Annual Report 2023
WÜRTH FINANCE GROUP
GROWING TOGETHER
KEY EVENTS IN 2023
■ 4.2 million customers and record sales for the Würth Group: Despite a signifi-
cant slowdown in the economy, the Würth Group increased its consolidated
sales by 2.4% to EUR 20,400 million. It acquired 100,000 new customers and
achieved the second-best result in the company’s history at EUR 1,400 million
(according to preliminary figures).
■ Extraordinarily sharp increase in profit for the Würth Finance Group: driven
by higher interest income on cash investments, total income increased by
26.0% to EUR 134.7 million, while pre-tax profit was even up 33.3% at
EUR 93.7 million (adjusted figures).
■ A large inflow of liquidity from the core business and strong increases in
interest rates were a key spur to action for Würth Finance International B.V.: In
an environment of significant rises in interest rates, active management of more
than 50 bank accounts in 26 currencies along with the optimal investment of
liquidity totalling well over EUR 1,000 million created significant added value.
Higher interest rates also dominated deliberations and decision-making
processes when it came to financing the Group companies.
■ Remarkable performance in a challenging market environment: With
a 6% increase in brokered premium volume and a 7% rise in revenue,
Würth Financial Services AG achieved new records. Thanks to its successful
sales strategy, Würth Financial Services AG is thus growing significantly
faster than the market.
■ Digital insurance sales as a key strategic initiative: The InsurHub on Twint
is performing well. With payment protection insurance for private individuals
with mortgage debts offered online on the brokermarket.ch platform,
Würth Financial Services AG has successfully entered the digital
bancassurance market.
THE WÜRTH FINANCE GROUP
AT A GLANCE
The Würth Finance Group is the financial competence centre for the
Würth Group. It employs 120 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 10,000
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
2019
2020
2021
2022
2023
Key figures from the consolidated income statement
Net interest income
14,284
13,789
14,170
29,576
50,844
Income from factoring activities
16,419
16,275
16,234
17, 733
13,573
Income from commission and service fee activities
35,897
37,668
43,725
48,348
49,564
Income from trading activities and financial instruments
14,713
12,376
14,789
11,289
20,376
Other ordinary income
2,870
1,709
797
653
592
Expected credit loss (expenses) /recovery
1,005
–7,886
6,846
–4,615
4,273
Total operating income
85,189
73,931
96,561
102,984
139,222
Total operating expenses
–32,397
–31,519
–34,031
–36,656
–41,021
Profit before taxes
52,792
42,412
62,530
66,328
98,201
Operating income adjustments Inhouse Banking
Hedge accounting effect management accounting
2,993
1,492
–548
–619
–203
Impairment for credit loss
–739
8,558
–6,450
4,615
–4,273
Total operating income (adjusted)
87, 443
83,981
89,563
106,980
134,747
Profit before taxes (adjusted)
55,046
52,462
55,532
70,324
93,726
Balance sheet total/equity ratio
Number of employees (FTEs)
in million EUR
in %
Employees
4,500
18
180
4,000
16
160
3,500
14
140
3,000
12
120
2,500
10
100
2,000
8
80
1,500
6
60
1,000
4
40
500
2
20
0
0
0
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
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
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Cost-income ratio
Return on equity before tax
Cost-income ratio adjusted
Return on equity before tax adjusted
CONTENTS
02 Würth Finance Group Insights – Growing Together
and Growing Closer Together
16 Report of the Board of Directors
18 Report of the Management
20 Inhouse Banking Division
28 External Financial Services Division
32 Risk Management and Control
40 Legal Structure of the Würth Group
41 Executive Bodies of the Würth Finance Group
42 Information for Investors
43 Excerpt from the Financial Statements 2023
Annual Report 2023 Würth Finance Group
Würth Finance International B.V.
REPORT OF THE BOARD OF DIRECTORS
Dear readers
During financial year 2023, the Board of Directors of Würth
At his own request and in connection with his departure
Finance International B.V. performed its duties in accordance
from the Central Management Board of the Würth Group,
with the law and the company’s articles of association, moni-
Joachim Kaltmaier stepped down as Chairman of the
tored the performance of the company and advised the
Board of Directors of Würth Finance International B.V. at
Management.
the shareholders’ meeting on 19 April 2023, with effect from
5 May 2023. On behalf of the Board of Directors and the
Four meetings were held during which the Management in-
Management, I would like to express my sincere thanks to
formed the Board of Directors verbally and in writing about
Mr Kaltmaier for his long-standing and successful leadership
the general situation of the company, the course of business
of the Board of Directors and am delighted that he remains a
and the principal issues relating to its business policy. This
full member of the Board.
reporting also included the subsidiaries Würth Financial
Services AG and Würth Invest AG. The information required
For the Würth Group, financial year 2023 was marked by
as the basis for decision-making was provided in timely fash-
economic slowdown and a steadily weakening market envi-
ion and enabled a detailed insight into business operations.
ronment over the course of the year. In spite of this, accord-
The Board of Directors was also informed promptly of all
ing to preliminary figures, the company recorded sales
potential opportunities and risks. In this context, the Board
growth of 2.4% to around EUR 20,400 million and an ope-
of Directors advised the Management on strategic measures
rating result of EUR 1,400 million – the second-highest result
and issues relating to the company’s future. The cooperation
in its history. This shows that the Würth Group’s highly diver-
between the Management and the Board of Directors was
sified business portfolio again paid off. The positive growth
highly constructive and fully complied with the principles of
trend was driven by the European markets, the traditional
good corporate governance.
sale of assembly and fastening materials to the crafts cus-
tomers of the Würth Line and the RECA Group as well as the
A focal point of the work of the Board of Directors was moni-
Electrical Wholesale unit.
toring the effectiveness of risk management, particularly
regarding compliance with the regulatory limits set by the
Given the significant cash inflow from the core business and
Board of Directors for measuring, managing and monitoring
the sharp rise in interest rates, Würth Finance International
market, credit and liquidity risk in relation to trading activities
B.V. – as the competence centre for the financing and liqui-
and the company as a whole.
dity management of the Würth Group – concentrated on
optimally investing cash on the money market and on advising
As in previous years, the audit companies Ernst & Young and
and supporting the Group companies in adapting their finan-
KPMG reported to the meetings of the Board of Directors.
cing structures. Buoyed by a huge improvement in net inter-
They reported in connection with risk management on a
est income as a consequence of higher interest rates and
quarterly basis on selected audit areas, which had been
successful sales activities in insurance brokerage, the compa-
discussed and decided upon beforehand by the Board of
ny’s adjusted consolidated pre-tax profit rose to a record
Directors. There was a particular emphasis on the reliability
EUR 93.7 million in financial year 2023.
of the internal control systems used by the company.
16
Board of Directors
from left to right: Mag. Michel Haller (Chief Executive Officer of Hypo Vorarlberg Bank AG) | Wolfgang Kirsch (former Chief Executive
Officer of DZ Bank AG, Chairman of the Supervisory Board of Fresenius SE & Co. KGaA) | Joachim Kaltmaier (former Member of the
Central Management Board of the Würth Group) | Prof. Dr. h. c. mult. Reinhold Würth (Chairman of the Supervisory Board of the Würth
Group) | Ralf Schaich (Member of the Central Management Board of the Würth Group and Chairman of the Board of Directors of Würth
Finance International B.V.) | Dieter Gräter (Vice President Finance, Würth-Verwaltungsgesellschaft mbH) | Christoph Raithelhuber
The 2023 Consolidated Financial Statements, along with
On behalf of the Board of Directors, I would like to thank
the 2023 separate Financial Statements of Würth Finance
the Management and all the staff for their hard work, and
International B.V., were prepared in accordance with Inter-
congratulate them on the very good operating result they
national Financial Reporting Standards (IFRS) and Part 9 of
achieved in the past financial year. I would also like to thank
Book 2 of the Dutch Civil Code. Ernst & Young audited the
the Würth Finance Group’s clients and business partners for
annual accounts and issued an unqualified audit opinion.
the trust they have placed in us and for their loyalty to the
The Financial Statements and the audit report were exam-
company and the Würth Group as a whole.
ined 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.
Ralf Schaich
Chairman of the Board of Directors of Würth Finance International B.V.
As part of its legal obligations to increase gender diversity
in management, Würth Finance International B.V. aims to
include at least one female member when appointing new
members to the Board of Directors and to the Management
by the end of 2025. Various specific measures are in place
to achieve this goal (see page 39). Currently, the proportion
of men on both boards is 100%.
17
Annual Report 2023 Würth Finance Group
Würth Finance Group
REPORT OF THE MANAGEMENT
It would be at best an understatement to say that the world
This development had a very positive impact on the Würth
has become more volatile over the past few years. In the
Group’s operating cash flow and net debt. With centrally –
wake of the pandemic and the (ongoing) war in Ukraine,
by the Würth Finance Group – held liquidity totalling around
the outbreak of war in the Middle East has triggered another
EUR 1,200 million and an undrawn credit facility of EUR 500
crisis with a global impact that extends beyond the human
million committed until 2028, the Würth Group has comfor-
tragedy of those directly involved. Relations between the US
table liquidity reserves available.
and China remain consistently tense, and the ongoing cost
of living crisis has sustained and exacerbated the high geo-
Würth Finance Group
political risk premium. The global economy continues to
The performance of the Würth Group’s core business had
face the challenges posed by inflation and lacklustre growth
knock-on effects for the Würth Finance Group’s Inhouse Bank-
prospects. Although GDP growth in 2023 was slightly
ing division: as expected, the volume of payments stagnated
stronger than expected, particularly in the US, it is now slow-
compared with the previous year due to the reduction in in-
ing due to tighter financing conditions, weak trade growth
ventories. Thanks to the higher interest rates, income from net
and lower business and consumer confidence in Europe and
lending to Group companies and from cash investments in-
North America. Inflation rates declined rapidly and moved
creased significantly, while interest expenses were kept rela-
towards levels consistent with central bank targets. Accord-
tively stable thanks to the existing fixed-rate bond financing.
ingly, central banks were able to end their rate hike cycle in
This led to a sharp rise in net interest income, from EUR 29.6
autumn 2023.
million to EUR 50.8 million. Würth Financial Services AG
maintained the steady growth trajectory of its insurance
Würth Group
brokerage business and saw commission income increase
As expected, the impact of the stagnating economic trend
by 6%.
on the Würth Group increased as financial year 2023 pro-
gressed. According to preliminary figures, the company
At EUR 134.7 million, the Würth Finance Group’s adjusted
nevertheless recorded sales growth of 2.4% to around
income rose by a further EUR 27.8 million compared with the
EUR 20,400 million. The sales trend in the construction sec-
previous year’s already high figure. This increase is primarily
tor, which is important for the Würth Group, was subdued.
due to the above-mentioned improvement in net interest in-
However, this weakness was offset by the developments in
come in the Inhouse Banking division. Operating expenses
other business units, such as Electrical Wholesale.
increased by 11.9%, rising from EUR 36.7 to EUR 41.0 million.
This development was driven by higher IT costs for operations
Higher energy prices, the increased cost of services and
and digitalisation projects, increased prices charged by ser-
inflation-related wage increases pushed up operating ex-
vice providers and higher personnel expenses. The latter is
penses to a greater extent than sales in financial year 2023.
attributable to wage rises and a slight increase in the aver-
Profits were therefore unable to keep pace with sales growth.
age headcount. As at 31 December 2023, the Würth Finance
However, at EUR 1,400 million, the company achieved the
Group had 120 employees (FTEs). With an adjusted pre-tax
second-highest operating result in its history.
profit of EUR 93.7 million, the company achieved a record-
high result (2022: EUR 70.3 million).
In financial year 2022, maintaining delivery capabilities
was crucial to the company’s success, so inventories were in-
In a challenging market environment in 2023, the Würth
creased to a greater-than-average extent. In the year under
Finance Group successfully positioned itself on the financial
review, the supply situation eased rapidly and the service
markets and significantly enhanced its profile as an innova-
level improved. At the same time, it was possible to normalise
tive provider of digital insurance solutions in Switzerland.
purchasing behaviour and reduce safety stocks.
Responsibility Statement
In accordance with the EU Transparency Directive and the
financial position and profit or loss of the Group, and that
Dutch Financial Supervision Act (Wet op het Financieel
the Management report includes a fair review of the devel-
Toezicht), the Management of the Würth Finance Group
opment and performance during the financial year and of
hereby confirms that, to the best of its knowledge, the Finan-
the financial situation of the Group at the balance sheet
cial Statements for the financial year ended on 31 December
date, as well as of the risks associated with its business.
2023 give a true and fair view of the assets, liabilities,
18
At the different company locations, the Würth Finance Group
Following some three years of double-digit sales growth, the
is known and valued as an attractive, reliable and successful
Würth Group expects sales in its core business to stagnate in
employer that offers modern and flexible working conditions.
the first half of 2024. The company is countering the eco-
nomic headwinds by slowing down the expansion of its
Details on the course of business in the Inhouse Banking and
workforce, maintaining strict net working capital manage-
External Financial Services divisions follow on pages 20 to
ment and pursuing a disciplined investment approach, with
31. The Würth Finance Group’s report on risk management
growth-oriented projects and the expansion of capacities im-
and control can be found on pages 32 to 39. The Würth
plemented only gradually. However, this will not detract from
Finance Group does not have its own audit committee, but
or result in compromises for our client-focused services. Our
is integrated into the Würth Group’s audit process.
actions will remain consistently geared to our clients and
their needs.
Outlook for 2024
The purchasing managers’ indices for the manufacturing sec-
The Würth Finance Group’s clients face a wide array of
tor and the relatively restrictive financing conditions indicate
rapidly evolving challenges and risks. Through its financial
that – in the best-case scenario – the economy will achieve
and insurance products, services and expertise, the Würth
a soft landing in the coming months, before potentially recov- Finance Group provides solutions for risk management, pen-
ering somewhat in the second half of the year. Heightened
sion planning and protecting assets against potential losses.
geopolitical tensions due to the conflict following Hamas’
It provides dedicated support to its clients over the long
terrorist attacks on Israel are again contributing to uncertainty
term. The Würth Finance Group will continue to focus on its
regarding the short-term outlook. This could lead to major
clients’ needs and the constant changes in the insurance and
disruptions on the energy markets and key trade routes, ham-
financial markets in 2024. Consequently, investments are
pering growth. For calendar year 2024, the OECD forecasts
continuously being made in the further development of solu-
a growth rate of just 0.6% in the euro area.
tions and the digitalisation of the business model in the In-
house Banking and External Financial Services divisions.
Inflation rates will probably continue to decline, but core
In view of the relatively weak economic forecasts for the first
inflation will remain stubbornly above central bank targets.
half of the year, the Management of the Würth Finance
Consequently, monetary policy will need to remain restrictive
Group anticipates only a moderate rise in business volumes
until there are clear signs of a lasting decrease in inflation-
in the current year and a slightly lower operating result com-
ary pressure, inflation expectations decline further and
pared with the record year 2023.
balance between supply and demand on the labour and
product markets is restored. Scope for key interest rate cuts
Thanks
is therefore likely to remain limited until well into 2024,
The Management of the Würth Finance Group is very satis-
even if key interest rates in Europe and the US have reached
fied with the results achieved in financial year 2023 and
a peak.
would like to thank all employees for their important contri-
bution to the success achieved. Thanks also go to our clients
Governments face growing fiscal pressure due to high debt
and business partners, whose trust in the Würth Finance
burdens and additional spending on the ageing population,
Group has made our success possible in the first place.
climate change and defence. In the short term, greater ef-
We look forward to continuing to work with them in 2024.
forts are required to create the leeway needed for future
spending pressure; fiscal support measures, including the
remaining energy support schemes, should be withdrawn
or better targeted at those most in need.
Roman Fust
Adrian Parpan
Managing Director
Managing Director
Würth Finance International B.V.
Würth Financial Services AG
19
Annual Report 2023 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
2019
2020
2021
2022
2023
Hedge accounting effect management accounting
2,993
1,492
–548
–619
–203
Impairment for credit loss
–739
8,558
–6,450
4,615
–4,273
• 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 decreased to 0.45% as at
31 December 2023 (31 December 2022: 0.79%), thus a reduction in ECL of EUR 4.3 million is recognised in the income
statement.
