrs. NickBortot
Jaarverslag 2006 49 Human resources policy Number of employees at year-end relatively BinckBank’s human resources policy is designed to (international) attract and retain enthusiastic, motivated and Binck Securities talented people, because they can supply the Syntel 25% 13% energy and expertise needed to grow our organisation. Customer focus, which is an integral part of the BinckBank culture at all levels, is one of the selection criteria we apply when recruiting new Binck België 4% staff. BinckBank BinckBank is growing fast and clarity is essential, in 58% both organisational structure and reporting lines, to ensure that opportunities and threats are identified at an early stage. This will ensure that Trading Professional Services BinckBank is able to sustain its controlled growth 23% 39% in the coming years.
The number of employees as at year-end increased to 223 in 2006 (2005: 170). The average number of employees last year was 179 (2004: 234) excluding Syntel and 195 including Syntel. The sharp increase Retail was mainly due to the acquisition of Syntel. The 38% Customer Service department in the Retail business unit accounted for the largest share of 50 new recruits.
BinckBank N.V. Thierry Schaap, Management Board Chairman
Kalo Bagijn, Management Board Member Secretariat Human Resources Pieter Aartsen, Management Board Member Finance Facilities
Risk Management Legal Binck Syntel Binck België N.V. PR/IR IT Securities B.V. Beheer B.V. Annual report 2006 IAD/Compliance Operations Institutional Equity Trading en EP Trading Bound Trading Development Brokerage
Retail Professional Services
Private Professional Clients Services Netherlands Private Clients Netherlands Marketing & Professional Sales Services Belgium
Marketing & Sales Private Clients Belgium Customer Service & Order Desk Financial statements
Annual report 2006 51 Annual Report 2006 52 Notes to the companyto Notes balancesheet...... the companyto Notes financialstatements...... Company statement ofchangesinequity Company income statement...... Company balancesheet...... Company Financial Statements Financial riskmanagement...... the consolidatedto Notes income statement...... the consolidatedto Notes balancesheet ...... the consolidatedto Notes financialstatements ...... Consolidated statement ofchangesinequity Consolidated cashflowstatement...... Consolidated income statement ...... Consolidated balancesheet Consolidated Financial Statements Financial Statements 2006BinckBankN.V...... 101 ...... 97 ...... 54 ...... 102 ...... 55 ...... 56 ...... 105 ...... 70 ...... 103 .....104 ...... 58 ...... 87 .....59
Annual Report 2006 53 Annual Report 2006 54 Consolidated balancesheet a 16 16 14 15 13 9 8 11 10 Deferred tax assets Tax 12 Property, andequipment plant Intangible assets Other investments Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets hrhles qiy25 23 21 22 16 19 Total equityandliabilities Shareholders’ equity 20 Provisions 17 Accruals anddeferred income Other liabilities Deferred tax liabilities 18 ofsecurities Liabilities inrespect Funds entrusted Equity andliabilities Total assets Prepayments andaccruedincome Other assets oe31December2006 Note 8,4 235,836 383,543 67784,031 111,353 96,737 60,494 ,9 11,699 7,993 4 512 445 109 x € 0,1 120,656 124,764 100,613 171,113 216,332 164,617 2,1 498,677 620,610 498,677 620,610 4,2 443,431 549,321 1511,051 11,511 42,427 67,828 12955,246 71,289 21,010 38,020 ,0 x 1,000 ,4 4,870 1,829 2,963 5,443 2,613 7,685 5,672 ,6 3,184 4,969 988 29 31 December2005 - € 1,000 - Consolidated income statement te noe30 28 26 28 28 29 26 26 27 Other income Resultstransactions onfinancial Commission Commission expense Commission income Income from otherinvestments Interest Interest expense Interest income Revenue tf ot 1( 31 Staff costs Expenses Total revenue iue P ncniun prtos 35 34 Diluted earningspershare Diluted EPS on discontinued operations Diluted EPS on continuing operations Earnings pershare 7 EPS ondiscontinued operations EPS oncontinuing operations Earnings per share (in ( Minority interests ( ( BinckBank N.V. shareholders Attributable to 13 32 33 forProfit the year ondiscontinuedProfit operations oncontinuingProfit operations 16 Tax Operating before profit tax Total expenses ofotherinvestments Impairment Depreciation andamortisation Other operating expenses € ) oe2006 Note 1,9)(11,521) (18,691) 44234,090 8,269 54,492 15,837 15,192) 502 (2,244) (5,052) 1,902) 9,589) 9 (8) 69) x € 2,5)(26,322) (26,752) 58122,569 6,025 35,801 10,785 40913,609 13,528 24,009 24,009 17,791 23,810 28,930 56244,113 55,682 40913,528 24,009 510 (4,879) (5,120) ,0 x 1,000 ,0 15,512 8,208 .90.45 0.02 0.43 0.45 0.02 0.79 0.43 0.01 0.78 0.79 0.01 0.78 855 9 616 199 37 33 - ( 16,612) ( ( 1,575) 8,127) € 12,912 2005 1,000 ( 81) -
Annual Report 2006 55 Annual Report 2006 56 Consolidated cashflowstatement mriaino nagbeast 14 Interest-bearing securities Loans andreceivables 15 availableBanks (balancesnot ondemand) Movements in: itemsincludedinprofit Non-cash Provisions Depreciation ofproperty, andequipment plant ofintangibleAmortisation assets Adjustments: shareholders forProfit the year attributableto BinckBankN.V. Cash flowfrom operating activities Itrmdvdn o h er36 21 36 6 cashflow Net cashflowfrom financingactivities Net 14 13 -Interim dividendforthe year -Final dividendfor preceding year 13 Dividends paid Profit-sharing bondloan 15 Cash flowfrom financingactivities cashflowfrom financingactivities Net Investments inproperty, andequipment plant Investments inintangible assets Disposals ofotherinvestments Investments inotherinvestments acquired cash Investments insubsidiariesadjustedfor Cash flowfrom investing activities cashflowfrom operatingNet activities Other liabilities, accrualsanddeferred income ofsecurities Liabilities inrespect Funds entrusted Other assets, prepayments andaccrued income Shares andvariable-income securities oe2006 Note 4,0 108,301 147,707 6,8)(41,173) (25,556 (62,689) 1,4)5,168 10,946 (7,951) (16,241) (62,238) (21,426) 872(14,221) 18,722 13,609 24,009 0772,558 40,727 331 (1,832) (1,527) (3,361) (4,889) (756) (1,446) (1,668) (6,707) ,7 1,223 1,170 33 (588) (313) 25 1,555 (235) (822) (956) 3 263 414 935 732 1)- (14) 414 ) x € 77372,233 27,713 77,047 45,539 845 (1,804) (8,485) (3,010) (9,341) ,0 x 1,000 (1,502) € 2005 1,000 Consolidated (continued) cashflowstatement ah8 Commission paid Commission received Dividend received 10 Interest paid Interest received Tax paid following items: Cash flowfrom operatingthe includes activities 9 Total Loans andreceivables (callmoney) Banks (excluding available balancesnot ondemand) Cash the amounts stated headings at below: the consolidatedthe following under balancesheet consolidated cashflowstatement are includedin The cashandequivalents presentedthe in Movement Closing balanceofcashandequivalents Opening balanceofcashandequivalents oe2006 Note 7,1 146,705 74,472 174,418 146,705 x € 7,1 146,705 114,520 174,418 126,746 86511,302 33,911 7,523 18,695 54,154 14,895 24,500 42,000 72,233 27,713 ,0 x 1,000 ,4 2,048 8,021 3,946 5,693 7,685 5,672 33 € 2005 1,000 7
Annual Report 2006 57 Annual Report 2006 58 (amounts in Consolidated statement ofchanges inequity hrs2 - 25 - 31 December2006 - ferredto otherreserves 36 25 Retainedtrans earnings - Payment ofbonusshares shares 25 - Payment ofstockoption to sharesRights granted dividend 36 Payment ofinterim Payment offinaldividend rftfrteya - expense Total income and forProfit the year xhne2 - - 25 11 inequity directly - Results recognised - exchange Gains andlosseson 25 financial assets - available-for-sale of Impairment 31 December2005 - 36 ferredto otherreserves Retainedtrans- earnings interest 25 - Acquisition ofminority to sharesRights granted dividend 36 Payment ofinterim Payment offinaldividend rftfrteya - expense Total income and forProfit the year xhne2 - - 25 11 inequity directly Results recognised exchange Gains andlosseson financial assets available-for-sale of Impairment 1 January2005 € x 1,000) Note 3,084 20,855 (956) 24,009 24,297 71,289 - 71,289 - 24,00924,29771,289 (956) 3,084 20,855 3,084 20,855 (1,121) 13,609 18,819 55,246 - 55,246 - 13,60918,81955,246 (1,121) 3,084 20,855 ,8 085 111 ,0 0064,1 4 46,654 942 2,80820,08645,712 (1,121) 3,084 20,855 aia rftand profit capital sudSaeTesr npr-OhrSb ioiyTotal Minority Sub- Other Unappro- Treasury Share Issued hr rmu hrspitdrsre oa neet equity interests total reserves priated shares premium share - - - - - 13,609- - (13,609) 9-( 9 - - - 49 - (49) - -23,951 - (3,361) 342 23,951 - - 342 - (3,361) (58) 342 (4,889) -24,009 (3,361) - (4,889) - (4,889) -2,0 -2,0 -24,009 -24,009 - (58) -24,009 (58) - - (58) 15 15 - (155) - 97 97 - (155) 97 - (155) (1,561) - (861) 2,808- (2,808) (700) - (700) - - (1,832) 263 - - 263 - (1,832) 263 (1,527) (1,832) - (1,527) - (1,527) 13,249 13,609 13,330 (81) (279) -1,0 -1,0 (1 13,528 (81) -13,609 - -13,609 (279) - (279) - (279) 45 45 - (475) - 196 (475) 196 - - 196 (475) 1 16 - 116 - (116) earnings retained .ArsnA.M. van Westerloo J.K. Brouwer C.J.M. Scholtes P. Aartsen K.J. Bagijn Board: Supervisory T.C.V. Schaap Board: Management 2007. Meeting ofShareholdersto beheldon19April statements forthe General 2006willbeadoptedat Board on1MarchSupervisory 2007. The financial takenthe Boardthe Management decision and by approved forto aformal publication pursuant preparedthe company’s by Board Management and the year ended31December2006have been BinckBank’s consolidated financialstatements for and itsvarious subsidiaries. ‘BinckBank’to refer willbeused to BinckBankN.V. transactions.the following In pages,the name processing andkeeping account ofsecurities developing software for financialinstitutionsfor subsidiary Syntel BeheerB.V. specialisesin shares andbondsonaproprietary basis. The Binck SecuritiesB.V.,the company trades also in and professional investors. Through itssubsidiary securities andderivativetransactions for private conventional broking in andinternet services shares aretraded. publicly BinckBankN.V. provides Netherlands withitsdomicileinAmsterdam, whose BinckBank N.V. isacompanythe establishedand affectthe consolidateddoes not figures inany way. the nameofBinckN.V.to BinckBankN.V. The merger date,the shareholders passedaresolution changing N.V. beingabsorbedinto BinckN.V.the same On of BinckN.V. andBinckBankN.V., withBinckBank resolution 2006approving on12October amerger The General MeetingofShareholders passeda Company information General 1. the consolidatedto Notes financialstatements
Annual Report 2006 59 Annual Report 2006 60 calculatingthe present value those cashflows. of and alsodeterminesasuitable discount rate for future cash flows fromthe cash-generating unit BinckBank makes anestimatethe expected of is attributed.to estimatethe value Inorder inuse, the cash-generatingthe goodwill of to which units goodwill. This involves estimatingthe value inuse of the carryingamount on test impairment onceayearAt an least BinckBankperforms ofgoodwill Impairment the provisions. assetsandliabilities certain the fairthe measurement of assets and value of loans andreceivables, otherinvestments andother losseson estimates ofimpairment madeinrespect ofassetsandliabilitiesarethe the carryingamount to riskofcausingamaterialsignificant adjustment have datethat the balancesheet a at uncertainty forthe future andotherkey sources ofestimation expense items. assumptions significant The most contingent rights andliabilitiesincome and recognition andvaluation ofassetsandliabilities, making assumptionsandestimatesthe on The preparationthe financialstatements of involves accountingSignificant judgements andestimates thousand. nearest are ineuros,the withallamounts roundedto stated,Unless otherwise the financialstatements assets, whichare recognised fair at value. trading purposesandavailable-for-sale financial exception offinancialassetsandliabilitiesheldfor convention,the historicalcost applying the with The financialstatements have beencompiled the Europeanendorsed by Commission. International Accounting Standards Board and Financialthe adoptedby Reporting Standards (IFRS) prepared inaccordancethe International with The consolidated financialstatements have been Presentationthe financialstatements of BinckBank. those of periodsarethe sameas reporting The accountingtheir the subsidiariesand policiesof immediately deconsolidated. control asubsidiary, willbe the subsidiary obtains control.to any IfBinckBankceasesat point Subsidiaries are consolidated assoonBinckBank to obtainbenefitsfromas itsactivities. financial andoperatingthe company policiesof so able, eitherdirectly orindirectly,to govern the control. Control ifBinckBankis to exist isdeemed Subsidiaries are entities over whichBinckBankhas the companyitems of anditssubsidiaries. the incomeassets andliabilities andexpense The consolidated financialstatementsthe include Basisofconsolidation 2. rates prevailing date. the balancesheet on in foreign currencies are convertedthe exchange at transaction date. Assetsandliabilities denominated currency’sthe functional exchange ratethe on currencies are converted oninitialrecognition at entity’s currency. functional Transactions inforeign entity arethe relevant measuredthe basisof on recognisedthe financialstatements in ofeach the presentationthis alsobeing currency. Items The consolidated financialstatements are ineuros, Foreign currencytranslation Recognition of andmeasurement 4. contracts ofemployment. their of those arisingout than other parties these relatedtransactions betweenBinckBankand be related parties.the yearthere During were no to Board the Supervisory BoardManagement and the BinckBank considersthe membersof the subsidiariesandassociates,to In addition Related disclosures party 3. assets, equityandliabilities instrument). Gainsandlossesoninvestments held prices (e.g. aninterest ratethe priceofafinancial or the contract andmovements rates incertain or of the underlyingnotional amount on dependent investment all, ornoneat withfuture settlement instruments initial requiring only alimitednet trading purposes. Derivatives are financial held onbehalfofclients are designated asheldfor recognisedthe income in statement. Derivatives not value fair withsubsequent value gainsandlosses orafinancialliabilityisrecognisedasset fair at term. Oninitialrecognitionthe short in afinancial acquiredthe aimofbeingsoldorrepurchased with as beingheldfortradingthey are purposesif Financial assetsandfinancialliabilitiesare regarded through orloss profit Financial fair assetsorfinancialliabilitiesat value financial assetsoninitialrecognition. the designationBinckBank determines ofits available-for-sale financialassetsorotherliabilities. maturity investments, asloansandreceivables oras fairat valuethrough orloss, profit asheld-to- designated asfinancialassetsorliabilities In accordance withIAS39, financialinstruments are Financial instruments on thetransaction date. converted intothe exchange euros at rate prevailing resultstransactions andcosts onfinancial are income statement.the income In statement,the equity forthe relevant company isrecognisedthe in sold,the deferred cumulative includedin amount component ofequity. Ifanon-eurozone entity is differences are recognised directly inaseparate average exchange rate forthe year. Translation incometranslated statement is the weighted at rate prevailing datethe while the balancesheet on presentation currency (theeuro)the exchange at foreign entities aretranslated into BinckBank’s date,the reporting At the assetsandliabilitiesof rates are recognisedthe income in statement. Differences relatingto movements inexchange acquisition. Oninitialrecognition, financial are recognised upon the balance sheet in Held-to-maturity assetsandloansreceivables transaction datethe relevant of purchase orsale. standard market conventions are recognisedthe at Financial andsoldinaccordance assetsbought with Recognitionthe balancesheet offinancialassetsin is recognisedthe income in statement. cumulative gainorlosspreviously showninequity to beimpaired.determined time, At such the the investmentof equityuntil isderecognised or Any gainorlossisshownasaseparate component for-sale financialassetsare measured fair at value. above categories. After initialrecognition, available- available forthe includedinoneof saleorare not arethat designatedfinancial assets asbeing Available-for-sale financialassetsarethose Available-for-sale financialassets impaired. the loansandreceivableswhen are derecognised or losses are recognisedthe income in statement cost,the effective using interest method. Gainsand an active market. They are recognised amortised at or determinablepayments quotedin arethat not Loans andreceivables are financialassetswithfixed Loans andreceivables any losses. impairment measuredthe effective using interest method, less investments are recognised cost, amortised at to doso.is inaposition Held-to-maturity them until maturityto hold specifically intends and as investmentsto maturityto beheld ifBinckBank payments andafixed maturity date are designated Financial assetswithfixed ordeterminable Held-to-maturity investments are alsocoveredtradingterm portfolio.the by fairfinancial assetsat valuethrough orloss profit The derivatives heldonbehalfofclients and not statement. fortrading purposesare recognisedthe income in
