2017 - unicredit factoring s.r.o.unicredit factoring • 2017 annual report 3. table of contents...

www.unicreditfactoring.cz

Annual Report

2017

UniCreditBank•Výročnízpráva2016 1

UniCreditFactoring•2017AnnualReport 3

Table of contents

Introduction from the Board of DirectorsUniCredit Factoring Czech Republic and Slovakia, a.s. 4

Independent Auditor’s Report 6

Financial statements for the Year Ended 31 December 2017 8Balancesheetfullversionasof31.12.17 9 Profitandlossaccountstructuredbythenatureofexpensemethodyearended31.12.17 11Statementofchangesinequityyearended31.12.17 12Cashflowstatementyearended31.12.17 13NotestotheFinancialStatementsfortheyearended31.12.17 14

Report on Relations 27Organisational chart of the UniCredit Group 30

4 2017AnnualReport•UniCreditFactoring

Dear Shareholders, Ladies and Gentlemen,We have completed another year of operation under the UniCredit brand and I believe that we can see this year as positive in terms of our factoring activities and the achieved results.

After 2015 and 2016, the years of transformation and stabilisation, we were able to start developing our business strategy based on the already implemented processes and rules. Under the leadership of the new business director, the Company completely changed and expanded its team of advisors focusing on active sale of the Company’s products both in the Czech Republic and Slovakia. As part of our efforts to be closer to our clients in the regions, we decided to apply a decentralised model of our coverage, which increased the clients’ comfort thanks to the territorial and time fl exibility of our advisors.

A parallel step concerned the integration of the strengthened customer care department under the business section, since we perceive the development of relations, expansion of customer portfolios and the resulting increase of the necessary fi nancing for our clients as an important part of our business direction.

It remains true that our primary sales channels are the advisors from the corporate division of UniCredit Bank. The achieved increase in the number of new clients then indicates that this close cooperation with the parent company works perfectly.

2017 was another economically strong year for the Czech Republic and Slovakia and it essentially continued the trend of excess of liquidity in the economy, with many companies not having to opt

UniCredit Factoring recorded a year-on-year turnover increase of 55% to CZK 22.606 billion in total.

Jiří Flégl Chairman of the Board of Directors UniCredit Factoring Czech Republic and Slovakia, a.s.

Introduction by the Chairman of the Board of Directors


for fi nancing from external sources. And if theychose to take this step, thanks to their better fi nancial position many companies had access to a simpler form of bank fi nancing that had been out of their reach in the past. Despite this handicap, the Czech factoring market managed to increase the total turnover of receivables by 19% year-on-year after two years of a decline. UniCredit Factoring certainly contributed to this very good result, since it recorded a year-on-year turnover increase of 55% to CZK 22.606 billion in total. The best results in this area were achieved in the last quarter of 2017 with the average turnover of CZK 2.179 billion per month. Domestic factoring played as usual the most important role, with a volume of CZK 12.296 billion. It is gratifying that our import factoring product maintained its leading position on the market with a total share of more than 75%. Another positive fact is the increase of our market share on the overall turnover to 14.5% from the original 11.1% in 2016.

This result was naturally due to the expansion of the client portfolio, which grew by 65% compared to 2016. This had an impact on the total volume of fi nancing provided to our clients, which increased during 2017 from CZK 1.488 billion to CZK 2.247 billion and the threshold of CZK 2.5 billion was passed shortly before the end of the year. The year-on-year increase is 51%.

The strengthening of the client base, a higher volume of fi nancing and the Company’s turnover were also refl ected in the dynamic increase of income, both from interest and from fees, of 55% year-on-year. The Company was able to maintain its operating expenses below the planned budget, which in conjunction with the achieved income and the lower creation of provisions compared to the expectations meant that the gross operating profi t of 2017 amounted to CZK 41.052 million, which represents a 159% increase compared to 2016. The Company’s resulting profi t after tax for the period amounts to CZK 20.400 million, representing more than double the amount of 2016.

Aside from fulfi lling the Company’s business strategy, we devoted signifi cant efforts and energy to the prepared project of construction of new IT infrastructure and implementation of the new version of our business system Aquarius. The complex and technically challenging project was completed in December 2017 with a positive result and with no negative impact on our clients. The current version of the system with new technology will additionally allow us to expand our product portfolio to include a module allowing automatic connection of the supplier chain with a signifi cant customer, i.e. reverse factoring.

Going forward we would like to continue presenting the factoring product as a modern tool for fi nancing, mitigation of the risk of customer default, collection and administration of receivables, while at the same time disproving the cliché that factoring is a fi nancing tool only for the least creditworthy companies.

We would have been unable to achieve the very good results and meet our goals in 2017 without our employees, who contribute to the creation of the Company’s value. I would like to thank them and express my hope that they will continue to do so in the following years.

In Prague on 2 February 2018

Jiří FléglChairman of the Board of Directors UniCredit

Factoring Czech Republic and Slovakia, a.s.

Jiří Flégl

Independent Auditor’s Report



Financial statements

fortheYearEnded31December2017

NameoftheCompany: UniCredit Factoring Czech Republic and Slovakia, a.s.RegisteredOffice: Želetavská 1525/1, 140 00 Prague 4 – MichleLegalStatus: Joint Stock CompanyCorporateID: 152 72 028

Components of the Financial Statements: BalanceSheetProfitandLossAccountStatementofChangesinEquityCashFlowStatementNotestotheFinancialStatements

Thesefinancialstatementswerepreparedon1March2018.

JiříFléglChairmanoftheBoardofDirectors

ZdeněkBílýMemberoftheBoardofDirectors

ChairmanoftheBoardofDirectors

ZdeněkBílý


Balancesheetfullversionasof31.12.17

31. 12. 17 31. 12. 16(in CZK thousand) Gross Adjustment Net Net TOTAL ASSETS 3 463 670 136 293 3 327 378 2 517 191B. Fixed assets 45 551 37 798 7 753 9 210B.I. Intangiblefixedassets 38925 33539 5386 7625B.I.1. Researchanddevelopment

B.I.2. Valuablerights 38925 33539 5386 7625

B.I.2.1. Software 38925 33539 5386 7625

B.II. Tangiblefixedassets 6626 4260 2366 1585B.II.1. Landandstructures 642 491 151 157

B.II.1.2. Structures 642 491 151 157

B.II.2. Tangiblemovableassetsandsetsoftangiblemovableassets 5338 3768 1570 783

B.II.3. Valuationdifferenceonacquiredassets

B.II.4. Othertangiblefixedassets 645 645 645

B.II.4.3. Othertangiblefixedassets 645 645 645

C. Current assets 3 417 177 98 494 3 318 683 2 506 504C.II. Receivables 3417064 98494 3318570 2501692C.II.2. Short-termreceivables 3417064 98494 3318570 2501692C.II.2.1. Tradereceivables 3417044 98494 3318550 2501678

C.II.2.4. Receivables–other 19 19 14

C.II.2.4.4. Short-termprepaymentsmade 19 19 14

C.II.2.4.6. Sundryreceivables 1 1

C.IV. Cash 114 114 4812C.IV.1. Cashonhand 114 114 130

C.IV.2. Cashatbank 4682

D. Other assets 942 942 1 477D.1. Deferredexpenses 942 942 1477


Balancesheetfullversionasof31.12.17

(in CZK thousand) 31. 12. 17 31. 12. 16 TOTAL LIABILITIES & EQUITY 3 327 378 2 517 191A. Equity 254 987 234 588A.I. Sharecapital 222600 222600A.I.1. Sharecapital 222600 222600

A.III. Fundsfromprofit 19952A.III.1. Otherreservefunds 19952

A.IV. Retainedearnings(+/–) 11988 –18066A.IV.1. Accumulatedprofitsbroughtforward 11988

A.IV.2. Accumulatedlossesbroughtforward(–) –18066

A.V. Profitorlossforthecurrentperiod(+/–) 20400 10101B.+C. Liabilities 3 072 391 2 282 603B. Reserves 3 206 4 715B.II. Incometaxreserve 3206 837

B.IV. Otherreserves 3878

C. Payables 3 069 184 2 277 888C.II. Short-termpayables 3069184 2277888C.II.2. Payablestocreditinstitutions 1886617 1167242

C.II.4. Tradepayables 1177454 1101252

C.II.8. Otherpayables 5114 9394

C.II.8.3. Payablestoemployees 724 636

C.II.8.4. Socialsecurityandhealthinsurancepayables 480 349

C.II.8.5. State-taxpayablesandsubsidies 603 772

C.II.8.6. Estimatedpayables 3306 7636


Profitandlossaccountstructuredbythenatureofexpensemethodyearended31.12.17

Year ended Year ended(in CZK thousand) 31. 12. 17 31. 12. 16I. Salesofproductsandservices 47711 36886