20
2023
APM Hedge accounting effect
Impairment for
Segment
in TEUR
Inhouse Banking management accounting
credit loss
Inhouse Banking
Income distribution
Group Financing
61,929
1,096
4,273
67,298
Net interest income
47,946
1,096
0
49,042
Income from factoring activities
13,573
0
0
13,573
Other ordinary income
410
0
0
410
Expected credit loss (expenses) /recovery
0
0
4,273
4,273
Central Settlement
33,736
0
0
33,736
Income from trading activities and
–893
financial instruments
22,758
0
21,865
Trading
16,071
–893
0
15,178
Securities investments
6,687
0
0
6,687
Total income
118, 423
203
4,273
122,899
Total expenses
–25,865
0
0
–25,865
Total Inhouse Banking
92,558
203
4,273
97,034
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
30,154
–1,291
0
28,863
Net interest income
17, 733
0
0
17, 733
Income from factoring activities
553
0
0
553
Other ordinary income
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
21
Annual Report 2023 Würth Finance Group
Key events
Economic environment and Group performance
The supply chain situation eased significantly in 2023. For
Record profit
the Würth Group, which mainly operates as a trading com-
Financial year 2023 was another record year. With a pre-
pany, this was initially good news on the purchasing side. As
tax profit of EUR 92.6 million, the previous year’s result was
a result, safety stocks in the warehouses were reduced, while
once again exceeded, this time by EUR 23.0 million. The
the level of service for customers was improved to the usual
main reason for this considerable improvement was record-
pre-crisis level. However, this is only one of many factors;
high net interest income. Securities investments also made a
most of the macroeconomic conditions deteriorated notice-
large contribution of EUR 6.7 million to earnings. However,
ably. The general political climate continued to be overshad-
the other segments (centralised settlement of payments to
owed by the war in Ukraine and, later in the year, by the
suppliers, factoring, currency hedging), which correlate
Gaza-Israel conflict. Domestic political issues in the Würth
closely with the Würth Group’s core business, declined
Group’s core markets (particularly in Germany) and persis-
in comparison with the previous year.
tently high inflation coupled with a sluggish economy also
did little to boost the confidence and planning security of
economic actors. Inflation in the core markets in Europe and
Income distribution
the US fell significantly over the course of the year, but most
in million EUR
recently was still in excess of the central banks’ targets. The
Income from
trading
central banks progressively raised their policy rates and did
activities and
Central
not take a breather until autumn. In the fourth quarter, the
financial
Settlement
instruments
expectation prevailed on the capital markets that the central
–0.3*
+13.0*
banks will begin to cut interest rates in the first half of 2024.
33.7
22.8
Other
This led to rising bond prices and falling yields to maturity.
ordinary
0.4
income
–0.2*
The Würth Group started the business year 2023 with high
single-digit sales growth, but lost momentum from month to
month, which was attributable to challenging economic
trends in its core markets. Nevertheless – according to pre-
liminary figures – it ultimately managed to post record sales
13.6
and the second-highest operating result in the company’s
47.9
history. Once again, the Electrical Wholesale unit should
Net interest
Income from
income
be highlighted, as it enjoyed significant double-digit sales
factoring activities
+17. 7*
–4.1*
growth until autumn 2023, before a correction set in here
too. The Würth Group’s growth strategy in this segment re-
*Change vis-à-vis 2022
mains focused on organic growth and targeted acquisitions;
several acquisitions were also made in financial year 2023,
not all of which had been completed as at the balance
sheet date.
22
Both capital expenditure and the M&A activities were at
low interest rate environment in recent years, a decision was
their highest for several years. The number of employees
made in the course of 2022 to reduce factoring fees starting
once again increased slightly to reach just over 87,000
from 2023. This is the main reason for the sharp fall in earn-
full-time equivalents.
ings in this area of business. The volumes transacted stagnat-
ed as a result of the reduction in safety stocks in the Würth
Group’s warehouses.
Although the Würth Group is
Central settlement of payments to suppliers
not immune to recessionary
In this segment, too, the combination of sales momentum in
trends, the company once
the underlying business, the change in purchase prices and
the management of inventories is crucial to payment volumes
again demonstrated its solidity
at Würth Finance International B.V.: With 540,000 payments
and a value of EUR 8,800 million they remained almost un-
in financial year 2023.
changed compared to the previous year. The contribution to
earnings from the central settlement of payments to suppliers
totalled EUR 33.7 million, EUR 0.3 million down on the previ-
Significantly positive operating cash flow reduced the need
ous year.
for financing and boosted the cash reserves of many Group
companies. Refinancing measures on the capital market
Central Settlement: payment volume/income
were therefore not necessary.
in million EUR
in million EUR
9,000
36
Although the Würth Group is not immune to recessionary
trends, the company once again demonstrated its solidity
7, 50 0
30
in financial year 2023. This is also reflected in the renewed
6,000
24
confirmation of its A credit rating by Standard & Poor’s.
4,500
18
Business performance
3,000
12
1,500
6
Intercompany factoring activities
0
0
A large part of intra-Group receivables are settled by means
2019
2020
2021
2022
2023
of an internally developed factoring mechanism via the
Payment volume third parties
Group’s inhouse bank. As in all the inhouse bank’s other
Contract volume
areas of business, the fees payable for factoring are com-
Income from Central Settlement services (right-hand scale)
pared with third-party fees. The inhouse bank endeavours to
smooth out sharp market fluctuations. Nevertheless, long-
term trends have an impact on the fee model. Because of the
23
Annual Report 2023 Würth Finance Group
The conservative balance
Net interest income
The decline in inflation started from levels of around 10%
sheet management of the
and began rather slowly, which is why the central banks ini-
Würth Group had a clearly
tially continued with or further amplified their cycle of mone-
tary policy tightening. This also directly pushed up the short-
positive effect and led to
term interest rates paid on Würth Finance International B.V.’s
cash investments with its banking partners. The sharp rise in
record-high net interest income
cash reserves during the financial year also meant that signi-
ficantly higher interest income was earned than in previous
at the inhouse bank.
years.
With regard to the interest expense paid to external counter-
parties, the fact that the existing borrowings on the capital
With high levels of operating cash flow, many Group compa-
markets are of a long-term nature (funds committed at fixed
nies were able to repay loans and borrowings from the in-
interest rates) has a positive effect. Following two bond issues
house bank or to increase their cash holdings. Net loans
in the previous year, the Würth Group stayed away from the
from Würth Finance International B.V. to Group companies
capital markets in 2023. No new funds had to be raised at
fell by around EUR 550 million to EUR 1,000 million be-
higher interest rate levels. The negative impact of higher mar-
tween the end of 2022 and the end of 2023. With interest
ket interest rates was therefore limited to the relatively small
rates rising, this had a positive effect on the net interest
proportion of older bond borrowings swapped into short-
income of those Group companies that were able to build
term rates.
up high levels of liquidity.
With the yield curve clearly inverted of late, some specific
Group Financing volume and revenue from intra-Group lendings
opportunities were utilised for balance sheet management;
in million EUR
in million EUR
targeted use was made of derivatives for this purpose. All
2,800
70
in all, the conservative balance sheet management of the
Würth Group had a clearly positive effect in the financial
2,400
60
year and led to record-high net interest income at the in-
2,000
50
house bank.
1,600
40
Currency hedging and trading with financial instruments
1,200
30
Wherever possible, all currency exchanges at the Würth
Group are effected via Würth Finance International B.V. Col-
800
20
leagues in the Treasury department endeavour always to ef-
400
10
fect currency exchanges at optimum times and terms and to
enhance planning security by means of tailored, systematic
0
0
hedging strategies. In terms of intercompany business, most
2019
2020
2021
2022
2023
of the volumes originate either from Group companies that
Factoring volume
Net lending as at 31 December
purchase in a foreign currency from the Group’s central pur-
Interest and factoring income (right-hand scale)
chasing companies, or from payments to external suppliers
whose invoices are in a foreign currency. These volumes
24
declined as a result of the slowdown in the Würth Group’s
second half, with a focus on good credit ratings and relative-
sales in conjunction with the progressive reduction in invento-
ly long maturities. This paid off. Share prices also moved in a
ries. In financial year 2023, declining trading volumes were
positive direction – with two pronounced upward phases in
again used specifically to enter into risk positions within de-
the first and fourth quarters – and predominantly posted sig-
fined position and loss limits. As a result, the overall contribu-
nificant double-digit price gains. The inhouse bank benefited
tion to earnings from trading with financial instruments in-
from this, too. With a record result of EUR 6.7 million, which
creased by 4.8% to a gratifying EUR 16.1 million.
equates to a performance of +6.5%, the losses from the
previous year were fully recouped. The average annualised
Securities investments
return achieved over five years is 2.0%, around 150 basis
The Würth Group’s inhouse bank continued with its policy of
points higher than the benchmark.
investing part of the strategic liquidity reserves for the longer
term. The aim is to achieve a return that is 200 basis points
Because of the central banks’ zero interest rate policy, over
above the interest rate on an ESTR money market investment
several years the funds from maturing bonds were only par-
in the long run.
tially reinvested, as a result of which the securities portfolio
steadily contracted. However, in the last two years up to
Based on the assessment that yields to maturity had reached
31 December 2023 the portfolio was expanded by 67.6%
an attractive level of well over 3% p.a., the bond portfolio
to reach EUR 114.8 million mainly through the acquisition of
was expanded from EUR 84.4 million to EUR 92.9 million
more bond positions. This reflects the management’s positive
in the first half of the year and to EUR 101.4 million in the
assessment of the prospects for returns on the markets.
Trading: income development
Securities investments: income development
in million EUR
in million EUR
8
18
6
16
4
14
2
12
0
10
–2
8
–4
6
–6
4
2019
2020
2021
2022
2023
2
0
2019
2020
2021
2022
2023
25
Annual Report 2023 Würth Finance Group
E-payment services
Operating expenses
Electronic payment instruments (e-payments) are becoming
The inhouse bank’s operating expenses increased by around
increasingly important for the Würth Group companies, as
half as much as operating income in the year under review.
they offer customers the opportunity to pay using their pre-
They rose by 13.7% to EUR 25.9 million. Around two-thirds
ferred means of payment, such as debit and credit cards,
of this increase was attributable to higher IT costs for pro-
PayPal, Apple Pay and Google Pay. In 2023, the volume of
jects to optimise the technical infrastructure, processes and IT
e-payments (incoming customer payments) processed via the
security, particularly for the Payment Factory. In addition,
Würth Omnichannel Payment Gateway (WOPG) increased
personnel expenses were higher because of an increase in
by approximately 27%. This growth was spread across
staff (annual average: +5.2%) and wage rises.
various customer contact points, such as the online shop,
sales branches, mobile POS and telesales. One of the most
challenging initiatives launched in 2023 is an e-payment
solution for a new online marketplace.
The inhouse bank’s e-payment team works in very close
collaboration with the IT companies and the various Group
companies active in this market with a view to optimising the
e-payment experience for customers. Together, these people
form the Würth Group’s e-payment competence centre.
Outlook for 2024
At the time this annual report went to press, leading busi-
For Würth Finance International B.V., this means that positive
ness indicators, global political uncertainties and the current
momentum in volume-dependent business is not expected
macroeconomic trend (particularly in the construction sector)
until the second half of the year at the earliest. As part of the
still leave little room for exuberant optimism. However,
Würth Group’s financing strategy, long-term funds at fixed
thanks to falling rates of inflation, central banks now have
rates may be raised on the capital markets in the course of
greater room for manoeuvre for an accommodative mone-
the year – at significantly higher interest rates than last time.
tary policy.
This will tend to have a negative impact on net interest
income. And after an exceptionally strong result in 2023,
In keeping with the tradition of a family-owned company,
income from securities investments is also likely to be signifi-
the management of the Würth Group takes a long-term view
cantly lower, as the bond and equity markets have probably
when making its decisions. There is solid confidence in the
already priced in a large part of the potential for interest
agility and resilience of the individual Group companies,
rate cuts.
and this confidence has been bolstered recently by major
acquisitions and is backed by large cash reserves. In gener-
After a number of positively correlated developments con-
al, there is optimism that the period of economic weakness
tributed to a record profit in 2023, and assuming that there
is coming to an end and that the company will emerge
is no escalation at the geopolitical hotspots and no negative
stronger from the competition with rival business partners.
surprises for the global economy, the management of the in-
house bank expects a low double-digit percentage decline
in its operating result in financial year 2024.
26
Management Würth Finance International B.V. and Würth Invest AG
from left to right: Patrik Imholz (Würth Invest AG) | Alejandro Muñoz | Philip Guzinski (Managing Director) |
Björn van Odijk (Managing Director) | Roman Fust (Managing Director) | Jorre van Schipstal | Daniel Ochsner
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 2023)
Central settlement of payments to suppliers
65 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
540,000 payment transactions with a volume of
■
11,000 Würth Group suppliers vis-à-vis all Group
EUR 8,800 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,
4,320 foreign exchange transactions with 330 Group com-
■
financial market regulators, rating agencies and credit
panies and a hedging volume totalling EUR 1,230 million
analysts
Provision of comprehensive advice and a wide range of
344,000 customer e-payments with a volume increase of
■
treasury products to Group companies
approximately 27% compared to the previous year
Central management of bank accounts and financial risk
■
management for the Würth Group
27
Annual Report 2023 Würth Finance Group
Report of the Management
EXTERNAL FINANCIAL SERVICES
Despite the gloomy global situation, there were many posi-
Thanks in part to financial market developments, most insur-
tive developments in 2023. The integration of artificial intelli-
ers can look back on positive results. However, due to the in-
gence (AI) to support and simplify everyday business and
creased inflation level, their combined ratios are increasingly
private life has been remarkable. Awareness of the impor-
coming under pressure. Various providers, particularly in the
tance of living sustainably and protecting the environment is
motor vehicle insurance business, have increased premiums
growing. In addition, financial market developments in 2023
accordingly.
also paint an encouraging picture.
In the field of corporate insurance, the risk of cyber attacks is
still underestimated and many companies forego insurance
Developments in the innovative
to cover attacks on their IT infrastructure. The situation in per-
sonal insurance remains strained due to high claims ratios.
area of digital insurance sales
In general, insurers underwrite risks much more selectively,
whereby good risks can in turn benefit from declining premi-
were particularly positive.
ums, especially in the area of asset insurance.
Swiss brokerage market
Overall, 2023 was a good year for Würth Financial
Services AG (WFS). Sales targets were exceeded and new
client acquisition was promising. Developments in the innova-
There is a notable trend towards consolidation in the broker-
tive area of digital insurance sales were particularly positive.
age market in Switzerland, as well as abroad. Due to the
In addition, preparations for new regulatory requirements –
pressure to adapt to a constantly evolving business environ-
including the Swiss Federal Act on Data Protection and the
ment, coupled with the desire to increase efficiency and ac-
Swiss Insurance Oversight Act – were successfully complet-
cess new technologies, many brokers are choosing to join
ed and promising progress was made in the area of process
forces. Other causes of this wave of consolidation include
digitalisation.
the shortage of skilled staff, technological developments (or
digitalisation) and more stringent regulatory requirements.
Insurance market 2023
The shortage of skilled staff has pushed up personnel ex-
penses and resulted in lower service quality – particularly
In terms of global claim events, the effects in 2023 were rel-
on the insurer side – as less qualified employees have had to
atively minor compared with previous years. However, in-
be hired. This shortage has far-reaching implications with re-
sured damages exceeded the USD 100,000 million mark for
gard to error frequency at insurance companies and requires
the fourth consecutive year, with severe storms accounting
more oversight by brokers to ensure that client confidence is
for a large proportion of this figure. With insured losses
not eroded.
amounting to USD 6,000 million, the earthquake in Turkey
was the most expensive natural disaster in the past year. In
Innovative strategies are needed to counteract this lack of
Switzerland, the storm in La Chaux-de-Fonds led to damages
qualified talent and maintain service quality. Advances in
of around CHF 90 million.
digitalisation and the use of AI offer opportunities in this
28
The most important assets are
area. AI will play a central role in risk management, as it
makes it possible to conduct more precise analyses and
the employees, who are
make faster, better-informed decisions. This could help sup-
committed to meeting clients’
port employees in an environment marked by a shortage of
skilled staff.
needs each and every day.
Upcoming regulatory changes – namely the new Swiss Fed-
eral Act on Data Protection and the Swiss Insurance Over-
sight Act – are also keeping the industry busy. These new
With regard to personnel recruitment, there is also a signifi-
acts aim to enhance client protection and ensure the profes-
cant requirement to create an attractive image for potential
sionalism of insurance brokers. A clear separation between
employees. In a brokerage market dominated by waves of
dependent and independent agents and the disclosure of
consolidation, WFS benefits from the stability and reliability
compensation and client hours worked are examples of the
afforded by belonging to the Würth Group. In addition, its
new requirements intended to improve the quality of advice
encouraging development in recent years led to its very
and client protection.
positive perception among insurance companies and com-
petitors.
Focal points in financial year 2023
In the past year, WFS further developed the digital insurance
sales channel. InsurHub, which covers the insurance partner
The subject of regulation took up a lot of time last year due
function in the Twint app, was expanded to include addition-
to the two new legislation mentioned above. Other key top-
al insurance products and achieved good growth rates in
ics included sales, personnel development and expansion,
both client numbers and the number of insurance policies
and product innovation.
concluded. A first insurance product was also successfully
integrated directly into the purchasing process, resulting in
The past year was one of the most successful ever for WFS,
significantly higher completion rates. The trend in recent
particularly in terms of sales. It continuously succeeded in
months has been positive and bodes well for InsurHub’s
convincing new clients of its services, structures and the qual-
ongoing development.
ity of its employees. Entrepreneurs are impressed by the sta-
bility of WFS, together with its down-to-earth corporate cul-
With regard to digital insurance sales, it is also encouraging
ture and focus on efficient processes.
that WFS was able to launch on a second platform on
brokermarket.ch at the beginning of December 2023. Clients
The most important assets when it comes to providing advis-
can use this sales channel to purchase involuntary unemploy-
ory services and support are the employees, who are com-
ment and disability insurance when taking out a new mort-
mitted to meeting clients’ needs each and every day. Given
gage or extending an existing mortgage. The process of
the shortage of skilled staff, personnel management is a pri-
concluding the insurance policy is fully digital and offers a
ority. Every day, it is important to re-emphasise to employees
highly simplified process for accessing the insurance product.
that WFS will remain the right employer for them tomorrow
and the next day, and that resisting the constant attempts by
competitors to entice them away will prove worthwhile.