Annual Report 2006 61 Annual Report 2006 62 market priceisavailable,the fair valuethe of the mid-price, excludingtransaction costs. Ifno price and ‘risk off-setting’ positionsare carriedat price,the offer financialliabilitiesare carriedat instrument. Financialthe bid assets are carriedat therethe market priceif isanactive market forthat The fair value isbasedon ofafinancialinstrument Determination offair value has expired. completedthe obligation or hasbeen removed or relatingperformance the obligationto hasbeen the assoon the balancesheet be shownin involvedthe asset. with Financialto liabilitiescease recognised for aslongBinckBankremains controlthe asset, of continuesto be asset that the asset, i.e. retainsthem, transferred andhasnot transferred allrisks andrewards ofownership largely hasnot cash flows but from anasset transferredIf BinckBankhas to receive itsrights the transferred BinckBankhas to receive itsrights the • to receive BinckBankretainsthe right the cash • flows fromthe asset; to havethe cash ∑ BinckBankceases to aright if:the balancesheet is nolongershownin ofagroup ofsimilarfinancialassets) orpart asset (oracomponent ofafinancial A financialasset transaction costs. cost,liabilities isat includingdirectly attributable Initial recognition ofallotherfinancialassetsand recognisedtime. the financialstatementsthe in at the waythis determines they are inwhich instruments areto aspecificcategory assigned and controlthe asset. of the asset, i.e. retainsthem, transferred has but transferred allrisks andrewards ofownership largely or(b)not the asset ownership of transferred largely allrisks andrewards of (a) cash flows andhaseither fromthe asset terms ofaspecificcontract; or entirety delaythe significant under andwithout obligation to pay themto a third in their party hasentered but flows into fromthe asset an cost at the reversal cost at date. exceed doesnot the amortised the asset of amount lossisreversed,impairment providingthe carrying was recognised,the previously recognised relatedto anevent occurringafterthe impairment decreasesthe decrease and canbeobjectively losssubsequently ofanimpairment amount loss isrecognisedthe income in statement.the If computed initialrecognition). at the of The amount effective interest rate (i.e.the effective interest rate incurred) discountedthe financialasset’s at original (excluding have futurethat losses been credit not the present value ofestimated future cashflows differencethe asset’s between and carryingamount incurred,the lossismeasuredthe of as the amount investments hasbeen cost amortised carriedat loss onloansandreceivables orheld-to-maturity thereIf isobjective animpairmentthat evidence Held-to-maturity investments /loansandreceivables receivables andavailable-for-sale assets. follows for held-to-maturity investments, loansand ofanyamount lossisdeterminedas impairment assets collectively. isindicated, Ifimpairment the of financialassetsindividuallyorgroups offinancial therewhether isobjective evidence ofimpairment date,At each balancesheet BinckBankassesses offinancial assets Impairment the liabilitysimultaneously. basis,settle onanet andsettle orrealisethe asset offthe amountsto set andanintention right to there when isalegallyenforceablebalance sheet ispresented amount the the net in each otherand Financial off assetsandliabilitiesare set against Offsetting offinancialinstruments cash flows. the present valuemodels orbydetermining the of essentially similar, orbyusingpricing instrument the currentmarket market or value ofanother, recent commercialthe most the transactions in isestimatedthe basisof financial instrument on either adefiniteoranindefinite usefullife. losses. Intangible assetsare determinedashaving andanyamortisation cumulative impairment intangible assetsare lesscumulative cost carriedat fair valuethe date ofacquisition. at Subsequently, assets acquired in abusinesscombinationtheir is on initialrecognition cost. at ofintangibleThe cost Intangible assetsacquired separately are measured Intangible assets value probably lie. the bandwidthwithinwhichestimatesthe fair of the reason isdisclosed, where possiblealongwith reliable fair value beachieved, measurement cannot arethe lower ofcost andmarket value. carriedat If fair value bemeasured reliably, cannot the assets Other investments are fair carriedat value.the If Other investments positions held. adequate collateralto cover withBinckBank the effected immediately. The clients have lodged transactions andpositionsis ofsuch in respect risk. Financialtheclients concerned with settlement positions forthe client’s the client’s account andat the resultantbehalf ofitsclients andholds BinckBank executes derivativestransactions on Clients’ derivatives recognisedthe income in statement. occurring afterthe previous losswas impairment canbeobjectivelyinstrument relatedto anevent the increasethe fairstatement if in valuethe of instruments are reversedthroughthe income Reversals lossesrelating ofimpairment to debt for recognised saleare not through orloss. profit relatingto equityinstruments classifiedasavailable income statement. Reversals losses ofimpairment transferred orlossis profit the fromto equity any lossespreviously impairment recognised in and any andcurrent amortisation) fair value less ofany repayments (net acquisition cost ofprincipal the differenceto equal an amount betweenits If anavailable-for-sale isimpaired, financialasset Available-for-sale financialassets losses. lessany cost carried at cumulative impairment contingent liabilities. Subsequently, goodwillis acquiree’s identifiable assets, liabilities and over BinckBank’s fairthe net interest value in the of the excessthe businesscombination of the cost of oninitialrecognition, cost carried at measured as Goodwill acquired inabusinesscombination is Goodwill the year. during impairment more frequentlythere if are indications of yet inuseor isnot the asset annuallyif impairment the development of amount coststested for is concernedproject areto berealised. The carrying the expected futureperiod inwhich salesfromthe Any suchcapitalised costs over arethe amortised andcumulativeamortisation losses. impairment lessany cost iscarriedat cumulativethe asset After initialrecognitionthe development of costs, development reliably. to measurethe costspossible incurred during is will bringfuture economic it that benefitsand technically feasible, is this intangible asset of it that recognised completionthat ifBinckBankcanshow costs incurred isonly onanindividualproject whichresultsintangible from asset development Research costs are recognised asincurred. An Costs ofresearch anddevelopment reassessed annually. withanindefiniteusefullifeintangible asset is amortised.assets are not The usefullife ofan levelthe cash-generating of unit. These intangible test, annual impairment the eitherindividuallyorat with anindefiniteusefullifeto an are subjected concerned.the asset of function Intangible assets categorythe cost statement in appropriatethe to with adefiniteusefullife ispresentedthe income in may beimpaired. ofintangible Amortisation assets there if areimpairment anasset indicationsthat overthe usefullifeamortised tested for and Intangible assetswithadefiniteusefullife are
Annual Report 2006 63 Annual Report 2006 64 financial statements. Deferredtax liabilitiesare these in their carryingamount liabilities and tax baseofassetsand datethe between sheet temporarythe differencesbased on the balance at A provision isrecognised for deferredtax liabilities, Deferred tax applicable tax law. tax rates is computedthe basis ofenacted on and from or paid tothetax authorities. The tax amount to beclaimed expected the amount are carriedat Tax assetsandliabilitiesfor current andprioryears Tax assetsandliabilities Tax hardware). and fittings), 20%(equipment) and33.3%(computer annual depreciation (fixtures percentages are 14.3% residual value ofassetsare reviewed annually. The useful lifethe asset.the usefullife of the Both and and calculated onastraight-line basisoverthe losses.impairment Depreciation isbasedoncost less cumulative depreciation andany cumulative computer hardware. These assetsare cost carriedat the company’s in equipment premises and term.long includesfixtures, It fittingsand ofBinckBank’sthe performance the in activities This itemcomprisesto beusedin assetsintended Property, andequipment plant lossesisrecognised.impairment the carryingamount,than isloweramount an the goodwillrelates.which the recoverable If recoverablethe cash-generatingto of amount unit lossismeasuredthe An impairment byassessing the businesscombination. of fromthe synergy are that to benefit expected generating unitsorgroups ofcash-generating units combination isallocatedto BinckBank’s cash- test, impairment goodwillacquired inabusiness beimpaired. might the asset indicatethat Forthis frequently ifevents orchangesincircumstances tested forGoodwill is annually, impairment ormore entity and the same tax authority.the same entity and and the deferred tax is related tothe same taxable deferred deferredtax assetsagainst tax liabilities there offif isalegallyenforceableto set right assets andliabilitiesare presented amount asanet the incomeinstead ofin statement. Deferredtax directly inequity isaccounted for directly inequity tax law.applicable tax onitemsrecognisedThe liability issettled,tax rates basedonenacted and isrealisedthe or the asset the periodinwhich tax ratesthe to to beapplicable carried at expected utilised. Deferredtax assetsand liabilitiesare the deferred canbe which futuretax asset against taxable profits probablethat willbeavailable the in is date it andrecognisedthat sheet the extent to deferredtax assetsare the balance reassessed at deferred canbeutilised.tax asset Unrecognised be availablethe whichsomeorallof against sufficient probablethat taxable profitsis not will date andreducedthe balancesheet ifit assessed at the deferred of The carryingamount tax assetsis used. facilitiestax losscarry-forwards andunused to be temporary differences,deductible tax unused the deferred canbeutilised,tax asset the enabling taxable profits that willbeavailable which against tax losscarry-forwardsunused isprobable whenit temporary differences,tax facilities unused and Deferredtax assetsare recognised for alldeductible in the case of taxable temporary differences • wherethe deferred the tax liabilityariseson • except: recognised fortemporarytaxable all differences will not reversewill not the foreseeable in future. temporarythe difference isprobablethat and it the reversaltiming of temporarythe difference of associates, whereto control BinckBankisable the connected withinvestments insubsidiariesand tax or thetaxable profit; affectthe operatingand doesnot before profit abusinesscombination isnot that transaction recognition oraliabilityin ofanasset initial recognitionthe initial ofgoodwillor reimbursement is virtually certain.reimbursement isvirtually The expense recognised asaseparate onlywhen asset provisionto bereimbursed, the reimbursement is obligation. IfBinckBankexpects someorallofa the of estimatethe amount canbemadeof requiredthe obligationto settle and(iii)areliable resources embodying economic benefitswillbe event;of apast anoutflowof isprobablethat (ii)it present obligation (legalorconstructive) asaresult A provision isrecognised if(i)BinckBankhasa Provisions effective interest method. calculated cost the using amortised carried at recognition, interest-bearing loansare subsequently attributabletransaction costs. After initial valuethe consideration of received lessdirectly All loansare carriedoninitialrecognitionthe fair at Other liabilities recognisedthe income in statement. BinckBank’s ownequityinstruments are not the purchase, sale, issueorwithdrawal of shares) are from deducted equity. Gainsorlosseson Equity instruments which are reacquired (treasury Repurchase ofownshares the recoverable amount. orcash-generating ofanasset exceedsamount unit lossisrecognisedAn impairment the carrying if the recoverable isestimated. the asset of amount therewhether are indications ofimpairment. Ifso, dateto determine inorder eachbalancesheet at ofBinckBank’sThe carryingamount tested assetsis ofassets Impairment maturitiesthree of months orless. deposits(callmoney)short-term withoriginal comprise banks cashat sheet andinhand the balance the headingofcashin The itemunder Cash andcashequivalents face value lessany losses. impairment The receivablesthis itemare includedin carriedat Other assets obligationthe unrecognised and gainsand actuarial the present valuetotal of the the definedbenefit of planis obligationthe definedbenefit under The net isexpensed cost service immediately. the benefitsare alreadythat extent vested,the past the benefitsbecomeperiod until vested. Tothe statement onastraight-line basisoverthe average isrecognisedservice asanexpensethe income in obligation whichrelatesamended benefit to past arethe amended, of the cost of portion that separate plans.the benefits underapensionplan If working livesthe the employees in participating divided overthe expected average remaining date.that plan assetsat These gainsorlossesare obligationthe fair and defined benefit valuethe of the greaterto morethan 10%of the amount of the precedingof year for eachplanseparately unrecognisedthe end gainsandlossesat actuarial as income cumulative orexpensethe net if method. gainsandlossesare Actuarial recognised creditthe projected unit basisusing an actuarial planare individuallydeterminedon defined benefit insured withapensionprovider. The coststhe of pensionplanwhichisalso has adefinedbenefit Through itssubsidiarySyntel BeheerB.V., BinckBank theythe year relate.to which related. The pensioncontributions are recognised in pension insurer. The percentage payable isage- percentage ofemployees’ fixedto a salaryispaid plan.the definedcontribution Under plan, a defined contribution planandadefinedbenefit Boardof itsManagement andstaff basedona BinckBank haspensionarrangements for members Pensions as aborrowing cost. time isrecognisedthe passageof provisionto due Where discounting isused,the increasethe in where appropriate,the liability.the risksto specific are discounted arate, at beforetax, reflects,that time valuethe of ofmoney ismaterial, provisions ofanystatement reimbursement. net the effect If relatingto any provision ispresentedthe income in