A. Purchasedconsumablesandservices 13809 15993

A.2. Consumedmaterialandenergy 764 672

A.3. Services 13045 15320

D. Staffcosts 18221 16226

D.1. Payrollcosts 10049 9642

D.2. Socialsecurityandhealthinsurancecostsandothercharges 8172 6584

D.2.1. Socialsecurityandhealthinsurancecosts 4418 3935

D.2.2. Othercharges 3754 2649

E. Adjustmentstovaluesinoperatingactivities 14628 –5532

E.1. Adjustmentstovaluesofintangibleandtangiblefixedassets 3940 4827

E.1.1. Adjustmentstovaluesofintangibleandtangiblefixedassets–permanent 3940 4827

E.3. Adjustmentstovaluesofreceivables 10688 –10359

III. Otheroperatingincome 9 12

III.1. Salesoffixedassets 12

III.3. Sundryoperatingincome 9

F. Otheroperatingexpenses 3462 16628

F.3. Taxesandcharges –173 –189

F.4. Reservesrelatingtooperatingactivitiesandcomplexdeferredexpenses –3878

F.5. Sundryoperatingexpenses 7513 16817

* Operating profit or loss (+/–) –2 400 –6 416VI. Interestincomeandsimilarincome 33955 24281

VI.2. Otherinterestincomeandsimilarincome 33955 24281

J. Interestexpensesandsimilarexpenses 2193 1228

J.1. Interestexpensesandsimilarexpenses–controlledorcontrollingentity 1413 455

J.2. Otherinterestexpensesandsimilarexpenses 781 773

VII. Otherfinancialincome 224581 21074

K. Otherfinancialexpenses 225810 23543

* Financial profit or loss (+/–) 30 533 20 584** Profit or loss before tax (+/–) 28 133 14 168L. Incometax 7733 4067

L.1. Dueincometax 7733 4067

** Profit or loss net of tax (+/–) 20 400 10 101*** Profit or loss for the current period (+/–) 20 400 10 101* Netturnoverforthecurrentperiod 306256 82254


Statementofchangesinequityyearended31.12.17

Share Capital Funds Accumulated Accumulated Profit Total capital funds from profits losses or loss for Equity profit, brought brought the current reserve forward forward period (in CZK thousand) fund Balance at 31 December 2015 222 600 19 952 10 798 –28 864 224 486Distributionofprofitorloss –10798 –18066 28864

Profitorlossforthecurrentperiod 10101 10101

Balance at 31 December 2016 222 600 19 952 –18 066 10 101 234 587Distributionofprofitorloss –19952 11988 18066 –10101 1

Profitorlossforthecurrentperiod 20400 20400

Balance at 31 December 2017 222 600 11 988 20 400 254 988

Cashflowstatementyearended31.12.17

Year ended Year ended(in CZK thousand) 31. 12. 17 31. 12. 16P. Opening balance of cash and cash equivalents –150 114 –75 810 Cashflowsfromordinaryactivities(operatingactivities) Z. Profitorlossbeforetax 28133 14168

A.1. Adjustmentsfornon-cashtransactions –16500 –16791

A.1.1. Depreciationoffixedassets 6172 16797

A.1.2. Changeinprovisionsandreserves 9179 –10554

A.1.3. Profit/(loss)onthesaleoffixedassets –12

A.1.5. Interestexpenseandinterestincome –31851 –23022

A.* Net operating cash flow before changes in working capital 11 633 –2 623A.2. Changeinworkingcapital –757147 –593620

A.2.1. Changeinoperatingreceivablesandotherassets –829262 –675890

A.2.2. Changeinoperatingpayablesandotherliabilities 72115 82270

A.** Net cash flow from operations before tax –745 514 –596 243A.3. Interestpaid –2104 –1259

A.4. Interestreceived 33955 24281

A.5. Incometaxpaidfromordinaryoperations –7927 –4261

A.*** Net operating cash flows –721 591 –577 482 Cashflowsfrominvestingactivities B.1. Fixedassetsexpenditures –2483 –131

B.2. Proceedsfromfixedassetssold 12

B.*** Net investment cash flows –2 483 –119 Cashflowfromfinancialactivities C.1. Changeinpayablesfromfinancing 713388 503297

C.*** Net financial cash flows 713 388 503 297F. Net increase or decrease in cash and cash equivalents –10 685 –74 304R. Closingbalanceofcashandcashequivalents –160799 –150114


Notes to the Financial Statements

Table of contents

1. General Information ............................................................................................................................................................. 21 1.1 IncorporationandDescriptionoftheBusiness.......................................................................................................................... 21 1.2. GroupIdentification................................................................................................................................................................ 21 1.3. BoardofDirectorsandSupervisoryBoard................................................................................................................................ 21 1.4. OrganisationalStructureasof31December2017................................................................................................................... 212. Basis of Accounting and General Accounting Principles ...................................................................................................... 213. Summary of Significant Accounting Policies ....................................................................................................................... 21 3.1. TangibleFixedAssets............................................................................................................................................................. 21 3.2. IntangibleFixedAssets........................................................................................................................................................... 22 3.3. Receivables........................................................................................................................................................................... 22 3.4. TradePayables....................................................................................................................................................................... 22 3.5. Loans.................................................................................................................................................................................... 23 3.6. Reserves............................................................................................................................................................................... 23 3.7. ForeignCurrencyTranslation................................................................................................................................................... 23 3.8. Taxation................................................................................................................................................................................. 23 3.8.1. CurrentTaxPayable............................................................................................................................................................... 23 3.8.2. DeferredTax.......................................................................................................................................................................... 23 3.9. RevenueRecognition.............................................................................................................................................................. 23 3.10. UseofEstimates.................................................................................................................................................................... 23 3.11. CashFlowStatement.............................................................................................................................................................. 244. Additional Information on the Balance Sheet and Profit and Loss Account ......................................................................... 24 4.1. FixedAssets........................................................................................................................................................................... 24 4.1.1. IntangibleFixedAssets........................................................................................................................................................... 24 4.2. TangibleFixedAssets............................................................................................................................................................. 25 4.3. Receivables........................................................................................................................................................................... 25 4.3.1. IntercompanyReceivables....................................................................................................................................................... 26 4.4. DeferredExpenses................................................................................................................................................................. 26 4.5. Equity.................................................................................................................................................................................... 26 4.6. Reserves............................................................................................................................................................................... 27 4.7. Payables................................................................................................................................................................................ 27 4.7.1. PayablestoRelatedParties..................................................................................................................................................... 27 4.8. BankLoans............................................................................................................................................................................ 27 4.8.1. Long-TermBankLoans.......................................................................................................................................................... 27 4.9. IncomeTaxation..................................................................................................................................................................... 28 4.9.1. DeferredTaxation................................................................................................................................................................... 28 4.9.2. IncomeTaxCharge(Credit)..................................................................................................................................................... 28 4.10. DueAmountsarisingfromSocialSecurityandHealthInsuranceContributionsandTaxArrears.................................................... 29 4.11. DetailsofIncomebyPrincipalActivity...................................................................................................................................... 29 4.11.1. RelatedPartyTransactions...................................................................................................................................................... 29 4.12. ConsumedPurchases............................................................................................................................................................. 29 4.13. Services................................................................................................................................................................................ 30 4.14. RemunerationtotheStatutoryAuditFirm................................................................................................................................. 30 4.15. DepreciationofIntangibleandTangibleFixedAssets................................................................................................................. 30 4.16. OtherOperatingExpenses....................................................................................................................................................... 30 4.17. OtherFinancialIncome........................................................................................................................................................... 31 4.18. OtherFinancialExpenses........................................................................................................................................................ 315. Employees, Management and Statutory Bodies .................................................................................................................. 31 5.1. StaffCostsandNumberofEmployees..................................................................................................................................... 316. Research and Development Activities .................................................................................................................................. 317. Environmental Impacts of the Company’s Activities ............................................................................................................ 318. Organisational Branches Abroad .......................................................................................................................................... 329. Post Balance Sheet Events .................................................................................................................................................. 32

fortheYearEnded31.12.17



1. General Information

1.1. Incorporation and Description of the Business UniCreditFactoringCzechRepublicandSlovakia,a.s.(hereinafterthe“Company”)wasformedbyaFounder’sDeedasajointstockcompanyon21January1991andwasincorporatedfollowingitsregistrationintheRegisterofCompaniesheldbytheCourtinPragueon5April1991.TheprincipalactivitiesoftheCompanyincludeprovidingoperatingfundsthroughthefactoringofdomesticandforeignreceivables.TheCompanyisengagedinthefinancing,collectingandsecuringofshort-termreceivablesheldbyclientsfromvariousindustries.

UntiltheendofMay2015,theCompanyoperatedontheCzechmarketunderthenameofTRANSFINANCE a.s.ThesoleshareholderisUniCreditBankCzechRepublicandSlovakia,a.s.,Prague4.

TheCompany’sissuedsharecapitalisCZK222,600thousand.

Thefollowingtableshowsindividualsandlegalentitieswithanequityinterestgreaterthan20percentandtheamountoftheirequityinterest:

Shareholder Ownership percentageUniCreditBankCzechRepublicandSlovakia,a.s.,CorporateIDNo.:64948242Želetavská1525/1,14092Prague4–Michle 100%

1.2. Group Identification FollowingthecompletionoftheacquisitiononthepartofUniCreditBankCzechRepublicandSlovakia,a.s.in2015,theCompanybecamepartoftheprominentUniCreditfinancialgroup.