29
Annual Report 2023 Würth Finance Group
Successful course of business in 2023
increased focus on digitalisation, while administrative ex-
penses remained at the previous year’s level. The operating
WFS ended financial year 2023 on a very successful note.
result improved by 22% in financial year 2023.
The brokered premium volume increased by 6% to CHF 384
million. As a result, revenue increased by 7%. This increase
Development of premium volume
is highly encouraging, particularly given that the growth is
entirely organic and the overall insurance market recorded
in million CHF
400
significantly lower growth rates.
350
On the cost side, personnel expenses were rising. This is
300
primarily attributable to the number of employees, which in-
creased from 52 to 55. In addition, the personnel expenses
250
also reflect the inflation-related wage adjustments of around
200
2%. IT costs also rose at an above-average rate due to the
150
Number of staff (FTEs)
100
50
60
0
50
2019
2020
2021
2022
2023
40
30
20
10
0
2019
2020
2021
2022
2023
Outlook for 2024
WFS expects to see steady and sustainable performance in
With regard to digital insurance sales, WFS aims to significantly
2024. Its stated goal for the core business is to increase the
scale up the number of clients and policies sold digitally on the
number of employees, laying the foundation for further growth.
two platforms Twint and brokermarket.ch. In addition, the digi-
The recruitment of additional sales representatives and special-
tal insurance sales offering is to be extended to further plat-
ists will be the main focus. WFS also intends to continue invest-
forms, significantly elevating the importance of digital insurance
ing in automation and technical support in the various areas of
sales for WFS.
digitalisation. The aim is for WFS to keep pace with technologi-
cal progress within the scope of its capabilities and to make in-
creased use of digital tools in day-to-day business.
30
Management Würth Financial Services AG
from left to right: Hans-Jürg Flury | Adrian Parpan (Managing Director) | Beat Jordan (Managing Director) | Luciano Viotto
EXTERNAL FINANCIAL SERVICES
AT A GLANCE
Core business
Facts and figures (at 31 December 2023)
The External Financial Services division operates under the
Number of corporate clients: around 4,000
legal entity of Würth Financial Services AG, one of the lead-
ing independent providers of pension and insurance services
Premium volume: CHF 384 million
to corporate clients and private persons in Switzerland.
Number of employees: 55 (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
31
Annual Report 2023 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.
system, weighs them against each other and communicates
Responsibility for the second line of defence is assigned to
them.
control 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
overall responsibility for the Group-wide risk management
responsible for internal auditing. It carries out risk-oriented
process and defines the principles of the Würth Group’s risk
audits on behalf of the Supervisory Body and is independent
policy and strategy. The Management of each Group com-
of 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-
2.2 Framework
mains in close contact with the risk controller of the Advisory
Mutual trust, predictability, honesty and straightforwardness,
Board, who reports directly to the Chairwoman of the Würth
directed both internally and externally, are fundamental prin-
Group.
ciples that are deeply ingrained in Würth’s corporate culture
and in the corporate philosophy. This does not just entail ad-
32
hering to all applicable laws and inhouse regulations, but
are directly linked with the divisional activities of its Inhouse
also means ensuring that employees maintain the proper
Banking and External Financial Services divisions. The
mindset, which is key to the sustainable corporate success of
Group’s most important risk types are credit risks (including
the Würth Group. Extensive internal guidelines, known as the
default risks), liquidity risks, market risks (including exchange
Policies and Procedures Manual, operationalise these funda-
rate, interest rate and securities price risks) and operational
mental principles in the form of descriptions of the structural
risks.
and process organisation, as well as setting out specific rules
and codes of conduct.
Most of the Würth Group’s financial risks are measured,
monitored and controlled centrally by Würth Finance Inter-
Using the Group-wide Würth Information System, an integral
national B.V. It pursues a conservative risk policy as part of
component of the internal control and risk management sys-
its risk-oriented company management. It refrains from trans-
tem of the Würth Group, all key performance indicators
actions with imponderable risks and only enters into quantifi-
required to steer the Würth Group are presented in a timely
able risks within clearly defined limits. This principle forms
manner and are available for further evaluation by the Cen-
the basis of the risk policy and provides guidelines for busi-
tral Management Board and Executive Vice Presidents,
ness decisions. The general goal is not to eliminate all risk,
based on standardised monthly reporting.
but to achieve a balanced relationship between risk and
return.
Würth’s Group-wide, system-based control mechanisms, such
as validation and cross-checks, optimise the quality of the
Principles and methods for measuring financial risks, limits
information used as a basis for decision-making. A Group-
and permissible instruments for managing financial risks, and
wide online record for the Würth Group entities’ financial
the design of an effective information and reporting system
statements is not only efficient, but also avoids carry-over er-
are set out in separate financial risk management regula-
rors, safeguards the uniform provision of information and in-
tions, and all financial transactions must comply with these.
cludes numerous plausibility checks, without which the infor-
This framework includes a detailed list of the maximum risk
mation cannot be forwarded. This platform also ensures that
exposures approved by the Board of Directors of Würth
financial reporting changes are implemented in a uniform
Finance International B.V. A core aspect of the framework is
manner across the Würth Group. Data are protected against
a system of defined, binding limits and permissible financial
changes by using check digits and a system of IT access
instruments.
rights. Standard software is used for consolidation. Changes
in the system settings are logged centrally. The monthly and
The Würth Finance Group (WFG) maintains an internal
annual financial statements of Würth Group companies are
control system. The self-imposed obligation to check certain
subject to regular automated assessment mechanisms, as are
processes, routines and functions at predetermined intervals
the consolidated financial statements. Moreover, Würth’s
and to monitor the elimination of identified sources of error
Policies and Procedures Manual contains internal procedural
allows the WFG to protect itself in advance against financial
instructions.
losses or liability risks. The internal control system is in place
to ensure the correctness and reliability of accounting. It
Internal publications and training include detailed rules on
contains principles, procedures and measures to ensure the
financial reporting. Compliance with these rules is regularly
effectiveness and efficiency of accounting. The main objec-
reviewed by the central auditing department. External spe-
tive of the internal control system is to ensure that all business
cialists are consulted to clarify the accounting implications
transactions are recorded, processed and documented
of legal and tax issues. External actuaries calculate pension
correctly and in full, in accordance with statutory regulations
and similar obligations. Central and local training courses
and standards as well as other internal guidelines.
for those in charge of finance departments also ensure that
all employees involved in the financial reporting process are
The principles for handling operational risk are anchored in
up to date on the latest legislation and information of rele-
a comprehensive set of guidelines and procedures that define
vance to them.
how employees should carry out their activities. The strategic
objective of a balanced relationship between risk and return
Embedded in the Würth Group, Würth Finance International
is always pursued, applying a cost/benefit analysis. Each
B.V. has access to the aforementioned Group-wide risk man-
business area takes responsibility for its operational and
agement system. It is exposed to a large number of risks that
compliance risks and for having adequate procedures in
33
Annual Report 2023 Würth Finance Group
place to manage those risks. Entities are supported by desig-
Every Würth Group company is granted a credit limit by the
nated second line of defence operational risk and compliance
Würth Group’s Central Management Board. Würth Finance
teams that are responsible for independent risk oversight.
International B.V. monitors compliance with these limits on a
monthly basis. In the event of a continuous credit limit
breach, the Würth Group’s Central Management Board is
3 Financial risk and opportunities
obliged to grant a new credit limit. Such credit limit breaches
were repeated in the year under review. The Central Man-
Further information on the risks arising from financial instru-
agement Board subsequently adjusted the credit limits. Any
ments and their management can be found specifically in
credit risk relating to loans to individual Würth Group com-
note 18 and in the notes to the separate financial report on
panies with negative equity as at the reporting date are
the website (wuerthfinance.net).
secured by letters of comfort from the superordinate parent
company.
3.1 Credit risk
Credit risk is defined as the risk of a financial loss caused by
3.2 Liquidity risk
a counterparty failing to meet its financial obligations or by
The WFG defines liquidity risk as the risk of being unable to
a deterioration in the credit quality of the counterparty. In
meet due payment obligations in full or on time. In addition,
the event of a default, the WFG incurs a loss equal to the
there is the risk that refinancing means cannot be procured
amount owed by the debtor, less any recoveries. The maxi-
or can only be procured at higher market rates (liquidity
mum credit risk corresponds to the value of all financial as-
protection or refinancing risk).
sets, contingent liabilities and unused irrevocably guaran-
teed lending commitments reported in the Financial
The WFG is the main financing company of the Würth
Statements.
Group and, in this function, manages liquidity risks in accord-
ance with the recorded strategic guidelines of the Central
Given the nature of its core business activities, the WFG
Management Board. It also helps to optimise the financial re-
monitors the counterparty default risk for all its major risk-
sult by exploiting market opportunities in a targeted manner.
related activities.
The overriding goal of the Würth Group and the associated
The WFG aims to minimise the credit risk and has defined its
risk appetite is the ability to meet its payment obligations at
risk appetite in only entering into business relationships with
all times, even in extraordinary situations.
first-class external counterparties. Binding counterparty limits
are defined for each rating level, but the aim is to enter into
The high international creditworthiness of the Würth Group
business relationships only with banks with a Standard &
(Standard & Poor’s has awarded its non-current liabilities an
Poor’s minimum rating of “BBB” (equivalent to a rating of
“A” rating) allows the WFG to raise funds in the international
“Baa” from Moody’s and “BBB” from Fitch). The creditwor-
capital markets on favourable terms. To cover any liquidity
thiness of all the Würth Group’s banking relationships is con-
needs that may arise even in extraordinary circumstances,
trolled by daily monitoring of ratings and outlook changes.
the WFG also has credit lines granted by various banks. The
A rating downgrade leads to a reduction in the credit limits
annual financial requirements plan of the Würth Group serves
and to immediate reduction or closure and transfer of open
as a basis for the size and the management of such liquidity
transactions to other banks. In 2023 there were four rating
reserves.
upgrades and two rating downgrades, which did not affect
the open positions at the counterparties.
To measure, analyse, monitor and report on liquidity risk, the
WFG prepares liquidity overviews on a daily basis and re-
With all external counterparties for financial derivatives
ports the liquidity and debt status of the whole Würth Group
transactions, the WFG has concluded ISDA agreements,
to the Central Management Board of the Würth Group on a
including a Credit Support Annex that ensures the periodic
monthly basis.
net present value cash settlement of the outstanding transac-
tions. The counterparty risks relating to delcredere business
In the current reporting period under review all financial
are transferred in full to insurance companies.
requirements were met.
34
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
market risk, defined as the possibility of changes in the fair
interest rates in all currencies. Interest rate risk arises from
values of the trading and investment positions. Risks may
balance sheet positions such as loans, financial assets at fair
arise from changes in exchange rates, interest rates and
value, payables to related parties and banks, and deriva-
securities 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.
The defined limits set by the Board of Directors were not
Individual limits are set for each currency or currency group
exceeded in the current reporting period under review.
to manage exchange rate risks. The limits are to be regarded
as open net positions towards the balance sheet currency.
3.3.3 Securities price risk
The positions are valued and monitored on a daily basis.
Securities price risk is the risk of financial loss resulting from
changes in the price of (publicly traded) securities. To assess
In assessing exchange rate risks, the absolute amount of
securities price risks, the absolute amount of the securities
open foreign currency positions and changes in their earn-
position and its earnings performance are considered. All
ings development are taken into account. For this purpose,
positions are valued at market prices (marked to market).
all positions are valued on a daily basis at market rates
(marked to market) and should not exceed the total amount
of EUR 50 million.
In order to control the exposure to exchange rate risk, the
WFG enters into FX spot transactions, forwards, cross-currency
swaps and currency options with external counterparties.
The defined limits were not exceeded in the current reporting
period under review.
35
Annual Report 2023 Würth Finance Group
The WFG pursues a conservative investment policy which
Furthermore, a Group-wide whistleblowing system exists that
allows investment in bonds and money market paper (invest-
can be used not only by employees but also by customers,
ment and sub-investment-grade) and shares on regulated
suppliers and other stakeholders to anonymously report sus-
stock exchanges and capital markets. In addition to a de-
picions of compliance breaches.
fined benchmark strategy with strategic equity exposure,
securities price risk is countered through diversification of the
For tax compliance, the WFG is structured in the manner that
investment portfolio. Limits per asset class have also been
it needs to comply with both Swiss and Dutch tax legislation
defined to limit securities price risk, including an automatic
and has embedded operating policies and procedures to en-
equity position reduction mechanism which is triggered at a
sure compliance with these tax legislations.
negative YTD return of the equity portfolio of EUR 750,000,
maximising the total negative return of the equity portfolio at
4.2 Technology
EUR 6 million per financial year.
As the Würth Group’s “payment factory”, the WFG handles
large payment volumes, which rely on high-performance IT
In the current reporting period under review this automatic
systems and networks. Consequently, the IT systems and IT
position reduction mechanism was not activated.
security are continually enhanced and monitored via an in-
formation security management system. The WFG, in collab-
oration with cyber security experts, works to counter the con-
4 Operational risk
stantly growing and evolving threat from attacks on information
and communications technology. It does so by extending
Operational risk is the risk of losses resulting from inadequate
technical and organisational protection measures and by
or failed internal processes or systems, human error or exter-
conducting awareness training for employees. In addition,
nal events.
the WFG has a business disaster recovery system. The ICT
infrastructure is highly scalable, enabling additional business
4.1 Legal and compliance risk
volumes to be dealt with cost-effectively and with a high
By legal and compliance risk, the WFG means the risk of
level of processing quality.
possible, unintentional non-compliance with laws, regula-
tions or standards which could have a negative impact on
4.3 Staff
the business and its business relationships and, in the worst
The success of the WFG depends to a large extent on its
case, could result in the imposition of payments for dam-
employees and their know-how. Through their ideas and
ages, fines, penalties or other forms of liability.
suggestions, the employees are deeply involved in particular
activities and work processes and thus make a significant
Meeting regulatory requirements is challenging for providers
contribution every day to the WFG’s continued existence,
of financial and insurance services. Among other things, this
ongoing improvement and innovations. Personnel risks will
entails rules on dealing with employees, with clients and
continue to influence the WFG in the coming years, as
business partners, with data and with authorities. It goes
competition for highly qualified employees remains intense.
without saying that the WFG endeavours to observe and
Future success will depend, among other factors, on the
adhere to all rules and regulations applying to its business.
extent to which the WFG succeeds in recruiting, integrating
It has the necessary critical mass and the organisational set-
and retaining skilled employees in the long term.
up to ensure effective and efficient compliance management
and thus to meet the increasing regulatory requirements in
Staff turnover is documented and analysed across all hierar-
the finance and insurance brokerage business. Due to the in-
chy levels. Regular surveys conducted by independent institu-
creasing legal complexity, the Würth Group has inhouse ex-
tions and monthly monitoring of staff turnover are key tools
perts and consults renowned external consultants on a case-
that allow the WFG to identify unfavourable developments,
by-case basis.
analyse their impact on staff recruitment and combat these
effects using targeted measures.
Training and education within and outside the (Würth)
Group are carried out regularly to promote awareness of
The bottleneck risk arising from current demographic trends,
legal and compliance risks among employees.
among other considerations, can be countered by attractive
employment conditions, a modern and appealing working
environment, and training tailored to individual roles. As a
36
family-owned business, Würth focuses on the long-term de-
have on each other. They are based on a triangular relation-
velopment of the company. That applies equally to support-
ship where each nodal point acts in both directions. ESG
ing up-and-coming talent at the Würth Finance Group. For
risks can have a positive or negative impact on a company’s
many years it has taken on apprentices and employed them
assets, business models and reputation. They have a com-
on a permanent basis, in line with staffing needs, once they
plex cause-and-effect relationship with the risk framework
have completed their training. In addition, Würth Finance
and all other risk factors. The systematic incorporation of
International B.V. successfully gained some initial experience
these risks through the three lines of defence in the compa-
with an international trainee programme aimed at counter-
ny’s risk framework is based on reliable and transparent
acting the shortage of qualified specialists.
information.