Annual Report 2006 65 Annual Report 2006 66 Revenues aretheir recognised isprobablethat ifit and measurement ofassets, equityandliabilities. the above accounting policiesforthe recognition they relate,to which period having dueregardto Income and expense itemsare recognisedthe in General Recognition of andmeasurement 5. lease period. income statement onastraight-line basisoverthe lessee,the leasepayments arethe to charged the caseofoperatingIn leaseswhere BinckBankis Leasing period. that beginning andendof movement incumulative expense recognisedthe at the income statement forthe aperiodreflects will ultimately bevested. The expenseto charged estimatethatthe numberofequityinstruments of the vesting periodhasexpired andBinckBank’s best dateto which eachreporting the extentat reflects expense recognised for equity-settledtransactions rights become unconditional). The cumulative the awardto entitled (i.e.the datethese onwhich the relevanton which employees become fully conditionsservice are fulfilled,the date endingon over and/orthe performance the periodinwhich together withacorresponding increase inequity, ofequity-settledcost transactions isrecognised, valuethe datethey are onwhich at granted. The employees ismeasured byreferencethe fairto ofequity-settledThe cost transactions with the company orbycashpayment. are settledeitherbyissuingequityinstruments of the form ofshare-based payments. These payments group ofBinckBankstaff receive remuneration in Members ofBinckBank’s Board Management anda Share-based payments the obligationswhich haveto bedirectly settled. the fairbenefits and of valuethe planassetsout of the asyet unrecognisedlosses less amended income andexpenses software. suppliedrelatingservices to hardware and the year ofgoodsand during inrespect parties Other income comprisesthird amountsto charged Other income attributable totrading activities. and stockexchange andclearingcosts directly rate movements,transaction coststogether with movements, exchange rate movements andinterest includes gainsandlossesresulting from price the incometransactions in statement. The item are recognised onfinancial the result in faircarried at value. Any fair value gainsandlosses Financial instruments heldfortrading purposesare Resultstransactions onfinancial provided.services non-recurring ormore regular basis, of inrespect payablethird parties,to respectively, whetherona received orreceivable andpaidor fromthird parties This itemcomprises commission, excluding interest, Commission income andexpense investments. for ofother the headingofimpairment under the otherinvestmentsand losseson are accounted to receivethe dividend. Any realised fair value gains other investments are recognised uponentitlement relates.yearto whichit Dividendsreceived from Income from otherinvestmentsthe isattributedto Income from otherinvestments measuredthe effective using interest method. theyyear relate.to which Interest income is Interest income andexpense are recognisedthe in incomeInterest andexpense revenue canbereliably measured. the economicto BinckBankand benefitswillflow Purchase price Goodwill onacquisition Total assets net contributions Tax andsocial security Pension provision Trade payables Trade receivables Deferred tax assets equipment Property, and plant Intangible assets equivalents Cash andcash Syntelthe acquisitiondate was asat asfollows: fair valuethe identifiable assetsandliabilitiesof of and keepingtransactions. account ofsecurities The software for financialinstitutionsfor processing the Netherlandsandspecialisesindeveloping company alistedcompany) (whichisnot isbasedin the voting stockofSyntel BeheerB.V. (Syntel). This 2006,On 18October BinckBankacquired 100%of Acquisition ofSyntel BeheerB.V. Businesscombination 6. eonsdo Syntel Recognised on custo carrying acquisition 11,331 167 (1,637) (1,637) 218 (1,872) (2,118) ,5 1,703 8,881 2,450 3,575 1,269 4,568 1,269 425 1,595 1,355 1,595 25 (235) - (235) (246) 8 286 286 3- 63 amount outside ofgoodwill. software andstaff forthere which isnorecognition income and expensesthe value and ofSyntel’s the expectedthe acquisitionas regards synergies of acquisition date. The recognised goodwillreflects identifiable assetsandliabilitiesofSyntelthe asat the fairthe acquisitionand of valuethe cost the of the differencemeasuredthe basisof on between morethan five of not years. The goodwillhasbeen the income via statement overamortised aperiod the revenues concerned. willbe This amount present valuethe net the reliable of estimates of The fair valuethese contracts of taken hadbeen as company’s existing revenue-generating contracts. fromthe acquisitionofSyntel representsthe recognisedamount asintangible assetsresulting 3.the purchase methoddescribedinIFRS using The The acquisitionofSyntel hasbeenaccounted for operations wouldhave been BinckBank’stotal revenue from continuing profit afterprofit tax would have to amounted the year,the beginningof place at BinckBank’s contributed Fromthe acquisitiondate onwards, Syntel cashoutflow Net Cash paid acquiredthe subsidiary with cashandequivalentsNet Cash outflowonacquisition: Total Transaction costs Purchase price margin forthe years 2007and2008. dependingonSyntel’san additionalamount gross The purchase priceismadeupofaninitialsumand operations wouldhave been the continuing afterthe profit tax on million and to total revenuewith overthe sameperiodamounting € 855,000.the businesscombination If taken had € 95,000to BinckBank’s profits, net € € 60.8 million. 24.0 million. 24.0 € 24.2 11,331 11,181 (6,707) (8,302) Cost: 1,595 150
Annual Report 2006 67 Annual Report 2006 68 approximately ofapproximately loss total expensesthe isanimpairmentIncluded in operations ondiscontinuedProfit Tax discontinued operations beforeProfit tax on Expenses Revenue from discontinued operations, were asfollows: HIT’s results, whichhave beenpresented asresult 2006. was activities completedthe HIT on13October way operated inwhichHIT either. The disposalof to behadforsynergistic gains BinckBankfromthe brokerage andprofessional services. There were no focus onBinckBank’s core activities, viz. onlineretail was promptedthe increaseddisposal ofHIT by segment. The businesswas bookvalue. soldat The trading werethe activities business includedin the Londonchiefly on StockExchange. HIT’s in equityderivatives andunderlyingsecurities, Traders Ltd engagedinproprietarytrading (HIT). HIT ofHillsIndependentthe activities to disposeof previouslytaken Boardthe Management decisionof On 25July2006,the BinckBankannounced Discontinued operations 7. € 1.3 millionaftertax. € 1.8 million, which was 736 (5,206) (7,306) 062005 2006 ,9 6,086 7,591 9 616 199 880 285 8)(264) (86) discontinued operations Diluted earningspershare on on discontinued operations Ordinary earningspershare Earnings pershare: (outflow)/inflow Total cash net activities Cash flowfrom operating HIT’s cashflows were net asfollows: (27,712) 29,056 29,056 (27,712) .10.02 0.01 0.01 0.02 Annual Report 2006 69 Annual Report 2006 70 Notes to the consolidatedto Notes balancesheet Receivables optionpositions from ofshort clients inrespect Receivables collateralised bybankguarantees Receivables collateralised by securities Public loan sector Other loansandreceivables: Private callmoney sector Cash equivalents: The analysisisasfollows: securities andbankguarantees. including overnight loansandoverdrafts arethat collateralised by This itemcomprises receivables from private clients, sector 10. Loans andreceivables avariablethese balancesat rate basedonEuribor. as collateral forthe delivery riskonsecurities. Interest isreceived on three months. available balancesnot Credit ondemandserve partly The callmoney receivables have originalmaturitiesthan ofless available balancesnot Credit ondemand Call money balancesavailableCredit ondemand The itemcomprises: the bankregulators. by supervised heldinaccountsbusiness activities institutions withcredit This itemincludesallcashandequivalents relatingthe to 9. Banks offices. demand fromthe central banks incountries where BinckBankhas coins inforeign currency, andany balancesavailable credit on tender,This itemincludesallcashinlegal includingbanknotesand 8. Cash Assets 31 December2006 6,1 171,113 110,484 164,617 113,171 78156,593 4,036 37,871 13,575 3,4 78,132 132,641 27921,360 32,739 ,5 772 - 3,952 5,000 x € 1,3 124,764 100,264 216,332 174,332 1,3 124,764 216,332 171,113 164,617 20024,500 42,000 ,0 x 1,000 ,7 7,685 5,672 31 December2005 € 1,000 As at 31December2006,As at provisions baddebt of 31December Balance asat optionpositionsheldbyclients Movement inshort Movement inreceivables collateralised bybankguarantees Movement inreceivables collateralised bysecurities Movement loan inpublicsector Movement incallmoney Position 1January asat Movementsthe year during were asfollows: receivables underloansandreceivables isbasedonEuribor. have unspecifiedmaturities. The interest rateto applying Dutch municipalauthoritymaturing in2008. The otherreceivables than 3months.of less loanconcernsto a The publicsector aloan The receivables relatingto cashequivalents have originalmaturities amounting to 2012. In2006, fair valuethe available-to-sale losseson assets with definitematuritythis portfolio are in duefor redemption in prevailing interest 10-year rate ongovernment bonds. The bonds indefinite maturity isrevised everythreethe the basisof months on the available-to-saleIn portfolio,the interest rate the bondswith on measuredcost the effective using interest method. requirements. The held-to-maturity amortised portfolio iscarriedat to coverthe above All securitiesare margin listedandusedinpart - Tradingportfolio - Available for sale: to maturity- Held This itemcomprises: 11. Interest-bearing securities off in2006, asin2005,thousand euros.than one to less amounted € assets was soldin2006. tax effectthis impairment.the account of of Asin2005,the noneof € 17,500)this item. were charged against baddebtswritten Actual 475,000). takesto equity chargedThe calculationthe amount of - Otherbondswithdefinitematurity - Otherbondswithindefinitematurity - Government bonds € 155,000 were recognised directly inequity(2005: € 16,000 (2005: 31 December2006 1,3 124,764 216,332 62,386 124,764 1398,955 41,409 12,250 11,379 54,509 17,500 84521,333 48,445 78842,427 12,953 67,828 10,336 ,8 (236) - 3,180 5,000 ,3 - 8,141 1,337 7,710 x € 78842,427 67,828 ,0 x 1,000 31 December2005 € 1,000
Annual Report 2006 71 Annual Report 2006 72 2006 remaining 15%interest inD&O Vermogensbeheer B.V. was soldin In 2005,the 6.25%interest in Trader Team Ltd was sold. The € of Inmaxxa B.V.,the recognitionto leading lossof ofanimpairment has resultedthe interests indilutionof the existing of shareholders measure offair value isavailable. The advent ofnewshareholders andmarketthe lowerofcost value carried at sincenoreliable 2006) representing intereststhan 5%. ofless These investments are Inmaxxa B.V. (formerly Triple AssetsB.V.) andLPECapital (acquired in The otherinvestments concern investmentsthe share in capitalof Other investments 31December asat Purchase Sale Impairment Other investments 1January asat 13. Other investments BinckBank’s nameforthe relevantthe account andriskof clients. lending. Long optionpositionsheldfor clients are held in to cover and are margin usedinpart requirements andsecurities tradingthe portfolio areThe positionsheldin inlistedsecurities Long optionpositionsheldfor clients Derivatives trading portfolio Securities trading portfolio This itemcomprises: 12. Shares andothervariable-income securities 69,000 ofInmaxxa. inrespect 31 December2006 0,1 120,656 100,613 56654,992 59,583 75,676 24,833 0 6,081 104 6)- (69) 988 - 102 29 14 88 4 (14) (4) x € 0,1 120,656 100,613 ,0 x 1,000 988 29 31 December2005 € 1,000 The movements inintangible assetsin2006were asfollows: events maythe carryingamount or changesincircumstances beimpaired. indicatethat for otherintangible assets20%. ongoodwillannuallyormore isperformed frequentlytest Animpairment if annual rate for ofamortisation software externally bought is33.3%, for software developed in-house25%and BinckBank’s intangible assetscomprise software, development costs, goodwillandotherintangible assets. The 14. Intangible assets 31 December Carrying as at amount impairment Cumulative and amortisation Cost 31 December2006 31 December Carrying as at amount Amortisation Disposals Acquisition ofSyntel Investments Carrying 1January asat amount otaeDvlp te odilTotal Goodwill Other Develop- Software 264 2)--(2,681) - - (27) (2,654) ,7 2 3 ,8 11,511 8,881 14,192 930 8,881 11,511 427 930 8,881 1,273 930 454 427 3,927 1,273 1,05 75 2)--(732) - - (27) (705) 2 9--956 - - 29 927 1--- 2 3 ,8 10,236 8,881 930 425 ------etcssintangible costs ment 31 December2006 assets x € 1511,051 11,511 ,0 x 1,000 31 December2005 € 1,000 1,051
Annual Report 2006 73 Annual Report 2006 74 Carrying amount impairment Cumulative and amortisation Cost 31 December2005 31 December Carrying asat amount Amortisation Investments Carrying 1January asat amount The movements inintangible assetsin2005were asfollows: otaeDvlp te odilTotal Goodwill Other Develop- Software 199 (1,949) - - - (1,949) 1,05 3,00 1,05 44 (414) - - - (414) 822---822643---643 1--- 1--- 0--- etcssintangible costs ment assets 1,051 3,000 1,051 f0%. of horizon have been extrapolated rate agrowth at 10.64%the cashflows and beyondthe five-year ratethe cashflowprojections wasto applied formanagement aperiodoffive years. The discount the budgetsapprovedbased on bysenior calculatedthe basisofcashflowprojections on been measuredthe basisofavalue on inuse The recoverable has activities the BPO of amount The cash-generating BPO unit extrapolated rate agrowth at of2%. beyondthe five-year horizon have been cash flowprojections wasthe cashflows 9.68%and period offive years. The discount ratethe to applied budgets approved for byseniormanagement a the the basisofcashflowprojections basedon on measuredthe basisofavalue on inusecalculated The recoverable ofSyntel amount hasbeen The cash-generating Syntel unit BinckBankN.V.to BusinessProcess withrespect • • Syntel and individual cash-generating units: the followingThe goodwillhasbeenallocatedto test Goodwill impairment cost ofSyntel. Syntel’s assetsover identifiable net the acquisition Goodwill relatesthe excessto the fair of value of development costs. the capitalisedsoftware of amortisation research anddevelopment expensesthe besides overamortised four years. There were noother isavailablethat for saleare capitalisedand to customers. The costs ofdevelopingthe software organisation develops proprietary software for sale software houseSyntel was acquired. This 2006,On 18October the entire sharethe capitalof Outsourcing (BPO) activities. . Costs basedonstandardised costs forthe year • hasestimatedthe salesfor Management the BPO • Estimated salesbasedonforthe year • were: test the goodwillimpairment purposes of the cashflowprojections forthe arriving at in The principalassumptionsusedbymanagement 31 December2006 in useofSyntel asat activities the BPO and Principal assumptionsusedincalculatingthe value goodwill Carrying of amount cash-generating unit: Carrying ofgoodwillallocatedto each amount an annualrate ofincrease of3%. year,immediately precedingthe budget applying activities. ratean annualgrowth of2%. year,immediately precedingthe budget applying ytlBOTotal BPO Syntel ,4 ,3 8,881 2,033 6,848
