Annual Report 2022
WÜRTH FINANCE GROUP
CHANGE AND CONSTANCY
KEY EVENTS IN 2022
■ A further demonstration of the impressive competitive strength and stability of
the Würth Group’s core business: The Würth Group increased its sales by
16.9% to EUR 19,950 million, thereby gaining further market share. In addition,
with an operating result of EUR 1,500 million, the Würth Group succeeded in
defending its profit margin of 7.5% (based on preliminary figures).
■ Successful completion of a comprehensive refinancing phase in an unfavour-
able capital market environment: with two notes issued in the amounts of
EUR 600 million and CHF 300 million, as well as the renewal of the com-
mitted revolving credit facility in the amount of EUR 500 million, the Würth
Group’s inhouse bank fulfilled its most important mandate: to safeguard the
availability of liquidity for the companies of the Würth Group at all times.
■ Income at the Würth Finance Group exceeds EUR 100 million for the first time:
driven by a marked increase in lending volumes and higher interest income on
cash investments, operating income increased by 19.4% to EUR 107.0 million
and pre-tax profit was even up 26.6% at EUR 70.3 million (adjusted figures).
■ Solid target achievement despite a challenging environment in the insurance
brokerage market: with revenue growth of just under 5% and brokered premium
volume up 6%, Würth Financial Services AG clearly exceeded expectations in
a market environment that remained difficult.
■ Successful establishment of digital distribution of insurance products: With its
innovative online insurance platform InsurHub, Würth Financial Services AG
established a new mainstay in digital distribution and is thereby continuing on
its digitalisation path. The potential of this bancassurance solution is far from
exhausted and offers promising prospects for the future.
THE WÜRTH FINANCE GROUP
AT A GLANCE
The Würth Finance Group is the financial competence centre for the
Würth Group. It employs 121 staff (FTEs) at six locations in the two
divisions Inhouse Banking and External Financial Services.
WÜRTH FINANCE GROUP
Core
RISK MANAGEMENT
competence
Core
Group financing, liquidity
Insurance brokerage for SMEs,
business
assurance and payment flow
national and international
optimisation for the Würth
companies
Group and its subsidiaries
DIVISION
DIVISION EXTERNAL
INHOUSE BANKING
FINANCIAL SERVICES
The Inhouse Banking division works with
The External Financial Services division operates
over 400 Group companies in more than
as Würth Financial Services AG. Around 9,300
85 countries. The legal entities of the divi-
clients in Switzerland are looked after from the
sion are Würth Finance International B.V.
five offices in Rorschach (head office), Zurich,
(NL/CH) and Würth Invest AG.
Lugano, Arlesheim and Chur.
KEY FIGURES
OF THE WÜRTH FINANCE GROUP
in TEUR
2018
2019
2020
2021
2022
Key figures from the consolidated income statement
Net interest income
9,730
14,284
13,789
14,170
29,576
Income from factoring activities
16,018
16,419
16,275
16,234
17, 733
Income from commission and service fee activities
35,272
35,897
37,668
43,725
48,348
Income from trading activities and financial instruments
7, 320
14,713
12,376
14,789
11,289
Other ordinary income
3,292
2,870
1,709
797
653
Expected credit loss (expenses) /recovery
–3,698
1,005
–7,886
6,846
–4,615
Total operating income
67,934
85,189
73,931
96,561
102,984
Total operating expenses
–29,418
–32,397
–31,519
–34,031
–36,656
Profit before taxes
38,516
52,792
42,412
62,530
66,328
Operating income adjustments Inhouse Banking
Hedge accounting effect management accounting
3,742
2,993
1,492
–548
–619
Impairment for credit loss
3,698
–739
8,558
–6,450
4,615
Total operating income (adjusted)
75,374
87, 443
83,981
89,563
106,980
Profit before taxes (adjusted)
45,956
55,046
52,462
55,532
70,324
Balance sheet total/equity ratio
Number of employees (FTEs)
in million EUR
in %
Employees
4000
16
160
3500
14
140
3000
12
120
2500
10
100
2000
8
80
1500
6
60
1000
4
40
500
2
20
0
0
0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Balance sheet total
Equity ratio (right-hand scale)
Cost-income ratio
Return on equity before tax
in %
in %
50
25
40
20
30
15
20
10
10
5
0
0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Cost-income ratio
Return on equity before tax
Cost-income ratio adjusted
Return on equity before tax adjusted
CONTENTS
02 Report of the Board of Directors
04 Report of the Management
08 Inhouse Banking Division
18 External Financial Services Division
24 Risk Management and Control
34 Legal Structure of the Würth Group
35 Executive Bodies of the Würth Finance Group
36 Information for Investors
37 Excerpt from the Financial Statements 2022
“Change and constancy” – the illustration design for the 2022 Annual Report
The world is in a state of constant flux. Changing needs con-
In collaboration with the Swiss studio Ploy, a series of imag-
tinually give rise to new frameworks and demands. This re-
es has been created in which the interplay between change
quires flexibility and anticipation – including in the financial
and constancy is conveyed in an artistic way by means of
services industry. The Würth Finance Group accepts new
thematic projections onto 3D models of the locations in
challenges and evolves on an ongoing basis. At the same
’s-Hertogenbosch and Rorschach. Change and constancy
time, it remains reliable and offers its clients constancy in this
are not opposites but complementary elements in the Würth
volatile environment.
Finance Group’s self-image.
Annual Report 2022 Würth Finance Group
Würth Finance International B.V.
REPORT OF THE BOARD OF DIRECTORS
Dear readers
During financial year 2022, the Board of Directors of Würth
As in the previous years, the audit companies Ernst & Young
Finance International B.V. performed its duties in accordance
and KPMG reported to the meetings of the Board of Direc-
with the law and the company’s articles of association, moni-
tors. They reported in connection with risk management on
tored the performance of the company and advised the
the quarterly audits they performed on selected audit areas,
Management.
which had been discussed and decided upon beforehand by
the Board of Directors. There was a particular emphasis on
Four meetings were held during which the Management in-
the reliability of the internal control systems used by the com-
formed the Board of Directors verbally and in writing about
pany.
the general situation of the company, the course of business
and the principal issues relating to its business policy. This re-
According to preliminary figures, the Würth Group recorded
porting also included the subsidiaries Würth Financial Ser-
sales growth of almost 16.9% to reach EUR 19,950 million
vices AG and Würth Invest AG. The information required as
and an increase in its operating result of 18.1% to
the basis for decision-making was provided in timely fashion
EUR 1,500 million in financial year 2022. All regions and di-
and enabled a detailed insight into business operations. The
visions contributed to this performance. Thus, in a year bur-
Board of Directors was also informed promptly of all poten-
dened by supply and materials bottlenecks, price increases,
tial opportunities and risks. In this context, the Board of Di-
the zero-COVID strategy in China and the war in Ukraine, a
rectors advised the Management on strategic measures and
very good result was achieved and the Würth Group’s com-
issues relating to the company’s future. The cooperation be-
petitive position was strengthened. As a consequence of this
tween the Management and the Board of Directors was
performance, the Würth Group’s financial position also im-
highly constructive and fully complied with the principles of
proved further: as at 31 December 2022, equity increased
good corporate governance.
by EUR 1,100 million to EUR 7,900 million year on year,
while net debt rose by only EUR 450 million to EUR 1,100
A focal point of the work of the Board of Directors was moni-
million. With funds from fixed-rate notes totalling EUR 2,100
toring the effectiveness of risk management, particularly
million and maturities between 2025 and 2030, the Würth
compliance with the regulatory limits set by the Board of Di-
Group is well protected against any further increases in inter-
rectors for measuring, managing and monitoring market,
est rates. The Würth Group’s high level of financial manoeu-
credit and liquidity risk in relation to the Group balance
vrability is also reflected in liquidity reserves amounting to
sheet and trading activities.
EUR 1,500 million.
In memory of Dr. Bernd Thiemann
Dr. Bernd Thiemann, a member of the Board of Directors,
With great respect for his achievements and in deep
passed away on 28 December 2022 at the age of 79.
gratitude for his loyalty, we remember Dr. Thiemann as a
person whose actions were driven by a big heart and in-
Dr. Thiemann was a member of the Advisory Board of
formed by a great sense of humour and a keen concern
the Würth Group from 1994 to 2013 and had been an
for fairness.
honorary member of the Advisory Board since 2014. In
addition, he had made his knowledge and long experi-
We will honour his memory.
ence as former Chief Executive Officer of DG Bank avail-
able to Würth Finance International B.V. as a member of
its Board of Directors since 2010.
With his valuable financial expertise he played a key role
Joachim Kaltmaier
Chairman of the Board of Directors of Würth Finance International B.V.
in shaping the company over the last 12 years. With him,
we lose a companion and wise advisor with a spirited
personality.
02
Board of Directors
from left to right: Dr. Bernd Thiemann † (Former Chairman of the Board of Deutsche Genossenschaftsbank AG) | Christoph Raithelhuber |
Dieter Gräter (Vice President Finance, Würth-Verwaltungsgesellschaft mbH) | Ralf Schaich (Member of the Supervisory Board of the
Würth Group, Vice President Adolf Würth GmbH & Co. KG) | Prof. Dr. h. c. mult. Reinhold Würth (Chairman of the Supervisory Board of the
Würth Group) | Joachim Kaltmaier (Member of the Central Management Board of the Würth Group and Chairman of the Board of Directors
of Würth Finance International B.V.) | Wolfgang Kirsch (Former Chief Executive Officer of DZ Bank AG, Chairman of the Supervisory Board of
Fresenius SE & Co. KGaA) | Mag. Michel Haller (Chief Executive Officer of Hypo Vorarlberg Bank AG)
In its role as the competence centre for the financing and li-
As part of its legal obligations to increase gender diversity in
quidity management of the Würth Group, Würth Finance In-
management, Würth Finance International B.V. aims to in-
ternational B.V. issued bonds for EUR 600 million in May
clude at least one female member when appointing new
and CHF 300 million in November; through these transac-
members to the Board of Directors and to the Management
tions it successfully completed the refinancing of the US pri-
over the next three years. Various specific measures are in
vate placement of USD 200 million maturing in September
place to achieve this goal (see page 30). Currently, the pro-
2021 and the early repayment of a EUR 500 million bond in
portion of men on both boards is 100%.
February 2022. Buoyed by strong growth in the Würth Group’s
core business, a huge improvement in net interest income as
On behalf of the Board of Directors, I would like to thank the
a consequence of higher interest rates and successful sales
Management and all the staff for their hard work, and con-
activities in insurance brokerage, the company’s adjusted
gratulate them on the good operating result they achieved in
consolidated pre-tax profit rose to a record EUR 70.3 million
the past financial year. I would also like to thank the Würth
in financial year 2022.
Finance Group’s clients and business partners for the trust
they have placed in us and for their loyalty to the company
The 2022 Consolidated Financial Statements, along with the
and the Würth Group as a whole.
separate 2022 Financial Statements of Würth Finance Inter-
national B.V., were prepared in accordance with Internation-
al Financial Reporting Standards (IFRS). Ernst & Young audit-
ed the annual accounts and issued an unqualified audit
opinion. The Financial Statements and the audit report were
Joachim Kaltmaier
Chairman of the Board of Directors of Würth Finance International B.V.
examined by the Board of Directors and discussed in detail
with both the Management and Ernst & Young. Following the
final result of the audit, the Board of Directors raised no
objections, agreed with the audit report and approved the
Financial Statements.
03
Annual Report 2022 Würth Finance Group
Würth Finance Group
REPORT OF THE MANAGEMENT
The world is paying a high price for Russia’s war in Ukraine.
Given the supply bottlenecks for many product groups, sup-
It is a humanitarian disaster. The war, together with China’s
plying our customers was even more important than in nor-
zero-COVID policy, has also set the global economy on a
mal times. Thanks to numerous long-standing relationships
course for much slower growth coupled with high inflation –
and the massive efforts made in the areas of purchasing and
a situation last seen in the 1970s. GDP growth slowed to
logistics, the service level – as a measure of timely delivery
around 2% in the US and 3% in the euro area in 2022.
to customers – improved during financial year 2022 from un-
Many of the hardest hit countries are in Europe, which is be-
der 94% to over 96%. The strategy of maintaining higher lev-
ing heavily impacted by the war due to energy imports. The
els of safety stocks contributed to this improvement. Accord-
war has also dashed hopes of a quick end to the rising infla-
ingly, net working capital increased at an above-average
tion caused by the COVID-19-related supply shortages in
rate compared with sales.
2021 and early 2022. High food and energy prices and
supply bottlenecks mean that consumer price inflation will
The Würth Group’s financial position nonetheless remains
peak later and at a higher level than anticipated. In a stag-
very solid. This is reflected both in its financial metrics and in
nating economy, this forced central banks to tighten mone-
the confirmed rating from Standard & Poor’s (A, outlook sta-
tary policy rapidly and significantly.
ble). This was also appreciated by the capital markets, as re-
flected in two successful bond issues with respective volumes
Würth Group
of EUR 600 million and CHF 300 million. As at 31 Decem-
Despite the unstable economic environment, the Würth
ber 2022, shareholders’ equity amounted to EUR 7,900 mil-
Group was able to maintain its growth momentum in finan-
lion, with an equity ratio of 46.0% (preliminary figures). With
cial year 2022 and record a 16.9% rise in sales to
liquidity of around EUR 1,000 million and an undrawn credit
EUR 19,950 million (based on preliminary figures). The indi-
facility of EUR 500 million committed until 2027, the Würth
vidual regions performed well across the board. With regard
Group has comfortable liquidity reserves available.
to the different divisions, the Electronics and Electrical
Wholesale units recorded above-average growth. Although
Würth Finance Group
the strong sales growth needs to be adjusted for inflation, it
In 2022 also the Würth Finance Group proved its ability to
still represents a milestone in the family-owned company’s
act and adapt to changing market conditions. The Inhouse
history.
Banking division successfully completed an extensive refi-
nancing phase despite the sometimes considerable turbu-
The steps taken to improve performance in the digital field
lence on the capital markets, and Würth Financial Services
bore fruit. As a robust addition to the classic sales force and
AG took advantage of the opportunities offered by the digital
the branch network, sales from e-business rose by around
distribution of insurance products with its InsurHub platform.
21% to EUR 4,100 million in 2022.
The 2022 year under review was also very successful for the
The drastic rise in energy and raw materials prices resulted
Würth Finance Group in financial terms. At EUR 107.0 mil-
in significantly higher purchase prices, which were passed
lion, adjusted operating income exceeded the EUR 100 mil-
on to customers only partly. However, thanks to high capaci-
lion mark for the first time in the company’s history – and by
ty utilisation and additional measures to improve productiv-
a significant margin. The year-on-year rise amounts to
ity, the operating result increased by 18.1% to EUR 1,500
EUR 17.4 million (19.4%) and is mainly attributable to a dou-
million based on preliminary figures, maintaining the profit
bling of net interest income in the Inhouse Banking division,
margin of 7.5%. A remarkable achievement.
driven by increased lending volumes and higher interest
Responsibility Statement
In accordance with the EU Transparency Directive and the
cial position and profit or loss of the Group, and that the
Dutch Financial Supervision Act (Wet op het Financieel
Management report includes a fair review of the develop-
Toezicht), the Management of the Würth Finance Group
ment and performance during the financial year and of the
hereby confirms that, to the best of its knowledge, the Finan-
financial situation of the Group at the balance sheet date, as
cial Statements for the financial year ended on 31 December
well as of the risks associated with its business.
2022 give a true and fair view of the assets, liabilities, finan-
04
income on cash investments. Operating expenses increased
How consumer behaviour and energy prices will develop
by 7.7%, rising from EUR 34.0 to EUR 36.7 million. Around
and the impact of China’s abandoned zero-COVID strategy
half of this rise is due to exchange rate effects from the trans-
on supply chains remain to be seen. Adapting to these frag-
lation of operating expenses at the Swiss locations. The aver-
ile conditions remains the central task of the Würth Group. It
age number of employees remained stable; as at 31 Decem-
is possible that the peak of inflation has been seen and eco-
ber 2022, the Würth Finance Group had 121 employees
nomic growth will bottom out by the end of the first quarter
(FTEs). Accordingly, productivity improved significantly. With
of 2023. The company therefore remains cautious, keeping
an adjusted pre-tax profit of EUR 70.3 million, the company
market opportunities in sight and carrying the momentum
achieved a record-high result (2021: EUR 55.5 million) and
from the past year into financial year 2023. Investment, ac-
made a significant contribution to the consolidated result of
quisition and development projects are aligned with the rele-
the Würth Group.
vant markets and the growth targets for the coming years,
but will be adjusted to the speed of the economy.
Details on the course of business in the Inhouse Banking and
External Financial Services divisions follow on pages 8 to
For the Würth Finance Group, intense competition on the in-
21. The Würth Finance Group’s report on risk management
surance and financial services market means margins are
and control can be found on pages 24 to 31. The Würth
constantly under pressure and continuous operational effi-
Finance Group does not have its own audit committee and is
ciency improvements are required. At the same time, the
therefore integrated into the Würth Group’s audit process.
changes on the insurance and financial markets are creating
long-term growth opportunities, which the Würth Finance
Outlook for 2023
Group is focusing on. Consequently, investments are continu-
Combating inflation will rightly remain the top political priori-
ously being made in the further development and digitalisa-
ty. In many countries where inflation remains high and is im-
tion of the business model in the Inhouse Banking and Exter-
pacting large parts of the economy, central banks will contin-
nal Financial Services divisions – while keeping in mind the
ue to raise key interest rates. Borrowing is becoming more
scope and quality of client services. Protecting assets –
expensive, posing major challenges and risks for companies
against cyber attacks, for example – and fulfilling regulatory
and households. At the same time, the room for monetary
requirements are important prerequisites for financial and in-
policy manoeuvre is shrinking. In many places, governments
surance service providers to conduct their business success-
have exhausted their financial options for providing families
fully over the long term. The Würth Finance Group has the
and businesses with targeted temporary protection against
necessary critical mass and organisational structure to ensure
the energy shock. Furthermore, it is already becoming
effective and efficient IT risk and compliance management.
apparent that the gas supply in Europa in winter 2023/2024
will be difficult.
Overall, the Management of the Würth Finance Group ex-
pects business volumes to remain stable in the current year,
There is no doubt that the economic outlook is troubled. The
but income to be lower than in the record year 2022, with
OECD forecasts minimal economic growth of around 0.5%
the operating result on a par with 2019 to 2021.
in the US and the euro area in 2023. However, the Ukraine
war has prompted numerous changes that would have been
Thanks
impossible until recently. These include the sharp rise in in-
The Management of the Würth Finance Group is very satis-
vestments in energy security, energy supply diversification
fied with the results achieved in financial year 2022 and
and the promotion of renewable energy. The current crisis is
would like to thank all employees for their important contri-
therefore also accelerating the transformation of society and
bution to the success achieved. Thanks also go to our clients
the economy, while also opening up opportunities. In addi-
and business partners, whose trust in the Würth Finance
tion, the materials shortages in industry and bottlenecks in
Group has made our success possible in the first place. We
many sectors began to gradually ease in the first quarter
look forward to continuing to work with them in 2023.
2023.
Roman Fust
Adrian Parpan
Managing Director
Managing Director
Würth Finance International B.V.
Würth Financial Services AG
05
Constancy and security in planning
We look back on a turbulent financial year. Fluctuating share prices and interest rates
as well as price increases and supply bottlenecks present companies with unpreceden-
ted challenges and make financial planning more difficult.
Würth Finance International B.V. secures the Würth Group’s long-term ability to act.
In three steps, extensive financial resources were successfully raised on the capital and
credit markets in 2022. These form the basis for the medium to long-term planning
security of the entire Würth Group.
Annual Report 2022 Würth Finance Group
Report of the Management
INHOUSE BANKING
Alternative Performance Measures (APMs) comparable IFRS measures. APMs do not have a standard-
ised meaning under IFRS, and therefore may not be compa-
In presenting and discussing the Würth Finance Group’s
rable to similar measures presented by other companies.
financial position, operating results and net profit, Manage-
ment uses certain alternative performance measures not
To provide a better overview of the development of the In-
defined under IFRS. These alternative performance measures
house Banking activities and their added value for the Würth
(APMs) should not be viewed in isolation as alternatives to
Group, APM adjustments are made. They affect the operat-
the equivalent IFRS measures, and should be used as supple-
ing income and net profit of the Inhouse Banking segment, as
mentary information in conjunction with the most directly
shown in the table below.
in TEUR
2018
2019
2020
2021
2022
Hedge accounting effect management accounting
3,742
2,993
1,492
–548
–619
Impairment for credit loss
3,698
–739
8,558
–6,450
4,615
• Hedge accounting effect management accounting refers to the effect of the market valuation of interest rate derivatives to
hedge interest rate risk where historically no hedge accounting was applied. As of the implementation of IFRS 9 Hedge
Accounting, new hedge relations will be presented as such.
• Impairment for credit loss refers only to related party loss and therefore does not apply to the consolidated financial
statements of the Würth Group. This position represents the expected credit loss (ECL) on loans and receivables as at the
balance sheet date and until 2021 also the Würth Finance Group’s impairment of the capital relinquishment to Interna-
tionales Bankhaus Bodensee AG. The ECL calculation is probability-weighted applying a combination of probability of
default (PD), exposure at default (EAD) and loss given default (LGD). The LGD is based on the global corporate average
of 60% and the PD is based on the Bloomberg default risk of the Würth Group. The PD increased to 0.79% as at
31 December 2022 (31 December 2021: 0.44%), thus an additional ECL of EUR 4.6 million is recognised in the income
statement.
08
2022
APM Hedge accounting effect
Impairment for
Segment
in TEUR
Inhouse Banking management accounting
credit loss
Inhouse Banking
Income distribution
Group Financing
48,440
–1,291
–4,615
42,534
Net interest income
30,154
–1,291
0
28,863
Income from factoring activities
17, 733
0
0
17, 733
Other ordinary income
553
0
0
553
0
0
–4,615
–4,615
Expected credit loss (expenses) /recovery
Central Settlement
34,029
0
0
34,029
Income from trading activities and
financial instruments
9,815
1,910
0
11, 725
Trading
15,340
1,910
0
17,250
Securities investments
–5,525
0
0
–5,525
Total income
92,284
619
–4,615
88,288
Total expenses
–22,758
0
0
–22,758
Total Inhouse Banking
69,526
619
–4,615
65,530
2021
APM Hedge accounting effect
Impairment for
Segment
in TEUR
Inhouse Banking management accounting
credit loss
Inhouse Banking
Income distribution
Group Financing
30,015
596
6,846
37, 457
Net interest income
13,114
596
0
13,710
Income from factoring activities
16,234
0
0
16,234
Other ordinary income
667
0
0
667
0
0
6,846
6,846
Expected credit loss (expenses) /recovery
Central Settlement
30,653
0
0
30,653
Income from trading activities and
financial instruments
15,640
–48
–396
15,196
Trading
14,104
–48
–396
13,660
Securities investments
1,536
0
0
1,536
Total income
76,308
548
6,450
83,306
Total expenses
–21,541
0
0
–21,541
Total Inhouse Banking
54,767
548
6,450
61,765
09
Annual Report 2022 Würth Finance Group
Key events
Economic environment and Group performance
The year 2022 will be remembered as a year of multiple –
Record profit
sometimes overlapping – crises. The COVID-19 pandemic,
The stars aligned for the Inhouse Banking division in financial
the Ukraine war, disrupted supply chains, looming energy
year 2022. At EUR 69.5 million, the adjusted pre-tax profit
shortages and soaring inflation preoccupied almost all play-
hugely exceeded the previous year’s record level, rising by
ers in the real economy and on the financial markets. The
27% or EUR 14.8 million. This is largely attributable to the
global political situation, which increasingly indicated a re-
doubling of net interest income, which was bolstered by the
turn to the East-West bloc that had long been considered re-
higher financing requirements of Würth Group companies
solved, and, at times, even the threat of potential nuclear
and substantially higher interest income on the investment of
strikes dominated the news flow and occupied many compa-
liquidity reserves during the year. The other segments that
nies worldwide – including the Würth Group.
correlate strongly with the Würth Group’s core business (cen-
tral settlement of payments to suppliers, factoring, currency
However, the family-owned business had already demon-
hedging) posted double-digit growth and compensated for
strated its ability to deal with uncertainty during the COVID-19
the significant negative performance of securities investments.
pandemic in 2020 and 2021. The escalation of the threat
situation further intensified the challenges faced. Ultimately,
what was needed to address these challenges included
Income distribution
scenario planning, developing an adaptable organisational
structure and – especially in financial management – lend-
in million EUR
Income from
ing greater weight to security aspects than in less uncertain
trading
activities and
times. With its diversified business model and flat hierarchi-
Central
financial
Settlement
cal levels, the Würth Group was very successful in this
instruments
+3.3*
–5.8*
respect. A 17% rise in sales and a record operating profit
34.0
of EUR 1,500 million are an impressive result.
Other
9.8
ordinary
income
0.6
Financial resources successfully raised on the bond
–0.1*
and credit markets
To safeguard its ability to act, the Würth Group consciously
increased its safety stocks and strengthened its liquidity re-
serves. To this end, Würth Finance International B.V. raised
30.2
long-term fixed-interest funds on the capital market. The rele-
17.7
vant decisions were taken in close consultation with the Man-
Net interest
income
agement of the Würth Finance Group, taking into account
Income from
+17.1*
factoring activities
the significant change in the interest rate and financial mar-
+1.5*
ket environment.
*Change vis-à-vis 2021
10
Business performance
The uncertain times and financial market turbulence in-
creased the general need for discussion and advice on treas-
ury issues among the Group’s management committees and
Intercompany factoring activities
within the Group companies. The outbreak of war in Ukraine
Most of the Group companies procure a large proportion of
further intensified this dialogue. As already demonstrated
their merchandise from central purchasing companies of the
during the pandemic, the importance of the inhouse bank’s
Würth Group. Settlement of the associated receivables is
integration into the Group’s overall business operations
mainly handled by a factoring system via accounts at the
along the entire value chain, as well as the network built up
Würth Finance Group. The main advantages of the system
over the past few years with personal contact between
are the avoidance of bank transactions and the correspond-
Würth Finance International B.V. and local colleagues, again
ing fees, the pre-financing component, the easier accounts
became apparent.
receivable management and the efficient Group reconciliation.
Even after many years, this internally developed service is
still proving extremely beneficial for the Würth Group com-
Never before has Würth
panies. The transaction volumes handled correlate closely
Finance raised such extensive
with purchasing behaviour within the Würth Group. In
financial year 2022, these volumes increased by 8% to
financial resources within a
EUR 2,200 million.
single financial year.
Central settlement of payments to suppliers
Würth Finance International B.V. benefited from the signifi-
cantly increased purchasing volumes in the Würth Group.
The issue of two bonds and the early extension of the
Due to the predominantly central processing of payments
committed credit line with a total volume of more than
to Group suppliers on behalf of the Group companies,
EUR 1,400 million – never before has Würth Finance
530,000 payments totalling EUR 8,700 million were pro-
International B.V. raised such extensive financial resources
cessed through the inhouse bank. Payment settlement agree-
within a single financial year. For the coming years, the
ments are in place with the majority of the Group’s strategic
Würth Group is well protected against potential further inter-
suppliers, resulting in income of EUR 34.0 million, up 11% on
est rate increases.
the previous year.
These major transactions unjustifiably overshadow the clear
Central Settlement: payment volume/income
double-digit growth in the inhouse bank’s payment volumes
in parallel with the Group’s growth. It is also notable that the
in million EUR
in million EUR
financial year 2022 was tackled with a virtually unchanged
9000
36
average number of employees compared with the previous
7500
30
year.