TheCompany’sfinancialstatementsareincludedintheconsolidationgroupofUniCreditBankCzechRepublicandSlovakia,a.s.,havingitsregisteredofficeatŽeletavská1525/1,14092Prague4,andintheconsolidationgroupofUniCreditS.p.A.,havingitsregisteredofficeatViaAlessandroSpecchi16,00186Rome,Italy.

1.3. Board of Directors and Supervisory Board

Position Name Board of Directors Chairman JiříFlégl Member ZdeněkBílýSupervisory Board Chairman DavidGrund ViceChairman AlešBarabas Member JosefVondrka Member RolandViskupič

On14February2017,AlešBarabaswasappointedanewmemberoftheSupervisoryBoard,replacingGregorPeterHofstätter-Pobst.Subsequently,on24February2017,AlešBarabaswaselectedVice-ChairmanoftheSupervisoryBoard.

1.4. Organisational Structure as of 31 December 2017TheCompanyisorganisedintofivedepartments,theheadsofwhichreportdirectlytotheCompany’sBoardofDirectors.

2. Basis of Accounting and General Accounting Principles

TheCompany’saccountingbooksandrecordsaremaintainedandthefinancialstatementswerepreparedonthehistoricalcostvaluationbasisinaccordancewiththeAccountingAct563/1991Coll.,asamended;theRegulation500/2002Coll.whichprovidesimplementationguidanceoncertainprovisionsoftheAccountingActforreportingentitiesthatarebusinessesmaintainingdouble-entryaccountingrecords,asamended;andCzechAccountingStandardsforBusinesses,asamended.

ThesefinancialstatementsarepresentedinthousandsofCzechcrowns(‘CZK’).

3. Summary of Significant Accounting Policies

3.1. Tangible Fixed Assets TangiblefixedassetsincludeassetswithanestimatedusefullifegreaterthanoneyearandanacquisitioncostgreaterthanCZK40thousandonanindividualbasis.

Purchasedtangiblefixedassetsareinitiallyrecognisedatcostwhichincludesthecostofacquisitionandthecostsrelatedtotheacquisition.

Board of DirectorsJiříFlégl–ChairmanoftheBoardofDirectorsZdeněkBílý–MemberoftheBoardofDirectors

Finance and administrationOlgaPavlíčková–ChiefFinancialOfficer

Sales

Client ManagementPetraNěmcová–HeadofDepartment

OperationsRenátaŠašková–ChiefOperatingOfficer

Receivables Administration Department MartinaJežková–HeadofDepartment

Data Administration DepartmentMarkétaMatoušková–HeadofDepartment


ThecostoffixedassetimprovementsexceedingCZK40thousandforthetaxationperiodincreasestheacquisitioncostoftherelatedtangiblefixedasset.

Depreciationischargedsoastowriteoffthecostoftangiblefixedassets,otherthanlandandassetsunderconstruction,overtheirestimatedusefullives,usingthestraightlinemethod,onthefollowingbasis:

Depreciation method Number of yearsBuildings straightline 50Machinery,devicesandequipment straightline 3–10Vehicles straightline 5

Ifthecarryingamountofanassetisgreaterthantheestimatedrecoverableamount,thecarryingamountiswrittendowntotherecoverableamountthroughtherecognitionofaprovision.Therecoverableamountisdeterminedonthebasisofexpectedfuturecashflowsgeneratedfromtherelevantasset.

TheCompanydoesnotholdanyassetsunderfinanceleases.

Technicalimprovementsontangiblefixedassetsaredepreciatedonastraightlinebasistogetherwiththeoriginalimprovedasset.

Technicalimprovementsontangiblefixedassetsheldunderaleasearedepreciatedonastraightlinebasisinaccordancewiththedepreciationofthebuildingperformedbytheowner.

Thegainorlossarisingonthedisposalorretirementofanassetisdeterminedasthedifferencebetweenthesalesproceedsandthenetbookvalueoftheassetatthesaledateandisrecognisedthroughtheprofitandlossaccount.

Thecostsofrepairsandmaintenanceoftangiblefixedassetsareexpensedasincurred.

3.2. Intangible Fixed AssetsIntangiblefixedassetsincludeassetswithanestimatedusefullifegreaterthanoneyearandanacquisitioncostgreaterthanCZK60thousandonanindividualbasis.

Purchasedintangiblefixedassetsarestatedatcostwhichincludesthecostofacquisitionandthecostsrelatedtotheacquisition.

ThecostoffixedassetimprovementsexceedinganaggregateamountofCZK60thousandforthetaxationperiodincreasestheacquisitioncostoftherelatedintangiblefixedassetandisdepreciatedtogetherwiththeoriginalimprovedasset.

Amortisationofintangiblefixedassetsisrecordedonastraightlinebasisovertheirestimatedusefullivesasfollows:

Amortisation method Number of yearsSoftware straightline 3–8

Ifthecarryingamountofanassetisgreaterthantheestimatedrecoverableamount,thecarryingamountiswrittendowntotherecoverableamountthroughtherecognitionofaprovision.

3.3. ReceivablesFactoringrepresentsthepurchaseofshort-termreceivablesatnominalvaluesthatoriginatedonthebasisofsuppliesofgoodsorservicesmadebyasuppliertoacustomerandarenotpasttheirduedates.Thefactoringcompanypaysthesupplierapartofthepurchaseprice(‘prefinancing’).ReceivablesfrompurchasedreceivablesarereportedintheCompany’sbalancesheetas‘Tradereceivables’.PayablesfrompurchasedreceivablesarereportedintheCompany’sbalancesheetas‘Tradepayables’.Oncethecustomermakesthepayment,theremainingpartofthepurchasepriceispaidtothesupplier.

Inreturnforitsservices,thefactoringcompanycollectsafeefortheprovidedprefinancingandinterest.SeeNote3.9RevenueRecognitionformoredetails.

ProvisioningTaxdeductibleprovisionsagainstreceivablesarecreatedinlinewiththecurrentwordingoftheProvisioningAct.

Increatingnon-taxdeductibleprovisions,thetreatmentappliedbytheCompanyinvolvesquantifyingtheanticipatedlossesonthevalueofthefundsprovidedtoclientsbasedonthetestingofpotentialimpairmentwhiletakingintoaccounttheratingsoftheclientanditscustomers,withtheratingsassignedbyUniCreditBankCzechRepublicandSlovakia,a.s.

TheCompanycreatestaxdeductibleprovisionsagainst:•Receivableswithoutthedebtor’sdefault•Receivableswiththedebtor’sdefault

Provisionsagainstreceivableswithoutthedebtor’sdefaultarerecognisedapplyingtheportfolioapproachbasedonthe“incurredloss”conceptusingtheIBNRcalculation(IncurredButNotReported).

Withrespecttoreceivableswiththedebtor’sdefault,theCompanycreatesspecificprovisionsbasedonanindividualassessmentofeachcase.

TheCompanyassesseswhethertherecognisedprovisionsaresufficientandappropriateonamonthlybasisandadjuststheirlevelasandwhenneeded.

3.4. Trade PayablesTradepayablesarestatedattheirnominalvalue.


3.5. LoansLoansarestatedattheirnominalvalue.

Theportionoflong-termloansmaturingwithinoneyearfromthebalancesheetdateisincludedinshort-termloans.

Interestonshort-termloansisdueretroactivelyasofthelastdateofeachinterestperiod.Theinterestperiodforshort-termloansisthesameperiodasthatforwhichtheloanswereobtained.Ifmonthsoverlapwithintheperiod,interestisaccruedandrecognisedintheprofitorlossfortheperiod.

3.6. ReservesReservesareintendedtocoverfuturerisksandexpenditure,thenatureofwhichisclearlydefinedandwhicharelikelytobeincurred,butwhichareuncertainastotheamountorthedateonwhichtheywillarise.

TheCompanyrecognisesareservewhenithasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andareliableestimatecanbemadeoftheamountoftheobligation.

3.7. Foreign Currency TranslationAccountingoperationsdenominatedinforeigncurrenciesperformedduringtheyeararetranslatedusingafixedexchangeratesetasof1Januaryvalidfortheentirereportingperiod.Atthebalancesheetdate,therelevantassetsandliabilitiesaretranslatedattheCzechNationalBank’sexchangerateprevailingasofthatdate.

Realisedaswellasunrealisedforeigncurrencytranslationgainsandlossesarereportedinfinancialincomeorfinancialexpensesforthecurrentperiod.

Sinceasubstantialpartofreceivablesisinforeigncurrencies,provisionsagainstreceivablesmayalsogenerateforeignexchangetranslationgainsandlosses.

3.8. Taxation

3.8.1.CurrentTaxPayableManagementoftheCompanyhasrecognisedataxpayableandataxchargebasedonitstaxcalculationwhichfollowsfromitsunderstandingoftheinterpretationofCzechtaxlegislationvalidatthefinancialstatementsdateandbelievesthattheamountoftaxiscorrectincompliancewiththeeffectiveCzechtaxregulations.Sincevariousinterpretationsoftaxlawsandregulationsbythirdparties,includingstateadministrativebodies,exist,theincometaxpayablereportedintheCompany’sfinancialstatementsmaychangebasedontheultimateopinionofthetaxauthorities.