In order to secure the company’s future, the Würth Finance
The Würth Group’s first Group-wide sustainability report for
Group supports ongoing training throughout employees’
financial years 2020–2022 is a key milestone in creating
professional lives. Its own employees take precedence when
transparency and providing guidance for sustainability
management positions need to be filled. Up-and-coming
management. This report, prepared in accordance with the
management talents attend courses to prepare them for
standards of the Global Reporting Initiative (GRI) and within
various levels of management within the Group, via the MC
the framework of the United Nations Sustainable Develop-
Würth, High Potential and Top Potential programmes. These
ment Goals (SDGs), provides a comprehensive insight into
programmes give employees targeted training that is tailored
the Group’s social, economic and environmental activities.
to suit their particular ambitions and skills, to prepare them
(Sustainability Report Würth Group 2020–2022 see
for further management duties within the Group. Independent-
wuerthfinance.net).
ly of the inhouse training programmes, both the Würth Group
and the WFG support any employee training as promoting
The WFG – which is integrated into the Würth Group’s sus-
lifelong learning.
tainability management system – will base its future sustaina-
bility reporting on the Group-wide database and standard-
ised data infrastructure, thereby ensuring transparency and
5 Sustainability
comparability of sustainability performance. This will enable
the WFG not only to minimise risks, but also to achieve a
5.1 Foundation
positive impact on the company’s reputation and value.
Sustainability is becoming increasingly relevant to society.
This is leading to a heightened awareness for concerns such
The WFG also sees opportunities to take greater account of
as climate change, social standards and corporate miscon-
sustainability aspects in the design of its own products and
duct. As a result, the market environment is changing rapidly
services. The WFG has identified initial starting points and
across all industries. In addition, the inclusion of sustainabili-
will specify them in coordination with the Würth Group’s
ty criteria in decision-making by investors and by banks
sustainability strategy.
granting loans has led to an expansion and tightening of the
associated requirements for corporate governance and risk
5.2 Environmental protection and climate change
management at companies.
Environmental risks arise from the effects of climate change
and efforts to mitigate or contain it. They are divided into
Sustainability risks, also known as environmental, social and
two categories: Physical risks include the direct impact of
governance (ESG) risks, potentially influence the level of
weather and climate changes on the economy. Transition
capital and insurance costs, as well as the creditworthiness
risks result from the societal changes brought about by the
of the Würth Group and its business partners. This challenge
shift to a decarbonised and circular economy.
is being met through active sustainability management at
strategic and operational level and the expansion of associ-
The WFG intends to support an environmentally friendly cor-
ated reporting, including at the WFG.
porate governance of the Würth Group and its business part-
ners. That includes promoting and funding projects that help
Sustainability risks relate to the potential impact that a com-
to reduce greenhouse gas emissions and protect the environ-
pany, its stakeholders and the environment or society can
ment. The first step in this direction is the disclosure and
37
Annual Report 2023 Würth Finance Group
reporting of quantitative metrics on the current situation and
The WFG has suitable and effective structures, management
the creation of incentives for positive sustainability develop-
and decision-making systems, procedures and processes as
ment. At the same time, the latest developments in IFRS
well as competent staffing of management and supervisory
standards as well as the Corporate Sustainability Reporting
bodies, as important elements in ensuring good corporate
Directive and the European Sustainability Reporting Stand-
governance. This is complemented by a solid financial posi-
ards are adhered to.
tion, a comprehensive and effective risk control system and
performance-related remuneration structures.
The WFG sees the integration of environmental and climate
goals into the design of financial and insurance solutions as
The WFG’s corporate governance is geared towards com-
an opportunity and has made an initial contribution to
plying with the relevant legal and regulatory requirements,
strengthening sustainability-based financial management in
avoiding infringements wherever possible and thus protect-
the Würth Group by concluding a “sustainability-linked”
ing the company’s good reputation. An institutionalised whis-
loan agreement.
tleblowing system helps in the identification and reporting of
any infringements. The WFG works closely with the authori-
5.3 Social standards
ties in the clarification of conduct that does not comply with
In the context of ESG, social risks relate to the consequences
the law and standards.
of a company’s failure to meet its social responsibilities in its
role as an employer, customer, service provider and stake-
The decentralised structure of the Würth Group and short
holder in society. For the Würth Group and the WFG, it has
decision-making paths enable the WFG to respond quickly
always been self-evident that they need to behave in a
to changes with regard to the shaping of corporate gover-
socially responsible manner towards all stakeholders and to
nance and thus support long-term, sustainable growth.
give high priority to the relevant values when designing and
developing the company’s social architecture.
5.5 Diversity and inclusion
The Würth Group and Würth Finance International B.V. rec-
With regard to employees, the WFG’s commitment is not
ognise the importance of a diverse workforce and believe
limited to health and safety. It wishes to support its employ-
that their business activities benefit from staff with a wide
ees in their activities and work experience. The WFG strives
range of skills and a variety of backgrounds. Diversity as-
to attract and foster a broad range of talented employees at
pects relevant to the company include gender, education/
all levels of the company; it is eager to promote workforce
experience, age and nationality/cultural background. Thanks
diversity and equality of opportunity and regards a fair re-
to these aspects different perspectives arise, which help to
muneration system as a self-evident requirement.
drive growth and innovation and avoid a silo mentality.
The WFG is continuously investing in digital collaboration in-
In order to anchor these aspects firmly within the corporate
frastructure. This results not just in efficiency-enhancing work-
culture, multilingual communication is promoted for employ-
flow automation; it also creates new opportunities for collab-
ees. This can be seen, for example, in bilingual information
oration at different work locations with flexible working time
events and in written communication with employees in dif-
models and conditions, adapted to the needs of employees.
ferent languages. Access to relevant information in different
languages improves mutual understanding, makes for a
Based on the values of the Würth Group, the WFG supports
stronger connection between the various teams and pro-
local social projects and organisations in the Netherlands
motes a sense of belonging to the company among employ-
and Switzerland. These are often linked to volunteering work
ees.
by employees, for example as part of Special Olympics, an
organisation that provides training and competition in sports
Following the introduction of statutory requirements regard-
for people with intellectual disabilities.
ing gender diversity in the Netherlands for companies such
as Würth Finance International B.V., the company’s diversity
5.4 Governance
policy was revised in 2022. Under the new policy, the com-
The third element in ESG relates to the factors of good cor-
pany undertakes to improve the gender balance throughout
porate governance. The guiding principles in this area are
the company and has developed ambitious targets for this
accountability, fairness, transparency and responsibility. It
purpose. In this context, the current composition of the Board
must be taken into account that the specific institutional and
of Directors and Management, as well as the current rep-
cultural context significantly influences the way a company is
resentation of women in the company, have been taken into
set up and monitored.
account.
38
Würth Finance International B.V. as at 31 December 2023
• Working towards teams with greater gender diversity is
Composition male/female
included as an objective for senior management.
per relevant corporate body
Male
Female
• All employees are educated on the value of diversity.
Board of Directors
7
0
Managers are trained and made aware of the topic.
Management: Managing Directors
3
0
• The company will monitor how applicants, employees and
Management: other members
3
0
leavers perceive the issues of diversity and inclusion as
Company
48
19
experienced within Würth Finance International B.V. (and
action is taken based upon the outcome).
Note: the Management consists of the statutory members (Managing
Directors) and non-statutory members.
The current composition of the management reflects the fact
To accelerate the achievement of a better gender balance at
that the company, with its male-dominated employee base,
the management level, the company aims to appoint at least
has traditionally supported the promotion of internal candi-
one female member for the Management and Board of Di-
dates. While the company will continue to invest in the devel-
rectors by the end of 2025. In the long term, a minimum bal-
opment and promotion of its people, it recognises the impor-
ance of 30% men and 30% women by 2030 is targeted.
tance of creating an inclusive workplace and attracting
female talent at all levels. Although the desired change will
The following measures have been or will be taken to
not happen overnight, the company has clear goals on what
achieve these goals:
it aims to accomplish and is determined to act accordingly.
• The Würth Group has established a “diversity and
inclusion team” supporting all Group companies including
Würth Finance International B.V. in their ambition to
achieve a more diverse workforce and an inclusive
working environment. This support consists of a mentoring
programme, a women’s network and training materials to
create awareness on diversity and inclusion.
• Würth Finance International B.V. has ensured that gender
neutral wording will be used whenever job vacancies are
announced.
• “Gender diversity” will be included in the profile for new
members of Management and the Board of Directors.
• Recruiters are instructed to include female talent in
relevant shortlists.
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
39
Annual Report 2023 Würth Finance Group
Würth Group
LEGAL STRUCTURE
(SIMPLIFIED ILLUSTRATION)
Würth
Family Foundations
Adolf Würth
Würth Promotion GmbH
GmbH & Co. KG
Austria
Germany
Reinhold Würth
International
Holding GmbH
subsidiaries
Germany
International
subsidiaries
Würth Finance Group
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
40
Würth Finance Group
EXECUTIVE BODIES
(As at 31 December 2023)
Board of Directors
Würth Finance International B.V.
Elected until:
Ralf Schaich
(Member of the Central Management Board of the Würth Group)
Chairman
2025
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
Mag. Michel Haller
(Chief Executive Officer of Hypo Vorarlberg Bank AG)
Member
2026
Joachim Kaltmaier
(Former Member of the Central Management Board of the Würth Group)
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
Philip Guzinski
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.
41
Annual Report 2023 Würth Finance Group
Würth Finance Group
INFORMATION FOR INVESTORS
Outstanding Capital Market Transactions by Würth Finance International B.V. at 31 December 2023:
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.
42
Würth Finance Group
EXCERPT FROM THE
FINANCIAL STATEMENTS 2023
43
Annual Report 2023 Würth Finance Group
Consolidated income statement
for the year ended at 31 December
in TEUR
2023
2022
Operating income
Interest income from financial instruments measured at amortised cost
125,621
72,136
Interest income from financial instruments measured at fair value through profit or loss
22,768
16,290
Interest expenses
–97, 545
–58,850
Net interest income
50,844
29,576
Income from factoring activities
13,573
17, 733
Income from commission and service fee activities
49,564
48,348
Income from trading activities and financial instruments
20,376
11,289
Other ordinary income from related parties
592
653
Expected credit loss (expenses) /recovery
4,273
–4,615
Total operating income
139,222
102,984
Operating expenses
Personnel expenses
–23,735
–21,991
Other administrative expenses
–15,268
–12,682
Amortisation expenses
–2,018
–1,968
Other ordinary expenses
0
–15
Total operating expenses
–41,021
–36,656
Profit before taxes
98,201
66,328
Income tax expense
–18,966
–12,673
Deferred taxes
–166
749
Net profit for the year
79,069
54,404
Consolidated statement of comprehensive income
for the year ended at 31 December
in TEUR
Net of tax
2023
2022
Profit for the year
79,069
54,404
Total items that will be reclassified to the income statement
Exchange differences on translation of foreign operations
141
92
Net gain/(loss) on cash flow hedges
2,304
2,031
Total items that will not be reclassified to the income statement
Remeasurement gain /(loss) on defined benefit plans
–3,439
1,893
Deferred taxes on cash flow hedges
–386
–411
Other comprehensive income for the year (OCI)
–1,380
3,605
Total comprehensive income for the year, net of tax
77, 689
58,009
44
Consolidated balance sheet
at 31 December before appropriation of profits
in TEUR
2023
2022
ASSETS
Non-current assets
Intangible assets
1,435
1,441
Right-of-use assets
1,621
1,749
Property, plant and equipment
271
431
Loans to related companies
1,389,770
1,554,992
Positive fair values of derivative instruments
10,193
14,894
Deferred tax assets
1,781
2,507
Total non-current assets
1,405,071
1,576,014
Current assets
Receivables from related companies
1,297,954
1,348,390
Positive fair values of derivative instruments
9,785
6,634
Other assets
5,724
2,949
Income tax receivables
55
52
Accrued income and prepaid expenses
12,088
12,248
Securities at amortised cost
112,949
0
Securities at fair value through profit or loss
114, 782
95,473
Cash and cash equivalents
1,191,590
804,952
Total current assets
2,744,927
2,270,698
Total assets
4,149,998
3,846,712
EQUITY AND LIABILITIES
Shareholders’ equity
Issued capital
16,000
16,000
Additional paid-in capital
5,000
5,000
Retained earnings
359,064
333,099
Other comprehensive income from cash flow hedges
–5,409
–7, 327
Foreign currency translation
179
38
Net profit for the year
79,069
54,404
Total shareholders’ equity
453,903
401,214
Non-current liabilities
Bonds issued
2,149,847
2,109,593
Liabilities for pension plans
5,292
2,160
Lease liabilities
341
480
Negative fair values of derivative instruments
12,896
12,442
Deferred tax liabilities
397
342
Total non-current liabilities
2,168,773
2,125,017
Current liabilities
Commercial paper
0
75,000
Payables to related companies
1,474,770
1,194,662
Lease liabilities
1,304
1,287
Payables to banks
5,731
6,589
Income tax payables
12,422
9,310
Negative fair values of derivative instruments
13,280
7, 565
Other liabilities
10,435
15,612
Accrued expenses and deferred income
9,380
10,456
Total current liabilities
1, 527, 322
1,320,481
Total equity and liabilities
4,149,998
3,846,712
45
Annual Report 2023 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 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
At 1 January 2023
16,000
5,000
387, 503
–7, 327
38
401,214
Net profit for the year
0
0
79,069
0
0
79,069
Foreign currency translation
0
0
0
0
141
141
Cash flow hedge accounting
0
0
0
2,304
0
2,304
Remeasurement gain /(loss) on defined benefit plans
0
0
–3,439
0
0
–3,439
Deferred taxes on cash flow hedges
0
0
0
–386
0
–386
Total comprehensive income for the year
0
0
75,630
1,918
141
77, 689
Dividend payments
0
0
–25,000
0
0
–25,000
At 31 December 2023
16,000
5,000
438,133
–5,409
179
453,903
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 2023, a dividend of TEUR 25,000 (EUR 781 per share) was paid for financial year 2022.
46
Consolidated cash flow statement
for the year ended at 31 December
in TEUR
2023
2022
Net profit for the year
79,069
54,404
Amortisation and impairments
501
508
Adjustment to provision for taxes
3,112
2,290
Deferred tax expense /(benefit)
781
–423
Other expenses and revenues without cash flows
27,319
–33,619
Foreign exchange gains and losses (long-term loans)
3,132
–25,165
Foreign exchange gains and losses (short-term loans)
2,287
1,331
(Increase)/decrease in operating assets
Redemption of long-term loans to related companies
69,167
60,744
Lending of long-term loans to related companies
–303,882
–496,979
Receivables from related companies
449,753
62,945
Positive fair values of derivative instruments
1,549
–15,873
Income tax receivables
–3
–52
Other assets, accrued income and prepaid expenses
–2,615
–4,746
Increase/(decrease) in operating liabilities
Payables to related companies
280,108
–88,340
Negative fair values of derivative instruments
6,169
10,941
Other liabilities, accrued expenses and deferred income
–6,253
3,011
Net cash flows from operating activities
610,194
–469,023
Purchase of property, plant and equipment, and intangible assets
–335
–405
Purchase of securities
–154,587
–60,139
Disposal of securities
32,224
28,180
Net cash flows from investing activities
–122,698
–32,364
Proceeds of borrowings
0
902,649
Repayment of borrowings
0
–500,000
Commercial paper
–75,000
75,000
Dividend payments
–25,000
–25,000
Net cash flows from financing activities
–100,000
452,649
Net foreign exchange difference
0
36
Net increase/(decrease) in cash and cash equivalents
387, 496
–48,702
Net cash and cash equivalents at the beginning of the year
798,363
847,065
Net cash and cash equivalents at the end of the year
1,185,859
798,363
Net increase/(decrease) in cash and cash equivalents
387, 496
–48,702
Increase/(decrease) in taxes paid
–15,742
–10,031
Interest received
154,701
101,167
Interest paid
–88,707
–49,464
The funds for this cash flow statement are represented by cash and cash equivalents (net).
47
Published by
Layout and concept
Würth Finance International B.V.
Wirz Group AG, Zurich
Editors
Photos
Corporate Communications
René Lamb Fotodesign, Kreuzlingen
Würth Finance International B.V.
Wirz Group AG, Zurich
Würth Finance Group/Würth Finance International B.V.