6000
24
4500
18
3000
12
1500
6
0
0
2018
2019
2020
2021
2022
Payment volume third parties
Contract volume
Income from Central Settlement services (right-hand scale)
11
Annual Report 2022 Würth Finance Group
Net interest income
In order to maintain liquidity reserves at an adequate level,
At the beginning of the year, inflation rates had already
a EUR 600 million bond with a term of 8.25 years and an
increased worldwide. But the outbreak of war in Ukraine
interest coupon of 2.125% was issued in May. In addition,
prompted a massive energy price shock, the like of which
after a 13-year break, a CHF 300 million bond with a four-
had not been seen since the 1970s. As the year progressed,
year term and an annual coupon of 2.1% was very success-
prices for a broad basket of goods and services rose, for-
fully issued on the Swiss capital market in November. These
cing central banks to tighten monetary policy rapidly and
transactions also refinanced the EUR 500 million bond
significantly. In the US, key interest rates were raised by 425
(2015 - 2022), which was repaid early in February.
basis points in seven stages, while in the euro area rates
were raised by 250 basis points in four steps. Long-term in-
The significant increase in net lending and the relatively
terest rates increased to the same extent.
sharp rise in interest rates on cash investments resulted in re-
cord net interest income of EUR 30.2 million (previous year:
The rise in interest rates affects the Würth Group’s financing
EUR 13.1 million).
costs with a time lag, since the company primarily finances
itself through long-term bonds issued by Würth Finance
The Würth Group is committed to sustainable corporate gov-
International B.V.
ernance and the finance segment also plays its part. In this
regard, Würth Finance International B.V. used the early ex-
tension of the committed credit facility due in summer 2023
The Würth Group is com-
to include several sustainability targets as pricing compo-
mitted to sustainable corporate
nents. Closing took place in September 2022. The pricing on
the “sustainability-linked” syndicated loan provided by 13
governance and Würth
core banks, which has a volume of EUR 500 million and a
term to September 2027, is based on the target achievement
Finance also plays its part.
of gradually reducing carbon emissions (scope 1 and 2) and
increasing the proportion of recyclable packaging material
at Adolf Würth GmbH & Co. KG, the largest single company
The focus on safeguarding high delivery capabilities and
within the Würth Group.
holding higher stock levels resulted in a substantial increase
in financial requirements during 2022. Consequently, Würth
Group Financing volume and revenue from intra-Group lendings
Finance International B.V.’s net lending to Group companies
increased by an average of more than EUR 600 million –
in million EUR
in million EUR
from EUR 730 million to EUR 1,340 million.
2400
60
2000
50
1600
40
1200
30
800
20
400
10
0
0
2018
2019
2020
2021
2022
Factoring volume
Net lending as at 31 December
Interest and factoring income (right-hand scale)
12
Currency hedging and trading with financial instruments
Securities investments
Due to the above-mentioned sharp rise in interest rates and
Based on a strategic ratio of 80% investment grade bonds
the prospect of stagflation, the financial markets also experi-
with a three-year duration, the Würth Finance Group aims to
enced a high degree of volatility and significant corrections
achieve a long-term return on its securities investments that is
in currencies, commodities, energy and all asset classes. For
200 basis points higher than the return on an ESTR money
example, the euro declined by around 10% against the US
market investment. Following the above-average cumulative
dollar during the year. This development hints at the content
returns of 11.7% in the years 2019 to 2021, the value of se-
of the discussions with those responsible at Würth Group
curities investments fell by EUR 5.5 million in financial year
companies with large dollar-based purchasing volumes.
2022, causing a performance of –7.3% despite the relatively
conservative investment strategy. This also reduced the annu-
The major stock market indices recorded double-digit price
alised average return for 2019 to 2022 to 0.9%, 0.7 per-
declines in an often nervous market environment – quite fre-
centage points below the benchmark.
quently with implied volatility of more than 30%. Oil price
fluctuations even reached around 50% during the year. En-
Equities, real estate and bonds – all major asset classes ex-
couragingly, the traders at Würth Finance International B.V.
perienced losses in 2022, with 80% of the negative perfor-
once again made a record contribution to earnings of
mance due to lower valuations in the investment grade bond
EUR 15.3 million (previous year: EUR 14.1 million) through
portfolio. As a result, its yield to maturity improved to more
trading with financial instruments within tight trading limits.
than 3% p.a., with correspondingly positive earnings pros-
pects for the future. Based on the assessment that yields had
meanwhile probably reached an attractive level, the bond
Trading: income development
portfolio was increased to EUR 81.7 million in the course of
the year.
in million EUR
16
Securities investments: income development
14
12
in million EUR
6
10
4
8
2
6
0
4
–2
2
–4
0
2018
2019
2020
2021
2022
–6
2018
2019
2020
2021
2022
13
Annual Report 2022 Würth Finance Group
E-payment services
Operating expenses
Absolutely no decline in transaction volumes was experi-
Operating expenses in the Inhouse Banking division in-
enced in 2022 when the COVID-19 measures, which had
creased by 5.6% year on year to EUR 22.8 million. The addi-
pushed up demand for e-payment services, came to an end
tional expense compared with the previous year amounted
in almost all regions. Quite the opposite: the use of alterna-
to EUR 1.2 million, of which around 60% is attributable to
tive payment methods to speed up cash receipts, reduce risk
higher IT costs (mostly for planned projects) and the stronger
and increase the efficiency of processing incoming payments
Swiss franc. The latter increased operating costs at the Swiss
remains an unbroken global trend. The technical and organi-
branch.
sational standards for integrating electronic payment meth-
ods, which were established in close cooperation with the
Würth Group’s internal IT service providers, were expanded
and proved successful. This success took the form of more
connected Group companies, an expansion of the payment
methods into new sales channels (e.g. call centres and
sales-enabling apps), and new functionalities that further
support payment via electronic payment instruments for the
benefit of Group companies and their customers.
The payment volumes processed via the WOPG (Würth
Omnichannel Payment Gateway) platform again increased
by well over 25% year on year in 2022.
Outlook for 2023
The EU and North American economies are expected to ex-
pects operating expenses to rise in financial year 2023. At
perience slow growth and a high rate of inflation over the
the same time, stagnating income and, consequently, a slight-
coming quarters. There is still no end in sight to central bank
ly lower operating result are anticipated. The flattening out
monetary policy tightening, meaning that it is probably still
of inventories is expected to lead to a slightly below-average
too early for a trend reversal on the interest rate markets or
performance in the central settlement of payments to suppli-
a recovery of equity prices.
ers and in factoring volumes. In 2023, the interest expenses
on the two new bonds will be incurred across the entire 12-
In light of this, the Würth Group remains relatively cautious
month period and will therefore negatively impact net inter-
with regard to growth-oriented investments. However, the
est income. For securities investments, the Management be-
company intends to continue to focus on the opportunities
lieves that the current valuations now offer a more attractive
still available, such as those arising from the increasingly
profile of opportunities and risks, though ensuring the right
rapid sustainable transformation of the economy.
timing will be crucial. Numerous risks and uncertainties
could affect this outlook: an escalation of the war in Ukraine,
The Würth Group’s inhouse bank filled vacant positions in
electricity or gas shortages, a sharp recession or a wide-
the second half of 2022. The Management therefore ex-
spread debt crisis.
14
Management Würth Finance International B.V. and Würth Invest AG
from left to right: Daniel Ochsner | Alejandro Muñoz | Philip Guzinski (Managing Director as of 1 January 2023) |
Björn van Odijk (Managing Director) | Roman Fust (Managing Director) | Jorre van Schipstal | Patrik Imholz (Würth Invest AG)
INHOUSE BANKING AT A GLANCE
Core business
Cash and securities investments
Securing of strategic freedom to act by managing the cash
■
The Inhouse Banking division of the Würth Finance Group
reserves of the Würth Group
monitors the financial risks incurred by the Würth Group and
Central management of financial investments in the
■
takes the necessary measures to retain its financial stability.
conflicting areas of security, liquidity and return
In close collaboration with the Central Management Board
Providing electronic payment possibilities
and the operational Group companies, the Inhouse Banking
Analysing the business needs and identifying the right
■
division ensures that the necessary liquid funds are available
service providers
to the Würth Group at all times and employs the Group’s
Integrating various electronic payment methods across
■
funds in an optimal manner. The division consists of the legal
sales channels for the branches, e-commerce, m-commerce
entities Würth Finance International B.V. and Würth Invest AG.
and the call centres within the Würth Group
Services
Facts and figures (at 31 December 2022)
Central settlement of payments to suppliers
69 employees (FTEs) at the offices in Den Bosch, the
Service provider for the central settlement of payments to
Netherlands, and Rorschach, Switzerland
■
beneficiaries worldwide
Collection of outstanding invoices on behalf of over
530,000 payment transactions with a volume of
■
10,000 Würth Group suppliers vis-à-vis all Group
EUR 8,700 million in the year under review
companies and, to a certain extent, insurance of default
risk
Outstanding capital market funding with a total volume of
EUR 2,100 million
Group financing and risk management
Financing of the Würth Group on the capital market,
Account relationships with over 400 Würth Group companies
■
principally by means of bond issues
Competence centre and interface for banks, investors,
4,210 foreign exchange transactions with 340 Group com-
■
financial market regulators, rating agencies and credit
panies and a hedging volume totalling EUR 1,300 million
analysts
Provision of comprehensive advice and a wide range of
265,000 customer e-payments with a volume increase of
■
treasury products to Group companies
25% compared to previous year
Central management of bank accounts and financial risk
■
management for the Würth Group
15
Focus on client needs
New opportunities create new needs. Technology is constantly evolving, and digitalisa-
tion is now also key to the insurance business.
Würth Financial Services AG sees it as its task to identify trends, to respond continu-
ously to changing client needs and to develop modern solutions. The best example
of this is InsurHub, a digital solution that makes it possible to conclude and pay for
insurance policies directly with just a few clicks on a smartphone. A milestone for the
insurance industry.
Annual Report 2022 Würth Finance Group
Report of the Management
EXTERNAL FINANCIAL SERVICES
Innovation was the watchword at Würth Financial Services
The consequences of inflation and supply difficulties are ex-
AG (WFS) in 2022. Thanks to InsurHub, insurance policies
emplified in motor vehicle insurance, which is an important
can now be taken out in entirely digital fashion with just a
area of business for the industry. Prices for spare parts have
few clicks, using the Twint payment app on a smartphone.
risen across the board, which makes repairs more expensive.
Through this project WFS has established a foothold in digi-
As a result, the cost of processing claims has risen significant-
tal insurance sales, and it was awarded second place out of
ly, and this increase will be passed on to consumers through
35 competing projects at the 2022 Swiss insurance industry
higher premiums in subsequent years.
innovation awards. A milestone in the history of WFS and
affirmation of InsurHub’s potential!
The issue of sustainability is also increasingly dominating the
agenda of the insurance industry. The direct connection be-
tween climate change and losses from environmental events
Würth Financial Services
impacts insurers’ results. Given the rise in global warming,
pushed forward in all key
calculation models show that if the climate policy target of
1.5 degrees is rapidly exceeded, a point of no return could
areas – in sales, organisation
soon be reached, beyond which certain risks are no longer
insurable. In response, insurers are beginning to apply envi-
and digitalisation.
ronmental, social and governance (ESG) criteria in assessing
the risks they insure and to classify them by means of pre-
mium adjustments. The extension of risk analysis to include
In the core business, 2022 was marked by an increasingly
sustainability, diversity and social responsibility will have an
challenging insurance market and by the ongoing wave of
increasing impact on insurance premiums.
consolidation among insurance brokers. Despite this environ-
ment, WFS pushed forward in all key areas – in sales, or-
The battle for critical size in the broker-
ganisation and digitalisation – and can look back on a suc-
cessful financial year 2022.
age market
The challenges in the insurance market
The challenges in the insurance market mean that brokers
are growing
are working on an altered basis. Increasingly, customers
have to be confronted with premiums going up even though
they have made no claims. After many years in which a soft
While in previous years insurers were feeling the effects pri-
market and steadily lower premiums prevailed, the current
marily of climate risks and of the pandemic, in 2022 addi-
environment requires a great deal of tact on the part of advi-
tional challenges had to be faced as a result of the war in
sors. In addition, brokers face other complex issues in risk
Ukraine and rising inflation. Negative trends on the financial
management besides sustainability and supply chain chal-
markets also put further pressure on insurers and are likely to
lenges: the severe energy crisis, integral corporate security,
have a negative impact on their results.
increased compliance requirements, ubiquitous cyber threats
18
or even corporate health management are examples of such
issues. The resulting demands made by clients require in-
Unveiling and enhancing
depth expertise and present brokers with the challenge of in-
InsurHub was a key
vesting in the appropriate specialists despite a very tight la-
bour market. The shortage of skilled staff remains a constant
initiative for Würth Financial
difficulty and requires investment in the training of brokers’
own employees to ensure ongoing growth.
Services in 2022.
A second critical area of investment for lasting growth is digi-
talisation. Whether in sales, advising, risk analysis and as-
sessment or the claims process, digital support tools with au-
Additional products and functionalities, as well as suitable
tomated data analysis and processing are gaining in
marketing measures, are intended to achieve the further
importance in terms of providing clients with a high-quality
scaling of the plattform. InsurHub will become increasingly
service. The industry is only just getting started in this regard,
significant both for clients and for WFS as an additional
and the potential for using digital solutions is far from ex-
mainstay of its business.
hausted.
Enhanced efficiency through progress in
The current consolidation in the brokerage market must also
be seen against the backdrop of these varied challenges.
digitalising core processes
Without the requisite critical size, a broker may be able at
present to survive in the marketplace through its close client
relationships and sound expertise, but in the medium term it
In modernising the process landscape, the focus in 2022
is likely to be difficult for a relatively small operator to com-
was on the core processes of client communication, claims
pete with the service offerings of the large brokers. The in-
notification and contract tendering. A switch was made to
vestment needed in people and technology is considerable,
deploying Brokerbusiness and Sobrado, both tools common-
and, with the market remaining a very attractive one, many
ly used in the marketplace for the purpose of contract ten-
brokers are choosing to join forces with a larger provider.
ders, and the results in terms of process quality and efficien-
cy were very positive. The use of artificial intelligence, which
began in 2021, was extended last year to include the new
InsurHub: an innovative mainstay for WFS communications module and ensures significantly reduced
cycle times for written communications with clients. The client
Unveiling and enhancing InsurHub was a key initiative for
portal for the notification of claims was optimised to allow
WFS in 2022. Combining an insurance product structured in
claims to be submitted digitally from end to end. This short-
full digital fashion with the payment app Twint, which has al-
ens the individual process steps and reduces potential
most five million active users, opens up previously unavail-
sources of error.
able market potential for the digital sale of insurance. Clients
are provided with an insurance offer via their smartphone,
The continuous improvement in the process landscape
which can be taken up and paid for directly via InsurHub.
through digitalisation measures will continue to be a high pri-
The process of taking out the insurance policy is greatly sim-
ority within WFS.
plified through the immediate visibility of the policy and of
the general insurance conditions in the app.
19
Annual Report 2022 Würth Finance Group
Successful course of business in 2022
As a result of the expansion in premium volume, revenue also
increased by just under 5% in 2022, which equates to a new
WFS can also look back on a successful financial year in
revenue record for WFS. At the same time, the number of
terms of its key figures. The number of corporate clients in-
sales representatives remained constant compared with the
creased year on year from 3,600 to just under 3,700 and
previous year at 32 employees (FTEs). The number of office
the volume of brokered premiums expanded to CHF 365 mil-
employees was reduced from 24 to 20, which shows a direct
lion, representing growth of 6%. The number of private cli-
effect from the digitalisation measures taken to increase effi-
ents also rose in 2022 to a total of 5,600. This increase
ciency. Administrative expenses rose by 1%, while IT expens-
needs to be seen in the context of the InsurHub digital sales
es were up by 15%. All these effects brought growth in the
channel. Over the last 10 years, WFS has been able to in-
operating result of 7%, which means a new record result in
crease its premium volume by an average of 7%. With the
2022.
exception of the acquisition of Optima Versicherungsbroker
AG, this growth was achieved organically.
Development of premium volume
in million CHF
Number of staff (FTEs)
400
350
60
300
50
250
40
200
30
150
20
100
10
50
0
2018
2019
2020
2021
2022
0
2018
2019
2020
2021
2022
Outlook for 2023
WFS expects growth in 2023 will be similar to what it was in
Even though the overall economic outlook is characterised
previous years. While growth in the core brokerage business
by many unknowns and major uncertainties, WFS is very
is to be generated primarily through traditional sales opera-
well positioned, despite these challenges, to continue on its
tions, the course is being set with regard to InsurHub such
growth path.
that substantial scaling can be achieved in subsequent years.
The further development of functionalities, connecting up
new insurance companies and the launch of new digital in-
surance products will be the focus in the next financial year.
20
Management Würth Financial Services AG
from left to right: Luciano Viotto | Adrian Parpan (Managing Director) | Beat Jordan (Managing Director)
Hans-Jürg Flury is not shown
EXTERNAL FINANCIAL SERVICES
AT A GLANCE
Core business
Facts and figures (at 31 December 2022)
The External Financial Services division operates under the
Number of corporate clients: around 3,700
legal entity of Würth Financial Services AG, one of the lead-
ing independent providers of pension and insurance services
Premium volume: CHF 365 million
to corporate clients and private persons in Switzerland.
Number of employees: 52 (FTEs)
Experienced consultants and highly qualified specialists
draw up tailor-made solutions and advise clients on the best
Five locations: Rorschach (head office), Zurich, Lugano,
choice of pension and insurance products.
Arlesheim and Chur
Services
Insurance brokerage for corporate and private clients
■
Claims management
■
Pension fund advisory services for corporate clients
■
Insurance solutions for credit card issuers and payment
■
providers
21
Personal relationships outlast crises
Contrary to the trend towards anonymity and standardisation, the Würth Finance
Group focuses on long-term, personal relationships.
It cultivates its business relationships with enduring values such as reliability, honesty
and mutual trust. For example, the teams at Würth Finance International B.V. work
closely with the Würth companies and their suppliers in order to be a reliable partner
for them, even in uncertain times.
Annual Report 2022 Würth Finance Group
Würth Finance Group
RISK MANAGEMENT AND CONTROL
1 Risk culture
The Würth Group actively promotes a strong risk culture,
and the Central Management Board or the responsible per-
Taking risks has always been inherent in any entrepreneurial
sons in the areas of compliance, controlling, information se-
activity. As a globally active company, the Würth Group is
curity, IT security and data protection regularly communicate
constantly exposed to risks that can arise both as a result of
the expectations of the risk culture. Employees are also en-
its own actions or failure to act and as a result of external
couraged to take responsibility for identifying and escalating
factors. The conscious and systematic approach to address-
risks and rejecting inappropriate measures. Internal control
ing opportunities and risks is inextricably linked to the Würth
systems, instructions and training courses ensure that employ-
Group’s entrepreneurial activities.
ees are informed about the current status of legislation and
also support them in identifying and dealing with risks.
The decentralised structure of the Würth Group represents a
great advantage, especially given that the individual coun-
2 Risk governance framework
tries in which Würth operates vary so greatly in their eco-
nomic performance. However, as a result of the international-
isation of its business activities, the Würth Group is exposed
2.1 Governance
to the political risks of each economic region.
The Würth Group’s risk governance framework is based on
the “three lines of defence” model as an effective control
Due to restrictive legal standards applying to national and
and monitoring system. In this context, corporate risks are
international transactions involving goods, services, pay-
managed by three independent levels, which ensure that the
ments, capital, technology, software and other types of intel-
risk and control procedures work properly.
lectual property, compliance risks have also gained in impor-
tance. The Würth Group always seeks to comply with all
The first line of defence consists of all the functions associat-
regulations and administrative requirements for its business,
ed with the implementation of day-to-day business. As the
both nationally and internationally. This applies when deal-
risk owners, they are responsible for identifying and analys-
ing with Würth’s customers and suppliers, employees, com-
ing risks in the business processes, implementing appropriate
petitors, other business partners and public authorities.
controls on the management of the risks and testing their ef-
fectiveness. This first line of defence is intended to prevent or
Against this background, systematic risk management for
discover and correct at an early stage all risks that are inher-
achieving corporate goals has become of central impor-
ent in the operational activities.
tance. The Würth Group’s policy on risk and opportunities is
aimed at meeting the medium-term financial objectives and
In contrast to the first line, the second line of defence primar-
at ensuring sustainable, long-term growth. To achieve this,
ily serves to control and monitor the first line of defence. It
the Würth Group has a system that identifies entrepreneurial
takes on various tasks in supervising and controlling operat-
opportunities and risks, assesses them using a standardised
ing risk management, ensuring that this works properly. Re-
system, weighs them against each other and communicates
sponsibility for the second line of defence is assigned to con-
them.
trol functions such as compliance and controlling.
The Central Management Board of the Würth Group holds
The third line of defence is the independent auditing body re-
overall responsibility for the Group-wide risk management
sponsible for internal auditing. It carries out risk-oriented au-
process and defines the principles of the Würth Group’s risk
dits on behalf of the Supervisory Body and is independent of
policy and strategy. The Management of each Group com-
the first two lines of defence and the entity’s management
pany is responsible for establishing an effective and efficient
team. This allows the third line of defence to understand the
risk management system in its entity. They are supported by
processes and risks at the first and second lines of defence
the Würth Group risk manager, who reports directly to the
and to objectively assess the internal control mechanisms.
Central Management Board and coordinates the risk man-
agement process at Würth Group level. The risk manager re-
mains in close contact with the risk controller of the Advisory
Board, who reports directly to the Chairwoman of the Würth
Group.
24
2.2 Framework
Embedded in the Würth Group, Würth Finance International
Mutual trust, predictability, honesty and straightforwardness,
B.V. has access to the aforementioned Group-wide risk man-
directed both internally and externally, are fundamental prin-
agement system. It is exposed to a large number of risks that
ciples that are deeply ingrained in Würth’s corporate culture
are directly linked with the divisional activities of its Inhouse
and in the corporate philosophy. This does not just entail ad-
Banking and External Financial Services divisions. The
hering to all applicable laws and inhouse regulations, but
Group’s most important risk types are credit risks (including
also means ensuring that employees maintain the proper
default risks), liquidity risks, market risks (including exchange
mindset, which is key to the sustainable corporate success of
rate, interest rate and securities price risks) and operational
the Würth Group. Extensive internal guidelines, known as the
risks.
Policies and Procedures Manual, operationalise these funda-
mental principles in the form of descriptions of the structural
Most of the Würth Group’s financial risks are measured,
and process organisation, as well as setting out specific rules
monitored and controlled centrally by Würth Finance Inter-
and codes of conduct.
national B.V. It pursues a conservative risk policy as part of
its risk-oriented company management. It refrains from trans-
Using the Group-wide Würth Information System, an integral
actions with imponderable risks and only enters into quantifi-
component of the internal control and risk management sys-
able risks within clearly defined limits. This principle forms
tem of the Würth Group, all key performance indicators re-
the basis of the risk policy and provides guidelines for busi-
quired to steer the Würth Group are presented in a timely
ness decisions. The general goal is not to eliminate all risk,
manner and are available for further evaluation by the Cen-
but to achieve a balanced relationship between risk and re-
tral Management Board and Executive Vice Presidents,
turn.
based on standardised monthly reporting.
Principles and methods for measuring financial risks, limits
Würth’s Group-wide, system-based control mechanisms, such
and permissible instruments for managing financial risks, and
as validation and cross-checks, optimise the quality of the in-
the design of an effective information and reporting system
formation used as a basis for decision-making. A Group-
are set out in separate financial risk management regula-
wide online record for the Würth Group entities’ financial
tions, and all financial transactions must comply with these.
statements is not only efficient, but also avoids carry-over er-
This framework includes a detailed list of the maximum risk
rors, safeguards the uniform provision of information and in-
exposures approved by the Board of Directors of Würth Fi-
cludes numerous plausibility checks, without which the infor-
nance International B.V. A core aspect of the framework is a
mation cannot be forwarded. This platform also ensures that
system of defined, binding limits and permissible financial in-
financial reporting changes are implemented in a uniform
struments.
manner across the Würth Group. Data are protected against
changes by using check digits and a system of IT access
The Würth Finance Group (WFG) maintains an internal con-
rights. Standard software is used for consolidation. Changes
trol system. The self-imposed obligation to check certain pro-
in the system settings are logged centrally. The monthly and
cesses, routines and functions at predetermined intervals and
annual financial statements of Würth Group companies are
to monitor the elimination of identified sources of error al-
subject to regular automated assessment mechanisms, as are
lows the WFG to protect itself in advance against financial
the consolidated financial statements. Moreover, Würth’s Pol- losses or liability risks. The internal control system is in place
icies and Procedures Manual contains internal procedural in-
to ensure the correctness and reliability of accounting. It con-
structions.
tains principles, procedures and measures to ensure the ef-
fectiveness and efficiency of accounting. The main objective
Internal publications and training include detailed rules on fi-
of the internal control system is to ensure that all business
nancial reporting. Compliance with these rules is regularly
transactions are recorded, processed and documented cor-
reviewed by the central auditing department. External spe-
rectly and in full, in accordance with statutory regulations
cialists are consulted to clarify the accounting implications of
and standards as well as other internal guidelines.
legal and tax issues. External actuaries calculate pension
and similar obligations. Central and local training courses
for those in charge of finance departments also ensure that
all employees involved in the financial reporting process are
up to date on the latest legislation and information of rele-
vance to them.
25
Annual Report 2022 Würth Finance Group
The principles for handling operational risk are anchored in
transactions to other banks. In 2022 there were one rating
a comprehensive set of guidelines and procedures that de-
upgrade and two rating downgrades. The two rating down-
fine how employees should carry out their activities. The stra-
grades related to Credit Suisse (Schweiz) AG and resulted in
tegic objective of a balanced relationship between risk and
the counterparty limit being exceeded because of an open
return is always pursued, applying a cost/benefit analysis.
transaction. The transaction was a term deposit with a final
Each business area takes responsibility for its operational
maturity of 27 April 2023. In this context, the Board of Direc-
and compliance risks and for having adequate procedures in
tors granted special approval for the continuation of the
place to manage those risks. Entities are supported by desig-
transaction.
nated second line of defence operational risk and compli-
ance teams that are responsible for independent risk over-
With all external counterparties for financial derivatives
sight.
transactions, the WFG has concluded ISDA agreements, in-
cluding a Credit Support Annex that ensures the periodic net
present value cash settlement of the outstanding transac-
3 Financial risk and opportunities
tions. The counterparty risks relating to delcredere business
are transferred in full to insurance companies.
Further information on the risks arising from financial instru-
ments and their management can be found specifically in
Every Würth Group company is granted a credit limit by the
note 17 and in the notes to the separate financial report on
Würth Group’s Central Management Board. Würth Finance
the website (www.wuerthfinance.net).
International B.V. monitors compliance with these limits on a
monthly basis. In the event of a continuous credit limit
3.1 Credit risk
breach, the Würth Group’s Central Management Board is
Credit risk is defined as the risk of a financial loss caused by
obliged to grant a new credit limit. Such credit limit breaches
a counterparty failing to meet its financial obligations or by
were repeated in the year under review. The Central Man-
a deterioration in the credit quality of the counterparty. In
agement Board subsequently adjusted the credit limits. Any
the event of a default, the WFG incurs a loss equal to the
credit risk relating to loans to individual Würth Group com-
amount owed by the debtor, less any recoveries. The maxi-
panies with negative equity as at the reporting date are se-
mum credit risk corresponds to the value of all financial as-
cured by letters of comfort from the superordinate parent
sets, contingent liabilities and unused irrevocably guaran-
company.
teed lending commitments reported in the Financial
Statements.
3.2 Liquidity risk
The WFG defines liquidity risk as the risk of being unable to
Given the nature of its core business activities, the WFG
meet due payment obligations in full or on time. In addition,
monitors the counterparty default risk for all its major risk-re-
there is the risk that refinancing means cannot be procured
lated activities.
or can only be procured at higher market rates (liquidity pro-
tection or refinancing risk).
The WFG aims to minimise the credit risk and has defined its
risk appetite in only entering into business relationships with
The WFG is the main financing company of the Würth
first-class external counterparties. Binding counterparty limits
Group and, in this function, manages liquidity risks in accord-
are defined for each rating level, but the aim is to enter into
ance with the recorded strategic guidelines of the Central
business relationships only with banks with a Standard &
Management Board. It also helps to optimise the financial re-
Poor’s minimum rating of “BBB” (equivalent to a rating of
sult by exploiting market opportunities in a targeted manner.
“Baa” from Moody’s and “BBB” from Fitch). The creditwor-
thiness of all the Würth Group’s banking relationships is con-
The overriding goal of the Würth Group and the associated
trolled by daily monitoring of ratings and outlook changes. A
risk appetite is the ability to meet its payment obligations at
rating downgrade leads to a reduction in the credit limits
all times, even in extraordinary situations.
and to immediate reduction or closure and transfer of open
26
The high international creditworthiness of the Würth Group
Individual limits are set for each currency or currency group
(Standard & Poor’s has awarded its non-current liabilities an
to manage exchange rate risks. The limits are to be regarded
“A” rating) allows the WFG to raise funds in the international
as open net positions towards the balance sheet currency.
capital markets on favourable terms. To cover any liquidity
The positions are valued and monitored on a daily basis.
needs that may arise even in extraordinary circumstances,
the WFG also has credit lines granted by various banks. The
In assessing exchange rate risks, the absolute amount of
annual financial requirements plan of the Würth Group serves
open foreign currency positions and changes in their earn-
as a basis for the size and the management of such liquidity
ings development are taken into account. For this purpose,
reserves.
all positions are valued on a daily basis at market rates
(marked to market) and should not exceed the total amount
To measure, analyse, monitor and report on liquidity risk, the
of EUR 50 million.