3.8.2.DeferredTaxDeferredtaxisaccountedforusingthebalancesheetliabilitymethod.

Thecarryingamountofdeferredtaxassetsisreviewedatthebalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartoftheassettoberecovered.

Deferredtaxassetsandliabilitiesareoffsetandreportedonanaggregatenetbasisinthebalancesheet,exceptwhenpartialtaxassetscannotbeoffsetagainstpartialtaxliabilities.

3.9. Revenue RecognitionRevenueismeasuredatthevalueoftheconsiderationreceivedorreceivableandrepresentsamountsreceivableforgoodsandservicesprovidedinthenormalcourseofbusiness,netofdiscounts,valueaddedtaxandothersalesrelatedtaxes.

TheCompany’sprincipalsourcesofrevenueare:feefortheassignmentofreceivablesandfactoringinterest.

Thefeecomprisestwobasiccomponents–theriskcomponentandthecostcomponent.Theriskcomponentrepresentsthefactoringcompany’sremunerationfortakingoncreditriskandisprincipallyaffectedbythecustomers’financialhealthandpaymentdiscipline.Indeterminingthecostcomponent,otherfactorsaretakenintoaccount,suchasthecostsincurredinkeepingtherecordsofreceivables,thecostofconductingthedunningprocess,informationservices,assistanceinthecomplaintshandlingprocedure,othercostsinvolvedinblockingthefundsrequiredtofinancethereceivables.Thecurrentcostisbasedonthespecificamountofturnover,numberandcreditworthinessofcustomersetc.Itisrecognisedinrevenueasofthelastdayofthecalendarmonth.Itisreportedas‘Salesofownproductsandservices’.

Thefactoringinterest,theabsoluteamountofwhichdependsontheamountofprefinancingmadeandthelengthofthetimeperiodbetweentheprovisionofpartofthepurchasepriceandcollectionofthepaymentfromthecustomer,isrecognisedinrevenueasofthelastdayofthecalendarmonth.Itisreportedas‘Salesofownproductsandservices’.

3.10. Use of Estimates Thepresentationoffinancialstatementsrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesatthebalancesheetdateandthereportedamountsofrevenuesandexpensesduringthereportingperiod.ManagementoftheCompanyhasmadetheseestimatesandassumptionsonthebasisofalltherelevantinformationavailabletoit.Nevertheless,pursuanttothenatureofestimates,theactualresultsandoutcomesinthefuturemaydifferfromtheseestimates.


3.11. Cash Flow Statement Thecashflowstatementispreparedusingtheindirectmethod.Cashequivalentsincludecurrentliquidassetseasilyconvertibleintocashinanamountagreedinadvance.

Cashandcashequivalentsdisclosedinthecashflowstatementinclude:

(CZK ‘000) 31 Dec 2017 31 Dec 2016Cashonhand 24 8Stampsandvouchers 90 122Cashatbankandcashintransit 0 4682Overdraftbalancesofcurrentaccountsincludedincurrentbankloans –160913 –154926Total cash and cash equivalents –160 799 –150 114

Cashflowsfromoperating,investmentandfinancialactivitiespresentedinthecashflowstatementarenotoffset.

TheCompanymaintainsoverdraftfacilitieswithdomesticbankinstitutions.TheCompanyutilisesloanstofundtherequirementsmadeitsclientsbymeansoftranchesaswellasoperativelyuptothetotalamountoftheloanfacilityusingtheoverdraftfacilitieswhicharereportedinthebalancesheetaspartofbankloans.

4. Additional Information on the Balance Sheet and Profit and Loss Account

4.1. Fixed Assets

4.1.1.IntangibleFixedAssets

Cost

(CZK ‘000) Balance at Additions Disposals Balance at Additions Disposals Balance at 31 Dec 2015 31 Dec 2016 31 Dec 2017Software 41205 0 –2567 38638 886 –599 38925Total 41 205 0 –2 567 38 638 886 –599 38 925

AccumulatedAmortisation

(CZK ‘000) Balance at Additions Disposals Balance at Additions Disposals Balance at 31 Dec 2015 31 Dec 2016 31 Dec 2017Software 29234 4346 –2567 31013 3125 –599 33539Total 29 234 4 346 –2 567 31 013 3 125 –599 33 539

NetBookValue

(CZK ‘000) Balance at Balance at 31 Dec 2016 31 Dec 2017Software 7625 5386Total 7 625 5 386

TheadditionstointangibleFArepresenttechnicalimprovementontheAquariussoftware.Thedisposalsrepresentthedisposalofsoftwareandlicencesto2010servers.TheintangibleFAbalancecomprisestheAquariussoftware.


4.2. Tangible Fixed Assets

Cost

(CZK ‘000) Balance at Additions Disposals Balance at Additions Disposals Balance at 31 Dec 2015 31 Dec 2016 31 Dec 2017Buildings 642 0 0 642 0 0 642Individualtangiblemovableassets –Machineryandequipment 1201 130 0 1331 1596 –898 2029 –Vehicles 3100 0 0 3100 0 0 3100 –Furnitureandfixtures 209 0 0 209 0 0 209Worksofart 645 0 0 645 0 0 645Total 5 798 130 0 5 928 1 596 –898 6 626

AccumulatedDepreciation

(CZK ‘000) Balance at Additions Disposals Balance at Additions Disposals Balance at 31 Dec 2015 31 Dec 2016 31 Dec 2017Buildings 482 3 0 485 6 0 491Individualtangiblemovableassets –Machineryandequipment 1199 14 0 1213 347 –898 662 –Vehicles 1971 464 0 2435 462 0 2897 –Furnitureandfixtures 209 0 0 209 0 0 209Total 3 861 481 0 4 342 816 –898 4 260

NetBookValue

(CZK ‘000) Balance at Balance at 31 Dec 2016 31 Dec 2017Buildings 157 151Individualtangiblemovableassets –Machineryandequipment 117 1367 –Vehicles 665 203Worksofart 645 645Total 1 584 2 366

Theadditiontomachineryandequipmentrepresentstheacquisitionofthe2017serversolution.Thedisposalrepresentsthedisposalofthe2010serversolution.

Intheyearsended31December2017and2016,theCompanyacquiredtangibleassetsthatwereexpensedasincurredintheamountsofCZK234thousandandCZK173thousand,respectively.Theassetsrepresentlowvaluetangibleassetscomprisingothermovableassetsandsetsofmovableassetswithanestimatedusefullifegreaterthanoneyearnotreportedinfixedassets.Theassetsarerecognisedasinventoryandchargedonanindividualbasisdirectlytoexpenses.

4.3. Receivables

(CZK ‘000) 31 Dec 2017 31 Dec 2016Receivablesfromfactoringactivitiesandfromtheassignmentofreceivables Beforeduedate 2940995 2274937 Pastduedate 476049 314548 Total trade receivables 3 417 044 2 589 485Otherreceivables Beforeduedate 1 0Short-termprepaymentsmade 19 14Total other receivables 20 14 Provisionsagainstdoubtfulreceivables –98494 –87807Total net book value of receivables 3 318 570 2 501 692


Intheyearsended31December2017and2016,theCompanycreatedprovisionsagainstreceivablesregardedasdoubtfulbasedontheestimateofindividualcasesintermsofriskandanticipatedcashflows.

Asin2016,theoutstandingtradereceivablesasof31December2017arenotcollateralisedthroughbillsofexchange.

Asof31December2017,theCompanydoesnotreportanyreceivableswithmaturityofmorethan5years.

Intheyearended31December2017,receivablesintheamountofCZK2,231thousand(2016:CZK11,970thousand)werewrittenoffthroughexpensesduetouncollectability,rejectionofbankruptcyandsettlement,andfailuretorecoverreceivablesinthebankruptcyproceedingsorsale.Theamortisationisreportedintheprofitandlossaccountas‘Otheroperatingexpenses’.

ReceivablesfromrelatedpartiesaredisclosedinNote4.11.1.

Changeintheprovisionagainstdoubtfulreceivables:

(CZK ‘000) Provisions against Provisions against receivables – receivables – tax deductible other TotalOpening balance at 31 December 2015 15 292 82 873 98 165Provisionscreated 0 0 0Provisionsreleased –5595 –4764 –10359Closing balance at 31 December 2016 9 697 78 110 87 807Provisionscreated 0 10687 10687Provisionsreleased 0 0 0Closing balance at 31 December 2017 9 697 88 797 98 494

4.3.1.IntercompanyReceivables

(CZK ‘000) Balance at Balance atName of the entity 31 Dec 2017 31 Dec 2016UnicreditBankHungaryzRt.(HU) 0 0UniCreditFactoringS.p.A.(IT) 6901 11211Total intercompany receivables 6 901 11 211

4.4. Deferred Expenses Asof31December2017,themostsignificantitemsofdeferredexpensescomprisethemaintenanceoftheWindowsforPClicences(CZK387thousand)for33months,the2018FCImembershipfee(CZK203thousand);MagnusWebCsandBIZguardCS–ieinformationcosts(CZK152thousand)wereinvoicedinNovember2017withaone-yearsubscription,andlastbutnotleast,licencestonewservers(CZK142thousand)wereinvoicedinJanuary2017.Theyamountapproximatelyto94%ofdeferredexpenses.