FINANCIAL STATEMENTS 2023
CONTENTS
Financial Statements 2023
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 2023
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 2023
Annual Report 2023 Würth Finance Group
Consolidated income statement
for the year ended at 31 December
in TEUR
Notes
2023
2022
Operating income
Interest income from financial instruments measured at amortised cost
10
Interest income from financial instruments measured at fair value through profit or loss
10
Interest expenses
10
–97, 545
–58,850
Net interest income
Income from factoring activities
Income from commission and service fee activities
11
Income from trading activities and financial instruments
12
Other ordinary income from related parties
13
Expected credit loss (expenses) /recovery
18a
–4,615
Total operating income
Operating expenses
Personnel expenses
14
–23,735
–21,991
Other administrative expenses
–15,268
–12,682
Amortisation expenses
–2,018
–1,968
Other ordinary expenses
–15
Total operating expenses
–41,021
–36,656
Profit before taxes
Income tax expense
15
–18,966
–12,673
Deferred taxes
15
–166
Net profit for the year
Consolidated statement of comprehensive income
for the year ended at 31 December
in TEUR
Net of tax
2023
2022
Profit for the year
Total items that will be reclassified to the income statement
Exchange differences on translation of foreign operations
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
–3,439
Deferred taxes on cash flow hedges
–386
–411
Other comprehensive income for the year (OCI)
–1,380
Total comprehensive income for the year, net of tax
04
Consolidated balance sheet
at 31 December before appropriation of profits
in TEUR
Notes
2023
2022
ASSETS
Non-current assets
Intangible assets
3
Right-of-use assets
3
Property, plant and equipment
3
Loans to related companies
4, 16
Positive fair values of derivative instruments
18b, 18c
Deferred tax assets
15
Total non-current assets
Current assets
Receivables from related companies
16
Positive fair values of derivative instruments
18b, 18c
Other assets
5
Income tax receivables
15
Accrued income and prepaid expenses
Securities at amortised cost
7
Securities at fair value through profit or loss
6, 18a
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
–5,409
–7, 327
Foreign currency translation
Net profit for the year
Total shareholders’ equity
Non-current liabilities
Bonds issued
8
Liabilities for pension plans
14
Lease liabilities
Negative fair values of derivative instruments
18b, 18c
Deferred tax liabilities
15
Total non-current liabilities
Current liabilities
Commercial paper
Payables to related companies
16
Lease liabilities
Payables to banks
Income tax payables
Negative fair values of derivative instruments
18b, 18c
Other liabilities
9, 16
Accrued expenses and deferred income
Total current liabilities
Total equity and liabilities
05
Annual Report 2023 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 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
At 1 January 2023
–7, 327
Net profit for the year
Foreign currency translation
Cash flow hedge accounting
Remeasurement gain /(loss) on defined benefit plans
–3,439
–3,439
Deferred taxes on cash flow hedges
–386
–386
Total comprehensive income for the year
Dividend payments
–25,000
–25,000
At 31 December 2023
–5,409
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 2023, a dividend of TEUR
25,000
(EUR
781 per share) was paid for financial year 2022.
06
Consolidated cash flow statement
for the year ended at 31 December
in TEUR
2023
2022
Net profit for the year
Amortisation and impairments
Adjustment to provision for taxes
Deferred tax expense /(benefit)
–423
Other expenses and revenues without cash flows
–33,619
Foreign exchange gains and losses (long-term loans)
–25,165
Foreign exchange gains and losses (short-term loans)
(Increase)/decrease in operating assets
Redemption of long-term loans to related companies
Lending of long-term loans to related companies
–303,882
–496,979
Receivables from related companies
Positive fair values of derivative instruments
–15,873
Income tax receivables
–3
–52
Other assets, accrued income and prepaid expenses
–2,615
–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
–6,253
Net cash flows from operating activities
–469,023
Purchase of property, plant and equipment, and intangible assets
–335
–405
Purchase of securities
–154,587
–60,139
Disposal of securities
Net cash flows from investing activities
–122,698
–32,364
Proceeds of borrowings
Repayment of borrowings
–500,000
Commercial paper
–75,000
Dividend payments
–25,000
–25,000
Net cash flows from financing activities
–100,000
Net foreign exchange difference
Net increase/(decrease) in cash and cash equivalents
–48,702
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
Increase/(decrease) in taxes paid
–15,742
–10,031
Interest received
Interest paid
–88,707
–49,464
The funds for this cash flow statement are represented by cash and cash equivalents (net).
07
Notes to the consolidated Financial Statements
for the year ended at 31 December
1 Business activity
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 and the goal of the Group include provid- ing financing to and carrying out a wide range of financial activities with companies, both at home and abroad, belong- ing to the entire Würth Group, as well as providing consult- ing and other services in the area of pension funds and insur- ance to both private persons and small and medium-sized enterprises.
The Annual Report of the Group was approved by the Man- agement on 24 April 2024 and can be obtained from Würth Finance International B.V., Amsterdam, or downloaded from the Würth Finance International B.V. website: 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 Finance 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.
Method of consolidation
The scope of consolidation of the Group as at 31 December 2023 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 |
Annual Report 2023 Würth Finance Group
08
2 Accounting principles
General
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 2023, 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.
IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts is a comprehensive new ac- counting standard for insurance contracts covering recogni- tion and measurement, presentation and disclosure. IFRS 17 replaces IFRS 4 Insurance Contracts. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insur- ance and re-insurance), regardless of the type of entities that issue them as well as to certain guarantees and financial instruments with discretionary participation features; a few scope exceptions will apply. The overall objective of IFRS 17 is to provide a comprehensive accounting model for insur- ance contracts that is more useful and consistent for insurers, covering all relevant accounting aspects. IFRS 17 is based on a general model, supplemented 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
The new standard had no impact on the Group’s consolidat- ed financial statements.
Definition of Accounting Estimates – Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Group’s consolidated financial statements.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and exam- ples to help entities apply materiality judgements to account-
ing policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their “signifi- cant” accounting policies with a requirement to disclose their “material” accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments have had an impact on the Group’s disclosures of accounting poli- cies, but not on the measurement, recognition or presentation of any items in the Group’s financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities. The amendments had no impact on the Group’s consolidated financial statements.
International Tax Reform – Pillar Two Model Rules –
Amendments to IAS 12
The amendments to IAS 12 have been introduced in re- sponse to the OECD’s BEPS Pillar Two rules and include:
•
A mandatory temporary exception to the recognition and
disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules
•
Disclosure requirements for affected entities to help users
of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date
The mandatory temporary exception – the use of which is re- quired to be disclosed – applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any inter- im periods ending on or before 31 December 2023. The Group has applied the mandatory temporary exception for the recognition and disclosure of information on deferred tax assets and liabilities arising from Pillar Two income taxes. In addition, the Group reviewed its corporate structure with regard to the introduction of the Pillar Two Model Rules in various jurisdictions. Based on a preliminary assessment formed on the 2022 CbCR data, the Group does not expect significant Pillar Two income taxes to arise in the jurisdictions it operates.
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.
Amendments to IFRS 16: Lease Liability in a Sale and Leaseback
In September 2022, the IASB issued amendments to IFRS 16 to specify the requirements that a seller-lessee uses in meas- uring the lease liability arising in a sale and leaseback trans- action, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains.
09
The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and must be applied retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16. Earlier application is permitted and that fact must be disclosed. The amendments are not expected to have a material impact on the Group’s financial statements.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020 and October 2022, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non- current. The amendments clarify:
• What is meant by a right to defer settlement
•
That a right to defer must exist at the end of the reporting
period
•
That classification is unaffected by the likelihood that an
entity will exercise its deferral right
•
That only if an embedded derivative in a convertible
liability is itself an equity instrument would the terms of a liability not impact its classification
In addition, a requirement has been introduced to require disclosure when a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settle- ment is contingent on compliance with future covenants within twelve months. The amendments are effective for annual report- ing periods beginning on or after 1 January 2024 and must be applied retrospectively. The amendments are not expected to have a material impact on the Group’s financial statements.
Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
In May 2023, the IASB issued amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to clarify the characteristics of supplier finance arrangements and require additional disclosure of such ar- rangements. The disclosure requirements in the amendments are intended to assist users of financial statements in under- standing the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. The amendments will be effective for annual reporting peri- ods beginning on or after 1 January 2024. The Group is currently assessing the impact of the amendments.
Assumptions and estimates
The IFRS include guidelines requiring the Group to make assumptions and estimates when preparing its consolidated Financial Statements. These assumptions and estimates are continuously reviewed and are based on past experience and other factors, including expectations regarding likely future developments. The most important assumptions and estimates 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 recognised on the settlement day. Transactions are thus recognised in the balance sheet mainly on the settlement
date and not on the transaction date. Derivatives, however, are recognised on the trade date. All concluded transactions are recorded and evaluated. Any unrealised gains or losses resulting from valuing transactions at market value are recog- nised in the income statement.
Accrual of earnings and expenses
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 effective 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 | 2023 | 2022 |
| US dollar (USD) | 1.105 | 1.068 |
| Swiss franc (CHF) | 0.930 | 0.987 |
| British pound (GBP) | 0.867 | 0.888 |
| Canadian dollar (CAD) | 1.457 | 1.446 |
| Chinese renminbi (CNH) | 7.866 | 7.386 |
| Norwegian krone (NOK) | 11.218 | 10.516 |
| Danish krone (DKK) | 7. 455 | 7. 436 |
| Swiss franc (CHF) – average exchange rate | 0.972 | 1.005 |
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 operation, the component of OCI relating to that particular foreign operation is reclassified in profit or loss foreign currency translation.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Annual Report 2023 Würth Finance Group
10
Recognition and measurement of financial instruments
Financial instruments are recognised when the Group be- comes party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. Financial liabilities are derec- ognised when the related contractual obligations are extin- guished, discharged/cancelled or expire. Financial instru- ments are recognised and derecognised using settlement date accounting.
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 financial 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 incurred.
Financial instruments are measured in subsequent periods either at fair value or at amortised cost using the effective interest rate method, depending on the financial instrument classification.
The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected 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.
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 at fair value through profit or loss
Within the scope of its management and performance mea- surement activities relating to a documented risk manage- ment and investment strategy, the Group measures securities as financial instruments at fair value through profit or loss. The fair value of securities that are actively traded in organ- ised financial markets is determined by reference to quoted market 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 de- pendent on the assumptions on which they are based. Trad- ed debt securities are carried at their clean price.
Securities at amortised cost
Securities at amortised cost are initially recognised at their ac- tual cost, which corresponds to the fair value at the time of the purchase of the security. After initial recognition, subsequently measurement is at amortised cost using the EIR method. Secu-
rities at amortised cost are held to collect contractual cash flows that are solely payments of principal and interest.
Loans and receivables
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 recognised at their actual cost, which corresponds to the fair value at the time of the loan being granted. After initial recognition, loans and receivables are subsequently mea- sured at amortised cost less value adjustments using the effective interest rate method and less allowance for expect- ed credit losses.
The loans are granted to related companies and the pay- ments consist solely of interest and the principal.
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”. Financial assets and financial liabilities are offset according to the ISDA netting agreements based on the conditions set therein and thus the net amount is reported in the consolidated bal- ance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabil- ities simultaneously.
The fair values recognised in the balance sheet reflect the net fair value of the instruments after the cash settlement.
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
11
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 during 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 cumulative gain or loss that was reported in equity is immediately 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
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
Intangible assets comprise among others software. Intangible assets acquired separately are initially measured at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any ac- cumulated amortisation and accumulated impairment losses.
Intangible assets are amortised over their useful economic life and assessed for impairment whenever there is an indi- cation that the intangible asset may be impaired.
Amortisation is calculated on a straight-line basis over the estimated 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 period or method, as appropriate, and treated as changes in accounting 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 liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
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 liabili-
ties 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 recog- nises 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
Annual Report 2023 Würth Finance Group
12
terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the peri- od 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 commence- ment 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 addition, 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 assess- ment 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 option). It also applies the lease of low-value assets recogni- tion exemption to leases of office equipment that are consid- ered 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 judgement 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 embodying economic benefits will be required to settle the obligation, 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 applic- able 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 income 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.
Pensions and other post-employment benefits
The Group operates a number of pension plans for its employees. These are treated as defined benefit plans in accordance with IAS 19. Actuarial gains and losses are recognised immediately in the balance sheet with a corre- sponding debit or credit to retained earnings through OCI in the period 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 unrecorded actuarial gains or losses (the “projected unit credit method”).
Transactions with related companies
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 framework of the consolidated financial statements of the Würth Group.
13
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 con- sidered 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 to third parties, which include financial 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.
Annual Report 2023 Würth Finance Group
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 2023
| Additions | ||||||||
| (disposals) | ||||||||
| Acquisition | incl. asset | Acquisition | Accum. | Asset | Amortisation | Accum. | Net book | |
| cost | retirement | cost | amortisation | retirement | for the year | amortisation | value | |
| in TEUR | 2022 | 2023 | 2023 | 2022 | 2023 | 2023 | 2023 | 2023 |
| Intangible assets | ||||||||
| Software | 2,579 | 308 | 2,887 | –2,311 | –65 | –139 | –2,515 | 372 |
| Activated customer base | 16,738 | 1,040 | 17, 7 78 | –15,565 | –976 | –174 | –16,715 | 1,063 |
| Total intangible assets | 19,317 | 1,348 | 20,665 | –17,876 | –1,041 | –313 | –19,230 | 1,435 |
| Right-of-use assets | ||||||||
| Right-of-use land and buildings | 6,283 | 1,463 | 7, 746 | –4,589 | –77 | –1,500 | –6,166 | 1,580 |
| Right-of-use vehicles | 65 | 4 | 69 | –10 | –1 | –17 | –28 | 41 |
| Total right-of-use assets | 6,348 | 1,467 | 7,815 | –4,599 | –78 | –1,517 | –6,194 | 1,621 |
| Property, plant and equipment | ||||||||
| Vehicles | 631 | 12 | 643 | –400 | –9 | –95 | –504 | 139 |
| Art objects | 34 | 0 | 34 | 0 | 0 | 0 | 0 | 34 |
| Office equipment/installations | 3,201 | 126 | 3,327 | –3,035 | –101 | –93 | –3,229 | 98 |
| Total property, plant and equipment | 3,866 | 138 | 4,004 | –3,435 | –110 | –188 | –3,733 | 271 |
| Total | 29,531 | 2,953 | 32,484 | –25,910 | –1,229 | –2,018 | –29,157 | 3,327 |
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 |
15
| in TEUR | Right-of-use assets |
| As at 1 January 2023 | 1,749 |
| Accretion of interest | 0 |
| Additions | 1,467 |
| Amortisation expense | –1,595 |
| As at 31 December 2023 | 1,621 |
| in TEUR | Lease liabilities |
| As at 1 January 2023 | 1,767 |
| Accretion of interest | –31 |
| Payments | –91 |
| As at 31 December 2023 | 1,645 |
| in TEUR | Lease liabilities |
| Amortisation expense of right-of-use assets | –1,595 |
| Interest expense on lease liabilities | –31 |
| 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 | –1,626 |
4 Loans to related parties
| in TEUR | 2023 | 2022 |
| Balance at 1 January | 1,558,944 | 1, 437,145 |
| New loans granted, increase in existing loans | 303,882 | 496,979 |
| Repayments | –69,167 | –60,744 |
| Currency and other adjustments | 773 | 21,217 |
| Term reclassification | –400,710 | –331,750 |
| Expected credit loss | –3,952 | –7,855 |
| Total loans to related parties | 1,389,770 | 1,554,992 |
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:
| 2023 | 2022 | |
| EUR | 2.56% | 1.94% |
| CHF | 1.40% | 1.01% |
| USD | 3.96% | 3.62% |
| DKK | 1.42% | 0.99% |
Annual Report 2023 Würth Finance Group
16
5 Other assets
| in TEUR | 2023 | 2022 |
| Receivables from third parties | 5,567 | 2,773 |
| Other assets | 157 | 176 |
| Total other assets | 5,724 | 2,949 |
6 Securities at fair value through profit or loss
| Market value | Acquisition cost | Market value | Acquisition cost | |
| in TEUR | 2023 | 2023 | 2022 | 2022 |
| Equity/equity funds | 11,314 | 9,807 | 9,065 | 10,070 |
| Investment-grade bonds /bond funds | 99,429 | 95,393 | 81,673 | 85,371 |
| Sub-investment-grade bonds | 1,990 | 1,901 | 2,759 | 3,131 |
| Commodities | 2,049 | 1,892 | 1,976 | 1,864 |
| Total securities | 114,782 | 108,993 | 95,473 | 100,436 |
7 Securities at amortised cost
The securities at amortised cost refers to investments in private placements issued by Swiss cities and cantons.
8 Bonds issued
In 2023, no new bonds were issued.
Overview of bonds issued at 31 December 2023
| in TEUR | Notional | Notional | Premium/ | Own | ||
| Maturity | amount | amount TEUR | discount | bonds | Total | Coupon |
| Long term | ||||||
| 26.05.2025 | TEUR 500,000 | 500,000 | –5,502 | 0 | 494,498 | 1.000% |
| 16.11.2026 | TCHF 300,000 | 306,639 | 17,123 | 0 | 323,762 | 2.100% |
| 22.11.2027 | TEUR 750,000 | 750,000 | –2,032 | 0 | 747,968 | 0.750% |
| 23.08.2030 | TEUR 600,000 | 600,000 | –16,380 | 0 | 583,620 | 2.125% |
| Total book value long-term bondliabilities | 2,149,848 | |||||
| Total book value bonds issued | 2,149,848 |
| in TEUR | Notional | ||
| Maturity | (excluding own bonds) | Market value | Coupon |
| 26.05.2025 | 500,000 | 484,820 | 1.000% |
| 16.11.2026 | 306,639 | 328,153 | 2.100% |
| 22.11.2027 | 750,000 | 693,870 | 0.750% |
| 23.08.2030 | 600,000 | 566,214 | 2.125% |
| Total market value at 31 December | 2,073,057 |
17
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 bondliabilities | 2,109,593 | |||||
| Total book value bonds issued | 2,109,593 |
| in TEUR | Notional | ||
| Maturity | (excluding own 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 |
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.
9 Other liabilities
| in TEUR | 2023 | 2022 |
| Payables for deliveries and services | 2,673 | 8,800 |
| of which to third parties | 1,826 | 658 |
| of which to related parties | 847 | 8,142 |
| Compensation-related liabilities | 5,002 | 4,646 |
| Other liabilities | 2,760 | 2,166 |
| Total other liabilities | 10,435 | 15,612 |
Other liabilities primarily comprise accruals for services received but not invoiced during the financial year.