WFG prepares liquidity overviews on a daily basis and re-
ports the liquidity and debt status of the whole Würth Group
In order to control the exposure to exchange rate risk, the
to the Central Management Board of the Würth Group on a
WFG enters into FX spot transactions, forwards, cross-curren-
monthly basis.
cy swaps and currency options with external counterparties.
In the current reporting period under review all financial re-
The defined limits were not exceeded in the current reporting
quirements were met.
period under review.
3.3 Market risk
3.3.2 Interest rate risk
A large part of the WFG’s business activities is subject to
Interest rate risk is the risk of loss arising from changes in in-
market risk, defined as the possibility of changes in the fair
terest rates in all currencies. Interest rate risk arises from bal-
values of the trading and investment positions. Risks may
ance sheet positions such as loans, financial assets at fair
arise from changes in exchange rates, interest rates and se-
value, payables to related parties and banks, and deriva-
curities prices.
tives, including those used for hedge accounting purposes.
These positions may affect other comprehensive income or
One of the main objectives in dealing with market risks is to
the income statement, depending on their accounting treat-
ensure that the risk corresponds with the approved risk appe-
ment. A significant proportion of the loans to Würth Group
tite and is appropriate to the defined strategy.
companies are refinanced by fixed-interest bonds with par-
tially similar interest and maturity structures.
Both on-balance-sheet and off-balance-sheet financial instru-
ments are used to manage market price risks. Before con-
In order to hedge interest rate risks, the use of derivatives
cluding new transactions, compliance with the prescribed
such as forward rate agreements, interest rate swaps, swap-
limits and the permissibility of derivative financial instruments
tions, caps/floors and cross-currency swaps is permitted in
must be checked. Compliance with the limits is monitored on
addition to any balance sheet structure measure. The limit for
a daily basis.
these derivative financial instruments is set at a notional
amount of EUR 1,000 million, which was not breached in the
The defined limits were not exceeded in the current reporting
current reporting period under review.
period under review.
Interest rate risks are measured using gap and sensitivity
3.3.1 Exchange rate risk
analyses, key rate duration analyses and present value cal-
By exchange rate risks, the WFG means the loss risk on the net
culations.
assets resulting from exchange rate fluctuations between the
transaction currency and the applicable functional currency.
The WFG’s appetite for interest rate risks is defined by the
net present value sensitivity of all on-balance-sheet and off-
Inhouse Banking’s business is exposed to exchange rate risk;
balance-sheet exposures to adverse changes in interest rates
the insurance brokerage business is only subject to transla-
by 100 basis points, expressed as a percentage of equity
tion risk from the conversion of business transactions in Swiss
capital.
francs into the consolidation currency, which is the euro.
27
Annual Report 2022 Würth Finance Group
The defined limits set by the Board of Directors were not ex-
Meeting regulatory requirements is challenging for providers
ceeded in the current reporting period under review.
of financial and insurance services. Among other things, this
entails rules on dealing with employees, with clients and
3.3.3 Securities price risk
business partners, with data and with authorities. It goes
Securities price risk is the risk of financial loss resulting from
without saying that the WFG endeavours to observe and ad-
changes in the price of (publicly traded) securities. To assess
here to all rules and regulations applying to its business. It
securities price risks, the absolute amount of the securities
has the necessary critical mass and the organisational set-up
position and its earnings performance are considered. All
to ensure effective and efficient compliance management
positions are valued at market prices (marked to market).
and thus to meet the increasing regulatory requirements in
the finance and insurance brokerage business. Due to the in-
The WFG pursues a conservative investment policy which al-
creasing legal complexity, the Würth Group has inhouse ex-
lows investment in bonds and money market paper (invest-
perts and consults renowned external consultants on a case-
ment and sub-investment-grade) and shares on regulated
by-case basis.
stock exchanges and capital markets. In addition to a de-
fined benchmark strategy with strategic equity exposure, se-
Training and education within and outside the (Würth)
curities price risk is countered through diversification of the
Group are carried out regularly to promote awareness of le-
investment portfolio. Limits per asset class have also been
gal and compliance risks among employees.
defined to limit securities price risk, including an automatic
equity position reduction mechanism which is triggered at a
Furthermore, a Group-wide whistleblowing system exists that
negative YTD return of the equity portfolio of EUR 750,000,
can be used not only by employees but also by customers,
maximising the total negative return of the equity portfolio at
suppliers and other stakeholders to anonymously report sus-
EUR 6 million per financial year.
picions of compliance breaches.
In the current reporting period under review this automatic
For tax compliance, the WFG is structured in the manner that
position reduction mechanism was not activated.
it needs to comply with both Swiss and Dutch tax legislation
and has embedded operating policies and procedures to en-
sure compliance with these tax legislations.
4 Operational risk
4.2 Technology
Operational risk is the risk of losses resulting from inade-
As the Würth Group’s “payment factory”, the WFG handles
quate or failed internal processes or systems, human error or
large payment volumes, which rely on high-performance IT
external events.
systems and networks. Consequently, the IT systems and IT
security are continually enhanced and monitored via an in-
4.1 Legal and compliance risk
formation security management system. The WFG, in collab-
By legal and compliance risk, the WFG means the risk of
oration with cyber security experts, works to counter the con-
possible, unintentional non-compliance with laws, regula-
stantly growing and evolving threat from attacks on information
tions or standards which could have a negative impact on
and communications technology. It does so by extending
the business and its business relationships and, in the worst
technical and organisational protection measures and by
case, could result in the imposition of payments for dam-
conducting awareness training for employees. In addition,
ages, fines, penalties or other forms of liability.
the WFG has a business disaster recovery system. The ICT in-
frastructure is highly scalable, enabling additional business
volumes to be dealt with cost-effectively and with a high lev-
el of processing quality.
28
5 Sustainability
4.3 Staff
The success of the WFG depends to a large extent on its em-
ployees and their know-how. Through their ideas and sug-
5.1 Foundation
gestions, the employees are deeply involved in particular ac-
Sustainability is becoming increasingly relevant to society.
tivities and work processes and thus make a significant
This is leading to a heightened awareness for concerns such
contribution every day to the WFG’s continued existence, on- as climate change, social injustice and corporate miscon-
going improvement and innovations. Personnel risks will con-
duct. As a result, the market environment is changing rapidly
tinue to influence the WFG in the coming years, as competi-
across all industries. In addition, the inclusion of sustainabil-
tion for highly qualified employees remains intense. Future
ity criteria in decision-making by investors and by banks
success will depend, among other factors, on the extent to
granting loans has led to an expansion and tightening of the
which the WFG succeeds in recruiting, integrating and re-
associated requirements for corporate governance and risk
taining skilled employees in the long term.
management at companies.
Staff turnover is documented and analysed across all hierar-
Thus, sustainability risks, also known as environmental, social
chy levels. Regular surveys conducted by independent institu-
and governance (ESG) risks, also influence the level of capi-
tions and monthly monitoring of staff turnover are key tools
tal costs and insurance costs as well as the creditworthiness
that allow the WFG to identify unfavourable developments,
of the Würth Group and its business partners. This challenge
analyse their impact on staff recruitment and combat these
is being met through active sustainability management at
effects using targeted measures.
strategic and operational level and the expansion of associ-
ated reporting, including at the WFG.
The bottleneck risk arising from current demographic trends,
among other considerations, can be countered by attractive
Sustainability risks relate to the potential impact that a com-
employment conditions, a modern and appealing working
pany, its stakeholders and the environment or society can
environment, and training tailored to individual roles. Em-
have on each other. They are based on a triangular relation-
ployee training can be internal or external. As a family-
ship where each nodal point acts in both directions. ESG
owned business, Würth focuses on the long-term develop-
risks can have a positive or negative impact on a company’s
ment of the company. That applies equally to supporting up-
assets, business models and reputation. They have a com-
and-coming talent at the Würth Finance Group. For many
plex cause-and-effect relationship with the risk framework
years it has taken on apprentices and employed them on a
and all other risk factors. Considering sustainability risks
permanent basis, in line with staffing needs, once they have
therefore requires their systematic integration along the three
completed their training. In order to secure the company’s fu-
lines of defence in the company’s risk framework. The basis
ture, the Würth Finance Group supports ongoing training
for this is reliable and transparent information.
throughout employees’ professional lives. Its own employees
take precedence when management positions need to be
To ensure this transparency, the Würth Group plans to pub-
filled. Up-and-coming management talents attend courses to
lish a Group-wide sustainability report for the first time in
prepare them for various levels of management within the
2023. This will be based on the guidelines and standards of
Group, via the MC Würth, High Potential and Top Potential
the Global Reporting Initiative (GRI) with a view to recording
training programmes. These programmes give employees tar-
the diverse social, economic and environmental activities of
geted training that is tailored to suit their particular ambitions
the Würth Group. Derived from this and based on consistent
and skills, to prepare them for further management duties
data and metrics, the WFG also intends to establish its own
within the Group. Independently of the inhouse training pro-
sustainability reporting. The aim is to create a system that
grammes, both the Würth Group and the WFG support any
makes the progress achieved with regard to sustainability-
employee training as promoting lifelong learning.
oriented corporate governance transparent and comparable.
29
Annual Report 2022 Würth Finance Group
The WFG also sees opportunities to take greater account of
Based on the values of the Würth Group, the WFG supports
sustainability aspects in the design of its own products and
local social projects and organisations in the Netherlands
services. The WFG has identified initial starting points and
and Switzerland. These are often linked to volunteering work
will specify them in coordination with the Würth Group’s sus-
by employees, for example as part of Special Olympics, an
tainability strategy.
organisation that provides training and competition in sports
for people with intellectual disabilities.
5.2 Environmental protection and climate change
Environmental risks arise from the effects of climate change
5.4 Governance
and efforts to mitigate or contain it. They are divided into
The third element in ESG relates to the factors of good cor-
two categories: Physical risks include the direct impact of
porate governance. The guiding principles in this area are
weather and climate changes on the economy. Transition
accountability, fairness, transparency and responsibility. It
risks result from the societal changes brought about by the
must be taken into account that the specific institutional and
shift to a carbon-neutral economy.
cultural context significantly influences the way a company is
set up and monitored.
The WFG intends to support an environmentally friendly cor-
porate governance of the Würth Group and its business part- The WFG has suitable and effective structures, management
ners. That includes promoting and funding projects that help
and decision-making systems, procedures and processes as
to reduce greenhouse gas emissions and protect the environ-
well as competent staffing of management and supervisory
ment. The first step in this direction is the disclosure and re-
bodies, as important elements in ensuring good corporate
porting of quantitative metrics on the current situation and
governance. This is complemented by a solid financial posi-
the creation of incentives for positive sustainability develop-
tion, a comprehensive and effective risk control system and
ment. To this end, metrics have been put in place in line with
performance-related remuneration structures.
the standards of the GRI and initial data collected. At the
same time, the work of the Task Force on Climate-related Fi-
The WFG’s corporate governance is geared towards com-
nancial Disclosures (TCFD) will be kept under review and the
plying with the relevant legal and regulatory requirements,
latest developments in IFRS standards will be followed. The
avoiding infringements wherever possible and thus protect-
WFG sees the integration of environmental and climate
ing the company’s good reputation. An institutionalised whis-
goals into the design of financial and insurance solutions as
tleblowing system helps in the identification and reporting of
an opportunity and has made an initial contribution to
any infringements. The WFG works closely with the authori-
strengthening sustainability-based financial management in
ties in the clarification of conduct that does not comply with
the Würth Group by concluding a “sustainability-linked”
the law and standards.
loan agreement.
The decentralised structure of the Würth Group and short de-
5.3 Social responsibility
cision-making paths enable the WFG to respond quickly to
In the context of ESG, social risks relate to the consequences
changes with regard to the shaping of corporate govern-
of a company’s failure to meet its social responsibilities in its
ance and thus support long-term, sustainable growth.
role as an employer, customer, service provider and stake-
holder in society. For the Würth Group and the WFG, it has
5.5 Diversity and inclusion
always been self-evident that they need to behave in a so-
The Würth Group and Würth Finance International B.V. rec-
cially responsible manner towards all stakeholders and to
ognise the importance of a diverse workforce and believe
give high priority to the relevant values when designing and
that their business activities benefit from staff with a wide
developing the company’s social architecture.
range of skills and a variety of backgrounds. Diversity as-
pects relevant to the company include gender, education/ex-
With regard to employees, the WFG’s commitment is not
perience, age and nationality/cultural background. Thanks
limited to health and safety. It wishes to support its employ-
to these aspects different perspectives arise, which help to
ees in their activities and work experience. The WFG strives
drive growth and innovation and avoid a silo mentality.
to attract and foster a broad range of talented employees at
all levels of the company; it is eager to promote workforce
diversity and regards a fair remuneration system as a self-
evident requirement.
30
Following the introduction of statutory requirements regard-
The following measures have been or will be taken to
ing gender diversity in the Netherlands for companies such
achieve these goals:
as Würth Finance International B.V., the company’s diversity
• The Würth Group has established a “diversity and
policy was revised in 2022. Under the new policy, the com-
inclusion team” supporting all Group companies including
pany undertakes to improve the gender balance throughout
Würth Finance International B.V. in their ambition to
the company and has developed ambitious targets for this
achieve a more diverse workforce and an inclusive
purpose. In this context, the current composition of the Board
working environment. This support consists of a mentoring
of Directors and Management, as well as the current rep-
programme, a women’s network and training materials to
resentation of women in the company, have been taken into
create awareness on diversity and inclusion.
account.
• Würth Finance International B.V. has ensured that gender
neutral wording will be used whenever job vacancies are
announced.
Würth Finance International B.V. as at 31.12.2022
• “Gender diversity” will be included in the profile for new
Composition male/female
members of Management and the Board of Directors.
per relevant corporate body
Male
Female
• Recruiters are instructed to include female talent in
Board of Directors
7
0
relevant shortlists.
Management: Managing Directors
2
0
• Working towards more gender diverse teams is included
Management: other members
4
0
as an objective for senior management.
Company
54
22
• All employees are educated on the value of diversity.
• The company will monitor how applicants, employees and
Note: The Management consist of the statutory members (Managing
leavers perceive the issues of diversity and inclusion as
Directors) and non-statutory members.
experienced within Würth Finance International B.V. (and
action is taken based upon the outcome).
To accelerate the achievement of a better gender balance at
the management level, the company aims to appoint at least
The current composition of the management reflects the fact
one female member for the Management and Board of Di-
that the company, with its male-dominated employee base,
rectors in the next three years. In the long term, a minimum
has traditionally supported the promotion of internal candi-
balance of 30% men and 30% women by 2030 is targeted.
dates. While the company will continue to invest in the devel-
opment and promotion of its people, it recognises the impor-
tance of creating an inclusive workplace and attracting
female talent at all levels. Although the desired change will
not happen overnight, the company has clear goals on what
it aims to accomplish and is determined to act accordingly.
Basic principles of our risk management system
The Management bears the responsibility for all risks
disclosure of risks to the Group and company management,
■
incurred as a result of the company’s business activities
owners, supervisory authorities and other stakeholders.
and seeks to achieve a healthy balance between risk and
returns.
Income is protected on the basis of risk tolerance – i.e. the
■
maximum risk that the Würth Finance Group can bear
An independent control process forms an integral part of
given its financial and earning power.
■
the corporate structure.
Ultimately, the Würth Finance Group’s reputation depends
■
Employees are familiar with and alert to the principal risks
on effective risk management and control.
■
specific to their area of activity. A central element of risk
control is the comprehensive, transparent and objective
31
Job security through agility
Being able to react to change and evolve is the basis for success – for companies as
well as for their employees.
Thanks to these skills, the Würth Finance Group has had a stable number of employees
for years. It invests in the development of new skills and competencies of its employees,
while at the same time creating secure jobs. Employees can rely on the Würth Finance
Group as an employer.
Annual Report 2022 Würth Finance Group
Würth Group
LEGAL STRUCTURE (SIMPLIFIED CHART)
Würth
Family Foundations
Adolf Würth
Würth Promotion GmbH
GmbH&Co. KG
Austria
Germany
Reinhold Würth
International
Holding GmbH
subsidiaries
Germany
International
subsidiaries
Würth Finance
Würth International AG
International B.V.
Switzerland
Netherlands
Würth Financial
Würth Finance Int’l B.V.
International
Services AG
Rorschach Branch
subsidiaries
Switzerland
Switzerland
Würth Invest AG
Switzerland
34
Würth Finance Group
EXECUTIVE BODIES
(As at 31 December 2022)
Board of Directors
Würth Finance International B.V.
Elected until:
Joachim Kaltmaier
(Member of the Central Management Board of the Würth Group)
Chairman
2026
Prof. Dr. h. c. mult. Reinhold Würth
(Chairman of the Supervisory Board of the Würth Group)
Member
2025
Dieter Gräter
(Vice President Finance, Würth-Verwaltungsgesellschaft mbH)
Member
2025
Christoph Raithelhuber
Member
2025
Ralf Schaich
(Member of the Supervisory Board of the Würth Group, Vice President Adolf Würth GmbH & Co. KG)
Member
2025
Mag. Michel Haller
(Chief Executive Officer of Hypo Vorarlberg Bank AG)
Member
2026
Wolfgang Kirsch
(Former Chief Executive Officer of DZ Bank AG, Chairman of the Supervisory Board of Fresenius SE & Co. KGaA)
Member
2026
Managing Directors
Würth Finance International B.V.
Björn van Odijk
Roman Fust
Managing Directors
Würth Financial Services AG
Adrian Parpan
Beat Jordan
Managing Directors
Würth Invest AG
Roman Fust
(Delegate of the Board of Directors)
Patrik Imholz
Auditors
EY, Amsterdam/Zurich:
Würth Finance International B.V.
EY, Zurich:
Würth Financial Services AG, Würth Invest AG
Internal auditors
KPMG, Zurich:
Würth Finance International B.V.
35
Annual Report 2022 Würth Finance Group
Würth Finance Group
INFORMATION FOR INVESTORS
Outstanding Capital Market Transactions by Würth Finance International B.V. at 31 December 2022:
Bond
Notional amount:
Coupon rate:
Issue yield:
Term:
Listing:
EUR 500 m
1.000%
1.038%
25.05.2018–26.05.2025 Luxembourg Stock Exchange /ISIN: XS1823518730
CHF 300 m
2.100%
2.070%
16.11.2022–16.11.2026 SIX Swiss Exchange / ISIN: CH1206367604
EUR 750 m
0.750%
0.782%
21.05.2020–22.11.2027 Luxembourg Stock Exchange /ISIN: XS2176534795
EUR 600 m
2.125%
2.174%
23.05.2022–23.08.2030 Luxembourg Stock Exchange /ISIN: XS2480515662
All bonds have been granted an “A” rating by Standard & Poor’s.
Multi Currency Commercial Paper Programme
Notional amount:
Coupon rate:
Maturity period:
EUR 500 m
variable
7 days–2 years
Under this programme, in addition to Würth Finance International B.V., Adolf Würth GmbH & Co. KG can also issue short-
term commercial paper for up to a cumulative total of EUR 500 million.
36
Würth Finance Group
EXCERPT FROM THE
FINANCIAL STATEMENTS 2022
37
Annual Report 2022 Würth Finance Group
Consolidated income statement
for the year ended at 31 December
in TEUR
2022
2021
Operating income
Interest income from financial instruments measured at amortised cost
72,136
42,665
Interest income from financial instruments measured at fair value through profit or loss
16,290
15,408
Interest expenses
–58,850
–43,903
Net interest income
29,576
1 4 ,1 7 0
Income from factoring activities
17, 733
16,234
Income from commission and service fee activities
48,348
43,725
Income from trading activities and financial instruments
11,289
14,789
Other ordinary income from related parties
653
797
Expected credit loss (expenses) /recovery
–4,615
6,846
Total operating income
102,984
96,561
Operating expenses
Personnel expenses
–21,991
–20,701
Other administrative expenses
–12,682
–11, 485
Amortisation expenses
–1,968
–1,845
Other ordinary expenses
–15
0
Total operating expenses
–36,656
–34,031
Profit before taxes
66,328
62,530
Income tax expense
–12,673
–9,587
Deferred taxes
749
–82
Net profit for the year
54,404
5 2 ,8 6 1
Consolidated statement of comprehensive income
for the year ended at 31 December
in TEUR
Net of tax
2022
2021
Profit for the year
54,404
5 2 ,8 6 1
Total items that will be reclassified to the income statement
Exchange differences on translation of foreign operations
92
–49
Net gain/(loss) on cash flow hedges
2,031
3,457
Total items that will not be reclassified to the income statement
Remeasurement gain /(loss) on defined benefit plans
1,893
3,080
Deferred taxes on cash flow hedges
–411
2,062
Other comprehensive income for the year (OCI)
3,605
8 ,5 5 0
Total comprehensive income for the year, net of tax
58,009
61, 411
38
Consolidated balance sheet
at 31 December before appropriation of profits
in TEUR
2022
2021
ASSETS
Non-current assets
Intangible assets
1,441
1,477
Right-of-use assets
1,749
1,814
Property, plant and equipment
431
428
Loans to related companies
1,554,992
1,429,290
Positive fair values of derivative instruments
14,894
4,670
Deferred tax assets
2,507
2,062
Total non-current assets
1,576,014
1,439,741
Current assets
Receivables from related companies
1,348,390
1,079,652
Positive fair values of derivative instruments
6,634
985
Other assets
2,949
3,623
Income tax receivables
52
0
Accrued income and prepaid expenses
12,248
6,828
Securities held for trading
95,473
68,479
Cash and cash equivalents
804,952
859,052
Total current assets
2,270,698
2,018,619
Total assets
3,846,712
3,458,360
EQUITY AND LIABILITIES
Shareholders’ equity
Issued capital
16,000
16,000
Additional paid-in capital
5,000
5,000
Retained earnings
333,099
303,345
Other comprehensive income from cash flow hedges
–7, 327
–8,947
Foreign currency translation
38
–54
Net profit for the year
54,404
52,861
Total shareholders’ equity
401,214
368,205
Non-current liabilities
Bonds issued
2,109,593
1,250,060
Liabilities for pension plans
2,160
3,969
Lease liabilities
480
610
Negative fair values of derivative instruments
12,442
719
Deferred tax liabilities
342
320
Total non-current liabilities
2,125,017
1,255,678
Current liabilities
Bonds issued
0
499,843
Commercial paper
75,000
0
Payables to related companies
1,194,662
1,283,002
Lease liabilities
1,287
1,220
Payables to banks
6,589
11,988
Income tax payables
9,310
7,020
Negative fair values of derivative instruments
7, 565
8,347
Other liabilities
15,612
15,565
Accrued expenses and deferred income
10,456
7, 492
Total current liabilities
1,320,481
1,834,477
Total equity and liabilities
3,846,712
3,458,360
39
Annual Report 2022 Würth Finance Group
Consolidated statement of changes in equity
for the year ended at 31 December
Foreign
Issued
Additional
Retained
Cash flow
currency
in TEUR
capital paid-in capital
earnings hedge reserve
translation
Total
At 1 January 2021
16,000
5,000
320,265
–14,466
–5
326,794
Net profit for the year
0
0
52,861
0
0
52,861
Foreign currency translation
0
0
0
0
–49
–49
Cash flow hedge accounting
0
0
0
3,457
0
3,457
Remeasurement gain /(loss) on defined benefit plans
0
0
3,080
0
0
3,080
Deferred taxes on cash flow hedges
0
0
0
2,062
0
2,062
Total comprehensive income for the year
0
0
55,941
5,519
–49
61, 411
Dividend payments
0
0
–20,000
0
0
–20,000
At 31 December 2021
16,000
5,000
356,206
–8,947
–54
368,205
At 1 January 2022
16,000
5,000
356,206
–8,947
–54
368,205
Net profit for the year
0
0
54,404
0
0
54,404
Foreign currency translation
0
0
0
0
92
92
Cash flow hedge accounting
0
0
0
2,031
0
2,031
Remeasurement gain /(loss) on defined benefit plans
0
0
1,893
0
0
1,893
Deferred taxes on cash flow hedges
0
0
0
–411
0
–411
Total comprehensive income for the year
0
0
56,297
1,620
92
58,009
Dividend payments
0
0
–25,000
0
0
–25,000
At 31 December 2022
16,000
5,000
387, 503
–7, 327
38
401,214
Würth Finance International B.V. has authorised share capital of EUR 80 million consisting of 160,000 share certificates with
a nominal value of EUR 500. Of this authorised share capital, 32,000 share certificates have been subscribed and fully paid
in, corresponding to EUR 16 million.
In 2022, a dividend of TEUR 25,000 (EUR 781 per share) was paid for financial year 2021.
40
Consolidated cash flow statement
for the year ended at 31 December
in TEUR
2022
2021
Net profit for the year
54,404
52,861
Amortisation and impairments
508
429
Adjustment to provision for taxes
2,290
1,065
Deferred tax expense /(benefit)
–423
–2,143
Other expenses and revenues without cash flows
–33,619
–3,618
Foreign exchange gains and losses (long-term loans)
–25,165
–17,213
Foreign exchange gains and losses (short-term loans)
1,331
–942
(Increase)/decrease in operating assets
Redemption of long-term loans to related companies
60,744
57,083
Lending of long-term loans to related companies
–496,979
–584,111
Receivables from related companies
62,945
156,959
Positive fair values of derivative instruments
–15,873
8,375
Income tax receivables
–52
0
Other assets, accrued income and prepaid expenses
–4,746
100
Increase/(decrease) in operating liabilities
Payables to related companies
–88,340
62,551
Negative fair values of derivative instruments
10,941
300
Other liabilities, accrued expenses and deferred income
3,011
3,746
Net cash flows from operating activities
–469,023
–264,557
Purchase of property, plant and equipment, and intangible assets
–405
–421
Disposal of property, plant and equipment, and intangible assets
0
–61
Purchase of securities
–60,139
–28,451
Disposal of securities
28,180
30,449
Sales of other financial assets to related parties
0
9,500
Net cash flows from investing activities
–32,364
11,016
Proceeds of borrowings
902,649
0
Repayment of borrowings
–500,000
0
Commercial paper
75,000
0
Dividend payments
–25,000
–20,000
Net cash flows from financing activities
452,649
–20,000
Net foreign exchange difference
36
–48
Net increase/(decrease) in cash and cash equivalents
–48,702
–273,589
Net cash and cash equivalents at the beginning of the year
847,065
1,120,654
Net cash and cash equivalents at the end of the year
798,363
847,065
Net increase/(decrease) in cash and cash equivalents
–48,702
–273,589
Increase/(decrease) in taxes paid
–10,031
–8,254
Interest received
101,167
69,090
Interest paid
–49,464
–37, 334
The funds for this cash flow statement are represented by cash and cash equivalents (net).
41
Published by
Layout and concept
Würth Finance International B.V.
Wirz Group AG, Zurich
Editors
Photos / Illustrations
Corporate Communications
René Lamb Fotodesign, Kreuzlingen
Würth Finance International B.V.
Jürg Dummermuth, Ploy Studio GmbH, Zurich
Wirz Group AG, Zurich
Würth Finance Group/Würth Finance International B.V.
FINANCIAL STATEMENTS 2022
CONTENTS
Financial Statements 2022
Würth Finance Group
04 Consolidated Income Statement
04 Consolidated Statement of Comprehensive Income
05 Consolidated Balance Sheet
06 Consolidated Statement of Changes in Equity
07 Consolidated Cash Flow Statement
08 Notes to the Consolidated Financial Statements
Financial Statements 2022
Würth Finance International B.V.