4.5. Equity

(CZK ‘000) 31 Dec 2017 31 Dec 2016 Number (pieces) Carrying amount Number (pieces) Carrying amountCommonshares 3975 222600 3975 222600

CommonsharesamounttoCZK56thousandperpieceandarepaidinfull.

Intheyearsended31December2017and2016,nodividendsordirectors’feeswerepaidout.

Ithadnotbeendecidedontheallocationofthelossfor2017asofthefinancialstatementsapprovaldate,whichiswhytheCompanydoesnotdisclosethedecision.

Asof31December2017thesoleshareholderwasUniCreditBankCzechRepublicandSlovakia,a.s.,Prague.


On18April2017,theCompany’ssoleshareholderapprovedtheCompany’sfinancialstatementsfortheyearended31December2016anddecidedthattheaggregateprofitofCZK10,101thousandfortheyearended31December2016wouldbetransferredtoretainedearningsinfull.

Inaddition,theCompany’ssoleshareholderdecidedtoreleasethereservefundofCZK19,952thousandasfollows:theamountofCZK18,066thousandwillbeusedtosettletheaccumulatedlossbroughtforwardandtheamountofCZK1,886willbetransferredtoretainedearningsbroughtforward.Thereservefundwilltherebybefullyreleased.

4.6. Reserves

(CZK ‘000) Balance at Balance atReserves 31 Dec 2017 31 Dec 2016Incometaxreserve 7733 837Otherreserves 0 3878Total 7 733 4 715

4.7. Payables

(CZK ‘000) Balance at Balance atPayables 31 Dec 2017 31 Dec 2016Tradepayablesfromoperatingactivities 413 56Payablesfromfactoringactivitiesandtheassignmentofreceivables 1177041 1101196Otherpayables 5114 9394Total 1 182 568 1 110 646

Short-termpayablesfromfactoringactivitiesrepresentpayablesarisingfromthecostofpurchasedreceivables.

TheabovestatedpayableshavenotbeencollateralisedbyanyoftheCompany’sassetsanddonothaveamaturityofmorethan5years.

Othershort-termpayablescomprisenamelyestimatedpayables.Asof31December2017,estimatedpayablesamountedtoCZK3,306thousand(asof31December2016:CZK7,636thousand)andincludemainlyunpaidbonusesandunbilledsuppliesandservices.

TheCompanydoesnotreportanypayablespasttheirduedatesfromsocialsecurityorhealthinsurancecontributionsandneitherdoesitreportanyotheramountspasttheirduedatespayabletotaxauthoritiesorotherstateinstitutions.

4.7.1.PayablestoRelatedParties

(CZK ‘000)Company name 31 Dec 2017 31 Dec 2016UniCreditFactoringEAD(BG) 1084 1810UniCreditFactoringS.p.A.(IT) 537941 649969Total intercompany payables 539 025 651 779

4.8. Bank Loans

4.8.1.Long-TermBankLoansAllbankloansmaturewithinoneyearfromthebalancesheetdate.LoansarecollateralisedthroughabankguaranteeissuedbyUniCreditBankCzechRepublicandSlovakia,a.s.Theyareusednamelythroughtranchesupto3monthsatthemaximum.TheCompanymaydrawfundsforitsoperationsuptothecreditlimitbymeansofoverdraftfacilities.

Asof31December2017,interestcostsrelatedtobankloansamountedtoCZK2,193thousand(2016:CZK1,228thousand).


Bankloansmaybedividedasfollows:

(CZK ‘000) Credit Use of Use of facilities Use of Use of Bank Dates / Terms limit as of tranches as of overdraft as of loans as of loans as of 31 Dec 2017 31 Dec 2017 31 Dec 2017 31 Dec 2017 31 Dec 2017 incl. overdraft incl. overdraft facilities facilitiesUniCreditBankCzechRepublic LoancontractMaturing 2327000 1631206 145753 1776960 1056636andSlovakia,a.s. on28February2018Komerčníbanka,a.s. LoancontractIndefiniteperiod 196658 0 8119 8119 7147Československáobchodníbankaa.s. LoancontractIndefiniteperiod 210000 94498 4447 98945 103459Total 2 733 658 1 725 704 158 320 1 884 024 1 167 242

Asof31December2017,theCompanymaintainedoff-balancesheetthebankguaranteeissuedbyUniCreditBankCzechRepublicandSlovakia,a.s.infavourofKomerčníbanka,a.s.intheamountofEUR2,800thousand(collateralforaloancontractpayable),infavourofČeskoslovenskáobchodníbanka,a.s.intheamountofEUR3,700thousandandCZK10,000thousand(collateralforaloancontractpayable),andabankguaranteecreditedtoPASSERINVESTBBC1,s.r.o.intheamountofEUR67thousand(collateralforaleasecontractpayable).

4.9. Income Taxation

4.9.1.DeferredTaxationThedeferredtaxasset/(liability)isanalysedasfollows:

(CZK ‘000) 31 Dec 2017 31 Dec 2016Deferred tax items Deferred tax Deferred tax Deferred tax Deferred tax asset liability asset liabilityDifferencebetweentaxandaccountingnetbookvaluesoffixedassets 0 818 0 1380Differencebetweentaxandaccountingvaluesofprovisionsagainstreceivables 2031 0 12998 0Net deferred tax asset 1 213 11 618

(CZK ‘000) Balance at Balance atDeferred tax asset – breakdown 31 Dec 2017 31 Dec 2016Recognisedasset 0 0Unrecognisedasset 1212 11618Total 1 212 11 618

TheCompanydecidednottorecognisethedeferredtaxassetonthegroundsofprudence.

4.9.2.IncomeTaxCharge(Credit)

(CZK ‘000) Balance at Balance at 31 Dec 2017 31 Dec 2016Profitbeforetax 28133 14168Differencebetweendepreciationforaccountingandtaxpurposes 2953 4339Non-tax revenue: Provisionsreleased 0 0Non-deductible expense: Provisionscreated 0 0 Realisedreceivables 22889 10224 Other(egrepresentationcosts,deficitsanddamage) –13273 –7637Taxableincome 40702 21094Incometaxrate 19% 19%Tax 7 733 4 008


4.10. Due Amounts arising from Social Security and Health Insurance Contributions and Tax ArrearsThedueamountsarisingfromsocialsecuritycontributionsandcontributionstotheStateemploymentpolicywereCZK319thousandandCZK230thousandasof31December2017and31December2016,respectively.

ThedueamountsarisingfrompublichealthinsurancecontributionswereCZK161thousandandCZK119thousandasof31December2017and31December2016,respectively.

TheCompanydidnotreporttaxarrearstothelocaltaxationauthoritiesasof31December2017and2016.

TheCompanywasnotassessedadueincometaxamountrelatedtothepreviousreportingperiods.

4.11. Details of Income by Principal Activity Incomefromfactoringactivitieswasgeneratedasfollows:

(CZK ‘000) Balance at Balance at 31 Dec 2017 31 Dec 2016Foreign income Importfactoring 4877 5020Domestic income Exportfactoring 13018 13756 Domesticfactoring 29816 18110Other 0 0Total sales of own services 47 711 36 886Otherincome 9 0Total income from operating activities 47 720 36 886Interestincomefromfactoringactivities 33955 24281Total income from operating activities and interest income 81 675 61 167

IncomegeneratedwithrelatedpartiesisdisclosedinNote4.11.1.

4.11.1.RelatedPartyTransactions

(CZK ‘000) Balance at Balance at 31 Dec 2017 31 Dec 2016Expense UniCreditBankCzechRepublicandSlovakia,a.s.(CZ) 6209 1529UniCreditFactoringEAD(BG) 0 19UniCreditFactoringS.p.A.(IT) 258 279Income UnicreditBankHungaryzRt.(HU) 74 121UniCreditFactoringS.p.A.(IT) 3472 3125Loans UniCreditBankCzechRepublicandSlovakia,a.s.(CZ) 1776960 1056636

4.12. Consumed Purchases

(CZK ‘000) Year ended Year ended 31 Dec 2017 31 Dec 2016Consumedmaterial 522 401Consumedenergy 242 271Total consumed purchases 764 672


4.13. Services

(CZK ‘000) Year ended Year ended 31 Dec 2017 31 Dec 2016Repairsandmaintenance 361 41Travelexpenses 254 160Representationcosts 127 93Administrationandmaintenanceofinformationtechnology 5319 5189Rent 2551 2674Consultationactivities 397 2506Legalservices 1295 1116Importfactorcommissions 421 835Mediationservices 1042 700Auditservices 243 502Informationaboutthefinancialsituationofentities 338 350Executions,insolvenciesandpreliminarymeasures 146 329Servicesrelatedtoleaseofpremises 155 198Telephone,fax,internet 140 181Taxadvisory –14 96Otherservices 270 350Total 13 045 15 320

Otherservicescomprisepredominantlythecostsofcleaning(CZK79thousand),postalfees(CZK75thousand),annualreport(CZK49thousand),translationandphotocopying(CZK45thousand).