Annual Report 2023 Würth Finance Group
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10 Interest income and expenses
At 31 December 2023
| Parent | Associated | Third | ||
| in TEUR | Total | companies | companies | parties |
| Interest income | ||||
| Interest income from financing activities at amortised cost | 68,675 | 0 | 68,660 | 15 |
| Interest income from financing leasing activities at amortised cost | 3,118 | 0 | 3,118 | 0 |
| Interest income from liquid assets at amortised cost | 53,828 | 5 | 29,118 | 24,705 |
| Interest income from current accounts | 29,123 | 5 | 29,118 | 0 |
| Interest income from bank accounts, time deposits and money market funds | 24,705 | 0 | 0 | 24,705 |
| Interest income from financial instruments at fair value through profit or loss | 22,768 | 0 | 5,485 | 17,283 |
| Interest income from interest rate and cross-currency swaps | 20,524 | 0 | 4,613 | 15,911 |
| Other interest income from financial instruments | 2,244 | 0 | 872 | 1,372 |
| Total interest income | 148,389 | 5 | 106,381 | 42,003 |
| Interest expenses | ||||
| Interest expenses for current accounts and time deposits | 34,647 | 12,187 | 22,434 | 26 |
| Interest expenses for bonds issued | 38,108 | 2,769 | 0 | 35,339 |
| Interest expenses from financial instruments | 23,992 | 404 | 5,687 | 17,901 |
| Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised) | 0 | 0 | 0 | 0 |
| Interest expenses from interest rate and cross-currency swaps | 22,002 | 0 | 4,560 | 17, 442 |
| Other interest expenses from financial instruments | 1,990 | 404 | 1,127 | 459 |
| Other interest expenses (third parties) | 798 | 0 | 3 | 795 |
| Total interest expenses | 97, 545 | 15,360 | 28,124 | 54,061 |
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 or loss | 16,290 | 0 | 5,011 | 11,279 |
| 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 |
19
11 Income from commission and service fee activities
| in TEUR | 2023 | 2022 |
| Acquisition commissions, brokerage fees | 15,860 | 14,340 |
| Collection and delcredere agreements | 33,704 | 34,008 |
| Total income from commission and service fee activities | 49,564 | 48,348 |
12 Income from trading activities and financial instruments
| in TEUR | 2023 | 2022 |
| Income from securities transactions | 8,315 | –5,463 |
| Income from foreign exchange transactions | 12,061 | 16,752 |
| Total income from trading activities and financial instruments | 20,376 | 11,289 |
13 Other ordinary income from related parties
Other ordinary income comprised TEUR 592 (2022: TEUR 653) in income from the e-payment services provided to other Würth Group companies, as well as fees charged for other services rendered.
14 Personnel expenses
At 31 December personnel expenses were as follows:
| in TEUR | 2023 | 2022 |
| Wages and salaries | 20,341 | 18,439 |
| Pension cost | 898 | 1,174 |
| Social securitycost | 1,678 | 1,533 |
| Other employee cost | 818 | 845 |
| Total personnel expenses | 23,735 | 21,991 |
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 112 (2022: TEUR 100). The premium 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 (longevity, 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.
Annual Report 2023 Würth Finance Group
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The following figures provide an overview of the financial situation regarding the defined benefit plans as at 31 December:
| in TEUR | 2023 | 2022 |
| Pension cost | ||
| Current service cost | 904 | 1,167 |
| Net interest expense /(income) | 35 | 11 |
| Foreign currency translation | –41 | –4 |
| Pension cost recognised in income statement | 898 | 1,174 |
| Revaluation of defined benefit plan | ||
| Actuarial (gains)/losses due to changes in demographic assumptions | 3,324 | –8,042 |
| Actuarial (gains)/losses due to changes based on experience | 1,619 | 3,990 |
| Return on plan assets (less interest income) | –1,739 | 2,089 |
| Foreign currency translation | 235 | 70 |
| Revaluation recognised in OCI | 3,439 | –1,893 |
| Liabilities for pension plan | ||
| Defined benefit obligation at 31 December | 52,364 | 42,106 |
| Fair value of plan assets at 31 December | –47,072 | –39,946 |
| Net liabilities at 31 December | 5,292 | 2,160 |
| Changes in the benefit obligations | ||
| Benefit obligation at 1 January | 42,106 | 43,190 |
| Interest expense | 947 | 133 |
| Current service cost | 904 | 1,167 |
| Plan participant contributions | 1,153 | 1,067 |
| Actuarial (gains)/losses due to changes in demographic assumptions | 3,324 | –8,042 |
| Actuarial (gains)/losses due to changes based on experience | 1,619 | 3,990 |
| Benefit payments | –637 | –1,461 |
| Foreign currency translation | 2,948 | 2,062 |
| Benefit obligation at 31 December | 52,364 | 42,106 |
| Changes in the plan assets | ||
| Fair value of plan assets at 1 January | 39,946 | 39,221 |
| Interest income | 912 | 122 |
| Return on plan assets (less interest income) | 1,739 | –2,089 |
| Plan participant contributions | 1,153 | 1,067 |
| Employer contributions | 1,285 | 1,188 |
| Benefit payments | –637 | –1,461 |
| Foreign currency translation | 2,674 | 1,898 |
| Fair value of plan assets at 31 December | 47,072 | 39,946 |
| Assumptions | ||
| Discount rate | 1.50% | 2.20% |
| Expected return on plan assets | 2.20% | 0.30% |
| Future salary increases up to age 54 P /A | 1.50% | 1.00% |
| 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
Sensitivity of benefit obligation
| in TEUR | Defined benefit | Gross service |
| Defined changes in assumptions | obligation | cost |
| Assumption at 31.12.2023 | 52,364 | 2,578 |
| Discount rate | ||
| Increase by 25 basis points | 53,520 | 2,484 |
| Decrease by 25 basis points | 57,218 | 2,678 |
| Rate of salary increase | ||
| Increase by 50 basis points | 55,870 | 2,578 |
| Decrease by 50 basis points | 54,778 | 2,578 |
Plan asset allocation by category:
| 2023 | 2022 | |
| Equities | 23.1% | 22.0% |
| Bonds | 40.1% | 40.0% |
| Real estate | 26.7% | 28.5% |
| Other | 10.1% | 9.5% |
| Total of plan asset allocation | 100.0% | 100.0% |
The plan assets of the pension funds consisted either of credit balances with an insurance company or a semi- autonomous pension scheme.
For financial year 2024, the Group anticipated contributions to defined benefit pension plans amounting to approximately TEUR 2,578.
Compensation of key management personnel of the Group
In 2023, fees of TEUR 350 were paid to members of the Board of Directors (2022: TEUR 320).
The key management comprised the Managing Directors of the Group companies (2023: 6 persons; 2022: 5 persons).
Remuneration for the Managing Directors of the Group companies totalled TEUR 3,229 in the year 2023 (2022: TEUR 2,500).
In 2023 and 2022, no other forms of compensation were paid to key management staff.
| in TEUR | 2023 | 2022 |
| Short-term employee benefits | 3,229 | 2,500 |
| Total compensation paid to key management personnel | 3,229 | 2,500 |
Annual Report 2023 Würth Finance Group
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15 Income tax
Tax positions are, inherently to operating internationally and across borders, in certain cases uncertain. Accruals and/or provisions were made where deemed necessary. The 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 2023 are accrued as at 31 December 2023.
The relevant tax rate for the Netherlands was 25.8% (2022: 25.8%). 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 corre- sponding countries, there was a difference between the effective tax rate and the relevant tax rate for the Nether- lands. The relevant tax rates in Switzerland were 8.5% (2022: 8.5%) on a federal level and 8.2% (2022: 8.3%) on a cantonal level.
The withholding tax credits not utilised in the Netherlands amounted to TEUR 6,262 (2022: TEUR 6,501) and are available for carryforward indefinitely.
The reconciliation of income taxes is composed as follows:
| in TEUR | 2023 | 2022 |
| Income before taxes | 98,201 | 66,328 |
| Tax expense using the assumed average tax rate (25.8%) | 25,336 | 17,113 |
| Difference between actual and assumed tax rates | –6,917 | –5,572 |
| Withholding tax payments | 160 | 99 |
| (De)recognition deferred taxes | –165 | 749 |
| Tax effects related to prior years | 717 | –465 |
| Net effective tax expenses | 19,131 | 11,924 |
| in TEUR | 2023 | 2022 |
| Deferred tax assets on cash flow hedges | 1,265 | 1,651 |
| Deferred tax assets from loss carry-forwards | 516 | 856 |
| Deferred tax assets | 1,781 | 2,507 |
| in TEUR | 2023 | 2022 |
| Deferred tax liabilities on intangible assets | 397 | 342 |
| Deferred tax liabilities | 397 | 342 |
23
16 Transactions with related parties
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. Related party transactions were based on arm’s length terms and conditions.
At 31 December 2023
| Parent | Associated | ||
| in TEUR | Total | companies | companies |
| Receivables from relatedparties | |||
| Loans to related companies | 1,389,770 | 0 | 1,389,770 |
| Receivables from related companies | 1,297,954 | 11, 457 | 1,286,497 |
| Current accounts | 478,638 | 0 | 478,638 |
| Short-term loans | 610,300 | 0 | 610,300 |
| Factoring | 209,016 | 11, 457 | 197, 559 |
| Total receivables from related parties | 2,687,724 | 11, 457 | 2,676,267 |
| Payables to related parties | |||
| Payables to related companies | 1,474,770 | 598,164 | 876,606 |
| Current accounts | 829,508 | 198,164 | 631,344 |
| Fixed-term deposits | 645,262 | 400,000 | 245,262 |
| Other payables to related parties | 847 | 0 | 847 |
| Total payables to related parties | 1,475,617 | 598,164 | 877, 453 |
At 31 December 2022
| Parent | Associated | ||
| in TEUR | Total | companies | companies |
| Receivables from relatedparties | |||
| 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 related parties | |||
| 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 |
The receivables from related companies (short-term loans) above include an amount of TEUR 894 (2022: TEUR 1,264) related to the expected credit loss (ECL). Reference is made to Note 18.
Annual Report 2023 Würth Finance Group
24
17 Commitments and contingencies
The Group has issued guarantees, letters of comfort and let- ters of credit. These respresent commitments and contingen- cies in favour of third parties for associated company liabil- ities. As at 31 December 2023, the contingent liabilities
included contractual guarantees in connection with a planned acquisition by the Würth Group. The lending com- mitments, which had been guaranteed, but not yet utilised, are disclosed at nominal value.
| in TEUR | 2023 | 2022 |
| Guarantees, letters of comfort, letters of credit | 458,972 | 227, 371 |
| Total contingent liabilities | 458,972 | 227, 371 |
| in TEUR | 2023 | 2022 |
| Unutilised lending commitments | 3,785 | 67,684 |
| Total unutilised lending commitments | 3,785 | 67, 684 |
18 Financial instruments and risk management
a) Financial risk management
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. Amendments to 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 basis. Corresponding reporting by the bodies which control the risk for the attention of management was effected daily. The man- agement of market risks (foreign currency, interest rate, securi- ty price), credit risks and liquidity risks is described below.
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 fluctuations. 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.
| 2023 | 2022 | |||
| Market scenario | Impact on profit | Market scenario | Impact on profit | |
| Currency | (in TEUR) | (in TEUR) | ||
| CHF | 10% | 1,837 | 10% | 1,705 |
| – 10% | –1,837 | – 10% | –1,705 | |
| USD | 10% | 2,451 | 10% | 1,568 |
| – 10% | –2,451 | – 10% | –1,568 | |
| GBP | 10% | 1 | 10% | 17 |
| – 10% | –1 | – 10% | –17 | |
| CAD | 10% | 62 | 10% | 113 |
| – 10% | –62 | – 10% | –113 | |
| CNY | 10% | 4 | 10% | 45 |
| – 10% | –4 | – 10% | –45 | |
| DKK | 10% | 61 | 10% | 25 |
| – 10% | –61 | – 10% | –25 | |
| NOK | 10% | 80 | 10% | 105 |
| – 10% | –80 | – 10% | –105 | |
25
Balance sheet by currency at 31 December 2023
| Amounts in TEUR countervalue | ||||||
| in TEUR | Total | EUR | USD | CHF | DKK | Others |
| ASSETS | ||||||
| Non-current assets | ||||||
| Intangible assets | 1,435 | –190 | 0 | 1,625 | 0 | 0 |
| Right-of-use assets | 1,621 | 1,361 | 0 | 260 | 0 | 0 |
| Property, plant and equipment | 271 | –134 | 0 | 405 | 0 | 0 |
| Loans to related companies | 1,389,770 | 849,804 | 379,870 | 131,269 | 3,178 | 25,649 |
| Positive fair values of derivative instruments | 10,193 | 162,284 | –153,865 | 1,597 | 5 | 172 |
| Deferred tax assets | 1,781 | 1,265 | 0 | 516 | 0 | 0 |
| Total non-current assets | 1,405,071 | 1,014,390 | 226,005 | 135,672 | 3,183 | 25,821 |
| Current assets | ||||||
| Receivables from related companies | 1,297,954 | 878,115 | 94,435 | 56,605 | 50,662 | 218,137 |
| Positive fair values of derivative instruments | 9,785 | 12,676 | –9,444 | 1,959 | 40 | 4,554 |
| Other assets | 5,724 | 4,291 | 0 | 1,432 | 0 | 1 |
| Income tax receivables | 55 | 0 | 0 | 55 | 0 | 0 |
| Accrued income and prepaid expenses | 12,088 | 9,321 | –618 | 2,129 | 5 | 1,251 |
| Securities at amortised cost | 112,949 | 0 | 0 | 112,949 | 0 | 0 |
| Securities at fair value through profit or loss | 114, 782 | 81,515 | 4,536 | 26,936 | 0 | 1 ,7 9 5 |
| Cash and cash equivalents | 1,191,590 | 631,599 | 1,068 | 543,849 | 2 | 15,072 |
| Total current assets | 2,744,927 | 1,617,517 | 89,977 | 745,914 | 50,709 | 240,810 |
| Total assets | 4,149,998 | 2,631,907 | 315,982 | 881,586 | 53,892 | 266,631 |
| 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 | 359,064 | 359,064 | 0 | 0 | 0 | 0 |
| Other comprehensive income from cash flow hedges | –5,409 | –5,409 | 0 | 0 | 0 | 0 |
| Foreign currency translation | 179 | 179 | 0 | 0 | 0 | 0 |
| Net profit for the year | 79,069 | 79,069 | 0 | 0 | 0 | 0 |
| Total shareholders’ equity | 453,903 | 453,903 | 0 | 0 | 0 | 0 |
| Non-current liabilities | ||||||
| Bonds issued | 2,149,847 | 2,149,847 | 0 | 0 | 0 | 0 |
| Liabilities for pension plans | 5,292 | 0 | 0 | 5,292 | 0 | 0 |
| Lease liabilities | 341 | 240 | 0 | 101 | 0 | 0 |
| Negative fair values of derivative instruments | 12,896 | 61,856 | –36,472 | –12,194 | 0 | –294 |
| Deferred tax liabilities | 397 | 0 | 0 | 397 | 0 | 0 |
| Total non-current liabilities | 2,168,773 | 2,211,943 | –36,472 | –6,404 | 0 | –294 |
| Current liabilities | ||||||
| Commercial paper | 0 | 0 | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,474,770 | 1,224,990 | 103,252 | 23,973 | 4,134 | 118,421 |
| Lease liabilities | 1,304 | 1,139 | 0 | 165 | 0 | 0 |
| Payables to banks | 5,731 | 84 | 4,777 | 0 | 173 | 697 |
| Income tax payables | 12,422 | 2,121 | 0 | 10,301 | 0 | 0 |
| Negative fair values of derivative instruments | 13,280 | 55,083 | –20,593 | –15,187 | –6 | –6,017 |
| Other liabilities | 10,435 | 1,603 | 1,149 | 6,692 | 2 | 989 |
| Accrued expenses and deferred income | 9,380 | 8,422 | 102 | 856 | 0 | 0 |
| Total current liabilities | 1, 527, 322 | 1,293,442 | 88,687 | 26,800 | 4,303 | 114,090 |
| Total equity and liabilities | 4,149,998 | 3,959,288 | 52,215 | 20,396 | 4,303 | 113,796 |
| Balance sheet position | 0 | –1,327,381 | 263,767 | 861,190 | 49,589 | 152,835 |
Annual Report 2023 Würth Finance Group
26