Annual Report 2006 75 Annual Report 2006 76 Carrying 31December asat amount impairment Cumulative depreciation and Cost 31 December2005 Carrying 31December asat amount Currency adjustments Cumulative depreciation anddisposals Depreciation Additions Carrying 1January asat amount The movements in2005were asfollows: Carrying 31December asat amount impairment Cumulative depreciation and Cost 31 December2006 Carrying 31December asat amount Currency adjustments Cumulative depreciation anddisposals Depreciation Acquisition ofSyntel Disposals Additions Carrying 1January asat amount The movements in2006were asfollows: 15. Property, andequipment plant itrsadCmue te Total Other Computer Fixtures and Total Other Computer Fixtures and qimn hardware equipment hardware equipment 588 207 (7,905) - (2,067) (5,838) (7,028) (1) (2,101) (2,726) - (4,301) - (2,101) ,3 ,0 9,734 - 2,296 3,000 - 6,734 9,641 939 2,047 18 1,357 - 4,537 - 5,086 2,047 61 50 (1,161) - (540) (621) (1,170) (1) (659) (510) 9 3 1,829 - 1,829 753 - 933 - 896 933 2,613 534 896 17 2,613 219 286 1,811 17 1,829 1,722 - 785 1,811 - 18 96 785 1,441 933 190 263 896 6)--(62) - - (62) 3--3 ---- 31 December2006 x € ,0 x 1,000 ,1 1,829 2,613 31 December2005 € 1,000 Total deferredtax assets Availabletax losscarryforwards Pension liabilities Deferred tax assets: Taxable temporary differences bonus shares for Syntel staff Temporary difference relatingto Deferred tax liabilities: income statement canbeanalysedasfollows: The deferredtax assetsandliabilitiesrecognised the consolidatedthe consolidated in andin balancesheet tax recognised of total amount The directly inequitywas beingcontinued not For basis,tax expense onapermanent the activities the on seenote7. Total tax burden Effecttax losscarryforwards of utilised Tax-exempt components profit previously recognised Effecttax losscarryforwards of not Deferred tax liabilities losses Non-deductible Prior yeartax adjustments (in othercountries) Effect ofdifferenttax rates Standard tax rate is asfollows: The reconciliationthe effective of tax ratetax rate the consolidatedthe to with applicable financialstatements 16. Tax mutPretg mutPercentage Amount Percentage Amount 290 1.% - - (10.0%) (2,900) 0620 062005 2006 2005 2006 2005 2005 2006 2006 ,6 ,0 - - 2,900 2,900 - - 2,963 2,900 ,2 77 ,7 27.4% 4,879 17.7% 31.5% 5,120 5,604 29.6% 8,564 aac he Income statement Balance sheet 19 - - - (109) 43 15)-- (109) - (4.1%) (1.5%) (723) (443) (0.8%) (220) 0 .%-- - 0.4% 109 4)(.% 15 (1.0%) (185) (0.2%) (43) 3- 63 302 1)(0.1%) (13) 0.2% 53 9 1.1% 196 - - € 286,000 (2005: nil). 31 December2006 --- x € ,0 x 1,000 ,4 4,870 5,443 31 December2005 € 1,000
Annual Report 2006 77 Annual Report 2006 78 tax lossesof The movementsthe deferred in tax assetsandliabilitieswere asfollows: loss carryforwardsto amounting The returnto profitabilitythe associate of BinckBelgiëN.V. wasto recognise it possible that tax in2006meant Due after years Due in1–5 Due in<1year Of which: Carrying 31December2006 asat amount Acquisition ofSyntel Added Carrying 1January2006 asat amount € 8.5 million. year-endtax lossesas at total The to 2006amounted € 2.9 million in the deferred2.9 millionin tax assets(2005: nil), corresponding of to anamount € ablte assets laibilities eerdDeferred Deferred 21.1 million(2005: 0 2,963 63 109 109 a tax tax 22,369 531 82 27 -63 2,900 - -- € 22.4 million). 22.4 Prepaid expenses Commission receivable Interest receivable This itemcomprises: 18. Prepayments andaccruedincome final reimbursement was of2006. madeinrespect for amount transaction eachpermit.to acertain charges up The year exemption from registration charges orreimbursement of the stockexchangeof merger in1997. These permitsprovideten- a The licencesandpermitsrelatethe F-permitsreceivedto asaresult Other receivables Trade receivables Receivables relatingto securitiessold, yet delivered not but Licences andpermits Loans andreceivables Other assetshave maturitiesthan oneyear ofless andcomprise: 17. Otherassets 31 December2006 80021,010 38,020 68520,313 36,805 ,6 3,184 1,283 1,541 4,969 1,399 2,872 ,5 100 1,051 9 360 698 6 451 164 146 - x € 80021,010 38,020 ,0 x 1,000 ,6 3,184 4,969 31 December2005 € 1.000
Annual Report 2006 79 Annual Report 2006 80 - - Fixed-income securities Trading portfolio securities are listed. The itemcanbeanalysedasfollows: positionsinsecurities.This itemcomprisesthe the short All 20. ofsecurities Liabilitiesinrespect accounts. This itemcomprises clients’ balancesoncashormargin credit 19. Funds entrusted Equity andliabilities in the result forthe result year.that in The interest forto 15%, 2006 amounts interest payablethe endofeachyear iscalculated at and recognised BinckBank’s andvarying profit net between0% and15%. The agreed,the interest rate with payable on beingdependent the fullcalendaryear. Aschedulefor interest payments hasbeen BinckBank’s andat lent the amount of only inrespect disposalfor to receiveentitled year.that of interest inrespect Interest ispaid the calendaryear,the loanisdemandedduring the lendersare not penalty. noticeandwithout and demandedwithout Ifrepayment of to 31December2008.2005 Repaymentthe loanmay of bemade hasamaturitythree of yearsIt three and months from 1October The profit-sharing bondisaloanprovided byagroup ofemployees. Other the purchase pricefor of Part Syntel stillpayable Tax andsocial securitycontributions Other liabilities Loan notes Profit-sharing bond to clients forLiabilities longderivative positionsheld yet delivered not but ofsecuritiesbought Liabilities inrespect Liabilities relatingto financialinstruments 21. Other liabilities derivativeMovement inshort positionsheldbyclients Shares andvariable-income securities 31 December2006 36186,151 23,671 56654,992 21,493 75,676 111,353 12,737 21,360 60,494 32,739 ,8 3,842 4,084 ,1 4,615 182 2,714 1,555 3,029 1,261 1,320 1,194 - x € 8,4 235,836 383,543 044111,353 60,494 67784,031 96,737 97379,234 89,733 67784,031 96,737 ,0 x 1,000 ,0 4,797 7,004 31 December2005 - € 1,000 exceedthe costs. was Anamount accordingly releasedto income in reducedthe economic asandwhen benefitsare deemedlikelyto durationthe lease, of whichexpires 2010, on1October willbe but period forthe provision which the hasbeenformedto isequal economicto begenerated benefitsexpected the contract. by The rented office space,the wherethe coststhe leasearethan of higher The provision for onerous contracts hasbeenformed of inrespect 31December Balance asat Utilised Released to income 1January Balance asat year were asfollows: The movementsthe provision in for onerous contractsthe during Pensions Onerous contracts 23. Provisions payable. Staff coststhis headinglargely comprise under staff bonuses Total Other Accrued interest Accrued stockexchangetransaction costs and Staff costs This itemcomprises: 22. Accrualsanddeferred income combination. 2007 and2008. For details, further seenote6Business capital ofSyntel dependsonSyntel’s gross margin overthe years the purchasethe share pricerelating of the acquisitionof Part to on demand. the interest payableon which Libor, isat are inprinciplerepayable BinckBank’s sharethird parties. inloannotesissuedby These notes, presentedThe amount in2005underloannotesrefersto the General MeetingofShareholders. and willbepayable afterthe financialstatements adoptionof by 31 December2006 ,9 11,699 2,406 401 8,252 7,993 1,867 1,896 3,783 20 - (102) (103) (210) 9 512 614 199 512 - 512 512 445 246 199 640 447 x € ,0 x 1,000 ,9 11,699 7,993 4 512 445 31 December2005 € 1,000
Annual Report 2006 81 Annual Report 2006 82 eieetae65 1.5% 4.5% table 1994 multipliedby30% GMD Indexation discretionary.the benefitsisnot of withagereduction of2years for table 1995–2000 mortality GBM/V There are noother material assumptions. actuarial 3.85% Retirement age Expected pay rises Expected return onplanassets Discount rate Incapacity risk Life expectancy the above assumptionsusedinmeasuring The actuarial itemswere as follows: the planassetsareNone of heldorusedbyBinckBank. Position 31December asat Acquisition ofSyntel Position 1January asat Plan assets: Position 31December asat Acquisition ofSyntel Position 1January asat obligation: Benefit The movementsthe pensionliabilitieswere in asfollows: Total pension liabilities cost service Unattributed past Unrecognised gainsandlosses actuarial Fair value ofplanassets Present value obligation ofdefinedbenefit Pension liabilities: plan: the definedbenefit of inrespect balance sheet The following provision hasbeenrecognisedthe consolidated in 24. Pension liabilities 31December Balance asat Acquisition ofSyntel 1January Balance asat The movementsthe pensionprovision in were asfollows: expected future rate ofincreasethe rent. in 2006. The discount ratethe this provisionto to isequal applied men and1year for women, before andafter retirement age 31 December2006 246 246 - x € (1,576) ,0 x 1,000 1,576 1,576 1,822 1,822 1,822 246 - - - - 31 December2005 € 1,000 issued on29December2006. to incomebe charged overthis period. total, In 30,820 shares were fulfilled runsfromto 2010. 2007 the arrangement of The cost will the conditionsthis awardperiod inwhich attachedto areto be to agroup ofstaffthe subsidiarySyntel of acquired in 2006. The the formA bonusin ofBinckBankshares was conditionally awarded 2005. in2005. ofperformance respect The expense was recognised in Boardthe Management asavariableof remuneration in element On 3March 2006,total of12,890shares a was grantedto members 296,855, acquired anaverage at purchase priceof 1January2006,As at treasurythe numberof shares heldwas 31 December2006 to SyntelIssued staff Issued to management 1 January2006 measured at the averagemeasured at purchase priceofapproximately treasury sharesthe 253,145 of (asamount year-end at 2006)was to otherreservesthe average at purchase price. The carrying 43,710treasury shares were issued. The issuedshares were charged Treasury shares distributable. The share premium isexempt fromtax andinprinciplefreely Share premium of value AOTStichting Prioriteit owns50priorityshares, eachwithanominal were nomovements insharethe year. capitalduring 2006 was amounts andsold. bought The quotedshare year-end priceasat treasuryThe movement of sharesthe inequityrespect reflects nominal value of total of30,837,403A ordinary shares were inissue, eachwitha Issued share capital 25. Equity € € 0.10. 14.66 (2005: 14.66 € 0.10. The share capitalisfullypaidup. There € 9.15). € 3.78. In2006, € 3.78. ubrAon ubramount Number Amount Number 31 December2006 5,4 96 9,5 (1,121) 296,855 (956) (1,121) 253,145 296,855 (1,121) 296,855 08016-- - - - 116 49 30,820 12,890 x € 08520,855 20,855 12955,246 71,289 ,0 x 1,000 ,8 3,084 3,084 96 (1.121) (956) 31 December2005 € 1,000
Annual Report 2006 83 Annual Report 2006 84 2006. available-for-sale financialassets. There were nosalesin2005 or The reserve comprisesthe fair value gainsand losses, aftertax, on Closing balance Tax onavailable-for-sale onresult financialassets Result onavailable-for-sale financialassets Opening balance (ii) Reserve for unrealised results foreign subsidiaries. differencestranslation arisingon the financialstatements of of The foreign currencytranslation reserve comprises exchange Closing balance Movement Opening balance (i) Foreign currencytranslation reserve reserves (iii)Other Reserve for unrealised results (ii) Foreign currencytranslation reserve (i) These comprise: Other reserves in2006. profit The retained earningsreserve comprisethe unappropriated Closing balance forProfit the year to otherreservesAdded Opening balance Retained earningsreserve 31 December2006 1,0)(2,808) (13,609) 42718,819 19,076 24,297 24,612 13,609 13,609 2,808 24,009 24,009 13,609 69 (494) (475) (19) (649) (441) (494) (494) (649) 8 - 286 237 41 334 237 237 334 7196 97 x € 42718,819 24,297 13,609 24,009 ,0 x 1,000 31 December2005 € 1,000 in 2005or2006. Nooptionswere granted orexpired in2006. related expense isincludedinstaff costs. Nooptionswere exercised trading daysto calculate volatility, andaninterest rate of3%. The valuing options,the sharethe previous whichuses priceson 150 € These optionswere granted in2004,total valuethey hada when of 25,000 shares at 100,000 shares at employees were outstanding: the company granted Boardthe Management and/orto membersof 31December2006,As at the followingto acquire options shares of Share options shareholders withinagroup. in otherreservestransaction between because ofbeinga the remaining2005 of shares ofBinckBelgiëN.V. andisrecognised The acquisitionofaminorityinterest refersthe acquisitionin to The otherreserves are inprinciplefreely distributable. Closing balance Appropriation for ofprofit previous year Payment ofinterim dividend Payment offinaldividend Issue ofsharesto Syntel staff Issue ofsharesto management Rights to shares Acquisition ofminorityinterest Opening balance (iii) Otherreserves 98,000. This valuationthe Black&Scholesformula isbasedon for € € 3.15, expiry date 21December2009. 2.24, expiry date 2007; 10October 31 December2006 46219,076 2,808 24,612 13,609 20,064 19,076 331 (1,832) (1,527) (3,361) (4,889) 16 - (116) 4 263 342 4)- (49) (700) - x € ,0 x 1,000 31 December2005 € 1,000
Annual Report 2006 85 Annual Report 2006 86 sharesto amounting the variable of ofremuneration, element As part stockoption Rights to shares 2007,the closingpriceofBinckBankshares when was published.the 2006results,the caseof In datethat was 26January the dayclosing priceon onwhichBinckBank’s annualresults are the shares concerned are issuedisdeterminedwithreferencethe to committee.the management the membersof to which The priceat an amount of an amount the above ofstockoptionshares,to inrespect In addition amount shares reserve. committeemanagement havetreasury fromthe beendeducted committee on29January2007. the The sharesto issued basis,that 19,508sharesthe management wereto issued making the total amount fortotal amount the to shares rightsmaking these freereservesto of shares inrespect nowamount granted. The related expense isincluded instaff costs. total The to the rightsreserves of inrespect ‘free shares’ havethat been (2005: 2006. Syntel staffthe equity-settled under programme on29December year incontinued service.total of30,820 A shares wasto issued madeavailableamount to eachemployee beingreleased for each employee ofSyntel for aperiodoffour years,the with25%of recognised asanexpense providedthe recipient remains an BinckBank share price(cashsettlement). This bonuswillbe sharesthe (equitysettlement) basedon anamount orincashat arrangement, eachemployeeto bepaideitherinBinckBank opted of 28Syntel employees.this bonus time ofacceptance the At On acquisitionofSyntel, abonusschemewas agreed withagroup Bonus schemefor Syntel staff € 263,000). € 57,000 (2005: € 285,000 (2005: € 132,000) wasto other added € 131,625) have beengranted € 342,000 in2006 € € 14.62. On 188,000, Notes to the consolidatedto Notes income statement Other interest income tradingInterest on portfolio bonds Interest onavailable-for-sale financialassets Interest onheld-to-maturity financialassets Interest oncallmoney Interest onclients’ overdrafts Interest income This itemcomprisesthe following: trading portfolio. expense onoverdraftsthe unlesssuchborrowingto fund isused interest, aswellinterest income balancesorinterest oncredit and borrowing ofmoney, providingthey are ofasimilarnatureto This includesallincome andexpense itemsrelatingthe lending to 26. Interest investments. this itemarethe dividendsreceivedIncluded in fromthe other 27. Income from otherinvestments institutions. credit Other interest expense balancesonaccounts relatesto debit with Other interest expense Interest onprofit-sharing bondloan Interest oncallmoney Interest onfundsentrusted Interest expense institutions. credit Other interest income relates balancesonaccountsto credit with x € 0756,025 10,785 6268,269 16,226 2006 ,0 x 1,000 ,7 661 2,158 3,919 1,472 5,679 7,885 ,4 1,163 4,347 ,4 2,244 5,441 9 576 644 311 493 339 358 7 912 57 112 372 198 524 37 33 € 2005 1,000
