IKB Deutsche Industriebank AG / Capital Increase/AGM/EGM 18.02.2008 Release of a Corporate-announcement, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Restated 2006/07 financial statements confirmed Based on the insights related to the sub-prime crisis and the findings of a special report by PricewaterhouseCoopers, the newly appointed Board of Managing Directors resolved to restate the Groups consolidated financial statements for the financial year 2006/07, as well as the financial statements of IKB AG. IKB already announced on 16 October 2007 that these changes were expected to reduce IKB's operating results for the financial year 2006/07 by up to 180 million on group level. The changes that were applied relate in particular to the consolidation of Rhineland Funding and on parts of an issuing entity whose securities serve as a vehicle for IKBs proprietary investments. The process of consolidating Rhineland Funding in retrospect has been extremely complex and time-consuming, as it involved 28 entities each preparing their own annual and interim financial statements. IKB today presents the restated financial statements. Therewith IKB fulfils the requirements for the invitation to its Annual General Meeting for the financial year 2006/07. Restated figures for the financial year 2006/07 The retrospective changes in accounting for IKBs financial year 2006/07 (1 April 2006 to 31 March 2007) resulted in an operating result of 115 million in the Groups consolidated accounts, which is 148 million lower than the figure of 263 million reported originally. This decline was primarily due to the valuation of derivatives, which were included within the first-time consolidation of an issuing entity, and of Rhineland Funding (and Havenrock in particular). The previous figures for the 2005/06 financial year have also been adjusted accordingly, reducing the operating profit for that year from 233 million to 171 million. The restated consolidated financial statements 2006/07 report consolidated net interest income of 678 million. The positive difference of 32 million compared to the 646 million originally disclosed for the financial year 2006/07 originates in particular from the interest income of Rhineland Funding. Provisions for possible loan losses of 259 million remain unchanged; accordingly, net interest income after provisions for possible loan losses increased by the same amount as net interest income (+ 32 million), to 419 million. Net commission income disclosed in the restated consolidated financial statements amounts to 52 million. The difference of 56 million to net commission income of 108 million initially reported for the 2006/07 financial year is explained in particular by commission income IKB received from Rhineland Funding. As a result of the consolidation of Rhineland Funding commission income is now shown as interest income in the consolidated financial statements. Net income from financial instruments at fair value was restated at - 41 million. The negative difference of 121 million to net income from financial instruments at fair value originally reported for the financial year 2006/07 ( 80 million) resulted largely from changes in the market value of securities and derivatives, which were included as a result of the consolidation of Rhineland Funding referred to above, as well as parts of an issuing entity. Net income from investment securities of 7 million was not affected by the restatement, whilst general administrative expenses decreased by 1 million, to 316 million. The cost/income ratio deteriorated to 45.8% (37.8% prior to restatement). The pre-tax return on equity was 9.4% (20.6%). IKB has not restated its quarterly results for the financial years 2005/06 and 2006/07. Segment reporting Segment reporting for the market-facing segments Corporate Clients, Real Estate Clients, and Structured Finance which will continue to comprise IKBs core business segments in the future was unaffected by the restatement. At 34 million, the Securitisation segment, which included portfolio investments and the securitisation of risks from assets carried on the Banks books, reported a significantly lower operating result compared to the original figure reported for 2006/07 ( 108 million). This decline was mainly attributable to the negative fair-value result of - 49 million (original result for 2006/07: 10.1 million). Balance sheet Total assets increased by 11.5 billion to 63.5 billion as of 31 March 2007, in particular due to the consolidation of Rhineland Funding. Total assets as of 31 March 2006 rose by 9.1 billion, to 53.3 billion, for the same reason. Annual General Meeting and Dividends The Annual General Meeting will now be convened on 27 March 2008. No net retained profit (Bilanzgewinn) as of 31 March 2007 will be shown in IKBs restated financial statements of IKB AG in accordance with the German Commercial Code (HGB); therefore, no dividends will be distributed. IKB had originally planned to distribute a dividend of 0.85 per share. Conversion of convertible bond by KfW The convertible bond, which was issued on 7 January 2008 and subscribed by KfW has been converted in the mean time. On 28 February 2008 IKB will deliver the shares to KfW. Thereby, the number of IKB shares will increase by 8,794,661 shares to 96,794,661 shares. IKBs core capital will increase to 247.8 million (from 225.3 million). Following the conversion, KfW will have a 43.4% stake in IKB. Outlook The previous forecast of a consolidated loss of up to 700 million for the IKB Group is changed due to two important reasons: The major part of the mark-to-market losses of approx. 950 million resulting from the revaluation of the portfolio investments, as reported on 13 February 2008, need to be recognised in the profit and loss account, in accordance with IFRS. Furthermore, on the basis of the current market situation IKB expects a reverse (positive) valuation effect of around 770 million, of which only a small portion is considered sustainable. The background to this is that IKB has opted for a valuation at fair value under IFRS for a large part of its liabilities. These liabilities have lost heavily in market value due to the crisis and are therefore booked at a lower market value on the balance sheet. Under IFRS, this valuation gain is reflected in the profit and loss account for the group. As long as it is not booked against permanent interest and capital losses of hybrid liabilities, such gain will dissolve until the liabilities are reimbursed and lead to a corresponding expense. If the fair value of these liabilities rises due to an improvement in IKB's capital market standing, this expense may also occur at a much earlier stage. Overall, the Board of Managing Directors expects the Group to record a loss for the 2007/08 financial year (according to IFRS) of approx. 550 million. The current estimate of results is still subject to significant uncertainty. This is due to the fact that the audit of the half-year report as at 30 September 2007 has not yet been completed. The partial sale of a portfolio investments may also result in higher losses. The Board of Managing Directors expects the net loss in the financial statements of IKB AG to amount to approx. 750 million. This figure reflects higher losses from the revaluation of portfolio investments, which were offset to some extent by loss-sharing on profit-participation certificates and silent partnership contributions. For further detailed information on IKBs restated consolidated financial statements and financial statements for the financial year 2006/07, please refer to wwwwww.ikb.de.ikb.de, under the heading 'Investor Relations' (htthttp://www.ikb.de/content/en/ir/index.jspp://www.ikb.de/content/en/ir/ index.jsp). The Board of Managing Directors Dusseldorf, 18 February 2008 Contacts: Dr. Jörg Chittka (telephone +49 211 8221-4349) Michael Klein (telephone +49 211 8221-4920) Dr. Annette Littmann (telephone +49 211 8221-4745) Dr. Roland Nolte (telephone +49 211 8221-4860) Facsimile: +49 211 8221-2511 E-mail: investor.relations@ikb.de DGAP 18.02.2008 --------------------------------------------------------------------------- Language: English Issuer: IKB Deutsche Industriebank AG Wilhelm-Bötzkes-Straße 1 40474 Düsseldorf Deutschland Phone: +49 (0)211 8221-4511 Fax: +49 (0)211 8221-2511 E-mail: investor.relations@ikb.de Internet: www.ikb.de ISIN: DE0008063306 WKN: 806330 Indices: MDAX Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard), Düsseldorf, Hamburg, München; Freiverkehr in Hannover, Stuttgart End of News DGAP News-Service ---------------------------------------------------------------------------
DGAP-News: Restated 2006/07 financial statements confirmed
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