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 at amortised cost | 0 | 0 | 0 | 0 | 0 | 0 |
| Securities at fair value through profit or loss | 95,473 | 65,092 | 4,012 | 24,474 | 0 | 1,894 |
| Cash and cash equivalents | 804,952 | 369,800 | 726 | 418,871 | 1,466 | 14,089 |
| Total current assets | 2,270,698 | 1, 317,824 | 148,951 | 504,007 | 51,266 | 248,649 |
| Total assets | 3,846,712 | 2,331,607 | 537,136 | 622,990 | 54,984 | 299,994 |
| 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 | ||||||
| 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 | –1,024,256 | 222,454 | 563,573 | 54,342 | 183,886 |
27
Balance sheet by maturity at 31 December 2023
| Maturity | |||||
| in TEUR | Total | Sight | <1 year | 1–5 years | >5 years |
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 1,435 | 372 | 0 | 0 | 1,063 |
| Right-of-use assets | 1,621 | 0 | 0 | 1,621 | 0 |
| Property, plant and equipment | 271 | 271 | 0 | 0 | 0 |
| Loans to related companies | 1,389,770 | 0 | 0 | 1,220,901 | 168,869 |
| Positive fair values of derivative instruments | 10,193 | 0 | 0 | 10,193 | 0 |
| Deferred tax assets | 1,781 | 1,781 | 0 | 0 | 0 |
| Total non-current assets | 1,405,071 | 2,424 | 0 | 1,232,715 | 169,932 |
| Current assets | |||||
| Receivables from related companies | 1,297,954 | 687,654 | 610,300 | 0 | 0 |
| Positive fair values of derivative instruments | 9,785 | –19 | 9,804 | 0 | 0 |
| Other assets | 5,724 | 5,724 | 0 | 0 | 0 |
| Income tax receivables | 55 | 55 | 0 | 0 | 0 |
| Accrued income and prepaid expenses | 12,088 | 12,088 | 0 | 0 | 0 |
| Securities at amortised cost | 112,949 | 0 | 112,949 | 0 | 0 |
| Securities at fair value through profit or loss | 114, 782 | 114, 782 | 0 | 0 | 0 |
| Cash and cash equivalents | 1,191,590 | 1,191,590 | 0 | 0 | 0 |
| Total current assets | 2,744,927 | 2,011,874 | 733,053 | 0 | 0 |
| Total assets | 4,149,998 | 2,014,298 | 733,053 | 1,232,715 | 169,932 |
| 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 | 359,064 | 359,064 | 0 | 0 | 0 |
| Other comprehensive income from cash flow hedges | –5,409 | –5,409 | 0 | 0 | 0 |
| Foreign currency translation | 179 | 179 | 0 | 0 | 0 |
| Net profit for the year | 79,069 | 79,069 | 0 | 0 | 0 |
| Total shareholders’ equity | 453,903 | 453,903 | 0 | 0 | 0 |
| Non-current liabilities | |||||
| Bonds issued | 2,149,847 | 0 | 0 | 1,566,227 | 583,620 |
| Liabilities for pension plans | 5,292 | 0 | 0 | 5 ,2 9 2 | 0 |
| Lease liabilities | 341 | 0 | 0 | 341 | 0 |
| Negative fair values of derivative instruments | 12,896 | 0 | 0 | 6,131 | 6,765 |
| Deferred tax liabilities | 397 | 397 | 0 | 0 | 0 |
| Total non-current liabilities | 2,168,773 | 397 | 0 | 1, 577,991 | 590,385 |
| Current liabilities | |||||
| Commercial paper | 0 | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,474,770 | 829,508 | 645,262 | 0 | 0 |
| Lease liabilities | 1,304 | 0 | 1,304 | 0 | 0 |
| Payables to banks | 5,731 | 5,731 | 0 | 0 | 0 |
| Income tax payables | 12,422 | 12,422 | 0 | 0 | 0 |
| Negative fair values of derivative instruments | 13,280 | –328 | 13,555 | 53 | 0 |
| Other liabilities | 10,435 | 5,433 | 5,002 | 0 | 0 |
| Accrued expenses and deferred income | 9,380 | 9,380 | 0 | 0 | 0 |
| Total current liabilities | 1, 527, 322 | 862,146 | 665,123 | 53 | 0 |
| Total equity and liabilities | 4,149,998 | 1,316,446 | 665,123 | 1,578,044 | 590,385 |
| Balance sheet position | 0 | 697,852 | 67,930 | –345,329 | –420,453 |
Annual Report 2023 Würth Finance Group
28
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 at amortised cost | 0 | 0 | 0 | 0 | 0 |
| Securities at fair value through profit or loss | 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 | |||||
| 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 |
29
Balance sheet by interest rate exposure at 31 December 2023
| Fixed | Variable | Non–interest | ||
| in TEUR | Total | interest rate | interest rate | bearing |
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 1,435 | 0 | 0 | 1,435 |
| Right-of-use assets | 1,621 | 1,621 | 0 | 0 |
| Property, plant and equipment | 271 | 0 | 0 | 271 |
| Loans to related companies | 1,389,770 | 1,389,770 | 0 | 0 |
| Positive fair values of derivative instruments | 10,193 | 0 | 0 | 10,193 |
| Deferred tax assets | 1,781 | 0 | 0 | 1,781 |
| Total non-current assets | 1,405,071 | 1,391,391 | 0 | 13,680 |
| Current assets | ||||
| Receivables from related companies | 1,297,954 | 610,300 | 478,638 | 209,016 |
| Positive fair values of derivative instruments | 9,785 | 0 | 0 | 9,785 |
| Other assets | 5,724 | 0 | 5,724 | 0 |
| Income tax receivables | 55 | 0 | 0 | 55 |
| Accrued income and prepaid expenses | 12,088 | 0 | 0 | 12,088 |
| Securities at amortised cost | 112,949 | 112,949 | 0 | 0 |
| Securities at fair value through profit or loss | 114, 782 | 92,847 | 8,572 | 13,363 |
| Cash and cash equivalents | 1,191,590 | 0 | 1,191,590 | 0 |
| Total current assets | 2,744,927 | 816,096 | 1,684,524 | 244,307 |
| Total assets | 4,149,998 | 2, 207, 487 | 1,684,524 | 257,987 |
| 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 | 359,064 | 0 | 0 | 359,064 |
| Other comprehensive income from cash flow hedges | –5,409 | 0 | 0 | –5,409 |
| Foreign currency translation | 179 | 0 | 0 | 179 |
| Net profit for the year | 79,069 | 0 | 0 | 79,069 |
| Total shareholders’ equity | 453,903 | 0 | 0 | 453,903 |
| Non-current liabilities | ||||
| Bonds issued | 2,149,847 | 2,149,847 | 0 | 0 |
| Liabilities for pension plans | 5,292 | 0 | 5,292 | 0 |
| Lease liabilities | 341 | 341 | 0 | 0 |
| Negative fair values of derivative instruments | 12,896 | 0 | 0 | 12,896 |
| Deferred tax liabilities | 397 | 0 | 0 | 397 |
| Total non-current liabilities | 2,168,773 | 2,150,188 | 5,292 | 13,293 |
| Current liabilities | ||||
| Commercial paper | 0 | 0 | 0 | 0 |
| Payables to related companies | 1,474,770 | 645,262 | 829,508 | 0 |
| Lease liabilities | 1,304 | 0 | 0 | 1,304 |
| Payables to banks | 5,731 | 0 | 5,731 | 0 |
| Income tax payables | 12,422 | 0 | 0 | 12,422 |
| Negative fair values of derivative instruments | 13,280 | 0 | 0 | 13,280 |
| Other liabilities | 10,435 | 0 | 0 | 10,435 |
| Accrued expenses and deferred income | 9,380 | 0 | 0 | 9,380 |
| Total current liabilities | 1, 527, 322 | 645,262 | 835,239 | 46,821 |
| Total equity and liabilities | 4,149,998 | 2,795,450 | 840,531 | 514,017 |
| Balance sheet position | 0 | –587,963 | 843,993 | –256,030 |
Annual Report 2023 Würth Finance Group
30
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 at amortised cost | 0 | 0 | 0 | 0 |
| Securities at fair value through profit or loss | 95,473 | 7 7,348 | 7,084 | 11,041 |
| Cash and cash equivalents | 804,952 | 0 | 804,952 | 0 |
| Total current assets | 2,270,698 | 665,850 | 1,392,497 | 222,351 |
| Total assets | 3,846,712 | 2,210,842 | 1,392,497 | 243,373 |
| 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 | ||||
| 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 | –163,118 | 377,973 | –214,855 |
31
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 individual 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 asset 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 instruments 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 decreased due to the lower residual term of the outstanding bonds. The table reflects the most impor- tant 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 decreased in total. However, interest rate risks have been kept minimal.
Sensitivity of equity 2023
| in TEUR | Duration | |||||||||||
| Change in | ||||||||||||
| Currency | basis points | ≤6 months | 6 months to 1 year | 1–5 years | >5 years | Total | ||||||
| EUR | 100 | –100 | –724 | 766 | –1,945 | 2,029 | 9,466 | –9,996 | 15,507 | –16,622 | 22,304 | –23,823 |
| USD | 100 | –100 | 43 | –46 | –195 | 204 | 59 | –60 | –2,046 | 2,156 | –2,139 | 2,254 |
| CHF | 100 | –100 | –540 | 560 | –66 | 68 | 4,593 | –4,767 | –1,072 | 1,328 | 2,915 | –2,811 |
| DKK | 100 | –100 | 6 | –7 | 0 | 0 | 27 | –27 | 0 | 0 | 33 | –34 |
| CNH | 100 | –100 | 6 | –7 | 10 | –10 | 0 | 0 | 0 | 0 | 16 | –17 |
| NOK | 100 | –100 | 1 | –2 | –12 | 13 | 0 | 0 | 0 | 0 | –11 | 11 |
| CAD | 100 | –100 | 0 | 0 | 1 | –1 | 0 | 0 | 0 | 0 | 1 | –1 |
| GBP | 100 | –100 | –6 | 7 | –25 | 26 | 0 | 0 | 0 | 0 | –31 | 33 |
| Others | 100 | –100 | –4 | 5 | –47 | 49 | –145 | 150 | 0 | 0 | –196 | 204 |
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 |
Annual Report 2023 Würth Finance Group
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 at fair value through profit or loss.
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 value 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 basis. The allocation is shown in the table below:
Asset allocation at 31 December 2023
| in TEUR | Market value | Share |
| Equity/equity funds | 11,314 | 9.9% |
| Investment-grade bonds /bond funds | 99,429 | 86.6% |
| Sub-investment-grade bonds | 1,990 | 1.7% |
| Commodities | 2,049 | 1.8% |
| Total asset allocation | 114,782 | 100.0% |
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% |
Credit risk
In order to minimise credit risks, transactions are only conducted with first-class external counterparties. For each rating level, binding counterparty limits are defined. Their absolute value is subject to regular critical reviews by the supervisory bodies and is adjusted if necessary. Würth Group counterparties are monitored by Würth Finance International 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
| in TEUR | 2023 | 2022 |
| Credit risks at 31 December | ||
| Total Würth Group long-term | 1,393,722 | 1,562,847 |
| Total Würth Group short-term | 1,298,848 | 1,349,654 |
| Cash and cash equivalents | 1,191,590 | 804,952 |
| Securities at amortised cost | 112,949 | 0 |
| Positive fair values of derivative instruments | 19,978 | 21,528 |
| Other assets | 5,724 | 2,949 |
| Contingent liabilities | 458,972 | 227, 371 |
| Lending commitments | 3,785 | 67,684 |
| Total credit risk exposure | 4,485,568 | 4,036,985 |
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 effective 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 ex- ternal companies that are not measured at fair value through profit or loss. The methodology the Group applied to calcu- late 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 signif- icant 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 | 31.12.2023 | 31.12.2022 |
| Loans to related companies | 3,952 | 7,855 |
| Short-term receivables from related companies | 894 | 1,264 |
| Total expected credit loss | 4,846 | 9,119 |
| ECL movements (in TEUR) | Stage 1 | Stage 2 | Stage 3 | Total |
| Balance as at 1 January 2023 | 8,444 | 675 | 0 | 9,119 |
| Changes due to | ||||
| Net movements from new and derecognised transactions | –474 | –122 | 0 | –596 |
| Stage migration | –5 | 11 | 0 | 6 |
| Remeasurements | –3,439 | –244 | 0 | –3,683 |
| Balance as at 31 December 2023 | 4,526 | 320 | 0 | 4,846 |
Legend
Net movements from new and derecognised transactions
Stage migration
Remeasurements
Effects resulting from the change in volume; calculated using the current closing balance of the assets multiplied by the PD of the previous year
Shifts between the stages due to reassessment of the credit risk
Residual amount represents the influence of the changed PD
Annual Report 2023 Würth Finance Group
34
The PD at year-end amounted to 0.4477% (2022: 0.7884%) which caused the reduced impairment credit amount of TEUR 4,273 over 2023. The reduction is mainly driven by the impact of the changed PD of TEUR 3,683.
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” rating to Adolf Würth GmbH & Co. KG) allows the Group to raise liquid funds in the international capital markets on favourable conditions. Würth Finance International B.V. had established 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 2028 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 2023
| Contract value or | |||
| in TEUR | notional value | Positive fair value | Negative fair value |
| Foreign currency instruments | |||
| Forward currency contracts | 2,180,701 | 11,321 | –29,892 |
| Options | 56,658 | 2,795 | –108 |
| Total foreign currency instruments | 2, 237, 359 | 14,116 | –30,000 |
| Interest rate instruments | |||
| Interest rate swaps | 687,034 | 8,555 | –19,951 |
| Cross-currency swaps | 245,348 | 7,252 | –2,191 |
| Financial futures | 2,182 | 0 | 0 |
| Total interest rate instruments | 934,564 | 15,807 | –22,142 |
| Reduction due to CSA | 0 | –9,945 | 25,966 |
| Total derivative financial instruments | 3,171,923 | 19,978 | –26,176 |
Positions at 31 December 2022
| Contract value or | |||
| in TEUR | notional 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 |
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
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 –15.1 million (2022: EUR –1.5 million) had a maturity date of less than 12 months and EUR –3.4 million (2022: EUR –4.4 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 2023
| 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 | 29,923 | –9,945 | 19,978 |
| Total | 29,923 | –9,945 | 19,978 |
| FINANCIAL LIABILITIES | |||
| Derivative financial instruments | –52,142 | 25,966 | –26,176 |
| Total | –52,142 | 25,966 | –26,176 |
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 |
Offsetting rights that do not meet some or all of the criteria for offsetting in the balance sheet are not disclosed since the effects are considered immaterial.
Annual Report 2023 Würth Finance Group
36
c) Fair value of financial instruments at 31 December
| Carrying amount | Fair value | |||
| in TEUR | 2023 | 2022 | 2023 | 2022 |
| ASSETS | ||||
| Non-current assets | ||||
| Loans to related companies | 1,389,770 | 1,554,992 | 1,401,428 | 1,525,713 |
| Positive fair values of derivative instruments | 10,193 | 14,894 | 10,193 | 14,894 |
| Total non-current assets | 1,399,963 | 1,569,886 | 1,411,621 | 1,540,607 |
| Current assets | ||||
| Receivables from related companies | 1,297,954 | 1,348,390 | 1,297,885 | 1,348,388 |
| Positive fair values of derivative instruments | 9,785 | 6,634 | 9,785 | 6,634 |
| Securities at amortised cost | 112,949 | 0 | 113,214 | 0 |
| Securities at fair value through profit or loss | 114, 782 | 95,473 | 114, 782 | 95,473 |
| Cash and cash equivalents | 1,191,590 | 804,952 | 1,195,095 | 804,987 |
| Total current assets | 2,727,060 | 2,255,449 | 2,730,761 | 2,255,482 |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Bonds issued | 2,149,847 | 2,109,593 | 2,094,836 | 1,972,029 |
| Negative fair values of derivative instruments | 12,896 | 12,442 | 12,896 | 12,442 |
| Total non-current liabilities | 2,162,743 | 2,122,035 | 2,107, 731 | 1,984,471 |
| Current liabilities | ||||
| Commercial paper | 0 | 75,000 | 0 | 75,233 |
| Payables to related companies | 1,474,770 | 1,194,662 | 1,471,927 | 1,192,790 |
| Payables to banks | 5,731 | 6,589 | 5,731 | 6,589 |
| Negative fair values of derivative instruments | 13,280 | 7, 565 | 13,280 | 7, 565 |
| Total current liabilities | 1,493,781 | 1,283,816 | 1,490,938 | 1,282,177 |
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.
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 discount factors within the calculation are generated using industry standard yield curve modelling techniques.