Annual Report 2006 87 Annual Report 2006 88 period 18 October 2006 to 31December2006. 2006 period 18October subsidiary Syntel acquiredtherefore in2006and relatesthe to hardware andsoftware. This income was generatedthe by suppliedrelatingthe year ofgoodsandservices to inrespect Other income comprises during third amounts parties to charged 30. Otherincome the liquidation payment received fromthe Association in2005. The distributionfromthe Amsterdam StockExchange Association is exchange andclearingcosts. foreign currencies aswellfundingcosts, dividendsandstock results achievedtransactions insecurities, on derivatives and statement. tradingtransactions on The result portfolio comprises including recognition offair valuethe income gainsandlossesin fairfinancial assetsandliabilitiescarriedat value the overallthis headingis Included under achieved result on Distribution from Amsterdam StockExchange Association Tradingtransaction portfolio results This itemcomprisesthe following: 29. Resultstransactions onfinancial Stock exchange andclearingcosts –professional Stock exchange andclearingcosts –retail Professional services Commission expense Professional services Retail Commission income item canbeanalysedasfollows: transactions andrelated ofsecurities inrespect services.parties The Commission comprises fees for for performed third services andby 28. Commission x € 86111,521 6,598 18,691 34,090 8,695 11,543 25,395 54,492 12,735 41,757 22,569 35,801 2006 ,0 x 1,000 ,0 14,931 15,512 8,208 1,231 8,208 3,692 1,330 5,818 ,0 15,512 8,208 5 - 855 581 - € 2005 1,000 A.M. van Westerloo Ch.J. Langereis J.K. Brouwer C.J.M. Scholtes K.J. Bagijn T.C.V.Schaap A.E. Teeuw ownership ofsharesthe company in 31 December2005are asat asfollows: the remunerationDetails of Boardtheir Board Directorsto Management in2005and andSupervisory paid A.M. van Westerloo member) Board Supervisory Ch.J. Langereis (former J.K. Brouwer C.J.M. Scholtes Boardagement member) A.E. Teeuw (former Man- P. Aartsen K.J. Bagijn T.C.V.Schaap ownership ofsharesthe company in 31December2006are asat asfollows: the remunerationDetails of Boardtheir Board Directorsto Management in2006and andSupervisory paid Remuneration Board Board ofManagement Directors and Supervisory year-endThe numberat 2005: 2006was 223(year-end 170). The average numberofemployees in2006, Board,the Management includingmembersof was 195(2005: 167). Average numberofemployees Other staff costs Rights to shares Social securitycharges Pension contributions sharingandbonuses Profit Wages andsalaries 31. Staff costs lmn lmn otiuinScrt shares Security contribution element element shares Security contribution element element ie aibePninSca BinckBank Social Pension Fixed Variable BinckBank Social Pension Fixed Variable 0 651,013 - - 1,956,502 978,251 - 978,251 12 4 4 4 - 393,392 44 22 - 22 - 102 787 - 269 269 - 337 1,319,392 - 722 211 24 6 659.696 211 659.696 - 300 6 6 6 83 - 103 39 22 742 22 75 203 232 795 232 180 193 211 211 4---651,013 - - - 393,392 - 2024 2731 ------2024 2732 ------x € 51216,612 15,192 16,612 15,192 2006 ,0 x 1,000 ,2 942 639 6,451 7,881 1,223 1,036 3,170 8,865 4 263 436 343 555 € 2005 1,000
Annual Report 2006 89 Annual Report 2006 90 fixed salary spread overtwo years. a bonusequivalentto approximately oneyear’s approved Board,the Supervisory by they for qualify the annualbudgets BoardManagement meet the remunerationthat, is the the members of if the variable of of The principleinrespect element the otheremployees.the majorityof to pensionschemeasapplies same definedbenefit BoardManagement membersare coveredthe by secondary conditions ofemployment. Inprinciple, 2006 remuneration policy. to The sameapplies the remuneration of part package accordingthe to expenses insurance, form donot afundamental Other periodicallypaidbenefits, suchasmedical Board. the sameforthe Management allmembersof number ofBinckBankshares. The remuneration is andconsistingperformance ofabonusand reward for andmedium/long-term their short-term andavariableelement element,the latter beinga BinckBank’s Board Management consists ofafixed remuneration receivedthe membersof by the 2006remunerationUnder policy,the 2006 remuneration policy Board on25January2007.BinckBank Supervisory a periodoffour years. MrLangereis retired fromthe Meeting ofShareholders heldon27March 2006for the General BoardBinckBank Management in wasthe appointedMr Aartsen memberof with MessrsSchaapandBagijnexpire inMay 2008. Board untilSupervisory May 12007. The contracts the Boardthe Management and to of adviser the company’s disposal, continuingthe capacity in agreedto placehisexperience andknowledgeat the endof2005.Board at Mr Teeuw has, however, Mr Teeuw retired fromthe company’s Management 2007. October 10 2004 at anexercise2004 at priceof granted optionson100,000 BinckBankshares in the above,to In addition Mr Teeuw hasbeen € 2.24 expiring on 2006 hasbeen finalisedinaccordancethe with The remuneration Boardthe Management for of Implementation of2006remuneration policy this occurs within fiveif years. be heldfor five yearstermination oruntil ofservice to refundthe incometax paid. The free shares must require Boardthe Management memberconcerned arethree soldwithin years,the company will the company.paid by these shares Ifsomeorallof the bonuspaidinBinckBankshares of willbe part the results forthe year. the The incometax dueon the datethe closingpriceon ofpublicationby of of shares awardedthis basiswillbedetermined on the formpaid in ofstockoptionshares. The number their cashbonus 25% andamaximumof100% Boardthe Management canhaveof aminimumof the 2006remunerationUnder policy,the members rise bymorethan 100%. share dulyheldifearningsperstockoptionshare will beawarded for eachBinckBankstockoption per share risebymorethan 50%andonefree share BinckBank stockoptionshares dulyheldifearnings one free share willbeawarded for everytwo three-year andeach thereafter, period 2005–2007 Accordingthe remunerationto policy, forthe period are achieved. (free shares) may beawarded iflonger-termtargets Additional shares free offinancialconsideration three be heldfor shares years. must least at in BinckBankshares (stockoptionshares). These their cashbonus of to receiveperiod may opt part to staythe companyexpected with for anextended Boardthe Management whoareMembers of of 25%basicsalary. to amaximum members acashbonusamounting may, itsdiscretion, at award Boardthe Management Board’sManagement control, Board the Supervisory for exampleto external circumstances beyondthe the results. fullyachieved, isnot target the If due the bonusifjustifiedby to maximum uplift of25% Board may,Supervisory itsdiscretion, at applya the 2006remunerationUnder policy,the 2006 (2005: per personwasthe incometo charged statement in Messrs SchaapandBagijn, of anamount uplift of25%inrecognitionthe goodresults. of For to award Board decided Supervisory the maximum adopted annualbudget,the the basisofwhich on the achievementthe previouslybeen basedon of the company.by This variable remuneration has 2006. witheffectif hehadbeeninservice from 1January alsoreceived Aartsen variable remuneration as Mr scheme, being morethat normalpractice. pension contributionto adefinedcontribution payment of20%hisannualbasicsalaryas Mr Aartsen, however,to make hasbeendecided a it the otheremployees.the majorityof the caseof In to pensionschemeasapplies same definedbenefit BoardManagement membersare coveredthe by the achievement oflong-termobjectives. The recognised for free shares payablethe future in for remuneration,to amounting ( remuneration awardthe form in ofshares taketheir variableto Board 50%of membersopted Board,the Supervisory the Management eachof remuneration was gross annualsalaryof Boardthe Management Each received memberof a the formin ofacarallowance. their remuneration of part ispaid that This means the company’sto those applying commercial staff. use ofacompany carunderarrangementsto similar their duties,of have MessrsBagijnandAartsen the remuneration policy, exceptthat, giventhe nature € 66,000). this The incometax dueon € 66,000) ofreserves inrespect € 132,000. Inconsultation with € 211,000.variable The € 71,000, willbepaid € 29,000
Annual Report 2006 91 Annual Report 2006 92 Less: repurchased shares (number) Average numberofshares inissue(number) ondiscontinuedProfit operations oncontinuingProfit operations The calculationthe earningspersharethe following: of isbasedon shares. couldthat options diluteearningshadbeenconverted into ordinary wouldhavesharesthat the ordinary share beeninissueifall the yearthe weightedduring average and numberofordinary the weighted averagesum of numberofordinary shares inissue attributableto ordinary shareholders the parent company of the by The dilutedearningspershare are calculatedthe result bydividing year. weighted average numberofordinary sharesthe inissueduring attributableto ordinary shareholders the parent company of the by The basicearningspershare are calculatedthe result bydividing 34. Earnings pershare Total - property, andequipment plant - intangible assets This itemcomprises anddepreciation amortisation on: 33. Depreciation andamortisation directly associatedthe promotion with ofBinckBankproducts. commercials,the marketing expenses alsoincludeothercosts fromthe costs involving ofadvertising Apart radio and TV Total Miscellaneous overheads third contracted parties to Services out Membership fees ICT Provision ofinformation Premises Marketing This itemcomprisesthe following: 32. Otheroperating expenses (14) (15) ,0 1,575 1,161 1,902 1,170 ,8 991 1,192 1,371 1,338 2,392 1,084 1,301 1,342 1,136 3,953 1 381 462 315 458 3 414 732 0505830,540.548 30,837,403 30,540,548 30,837,403 x € 9,5 296,855 296,855 38012,912 23,810 2006 ,0 x 1,000 ,0 1,575 8,127 1,902 9,589 8,127 9,589 .90.45 0.79 9 616 199 € 2005 1,000 Stock option shares issued to management (number) Stock optionsharesto management issued (*): Weighted average numberofshares relatingto shares were apriceof issuedon29January2007at As areward forthe results achieved in2006, 19,508stockoption completionthese financialstatements. of shares were datethe datethe reporting conducted and of between transactions inordinaryNo other shares orpotential ordinary Diluted earningspershare ondiscontinued operations Diluted earningspershare oncontinuing operations Number ofshares usedfor calculation ofdilutedearningspershare Number ofshares potentially fair issuedat value Average fair value Average exercise price Number ofoptionsgranted, yet exercised not but Average numberofordinary shares inissue 35. Diluted earningspershare Earnings pershare ondiscontinued operations Earnings pershare oncontinuing operations (*) For fulldetails, seenote25. The abovetotal numbersdisclosed numbersarethe basedon Dividend onordinary shares: recognised 31December) asaliabilityat (not Proposed for approvalthe General by Meeting ofShareholders Dividend onordinary shares: the year Declared andpaidduring 36. Paid andproposed dividend the earningspershare. dilute not share. The stockoptionshares were fair issuedat value and sodo in note25,the datetaking account of ofdistribution Final dividendfor 2006: Interim dividendfor 2006: Final dividendfor 2005: € € 0.16 (2004: (2004: 0.16 0.29 (2005: € 0.11 (2005: € € 0.05) € 0.16) 0.06) € 14.62 per 14.62 0512830,540,548 30,551,278 0625330,614,190 30,652,533 30,540,548 30,551,278 x € 2,0 125,000 125,000 2,4)(51,358) (23,745) 070- 10,730 2006 ,0 x 1,000 27 5.89 12.75 ,7 4,889 8,875 ,5 3,359 1,832 1,527 8,250 3,361 4,889 .10.02 0.42 0.01 2.42 0.78 0.44 0.45 2.42 0.02 0.43 0.79 0.79 0.01 0.78 € 2005 1,000
Annual Report 2006 93 Annual Report 2006 94 Longerthan five years to fiveOne years than oneyearLess the outstandingliabilitiesisasfollows:The agedanalysisof 2005 to office rents andoperating leasepayments forthe vehicles in2006was approximately operating leasecontracts forthe vehicle forthan five fleet periodsofless years. The combined expense relating The company hasleasesonoffice premisesthe Netherlands, in BelgiumandFrance. hasalsoentered It into 38. Contingent liabilities 2006 Belgium the marketsthe individualrelatedthey and the financialpositionof operate. inwhich of parties assessment (2005: nil). concerningthe needforThe judgement suchprovisions ismadeeachyearthe basisofan on year-end 2006, recognise BinckBankdidnot provisions any baddebt for receivables from associated parties Transactions withrelated are conducted parties oncommercialterms andconditions market andat prices. Asat Netherlands Terms andconditionstransactions withrelated of parties Country Un have Netherlands influence significant The group ofrelated includesassociates Board Board wherethe BinckBankManagement parties andSupervisory Netherlands Netherlands results forthe periodfromthe date ofacquisitiononwards. Netherlands Netherlands up in2007. Syntel was purchased2006. on18October The consolidated financialstatementsthe entire include 2006. ofHillsIndependent The activities Traders Ltd. were soldoff in2006. The companyto bewound isexpected The subsidiariesAOT Facilities B.V. andHoundsIslandLong Term Leasing CV werethe course woundupin of Hills Independent Traders Ltd. Binck BelgiëN.V. Hounds IslandLong Term Leasing CV Stichting Effectengiro Binck Bewaarbedrijf BinckBankB.V. AOT Facilities B.V Syntel Binck SecuritiesB.V. Name The consolidated financialstatementsthe following include BinckBanksubsidiaries: 37. Related disclosures party 5,998 2,299 594 ited Kingdom neetInterest Interest 0%100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% € 100% 100% - - 1.3 million. The segmentationthe followingtables. isshownin those inothercountries.Netherlands and taketransactionsthe separate No placebetween segments. The secondary systemofsegmentation isgeographical,the in beingmadebetween activities withadistinction this information use ofitsactivities. the management BinckBank doesnot directly in Segmentation itemsbetweenRetail ofbalance sheet andProfessional because performed isnot Services proprietarytrading inequitiesandbonds. itemsare onlydisclosedseparatelyThe balancesheet for Trading. acquired subsidiarySyntel ofitsbusinessunit. are aspart alsoreported The Trading engagesin businessunit in andoutside The Netherlands,the administrative includingmuchof effort. the newly of The activities providesbusiness unit professional insecuritiesandderivatives services transactions for professional investors The Retail isabroker businessunit for private clients (mainlyonlinebrokerage). The Professional Services Professional Services. The comparative information figuresthe segment in analyseshave restated accordingly. professional clients formerly grouped underRetail have beenmerged into knownas anewbusinesssegment Trading. With effect from 1January2006,the former of businesssegment to the services Wholesale and the following and businesssegmentsapplied isbasedonactivity are identified: Retail, Professional and Services different risks andgenerates different revenues from othersegments. The primary systemofsegmentation inaspecificeconomicsupplies products orservices area (i.e. ageographical segment) andisexposedto (i.e. eithersuppliesspecificproducts orservices that ofBinckBank abusinesssegment) or isapart A segment 40. information Segment ratioBIS Tear 1capital ownfunds Actual BinckBank capitaladequacyinformation: ownfundsfor actual qualifying 2006have increased significantly compared with2005. the effectthe groupthe mergerto Partly within ofBinckN.V. owing andBinckBankN.V., BinckBank’s The ratio ratio) ownfunds(BIS total actual basedon forthe bankingindustrygenerally is8%. andoff-balance-sheetthe faceassets onthebalancesheet of items. The assetsare weighted accordingto risk. The DutchCentral lays downminimumcapitalstandards. Bank(DNB) BinckBank’s capitaliscompared with Capital adequacy the requirementsthe ListingandIssuing Ruleswith 10inAppendixXof ofEuronext ofArticle N.V., Amsterdam. the opinionofbothBinckBankN.V.In the Board AOT, membersofStichting and Prioriteit the company complies the ListingandIssuingRulesto AppendixXof Disclosure pursuant 39. Otherinformation 28120,933 20,933 62,841 62,841 46 15.5% 24.6% 062005 2006