46 Company Income Statement
46 Company Balance Sheet
48 Accounting Policies Used in Preparing
the Company Financial Statements
49 Notes to the Company Financial Statements
55 Other Information
56 Independent Auditor’s Report
Würth Finance Group
FINANCIAL STATEMENTS 2022
Annual Report 2022 Würth Finance Group
Consolidated income statement
for the year ended at 31 December
in TEUR
Notes
2022
2021
Operating income
Interest income from financial instruments measured at amortised cost
9
Interest income from financial instruments measured at fair value through profit or loss
9
Interest expenses
9
–58,850
–43,903
Net interest income
Income from factoring activities
Income from commission and service fee activities
10
Income from trading activities and financial instruments
11
Other ordinary income from related parties
12
Expected credit loss (expenses) /recovery
17a
–4,615
Total operating income
Operating expenses
Personnel expenses
13
–21,991
–20,701
Other administrative expenses
–12,682
–11, 485
Amortisation expenses
–1,968
–1,845
Other ordinary expenses
–15
Total operating expenses
–36,656
–34,031
Profit before taxes
Income tax expense
14
–12,673
–9,587
Deferred taxes
14
–82
Net profit for the year
Consolidated statement of comprehensive income
for the year ended at 31 December
in TEUR
Net of tax
2022
2021
Profit for the year
Total items that will be reclassified to the income statement
Exchange differences on translation of foreign operations
–49
Net gain/(loss) on cash flow hedges
Total items that will not be reclassified to the income statement
Remeasurement gain /(loss) on defined benefit plans
Deferred taxes on cash flow hedges
–411
Other comprehensive income for the year (OCI)
Total comprehensive income for the year, net of tax
04
Consolidated balance sheet
at 31 December before appropriation of profits
in TEUR
Notes
2022
2021
ASSETS
Non-current assets
Intangible assets
3
Right-of-use assets
3
Property, plant and equipment
3
Loans to related companies
4, 15
Positive fair values of derivative instruments
17b, 17c
Deferred tax assets
14
Total non-current assets
Current assets
Receivables from related companies
15
Positive fair values of derivative instruments
17b, 17c
Other assets
5
Income tax receivables
14
Accrued income and prepaid expenses
Securities held for trading
6, 17a
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Shareholders’ equity
Issued capital
Additional paid-in capital
Retained earnings
Other comprehensive income from cash flow hedges
–7, 327
–8,947
Foreign currency translation
–54
Net profit for the year
Total shareholders’ equity
Non-current liabilities
Bonds issued
7
Liabilities for pension plans
13
Lease liabilities
Negative fair values of derivative instruments
17b, 17c
Deferred tax liabilities
14
Total non-current liabilities
Current liabilities
Bonds issued
7
Commercial paper
Payables to related companies
15
Lease liabilities
Payables to banks
Income tax payables
Negative fair values of derivative instruments
17b, 17c
Other liabilities
8, 15
Accrued expenses and deferred income
Total current liabilities
Total equity and liabilities
05
Annual Report 2022 Würth Finance Group
Consolidated statement of changes in equity
for the year ended at 31 December
Foreign
Issued
Additional
Retained
Cash flow
currency
in TEUR
capital paid-in capital
earnings hedge reserve
translation
Total
At 1 January 2021
–14,466
–5
Net profit for the year
Foreign currency translation
–49
–49
Cash flow hedge accounting
Remeasurement gain /(loss) on defined benefit plans
Deferred taxes on cash flow hedges
Total comprehensive income for the year
–49
Dividend payments
–20,000
–20,000
At 31 December 2021
–8,947
–54
At 1 January 2022
–8,947
–54
Net profit for the year
Foreign currency translation
Cash flow hedge accounting
Remeasurement gain /(loss) on defined benefit plans
Deferred taxes on cash flow hedges
–411
–411
Total comprehensive income for the year
Dividend payments
–25,000
–25,000
At 31 December 2022
–7, 327
Würth Finance International B.V. has authorised share capital of EUR
80
million consisting of 160,000 share certificates with
a nominal value of EUR 500 . Of this authorised share capital, 32,000 share certificates have been subscribed and fully paid
in, corresponding to EUR 16 million.
06
Consolidated cash flow statement
for the year ended at 31 December
in TEUR
2022
2021
Net profit for the year
Amortisation and impairments
Adjustment to provision for taxes
Deferred tax expense /(benefit)
–423
–2,143
Other expenses and revenues without cash flows
–33,619
–3,618
Foreign exchange gains and losses (long-term loans)
–25,165
–17,213
Foreign exchange gains and losses (short-term loans)
–942
(Increase)/decrease in operating assets
Redemption of long-term loans to related companies
Lending of long-term loans to related companies
–496,979
–584,111
Receivables from related companies
Positive fair values of derivative instruments
–15,873
Income tax receivables
–52
Other assets, accrued income and prepaid expenses
–4,746
Increase/(decrease) in operating liabilities
Payables to related companies
–88,340
Negative fair values of derivative instruments
Other liabilities, accrued expenses and deferred income
Net cash flows from operating activities
–469,023
–264,557
Purchase of property, plant and equipment, and intangible assets
–405
–421
Disposal of property, plant and equipment, and intangible assets
–61
Purchase of securities
–60,139
–28,451
Disposal of securities
Sales of other financial assets to related parties
Net cash flows from investing activities
–32,364
Proceeds of borrowings
Repayment of borrowings
–500,000
Commercial paper
Dividend payments
–25,000
–20,000
Net cash flows from financing activities
–20,000
Net foreign exchange difference
–48
Net increase/(decrease) in cash and cash equivalents
–48,702
–273,589
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the end of the year
Net increase/(decrease) in cash and cash equivalents
–48,702
–273,589
Increase/(decrease) in taxes paid
–10,031
–8,254
Interest received
Interest paid
–49,464
–37, 334
The funds for this cash flow statement are represented by cash and cash equivalents (net).
07
Annual Report 2022 Würth Finance Group
Notes to the consolidated Financial Statements
for the year ended at 31 December
The companies belonging to the Würth Finance Group (sub- sequently referred to as “the Group”) are part of the interna- tionally active Würth Group. All share certificates pertaining to Würth Finance International
B.V.
, Amsterdam, are held by
Reinhold Würth Holding GmbH
, Künzelsau, Germany, which is ultimately owned by the
family foundation
.
The core activities of the Group include providing financing to and carrying out a wide range of financial activities with companies, both at home and abroad, belonging to the en- tire Würth Group, as well as providing consulting and other services in the area of pension funds and insurance to both private persons and small and medium-sized enterprises.
The Annual Report of the Group was approved by the Man- agement on 19 April 2023 and can be obtained from Würth Finance International B.V., Amsterdam, or downloaded from the Würth Finance International B.V. website: www.wuerthfinance.net.
Fully consolidated companies
The consolidated Financial Statements include the financial statements of Würth Finance International B.V., Amsterdam, and its subsidiaries, which are represented as a single busi- ness entity known as the Würth Finance Group. Subsidiaries that are controlled directly or indirectly by the Group have been consolidated. Control is achieved when the Würth Fi- nance Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Con- trol is assumed if the Würth Finance Group holds more than 50% of the voting rights of the investee.
Subsidiaries are consolidated from the date on which they were acquired by the Group and are deconsolidated from the date of disposal.
The scope of consolidation of the Group as at 31 December 2022 is composed as follows:
| Company | Core activities | No. chamber of commerce | Currency | Share capital | Quota |
| Würth Finance International B.V., | Treasury activities for the Würth Group | 008654700 | EUR | 16,000 | 100% |
| Amsterdam | |||||
| Würth Invest AG, | Asset management | CH - 350.3.0 07.992- 6 | CHF | 23,000 | 100% |
| Chur | |||||
| Würth Financial Services AG, | Financial and pension plan consulting/insurance | CH-020.3.918.954-7 | CHF | 1,500 | 100% |
| Rorschach | brokerage for corporate and private clients |
08
The consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code. The main accounting principles are described in this section in order to show how their application influences the stated results and information for the Group.
The consolidated Financial Statements are presented in euros and all values are rounded to the nearest thousand (EUR 0,000), except when otherwise indicated.
The Group has prepared its consolidated financial statements on the basis that it will continue to operate as a going concern.
New and amended standards and interpretations Several amendments and interpretations apply for the first time in 2022, but do not have an impact on the consolidated Financial Statements of the Group. The Group has not adopt-ed any standards, interpretations or amendments early that have been issued but are not yet effective. The nature and effect of the changes as a result of adoption of these new accounting standards are described below.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
These amendments had no impact on the consolidated finan- cial statements of the Group as there were no onerous con- tracts that arose during the period.
Reference to the Conceptual Framework – Amendments to IFRS 3
These amendments had no impact on the consolidated finan- cial statements of the Group as there were no contingent as- sets, liabilities or contingent liabilities within the scope of these amendments that arose during the period.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 Leases
The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any pro- ceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. In- stead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. In accordance with the transitional provisions, the Group ap- plies the amendments retrospectively only to items of PP&E made available for use on or after the beginning of the earli- est period presented when the entity first applies the amend- ment (the date of initial application). These amendments had no impact on the consolidated financial statements of the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented.
IFRS 1 First-time Adoption of International Financial Re- porting Standards – Subsidiary as a first-time adopter
These amendments had no impact on the consolidated finan- cial statements of the Group as it is not a first-time adopter.
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified fi- nancial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, in- cluding fees paid or received by either the borrower or lend- er on the other’s behalf. There is no similar amendment pro- posed for IAS 39 Financial Instruments: Recognition and Measurement. In accordance with the transitional provisions, the Group applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment (the date of initial application). These amend- ments had no impact on the consolidated financial state- ments of the Group as there were no modifications of the Group’s financial instruments during the period.
IAS 41 Agriculture – Taxation in fair value measurements
These amendments had no impact on the consolidated finan- cial statements of the Group as it did not have assets in scope of IAS 41 as at the reporting date.
Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards and interpretations, if applicable, when they become effective.
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for in- surance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will re- place IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regard- less of the type of the entities that issue them, as well as to certain guarantees and financial instruments with discretion- ary participation features. A few scope exceptions will ap- ply. The overall objective of IFRS 17 is to provide an account- ing model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements of IFRS 4, which are largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive mod- el for insurance contracts, covering all relevant accounting aspects. The core IFRS 17 is the general model, supplement- ed by:
• A specific adaptation for contracts with direct participa-
tion features (the variable fee approach)
• A simplified approach (the premium allocation approach)
mainly for short-duration contracts
09
Annual Report 2022 Würth Finance Group
IFRS 17 is effective for reporting periods beginning on or af- ter 1 January 2023, with comparative figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. This standard is not applicable to the Group.
Assumptions and estimates
The IFRS include guidelines require the Group to make as- sumptions and estimates when preparing its consolidated Fi- nancial Statements. These estimates and assumptions are continuously reviewed and are based on past experience and other factors, including expectations regarding likely fu- ture developments. The most important assumptions and esti- mates relate to the actuarial calculations for pensions and other post-employment benefits, the expected credit loss, as well as the provisions.
Recognition
Purchases and sales of financial assets and liabilities are rec- ognised on the settlement day. Transactions are thus recog- nised in the balance sheet mainly on the settlement date and not on the transaction date. Derivatives, however, are recog- nised on the trade date. All concluded transactions are re- corded and evaluated. Any unrealised gains or losses result- ing from valuing transactions at market value are recognised in the income statement.
Interest income and interest expenses are accrued using the effective interest rate (EIR) method and recognised as in- come or expenses respectively.
Dividends are recognised as
from the date when they have been formally declared and
approved
. Premiums and discounts arising from the issuance of bonds are amortised over their residual term using the ef- fective interest rate method.
Factoring fees are recognised
when the receivable is assigned to the Group .
Foreign exchange translation
The Group’s consolidated Financial Statements are present- ed in euros, which is the Group’s presentation currency. Transactions in foreign currencies are initially recorded at the functional currency spot rate at the date the transaction first qualifies for recognition. Exchange differences arising from such transactions, as well as income resulting from convert- ing monetary assets and monetary liabilities denominated in foreign currencies at the rate of exchange applicable at the balance sheet date, are recognised in the income statement.
| Conversion rates at 31 December | 2022 | 2021 |
| US dollar (USD) | 1.068 | 1.137 |
| Swiss franc (CHF) | 0.987 | 1.036 |
| British pound (GBP) | 0.888 | 0.840 |
| Canadian dollar (CAD) | 1.446 | 1.436 |
| Chinese renminbi (CNH) | 7.386 | 7.232 |
| Norwegian krone (NOK) | 10.516 | 10.027 |
| Danish krone (DKK) | 7. 436 | 7. 438 |
| Swiss franc (CHF) – average exchange rate | 1.005 | 1.081 |
On consolidation, all assets and liabilities of the subsidiaries – with the exception of shareholders’ equity – are translated into euros at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consoli- dation are recognised in OCI. On disposal of a foreign op- eration, the component of OCI relating to that particular for- eign operation is reclassified in profit or loss foreign currency translation.
Financial instruments
A financial instrument is any contract that gives rise to a fi- nancial asset of one entity and a financial liability or equity instrument of another entity.
On initial recognition, financial instruments are measured at fair value. Fair value on initial recognition includes transac- tion costs directly attributable to the acquisition or issue of fi- nancial instruments, except for financial instruments carried at fair value through profit or loss, for which transaction costs are recognised in net income in the period when they are in- curred.
Financial instruments are measured in subsequent periods ei- ther at fair value or at amortised cost using the effective inter- est rate method, depending on the financial instrument classi- fication.
10
The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the ex- pected life of the financial asset or liability to its carrying amount. When calculating the effective interest rate, the Group estimates future cash flows, considering all contractu- al terms of the financial instrument.
Business combination
In a business combination, the acquirer obtains control over one or more businesses. Business combinations are account- ed for using the acquisition method. The cost of an acquisi- tion is measured as the aggregate of the consideration trans- ferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifi- able net assets. Acquisition-related costs are expensed as in- curred and included in administrative expenses.
When the Group acquires a business, it assesses the finan- cial assets and liabilities assumed for appropriate classifica- tion and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquir- er will be recognised at fair value at the acquisition date. A contingent consideration classified as equity is not remeas- ured and its subsequent settlement is accounted for within equity.
A contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments is measured at fair value with the changes in fair value recognised in the statement of profit or loss in accordance with IFRS 9. Other contingent considera- tions that are not within the scope of IFRS 9 are measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
Major types of financial and non-financial instruments and their classification
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an in- significant risk of changes in value. Cash and cash equiva- lents are valued at amortised cost.
Securities
Within the scope of its management and performance meas- urement activities relating to a documented risk management and investment strategy, the Group measures securities as fi- nancial instruments at fair value through profit or loss. The fair value of securities that are actively traded in organised financial markets is determined by reference to quoted mar- ket prices. For securities where there is no active market, fair value is determined using valuation techniques such as price quotations from securities brokers or on the basis of price models. The valuations are by their very nature dependent on the assumptions on which they are based. Traded debt securities are carried at their clean price.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. All loans and receivables are initially rec- ognised at their actual cost, which corresponds to the fair value at the time of the loan being granted. After initial rec- ognition, loans and receivables are subsequently measured at amortised cost less value adjustments using the effective interest rate method and less allowance for expected credit losses.
The payments on the loans consist solely of interest and prin- cipal. Income and expenses are recognised as income or ex- penses respectively.
The Group records an allowance for expected credit loss (ECL) for all loans. The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit losses or LTECL), unless there has been no significant increase in credit risk since origination, in which case the allowance is based on the 12 months’ expected credit losses (12mECL).
Derivative financial instruments
Derivative financial instruments are financial contracts that derive their value from underlying changes in interest rates, foreign exchange rates or other financial instruments. The Group acquires derivative financial instruments to manage exposures to interest, currency and other market risks. Derivative financial instruments are classified as held-for- trading financial assets / financial liabilities, unless they are included in hedge accounting as hedging instruments.
Derivative financial instruments are recognised at fair value at each balance sheet date and reported in the balance sheet under “positive fair values of derivative instruments” or “negative fair values of derivative instruments”.
The fair values recognised in the balance sheet reflect the net fair value of the instruments after the cash settlement.
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Annual Report 2022 Würth Finance Group
Derivative financial instruments and hedge accounting
The Group designates certain derivatives held for risk man- agement purposes as cash flow hedges or fair value hedges:
• Fair value hedges when hedging the exposure to changes
in the fair value of a recognised asset or liability or an unrecognised firm commitment
• Cash flow hedges when hedging the exposure to
variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or to a highly probable forecasted transaction or the foreign currency risk in an unrecognised firm commitment
The Group documents all hedging relationships and its risk management objectives, along with its strategy for carrying out the hedge transactions.
The Group assesses whether the derivatives used in hedging transactions are highly effective in offsetting changes in the cash flow or the fair value of hedged items, both at inception and over the life of the hedge.
If these hedging instruments expire, are sold or no longer meet the criteria for hedge accounting, the amounts previ- ously recognised in OCI are reclassified to the income state- ment as net gains or losses on other financial instruments dur- ing the periods when the variability in the cash flows or fair values of the hedged item affects net income. However, if a forecasted transaction is no longer expected to occur, the cu-mulative gain or loss that was reported in equity is immedi- ately transferred to the income statement under net gains or losses on other financial instruments.
Bonds issued
Issued bonds are initially recognised at the fair value of the consideration received, net of directly attributable transac- tion cost. They are subsequently reported in the balance sheet at amortised cost using the effective interest rate method. The amortisation of bond-issuing cost (discount) is recognised in the income statement over the duration of the term using the effective interest rate method. Bonds represent non-current liabilities. As soon as the remaining term is less than 12 months, the respective bond is reported as a current liability.
Property, plant and equipment comprise office furniture and equipment, interior installations, vehicles, ICT hardware and works of art. These assets are capitalised if their acquisition or production cost can be reliably determined, if they will bring future economic benefit, and if the anticipated usage extends beyond the reporting period.
Property, plant and equipment are stated at cost, net of accu- mulated amortisation and accumulated impairment losses, if any. Amortisation is calculated on a straight-line basis over the estimated useful life of the assets:
| Office furniture and equipment | 2–5 years |
| Interior installations | 5 years |
| Vehicles | 3–4 years |
| ICT hardware | 2–3 years |
No amortisation is calculated on works of art. The amortisation periods and methods are reviewed at least at each financial year-end.
Intangible assets comprise among others software. Intangi- ble assets acquired separately are initially measured at cost. The cost of intangible assets acquired in a business combina- tion is their fair value at the date of acquisition. Following ini- tial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Intangible assets are amortised over their useful economic life and assessed for impairment whenever there is an indica- tion that the intangible asset may be impaired.
Amortisation is calculated on a straight-line basis over the es- timated useful lives of the assets:
| EDP software | 2 years |
| Activated customer base | 10 years |
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are accounted for by changing the amortisation peri- od or method, as appropriate, and treated as changes in ac- counting estimates.
The amortisation expense is recognised in the income state- ment in the expense category amortisation expenses. The amortisation period and amortisation method are reviewed at least at each financial year-end.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabil- ities to make lease payments and right-of-use assets repre- senting the right to use the underlying assets.
12
Right-of-use assets
The Group recognises right-of-use assets at the commence- ment date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated amortisation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabil- ities recognised, initial direct costs incurred, and lease pay- ments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depre- ciated on a straight-line basis over the shorter of their esti- mated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognis- es lease liabilities measured at the present value of lease payments to be made over the lease term. The lease pay- ments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guaran- tees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to ter- minate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease com- mencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In ad- dition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemp- tion to its short-term leases of machinery and equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase op- tion). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Significant judgment in determining the lease term of con- tracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be ex- ercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
Impairment of assets
The value of property, plant and equipment and other fixed assets is reviewed for impairment at least once a year or if significant events or changes in circumstances suggest that their book value is too high. Where the carrying amount of an asset exceeds its recoverable amount, the asset is consid- ered impaired and is written down to its recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair value less the cost to sell and its value in use.
Provisions
Provisions are recognised in the balance sheet when the Group has a present obligation to a third party as a result of a past event, it is probable that an outflow of resources em- bodying economic benefits will be required to settle the obli- gation, and a reliable estimate can be made of the amount of the obligation.
Taxes and deferred taxes
Current income taxes are calculated based on the taxable income in the fiscal year and in accordance with the applica- ble tax laws in the
Netherlands
and Switzerland, and are recognised as an expense in the period in which the income is earned. They are stated as income tax receivables and in- come tax payables in the balance sheet.
Tax effects arising from temporary differences between the carrying value of assets and liabilities reported in the bal- ance sheet and their corresponding tax values are recog- nised separately as deferred tax assets and deferred tax lia- bilities respectively. Deferred income tax assets arising from temporary differences and from loss carryforwards eligible for offset are recognised only if it seems likely that in future sufficient taxable profits will be available against which those loss carryforwards can be offset.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the asset is realised or the liability is settled.
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Annual Report 2022 Würth Finance Group
Pensions and other post-employment benefits
The Group operates a number of pension plans for its em- ployees. These are treated as defined benefit plans in ac- cordance with IAS 19. Actuarial gains and losses are recog- nised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the peri- od in which they occur. The impact of the effect is shown in the consolidated statement of comprehensive income.
For separately funded defined benefit plans, the degree of coverage of the fair value of the benefit obligations com- pared with the plan’s assets, valued at market prices, is re- ported in the balance sheet as a liability or an asset, taking into consideration claims that still have to be offset and unre- corded actuarial gains or losses (the “projected unit credit method”).
The Group is responsible for concentrating and optimising the worldwide cash flows within the Würth Group, managing the financial risks and handling the Würth Group financing. In this connection, by its very nature the Group carries out a very wide variety of transactions with associated companies, that is, with companies belonging to the Würth Group. Only a relatively small proportion of transactions are carried out with third parties outside the Würth Group.
Transactions performed within the Group are eliminated for the purpose of these consolidated Financial Statements. All intra-Group transactions are consolidated within the frame- work of the consolidated financial statements of the Würth Group.
Segments
The Group generates income through a wide range of activi- ties, which are divided into the following segments:
• Inhouse Banking with Group Financing, Trading, Securities
investments, Central Settlement and Central Services
• External Financial Services with Pension Plans & Insurance
This structure forms the basis for the primary segment report- ing. Segment reporting by geographic area is not consid- ered meaningful as the services are only provided from the Netherlands and Switzerland.
The Group Financing segment borrows funds from the money and capital markets and places them at the disposal of the Würth Group companies in the form of loans and credits. The Trading segment purchases and sells currency and inter- est rate instruments as well as securities for the purpose of generating financial income and capital gains. The activities relating to payment for goods purchased by Würth Group companies, together with the delcredere and collection ser- vices for suppliers of goods, are summarised under Central Settlement. Some of the Group’s excess funds are allocated to a securities portfolio, which is managed through Würth Invest AG. The results of these asset management activities are disclosed in the segment Securities investments. The Pen- sion Plans & Insurance segment comprises the services pro- vided by Würth Financial Services AG, which include finan- cial and pension plan consulting and insurance brokerage for corporate and private clients.
Direct revenue and expense are allocated to the appropriate segment. Transfers between the business units are reported at fair value, which corresponds to the amounts that would be charged to third parties for similar services. Revenue and expense arising from activities that are not directly attributa- ble to the segments are booked to Central Services.
14
3 Intangible assets/right-of-use assets/property, plant and equipment
Intangible assets /right-of-use assets /property, plant and equipment comprise the following items:
At 31 December 2022
| Additions | ||||||||
| (disposals) | ||||||||
| Acquisition | incl. asset | Acquisition | Accum. | Asset | Amortisation | Accum. | Net book | |
| cost | retirement | cost | amortisation | retirement | for the year | amortisation | value | |
| in TEUR | 2021 | 2022 | 2022 | 2021 | 2022 | 2022 | 2022 | 2022 |
| Intangible assets | ||||||||
| Software | 2,360 | 219 | 2,579 | –2,165 | –40 | –106 | –2,311 | 268 |
| Activated customer base | 15,956 | 782 | 16,738 | –14,674 | –722 | –169 | –15,565 | 1,173 |
| Total intangible assets | 18,316 | 1,001 | 19,317 | –16,839 | –762 | –275 | –17,876 | 1,441 |
| Right-of-use assets | ||||||||
| Right-of-use land and buildings | 4,975 | 1,308 | 6,283 | –3,161 | 22 | –1,450 | –4,589 | 1,694 |
| Right-of-use vehicles | 0 | 65 | 65 | 0 | 0 | –10 | –10 | 55 |
| Total right-of-use assets | 4,975 | 1,373 | 6,348 | –3,161 | 22 | –1,460 | –4,599 | 1,749 |
| Property, plant and equipment | ||||||||
| Vehicles | 655 | –24 | 631 | –399 | 107 | –108 | –400 | 231 |
| Art objects | 34 | 0 | 34 | 0 | 0 | 0 | 0 | 34 |
| Office equipment/installations | 2,932 | 269 | 3,201 | –2,794 | –116 | –125 | –3,035 | 166 |
| Total property, plant and equipment | 3,621 | 245 | 3,866 | –3,193 | –9 | –233 | –3,435 | 431 |
| Total | 26,912 | 2,619 | 29,531 | –23,193 | –749 | –1,968 | –25,910 | 3,621 |
At 31 December 2021
| Additions | ||||||||
| (disposals) | ||||||||
| Acquisition | incl. asset | Acquisition | Accum. | Asset | Amortisation | Accum. | Net book | |
| cost | retirement | cost | amortisation | retirement | for the year | amortisation | value | |
| in TEUR | 2020 | 2021 | 2021 | 2020 | 2021 | 2021 | 2021 | 2021 |
| Intangible assets | ||||||||
| Software | 2,228 | 133 | 2,360 | –2,075 | –30 | –59 | –2,165 | 196 |
| Activated customer base | 15,280 | 675 | 15,956 | –13,897 | –620 | –158 | –14,674 | 1,281 |
| Total intangible assets | 17, 508 | 808 | 18,316 | –15,972 | –650 | –217 | –16,839 | 1,477 |
| Right-of-use assets | ||||||||
| Right-of-use land and buildings | 3,714 | 1,260 | 4,975 | –2,028 | 283 | –1,417 | –3,161 | 1,814 |
| Right-of-use vehicles | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total right-of-use assets | 3,714 | 1,260 | 4,975 | –2,028 | 283 | –1,417 | –3,161 | 1,814 |
| Property, plant and equipment | ||||||||
| Vehicles | 635 | 21 | 655 | –482 | 204 | –121 | –399 | 256 |
| Art objects | 34 | 0 | 34 | 0 | 0 | 0 | 0 | 34 |
| Office equipment/installations | 2,789 | 143 | 2,932 | –2,658 | –45 | –90 | –2,794 | 138 |
| Total property, plant and equipment | 3,458 | 164 | 3,621 | –3,140 | 159 | –211 | –3,193 | 428 |
| Total | 24,680 | 2,232 | 26,912 | –21,140 | –208 | –1,845 | –23,193 | 3,719 |
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Annual Report 2022 Würth Finance Group
| in TEUR | Right-of-use assets |
| As at 1 January 2022 | 1,814 |
| Accretion of interest | 0 |
| Additions | 1,373 |
| Amortisation expense | –1,438 |
| As at 31 December 2022 | 1,749 |
| in TEUR | Lease liabilities |
| As at 1 January 2022 | 1,830 |
| Accretion of interest | –1 |
| Payments | –62 |
| As at 31 December 2022 | 1,767 |
| in TEUR | Lease liabilities |
| Amortisation expense of right-of-use assets | –1,438 |
| Interest expense on lease liabilities | –1 |
| Expense relating to short-term leases (incl. in cost of sales) | 0 |
| Expense relating to leases of low-value assets (incl. admin. expenses) | 0 |
| Variable lease payments (incl. in cost of sales) | 0 |
| Total amount recognised in income statement | –1,439 |
4 Loans to related parties
| in TEUR | 2022 | 2021 |
| Balance at 1 January | 1, 437,145 | 1,167, 421 |
| New loans granted, increase in existing loans | 496,979 | 584,111 |
| Repayments | –60,744 | –57,083 |
| Currency and other adjustments | 21,217 | 22,390 |
| Term reclassification | –331,750 | –283,641 |
| Expected creditloss | –7,855 | –3,908 |
| Total loans to related parties | 1,554,992 | 1,429,290 |
Long-term loans to related companies, granted in foreign currencies, are translated into euros at the year-end conversion rates. The average interest rates for the major currencies at 31 December are:
| 2022 | 2021 | |
| EUR | 1.94% | 1.76% |
| CHF | 1.01% | 0.99% |
| USD | 3.62% | 3.63% |
| DKK | 0.99% | 1.02% |
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5 Other assets
| in TEUR | 2022 | 2021 |
| Receivables from third parties | 2,773 | 3,002 |
| Other assets | 176 | 621 |
| Total other assets | 2,949 | 3,623 |
6 Securities
| Market value | Acquisition cost | Market value | Acquisition cost | |
| in TEUR | 2022 | 2022 | 2021 | 2021 |
| Equity/equity funds | 9,065 | 10,070 | 10,775 | 10,170 |
| Investment-grade bonds /bonds funds | 81,673 | 85,371 | 52,389 | 50,961 |
| Sub-investment-grade bonds | 2,759 | 3,131 | 3,451 | 3,361 |
| Commodities | 1,976 | 1,864 | 1,864 | 1,590 |
| Total securities | 95,473 | 100,436 | 68,479 | 66,082 |
Securities are recognised at market values.
On 21 February 2022, the company repaid a EUR 500 million bond with annual 1.000% coupon by exercising the 3-month par call option in due time before 14 January 2022. The company issued two bonds under its EUR 3 billion EMTN pro- gramme. The first bond was issued on 23 May 2022 with a notional amount of EUR 600 million, a term of 8¼ years and an annual coupon of 2.125%. The second bond was issued on 16 November 2022 with a notional amount of CHF 300 million, a term of 4 years and an annual coupon of 2.100%.