4.14. Remuneration to the Statutory Audit Firm

(CZK ‘000) Year ended Year ended 31 Dec 2017 31 Dec 2016Obligatoryauditofthefinancialstatements 590 624Total 590 624

4.15. Depreciation of Intangible and Tangible Fixed Assets

CZK ‘000) Year ended Year endedDepreciation of intangible and tangible fixed assets 31 Dec 2017 31 Dec 2016Depreciationofintangibleandtangiblefixedassets 3940 4827Extraordinarywrite-offswhenfixedassetsaretakenoutofservicethroughliquidation 0 0Total depreciation 3 940 4 827

4.16. Other Operating Expenses

(CZK ‘000) Year ended Year ended 31 Dec 2017 31 Dec 2016Write-offofreceivables 2231 11970Sundryoperatingexpenses 5282 4847Total 7 513 16 817

Sundryoperatingexpensescomprisenamelyexpensesincurredonsecuringreceivables,operatinginsuranceandmembershipinprofessionalassociations.


4.17. Other Financial Income

(CZK ‘000) Year ended Year ended 31 Dec 2017 31 Dec 2016Foreignexchangerategains 221373 20767Otherfinancialincome 3208 307Total 224 581 21 074

4.18. Other Financial Expenses

(CZK ‘000) Year ended Year ended 31 Dec 2017 31 Dec 2016Foreignexchangeratelosses 222428 20500Bankingfees 3382 3043Total 225 810 23 543

5. Employees, Management and Statutory Bodies5.1. Staff Costs and Number of EmployeesThefollowingtablessummarisetheaveragenumberoftheCompany’semployeesandmanagersfortheyearsended31December2017and2016:

2017

(CZK ‘000) Number Payroll Social security Other Total staff of staff costs and health costs costs insuranceStaff 14 6182 2094 361 8637Managers 7 7093 2324 167 9584Total 21 13 275 4 418 528 18 221

2016

(CZK ‘000) Number Payroll Social security Other Total staff of staff costs and health costs costs insuranceStaff 15 5250 1778 280 7308Managers 7 6608 2157 152 8917Total 22 11 858 3 935 432 16 225

Thenumberofemployeesisbasedontheaveragerecalculatedheadcount.Thecategoryof‘managers’includesmembersoftheBoardofDirectorsandmanagement.

6. Research and Development ActivitiesIntheyearended31December2017,theCompanydidnotperformanyresearchanddevelopmentactivities.

7. Environmental Impacts of the Company’s ActivitiesAstheCompany’sactivitiescompriseprovidingfinancialservices,itsactionsdonotdirectlyaffecttheenvironment.


8. Organisational Branches AbroadTheCompanydoesnothaveanyforeignbranches.

9. Post Balance Sheet EventsNoeventsoccurredsubsequenttothebalancesheetdatethatwouldhaveamaterialimpactonthefinancialstatements.

InPragueon1March2018


OlgaPavlíčkováChiefFinancialOfficer


JiříFlégl

OlgaPavlíčková

ZdeněkBílý


CompanyName:UniCredit Factoring Czech Republic and Slovakia, a.s.RegisteredOffice:Želetavská 1525/1, 140 00 Prague 4 – MichleLegalStatus:Joint Stock CompanyCorporateID:15272028

InaccordancewithSection82etseq.ofActNo.90/2012Coll.,onBusinessCorporations,theBoardofDirectorsofUniCreditFactoringCzechRepublicandSlovakia,a.s.,havingitsregisteredofficeatŽeletavská1525/1,14000Prague4–Michle,incorporatedintheRegisterofCompaniesmaintainedbytheMunicipalCourtinPrague,FileB,Insert649,preparedthisReportonRelationsfortheperiodfrom1January2017to31December2017(the“period”).

Duringtheabove-statedperiod,UniCreditFactoringCzechRepublicandSlovakia,a.s.wascontrolledbyUniCreditBankCzechRepublicandSlovakia,a.s.,Želetavská1525/1,14092Prague4–Michle.

1. The Structure of Relations among UniCredit Factoring Czech Republic and Slovakia, a.s. and the Controlling Entity and Entities Controlled by the Same Controlling Entity

ControlledEntity: UniCreditFactoringCzechRepublicandSlovakia,a.s. Želetavská1525/1,14000Prague4–Michle CorporateIDNo.:15272028 (hereinafter“UCF”)

DirectlyControllingEntity: UniCreditBankCzechRepublicandSlovakia,a.s. Želetavská1525/1,14092Prague4–Michle CorporateIDNo.:64948242 (hereinafter“UCB”)

IndirectlyControllingEntity: UniCreditS.p.A. ViaAlessandroSpecchi16 00186Rome,RepublicofItaly

ThestructureoftheUniCreditgroupisdescribedindetailintheAppendixtothisReport.

Thefollowingisasimplifiedstructureofrelationsasof31December2017amongUCFandthecompaniestherelationsofwhicharedescribedbelow:

TheparentcompanyisUniCreditBankCzechRepublicandSlovakia,a.s.TheCompanyispartofitsconsolidationgroup.TheparentcompanyofUniCreditBankCzechRepublicandSlovakia,a.s.isUniCredit,S.p.A.,havingitsregisteredofficeatViaAlessandroSpecchi16,00186Rome,Italy,whichistheultimatecontrollingentityofUniCreditFactoringCzechRepublicandSlovakia,a.s.

FurtherrelatedentitiescompriseothercompaniesintheUniCreditBankCzechRepublicandSlovakia,a.s.group.

2. The Role of UniCredit Factoring Czech Republic and Slovakia, a.s. in the Group

TheroleofUniCreditFactoringCzechRepublicandSlovakia,a.s.intheUniCreditfinancialgroupinvolvestheprovisionofreceivablefundingservicesontheCzechandSlovakmarkets,namelythefactoring,collectionandsecuringoftradereceivablesandinvoicediscounting.AnotherroleofUniCreditFactoringCzechRepublicandSlovakia,a.s.involvesattendingtothecorporateclientsofUniCreditontheCzechandSlovakmarketsandmakinguseoftheresultingsynergisticeffects.AspartoftheUniCreditGroup,theCzechandSlovakRepublicsareamongthefourkeymarketsinwhichtheUniCreditGroupintendstoexpandinthelongterm.

amongtheControllingandControlledEntitiesandamongtheControlledEntityandOtherEntitiesControlledbytheSameControllingEntity

Report on Relations

UniCredit S.p.A., Roma

UniCredit Bank Czech Republic and Slovakia, a.s., Praha

Other UniCredit Group companies

UniCredit Leasing CZ, a.s.

Želetavská1525/1,14000Praha4–Michle

UniCredit Factoring Czech Republic

and Slovakia, a.s.Želetavská1525/1,

14000Praha4–Michle

100%

100% 100%


3. Method and Tools of ControlThemethodemployedincontrollingUniCreditFactoringCzechRepublicandSlovakia,a.s.asamemberoftheUniCreditGroupmustbe,withtheexceptionofrelevantlegalregulations,inobservanceoftheregulationsissuedbyUniCreditS.p.A.withinUCBandalltheentitiescontrolledbyit.

4. Summary of Contracts Concluded between UniCredit Factoring Czech Republic and Slovakia, a.s. and the Controlling Entity or between Controlled Entities

TheCompanyhasconcludedthefollowingtypesofcontractswiththerelatedentities:

Related Entity Type of Contract and General TermsUniCreditBankCzechRepublicandSlovakia,a.s Contractonaloanandotherbankingservicesprovidedintheformofamulti-purposeloanfacility dated25June2010UniCreditBankCzechRepublicandSlovakia,a.s. Contractontheexchangeofparkingspacesdated4June2015UniCreditBankCzechRepublicandSlovakia,a.s. Frameworkcontractonfinancialmarkettradingdated21January2015UniCreditBankCzechRepublicandSlovakia,a.s. Servicecontractandassignmentcontractdated4January2016UniCreditBankCzechRepublicandSlovakia,a.s. Contractonmutualmediationofbusinesscasesdated4January2016UniCreditBankCzechRepublicandSlovakia,a.s. Contractontherightforthepositionofthelogodated21January2016UniCreditBankCzechRepublicandSlovakia,a.s. Contractonriskparticipation(participationcontract)dated29March2017UniCreditFactoringEAD,BG InterfactorAgreementdated22February2010UniCreditBankHungaryzRt.,HU InterfactorAgreementdated1October2011UniCreditFactoringS.p.A.,IT FCIInterfactorAgreementdated16November2015

TheeffectivecontractsconcludedbytheCompanyincludelong-termcontractsoncooperationwiththefactoringcompaniesUniCreditFactoringEAD,Bulgaria,UnicreditBankHungaryzRt.andUniCreditFactoringS.p.A.ThesearestandardcontractspursuanttotherulesofFCI(FactorsChainInternational),ietheinternationalassociationoffactoringcompaniesgoverningmutualrelationsarisingfromtheperformanceoffactoringamongthecompanies.

ThecontractconcludedbetweenUniCreditFactoringCzechRepublicandSlovakia,a.s.andUniCreditBankCzechRepublicandSlovakia,a.s.isadueloancontractprovidingfundsforthefinancingoftheCompany’scommercialandoperatingactivities.TheCompanyhasconcludedsimilarcontractsundercomparablebusinesstermswithotherbankingentitiesaswell.Inaddition,theCompanyhasconcludedaservicecontractsupportingtheCompany’sbusinessactivity.Thecontractonmutualmediationofbusinesscasesisalsomeanttosupportthebusinessactivitiesofbothcontractualparties.