Annual Report 2006 95 Annual Report 2006 96 Business segmentation Investment assets Liabilities Carrying ofassets amount operations Results oncontinuing 16 Operating before profit tax Total 31 expenses investments 13 ofother Impairment 33 amortisation 32 30 Depreciation and 29 Other operating expenses Staff costs Total revenue Other income transactions Results on financial Commission 28 investments 27 Income from other Interest 26 Geographical segmentation Depreciation andamortisation Investment assets Carrying ofassets amount Total revenue oe20 0520 0520 0520 0520 0520 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 Note 2006 9,5 2,7 5,4 6,0 4,9 8,7 32 55,557549,321443,431 322 62,202548,999387,874 50,441 60,301620,610498,677 1,809 91,771618,801438,376 63,184 498,558 325,672 555,617 346,605 1,3)(,9)(,7)(,8)(,4)(198 2,5)(632 736 526 3,5)(31,528) (34,058) (5,206) (7,306) (26,322) (26,752) (11,948) (7,841) (4,881) (4,974) (9,493) (13,937) 5301,0 280 4 70 ,4 8901,9 25 88029,21518,671 285 3,34328,93017,791 760 540 2,820 25,350 13,908 -35,80122,569 6,08663,27350,199 7,591 - 8,60115,29155,68244,113 5,421 7,794 39,287 23,401 -35,80122,569 - 4,285 5,588 30,213 18,284 106 86 49 43 37 26 192 155 6)(1 192 (1,636) (1,962) (61) (60) (9,210) (1,575) (10,633) (1,902) (20,674) (1,083) (246) (21,394) (1,044) (4,062) (327) (8,127) (6,202) (9,589) (483) (16,612) (2,162) (15,192) (489) (9,532) (1,379) (6,135) (1,267) (846) (3,131) (1,153) (1,086) (3,263) (4,698) (3,949) (7,057) (5,794) ,7 ,1 - 5 ,7 ,7 - -2,6781.575 - 2572,6781,575 - 2,678 1,318 - 10,785 6,025 - 103 10,785 6,025 393 995 9,074 4,9271,318 ealPoesoa rdn Total Trading Professional Retail 6)--()(9 8 (9 (8) (69) - (8) (69) - (8) - (69) 1348,208 15,188 8,208 - 15,512 7,5916,086 15,799 - 21,598 190 855 - - 855 - 855 - - 33 7 - 33 7 - 33 7 Services otne ciiisDsotne Total Discontinued Continued Activities 7,1 3,5 0601776881438,376 618,801 1,717 40,690 436,659 578,111 3024,4 ,1 15,8 44,113 55,682 71 2,610 44,042 53,072 0620 0620 062005 2006 2005 2006 2005 2006 ,6 ,7 641921,575 1,902 1,575 4 2,678 128 36 60 1,571 1,866 1,447 2,618 ehrad te onre Total Othercountries Netherlands 3801,1 19 61624,009 13,528 199 23,810 12,912 510 489 8)(6)(,0)(5,143) (5,206) (264) (86) (4,879) (5,120) Activities such lending to approvedsuch lending counterparties. The credit have forthe level beenset both andduration of clients inindustry,thatto internal limits subject on customeraccountsto banksto fundloans and In addition, BinckBankusesdepositsandbalances incorrectly (operating risk). monitoringprocedurescredit functioning (operatingmalfunctioning the riskof risk)and provided ascollateral,the riskofcomputer the securities the market priceof risk ofachangein time prices. The risksthis form in oflendingarethe automatedthe basisofreal- monitoringofloanson monitoring lending. performs This department isresponsible for department Management the relevantprice of securities. BinckBank’s Risk the liquidityandmarketamounts dependon lent case ofloanscollateralised bysecurities,the naturalthe Netherlands. andlegalpersonsin the In risk islimited.these loansare of providedto Most the collateralthe loansand of provided,the credit as securitiesandbankguarantees. Giventhe nature only ifsecured byreadily marketable collateral such loans andreceivables. These credits are provided BinckBank’s retail involve activities inproviding it Other assets Loans andreceivables Banks weergegeven: maximalekredietrisicotabel ishet In onderstaande risk Maximum credit assets. headings ofbanks, loansandreceivables andother the includedunder the balancesheet the itemsin incur afinancialloss. riskisrelevantThis credit to andconsequentlyinstrument to causeBinckBank failto discharge anobligation relatingthe to and/orinstrument will the instrument the issuerof trading afinancial aparty that the risk riskis Credit risk Credit Financial riskmanagement 1,6 316,887 418,969 124,764 171,113 216,332 164,617 80021,010 38,020 062005 2006 and fundsentrusted. other variable-income securities, otherliabilities receivables, interest-bearing securities, shares and the headingsofbanks,included under loans and the balancesheet to itemsin This riskapplies will beaffected byfluctuations ininterest rates. Interest rate futurethat profitabilitythe risk riskis Interest rate risk exposedto any currency significant risk. internally insuchawaythe company that was not limits. year-end Asat 2006, positionswere hedged remainsthe set within it to ensurein orderthat Committee. The currency positionismonitored daily strategy hasbeenapprovedthat the Risk by trading ofa currencytaken positionis aspart accordance withinternal guidelines, unlessa broking are activities hedgedassoonpossiblein Currency risks relatingthe company’sto trading and liabilities andfundsentrusted. shares andothervariable-income securities, other currency risks: banks, interest-bearing securities, arefollowing exposedthe balancesheet to itemsin because ofchangesinforeign exchange rates. The denominated inaforeign currency willfluctuate the value that Currencythe risk ofanitem riskis Currency risk • Price risk Interest rate risk • • Currency risk Market risk Market risk reconcilingtransactions). positionsand managed bymonitoringsettlements (i.e. by shares andbonds. is this respect The riskin counterparties.transactions arethese of in Most (OTC)transactions. Limitshave for beenset their obligationsdischarge inover-the-counter exposed riskifcounterpartiesto acredit fail to tradingthe caseofits activities,In BinckBankis form reviews. ofperiodiccredit risk resulting from suchlendingismonitoredthe in
Annual Report 2006 97 Annual Report 2006 98 portfolio are listed, fixed-interest arethat bonds government bonds. tradingthe The bondsin the prevailingof interest 10-year rates on coupon every beingreset three the basis months on interest have indefinitematurities,the interest with available for saleclassified ashaving variable 31December2006.at the portfolio The bondsin as the shareincludes premiumto beamortised still the fixed-interestto maturityof bonds held matures. the maturity date at The carryingamount having fixed interest isfixedthe instrument until The interest onfinancialinstruments classifiedas following table. interest rate riskuponmaturity arethe shownin BinckBank’s financialinstruments exposedto an 31December2006of asat The carryingamount Summary ofinterest andrepayment maturities periodically. the interest couponson which are adjusted spread ofdiffering maturities andincludesbonds limits.set The portfolio alsocontains abalanced company are alignedandmaintained withincertain interestthe periodsonamounts placedwithandby affectsthat byensuring itsbankingactivities BinckBank manages this risk tothe extent that it Bonds available for sale Effective interest rate to maturityBonds held Fixed interest Asset Bonds available for sale Variable interest tradingBonds in portfolio Effective interest rate Bonds in tradingBonds in portfolio Profit-sharing bonds Liabilities Interest-bearing securities ihn12233445Mr Total More 4-5 3-4 2-3 1-2 Within 136428412443436-48,445 - 4,326 4,433 4,122 4,258 31,306 2624915045595101,2 67,828 14,422 5,130 5,559 5,084 4,971 32,662 eryasyasyasyasthan years years years years 1 year .3 .5 .5 .6 .2 3.17% - 3.72% 3.26% 3.35% 2.85% 3.13% ,5 1 6 ,2 0 ,7 10,336 5,375 804 1,126 962 713 1,356 ------9)(9)(,0)-(,9)(4,084) (2,093) - (1,202) (693) (96) (1,320) - - monitored by the Risk Management department. monitoredthe RiskManagement by up aninternal systemoflimits, whichare price riskstrading inits portfolio, BinckBankhasset and results ofBinckBank.the to manage Inorder tradingthe portfolio and,therefore, the equity on and derivatives have effectthe value adirect on of Fluctuations in interest rates andpricesofsecurities portfolio ofshares, bondsandderivatives. BinckBank’strading hasa trading meanit activities variable-income securitiesandotherliabilities. interest-bearing securities, shares andother the headingsof includedunder balance sheet and derivatives. This riskrelatesthe to itemsin interest ratesthe market pricesofsecurities and willfluctuate ofchangesin asaresult instrument the value that the risk ofafinancial Price riskis Price risk months. instruments allhavethreethan maturities shorter note 21. Otherinterest-bearing financial bonds pay asdetailedin variable interest of0–15%, effective interest rate isgiven. The profit-sharing heldasinvestments,not nocalculationthe of BinckBank’strading portfolio.these bondsare Since normally heldforthan onemonth in periodsofless ---- 5 years .9 4.09% 4.09% ,3 1,337 1,337 ,1 7,710 7,710 (1,320) the presented deltaposition. effect onBinckBank’s of resultsthen one percent is positions.between fundsandlong short The instrument,taking fullaccount ofcorrelation while to apercentagethe underlying sensitivity changein the portfolio’s positionindicatesthe extent of net neutralthe gross includedin position. are not The positions.long andshort Positions arethat risk- account ofmutualcorrelation betweenfundsand the underlyinginstrument,taking any without portfolio’sto apercentage sensitivity increase in The grossthe positionindicatesthe extent of position Net Gross position tradingthe portfolio)thousands ofeuros: in the derivativesDelta positionof of portfolio (part percentagethe relevant in point interest rate. € end 2006was anegative ofapproximately amount the valuefluctuation in year-the portfolio asat of satisfying limits. internally set The forecast possible BinckBank invests onlyinfixed-interest securities the issuersofbonds. of the creditworthiness fluctuate ofchangesininterest asaresult rates and Board.Management The valuethe portfolio can of this portfolio arethe holdings in determinedby while othersare investments available for sale). The (some ofwhichare heldasinvestmentsto maturity, BinckBank hasaportfolio offixed-interest securities securities. require it, asamarket maker,to purchase orsell BinckBank’strading sometimesalso activities Board.the responsiblethe Management memberof to includes compulsory onalloccasions reporting immediately ifany limitsare exceeded. This also trading strategies.takes RiskManagement action existing positionsandlimitsproposals for new and approvethe systemoflimits, the risks in The RiskCommitteeto discuss meetsperiodically 550,000 for eachabsoluteincrease byone 1,191 (385) managed. itsliquidityriskismonitoredensurethat and taken being intowith allactivities account,to soas The company determinesitsliquiditypositiondaily, the levels offundsplacedwithit. the companyThis enables to absorbfluctuations in are limitedandare mainlyintraday orovernight. to otherparties placed withBinckBankare out lent The periodsfor balances which depositsandcredit clients’ accounts. reduction balancesonretail indepositsandcredit to retailhigh amounts oflending clients anda transactions forof securities institutionalclients, tradingof maximum positions, incorrect settlement the event, in a riskofliquiditydeficit for example, banksthe group. outside there mean is Itsactivities was ample. facility alsohasacredit It available at BinckBank’s year-end liquiditypositionasat 2006 balance sheet. the to allassetsandliabilities in applies inprinciple disproportionate costs and/or losses. This risk term payment commitments incurring without company itsshort- to meet weretime any unableat to BinckBank’sthreat equityandresultsthe if the riskofacurrent andfutureLiquidity riskis Liquidity risk
Annual Report 2006 99 Annual Report 2006 100 givesthe following analysisoffinancialassets: available-for-sale financialassets. This classification maturity investments, asloansandreceivables oras fairat valuethrough orloss, profit asheld-to- designated asfinancialassetsorliabilities In accordance withIAS39, financialinstruments are instruments recognised inBinckBank’s financial andfairThe carryingamount value ofallfinancial Fair value Financial instruments Available-for-sale financialassets Loans andreceivables Held-to-maturity investments Financial fair assetsat valuethrough orloss profit Other liabilities ofsecurities Liabilities inrespect Funds entrusted Financial liabilities Totaal Other assets Other investments Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Financial assets the basisofmarket interest rates. andotherfinancialassetsis calculated on parties interest rates. The fair valueto other ofloans the expected futureof cashflowsthe prevailing at loans isdeterminedbycalculatingthe present value assets isbasedonmarket prices. The fair value of The fair value oflistedavailable-for-sale financial table: as available for sale, are comparedthe following in statements, includingassetsandliabilitiesclassified 8,4 3,3 8,4 235,836 383,543 235,836 383,543 120,656 100,613 124,764 120,656 171,113 216,332 100,613 164,617 124,764 171,113 216,332 164,617 3,7 2,2 3,1 426,744 534,010 426,423 533,770 9,1 8,4 9,7 487,754 592,975 379,852 487,743 500,346 593,111 379,852 500,346 487,754 592,975 487,743 593,111 arigaon Fair value Carrying amount arigaon Fair value Carrying amount 9737,3 99379,555 89.973 111,353 60,494 79,234 111,353 89,733 60,494 21,010 38,020 42,438 21,010 67,692 38,020 42,427 67,828 8452,3 83921,144 78,617 48,309 35,273 21,133 78,617 48,445 35,273 0620 062005 2006 2005 2006 0620 062005 2006 2005 2006 ,7 ,8 ,7 7,685 5,672 7,685 5,672 ,4 ,4 ,4 8,141 9,047 8,141 9,047 98 988 29 88 29 (before appropriation ofprofit) Company balancesheet qiy t s q r o Other reserves Unappropriated profit Treasury shares p Share premium Share capital l Equity: m Provisions Accruals anddeferred income n Other liabilities j ofsecurities Liabilities inrespect Funds entrusted k Equity andliabilities h i Total assets d Prepayments c andaccruedincome f Other assets e Tax Property, andequipment plant g Intangible assets Investments insubsidiaries Other investments Shares andothervariable-income securities Interest-bearing securities Loans andreceivables Banks Cash Assets Total equityandliabilities oe31December2006 Note 8,4 235,837 383,543 42718,819 13,609 20,855 24,297 24,009 20,855 64,915 21,360 81,732 32,739 ,8 3,084 3,601 3,084 4,703 96 (1,121) (956) 9 512 199 x € 7,0 381,471 574,205 124,764 129,265 216,332 154,652 0,1 326,225 502,916 7,0 381,471 574,205 0455,350 1,048 20,415 19,460 54,992 10,141 29,274 22,639 75,676 57,492 12955,246 71,289 ,0 x 1,000 ,4 3,011 4,870 1,664 4,143 4,786 2,228 7,685 5,672 988 29 31 December2005 € 1,000