Overview of bonds issued at 31 December 2022
| in TEUR | Notional | Notional | Premium/ | Own | ||
| Maturity | amount | amount TEUR | discount | bonds | Total | Coupon |
| Long term | ||||||
| 26.05.2025 | TEUR 500,000 | 500,000 | –9, 711 | 0 | 490,289 | 1.000% |
| 16.11.2026 | TCHF 300,000 | 306,639 | –4,107 | 0 | 302,532 | 2.100% |
| 22.11.2027 | TEUR 750,000 | 750,000 | –2,554 | 0 | 747, 4 46 | 0.750% |
| 23.08.2030 | TEUR 600,000 | 600,000 | –30,674 | 0 | 569,326 | 2.125% |
| Total book value long-term bond liabilities | 2,109,593 | |||||
| Total book value bonds issued | 2,109,593 |
| Notional | |||
| in TEUR | (excluding own | ||
| Maturity | bonds) | Market value | Coupon |
| 26.05.2025 | 500,000 | 476,785 | 1.000% |
| 16.11.2026 | 306,639 | 304,038 | 2.100% |
| 22.11.2027 | 750,000 | 661,425 | 0.750% |
| 23.08.2030 | 600,000 | 540,162 | 2.125% |
| Total market value at 31 December | 1,982,410 |
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Annual Report 2022 Würth Finance Group
Overview of bonds issued at 31 December 2021
| in TEUR | Notional | Notional | Premium/ | Own | ||
| Maturity | amount | amount TEUR | discount | bonds | Total | Coupon |
| Short term | ||||||
| 19.05.2022 | TEUR 500,000 | 500,000 | –157 | 0 | 499,843 | 1.000% |
| Total book value short-term bond liabilities | 499,843 | |||||
| Long term | ||||||
| 26.05.2025 | TEUR 500,000 | 500,000 | 3,135 | 0 | 503,135 | 1.000% |
| 22.11.2027 | TEUR 750,000 | 750,000 | –3,074 | 0 | 746,925 | 0.750% |
| Total book value long-term bond liabilities | 1,250,060 | |||||
| Total book value bonds issued | 1,749,903 |
| Notional | |||
| (excluding own | |||
| in TEUR Maturity | bonds) | Market value | Coupon |
| 19.05.2022 | 500,000 | 500,900 | 1.000% |
| 26.05.2025 | 500,000 | 516,165 | 1.000% |
| 22.11.2027 | 750,000 | 773,055 | 0.750% |
| Total market value at 31 December | 1,790,120 |
The market values shown in the tables are calculated as the sum of all discounted cash flows based on the swap curves (source: Bloomberg).
The issued bonds are irrevocably and unconditionally guaranteed by joint and several guarantees of Adolf Würth GmbH & Co. KG, Künzelsau.
The effective interest rates do not significantly differ from the nominal interest rates.
8 Other liabilities
| in TEUR | 2022 | 2021 |
| Payables for deliveries and services | 8,800 | 8,583 |
| of which to third parties | 658 | 3,005 |
| of which to related parties | 8,142 | 5,578 |
| Compensation-related liabilities | 4,646 | 4,626 |
| Other liabilities | 2,166 | 2,356 |
| Total other liabilities | 15,612 | 15,565 |
Other liabilities primarily comprise accruals for services received but not invoiced during the financial year.
18
9 Interest income and expenses
At 31 December 2022
| Parent | Associated | Third | ||
| in TEUR | Total | companies | companies | parties |
| Interest income | ||||
| Interest income from financing activities at amortised cost | 51,273 | 0 | 51,248 | 25 |
| Interest income from financing leasing activities at amortised cost | 2,299 | 0 | 2,299 | 0 |
| Interest income from liquid assets at amortised cost | 18,564 | 47 | 16,173 | 2,344 |
| Interest income from current accounts | 16,220 | 47 | 16,173 | 0 |
| Interest income from bank accounts, time deposits and money market funds | 2,344 | 0 | 0 | 2,344 |
| Interest income from financial instruments at fair value through profit and loss | 16,290 | 0 | 5,011 | 11,279 |
| Valuation gains/(losses) from interest rate and cross-currency swaps (realised) | 0 | 0 | 0 | 0 |
| Interest income from interest rate and cross-currency swaps | 14,725 | 0 | 4,106 | 10,619 |
| Other interest income from financial instruments | 1,565 | 0 | 905 | 660 |
| Total interest income | 88,426 | 47 | 74,731 | 13,648 |
| Interest expenses | ||||
| Interest expenses for current accounts and time deposits | 3,434 | 190 | 3,172 | 72 |
| Interest expenses for bonds issued | 24,367 | 2,149 | 0 | 22,218 |
| Interest expenses from financial instruments | 28,814 | 131 | 9,553 | 19,130 |
| Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised) | 997 | 0 | 3,696 | –2,699 |
| Interest expenses from interest rate and cross-currency swaps | 18,371 | 0 | 4,201 | 14,170 |
| Other interest expenses from financial instruments | 9,446 | 131 | 1,656 | 7,659 |
| Other interest expenses (third parties) | 2,235 | 0 | 7 | 2,228 |
| Total interest expenses | 58,850 | 2,470 | 12,732 | 43,648 |
At 31 December 2021
| Parent | Associated | Third | ||
| in TEUR | Total | companies | companies | parties |
| Interest income | ||||
| Interest income from financing activities at amortised cost | 32,518 | 0 | 32,494 | 24 |
| Interest income from financing leasing activities at amortised cost | 2,580 | 0 | 2,580 | 0 |
| Interest income from liquid assets at amortised cost | 7, 567 | 28 | 7, 493 | 46 |
| Interest income from current accounts | 7, 521 | 28 | 7, 493 | 0 |
| Interest income from bank accounts, time deposits and money market funds | 46 | 0 | 0 | 46 |
| Interest income from financial instruments at fair value through profit and loss | 15,408 | 0 | 6,251 | 9,157 |
| Valuation gains/(losses) from interest rate and cross-currency swaps (realised) | 2 | 0 | 2 | 0 |
| Interest income from interest rate and cross-currency swaps | 14,138 | 0 | 4,981 | 9,157 |
| Other interest income from financial instruments | 1,268 | 0 | 1,268 | 0 |
| Total interest income | 58,073 | 28 | 48,818 | 9,227 |
| Interest expenses | ||||
| Interest expenses for current accounts and time deposits | 308 | 0 | 74 | 234 |
| Interest expenses for bonds issued | 20,562 | 2,188 | 0 | 18,374 |
| Interest expenses from financial instruments | 18,928 | 0 | 5,491 | 13,437 |
| Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised) | 0 | 0 | 0 | 0 |
| Interest expenses from interest rate and cross-currency swaps | 15,136 | 0 | 5,491 | 9,645 |
| Other interest expenses from financial instruments | 3,792 | 0 | 0 | 3,792 |
| Other interest expenses (third parties) | 4,105 | 0 | 1 | 4,104 |
| Total interest expenses | 43,903 | 2,188 | 5,566 | 36,149 |
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Annual Report 2022 Würth Finance Group
10 Income from commission and service fee activities
| in TEUR | 2022 | 2021 |
| Acquisition commissions, brokerage fees | 14,340 | 13,094 |
| Collection and delcredere agreements | 34,008 | 30,631 |
| Total income from commission and service fee activities | 48,348 | 43,725 |
11 Income from trading activities and financial instruments
| in TEUR | 2022 | 2021 |
| Income from securities transactions | –5,463 | 1,125 |
| Income from foreign exchange transactions | 16,752 | 13,664 |
| Total income from trading activities and financial instruments | 11,289 | 14,789 |
12 Other ordinary income from related parties
Other ordinary income comprised TEUR 653 (2021: TEUR 797) in income from the e-payment services provided to other Würth Group companies, as well as fees charged for other services rendered.
At 31 December personnel expenses were as follows:
| in TEUR | 2022 | 2021 |
| Wages and salaries | 18,439 | 17,333 |
| Pension cost | 1,174 | 1,164 |
| Social securitycost | 1,533 | 1,456 |
| Other employee cost | 845 | 748 |
| Total personnel expenses | 21,991 | 20,701 |
Pension plan
The Group had no direct or indirect share or option-based remuneration in favour of employees.
The pension plan in the Netherlands consists of a defined contribution plan. The salary over which pension was built up was maximised at TEUR 100 (2021: TEUR 98). The premi- um was partly paid by the employer.
In Switzerland, the individual Group companies participated in a semi-autonomous pension scheme in which several Swiss Würth entities participated. In this plan actuarial risks (longe- vity, disability and death) are vested in an insurance company.
The investment risks remained with the pension scheme, which was responsible for the asset management. The pen- sion scheme was an addition to the statutory social security insurance.
The employees paid a savings contribution amounting to 1.5%–10% of their insured annual salary. The employees’ contribution amount is age-related. In addition, the employ- ees had the option of paying voluntary contributions.
In another scheme for authorised representatives and Man- aging Directors in Switzerland, the annual employee contri- butions amounted to 50% of the total sum.
20
The following figures provide an overview of the financial situation regarding the defined benefit plans as at 31 December:
| in TEUR | 2022 | 2021 |
| Pension cost | ||
| Current service cost | 1,167 | 1,181 |
| Net interest expense/(income) | 11 | 9 |
| Foreign currency translation | –4 | –26 |
| Pension cost recognised in income statement | 1,174 | 1,164 |
| Revaluation of defined benefit plan | ||
| Actuarial (gains)/losses due to changes in demographic assumptions | –8,042 | –2,765 |
| Actuarial (gains)/losses due to changes based on experience | 3,990 | 863 |
| Return on plan assets (less interest income) | 2,089 | –1,205 |
| Foreign currency translation | 70 | 27 |
| Revaluation recognised in OCI | –1,893 | –3,080 |
| Liabilities for pension plan | ||
| Defined benefit obligation at 31 December | 42,106 | 43,190 |
| Fair value of plan assets at 31 December | –39,946 | –39,221 |
| Net liabilities at 31 December | 2,160 | 3,969 |
| Changes in the benefit obligations | ||
| Benefit obligation at 1 January | 43,190 | 40,563 |
| Interest expense | 133 | 62 |
| Current service cost | 1,167 | 1,181 |
| Plan participant contributions | 1,067 | 947 |
| Actuarial (gains)/losses due to changes in demographic assumptions | –8,042 | –2,765 |
| Actuarial (gains)/losses due to changes based on experience | 3,990 | 863 |
| Benefit payments | –1,461 | 514 |
| Foreign currency translation | 2,062 | 1,825 |
| Benefit obligation at 31 December | 42,106 | 43,190 |
| Changes in the plan assets | ||
| Fair value of plan assets at 1 January | 39,221 | 33,767 |
| Interest income | 122 | 53 |
| Return on plan assets (less interest income) | –2,089 | 1,205 |
| Plan participant contributions | 1,067 | 947 |
| Employer contributions | 1,188 | 1,080 |
| Benefit payments | –1,461 | 514 |
| Foreign currency translation | 1,898 | 1,655 |
| Fair value of plan assets at 31 December | 39,946 | 39,221 |
| Assumptions | ||
| Discount rate | 2.20% | 0.30% |
| Expected return on plan assets | 0.30% | 0.15% |
| Future salary increases up to age 54 P /A | 1.00% | 0.50% |
| Future salary increases from age 55 P /A | 0.00% | 0.00% |
| Future pension increases | 0.00% | 0.00% |
| Probability of termination of service | BVG 2015/Generation table | |
21
Annual Report 2022 Würth Finance Group
Sensitivity of benefit obligation
| in TEUR | Defined benefit | Gross service |
| Defined changes in assumptions | obligation | cost |
| Assumption at 31.12.2022 | 42,106 | 2,024 |
| Discount rate | ||
| Increase by 25 basis points | 42,807 | 1,956 |
| Decrease by 25 basis points | 45,612 | 2,096 |
| Rate of salary increase | ||
| Increase by 50 basis points | 44,572 | 2,024 |
| Decrease by 50 basis points | 43,782 | 2,024 |
Plan asset allocation by category:
| 2022 | 2021 | |
| Equities | 22.0% | 25.7% |
| Bonds | 40.0% | 38.7% |
| Real estate | 28.5% | 26.5% |
| Other | 9.5% | 9.1% |
| Total of plan asset allocation | 100.0% | 100.0% |
The plan assets of the pension funds consisted either of cred- it balances with an insurance company or a semi-autonomous pension scheme.
For financial year 2023, the Group anticipated contributions to defined benefit pension plans amounting to approximately TEUR 2,024.
| in TEUR | 2022 | 2021 |
| Short-term employee benefits | 2,500 | 2,335 |
| Total compensation paid to key management personnel | 2,500 | 2,335 |
Compensation of key management personnel of the Group
In 2022 and 2021, no other forms of compensation were paid to key management staff.
In 2022, fees of TEUR 320 were paid to members of the Board of Directors (2021: TEUR 240).
The key management comprised the Managing Directors of the Group companies (2022: 5 persons; 2021: 5 persons).
Remuneration for the Managing Directors of the Group companies totalled TEUR 2,500 in the year 2022 (2021: TEUR 2,335).
22
Tax positions are, inherently to operating internationally and across borders, in certain cases uncertain. Accruals and/or provisions were made where deemed necessary. Würth Finance Group is exposed to tax risks which amongst others could result in double taxation. The source of these risks could originate from local tax rules and regulations as well as international and EU regulatory frameworks. These in- clude transfer pricing risks on internal cross-border deliveries of services, tax risks related to acquisitions and divestments, tax risks related to permanent establishments, tax risks relat- ing to tax losses, interest and tax credits carried forward and potential changes in tax law that could result in higher tax expenses and payments.
The Group is subject to income tax in the Netherlands and in Switzerland. All taxes that were due or are payable in the
future relating to the financial years up to and including 2022 are accrued as at 31 December 2022.
The relevant tax rate for the Netherlands was 25.8% (2021: 25%). Due to separate taxation of the head office in the Netherlands, the branch office in Switzerland and the subsidiaries in accordance with valid legislation in the corres- ponding countries, there was a difference between the effec- tive tax rate and the relevant tax rate for the Netherlands. The relevant tax rates in Switzerland were 8.5% (2021: 8.5%) on a federal level and 8.3% (2021: 8.5%) on a cantonal level.
The withholding tax credits not utilised in the Netherlands amounted to TEUR 6,501 (2021: TEUR 6,693) and are avail- able for carryforward indefinitely.
The reconciliation of income taxes is composed as follows:
| in TEUR | 2022 | 2021 |
| Income before taxes | 66,328 | 62,530 |
| Tax expense using the assumed average tax rate (25.8%) | 17,113 | 15,633 |
| Effect on tax-free income /effect on non-taxable expenses | 0 | 0 |
| Difference between actual and assumed tax rates | –5,572 | –4,296 |
| Withholding tax payments | 99 | 174 |
| (De)recognition deferred taxes | 749 | –93 |
| Tax effects related to prior years | –465 | –2,471 |
| Other effects | 0 | 722 |
| Net effective tax expenses | 11,924 | 9,669 |
| in TEUR | 2022 | 2021 |
| Deferred tax assets on cash flow hedges | 1,651 | 2,062 |
| Deferred tax assets from loss carry-forwards | 856 | 0 |
| Deferred taxassets | 2,507 | 2,062 |
| in TEUR | 2022 | 2021 |
| Deferred tax liabilities on intangible assets | 342 | 320 |
| Deferred tax liabilities | 342 | 320 |
23
Annual Report 2022 Würth Finance Group
As the operative treasury unit of the Würth Group, the Group is responsible for concentrating and optimising the worldwide flow of payments, managing the financial risks and handling the financing of the Würth Group companies.
In addition to all the companies belonging to the Würth Group, the “related parties” also included the members of the Board of Directors and Management of the Group, as well as their families and companies closely associated with them.
At 31 December 2022
| Parent | Associated | ||
| in TEUR | Total | companies | companies |
| Receivables from related parties | |||
| Loans to related companies | 1,554,992 | 0 | 1,554,992 |
| Receivables from related companies | 1,348,390 | 8,420 | 1,339,970 |
| Current accounts | 577, 512 | 0 | 577, 512 |
| Short-term loans | 578,502 | 0 | 578,502 |
| Factoring | 192,376 | 8,420 | 183,956 |
| Total receivables from related parties | 2,903,382 | 8,420 | 2,894,962 |
| Payables to relatedparties | |||
| Payables to related companies | 1,194,662 | 405,254 | 789,408 |
| Current accounts | 1,005,775 | 405,254 | 600,521 |
| Fixed-term deposits | 188,887 | 0 | 188,887 |
| Other payables to related parties | 8,142 | 0 | 8,142 |
| Total payables to related parties | 1,202,804 | 405,254 | 797, 550 |
At 31 December 2021
| Parent | Associated | ||
| in TEUR | Total | companies | companies |
| Receivables from related parties | |||
| Loans to related companies | 1,429,290 | 0 | 1,429,290 |
| Receivables from related companies | 1,079,652 | 7, 712 | 1,071,940 |
| Current accounts | 353,586 | 0 | 353,586 |
| Short-term loans | 526,634 | 0 | 526,634 |
| Factoring | 199,432 | 7, 712 | 191,720 |
| Total receivables from related parties | 2,508,942 | 7, 712 | 2,501,230 |
| Payables to relatedparties | |||
| Payables to related companies | 1,283,002 | 415,982 | 867,020 |
| Current accounts | 1,266,385 | 415,982 | 850,403 |
| Fixed-term deposits | 16,617 | 0 | 16,617 |
| Other payables to related parties | 5,578 | 0 | 5,578 |
| Total payables to related parties | 1,288,580 | 415,982 | 872,598 |
The receivables from related companies (short-term loans) above include an amount of TEUR 1,264 (2021: TEUR 596) related to the expected credit loss (ECL). Reference is made to Note 17.
The exposure to Russian companies amounted to TEUR 514 at year-end 2022 and can be fully allocated to current account receivables from related companies. This does not represent a material position for the Würth Finance Group and therefore no further details are provided in the report.
24
16 Commitments and contingencies
The Group has issued guarantees, letters of comfort and let- ters of credit. These represent commitments and contingen- cies in favour of third parties for associated company liabil-
ities. The lending commitments, which had been guaranteed, but not yet utilised, are disclosed at nominal value.
| in TEUR | 2022 | 2021 |
| Guarantees, letters of comfort, letters of credit | 227, 371 | 212,126 |
| Total contingent liabilities | 227, 371 | 212,126 |
| in TEUR | 2022 | 2021 |
| Unutilised lending commitments | 67,684 | 42,198 |
| Total unutilised lending commitments | 67, 684 | 42,198 |
Financial risks are inherent in the Group’s business activities but are carefully measured, controlled and monitored by means of a systematic risk management process. To provide secure auditing and transparent information, a strict segrega- tion was made between the functions of bodies that take risks and those that monitor risks. The financial risks were measured and monitored without restriction by the Group’s risk controlling bodies. The control of financial risks was ef- fected on the basis of internal directives defined in writing or with reference to strategic guidelines for action. Amendmentsto the internal directives were made by a defined process and must be approved by the Group’s supervisory bodies.
In order to mitigate the financial risks and optimise income on the financial resources, the Group entered into derivative financial instrument transactions. The Group expected that any reduction in value of one such instrument will generally be compensated by a corresponding increase in the value of the underlying hedged transaction.
The financial risks were limited by determining the authorised instruments and by adhering to a limit system on a daily ba- sis. Corresponding reporting by the bodies which control the risk for the attention of management was effected daily. The management of market risks (foreign currency, interest rate, security price), credit risks and liquidity risks is described be- low.
Foreign currency risk
Due to its operating activities the Group enters into foreign currency transactions for companies of the Würth Group worldwide and was therefore exposed to exchange rate fluc- tuations. The Group deems foreign currency risks to mean the loss risk on the reported assets and revenues arising from the change in the relationship between exchange rates of the exposure currency and the balance sheet currency, the euro.
For the control of foreign currency risks, individual limits were set for each currency or for each geographical region. To control the currency risks, spot transactions, forward transac- tions, currency swaps, cross-currency swaps and currency options were used. The positions were valued and monitored on a daily basis.
Sensitivity analysis for material foreign currency posi- tions at 31 December
The following table discloses the sensitivity of the Group’s profit before tax (due to changes in the fair value of mone- tary assets and liabilities) triggered by a reasonably possible change in the exchange rate, with all other variables held constant. The table reflects the most important currencies for loans and deposits for the Würth Finance Group.