5. Assessment of whether the Controlled Entity Incurred any Detriment and Assessment of Detriment Settlement Pursuant to Sections 71 and 72 of the Business Corporations Act

TheCompany’sBoardofDirectorsdeclaresthatUniCreditFactoringCzechRepublicandSlovakia,a.s.incurrednodetrimentasaresultoftheconcludedcontracts.


6. Assessment of advantages and disadvantages arising from related party transactions according to section 82 (1) of the business corporations act

TheadvantagesarisingfromthetransactionsbetweenUniCreditGroupentitiesprincipallyincludethefollowing:•Aninternationally-recognisedbrandandreputationalbenefitfromtheUniCreditGroupbeingincludedamongSIFIs

(StrategicallyImportantFinancialInstitution).•Provisionandsharingofthebank’sknow-howintradefinance.•Provisionofamorecompetitivesourceofrefinancingforfactoringtransactions.•Possibilityofutilisingsynergisticeffectswiththebankinthebusinessarea.Operationalsynergyenablingtocutoperatingcosts.•DevelopmentofhumanresourcesassociatedwiththesharingoftheUniCreditGroup’sexperienceinEuropeanmarkets,anopportunityfor

employeestoobtainhands-onexperienceinotherbanksormanagementstructuresoftheGroup,careeropportunitiesintheUniCreditGroup.•PossibilityofusingtheUniCreditGroup’ssponsoringandmarketingataEuropeanlevelinthelocalconditions.

AssessingtheoverallimpactofincludingUniCreditFactoringCzechRepublicandSlovakia,a.s.intheUniCreditGroupindicatesthattheadvantagesarisingfromthispositionsubstantiallyprevail.UniCreditFactoringCzechRepublicandSlovakia,a.s.activelypreventsanypotentialdisadvantagesbyundertakingoperationalmeasuresinlocalmanagementandcommunicatingandbuildingastrongbrandatthelocallevel.

In2017,nolegalactsweretakenintheinterestoftherelatedpartiesandnomeasureswereadoptedortakenattheinstigationorintheinterestoftherelatedparties.

ManagementoftheCompanybelievesthatallrelatedpartytransactionswereconductedonanarm’slengthbasis.

InPragueon1March2018



Appendix:OrganisationalchartoftheUniCreditGroup

JiříFlégl

ZdeněkBílý


OrganisationalchartoftheUniCreditGroup

FinecobankSpA

PioneerGlobalFundsDistributor,Ltd

(a)

UniCreditBankHungaryZrt

ZagrebackaBankad.d.

UniCreditBankAG

Milano-banking-35,39%

Hamilton-distributionofmutualfunds

100%

Budapest-banking-100%

Zagreb-banking-84,475%

Munich-banking-100%

PAIManagementLimited

(a)

UniCreditJelzalogbankZrt

100%

PrvaStambenaŠtedionicad.d.

100%

Dublin-managementofhedgefunds100%

Budapest-banking

Zagreb-banking

…%

UniCreditInternationalBank(Luxembourg)SA

PAI(Bermuda)Limited

(a)

UniCreditLeasingHungaryZrt

100%

UniCreditBankd.d.

99,30%

Luxembourg-banking-100%

Hamilton-holding/man.-adv.ofhedgefunds100%

Budapest-leasing

Mostar-banking

PioneerAlt.Inv.(Israel)Ltdinvolunt.liquidation(a)

LocatCroatiad.o.o.

100%

RamatGan-research,acc.,market.offunds

100%

Zagreb-financialcompany

UniCreditBankIrelandPlc

PAI(New

York)Limited(a)

AOUniCreditBank

UniCreditLeasingCroatiad.o.o.zaleasing

100%

Dublin-banking-100%

Dover(USA)-investmentresearch100%

Moscow-banking-100%

Zagreb-leasing

BarodaPioneerAssetManag.Co.Ltd

100%

OOO"UniCreditLeasing"

ZaneBH

D.O.O.

Mumbay(India)-manag.mutualfunds

51%

Moscow-leasing

Sarajevo-realestatemanag.

BarodaPioneerTrusteeCompanyPrivateLtd

ZAOLocatLeasingRussia

100%

100%

ZagrebNekretnined.o.o..

100%

Mumbay(India)-manag.mutualfund/trustee

51%

Moskow-leasing

Zagreb-realestatemanag.

UniCreditLeasingSpA

ZBInvestd.o.o.

100%

UniCreditBankAustriaAG

Milano-leasing-100%

Zagreb-mutualfundsmanag.

Vienna-banking-99,99%

UniCreditGlob.Leas.P.M.GmbH

100%

UNICREDITBANKS.A.

Pominvestd.d.

88,66%

Vienna-holding

Bucharest-banking-98,33%

Split-realestateco.

v.r.88,95%

…%

BACALeasing(Deutschland)GmbH

94,99%

50,10%

UniCreditConsumerFinancingIFNSA

(b)

seeAnnexA

BadHomburg-leasing

Bucharest-consumercredit

99,95%

UniCreditLeasingCorporationIFNS.A.

0,05%

UniCreditBankCzechRepublicandSlovakiaa.s.

Bucharest-leasing

Prague-banking-100%

100%

UniCreditFactoringCzechRep.andSlovakia,a.s.

Prague-factoring

UniCreditBankaSlovenijaDD

100%

UniCreditLeasingCZa.s.

Ljubljana-banking-100%

Prague-leasing

UniCreditFactoringSpA

UniCreditLeasing,leasing,d.o.o.

100%

UniCreditLeasingSlovakiaa.s.

100%

Milano-factoring-100%

Ljubljana-leasing

Bratislava-leasing

CORDUSIOSoc.Fiduc.perAz.

Milano-fiduciary-100%

CordusioSIMS.p.A.

UniCreditBankSerbiaJsc

UniCreditBulbankAD

UniCreditBusinessIntegratedSol.Scpa(d)

Milano-advisoryoninvestments

96,10%

Belgrade-banking-100%

Sofia

-banking-99,45%

Milano-Instrumentalservices-99,99%

UniCreditBpC

MortgageSrl

100%

UniCreditLeasingSrbijad.o.o.Beograd

100%

UniCreditConsumerFinancingEAD

UniCreditBusinessIntegr.Sol.AustriaGmbH

100%

Verona-guaranteesprovider-60%

Belgrade-leasing

Sofia-consumercredit

Vienna-Instrumentalservices

UniCreditOBG

Srl

100%

UniCreditFactoringEAD

UniITSrl

51%

Verona-guaranteesprovider-60%

Sofia-factoring

Trento-EDPservices

UniCreditGlobalLeasingExp.GmbH

UniCreditBanka.d.BanjaLuka

100%

UniCreditFleetManageme ntEOOD

CrivelliS.r.l.

Vienna-leasing

100%

BanjaLuka-banking-98,46%

Sofia-fleetmanagement

Milan-realestate-100%

FINECOVerwaltungAG

(inliquidation)

100%

UniCreditLeasingEAD

UniCredit(UK)TrustServicesLtd

Munich-holding-100%

Sofia-leasing

London-trustee-100%

CoritSpA

inliquidazione

EuropaInvestmentFundManagement

BavariaServicosdeRepres.ComercialLtda. (e)

Roma-taxcollector-60%

Budapest-Managementofmutualfunds100%

(1)

SaoPaulo-administrativeservices-99,53%

(1)heldindirectlybyUniCreditS.p.A.

SOFIGERESaSinliquidazione

trhoughcompanynonbelongingtoBankingGroup

Paris-creditrepurchase-100%

SIA"UniCreditLeasing"

Soc.It.Gest.edInc.Cred.SpA(inliquidation)

Riga-leasing-100%

Roma-creditrecovery-100%

Companiesbelongingto

theBankingGroup

banking

financial

instrumental

forcontrolledcompanies

(belongingtoBankingGroup)

seeAnnexA

forcontrolledcompanies

(belongingtoBankingGroup)

(a)nonoperativa(b)49,9%

heldbyUniCreditSpA

(c)inPolish:PioneerPekaoTFISA(d)OthercompaniesbelongingtoUniCreditGroupandthirdpartiesholdsharesofthecompany(e)0,47%

heldbyUniCredit(UK)

TrustServicesLtd


AnnexA

UniCreditLuxembourgS.A.

WealthManag.CapitalHoldingGmbH

VereinWestOverseasFinance(Jersey)Ltd(aa)

SchoellerbankAktiengesellschaft

cardcompleteServiceBankAG

Luxembourg-banking-100%

Munich-holdingcompany-100%

St.Herlier(Jersey)-financialco.-100%

Vienna-privatebank-100%

Vienna-issuingofcreditcards-50,10%

UniCreditLeasingGmbH

100%

WealthCapInitiatorenGmbH

RedstoneMortgagesLimited

SchoellerbankInvestAG

100%

DCBankAG

99,94%

Hamburg-leasing-100%

Munich-holdingcompany

London-mortgageloans-100%

Salzburg-investmentcompany

Vienna-issuingofcreditcards

UniCreditLeasingFinanceGmbH

100%

WealthCapEquityGmbH

100%

HVB

Serv.SouthAfrica(Proprietary)Ltd

"Cafu"Vermögensverwalt.GmbH

inLiqu.