Annual Report 2006 101 Annual Report 2006 102 Company income statement Profit forProfit the year Other results (aftertax) Results ofsubsidiaries(aftertax) x € 40913,609 10,406 24,009 18,807 2006 ,0 x 1,000 ,0 3,203 5,202 € 2005 1,000 Company statement ofchanges inequity 31 December2006 reserves Retained earnings transferred to other Payment ofbonusshares Payment ofstockoptionshares to sharesRights granted Payment ofinterim dividend Payment offinaldividend Total income andexpense forProfit the year Results recognised inequity directly Gains andlossesonexchange assets ofavailable-for-saleImpairment financial 31 December2005 reserves Retained earnings transferred to other Acquisition ofminorityinterest to sharesRights granted Payment ofinterim dividend Payment offinaldividend Total income andexpense forProfit the year Results recognised inequity directly Gains andlossesonexchange assets ofavailable-for-saleImpairment financial 1 January2005 oeIse hr rauyUapo te Total Other Unappro- Treasury Share Issued Note 516-(1)- 116- (116) - - 49 - (49) - 25 342 25 342 - (3,361) - 25 (4,889) (3,361) (4,889) 36 36 - (155) 97 - 97 (155) 25 11 (700) - (700) - 263 25 263 - (1,832) - 25 (1,527) (1,832) (1,527) 36 36 - (475) 196 - 196 (475) 25 11 aia rftand profit capital ,8 085 96 24,00924,29771,289 (956) 3,084 20,855 13,60918,81955,246 (1,121) 3,084 20,855 2,80820,08645,712 (1,121) 3,084 20,855 hr rmu hrspitdrsre equity reserves priated shares premium share - 13,609- (13,609) - 23,951 (58) 24,009 - (58) - (58) 24,009 - 24,009 - 2,808- (2,808) - 13,609 13,330 - (279) (279) - 13,609 - (279) 13,609 earnings retained
Annual Report 2006 103 Notes to the company financial statements
a. General Amsterdam,
Company information Management Board: Supervisory Board: T.C.V. Schaap C.J.M. Scholtes The General Meeting of Shareholders passed a K.J. Bagijn J.K. Brouwer resolution on 12 October 2006 approving a merger P. Aartsen A.M. van Westerloo of Binck N.V. and BinckBank N.V., with BinckBank N.V. being absorbed into Binck N.V. On the same date, the shareholders passed a resolution changing Presentation of the financial statements the name of Binck N.V. to BinckBank N.V. The The company financial statements have been financial information of the amalgamated company prepared on the basis of the requirements included has been included in the financial statements of in Part 9 of Book 2 of the Netherlands Civil Code BinckBank N.V. with effect from 1 January 2006. and application of the accounting policies (IFRS) applied in the consolidated financial statements. As a consequence of the merger, the comparative The balance sheet is presented in accordance with figures for 2005 have been restated. The 2005 Format K for financial institutions. In accordance company figures for the former company Binck N.V. with the provisions of Article 2:402 of the (present name BinckBank N.V.) and the Netherlands Civil Code, the company income amalgamated company BinckBank N.V. have been statement shows only the share in results of combined into a new set of company figures for associates after tax and other profit after tax. BinckBank N.V. The merger does not affect the 104 assets, equity and liabilities and results in the figures for 2005. b. Accounting policies
BinckBank N.V. is a company established and the General Netherlands with its domicile in Amsterdam, whose Details of the accounting policies can be found in shares are publicly traded. BinckBank N.V. provides the notes to the consolidated financial statements conventional and internet broking services in and, unless otherwise stated, apply equally to the securities and derivative transactions for private company financial statements. and professional investors. Through its subsidiary Binck Securities B.V., the company also trades in Investments in associates shares and bonds on a proprietary basis. The The investments in group companies are recognised subsidiary Syntel Beheer B.V. specialises in at net asset value. The reporting dates of these developing software for financial institutions for companies are the same and the accounting processing and keeping account of securities policies applied to their financial reporting are in transactions. In the following pages, the name accordance with those applied by BinckBank for ‘BinckBank’ will be used to refer to BinckBank N.V. similar transactions and events in similar Annual Report 2006 and its various subsidiaries. circumstances.
BinckBank’s company financial statements for the year ended 31 December 2006 have been prepared by the company’s Management Board and approved for publication pursuant to a formal decision taken by the Management Board and the Supervisory Board on 1 March 2007. The financial statements for 2006 will be adopted at the General Meeting of Shareholders to be held on 19 April 2007. Notes to the companyto Notes balancesheet Receivables optionpositions from ofshort clients inrespect Receivables collateralised bybankguarantees Receivables collateralised bysecurities Public loan sector Other loansandreceivables: Private callmoney sector Cash equivalents: The analysisisasfollows: securities andbankguarantees. including overnight loansandoverdrafts arethat collateralised by This itemcomprises receivables from private clients, sector e. Loans andreceivables Euribor. Interest isreceived avariablethese balancesat on rate basedon three months. The callmoney receivables have originalmaturitiesthan ofless Call money balancesavailableCredit ondemand The itemcomprises: the bankregulators by supervised heldinaccountsbusiness activities institutions withcredit This itemincludesallcashandequivalents relatingthe to d. Banks offices. demand fromthe central banks incountries where BinckBankhas coins inforeign currency, andany balancesavailable credit on tender,This itemincludesallcashinlegal includingbanknotesand c. Cash Assets Dutch municipalauthoritymaturing in2008. The otherreceivables than 3 months.of less loanconcernsto a The publicsector aloan The receivables relatingto cashequivalents have originalmaturities 31 December2006 3,4 78,132 132,641 129,265 119,800 154,652 109,000 27921,360 32,739 9,465 45,652 ,5 772 - 3,952 5,000 x € 1,3 124,764 216,332 129,265 154,652 1,3 124,764 100,264 216,332 174,332 20024,500 42,000 ,0 x 1,000 ,7 7,685 5,672 31 December2005 € 1,000
Annual Report 2006 105 Annual Report 2006 106 assets was soldin2006. tax effectthis impairment.the account of of Asin2005,the noneof € amounting to 2012. In2006, fair valuethe available-to-sale losseson assets with specifiedmaturitythis portfolio are in duefor redemption in the prevailing interest 10-year rate ongovernment bonds. The bonds unspecified maturity isrevised everythree the basisof months on the available-to-saleIn portfolio,the interest rate the bondswith on measuredcost the effective using interest method. requirements. The held-to-maturity amortised portfolio iscarriedat to coverthe above All securitiesare margin listedandusedinpart Other bondswithspecifiedmaturity Other bondswithunspecifiedmaturity Available for sale Government bonds Held to maturity This itemcomprises: f. Interest-bearing securities off in2006, asin2005,thousand euros.than one to less amounted € As at 31December2006,As at provisions baddebt of optionpositionsheldbyclients Movement inshort Movement inreceivables collateralised bybankguarantees Movement inreceivables collateralised bysecurities Movement loan inpublicsector Movement incallmoney Position 1January asat Movementsthe year during were asfollows: receivables underloansandreceivables isbasedonEuribor. have unspecifiedmaturities. The interest rateto applying 475,000). takesto equity chargedThe calculationthe amount of 17,500)this item. were charged against baddebtswritten Actual € 155,000 were recognised directly inequity(2005: € 16,000 (2005: 31 December2006 1,3 124,764 216,332 62,386 124,764 74229,274 21,133 57,492 48,445 1398,955 41,409 12,250 11,379 54,509 17,500 ,3 - 8,141 1,337 7,710 ,8 (236) - 3,180 5,000 x € 74229,274 57,492 ,0 x 1,000 31 December2005 € 1,000 Island Long Term Leasing CV werethe course woundupin of2006. were discontinued. The subsidiariesAOT Facilities B.V. andPounds the subsidiaryHills Independent of the activities and Traders Ltd. an interest of100%. In2006, a100%interest was acquired inSyntel The majorityinterest inBinckBelgiëN.V. was increasedto in2005 Position 31December asat Exchange differences andothermovements Results forthe year to minorityshareholdersDistribution Dividends andcapitalrefunds Disposals anddissolutions Capital increases andacquisitions Position 1January asat Movementsthe year during were asfollows: i. Investments insubsidiaries 2006. remaining 15%interest inD&O Vermogensbeheer B.V. was soldin In 2005,the 6.25%interest in Trader Team Ltd was sold. The € of Inmaxxa B.V.,the recognitionto leading lossof ofanimpairment has resultedthe interests indilutionof the existing of shareholders measure offair value isavailable. The advent ofnewshareholders andmarketthe lowerofcost value carried at sincenoreliable 2006) representing intereststhan 5%. ofless These investments are Inmaxxa B.V. (formerly Triple AssetsB.V.) andLPECapital (acquired in The otherinvestments concern investmentsthe share in capitalof Other investments 31December asat Purchase Sale Impairment Other investments 1January asat h. Otherinvestments clients. held inBinckBank’s nameforthe relevantthe account andriskof This itemconcerns longoptionpositionsheldfor clients, whichare g. Shares andothervariable-income securities 69,000 ofInmaxxa B.V. inrespect 31 December2006 26919,460 22,639 19,220 19,460 351 (2,740) (1,569) (3,541) (1,029) ,0 3,203 1,643 5,202 2,450 6)- (69) 7403 97 88 - 102 29 14 88 4 (14) (4) (700) - x € 26919,460 22,639 54,992 75,676 ,0 x 1,000 988 29 31 December2005 € 1,000
Annual Report 2006 107 Annual Report 2006 108 identifiable net assetsoveridentifiable ofSyntel. net the acquisitioncost Goodwill relatesthe excessto the fair of value ofSyntel’s Carrying 31December asat amount Cumulative amortisation Cost 31 December2005 Carrying 31December asat amount Amortisation Investments Carrying 1January asat amount The movements in2005were asfollows: Carrying 31December asat amount Cumulative amortisation Cost 31 December2006 Carrying 31December asat amount Amortisation Investments Carrying 1January asat amount The movements in2006were asfollows: j. Intangible assets otaeAst rmSoftware Assetsfrom Software Total Goodwill Software 199 (1,919) - (1,919) (2,644) - (2,644) ,4 1,048 2,967 - 1,048 - - 1,048 2,967 10,141 1,048 12,785 10,141 8,881 1,048 8,881 8,881 1,260 - 3,904 1,260 1,048 43 (413) - (413) (703) - (703) 1 819 642 - - 819 642 9,796 8,881 915 31 December2006 acquisition x € 0111,048 10,141 ,0 x 1,000 31 December2005 € 1,000 The movements in2005were asfollows: Carrying 31December asat amount Cumulative depreciation andimpairment Cost 31 December2006 Carrying 31December asat amount Depreciation Additions Carrying 1January asat amount The movements in2006were asfollows: k. Property, andequipment plant Carrying 31December asat amount Cumulative depreciation andimpairment Cost 31 December2005 Carrying 31December asat amount Depreciation Additions Carrying 1January asat amount itrsadCmue te Total Other Computer Fixtures and itrsadCmue te Total Other Computer Fixtures and qimn hardware equipment qimn hardware equipment 428 251 1 (6,810) (1) (2,591) (4,218) 370 199 (5,719) - (1,949) (3,770) ,2 ,0 89,038 18 4,300 4,720 ,1 ,7 7,383 - 2,125 2,871 - 4,512 925 1,200 42 62 1 (1,115) (1) (642) (472) 62 55 (1,197) - (525) (672) 0 ,0 72,228 17 2,228 1,709 1,679 1,664 17 502 18 - 1,709 1,429 922 502 232 742 4 2 1,664 - 1,664 736 922 - - 742 922 522 742 214 31 December2006 x € ,0 x 1,000 ,2 1,664 2,228 31 December2005 € 1,000
Annual Report 2006 109 Annual Report 2006 110 This item comprises the short derivativeThis itemcomprisesthe short positionsheldbyclients. p. ofsecurities Liabilitiesinrespect accounts This itemcomprises clients’ balancesoncashormargin credit o. Funds entrusted Equity andliabilities Prepaid expenses Commission receivable Interest receivable This itemcomprises: n. Prepayments andaccruedincome Other receivables Trade receivables Receivables relatingto securitiessold, yet delivered not but Licences andpermits Loans andreceivables Other assetshave maturitiesthan oneyear ofless andcomprise: m. Otherassets due. tax actually of the amount theythan areto behigher expected the assessedamounts have2005 and2006 beenpaidalthough Provisional corporationtax assessments have beenreceived for tax lossforthe 2004. relatesthe carrybackof to tax asset The l. Tax 31 December2006 0455,350 20,415 9043,506 19,094 ,4 3,011 4,143 ,7 1,741 2,872 ,3 1,490 1,136 7 910 360 572 699 8 208 185 146 - x € 8,4 235,837 383,543 27921,360 32,739 0455,350 20,415 ,0 x 1,000 ,4 3,011 4,143 ,8 4,870 4,786 31 December2005 € 1,000 Liabilities to clients forLiabilities longderivative positionsheld yet delivered not but ofsecuritiesbought Liabilities inrespect Liabilities relatingto financialinstruments: q. Otherliabilities 2007 and2008. capital ofSyntel dependsonSyntel’s gross margin overthe years the purchasethe share pricerelating of the acquisitionof Part to on demand. the interest payableon which Libor, isat are inprinciple repayable BinckBank’s sharethird parties. inloannotesissuedby These notes, presentedThe amount in2005underloannotesrefersto statementsthe General by Meeting ofShareholders. (Q4 ’05: 3.75%), and willbepayable afterthe financial adoptionof forthe result year.that in The interest forto 15% 2006amounts interest payablethe endofeachyear iscalculated at andrecognised BinckBank’s andvarying profit net between0%and15%. The agreed,the interest rate with payable on beingdependent the fullcalendaryear. Aschedulefor interest payments hasbeen BinckBank’s andat lent the amount of only inrespect disposalfor to receiveentitled year.that of interest inrespect Interest ispaid the calendaryear,the loanisdemandedduring the lenders are not penalty. noticeandwithout and demandedwithout Ifrepayment of to 31December2008.2005 Repaymentthe loanmay of bemade hasamaturitythree of yearsIt three and months from 1October The profit-sharing bondisaloanprovided byagroup ofemployees. Total dueafter >1year Loan notes Profit-sharing bond Due after >1year: Total duein<1year Other the purchase pricefor of Part Syntel stillpayable Tax andsocialsecuritycontributions Other liabilities(due in<1year): 31 December2006 56654,992 75,676 ,2 1,555 - 1,657 1,320 1,276 3,029 3 180 431 5,337 - 1,194 - x € 17264,915 81,732 56660,329 75,676 17264,915 81,732 ,0 x 1,000 ,2 2,749 1,837 1,320 4,736 31 December2005 € 1,000
Annual Report 2006 111 31 December 2006 31 December 2005 x € 1,000 x € 1,000
r. Accruals and deferred income 4,703 3,601
This item comprises: Staff costs 1,440 1,378 Accrued stock exchange and transaction costs 310 184 Accrued interest 1,896 428 Commission 460 864 Other 597 747
Total 4,703 3,601
s. Provisions 199 512
The movements in the provision for onerous contracts during the year were as follows:
Balance as at 1 January 512 614 Released to income (210) - Utilised (103) (102) 112 Balance as at 31 December 199 512
The provision for onerous contracts has been formed in respect of rented office space, where the costs of the lease are higher than the economic benefits expected to be generated by the contract. The period for which the provision has been formed is equal to the duration of the lease, which expires on 1 October 2010, but will be reduced as and when the economic benefits are deemed likely to exceed the costs. The discount rate applied to this provision is equal to the expected future rate of increase in the rent.