| 2022 | 2021 | |||
| Market scenario | Impact on profit | Market scenario | Impact on profit | |
| Currency | (in TEUR) | (in TEUR) | ||
| CHF | 10% | 1,705 | 10% | 1,071 |
| –10% | –1,705 | –10% | –1,071 | |
| USD | 10% | 1,568 | 10% | 880 |
| –10% | –1,568 | –10% | –880 | |
| GBP | 10% | 17 | 10% | 44 |
| –10% | –17 | –10% | –44 | |
| CAD | 10% | 113 | 10% | 96 |
| –10% | –113 | –10% | –96 | |
| CNY | 10% | 45 | 10% | 36 |
| –10% | –45 | –10% | –36 | |
| DKK | 10% | 25 | 10% | 19 |
| –10% | –25 | –10% | –19 | |
| NOK | 10% | 105 | 10% | 123 |
| –10% | –105 | –10% | –123 | |
25
Annual Report 2022 Würth Finance Group
Balance sheet by currency at 31 December 2022
| Amounts in TEUR countervalue | ||||||
| in TEUR | Total | EUR | USD | CHF | DKK | Others |
| ASSETS | ||||||
| Non-current assets | ||||||
| Intangible assets | 1,441 | –190 | 0 | 1,631 | 0 | 0 |
| Right-of-use assets | 1,749 | 1,289 | 0 | 460 | 0 | 0 |
| Property, plant and equipment | 431 | –72 | 0 | 503 | 0 | 0 |
| Loans to related companies | 1,554,992 | 1,000,603 | 383,102 | 116,224 | 3,718 | 51,345 |
| Positive fair values of derivative instruments | 14,894 | 9,646 | 5,083 | 165 | 0 | 0 |
| Deferred tax assets | 2,507 | 2,507 | 0 | 0 | 0 | 0 |
| Total non-current assets | 1,576,014 | 1,013,783 | 388,185 | 118,983 | 3,718 | 51,345 |
| Current assets | ||||||
| Receivables from related companies | 1,348,390 | 866,876 | 143,251 | 58,599 | 49,701 | 229,963 |
| Positive fair values of derivative instruments | 6,634 | 4,529 | 1,586 | 32 | 95 | 392 |
| Other assets | 2,949 | 1,606 | 0 | 1,336 | 0 | 7 |
| Income tax receivables | 52 | 52 | 0 | 0 | 0 | 0 |
| Accrued income and prepaid expenses | 12,248 | 9,869 | –624 | 695 | 4 | 2,304 |
| Securities held for trading | 95,473 | 89,173 | 4,469 | 1,831 | 0 | 0 |
| Cash and cash equivalents | 804,952 | 369,800 | 726 | 418,871 | 1,466 | 14,089 |
| Total current assets | 2,270,698 | 1,341,905 | 149,408 | 481,364 | 51,266 | 246,755 |
| Total assets | 3,846,712 | 2,355,688 | 537, 593 | 600,347 | 54,984 | 298,100 |
| EQUITY AND LIABILITIES | ||||||
| Shareholders’ equity | ||||||
| Issued capital | 16,000 | 16,000 | 0 | 0 | 0 | 0 |
| Additional paid-in capital | 5,000 | 5,000 | 0 | 0 | 0 | 0 |
| Retained earnings | 333,099 | 333,099 | 0 | 0 | 0 | 0 |
| Other comprehensive income from cash flow hedges | –7, 327 | –7, 327 | 0 | 0 | 0 | 0 |
| Foreign currency translation | 38 | 38 | 0 | 0 | 0 | 0 |
| Net profit for the year | 54,404 | 54,404 | 0 | 0 | 0 | 0 |
| Total shareholders’ equity | 401,214 | 401,214 | 0 | 0 | 0 | 0 |
| Non-current liabilities | ||||||
| Bonds issued | 2,109,593 | 2,109,593 | 0 | 0 | 0 | 0 |
| Liabilities for pension plans | 2,160 | 0 | 0 | 2,160 | 0 | 0 |
| Lease liabilities | 480 | 229 | 0 | 251 | 0 | 0 |
| Negative fair values of derivative instruments | 12,442 | –227,938 | 227, 7 74 | 12,606 | 0 | 0 |
| Deferred tax liabilities | 342 | 0 | 0 | 342 | 0 | 0 |
| Total non-current liabilities | 2,125,017 | 1,881,884 | 227, 774 | 15,359 | 0 | 0 |
| Current liabilities | ||||||
| Bonds issued | 0 | 0 | 0 | 0 | 0 | 0 |
| Commercial paper | 75,000 | 75,000 | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,194,662 | 988,408 | 73,908 | 21,878 | 642 | 109,826 |
| Lease liabilities | 1,287 | 1,069 | 0 | 218 | 0 | 0 |
| Payables to banks | 6,589 | 2,823 | 130 | 3 | 0 | 3,633 |
| Income tax payables | 9,310 | –1,678 | 0 | 10,988 | 0 | 0 |
| Negative fair values of derivative instruments | 7, 565 | –9,860 | 11, 510 | 4,351 | 0 | 1,564 |
| Other liabilities | 15,612 | 7, 4 49 | 1,268 | 5,810 | 0 | 1,085 |
| Accrued expenses and deferred income | 10,456 | 9,554 | 92 | 810 | 0 | 0 |
| Total current liabilities | 1,320,481 | 1,072,765 | 86,908 | 44,058 | 642 | 116,108 |
| Total equity and liabilities | 3,846,712 | 3,355,863 | 314,682 | 59,417 | 642 | 116,108 |
| Balance sheet position | 0 | –1,000,175 | 222,911 | 540,930 | 54,342 | 181,992 |
26
Balance sheet by currency at 31 December 2021
| Amounts in TEUR countervalue | ||||||
| in TEUR | Total | EUR | USD | CHF | DKK | Others |
| ASSETS | ||||||
| Non-current assets | ||||||
| Intangible assets | 1,477 | –190 | 0 | 1,667 | 0 | 0 |
| Right-of-use assets | 1,814 | 1,220 | 0 | 594 | 0 | 0 |
| Property, plant and equipment | 428 | –49 | 0 | 477 | 0 | 0 |
| Loans to related companies | 1,429,290 | 940,831 | 324,416 | 91,824 | 5,390 | 66,829 |
| Positive fair values of derivative instruments | 4,670 | 249,939 | –226,615 | –18,654 | 0 | 0 |
| Deferred tax assets | 2,062 | 2,062 | 0 | 0 | 0 | 0 |
| Total non-current assets | 1,439,741 | 1,193,813 | 97,801 | 75,908 | 5,390 | 66,829 |
| Current assets | ||||||
| Receivables from related companies | 1,079,652 | 715,613 | 7 7, 532 | 55,760 | 40,463 | 190,284 |
| Positive fair values of derivative instruments | 985 | 41,003 | –36,093 | –4,750 | 0 | 825 |
| Other assets | 3,623 | 2,130 | –0 | 1,488 | 0 | 5 |
| Income tax receivables | 0 | 0 | 0 | 0 | 0 | 0 |
| Accrued income and prepaid expenses | 6,828 | 5,536 | –624 | 319 | 4 | 1,593 |
| Securities held for trading | 68,479 | 42,821 | 5,499 | 17,698 | 0 | 2,461 |
| Cash and cash equivalents | 859,052 | 452,330 | 323 | 391,522 | 1,298 | 13,579 |
| Total current assets | 2,018,619 | 1,259,433 | 46,637 | 462,037 | 41,765 | 208,747 |
| Total assets | 3,458,360 | 2,453,246 | 144,438 | 537,945 | 47,155 | 275,576 |
| EQUITY AND LIABILITIES | ||||||
| Shareholders’ equity | ||||||
| Issued capital | 16,000 | 16,000 | 0 | 0 | 0 | 0 |
| Additional paid-in capital | 5,000 | 5,000 | 0 | 0 | 0 | 0 |
| Retained earnings | 303,345 | 303,345 | 0 | 0 | 0 | 0 |
| Other comprehensive income from cash flow hedges | –8,947 | –8,947 | 0 | 0 | 0 | 0 |
| Foreign currency translation | –54 | –54 | 0 | 0 | 0 | 0 |
| Net profit for the year | 52,861 | 52,861 | 0 | 0 | 0 | 0 |
| Total shareholders’ equity | 368,205 | 368,205 | 0 | 0 | 0 | 0 |
| Non-current liabilities | ||||||
| Bonds issued | 1,250,060 | 1,250,060 | 0 | 0 | 0 | 0 |
| Liabilities for pension plans | 3,969 | 0 | 0 | 3,969 | 0 | 0 |
| Lease liabilities | 610 | 209 | 0 | 401 | 0 | 0 |
| Negative fair values of derivative instruments | 719 | 202 | 500 | 17 | 0 | 0 |
| Deferred tax liabilities | 320 | 0 | 0 | 320 | 0 | 0 |
| Total non-current liabilities | 1,255,678 | 1,250,471 | 500 | 4,707 | 0 | 0 |
| Current liabilities | ||||||
| Bonds issued | 499,843 | 499,843 | 0 | 0 | 0 | 0 |
| Commercial paper | 0 | 0 | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,283,002 | 1,096,775 | 58,218 | 12,149 | –801 | 116,661 |
| Lease liabilities | 1,220 | 1,016 | 0 | 204 | 0 | 0 |
| Payables to banks | 11,988 | 7,160 | 0 | 4,828 | 0 | 0 |
| Income tax payables | 7,020 | 6,280 | 0 | 740 | 0 | 0 |
| Negative fair values of derivative instruments | 8,347 | 6,385 | 1,606 | 159 | 0 | 197 |
| Other liabilities | 15,565 | 5,952 | 1,113 | 5,761 | 0 | 2,739 |
| Accrued expenses and deferred income | 7, 492 | 7, 394 | 84 | 14 | 0 | 0 |
| Total current liabilities | 1,834,477 | 1,630,805 | 61,021 | 23,855 | –801 | 119, 597 |
| Total equity and liabilities | 3,458,360 | 3,249,481 | 61,521 | 28,562 | –801 | 119, 597 |
| Balance sheet position | 0 | –796,235 | 82,917 | 509,383 | 47,956 | 155,979 |
27
Annual Report 2022 Würth Finance Group
Balance sheet by maturity at 31 December 2022
| Maturity | |||||
| in TEUR | Total | Sight | <1 year | 1–5 years | >5 years |
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 1,441 | 269 | 0 | 0 | 1,172 |
| Right-of-use assets | 1,749 | 0 | 0 | 1,749 | 0 |
| Property, plant and equipment | 431 | 431 | 0 | 0 | 0 |
| Loans to related companies | 1,554,992 | 0 | 0 | 1,215,727 | 339,265 |
| Positive fair values of derivative instruments | 14,894 | 0 | 0 | 8,882 | 6,012 |
| Deferred tax assets | 2,507 | 2,507 | 0 | 0 | 0 |
| Total non-current assets | 1,576,014 | 3,207 | 0 | 1,226,358 | 346,449 |
| Current assets | |||||
| Receivables from related companies | 1,348,390 | 769,888 | 578,502 | 0 | 0 |
| Positive fair values of derivative instruments | 6,634 | 6,402 | 232 | 0 | 0 |
| Other assets | 2,949 | 2,949 | 0 | 0 | 0 |
| Income tax receivables | 52 | 52 | 0 | 0 | 0 |
| Accrued income and prepaid expenses | 12,248 | 12,248 | 0 | 0 | 0 |
| Securities held for trading | 95,473 | 95,473 | 0 | 0 | 0 |
| Cash and cash equivalents | 804,952 | 804,952 | 0 | 0 | 0 |
| Total current assets | 2,270,698 | 1,691,964 | 578,734 | 0 | 0 |
| Total assets | 3,846,712 | 1,695,171 | 578,734 | 1,226,358 | 346,449 |
| EQUITY AND LIABILITIES | |||||
| Shareholders’ equity | |||||
| Issued capital | 16,000 | 16,000 | 0 | 0 | 0 |
| Additional paid-in capital | 5,000 | 5,000 | 0 | 0 | 0 |
| Retained earnings | 333,099 | 333,099 | 0 | 0 | 0 |
| Other comprehensive income from cash flow hedges | –7, 327 | –7, 327 | 0 | 0 | 0 |
| Foreign currency translation | 38 | 38 | 0 | 0 | 0 |
| Net profit for the year | 54,404 | 54,404 | 0 | 0 | 0 |
| Total shareholders’ equity | 401,214 | 401,214 | 0 | 0 | 0 |
| Non-current liabilities | |||||
| Bonds issued | 2,109,593 | 0 | 0 | 792,821 | 1,316,772 |
| Liabilities for pension plans | 2,160 | 0 | 2,160 | 0 | 0 |
| Lease liabilities | 480 | 0 | 0 | 480 | 0 |
| Negative fair values of derivative instruments | 12,442 | 0 | 0 | 4,634 | 7,808 |
| Deferred tax liabilities | 342 | 342 | 0 | 0 | 0 |
| Total non-current liabilities | 2,125,017 | 342 | 2,160 | 797,935 | 1,324,580 |
| Current liabilities | |||||
| Bonds issued | 0 | 0 | 0 | 0 | 0 |
| Commercial paper | 75,000 | 0 | 75,000 | 0 | 0 |
| Payables to related companies | 1,194,662 | 1,005,775 | 188,887 | 0 | 0 |
| Lease liabilities | 1,287 | 0 | 1,287 | 0 | 0 |
| Payables to banks | 6,589 | 6,589 | 0 | 0 | 0 |
| Income tax payables | 9,310 | 9,310 | 0 | 0 | 0 |
| Negative fair values of derivative instruments | 7, 565 | 7, 359 | 206 | 0 | 0 |
| Other liabilities | 15,612 | 10,966 | 4,646 | 0 | 0 |
| Accrued expenses and deferred income | 10,456 | 10,456 | 0 | 0 | 0 |
| Total current liabilities | 1,320,481 | 1,050,455 | 270,026 | 0 | 0 |
| Total equity and liabilities | 3,846,712 | 1, 452,011 | 272,186 | 797,935 | 1,324,580 |
| Balance sheet position | 0 | 243,160 | 306,548 | 428,423 | –978,131 |
28
Balance sheet by maturity at 31 December 2021
| Maturity | |||||
| in TEUR | Total | Sight | <1 year | 1–5 years | >5 years |
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 1,477 | 196 | 0 | 0 | 1,281 |
| Right-of-use assets | 1,814 | 0 | 0 | 1,814 | 0 |
| Property, plant and equipment | 428 | 428 | 0 | 0 | 0 |
| Loans to related companies | 1,429,290 | 0 | 0 | 1,096,492 | 332,798 |
| Positive fair values of derivative instruments | 4,670 | 0 | 0 | 2,928 | 1,742 |
| Deferred tax assets | 2,062 | 2,062 | 0 | 0 | 0 |
| Total non-current assets | 1,439,741 | 2,686 | 0 | 1,101,234 | 335,821 |
| Current assets | |||||
| Receivables from related companies | 1,079,652 | 553,018 | 526,634 | 0 | 0 |
| Positive fair values of derivative instruments | 985 | 985 | 0 | 0 | 0 |
| Other assets | 3,623 | 3,623 | 0 | 0 | 0 |
| Income tax receivables | 0 | 0 | 0 | 0 | 0 |
| Accrued income and prepaid expenses | 6,828 | 6,828 | 0 | 0 | 0 |
| Securities held for trading | 68,479 | 68,479 | 0 | 0 | 0 |
| Cash and cash equivalents | 859,052 | 859,052 | 0 | 0 | 0 |
| Total current assets | 2,018,619 | 1,491,985 | 526,634 | 0 | 0 |
| Total assets | 3,458,360 | 1,494,671 | 526,634 | 1,101,234 | 335,821 |
| EQUITY AND LIABILITIES | |||||
| Shareholders’ equity | |||||
| Issued capital | 16,000 | 16,000 | 0 | 0 | 0 |
| Additional paid-in capital | 5,000 | 5,000 | 0 | 0 | 0 |
| Retained earnings | 303,345 | 303,345 | 0 | 0 | 0 |
| Other comprehensive income from cash flow hedges | –8,947 | –8,947 | 0 | 0 | 0 |
| Foreign currency translation | –54 | –54 | 0 | 0 | 0 |
| Net profit for the year | 52,861 | 52,861 | 0 | 0 | 0 |
| Total shareholders’ equity | 368,205 | 368,205 | 0 | 0 | 0 |
| Non-current liabilities | |||||
| Bonds issued | 1,250,060 | 0 | 0 | 503,135 | 746,925 |
| Liabilities for pension plans | 3,969 | 0 | 3,969 | 0 | 0 |
| Lease liabilities | 610 | 0 | 0 | 610 | 0 |
| Negative fair values of derivative instruments | 719 | 0 | 0 | 702 | 17 |
| Deferred tax liabilities | 320 | 320 | 0 | 0 | 0 |
| Total non-current liabilities | 1,255,678 | 320 | 3,969 | 504,447 | 746,942 |
| Current liabilities | |||||
| Bonds issued | 499,843 | 0 | 499,843 | 0 | 0 |
| Commercial paper | 0 | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,283,002 | 1,266,385 | 16,617 | 0 | 0 |
| Lease liabilities | 1,220 | 0 | 1,220 | 0 | 0 |
| Payables to banks | 11,988 | 11,988 | 0 | 0 | 0 |
| Income tax payables | 7,020 | 7,020 | 0 | 0 | 0 |
| Negative fair values of derivative instruments | 8,347 | 8,347 | 0 | 0 | 0 |
| Other liabilities | 15,565 | 10,939 | 4,626 | 0 | 0 |
| Accrued expenses and deferred income | 7, 492 | 7, 492 | 0 | 0 | 0 |
| Total current liabilities | 1,834,477 | 1,312,171 | 522,306 | 0 | 0 |
| Total equity and liabilities | 3,458,360 | 1,680,696 | 526,275 | 504,447 | 746,942 |
| Balance sheet position | 0 | –186,025 | 359 | 596,787 | –411,121 |
29
Annual Report 2022 Würth Finance Group
Balance sheet by interest rate exposure at 31 December 2022
| Fixed | Variable | Non–interest | ||
| in TEUR | Total | interest rate | interest rate | bearing |
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 1,441 | 0 | 0 | 1,441 |
| Right-of-use assets | 1,749 | 0 | 0 | 1,749 |
| Property, plant and equipment | 431 | 0 | 0 | 431 |
| Loans to related companies | 1,554,992 | 1,554,992 | 0 | 0 |
| Positive fair values of derivative instruments | 14,894 | 0 | 0 | 14,894 |
| Deferred tax assets | 2,507 | 0 | 0 | 2,507 |
| Total non-current assets | 1,576,014 | 1,554,992 | 0 | 21,022 |
| Current assets | ||||
| Receivables from related companies | 1,348,390 | 578,502 | 57 7, 512 | 192,376 |
| Positive fair values of derivative instruments | 6,634 | 0 | 0 | 6,634 |
| Other assets | 2,949 | 0 | 2,949 | 0 |
| Income tax receivables | 52 | 0 | 0 | 52 |
| Accrued income and prepaid expenses | 12,248 | 0 | 0 | 12,248 |
| Securities held for trading | 95,473 | 81,673 | 0 | 13,800 |
| Cash and cash equivalents | 804,952 | 0 | 804,952 | 0 |
| Total current assets | 2,270,698 | 660,175 | 1,385,413 | 225,110 |
| Total assets | 3,846,712 | 2,215,167 | 1,385,413 | 246,132 |
| EQUITY AND LIABILITIES | ||||
| Shareholders’ equity | ||||
| Issued capital | 16,000 | 0 | 0 | 16,000 |
| Additional paid-in capital | 5,000 | 0 | 0 | 5,000 |
| Retained earnings | 333,099 | 0 | 0 | 333,099 |
| Other comprehensive income from cash flow hedges | –7, 327 | 0 | 0 | –7, 327 |
| Foreign currency translation | 38 | 0 | 0 | 38 |
| Net profit for the year | 54,404 | 0 | 0 | 54,404 |
| Total shareholders’ equity | 401,214 | 0 | 0 | 401,214 |
| Non-current liabilities | ||||
| Bonds issued | 2,109,593 | 2,109,593 | 0 | 0 |
| Liabilities for pension plans | 2,160 | 0 | 2,160 | 0 |
| Lease liabilities | 480 | 480 | 0 | 0 |
| Negative fair values of derivative instruments | 12,442 | 0 | 0 | 12,442 |
| Deferred tax liabilities | 342 | 0 | 0 | 342 |
| Total non-current liabilities | 2,125,017 | 2,110,073 | 2,160 | 12,784 |
| Current liabilities | ||||
| Bonds issued | 0 | 0 | 0 | 0 |
| Commercial paper | 75,000 | 75,000 | 0 | 0 |
| Payables to related companies | 1,194,662 | 188,887 | 1,005,775 | 0 |
| Lease liabilities | 1,287 | 0 | 0 | 1,287 |
| Payables to banks | 6,589 | 0 | 6,589 | 0 |
| Income tax payables | 9,310 | 0 | 0 | 9,310 |
| Negative fair values of derivative instruments | 7, 565 | 0 | 0 | 7, 565 |
| Other liabilities | 15,612 | 0 | 0 | 15,612 |
| Accrued expenses and deferred income | 10,456 | 0 | 0 | 10,456 |
| Total current liabilities | 1,320,481 | 263,887 | 1,012,364 | 44,230 |
| Total equity and liabilities | 3,846,712 | 2,373,960 | 1,014,524 | 458,228 |
| Balance sheet position | 0 | –158,793 | 370,889 | –212,096 |
30
Balance sheet by interest rate exposure at 31 December 2021
| Fixed | Variable | Non–interest | ||
| in TEUR | Total | interest rate | interest rate | bearing |
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 1,477 | 0 | 0 | 1,477 |
| Right-of-use assets | 1,814 | 0 | 0 | 1,814 |
| Property, plant and equipment | 428 | 0 | 0 | 428 |
| Loans to related companies | 1,429,290 | 1,429,290 | 0 | 0 |
| Positive fair values of derivative instruments | 4,670 | 0 | 0 | 4,670 |
| Deferred tax assets | 2,062 | 0 | 0 | 2,062 |
| Total non-current assets | 1,439,741 | 1,429,290 | 0 | 10,451 |
| Current assets | ||||
| Receivables from related companies | 1,079,652 | 526,634 | 353,586 | 199,432 |
| Positive fair values of derivative instruments | 985 | 0 | 0 | 985 |
| Other assets | 3,623 | 0 | 3,623 | 0 |
| Income tax receivables | 0 | 0 | 0 | 0 |
| Accrued income and prepaid expenses | 6,828 | 0 | 0 | 6,828 |
| Securities held for trading | 68,479 | 52,389 | 0 | 16,090 |
| Cash and cash equivalents | 859,052 | 0 | 859,052 | 0 |
| Total current assets | 2,018,619 | 579,023 | 1,216,261 | 223,335 |
| Total assets | 3,458,360 | 2,008,313 | 1,216,261 | 233,786 |
| EQUITY AND LIABILITIES | ||||
| Shareholders’ equity | ||||
| Issued capital | 16,000 | 0 | 0 | 16,000 |
| Additional paid-in capital | 5,000 | 0 | 0 | 5,000 |
| Retained earnings | 303,345 | 0 | 0 | 303,345 |
| Other comprehensive income from cash flow hedges | –8,947 | 0 | 0 | –8,947 |
| Foreign currency translation | –54 | 0 | 0 | –54 |
| Net profit for the year | 52,861 | 0 | 0 | 52,861 |
| Total shareholders’ equity | 368,205 | 0 | 0 | 368,205 |
| Non-current liabilities | ||||
| Bonds issued | 1,250,060 | 1,250,060 | 0 | 0 |
| Liabilities for pension plans | 3,969 | 0 | 3,969 | 0 |
| Lease liabilities | 610 | 610 | 0 | 0 |
| Negative fair values of derivative instruments | 719 | 0 | 0 | 719 |
| Deferred tax liabilities | 320 | 0 | 0 | 320 |
| Total non-current liabilities | 1,255,678 | 1,250,670 | 3,969 | 1,039 |
| Current liabilities | ||||
| Bonds issued | 499,843 | 499,843 | 0 | 0 |
| Commercial paper | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,283,002 | 16,617 | 1,266,385 | 0 |
| Lease liabilities | 1,220 | 0 | 0 | 1,220 |
| Payables to banks | 11,988 | 0 | 11,988 | 0 |
| Income tax payables | 7,020 | 0 | 0 | 7,020 |
| Negative fair values of derivative instruments | 8,347 | 0 | 0 | 8,347 |
| Other liabilities | 15,565 | 0 | 0 | 15,565 |
| Accrued expenses and deferred income | 7, 492 | 0 | 0 | 7, 492 |
| Total current liabilities | 1,834,477 | 516,460 | 1,278,373 | 39,644 |
| Total equity and liabilities | 3,458,360 | 1, 767,130 | 1,282,342 | 408,888 |
| Balance sheet position | 0 | 241,183 | –66,081 | –175,102 |
31
Annual Report 2022 Würth Finance Group
Interest rate risk
The Group finances Würth Group companies all over the world and is consequently exposed to interest rate risks. The Group deems interest rate risk to mean the negative impact on the financial position and the earnings situation arising from changes in the interest rates in all currencies. Loans to Würth Group companies were partially refinanced by fixed- interest bonds with similar interest and maturity structures. The maximum willingness to take risks in the interest rate sec- tor is defined by a sensitivity in relation to the equity capital. In the event of adverse changes in the interest rates on the in- dividual currencies by 100 basis points, the maximum loss potential is related to equity. The Group keeps the impact of interest rate changes on the equity capital base or on the as- set and income situation relatively low and is guided in the medium term by the target value of 5% for the equity sensitiv- ity. Furthermore, the Group enters into derivative financial in- struments to optimise its interest rate exposure.
Sensitivity analysis of equity as at 31 December
The following table discloses the sensitivity of the Group’s equity to a parallel shift of the interest rates, with all other variables held constant. Compared to last year the interest rate sensitivity has increased due to the bonds issued in the amount of EUR 600 million and CHF 300 million. The table reflects the most important currencies for loans and deposits in terms of volumes for the Würth Finance Group. Compared to the previous year volumes in currencies exposure other than the euro have increased in total. However, interest rate risks have been kept minimal.
Sensitivity of equity 2022
| in TEUR | Duration | |||||||||||
| Change in | ||||||||||||
| Currency | basis points | ≤6 months | 6 months to 1 year | 1–5 years | >5 years | Total | ||||||
| EUR | 100 | –100 | –1,272 | 1,322 | –1,686 | 1,746 | 14,446 | –15,525 | 13,594 | –14,824 | 25,082 | –27,281 |
| USD | 100 | –100 | 66 | –70 | 95 | –99 | –1,662 | 1,743 | –3,055 | 3,241 | –4,556 | 4,815 |
| CHF | 100 | –100 | –144 | 148 | 57 | –59 | 6,032 | –6,353 | –968 | 1,035 | 4,977 | –5,229 |
| DKK | 100 | –100 | 11 | –11 | –44 | 46 | –6 | 6 | –14 | 14 | –53 | 55 |
| CNH | 100 | –100 | 15 | –16 | 3 | –3 | 0 | 0 | 0 | 0 | 18 | –19 |
| NOK | 100 | –100 | 54 | –57 | –10 | 11 | 0 | 0 | 0 | 0 | 44 | –46 |
| CAD | 100 | –100 | –14 | 15 | 51 | –53 | –23 | 24 | 0 | 0 | 14 | –14 |
| GBP | 100 | –100 | –3 | 4 | 1 | –1 | –26 | 26 | 0 | 0 | –28 | 29 |
| Others | 100 | –100 | 43 | –46 | –53 | 56 | –177 | 182 | 0 | 0 | –187 | 192 |
Sensitivity of equity 2021
| in TEUR | Duration | |||||||||||
| Change in | ||||||||||||
| Currency | basis points | ≤6 months | 6 months to 1 year | 1–5 years | >5 years | Total | ||||||
| EUR | 100 | –100 | 711 | –730 | –576 | 594 | –15,478 | 16,213 | 37, 431 | –40,332 | 22,088 | –24,255 |
| USD | 100 | –100 | 78 | –80 | –352 | 364 | 67 | –70 | –2,057 | 2,213 | –2,264 | 2,427 |
| CHF | 100 | –100 | 173 | –177 | 36 | –36 | –1,743 | 1,828 | –1,218 | 1,319 | –2,752 | 2,934 |
| DKK | 100 | –100 | 41 | –42 | 33 | –34 | –31 | 33 | 0 | 0 | 43 | –43 |
| CNH | 100 | –100 | 8 | –8 | 1 | –1 | 0 | 0 | 0 | 0 | 9 | –9 |
| NOK | 100 | –100 | 3 | –3 | –17 | 17 | –66 | 69 | 0 | 0 | –80 | 83 |
| CAD | 100 | –100 | 6 | –6 | –11 | 12 | –39 | 40 | 0 | 0 | –44 | 46 |
| GBP | 100 | –100 | –4 | 4 | –14 | 14 | –25 | 27 | 0 | 0 | –43 | 45 |
| Others | 100 | –100 | –52 | 55 | –56 | 58 | –295 | 307 | 0 | 0 | –403 | 420 |
32
Security price risk
Due to its investment activities, the Group is exposed to secu- rity price risks. The Group deems security price risks to mean the exposure to loss resulting from changes in the prices of listed securities.
Basically, a minimum rating of BBB– (Standard & Poor’s) is required when selecting bonds. The trend of the rating is
monitored on a daily basis. In the event of the bond being downgraded, it is immediately disposed of. However, the Group has a limit of maximum EUR 15 million in market val- ue for sub-investment-grade bonds. Furthermore, the Group uses derivative instruments to hedge security price risks.
The composition of the portfolio is monitored on a daily ba- sis. The allocation is shown in the table below:
Asset allocation at 31 December 2022
| in TEUR | Market value | Share |
| Equity/equity funds | 9,065 | 9.5% |
| Investment-grade bonds /bond funds | 81,673 | 85.5% |
| Sub-investment-grade bonds | 2,759 | 2.9% |
| Commodities | 1,976 | 2.1% |
| Total asset allocation | 95,473 | 100.0% |
Asset allocation at 31 December 2021
| in TEUR | Market value | Share |
| Equity/equity funds | 10,775 | 15.7% |
| Investment-grade bonds /bond funds | 52,389 | 76.5% |
| Sub-investment-grade bonds | 3,451 | 5.1% |
| Commodities | 1,864 | 2.7% |
| Total asset allocation | 68,479 | 100.0% |
In order to minimise credit risks, transactions are only con- ducted with first-class external counterparties. For each rat- ing level, binding counterparty limits are defined. Their abso- lute value is subject to regular critical reviews by the supervisory bodies and is adjusted if necessary. Würth Group counterparties are monitored by Würth Finance Inter- national B.V. together with the appropriate member of the Würth Group’s Central Management Board, and granted a credit limit. ISDA agreements are concluded with external counterparties with whom the Group carries out transactions within the framework of financial risk management.
The corresponding credit rating of the internal and external counterparties and the limitation on aggregated individual party risks are constantly monitored.
The counterparty risks relating to delcredere business were transferred in full to insurance companies.
The maximum credit risk corresponds to the value of all the financial assets, contingent liabilities and unused irrevocable credit commitments stated in the annual accounts. Credit risks relating to loans to individual Würth Group companies with negative equity as at 31 December are covered up to an amount of 1.5 times the negative EBITDA of the subsidiary by letters of comfort from the superordinate parent company.
33
Annual Report 2022 Würth Finance Group
| in TEUR | 2022 | 2021 |
| Credit risks at 31 December | ||
| Total Würth Group long-term | 1,562,847 | 1,433,198 |
| Total Würth Group short-term | 1,349,654 | 1,080,249 |
| Cash and cash equivalents | 804,952 | 859,052 |
| Positive fair values of derivative instruments | 21,528 | 5,655 |
| Other assets | 2,949 | 3,623 |
| Contingent liabilities | 227, 371 | 212,126 |
| Lending commitments | 67,684 | 42,198 |
| Total credit risk exposure | 4,036,985 | 3,636,101 |
There is only a difference between the gross and net credit risk exposure for derivative transactions, which can be net- ted, based on the ISDA agreements. In principle, cash and cash equivalents are invested at banks with a minimal rating of “BBB”.
Credit losses are inherent costs of the Group’s operations and their occurrence and amount may be irregular in nature. Possible credit risk losses are reported in the Financial State- ments using the approach for determining impairments based on forward-looking expected credit losses (ECLs) in- troduced in IFRS 9.
From a credit risk modelling perspective,
the ECL parameters are the following three parameters: ex- posure at default (EAD), probability of default (PD) and loss given default (LGD). The EAD reflects the financial assets as potential credit risk at the reporting date. It represents the outstanding cash flows, taking into account expected repay- ments, interest payments and provisions, discounted at the ef- fective interest rate.
The PD represents the probability of a default over a certain period of time. The third component, the LGD, represents an estimate of the loss at the time of a potential default during the life of a financial instrument.
The Group’s impairment approach applied to long-term loan commitments and short-term receivables from related and external companies that are not measured at fair value through profit or loss. The methodology the Group applied to calculate an individual probability-weighted unbiased ECL is by using LGD amounting to 60% and PD based on the Global Corporate Average Cumulative Default Rates (Bloomberg).
In accordance with IFRS 9, a three-stage model is used to calculate the ECL, which takes into account the change in credit quality since initial recognition using different impair- ment models. A shift from Stage 1 to Stage 2 reflects a sig- nificant increase in credit risk. A shift from Stage 2 to Stage 3 is made if there are objective indications of impairment as of the balance sheet date.
Expected credit loss
| in TEUR | 31.12.2022 | 31.12.2021 |
| Loans to related companies | 7,855 | 3,908 |
| Short-term receivables from related companies | 1,264 | 596 |
| Total expected credit loss | 9,119 | 4,504 |
| ECL movements (in TEUR) | Stage 1 | Stage 2 | Stage 3 | Total |
| Balance as at 1 January 2022 | 4,289 | 215 | 0 | 4,504 |
| Changes due to | ||||
| Net movements from new and derecognised transactions | 403 | 63 | 0 | 466 |
| Stage migration | 25 | 99 | 0 | 124 |
| Remeasurements | 3,727 | 298 | 0 | 4,025 |
| Balance as at 31 December 2022 | 8,444 | 675 | 0 | 9,119 |
Legend
| Net movements from new and derecognised transactions | Effects resulting from the change in volume; calculated using the cur- |
| rent closing balance of the assets multiplied by the PD of the previous | |
| year | |
| Stage migration | Shifts between the stages due to reassessment of the credit risk |
| Remeasurements | Residual amount represents the influence of the changed PD |
34
The PD at year-end amounted to 0.7884% (2021: 0.4404%) which caused the additional impairment credit amount of EUR 4,615 over 2022. The increase is mainly driven by the impact of the changed PD of TEUR 4,025.
Liquidity risk
The Würth Group needs sufficient liquidity to fulfil its finan- cial obligations. In compliance with the superordinate Würth Group policy, Würth Group companies are required to trans- fer their excess liquidity to Würth Finance International B.V. and, with the latter’s support, to make it available to other Würth Group companies to bridge any potential shortages in liquidity.
The objective of liquidity management is to ensure that the Würth Group is able to meet its payment obligations. The liquidity situation is monitored by the Cash Management department of Würth Finance International B.V.
The high international creditworthiness of the Würth Group (Standard & Poor’s has awarded a Senior Unsecured “A” rat- ing to Adolf Würth GmbH & Co. KG) allows the Group to raise liquid funds in the international capital markets on fa- vourable conditions. Würth Finance International B.V. had es- tablished a committed credit line of EUR 500 million. The syndicate providing the funds consisted of 13 banks. The credit line was granted until 16 September 2027 and is guaranteed by Adolf Würth GmbH & Co. KG, Künzelsau. Additionally the Group had arranged credit lines with vari- ous banks to cover any potential liquidity requirements.
b) Derivative financial instruments
Positions at 31 December 2022
| Contract value or | |||
| in TEUR | national value | Positive fair value Negative fair value | |
| Foreign currency instruments | |||
| Forward currency contracts | 1,481,218 | 6,811 | –12,743 |
| Options | 17,016 | 0 | 0 |
| Total foreign currency instruments | 1,498,234 | 6,811 | –12,743 |
| Interest rate instruments | |||
| Interest rate swaps | 811,139 | 13,100 | –40,702 |
| Cross-currency swaps | 268,212 | 6,662 | –5,125 |
| Financial futures | 8,863 | 0 | –48 |
| Total interest rate instruments | 1,088,214 | 19,762 | –45,875 |
| Reduction due to CSA | 0 | –5,045 | 38,611 |
| Total derivative financial instruments | 2,586,448 | 21,528 | –20,007 |
Positions at 31 December 2021
| Contract value or | |||
| in TEUR | national value | Positive fair value Negative fair value | |
| Foreign currency instruments | |||
| Forward currency contracts | 1,504,281 | 3,347 | –19,184 |
| Options | 0 | 0 | 0 |
| Total foreign currency instruments | 1,504,281 | 3,347 | –19,184 |
| Interest rate instruments | |||
| Interest rate swaps | 605,618 | 6,919 | –3,523 |
| Cross-currency swaps | 290,663 | 1,551 | –1,251 |
| Financial futures | 9,328 | 7 | 0 |
| Total interest rate instruments | 905,609 | 8,477 | –4,774 |
| Reduction due to CSA | 0 | –6,169 | 14,892 |
| Total derivative financial instruments | 2,409,890 | 5,655 | –9,066 |
The total derivative financial instruments were presented gross per counterparty.