100%

100%

DinersClubPolskaSp.z.o.o.

Hamburg-banking


Johannesburg-economicservices-100%

Vienna-holding

Warsaw-creditcards

UniCreditLeasingAviationGmbH

100%

WealthCapFondsGmbH

100%

HVB

Gesells.fürGebäudembH

&CoKG

PalaisRothschil dVerm.GmbH

&CoOG

100%

100%

DinersClubCSs.r.o.

Hamburg-leasing


Munich-realestetemanagement-100%

Vienna-realestateservices

Bratislava-creditcards

MobilityConceptGmbH

60%

WealthCapStiftungstreuhandGmbH

100%

Salvatorplatz-Gr.mbH

&Co.OHGSaarland

100%

PalaisRothschildVermietungsGmbH

100%

KsgKarten-Verrech.-undServiceges.mbH

100%

Oberhaching-leasing

Munich-fiduciary

Munich-realestate

Vienna-realestateservices

vienna-EDPServices

HVB

ExportLeasingGmbH

94,00%

WealthCapPEIAManagementGmbH

GrundstücksgesellschaftSimonb.h.K.

100%

BankAustriaRealInvestImmob.-Managem.GmbH

FactorBankAktiengesellschaft

Munich-leasing-100%

Munich-economicservices-6%

Munich-realestatemanagement

Vienna-realestateinvestment-94,95%

Vienna-factoring-100%

UniCreditCAIBSecuritiesUKLtd(aa)

WealthCapManagementServicesGmbH

100%

AcisImm.-undPr.GmbH

&Co.St.Kronpr...KG

98,11%

BankAustriaRealInvestImm.Kap.GmbH

100%

BankAustriaWohnbaubankAG

London-broker-100%

Grünwald-economicservices

Grünwald-realestatemanagement

Vienna-realestateinvest.company

Vienna-realestatefinancing-100%

HVB

CapitalPartnersAG

100%

WealthCapLeasingGmbH

BayerischeWohn.fürHandelundInd.GmbH

100%

BankAustriaRealInvestClientInvestm.GmbH

100%

BABetriebsobjekteGmbH


Grünwald-holdingcompany


Vienna-investmentadvisory

Vienna-realestateownership-100%

UniCredit(China)AdvisoryLimited

(aa)

HVBFFObjektBeteiligungsGmbH

100%

HAW

AGrundstücksGmbH

&Co.OHGImm.

100%

ImmobilienRatingGmbH(d)

61%

BABetriebsobjektePrahaspol.s.r.o.

100%

Beijing-advising-100%


Munich-realestateman.(dont0,50%TIVOLI)

Vienna-realestateappraisal

Prague-realestateowning

BILLeas.-Fon.GmbH&CoVELUMKG

(a)

HVBFFProduktionshalleGmbH

inliquidation

100%

Hypo-B.Verw.GmbH

&Co.KG

O.Arabellastr.

100%

AlpineCaymanIslandsLtd.

BABetrieb.GmbH

&CoBetaVOG(c)

100%

Grünwald-Leasing-100%



Georgetown(CaymanIs.)-holdingco.-100%

Vienna-realestateownership

HVB

Verwa4GmbH

10%

HVBFFInternationaleLeasingGmbH

90%

PortiaGrund.-Verwalt.mbH

&Co.ObjektKG

100%

BA-CAFinance(Cayman)Limited

100%

BAGVG-HoldingGmbH

Munich-holding-100%



GeorgeTown(CaymanIs.)-issuinghybridcap.

Vienna-holding-100%

HVB

Verwa4.4GmbH

100%

HVBFFInternationalGreeceGmbH

100%

99,67%

TIVOLIGrundstücks-Aktiengesellschaft

BA-CAFinance(Cayman)IILimited

100%

BAGebäudevermietungsgmbH(c)

100%


Munich-leasingcompany


GeorgeTown(CaymanIs.)-issuinghybridcap.

Vienna-realestate

HVB

HongKongLimited

90%

WealthCapInvestmentServicesGmbH

100%

Hypo-BankVerwaltungszentrumGmbH

PaytriaUnternehmensbeteiligungenGmbH

KLEA

ZS-ImmobilienvermietungG.m.b.H.(c)

HongKong-financialcompany-100%

Munich-economicservices-10%


Vienna-holding-100%

Vienna-realest.Ownership-100%

HVB

Investments(UK)Limited

WealthCapRealEstateManagementGmbH

100%

97,78%

Salvatorplatz-G.mbH

&Co.OHGVerwalt

2,22%

BankAustriaFinanzserviceGmbH

KLEA

ZS-LiegenschaftsvermietungG.m.b.H.(c)

GeorgeTown(CaymanIs.)-financialco.-100%

Munich-economicservices


Vienna-mobilesalesanddistribution-100%

Vienna-realest.ownership-100%

UniCreditU.S.FinanceLLC

WealthCapInvestorenbetreuungGmbH

100%

100%

HVZ

GmbH

&Co.ObjektKG

BA-AlpineHoldings,Inc.

LassallestraßeBau-,Plan.,E.-undV.m.b.H.(c)

Wilmington(USA)-holdingcompany-100%

Munich-fiduciary


Wilmington(USA)-holdingcompany-100%

Vienna-realest.own.andadm.-100%

UniCreditCapitalMarketsLLC

100%

100%

WealthCapKapitalverwaltungsgesellschaftmbH

MerkurhofGrundstücks.m.b.H.

AIBeteiligungsGmbH

HumanResourcesServiceanddevel.GmbH

New

York-broker/dealer

Munich-collectiveassetmanagement

Munich-realestatemanagement-100%

Vienna-holding-100%

Vienna-personnelsecondment-100%

TrinitradeVermög.-G.m.b.H.

HVB

ImmobilienAG

Food&moreGmbH

CABET-HoldingGmbH

RamsesImmobilienGes.mbH

&CoOG(c)


Munich-holding-100%

Munich-hotelandrestaurantind.-100%

Vienna-holding-100%

Vienna-realestate-100%

B.I.InternationalLimited

100%

HVB

TectaGmbH

94%

VerwaltungsgesellschaftKatharinenhofmbH

Euroventures-Austria-CA-Manag.GesmbH

100%

PolluxImmobilienGmbH(c)

GeorgeTown(CaymanIs.)-bondissuer


Munich-realestatemanagement-100%

Vienna-holdingrealestate


HVB

CapitalLLC

HVB

ProjektGmbH

94%

UniCreditDirectServicesGmbH

CABOBeteiligungsgesellschaftm.b.H.

100%

RigelImmobilienGmbH(c)

Wilmington(USA)-financialcompany-100%


Munich-callcenterforretailbank-100%

Vienna-holding


HVB

CapitalLLC

II100%

OrestosImmobilien-VerwaltungsGmbH

HVB

SecurGmbH

BankAustria-CEE

BeteiligungsgmbH

SiriusImmobilienGmbH(c)




-100%

Vienna-holding-100%


HVB

CapitalLLC

IIITRICASAGr.Ges.mbH

&Co.1.Vermiet.KG

100%

HVB

ProfilGesells.fürPersonalmanag.mbH

BA-CAMarkets&InvestmentBet.GmbH


Munich-realestate


-100%

Vienna-holding-100%

HVB

FundingTrustII

TRICASAGr.desbürgerlichenRechtsNr.1

100%

UniCreditLeasingKft

UniCreditLeasing(Austria)GmbH(c)

Wilmington(USA)-economicservices-100%

Munich-realestate

Budapest-leasing

100%

(1)

Vienna-holdingandleasing

100%

StructuredInvestSociétéAnonyme

OmniaGrund.-GmbH&CoOb.PerlachKG(b)

94,78%

(1)heldindirectlybyUniCreditBankAustriaAG

LEASFINANZGmbH

(***)

Luxembourg-investmentcompany-100%

Munich-realestate

trhoughcompanynonbelongingtoBankingGroup

Vienna-leasing

100%

(***)

LeasfinanzBankGmbH

(***)

Vienna-smalllendingbusiness100%

(***)

3588

(***)heldindirectlybyUniCreditLeasing(Austria)GmbH

trhoughcompany/iesnonbelongingtoBankingGroup

Companiesbelongingto

theBankingGroup

banking

financial

instrumental

UNICREDITBANKAG

UNICREDITBANKAUSTRIAAG

(a)votingrightsheldbyUCBAG(33,33%)andbyBILLeasing-FondsVerwaltungsGmbH

(33,33%)(b)5,22%

heldbyWealthCapLeasingGmbH

(c)%

consideringsharesheldbyotherCompaniescontrolledbyBA

(d)19%

heldbyBAand19%heldbyUniCreditLeasing(Austria)GmbH

(aa)underliquidationprocess


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www.unicreditfactoring.cz

Annual Report

2017

2017 - unicredit factoring s.r.o.unicredit factoring • 2017 annual report 3. table of contents...

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