t. Equity 71,289 55,246
Issued share capital 3,084 3,084
A total of 30,837,403 ordinary shares were in issue, each with a nominal value of € 0.10. The share capital is fully paid up. There were no movements in share capital during the year. Annual Report 2006
Stichting Prioriteit AOT owns 50 priority shares, each with a nominal value of € 0.10.
Share premium 20,855 20,855
The share premium is exempt from tax and in principle freely distributable. profit in2006 profit The retained earnings reserve comprisesthe unappropriated Closing balance forProfit the year to otherreservesAdded Opening balance Retained earningsreserve were issuedon29December2006. to incomewill becharged overthis period. total, In 30,820 shares to befulfilledrunsfromto 2010. 2007 the arrangement of The cost 2006. the conditionsthis awardThe periodinwhich attachedto are awardedto agroup ofstaffthe subsidiarySyntel of acquired in 2005.the form Abonusin ofBinckBankshares was conditionally in2005. ofperformance respect The expense was recognised in Boardthe Management asavariableof remuneration in element On 3March 2006,total of12,890shares a was grantedto members 296,855, acquired anaverage at purchase priceof 1January2006,As at treasurythe numberof shares heldwas Closing balance to SyntelIssued staff Issued to management Opening balance measured at the averagemeasured at purchase priceofapproximately treasury sharesthe 253,145 of (asamount year-end at 2006)was to otherreservesthe average at purchase price. The carrying 43,710treasury shares were issued. The issuedshares were charged Treasury shares 2006 was amounts andsold. bought The quotedshare year-end priceasat treasuryThe movement of sharesthe inequityrespect reflects € 14.66 (2005: 14.66 € 9.15). € 3.78. In2006, € 3.78. ubrAon uvrAmount Numver Amount Number 31 December2006 5,4 96 9,5 (1,121) 296,855 (956) (1,121) 253,145 296,855 (1,121) 296,855 1,0)(2,808) (13,609) 40913,609 13,609 2,808 24,009 24,009 13,609 08016-- - - - 116 49 30,820 12,890 0620 052005 2005 2006 2006 x € 40913,609 24,009 ,0 x 1,000 96 (1,121) (956) 31 December2005 € 1,000
Annual Report 2006 113 31 December 2006 31 December 2005 x € 1,000 x € 1,000
Other reserves 24,297 18,819
These comprise: (i) Foreign currency translation reserve 334 237 (ii) Reserve for unrealised results (649) (494) (iii) Other reserves 24,612 19,076
24,297 18,819
(i) Foreign currency translation reserve
Opening balance 237 41 Movement 97 196
Closing balance 334 237
The foreign currency translation reserve comprises exchange differences arising on translation of the financial statements of foreign subsidiaries. 114 (ii) Reserve for unrealised results
Opening balance (494) (19) Result on available-for-sale financial assets (441) (475) Tax on result on available-for-sale financial assets 286 -
Closing balance (649) (494)
The reserve comprises the fair value gains and losses, after tax, on available-for-sale financial assets. The net loss is tax-deductible. There were no sales in 2005 or 2006. Annual Report 2006 consolidated financialstatements. the bonusschemefor Syntel staff,the to seenote25 Forthe optionrights, detailsof to shares rights and shareholders withinagroup. transaction between because ofbeinga België N.V. andisrecognised inotherreserves the remainingacquisition in2005of shares ofBinck The acquisitionofaminorityinterest refersthe to The otherreserves are inprinciplefreely distributable. Closing balance Appropriation for ofprofit previous year Payment ofinterim dividend Payment offinaldividend Issue ofsharesto Syntel staff Issue ofsharesto management Rights to shares Acquisition ofminorityinterest Opening balance (iii) Otherreserves 31 December2006 46219,076 2,808 24,612 13,609 20,064 19,076 331 (1,832) (1,527) (3,361) (4,889) 16 - (116) 4 263 342 4)- (49) (700) - x € ,0 x 1,000 31 December2005 € 1,000
Annual Report 2006 115 Other information
To: The General Meeting of Shareholders of An audit involves performing procedures to obtain BinckBank N.V. audit evidence about the amounts and disclosures in the financial statements. The procedures selected Auditors’ Report depend on the auditor’s judgment, including the assessment of the risks of material misstatement of Report on the financial statements the financial statements, whether due to fraud or We have audited the financial statements of error. In making those risk assessments, the auditor BinckBank N.V., Amsterdam, for the year 2006 (as considers internal control relevant to the entity’s set out on pages 54 to 115). The financial statements preparation and fair presentation of the financial consist of the consolidated financial statements statements in order to design audit procedures that and the company financial statements. The are appropriate in the circumstances, but not for consolidated financial statements comprise the the purpose of expressing an opinion on the consolidated balance sheet as at 31 December 2006, effectiveness of the entity’s internal control. An income statement, statement of changes in equity audit also includes evaluating the appropriateness and cash flow statement for the year then ended, of accounting policies used and the reasonableness and a summary of significant accounting policies of accounting estimates made by management, as and other explanatory notes. The company financial well as evaluating the overall presentation of the statements comprise the company balance sheet as financial statements. at 31 December 2006, the company income 116 statement for the year then ended and the notes. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a Management’s responsibility basis for our audit opinion. Management is responsible for the preparation and fair presentation of the financial statements in Opinion with respect to the consolidated financial accordance with International Financial Reporting statements Standards as adopted by the European Union and In our opinion, the consolidated financial with Part 9 of Book 2 of the Netherlands Civil Code, statements give a true and fair view of the financial and for the preparation of the management board position of BinckBank N.V. as at 31 December 2006, report in accordance with Part 9 of Book 2 of the and of its result and its cash flows for the year then Netherlands Civil Code. This responsibility includes: ended in accordance with International Financial designing, implementing and maintaining internal Reporting Standards as adopted by the European control relevant to the preparation and fair Union and with Part 9 of Book 2 of the Netherlands presentation of the financial statements that are Civil Code. free from material misstatement, whether due to fraud or error; selecting and applying appropriate Opinion with respect to the company financial Annual Report 2006 accounting policies; and making accounting statements estimates that are reasonable in the circumstances. In our opinion, the company financial statements give a true and fair view of the financial position of Auditor’s responsibility BinckBank N.V. as at 31 December 2006, and of its Our responsibility is to express an opinion on the result for the year then ended in accordance with financial statements based on our audit. We Part 9 of Book 2 of the Netherlands Civil Code. conducted our audit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. signed byN.G.D. Warmer for & Ernst Young Accountants Amsterdam, 1March 2007 the NetherlandsCivilCode. financial statements sub4of asrequired by2:391 the isconsistent board with management report the extent ofourcompetence,the that the NetherlandsCivilCode, eof part wereport,to sub5 the legalrequirementPursuantto under2:393 onotherlegalandregulatory requirementsReport
Annual Report 2006 117 Provisions of the Articles of Association providing it demonstrates in the form of an in respect of priority shares (Articles 15 interim statement of assets and liabilities as and 21) referred to Section 105, subsection 4, Book 2, of the Netherlands Civil Code that it complies with The rights attached to the priority shares include subsection 1 above and subject to the prior the right to make non-binding nominations for consent of the foundation. The distributions appointment to the company’s Supervisory Board referred to in this subsection may be made in and Management Board, and to take various other cash, in shares in the company’s equity or in actions. The priority shares are held by Stichting marketable rights thereto. Prioriteit AOT, Amsterdam. This foundation’s Board, 6. The General Meeting of Shareholders may which consists of three members, is appointed by resolve to declare that distributions on shares the Supervisory Board and Management Board of other than interim distributions as referred in the company. subsection 5 of this Article (whether at the shareholders’ discretion or otherwise) may, The Board members of Stichting Prioriteit AOT are: instead of being made in cash, be made fully or C.J.M. Scholtes partly (whether at the shareholders’ discretion J.K. Brouwer or otherwise) in: T.C.V. Schaap a. ordinary shares (which will, if desired and possible, be charged to the share premium 118 Provisions of the Articles of reserve) or marketable rights to ordinary Association in respect of appropriation shares, or of profit (Article 32) b. equity instruments of the company or marketable rights. 1. The company may only make distributions to A resolution as referred to in the previous the shareholders if the company’s equity sentence may only be passed after being exceeds its issued and paid-up share capital proposed by the Management Board and plus the reserves required to be held by law or approved by the Supervisory Board. A proposal by the Articles of Association. to pass a resolution as referred to in b will be 2. Firstly – and only insofar as profits allow – an submitted only after consultation with amount equal to 6% (six per cent) of the Euronext Amsterdam N.V. nominal value of the priority shares will be 7. No distribution will be made to the company in distributed on these shares. respect of shares it holds in its own capital or 3. The foundation will determine the extent to on shares for which the company holds which the remaining profits will be transferred depositary receipts. to reserves. Profits remaining after application 8. The calculation of the profit distributable on Annual Report 2006 of subsection 2 and the first sentence of this shares will disregard shares that are not subsection will be at the disposal of the eligible, pursuant to subsection 7, for such General Meeting of Shareholders. Any amounts distribution. not distributed will be transferred to the 9. Once a resolution to make a distribution has company’s reserves. been passed, the amount will be declared 4. Withdrawals from distributable reserves may payable within fourteen days. An entitlement to be made pursuant to a resolution by the receive a distribution will lapse five years after General Meeting of Shareholders, subject to the the date on which the amount is declared prior consent of the foundation. payable, and the said amount will then revert 5. The Management Board may resolve to allow to the company. the company to make interim distributions, dividend of This proposal is not reflected in the balancesheet. reflectedThis proposal in isnot disposal shareholders’ At 2006 for paid dividend Interim Less: reserves other to Transferred Less: 2006 in Profit appropriationThe profit then beasfollows: will € the formthis in ofafinaldividend to distribute the General MeetingofShareholders. isproposed It of2006.respect the disposalof The remainder isat of an amount AOTStichting Prioriteit hasproposedtransferring result Proposal for appropriationthe of 0.29 perordinary share. € 0.11 pershare hasalready beenpaidin € 11,773,000to reserves. Aninterim 11,773 24,009 8,875 3,361
Annual Report 2006 119 Annual Report 2006 120 BinckBank N.V. Vijzelstraat 20 1017 HK Amsterdam The Netherlands
Correspondence address P.O. Box 15536 1001 NA Amsterdam The Netherlands
Tel: +31 (0)20 606 26 66 Fax: +31 (0)20 320 41 76
Internet: www.binck.com
BinckBank N.V., established in Amsterdam and entered in the Trade Register of the Amsterdam Chamber of Commerce under no. 33 16 22 23.
Investor Relations Tel: +31 (0)20 522 03 72 Email: [email protected]
Colophon
Coordination and production Imprima (Nederland) bv
Photography Eveline Renaud, Amsterdam BinckBank N.V. Vijzelstraat 20 1017 HK Amsterdam The Netherlands
P.O. Box 15536 1001 NA Amsterdam The Netherlands
T +31 (0)20 606 26 66 F +31 (0)20 320 41 76 E [email protected] I www.binck.com