ISDA master agreements with a CSA are concluded with those counterparties with whom transactions are carried out
within the framework of financial risk management. For this reason, the positive and negative fair values of the derivative financial instruments are recorded in the Financial Statements (balance sheet, income statement) in net terms, considering also the cash settlement based on the CSAs.
35
Annual Report 2022 Würth Finance Group
The foreign currency instruments were mainly used to hedge the currency positions in USD and CHF recorded in the balance sheet. The net positions of the fair values were as follows: EUR –1.5 million (2021: EUR –13.5 million) had a maturity date of less than 12 months and EUR –4.4 million (2021: EUR –2.3 million) mature in 1–5 years.
The interest rate instruments were mainly used to hedge currency and interest rate risks on non-congruent asset and liability positions in EUR, USD and CHF. The maximum maturity was 8¼ years.
Offsetting financial instruments
Positions at 31 December 2022
| Gross amounts offset | |||
| Gross carrying amounts | in accordance with | Net amount presented | |
| in TEUR | (before offsetting) | the offsetting criteria | in balance sheet |
| FINANCIAL ASSETS | |||
| Derivative financial instruments | 26,573 | –5,045 | 21,528 |
| Total | 26,573 | –5,045 | 21,528 |
| FINANCIAL LIABILITIES | |||
| Derivative financial instruments | –58,618 | 38,611 | –20,007 |
| Total | –58,618 | 38,611 | –20,007 |
Positions at 31 December 2021
| Gross amounts offset | |||
| Gross carrying amounts | in accordance with | Net amount presented | |
| in TEUR | (before offsetting) | the offsetting criteria | in balance sheet |
| FINANCIAL ASSETS | |||
| Derivative financial instruments | 11, 824 | –6,169 | 5,655 |
| Total | 11,824 | –6,169 | 5,655 |
| FINANCIAL LIABILITIES | |||
| Derivative financial instruments | –23,958 | 14,892 | –9,066 |
| Total | –23,958 | 14,892 | –9,066 |
Offsetting rights that do not meet some or all of the criteria for offsetting in the balance sheet are not disclosed since the ef- fects are considered immaterial.
36
| Carrying amount | Fair value | |||
| in TEUR | 2022 | 2021 | 2022 | 2021 |
| ASSETS | ||||
| Non-current assets | ||||
| Loans to related companies | 1,554,992 | 1,429,290 | 1,525,713 | 1,524,096 |
| Positive fair values of derivative instruments | 14,894 | 4,670 | 14,894 | 4,670 |
| Total non-current assets | 1,569,886 | 1,433,960 | 1,540,607 | 1,528,766 |
| Current assets | ||||
| Receivables from related companies | 1,348,390 | 1,079,652 | 1,348,388 | 1,084,789 |
| Positive fair values of derivative instruments | 6,634 | 985 | 6,634 | 985 |
| Securities held for trading | 95,473 | 68,479 | 95,473 | 68,479 |
| Cash and cash equivalents | 804,952 | 859,052 | 804,987 | 859,341 |
| Total current assets | 2,255,449 | 2,008,168 | 2,255,482 | 2,013,594 |
| EQUITY AND LIABILITIES | ||||
| Non-current liabilities | ||||
| Bonds issued | 2,109,593 | 1,250,060 | 1,972,029 | 1,302,614 |
| Negative fair values of derivative instruments | 12,442 | 719 | 12,442 | 719 |
| Total non-current liabilities | 2,122,035 | 1,250,779 | 1,984,471 | 1,303,333 |
| Current liabilities | ||||
| Bonds issued | 0 | 499,843 | 0 | 505,925 |
| Commercial paper | 75,000 | 0 | 75,233 | 0 |
| Payables to related companies | 1,194,662 | 1,283,002 | 1,192,790 | 1,283,441 |
| Payables to banks | 6,589 | 11,988 | 6,589 | 11,994 |
| Negative fair values of derivative instruments | 7, 565 | 8,347 | 7, 565 | 8,347 |
| Total current liabilities | 1,283,816 | 1,803,180 | 1,282,177 | 1,809,707 |
Upon initial recognition, the Group recognised derivative fi- nancial instruments at fair value and non-derivative financial instruments with fixed or determinable payments that are not quoted in an active market at their amortised cost using the effective interest rate method.
Financial instruments classified as available for sale or held to maturity do not exist in the Group’s portfolio at the time of reporting.
In order to calculate the fair value of non-derivative financial instruments that are not actively traded and quoted, the valu- ation technique of a discounted cash flow model is used (fair value hierarchy level 2). The discounted cash flow valuation technique calculates fair values by using estimated expected or contractual future cash flows and then discounts these cash flows with a discount rate that reflects the credit spreads required by the market for instruments with similar risk and liquidity profiles to produce a present value. The dis- count factors within the calculation are generated using in- dustry standard yield curve modelling techniques.
37
Annual Report 2022 Würth Finance Group
Assets and liabilities measured at fair value at 31 December 2022
| in TEUR | Level 1 | Level 2 | Level 3 | Total fair value |
| ASSETS | ||||
| Derivative financial instruments | ||||
| Interest rate swaps | 0 | 13,100 | 0 | 13,100 |
| Cross-currency swaps | 0 | 6,662 | 0 | 6,662 |
| Financial futures | 0 | 0 | 0 | 0 |
| Forward currency contracts | 0 | 6,811 | 0 | 6,811 |
| Reduction due to CSA | 0 | –5,045 | 0 | –5,045 |
| Financial instruments held for trading | ||||
| Securities | 95,473 | 0 | 0 | 95,473 |
| Financial instruments atamortised cost | ||||
| Receivables from related companies | 0 | 2,874,101 | 0 | 2,874,101 |
| Cash and cash equivalents | 804,987 | 0 | 0 | 804,987 |
| LIABILITIES | ||||
| Derivative financial instruments | ||||
| Interest rate swaps | 0 | 40,702 | 0 | 40,702 |
| Cross-currency swaps | 0 | 5,125 | 0 | 5,125 |
| Financial futures | 0 | 48 | 0 | 48 |
| Foreign currency contracts | 0 | 12,743 | 0 | 12,743 |
| Reduction due to CSA | 0 | –38,611 | 0 | –38,611 |
| Other liabilities at amortised cost | ||||
| Bonds issued | 0 | 1,972,029 | 0 | 1,972,029 |
| Commercial paper | 0 | 75,233 | 0 | 75,233 |
| Payables to related companies | 0 | 1,192,790 | 0 | 1,192,790 |
| Payables to banks | 6,589 | 0 | 0 | 6,589 |
Fair value is the price at the reporting date that would be re- ceived for an asset sale or paid to transfer a liability in an or- derly transaction between market participants in the market. All financial instruments measured at fair value are catego- rised into one of the three fair value hierarchy levels. The lev- els of the fair value hierarchy as defined below are an indi- cation of the availability of market prices or price valuation inputs.
Level 1 financial instruments are those financial instruments whose fair value is based on quoted prices in active markets. This category comprises securities issued by public sector en- tities and corporates, cash and cash equivalents, and pay- ables to banks.
Level 2 financial instruments are those whose fair values must be derived using valuation techniques for which all signifi- cant inputs are based on observable market data. The fair value is calculated using a discounted cash flow analysis in which expected future cash flows are discounted. The fair value of financial instruments that are actively traded on or- ganised financial markets is determined by reference to quot- ed market prices. For financial instruments where there is no active market, fair value is determined using valuation tech- niques such as price quotations from securities brokers or the
Black-Scholes pricing model. These valuations are by their nature dependent on the assumptions on which they are based. This category comprises all derivative financial instru- ments, receivables from related companies, loans to family foundation, bonds issued and payables to related companies.
For all financial instruments categorised within level 2, a de- scription of the valuation techniques and the inputs used in the valuation (e.g. interest rates, volatilities, market price of the underlying, price in a similar transaction, etc.) are trans- parently documented. If there is a change in valuation tech- nique, the reason for it has to be disclosed.
Level 3 financial instruments are those whose fair value is based on a valuation method that uses at least one signifi- cant input parameter that cannot be observed directly or in- directly in the market. At the balance sheet date, the Group had no assets and liabilities measured at fair value level 3.
During the reporting period ending 31 December 2022, there were no transfers between level 1 and level 2 fair val- ue measurements, and no transfers into or out of level 3 fair value measurements.
38
Assets and liabilities measured at fair value at 31 December 2021
| in TEUR | Level 1 | Level 2 | Level 3 | Total fair value |
| ASSETS | ||||
| Derivative financial instruments | ||||
| Interest rate swaps | 0 | 6,919 | 0 | 6,919 |
| Cross-currency swaps | 0 | 1,551 | 0 | 1,551 |
| Financial futures | 0 | 7 | 0 | 7 |
| Forward currency contracts | 0 | 3,347 | 0 | 3,347 |
| Reduction due to CSA | 0 | –6,169 | 0 | –6,169 |
| Financial instruments held for trading | ||||
| Securities | 68,479 | 0 | 0 | 68,479 |
| Financial instruments atamortised cost | ||||
| Receivables from related companies | 0 | 2,608,885 | 0 | 2,608,885 |
| Cash and cash equivalents | 859,341 | 0 | 0 | 859,341 |
| LIABILITIES | ||||
| Derivative financial instruments | ||||
| Interest rate swaps | 0 | 3,523 | 0 | 3,523 |
| Cross-currency swaps | 0 | 1,251 | 0 | 1,251 |
| Financial futures | 0 | 0 | 0 | 0 |
| Foreign currency contracts | 0 | 19,184 | 0 | 19,184 |
| Reduction due to CSA | 0 | –14,892 | 0 | –14,892 |
| Other liabilities at amortised cost | ||||
| Bonds issued | 0 | 1,808,539 | 0 | 1,808,539 |
| Commercial paper | 0 | 0 | 0 | 0 |
| Payables to related companies | 0 | 1,283,441 | 0 | 1,283,441 |
| Payables to banks | 11,994 | 0 | 0 | 11,994 |
Capital management
The primary objective of the Group’s capital management is to ensure a strong credit rating towards external parties. The Group manages its capital structure and makes adjustments to it based on the equity ratio and the return on equity.
The Group designates cash flow hedges as part of its strat- egy to mitigate its interest rate and foreign currency revalua- tion fluctuations within its established limits and to reduce the
cash flow fluctuations arising from foreign exchange and in- terest rate risk for an instrument or a group of instruments.
The Group mainly uses interest rate swaps to hedge its cash flows associated with its highly probable forecasted transac- tions and cross-currency swaps to hedge its cash flows asso- ciated with its foreign currency loans to related parties.
The table below sets out the results of the Group’s hedging strategy, in particular the notional and carrying amount of the derivatives the Group uses as hedging instruments:
39
Annual Report 2022 Würth Finance Group
| Carrying amount 2022 | Carrying amount 2021 | |||||
| Transaction | Notional | |||||
| in TEUR | currency | amount | Assets | Liabilities | Assets | Liabilities |
| Micro cash flow hedges | ||||||
| Hedges to related parties | CHF | 12,000 | 0 | 162 | 0 | 275 |
| Hedges to related parties | USD | 20,000 | 0 | 1,017 | 0 | 158 |
| Hedges to related parties | USD | 37, 50 0 | 0 | 1,863 | 680 | 0 |
| Hedges to related parties | USD | 15,000 | 67 | 0 | 914 | 0 |
| Hedges to related parties | USD | 7,000 | 21 | 0 | 481 | 0 |
| Hedges to related parties | USD | 15,000 | 0 | 150 | 886 | 0 |
| Hedges to related parties | CHF | 19,937 | 0 | 1,365 | 0 | 616 |
| Forecasted – new bond issued 20181 | EUR | 0 | 184 | 0 | 260 | |
| Forecasted – new bond issued 20202 | EUR | 0 | 8,718 | 0 | 10,705 | |
| Forecasted – new bond issued 20223 | EUR | 546 | 0 | 0 | 0 | |
The following table shows the maturity and interest rate risk profile of the Group’s hedging instruments used in its cash flow hedges. As the Group applied only micro hedges with one-to-one hedging ratios, the table below effectively shows the cash flow hedges:
| in TEUR | |||
| Carrying amount | <1 year | 1–5 years | >5 years |
| At 31 December 2022 | |||
| Hedges to related parties CHF 12,000 | 162 | 0 | 0 |
| Hedges to related parties USD 20,000 | 0 | 1,017 | 0 |
| Hedges to related parties USD 37,500 | 0 | 1,863 | 0 |
| Hedges to related parties USD 15,000 | 0 | 67 | 0 |
| Hedges to related parties USD 7,000 | 0 | 21 | 0 |
| Hedges to related parties USD 15,000 | 0 | 150 | 0 |
| Hedges to related parties CHF 19,937 | 0 | 1,365 | 0 |
Since the issuance of the bonds and the subsequent recogni- tion of interest expense result in the forecasted transaction affecting profit and loss, the associated gains or losses rec- ognised in other comprehensive income are reclassified into profit and loss.
For designated and qualifying cash flow hedges, the effec- tive portion of the gain or loss on the hedging instrument is initially recognised directly in OCI within equity in the cash flow hedge reserve, while any ineffective portion of the gain or loss on the hedging instrument is recognised immediately in the income statement. The terms of the current cross-cur- rency swap contracts match the terms of the expected highly probable forecasted transactions. As a result, there is no hedge ineffectiveness to be recognised in the statement of profit or loss.
When a hedging instrument expires, is sold, terminated, exer- cised, or when a hedge no longer meets the criteria for hedge accounting under IFRS 9, any cumulative gain or loss that has been recognised in OCI at that time remains in OCI and is recognised when the hedged forecasted transaction is ultimately recognised in the income statement. When a fore- casted transaction is no longer expected to occur, the cumu- lative gain or loss that was reported in OCI is immediately transferred to the income statement.
Fair value hedges
The Group designates fair value hedges as part of an overall interest rate risk management strategy that enables the Group to keep interest rate sensitivities within its defined lim- its and to reduce fair value fluctuations of fixed-rate financial assets as if they were floating-rate instruments linked to the attributable benchmark rates.
1 This micro cash flow hedge is related to the bond issued in May 2018. The loss resulting from the termination of the hedging instruments will be designated in the in-
come statement form OCI (cash flow hedge reserve) starting May 2019 over the actual swap term.
2 This micro cash flow hedge is related to the bond issued in May 2020. The loss resulting from the termination of the hedging instruments will be designated in the in-
come statement form OCI (cash flow hedge reserve) starting May 2020 over the actual swap term.
3 This micro cash flow hedge is related to the bond issued in May 2022. The profit resulting from the termination of the hedging instruments will be designated in the in-
come statement form OCI (cash flow hedge reserve) starting May 2022 over the actual swap term.
40
The Group’s fair value hedges principally consist of interest rate swaps that are used to protect against changes in the fair value of the fixed-rate Würth bonds as well as the loans to related parties in EUR and cross-currency swaps that are used to protect against changes in the fair value of the fixed- rate foreign currency loans.
The table below sets out the result of the Group’s hedging strategy, in particular the notional and carrying amount of the derivatives the Group uses as hedging instruments:
| Carrying amount 2022 | Carrying amount 2021 | |||||
| Transaction | Notional | |||||
| in TEUR | currency | amount | Assets | Liabilities | Assets | Liabilities |
| Micro fair value hedges | ||||||
| Würth bond 2025 | EUR | 150,000 | 0 | 8,836 | 4,373 | 0 |
| Würth bond 2026 | CHF | 100,000 | 0 | 682 | 0 | 0 |
| Würth bond 2030 | EUR | 250,000 | 0 | 27,121 | 0 | 0 |
| Hedges to related parties | EUR | 30,000 | 1,982 | 0 | 0 | 678 |
| Hedges to related parties | EUR | 10,000 | 1,574 | 0 | 171 | 0 |
| Hedges to related parties | USD | 130,000 | 5,182 | 0 | 0 | 2,230 |
| Hedges to related parties | EUR | 40,000 | 5,340 | 0 | 764 | 0 |
| Hedges to related parties | USD | 10,000 | 568 | 0 | 98 | 0 |
| Hedges to related parties | USD | 25,000 | 824 | 0 | 0 | 368 |
The following table shows the maturity and interest rate risk profile of the Group’s hedging instruments used in its fair value hedges. As the Group applied only micro hedges with one-to-one hedging ratios, the table below effectively shows the out- come of the fair value hedges:
| in TEUR | |||
| Carrying amount | <1 year | 1–5 years | >5 years |
| At 31 December 2022 | |||
| Würth bond 2025 EUR 150,000 | 0 | 8,836 | 0 |
| Würth bond 2026 CHF 100,000 | 0 | 682 | 0 |
| Würth bond 2030 EUR 250,000 | 0 | 0 | 27,121 |
| Hedges to related parties EUR 30,000 | 0 | 1,982 | 0 |
| Hedges to related parties EUR 10,000 | 0 | 0 | 1,574 |
| Hedges to related parties USD 130,000 | 0 | 0 | 5,182 |
| Hedges to related parties EUR 40,000 | 0 | 5,340 | 0 |
| Hedges to related parties USD 10,000 | 0 | 568 | 0 |
| Hedges to related parties USD 25,000 | 0 | 824 | 0 |
For derivatives that are designated and qualified as fair val- ue hedges, the carrying value of the underlying hedged items is adjusted to fair value for the risk being hedged. Changes in the fair value of these derivatives are recorded in the same line item of the consolidated income statement as the change in fair value of the risk being hedged for the hedged assets or liabilities to the extent the hedge is effec- tive. The change in fair value representing hedge ineffective- ness is recorded separately in trading revenues.
The Group assesses hedge effectiveness by comparing fair value movements of the hedging instruments and the hedged items attributable to changes in these benchmark rates using the hypothetical derivative method.
In accordance with its hedging strategy, the Group matches the principal of the hedging instruments to the principal of the hedged items. The Group uses fixed-rate payer interest rate swaps to hedge its fixed-rate debt instruments and loans and fixed-rate receiver interest rate swaps to hedge its fixed- rate liabilities.
As at the end of 2022, hedge ineffectiveness resulting from credit valuation adjustment /debit valuation adjustment is marginal.
If the hedging instrument expires or is sold, terminated or ex- ercised, or when the hedge no longer meets the criteria for hedge accounting, the hedge relationship is discontinued prospectively. If the relationship does not meet the hedge ef- fectiveness criteria, the Group discontinues hedge account- ing from the last date on which compliance with hedge effec- tiveness is demonstrated. If the hedge accounting relationship is terminated for an item recorded at amortised cost, the accumulated fair value hedge adjustment to the car- rying amount of the hedged item is amortised over the re- maining term of the original hedge by recalculating the EIR. If the hedged item is derecognised, the unamortised fair value adjustment is recognised immediately in the income statement.
41
Annual Report 2022 Würth Finance Group
18 Segment information
The Group provides segment reporting by business line. Segment reporting by geographic areas is not considered meaningful as the Group only provides services from the Netherlands and Switzerland.
Income statement by segment at 31 December 2022
| Inhouse Banking | External | ||||||||
| Financial | |||||||||
| Services | |||||||||
| Total | |||||||||
| Total | Würth | ||||||||
| Group | Securities | Central | Central | Inhouse | Insurance | Finance | |||
| in TEUR | Financing | Trading | investments | Settlement | Services | Banking | Brokerage | Elimination | Group |
| Income | |||||||||
| Interest income | 87,677 | 0 | 869 | 0 | 0 | 88,546 | 0 | –120 | 88,426 |
| Interest expenses | –58,814 | 0 | –155 | 0 | 0 | –58,969 | –1 | 120 | –58,850 |
| Net interest income | 28,863 | 0 | 714 | 0 | 0 | 29,577 | –1 | 0 | 29,576 |
| Income from factoring activities | 17, 733 | 0 | 0 | 0 | 0 | 17, 733 | 0 | 0 | 17, 733 |
| Income from commission and | |||||||||
| service fee activities | 0 | 0 | 0 | 34,029 | 0 | 34,029 | 14,319 | 0 | 48,348 |
| Income from trading activities | |||||||||
| and financial instruments | 0 | 17,250 | –6,239 | 0 | 0 | 11,011 | 370 | –92 | 11,289 |
| Other ordinary income | 553 | 0 | 0 | 0 | 0 | 553 | 100 | 0 | 653 |
| Expected creditloss | |||||||||
| (expenses)/recovery | –4,615 | 0 | 0 | 0 | 0 | –4,615 | 0 | 0 | –4,615 |
| Total segment income | 42,534 | 17, 250 | –5,525 | 34,029 | 0 | 88,288 | 14,788 | –92 | 102,984 |
| Expenses | |||||||||
| Personnel expenses | –726 | –570 | 0 | –3,715 | –5,846 | –10,857 | –11,134 | 0 | –21,991 |
| Other administrative expenses | 0 | 0 | 0 | 0 | –10,769 | –10,769 | –1,913 | 0 | –12,682 |
| Amortisation | 0 | 0 | 0 | 0 | –1,132 | –1,132 | –836 | 0 | –1,968 |
| Other ordinary expenses | 0 | 0 | 0 | 0 | 0 | 0 | –15 | 0 | –15 |
| Segment expenses | –726 | –570 | 0 | –3,715 | –17, 747 | –22,758 | –13,898 | 0 | –36,656 |
| Segment result | 41,808 | 16,680 | –5,525 | 30,314 | –17, 747 | 65,530 | 890 | –92 | 66,328 |
| Income tax expenses | 0 | 0 | 0 | 0 | –12,538 | –12,538 | –135 | 0 | –12,673 |
| Deferred taxes | 0 | 0 | 0 | 0 | 756 | 756 | –7 | 0 | 749 |
| Net profit for the year | 41,808 | 16,680 | –5,525 | 30,314 | –29,529 | 53,748 | 748 | –92 | 54,404 |
42
| Inhouse Banking | External | ||||||||
| Financial | |||||||||
| Services | |||||||||
| Total | |||||||||
| Total | Würth | ||||||||
| Group | Securities | Central | Central | Inhouse | Insurance | Finance | |||
| in TEUR | Financing | Trading | investments | Settlement | Services | Banking | Brokerage | Elimination | Group |
| Income | |||||||||
| Interest income | 56,308 | 0 | 636 | 0 | 0 | 56,944 | 0 | 1,129 | 58,073 |
| Interest expenses | –42,598 | 0 | –175 | 0 | 0 | –42,773 | –1 | –1,129 | –43,903 |
| Net interest income | 13,710 | 0 | 461 | 0 | 0 | 14,171 | –1 | 0 | 14,170 |
| Income from factoring activities | 16,234 | 0 | 0 | 0 | 0 | 16,234 | 0 | 0 | 16,234 |
| Income from commission and | |||||||||
| service fee activities | 0 | 0 | 0 | 30,653 | 0 | 30,653 | 13,072 | 0 | 43,725 |
| Income from trading activities | |||||||||
| and financial instruments | 0 | 13,660 | 1,075 | 0 | 0 | 14,735 | 5 | 49 | 14,789 |
| Other ordinary income | 667 | 0 | 0 | 0 | 0 | 667 | 130 | 0 | 797 |
| Expected creditloss | |||||||||
| (expenses)/recovery | 6,846 | 0 | 0 | 0 | 0 | 6,846 | 0 | 0 | 6,846 |
| Total segment income | 37, 457 | 13,660 | 1,536 | 30,653 | 0 | 83,306 | 13,206 | 49 | 96,561 |
| Expenses | |||||||||
| Personnel expenses | –1,101 | –529 | 0 | –3,589 | –5,226 | –10,445 | –10,256 | 0 | –20,701 |
| Other administrative expenses | 0 | 0 | 0 | 0 | –9,959 | –9,959 | –1,526 | 0 | –11, 485 |
| Amortisation | 0 | 0 | 0 | 0 | –1,137 | –1,137 | –708 | 0 | –1,845 |
| Other ordinary expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Segment expenses | –1,101 | –529 | 0 | –3,589 | –16,322 | –21,541 | –12,490 | 0 | –34,031 |
| Segment result | 36,356 | 13,131 | 1,536 | 27,064 | –16,322 | 61,765 | 716 | 49 | 62,530 |
| Income tax expenses | 0 | 0 | 0 | 0 | –9,429 | –9,429 | –158 | 0 | –9,587 |
| Deferred taxes | 0 | 0 | 0 | 0 | –75 | –75 | –7 | 0 | –82 |
| Net profit for the year | 36,356 | 13,131 | 1,536 | 27,064 | –25,826 | 52,261 | 551 | 49 | 52,861 |
43
Annual Report 2022 Würth Finance Group
Balance sheet by segment at 31 December 2022
| Inhouse Banking | External | ||||||||
| Financial | |||||||||
| Services | |||||||||
| Total | |||||||||
| Total | Würth | ||||||||
| Group | Securities | Central | Central | Inhouse | Insurance | Finance | |||
| in TEUR | Financing | Trading | investments | Settlement | Services | Banking | Brokerage | Elimination | Group |
| Balance sheet | |||||||||
| Segment assets | 3,745,611 | 21,519 | 96,271 | 0 | 34,281 | 3,897,682 | 7,110 | –58,080 | 3,846,712 |
| Segment liabilities | 3,486,041 | 20,566 | 14,759 | 0 | 376,316 | 3,897,682 | 7,110 | –58,080 | 3,846,712 |
| Additional segment | |||||||||
| information | |||||||||
| Capital expenditures | 0 | 0 | 0 | 0 | 92 | 92 | 313 | 0 | 405 |
Balance sheet by segment at 31 December 2021
| Inhouse Banking | External | ||||||||
| Financial | |||||||||
| Services | |||||||||
| Total | |||||||||
| Total | Würth | ||||||||
| Group | Securities | Central | Central | Inhouse | Insurance | Finance | |||
| in TEUR | Financing | Trading | investments | Settlement | Services | Banking | Brokerage | Elimination | Group |
| Balance sheet | |||||||||
| Segment assets | 3,481,182 | 5,648 | 73,017 | 0 | 29,304 | 3,589,151 | 6,442 | –137,233 | 3,458,360 |
| Segment liabilities | 3,176,871 | 8,091 | 59,914 | 0 | 344,275 | 3,589,151 | 6,442 | –137,233 | 3,458,360 |
| Additional segment | |||||||||
| information | |||||||||
| Capital expenditures | 0 | 0 | 0 | 0 | 133 | 133 | 286 | 0 | 419 |
44
Würth Finance International B.V.
FINANCIAL STATEMENTS 2022
45
Annual Report 2022 Würth Finance International B.V.
Company income statement
for the year ended at 31 December
in TEUR
Notes
2022
2021
Net income
68,766
61,001
Other operating income
12
553
667
Total operating income
69,319
61,668
Wages and salaries
29
–10,050
–9,646
Social security charges
–807
–799
Amortisation of intangible and tangible fixed assets
19
–1,132
–1,137
Other operating expenses
30
–10,715
–9,866
Total operating expenses
–22,704
–21,448
46,615
40,220
Financial income
22
87,949
56,308
Impairments of assets
17a
–4,615
6,846
Financial expenses
22
–58,698
–43,299
Profit before taxes
71,251
60,075
Income tax expense
–12,636
–9,297
Share in result from participating interests
20
–4,211
2,083
Net profit for the year
54,404
52,861
Company balance sheet
for the year ended at 31 December
Before appropriation of profit
in TEUR
Notes
2022
2021
ASSETS
Non-current assets
Intangible assets
Software
19
0
0
Right-of-use assets
Right-of-use land and buildings
19
1,289
1,220
Property, plant and equipment
Operating equipment and furnishings
19
149
172
Financial assets
Participations in Group companies
20
30,674
33,842
Loans to related companies
4, 21
1,554,992
1,429,290
Positive fair values of derivative instruments
17b, 17c
14,894
4,670
Deferred tax assets
23
1,651
2,062
Total non-current assets
1,603,649
1,471,256
Current assets
Receivables from related companies
21
1,385,924
1,197,132
Positive fair values of derivative instruments
17b, 17c
6,625
978
Other assets
24
1,781
2,285
Accrued income and prepaid expenses
11,598
6,417
Securities held for trading
6, 17a
31,055
0
Cash
804,747
775, 711
Total current assets
2,241,730
1,982,523
Total assets
3,845,379
3,453,779
46
in TEUR
Notes
2022
2021
EQUITY AND LIABILITIES
Shareholders’ equity
Issued capital
16,000
16,000
Additional paid-in capital
5,000
5,000
Retained earnings
325,810
294,344
Net profit for the year
54,404
52,861
Total shareholders’ equity
27
401,214
368,205
Provisions
Liabilities for pension plans
13
1,154
2,059
Total provisions
1,154
2,059
Non-current liabilities
Bonds issued
7
2,109,593
1,250,060
Lease liabilities
229
209
Negative fair values of derivative instruments
17b, 17c
12,442
719
Total non-current liabilities
2,122,264
1,250,988
Current liabilities
Bonds issued
7
0
499,843
Commercial paper
75,000
0
Payables to related companies
21
1,197,954
1,285,592
Lease liabilities
1,068
1,015
Payables to banks
28
6,589
11,988
Income tax payables
14
9,135
6,305
Negative fair values of derivative instruments
17b, 17c
7, 565
7, 372
Other liabilities
26
12,980
12,920
Accrued expenses and deferred income
10,456
7, 492
Total current liabilities
1,320,747
1,832,527
Total equity and liabilities
3,845,379
3,453,779
47
Annual Report 2022 Würth Finance International B.V.
Accounting policies used in preparing the
company Financial Statements
for the year ended at 31 December
Basis of preparation
A subsequent share of the profit of the subsidiary is recog-
The company Financial Statements have been prepared in
nised only if and to the extent that the accumulated share of
accordance with Part 9 of Book 2 of the Dutch Civil Code. In
the previously unrecognised loss has been made good.
accordance with the provisions of Section 362-8 of Book 2
of the Dutch Civil Code the accounting policies used are the
Information on the use of financial instruments and on relat-
same as those used in the notes to the consolidated Financial
ed risks for the Group was provided in the notes to the con-
Statements, prepared under IFRS as adopted by the Euro-
solidated Financial Statements.
pean Union, unless stated otherwise below. The Financial
Statements were prepared on 19 April 2023. Where the
The company Financial Statements were presented in EUR
notes in the company Financial Statements were similar to
thousands unless otherwise stated.
the notes in the consolidated Financial Statements we refer
to the notes in the consolidated Financial Statements.
Changes in accounting policies
For details of changes in accounting policies, please refer to
Participations in related companies
the consolidated accounting principles.
Investments in subsidiaries are valued using the net asset val-
ue method, determined by applying the IFRS accounting pol-
The company made use of the option to eliminate intercom-
icies as described in the consolidated Financial Statements.
pany expected credit losses against the book value of loans
Under this method, subsidiaries are carried at the company’s
and receivables to Group companies, instead of elimination
share in their net asset value plus its share in the results of the
against the investments in Group companies.
subsidiaries and its share of changes recognised directly in
the equity of the subsidiaries as from the acquisition date,
Equity interests
determined in accordance with the IFRS accounting policies
Parent company
disclosed in the consolidated Financial Statements, less its
Würth Finance International B.V., Amsterdam, is the parent
share in the dividend distributions from the subsidiaries. The
company of the companies as listed below and includes the
company’s share in the results of the subsidiaries is recog-
financial data of these companies in its consolidated Financial
nised in the income statement. If and to the extent that the
Statements, copies of which are available at cost from the
distribution of profits is subject to restrictions, these are in-
head office of Würth Finance International B.V., Amsterdam.
cluded in a legal reserve.
Fully consolidated companies
If the value of the subsidiary under the net asset value meth-
• Würth Financial Services AG, Rorschach, Switzerland:
od has become nil, this method is no longer applied, with the
wholly owned subsidiary (2021: 100%)
subsidiary being valued at nil as long as the net asset value
remains negative. In connection with this, any long-term inter-
• Würth Invest AG, Chur, Switzerland:
ests that, in substance, form part of the investor’s net invest-
wholly owned subsidiary (2021: 100%)
ment in the subsidiary are included. A provision is formed if
and to the extent that the company stands surety for all or
The percentages stated represent the equity interests held.
part of the debts of the subsidiary or if it has a constructive
obligation to enable the subsidiary to repay its debts.
48
Notes to the company Financial Statements
for the year ended at 31 December
19 Intangible assets/right-of-use assets/property, plant and equipment
Intangible assets /right-of-use assets /property, plant and equipment are composed as follows:
At 31 December 2022
Additions
(disposals)
Acquisition incl. asset Acquisition
Accum.
Asset Amortisation
Accum.
Net book
cost retirement cost amortisation retirement for the year amortisation
value
in TEUR
2021
2022
2022
2021
2022
2022
2022
2022
Intangible assets
Software
1,470
0
1,470
–1,470
0
0
–1,470
0
Total intangible assets
1,470
0
1,470
–1,470
0
0
–1,470
0
Right-of-use assets
Right-of-use land and buildings
3,855
1,086
4,941
–2,635
0
–1,017
–3,652
1,289
Total right-of-use assets
3,855
1,086
4,941
–2,635
0
–1,017
–3,652
1,289
Property, plant and equipment
Vehicles
412
30
442
–329
48
–64
–345
97
Art objects
34
0
34
0
0
0
0
34
Office equipment/installations
577
13
590
–521
0
–51
–572
18
Total property, plant and equipment
1,023
43
1,066
–850
48
–115
–917
149
Total
6,348
1,129
7, 477
–4,955
48
–1,132
–6,039
1,438
At 31 December 2021
Additions
(disposals)
Acquisition incl. asset Acquisition
Accum.
Asset Amortisation
Accum.
Net book
cost retirement
cost Amortisation retirement for the year Amortisation
value
in TEUR
2020
2021
2021
2020
2021
2021
2021
2021
Intangible assets
Software
1,471
0
1,470
–1,471
0
0
–1,470
0
Total intangible assets
1,471
0
1,470
–1,471
0
0
–1,470
0
Right-of-use assets
Right-of-use land and buildings
2,839
1,015
3,855
–1,648
0
–987
–2,635
1,220
Total right-of-use assets
2,839
1,015
3,855
–1,648
0
–987
–2,635
1,220
Property, plant and equipment
Vehicles
416
–4
412
–266
48
–110
–329
83
Art objects
34
0
34
0
0
0
0
34
Office equipment/installations
539
38
577
–532
51
–40
–521
55
Total property, plant and equipment
989
34
1,023
–798
99
–149
–850
172
Total
5,299
1,049
6,348
–3,917
99
–1,137
–4,955
1,392
49
Annual Report 2022 Würth Finance International B.V.
20 Participations in Group companies
in TEUR
Net book value at 1 January 2021
30,359
OCI
1,400
Share in profit/(loss) of participating interests
2,083
Net book value at 31 December 2021
33,842
Net book value at 1 January 2022
33,842
OCI
1,043
Share in profit/(loss) of participating interests
–4,211
Net book value at 31 December 2022
30,674
21 Transactions with related parties
Related party transactions were based on arm’s length terms and conditions.
At 31 December 2022
Parent
Associated
in TEUR
Total
companies
Subsidiaries
companies
Receivables from related parties
Loans to related companies
1,554,992
0
0
1,554,992
Receivables from related companies
1,385,924
8,420
37,633
1,339,871
Current accounts
577, 513
0
100
577, 413
Short-term loans
616,035
0
37, 533
578,502
Factoring
192,376
8,420
0
183,956
Total receivables from related parties
2,940,916
8,420
37, 633
2,894,863
Payables to related parties
Payables to related parties
1,197,954
405,254
3,301
789,399
Current accounts
1,009,067
405,254
3,301
600,512
Fixed-term deposits
188,887
0
0
188,887
Other payables to related parties
8,142
0
0
8,142
Total payables to related parties
1,206,096
405,254
3,301
797, 541
At 31 December 2021
Parent
Associated
in TEUR
Total
companies
Subsidiaries
companies
Receivables from related parties
Loans to related companies
1,429,290
0
0
1,429,290
Receivables from related companies
1,197,132
7, 713
117, 490
1,071,929
Current accounts
354,021
0
446
353,575
Short-term loans
643,678
0
117,044
526,634
Factoring
199,433
7, 713
0
191,720
Total receivables from related parties
2,626,422
7, 713
117, 490
2,501,219
Payables to related parties
Payables to related parties
1,285,592
415,982
2,595
867,015
Current accounts
1,268,975
415,982
2,595
850,398
Fixed-term deposits
16,617
0
0
16,617
Other payables to related parties
5,578
0
0
5,578
Total payables to related parties
1,291,170
415,982
2,595
872,593
50
22 Interest income and expenses
At 31 December 2022
in TEUR
Total
Parent Subsidiaries Associated Third parties
Interest income
Interest income from financing activities at amortised cost
51,273
0
0
51,248
25
Interest income from financing leasing activities at amortised cost
2,299
0
0
2,299
0
Interest income from liquid assets at amortised cost
18,684
47
120
16,173
2,344
Interest income from current accounts
16,340
47
120
16,173
0
Interest income from bank accounts, time deposits and money market funds
2,344
0
0
0
2,344
Interest income from financial instruments at fair value through profit and loss
15,693
0
0
5,011
10,682
Valuation gains/(losses) from interest rate and cross-currency swaps (realised)
0
0
0
0
0
Interest income from interest rate and cross-currency swaps
14,725
0
0
4,106
10,619
Other interest income from financial instruments
968
0
0
905
63
Total interest income
87,949
47
120
74,731
13,051
Interest expenses
Interest expenses for current accounts and time deposits
3,434
190
0
3,172
72
Interest expenses for bonds issued
24,367
2,149
0
0
22,218
Interest expenses from financial instruments
28,814
131
0
9,553
19,130
Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised)
997
0
0
3,696
–2,699
Interest expenses from interest rate and cross-currency swaps
18,371
0
0
4,201
14,170
Other interest expenses from financial instruments
9,446
131
0
1,656
7,659
Other interest expenses (third parties)
2,083
0
0
7
2,076
Total interest expenses
58,698
2,470
0
12,732
43,496
At 31 December 2021
in TEUR
Total
Parent Subsidiaries Associated Third parties
Interest income
Interest income from financing activities at amortised cost
32,518
0
0
32,494
24
Interest income from financing leasing activities at amortised cost
2,580
0
0
2,580
0
Interest income from liquid assets at amortised cost
6,407
28
–1,160
7, 493
46
Interest income from current accounts
6,361
28
–1,160
7, 493
0
Interest income from bank accounts, time deposits and money market funds
46
0
0
0
46
Interest income from financial instruments at fair value through profit and loss
14,803
0
0
5,615
9,188
Valuation gains/(losses) from interest rate and cross-currency swaps (realised)
2
0
0
2
0
Interest income from interest rate and cross-currency swaps
14,168
0
0
4,980
9,188
Other interest income from financial instruments
633
0
0
633
0
Total interest income
56,308
28
–1,160
48,182
9,258
Interest expenses
Interest expenses for current accounts and time deposits
308
0
0
74
234
Interest expenses for bonds issued
20,562
2,188
0
0
18,374
Interest expenses from financial instruments
18,928
0
0
5,491
13,437
Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised)
0
0
0
0
0
Interest expenses from interest rate and cross-currency swaps
15,136
0
0
5,491
9,645
Other interest expenses from financial instruments
3,792
0
0
0
3,792
Other interest expenses (third parties)
3,501
0
0
1
3,500
Total interest expenses
43,299
2,188
0
5,566
35,545
51
Annual Report 2022 Würth Finance International B.V.
23 Income tax expense
in TEUR
2022
2021
Deferred tax assets on cash flow hedges
1,651
2,062
Deferred tax assets
1,651
2,062
For other details see the consolidated Financial Statements, Note 14 Income tax.
24 Other assets
in TEUR
2022
2021
Receivables from third parties
1,605
1,664
Other assets
176
621
Total other assets
1,781
2,285
25 Bonds issued
For details see the consolidated Financial Statements, Note 7 Bonds issued.
26 Other liabilities
in TEUR
2022
2021
Payables for deliveries and services
8,793
8,576
of which to third parties
651
2,998
of which to related parties
8,142
5,578
Compensation-related liabilities
3,137
2,970
Other liabilities
1,050
1,374
Total other liabilities
12,980
12,920
Other accrued expenses and deferred income primarily comprise accruals for services received but not invoiced during the
financial year.
52
27 Equity
Foreign
Issued
Additional
Retained
Cash flow
currency
in TEUR
capital paid-in capital
earnings hedge reserve
translation
Total
At 1 January 2021
16,000
5,000
320,265
–14,466
–5
326,794
Net profit for the year
0
0
52,861
0
0
52,861
Foreign currency translation
0
0
0
0
–49
–49
Cash flow hedge accounting
0
0
0
3,457
0
3,457
Remeasurement gain /(loss) on defined benefit plans
0
0
3,080
0
0
3,080
Deferred taxes on cash flow hedges
0
0
0
2,062
0
2,062
Total comprehensive income for the year
0
0
55,941
5,519
–49
61, 411
Dividend payments
0
0
–20,000
0
0
–20,000
At 31 December 2021
16,000
5,000
356,206
–8,947
–54
368,205
At 1 January 2022
16,000
5,000
356,206
–8,947
–54
368,205
Net profit for the year
0
0
54,404
0
0
54,404
Foreign currency translation
0
0
0
0
92
92
Cash flow hedge accounting
0
0
0
2,031
0
2,031
Remeasurement gain /(loss) on defined benefit plans
0
0
1,893
0
0
1,893
Deferred taxes on cash flow hedges
0
0
0
–411
0
–411
Total comprehensive income for the year
0
0
56,297
1,620
92
58,009
Dividend payments
0
0
–25,000
0
0
–25,000
At 31 December 2022
16,000
5,000
387, 503
–7, 327
38
401,214
The Board of Directors proposed to allocate the net income of TEUR 54,404 to retained earnings.
28 Payables to banks
The payables to banks in previous year refers to current account debt and a credit in the amount of TCHF 5,000. The credit
was repaid in 2022. The further decrease in current payables to banks refers to a lower current account debt.
53
Annual Report 2022 Würth Finance International B.V.
29 Personnel expenses
The average number of staff (in FTEs) employed by the com-
In 2022 and 2021, no other forms of compensation
pany in 2022 was 64 (2021: 64).
(post-employment benefits or other long-term benefits, termi-
nation benefits, share-based payments) were paid to key
The key management comprised the Managing Directors of
management.
the company.
In financial year 2022, fees of TEUR 320 were paid to mem-
Remuneration for the Managing Directors of the company to-
bers of the Board of Directors (2021: TEUR 240).
talled TEUR 1,089 in the year 2022 (2021: TEUR 925).
30 Audit fees
The cost of the Group for the external auditor, the audit organisation and the entire network to which the audit organisation
belongs charged for the financial year is set out below.
in TEUR
2022
2021
Ernst & Young
Audit of the Financial Statements
270
205
Other audit engagements
110
104
Total
380
309
The fees stated above for the audit of the Financial Statements are based on the total fees for the audit of the 2022 Financial
Statements, regardless of whether the procedures were already performed in 2022.
54
Other information
for the year ended at 31 December
Articles of Association provisions governing profit appropriation
The company’s Articles of Association provide for the net profit for the year to be fundamentally put at the disposal of the
shareholders.
Other branches
The company has the following branch:
Würth Finance International B.V.
Rorschach Branch
Churerstrasse 10
9400 Rorschach
Switzerland
Amsterdam and Rorschach, 19 April 2023
B. van Odijk
R. Fust
Managing Director
Managing Director
55
Annual Report 2022 Würth Finance International B.V.
Independent auditor’s report
To: the shareholder and board of directors of
Würth Finance International B.V.
Report on the audit of the financial statements 2022
included in the annual report
Our opinion
We have audited the financial statements 2022 of Würth Finance International B.V., based in Amsterdam. The financial
statements comprise the consolidated and company financial statements.
In our opinion:
•ꢀthe accompanying consolidated financial statements give a true and fair view of the financial position of Würth Finance Inter-
national B.V. as at 31 December 2022 and of its result and its cash flows for 2022 in accordance with International Financial
Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code
•ꢀthe accompanying company financial statements give a true and fair view of the financial position of Würth Finance Interna-
tional B.V. as at 31 December 2022 and of its result for 2022 in accordance with Part 9 of Book 2 of the Dutch Civil Code
The consolidated financial statements comprise:
•ꢀthe consolidated balance sheet as at 31 December 2022
•ꢀthe following statements for 2022: the consolidated income statement, the consolidated statements of comprehensive income,
changes in equity and the consolidated cash flow statement
•ꢀthe notes comprising a summary of the significant accounting policies and other explanatory information
The company financial statements comprise:
•ꢀthe company balance sheet as at 31 December 2022
•ꢀthe company income statement for 2022
•ꢀthe notes comprising a summary of the accounting policies and other explanatory information
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under
those standards are further described in the Our responsibilities for the audit of the financial statements section of our report.
We are independent of Würth Finance International B.V. (the company) in accordance with the EU Regulation on specific
requirements regarding statutory audit of public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit firms
supervision act), the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten” (ViO, Code
of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations
in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en beroepsregels accountants” (VGBA,
Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
56
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our
opinion thereon. The following information in support of our opinion and any findings were addressed in this context, and
we do not provide a separate opinion or conclusion on these matters.
Our understanding of the business
The core activities of Würth Finance International B.V. and its subsidiaries (the group) include providing financing to and
carrying out a wide range of financial activities with companies belonging to the Würth Group, as well as providing
consulting and other services in the area of pensions and insurance to both private persons and small and medium-sized
enterprises. We paid specific attention in our audit to a number of areas driven by the operations of the group and our risk
assessment.
We determined materiality and identified and assessed the risks of material misstatement of the financial statements, whether
due to fraud or error in order to design audit procedures responsive to those risks and to obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
Materiality
Materiality
EUR 10.5 million (2021: EUR 8.8 million)
Benchmark applied
0.5% of total amount of bonds issued as at 31 December 2022
Explanation
Based on our understanding of the business and our professional
judgment, we consider the total amount of bonds issued is the most
appropriate benchmark for the stakeholders of the company.
We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users
of the financial statements for qualitative reasons.
We agreed with the board of directors that misstatements in excess of EUR 0.5 million, which are identified during the audit,
would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
Würth Finance International B.V. is at the head of a group of entities. The financial information of this group is included in the
consolidated financial statements.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the
group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities.
Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for
which an audit or review had to be carried out on the complete set of financial information or specific items.
We have performed full scope audit procedures at Würth Finance International B.V. For the other group entities, Würth
Financial Services AG and Würth Invest AG, we performed, amongst other, analytical procedures to corroborate our assess-
ment that there were no significant risks of material misstatements within these components.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have
been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion
about the consolidated financial statements.
Teaming and use of specialists
We ensured that the audit team, both in the Netherlands and Switzerland, has the appropriate skills and competences which
are needed for the audit of a listed client in the financial industry. We included specialists in the area of income taxes.
57
Annual Report 2022 Würth Finance International B.V.
Our focus on fraud and non-compliance with laws and regulations
Our responsibility
Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compli-
ance with all laws and regulations, it is our responsibility to obtain reasonable assurance that the financial statements,
taken as a whole, are free from material misstatement, whether caused by fraud or error. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Our audit response related to fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we
obtained an understanding of the company and its environment and the components of the system of internal control, includ-
ing the risk assessment process and management’s process for responding to the risks of fraud and monitoring the system of
internal control and how board of directors exercises oversight, as well as the outcomes.
We refer to section “Risk management and control” of the annual report for management’s risk assessment after consideration
of potential fraud risks.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as
well as the code of compliance Würth Group, the group-wide whistleblowing system and incident registration. We evaluated
the design and the implementation and, where considered appropriate, tested the operating effectiveness, of internal controls
designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud,
misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material
misstatement due to fraud is present.
We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures
and evaluated whether any findings were indicative of fraud or non-compliance.
As in all of our audits, we addressed the risks related to management override of controls. For these risks we have performed
procedures among others to evaluate key accounting estimates for management bias that may represent a risk of material
misstatement due to fraud, in particular relating to important judgment areas and significant accounting estimates as disclosed
in the ’Assumptions and estimates’ in note 2 to the consolidated financial statements. We have also used data analysis to iden-
tify and address high-risk journal entries. We evaluated the business rationale (or the lack thereof) of significant extraordinary
transactions, including those with related parties and whether these were accounted for at-arm’s length and in accordance with
transfer pricing documentation.
As described in our key audit matter ‘Estimation uncertainty with respect to valuation of loans to related companies and
receivables from related companies’, we specifically considered whether the risks related to management override of controls
in the determination of the allowance for expected credit losses indicated a management bias that may represent a risk of
material misstatement due to fraud.
We did not identify a risk of fraud in revenue recognition.
We considered available information and made enquiries of relevant members of management and the board of directors as
well as the group auditor of Würth Group.
The fraud risks identified, enquiries and other available information did not lead to specific indications for fraud or suspected
fraud potentially materially impacting the view of the financial statements.
Our audit response related to risks of non-compliance with laws and regulations
We performed appropriate audit procedures regarding compliance with the provisions of those laws and regulations that
have a direct effect on the determination of material amounts and disclosures in the financial statements. Furthermore, we
assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to have
a material effect on the financial statements from our general industry experience, through discussions with management,
reading minutes, inspection of internal audit and compliance reports of Würth Group, and performing substantive tests of
details of classes of transactions, account balances or disclosures.
We also inspected lawyers’ letters and correspondence with regulatory authorities, enquired with the group auditor of Würth
Group, and remained alert to any indication of (suspected) non-compliance throughout the audit. Finally we obtained a written
representation that all known instances of non-compliance with laws and regulations have been disclosed to us.
58
Our audit response related to going concern
As disclosed in section ‘General’ of note 2 to the consolidated financial statements, the financial statements have been
prepared on a going concern basis. When preparing the financial statements, management made a specific assessment of
the company’s ability to continue as a going concern and to continue its operations for the foreseeable future.
We discussed and evaluated the specific assessment with management exercising professional judgment and maintaining
professional skepticism. We considered whether management’s going concern assessment, based on our knowledge and
understanding obtained through our audit of the financial statements or otherwise, contains all relevant events or conditions
that may cast significant doubt on the company’s ability to continue as a going concern, including considerations to the finan-
cial position of Würth Group in cooperation with the group auditor. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion.
Based on our procedures performed, we did not identify material uncertainties about going concern. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
a company to cease to continue as a going concern.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements. We have communicated the key audit matter to the board of directors. The key audit matter is not a comprehensive
reflection of all matters discussed.
In comparison with previous year, the nature of our key audit matter did not change
Estimation uncertainty with respect to valuation of loans to related companies and receivables from related companies
Risk
Our audit approach
Key observations
At 31 December 2022 the loans to related
Our audit procedures included, amongst others,
Based on our procedures performed we consider the
companies amount to EUR 1,555 million and
assessing the appropriateness of the company’s
estimates with respect to the valuation of loans to
receivables from related companies amount to EUR
accounting policies related to the recognition of
related companies and receivables from related
1,348 million. Per 31 December 2022 the allowance expected credit losses according to IFRS 9
companies to be reasonable.
for expected credit losses amounts to EUR 9.1 million. “Financial Instruments”. We evaluated whether the
accounting policies and methods applied for making The disclosure on loans to related companies and
The allowance for expected credit losses represent
estimates have been applied consistently. We have receivables from related companies, including the
the company’s best estimate of expected credit losses obtained an understanding of the process for
allowance for expected credit losses are considered
(ECL) on these loans and receivables at balance
recognizing expected credit losses and performed
appropriate and meet the requirements under
sheet date. The company records an allowance for
substantive procedures thereof.
EU-IFRS.
ECL for all loans. In accordance with IFRS 9, a
three-stage model is used to calculate the ECL, which We verified that management measured the
takes into account the change in credit quality since allowance for expected credit losses, taking into
initial recognition using different impairment models. consideration the external credit rating of Würth
A shift from Stage 1 to Stage 2 reflects a significant Group and events subsequent to 31 December
increase in credit risk. The ECL allowance is based on 2022. For the year-end expected credit losses we
the credit losses expected to arise over the life of the have evaluated the appropriateness of the LGD
asset, unless there has been no significant increase in benchmark used and verified the PD used with the
credit risk since origination, in which case the
Global Corporate Average Cumulative Defaults
allowance is based on the 12 months’ expected
Rates from Bloomberg. Furthermore, we have
credit losses. The ECL calculation is probabili-
assessed the recoverability of loans to and
ty-weighted using a combination of probability of
receivables from related parties, especially for those
default (PD), exposure at default (EAD) and loss
companies with a negative equity above a threshold
given default (LGD). The LGD applied is 60%, based of EUR 100,000 as per the balance sheet date. We
on input from Moody’s and Bloomberg. The PD is
have obtained comfort letters from group parent
based on the PD of Würth Group as stated in the
companies that guarantee the outstanding amounts
Global Corporate Average Cumulative Defaults
in the situation the related party defaults. We
Rates from Bloomberg as per 31 December 2022,
assessed the creditworthiness of those group parent
and pro rata calculated based on the remaining term companies that issued the comfort letters. Finally, we
of the loans. Furthermore, loans to related companies evaluated the related disclosures in compliance with
have been granted a credit limit and are constantly
EU-IFRS requirements.
monitored, as disclosed in note 17 Financial
instruments and risk management.
The loans to related companies and receivables from
related companies are material to the company’s
balance sheet and we considered the related
estimation uncertainty on impairment losses as well
as the potential risk of management override of
controls. As such, we consider this a key audit matter.
The accounting principles and IFRS 9 disclosure on
impairment calculation and transactions with related
parties, including the expected credit losses, are
disclosed in note 2 Accounting principles, note 4
Loans to related parties and note 17 Financial
instruments and risk management.
59
Annual Report 2022 Würth Finance International B.V.
Report on other information included in the annual report
The annual report contains other information in addition to the financial statements and our auditor’s report thereon.
Based on the following procedures performed, we conclude that the other information:
•ꢀIs consistent with the financial statements and does not contain material misstatements
•ꢀContains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and the other
information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, we have considered whether the other information contains material misstatements. By performing
these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720.
The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial
statements.
Management is responsible for the preparation of the other information, including the management report in accordance with
Part 9 of Book 2 of the Dutch Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the board of directors as auditor of Würth Finance International B.V., as of the audit for the year 2002
and have operated as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements
regarding statutory audit of public-interest entities.
European Single Electronic Reporting Format (ESEF)
Würth Finance International B.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated
Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting
format (hereinafter: the RTS on ESEF).
In our opinion, the annual report, prepared in the XHTML format, including the partially marked-up consolidated financial
statements, as included in the reporting package by Würth Finance International B.V., complies in all material respects with the
RTS on ESEF.
Management is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on
ESEF, whereby management combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package
complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ’Assurance-opdrachten inzake
het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to
compliance with criteria for digital reporting). Our examination included amongst others:
•ꢀobtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package
•ꢀidentifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and
designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including:
•ꢀobtaining the reporting package and performing validations to determine whether the reporting package con-
taining the Inline XBRL instance document and the XBRL extension taxonomy files, has been prepared in accordance
with the technical specifications as included in the RTS on ESEF
•ꢀexamining the information related to the consolidated financial statements in the reporting package to determine
whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF.
60
Description of responsibilities regarding the financial statements
Responsibilities of management and the board of directors for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS
and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as
management determines is necessary to enable the preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue
as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statement
s
using the going concern basis of accounting unless the shareholder either intends to liquidate the company or to cease opera-
tions, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant
doubt on the company’s ability to continue as a going concern in the financial statements.
The board of directors is responsible for overseeing the company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate
audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material
errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reason-
ably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality
affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our
opinion.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance
with Dutch Standards on Auditing, ethical requirements and independence requirements. The ‘Information in support of our
opinion’ section above includes an informative summary of our responsibilities and the work performed as the basis for our
opinion.
Our audit further included among others:
•ꢀPerforming audit procedures responsive to the risks identified, and obtaining audit evidence that is sufficient and appropriate
to provide a basis for our opinion
•ꢀObtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control
•ꢀEvaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management
•ꢀEvaluating the overall presentation, structure and content of the financial statements, including the disclosures
•ꢀEvaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation
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Annual Report 2022 Würth Finance International B.V.
Communication
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant findings in internal control that we identify during our audit.
In this respect we also submit an additional report to the audit committee of Würth Group in accordance with Article 11
of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in
this additional report is consistent with our audit opinion in this auditor’s report.
We provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine the key audit matters: those matters that were of
most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the
matter is in the public interest.
Amsterdam, 19 April 2023
Ernst & Young Accountants LLP
Signed by K. Tang
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