37
Assets and liabilities measured at fair value at 31 December 2023
| in TEUR | Level 1 | Level 2 | Level 3 | Total fair value |
| ASSETS | ||||
| Derivative financial instruments | ||||
| Interest rate swaps | 0 | 8,555 | 0 | 8,555 |
| Cross-currency swaps | 0 | 7,252 | 0 | 7,252 |
| Financial futures | 0 | 0 | 0 | 0 |
| Options | 0 | 2,795 | 0 | 2, 795 |
| Forward currency contracts | 0 | 11,321 | 0 | 11,321 |
| Reduction due to CSA | 0 | –9,945 | 0 | –9,945 |
| Financial instruments at fair value through profit or loss | ||||
| Securities at fair value through profit or loss | 114, 782 | 0 | 0 | 114, 782 |
| Financial instruments at amortised cost | ||||
| Loans to related companies | 0 | 1,401,428 | 0 | 1,401,428 |
| Receivables from related companies | 1,297,885 | 0 | 0 | 1,297,885 |
| Securities at amortised cost | 0 | 112,949 | 0 | 112,949 |
| Cash and cash equivalents | 1,195,095 | 0 | 0 | 1,195,095 |
| LIABILITIES | ||||
| Derivative financial instruments | ||||
| Interest rate swaps | 0 | 19,951 | 0 | 19,951 |
| Cross-currency swaps | 0 | 2,191 | 0 | 2,191 |
| Financial futures | 0 | 0 | 0 | 0 |
| Options | 0 | 108 | 0 | 108 |
| Foreign currency contracts | 0 | 29,892 | 0 | 29,892 |
| Reduction due to CSA | 0 | –25,966 | 0 | –25,966 |
| Other liabilities at amortised cost | ||||
| Bonds issued | 0 | 2,094,836 | 0 | 2,094,836 |
| Commercial paper | 0 | 0 | 0 | 0 |
| Payables to related companies | 0 | 1,471,927 | 0 | 1,471,927 |
| Payables to banks | 5,731 | 0 | 0 | 5,731 |
Fair value is the price at the reporting date that would be received for an asset sale or paid to transfer a liability in an orderly transaction between market participants in the mar- ket. All financial instruments measured at fair value are cat- egorised into one of the three fair value hierarchy levels. The levels of the fair value hierarchy as defined below are an in- dication 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 entities 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 organised financial markets is determined by reference to quoted market prices. For financial instruments where there is no active market, fair value is determined using valuation techniques such as price quotations from securities brokers, discounted cash flows or the Black-Scholes pricing model.
These valuations are by their nature dependent on the as- sumptions on which they are based. This category comprises all derivative financial instruments, receivables from related companies, loans to family foundation, bonds issued and payables to related companies.
For all financial instruments categorised within level 2, a description 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 transparently documented. If there is a change in valuation technique, 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 signi- ficant input parameter that cannot be observed directly or indirectly 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 2023, there were no transfers between level 1 and level 2 fair value measurements, and no transfers into or out of level 3 fair value measurements.
Annual Report 2023 Würth Finance Group
38
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 |
| Options | 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 at fair value through profit or loss | ||||
| Securities at fair value through profit or loss | 95,473 | 0 | 0 | 95,473 |
| Financial instruments at amortised cost | ||||
| Loans to related companies | 0 | 1,525,713 | 0 | 1,525,713 |
| Receivables from related companies | 1,348,388 | 0 | 0 | 1,348,388 |
| Securities at amortised cost | 0 | 0 | 0 | 0 |
| 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 |
| Options | 0 | 0 | 0 | 0 |
| 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 |
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.
d) Hedge accounting
Cash flow hedges
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
| Carrying amount 2023 | Carrying amount 2022 | |||||
| Transaction | Notional | |||||
| in TEUR | currency | amount | Assets | Liabilities | Assets | Liabilities |
| Micro cash flow hedges | ||||||
| Hedges to related parties | CHF | 12,000 | 0 | 0 | 0 | 162 |
| Hedges to related parties | USD | 20,000 | 0 | 401 | 0 | 1,017 |
| Hedges to related parties | USD | 37, 50 0 | 0 | 173 | 0 | 1,863 |
| Hedges to related parties | USD | 15,000 | 330 | 0 | 67 | 0 |
| Hedges to related parties | USD | 7,000 | 201 | 0 | 21 | 0 |
| Hedges to related parties | USD | 15,000 | 300 | 0 | 0 | 150 |
| Hedges to related parties | CHF | 19,937 | 0 | 1,617 | 0 | 1,365 |
| Forecasted – new bond issued 20181 | EUR | 0 | 108 | 0 | 184 | |
| Forecasted – new bond issued 20202 | EUR | 0 | 6,732 | 0 | 8,718 | |
| Forecasted – new bond issued 20223 | EUR | 474 | 0 | 546 | 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 2023 | |||
| Hedges to related parties USD 20,000 | 401 | 0 | 0 |
| Hedges to related parties USD 37,500 | 0 | 173 | 0 |
| Hedges to related parties USD 15,000 | 330 | 0 | 0 |
| Hedges to related parties USD 7,000 | 0 | 201 | 0 |
| Hedges to related parties USD 15,000 | 0 | 300 | 0 |
| Hedges to related parties CHF 19,937 | 0 | 1,617 | 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 recognised 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- currency 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.
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 amortised to the
income statement from 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 amortised to the
income statement from 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 amortised to the
income statement from OCI (cash flow hedge reserve) starting May 2022 over the actual swap term.
When a hedging instrument expires, is sold, terminated, exercised, 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 forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in OCI is immedi- ately 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 limits and to reduce fair value fluctuations of fixed-rate finan- cial assets as if they were floating-rate instruments linked to the attributable benchmark rates.
Annual Report 2023 Würth Finance Group
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 2023 | Carrying amount 2022 | |||||
| Transaction | Notional | |||||
| in TEUR | currency | amount | Assets | Liabilities | Assets | Liabilities |
| Micro fair value hedges | ||||||
| Würth bond 2025 | EUR | 150,000 | 0 | 4,992 | 0 | 8,836 |
| Würth bond 2026 | CHF | 100,000 | 1,528 | 0 | 0 | 682 |
| Würth bond 2030 | EUR | 250,000 | 0 | 13,291 | 0 | 27,121 |
| Hedges to related parties | EUR | 30,000 | 1,099 | 0 | 1 ,9 8 2 | 0 |
| Hedges to related parties | EUR | 10,000 | 1,021 | 0 | 1 ,5 7 4 | 0 |
| Hedges to related parties | USD | 130,000 | 5,030 | 0 | 5,182 | 0 |
| Hedges to related parties | EUR | 40,000 | 3,362 | 0 | 5,340 | 0 |
| Hedges to related parties | USD | 10,000 | 569 | 0 | 568 | 0 |
| Hedges to related parties | USD | 25,000 | 822 | 0 | 824 | 0 |
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 2023 | |||
| Würth bond 2025 EUR 150,000 | 0 | 4,992 | 0 |
| Würth bond 2026 CHF 100,000 | 0 | 1,528 | 0 |
| Würth bond 2030 EUR 250,000 | 0 | 0 | 13,291 |
| Hedges to related parties EUR 30,000 | 0 | 1,099 | 0 |
| Hedges to related parties EUR 10,000 | 0 | 1,021 | 0 |
| Hedges to related parties USD 130,000 | 0 | 5,030 | 0 |
| Hedges to related parties EUR 40,000 | 0 | 3,362 | 0 |
| Hedges to related parties USD 10,000 | 0 | 569 | 0 |
| Hedges to related parties USD 25,000 | 0 | 822 | 0 |
For derivatives that are designated and qualified as fair value 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.
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 2023, hedge ineffectiveness resulting from credit valuation adjustment /debit valuation adjustment is marginal.
If the hedging instrument expires or is sold, terminated or exercised, 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 effectiveness 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 carrying amount of the hedged item is amortised over the remaining term of the original hedge by recalculating the EIR. If the hedged item is derecognised, the unamortised fair value ad- justment is recognised immediately in the income statement.
41
19 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 2023
| 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 | 146,608 | 0 | 1,930 | 0 | 0 | 148,538 | 16 | –165 | 148,389 |
| Interest expenses | –97, 566 | 0 | –141 | 0 | 0 | –97, 707 | –3 | 165 | –97, 545 |
| Net interest income | 49,042 | 0 | 1,789 | 0 | 0 | 50,831 | 13 | 0 | 50,844 |
| Income from factoring activities | 13,573 | 0 | 0 | 0 | 0 | 13,573 | 0 | 0 | 13,573 |
| Income from commission and | |||||||||
| service fee activities | 0 | 0 | 0 | 33,736 | 0 | 33,736 | 15,828 | 0 | 49,564 |
| Income from trading activities | |||||||||
| and financial instruments | 0 | 15,178 | 4,898 | 0 | 0 | 20,076 | 440 | –140 | 20,376 |
| Other ordinary income | 410 | 0 | 0 | 0 | 0 | 410 | 182 | 0 | 592 |
| Expected credit loss | |||||||||
| (expenses)/recovery | 4,273 | 0 | 0 | 0 | 0 | 4,273 | 0 | 0 | 4,273 |
| Total segment income | 67, 298 | 15,178 | 6,687 | 33,736 | 0 | 122,899 | 16,463 | –140 | 139,222 |
| Expenses | |||||||||
| Personnel expenses | 0 | 0 | 0 | 0 | –11, 590 | –11, 590 | –12,145 | 0 | –23,735 |
| Other administrative expenses | 0 | 0 | 0 | 0 | –13,131 | –13,131 | –2,137 | 0 | –15,268 |
| Amortisation | 0 | 0 | 0 | 0 | –1,144 | –1,144 | –874 | 0 | –2,018 |
| Other ordinary expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Segment expenses | 0 | 0 | 0 | 0 | –25,865 | –25,865 | –15,156 | 0 | –41,021 |
| Segment result | 67, 298 | 15,178 | 6,687 | 33,736 | –25,865 | 97,034 | 1,307 | –140 | 98,201 |
| Income tax expenses | 0 | 0 | 0 | 0 | –18,847 | –18,847 | –119 | 0 | –18,966 |
| Deferred taxes | 0 | 0 | 0 | 0 | –131 | –131 | –35 | 0 | –166 |
| Net profit for the year | 67, 298 | 15,178 | 6,687 | 33,736 | –44,843 | 78,056 | 1,153 | –140 | 79,069 |
Annual Report 2023 Würth Finance Group
42
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 credit loss | |||||||||
| (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 | 0 | 0 | 0 | 0 | –10,857 | –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 | 0 | 0 | 0 | 0 | –22,758 | –22,758 | –13,898 | 0 | –36,656 |
| Segment result | 42,534 | 17, 250 | –5,525 | 34,029 | –22,758 | 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 | 42,534 | 17, 250 | –5,525 | 34,029 | –34,540 | 53,748 | 748 | –92 | 54,404 |
43
Balance sheet by segment at 31 December 2023
| 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 | 4,032,222 | 19,928 | 115,349 | 0 | 35,789 | 4,203,288 | 8,750 | -62,040 | 4,149,998 |
| Segment liabilities | 3,746,599 | 25,518 | 22,637 | 0 | 408,534 | 4,203,288 | 8,750 | -62,040 | 4,149,998 |
| Additional segment | |||||||||
| information | |||||||||
| Capital expenditures | 8 | 0 | 0 | 0 | 0 | 8 | 327 | 0 | 335 |
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 |
Annual Report 2023 Würth Finance Group
44
Würth Finance International B.V.
FINANCIAL STATEMENTS 2023
45
Annual Report 2023 Würth Finance Group
Company income statement
for the year ended at 31 December
in TEUR
Notes
2023
2022
Net income
20
65,432
68,766
Other operating income
13
410
553
Total operating income
65,842
69,319
Wages and salaries
31
–10,653
–10,050
Social security charges
–937
–807
Amortisation of intangible and tangible fixed assets
21
–1,144
–1,132
Other operating expenses
32
–13,035
–10,715
Total operating expenses
–25,769
–22,704
40,073
46,615
Financial income
24
147, 576
87,949
Impairments of assets
18a
4,273
–4,615
Financial expenses
24
–97, 473
–58,698
Profit before taxes
94,449
71,251
Income tax expense
–18,634
–12,636
Share in result from participating interests
22
3,254
–4,211
Net profit for the year
79,069
54,404
Company balance sheet
for the year ended at 31 December
Before appropriation of profit
in TEUR
Notes
2023
2022
ASSETS
Non-current assets
Intangible assets
Software
21
0
0
Right-of-use assets
Right-of-use land and buildings
21
1,361
1,289
Property, plant and equipment
Operating equipment and furnishings
21
87
149
Financial assets
Participations in Group companies
22
32,017
30,674
Loans to related companies
4, 23
1,389,770
1,554,992
Positive fair values of derivative instruments
18b, 18c
10,193
14,894
Deferred tax assets
25
1,265
1,651
Total non-current assets
1,434,693
1,603,649
Current assets
Receivables from related companies
23
1, 337,668
1,385,924
Positive fair values of derivative instruments
18b, 18c
9,785
6,625
Other assets
26
4,458
1,781
Accrued income and prepaid expenses
11,340
11, 598
Securities at amortised cost
7
112,949
0
Securities at fair value through profit or loss
6, 18a
44,865
31,055
Cash
1,191,521
804,747
Total current assets
2,712,586
2,241,730
Total assets
4,147,279
3,845,379
46
in TEUR
Notes
2023
2022
EQUITY AND LIABILITIES
Shareholders’ equity
Issued capital
16,000
16,000
Additional paid-in capital
5,000
5,000
Retained earnings
353,834
325,810
Net profit for the year
79,069
54,404
Total shareholders’ equity
29
453,903
401,214
Provisions
Liabilities for pension plans
14
2,487
1,154
Total provisions
2,487
1,154
Non-current liabilities
Bonds issued
27
2,149,847
2,109,593
Lease liabilities
240
229
Negative fair values of derivative instruments
18b, 18c
12,896
12,442
Total non-current liabilities
2,162,983
2,122,264
Current liabilities
Commercial paper
0
75,000
Payables to related companies
23
1,479,753
1,197,954
Lease liabilities
1,139
1,068
Payables to banks
30
5,731
6,589
Income tax payables
15
12,237
9,135
Negative fair values of derivative instruments
18b, 18c
12,693
7, 565
Other liabilities
28
6,973
12,980
Accrued expenses and deferred income
9,380
10,456
Total current liabilities
1,527,906
1,320,747
Total equity and liabilities
4,147,279
3,845,379
47
Annual Report 2023 Würth Finance Group
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
Information on the use of financial instruments and on relat-
of the Dutch Civil Code the accounting policies used are the
ed risks for the Group was provided in the notes to the con-
same as those used in the notes to the consolidated Financial
solidated Financial Statements.
Statements, prepared under IFRS as adopted by the Euro-
pean Union, unless stated otherwise below. The Financial
The company Financial Statements were presented in EUR
Statements were prepared on 24 April 2024. Where the
thousands unless otherwise stated.
notes in the company Financial Statements were similar to
the notes in the consolidated Financial Statements we refer
Changes in accounting policies
to the notes in the consolidated Financial Statements.
For details of changes in accounting policies, please refer to
the consolidated accounting principles.
Participations in related companies
Investments in subsidiaries are valued using the net asset
The company made use of the option to eliminate intercom-
value method, determined by applying the IFRS accounting
pany expected credit losses against the book value of loans
policies as described in the consolidated Financial State-
and receivables to Group companies, instead of elimination
ments. Under this method, subsidiaries are carried at the
against the investments in Group companies.
company’s share in their net asset value plus its share in the
results of the subsidiaries and its share of changes recog-
Equity interests
nised directly in the equity of the subsidiaries as from the
Parent company
acquisition date, determined in accordance with the IFRS
Würth Finance International B.V., Amsterdam, is the parent
accounting policies disclosed in the consolidated Financial
company of the companies as listed below and includes the
Statements, less its share in the dividend distributions from
financial data of these companies in its consolidated Financial
the subsidiaries. The company’s share in the results of the
Statements, copies of which are available at cost from the
subsidiaries is recognised in the income statement. Since no
head office of Würth Finance International B.V., Amsterdam.
the distribution of profits is not subject to restrictions, no legal
reserve is included.
Fully consolidated companies
• Würth Financial Services AG, Rorschach, Switzerland:
In connection with this, any long-term interests that, in
wholly owned subsidiary (2022: 100%)
substance, form part of the investor’s net investment in the
subsidiary are included.
• Würth Invest AG, Chur, Switzerland:
wholly owned subsidiary (2022: 100%)
The percentages stated represent the equity interests held.
48
Notes to the company Financial Statements
for the year ended at 31 December
20 Net income
The net income consist out of income from factoring activities amounting to TEUR 13,573 (2022: TEUR 17,733), commission
and service fee activities amounting to TEUR 34,406 (2022: TEUR 34,129) and trading activities amounting to TEUR 17,453
(2022: TEUR 16,904).
21 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 2023
Additions
(disposals)
Acquisition incl. asset Acquisition
Accum.
Asset Amortisation
Accum.
Net book
cost retirement cost amortisation retirement for the year amortisation
value
in TEUR
2022
2023
2023
2022
2023
2023
2023
2023
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
4,941
1,146
6,087
–3,652
0
–1,074
–4,726
1,361
Total right-of-use assets
4,941
1,146
6,087
–3,652
0
–1,074
–4,726
1,361
Property, plant and equipment
Vehicles
442
0
442
–345
0
–50
–395
47
Art objects
34
0
34
0
0
0
0
34
Office equipment/installations
590
–53
537
–572
61
–20
–531
6
Total property, plant and equipment
1,066
–53
1,013
–917
61
–70
–926
87
Total
7, 477
1,093
8,570
–6,039
61
–1,144
–7,122
1,448
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
49
Annual Report 2023 Würth Finance Group
22 Participations in Group companies
in TEUR
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
Net book value at 1 January 2023
30,674
OCI
–1,911
Share in profit/(loss) of participating interests
3,254
Net book value at 31 December 2023
32,017
23 Transactions with related parties
Related party transactions were based on arm’s length terms and conditions.
At 31 December 2023
Parent
Associated
in TEUR
Total
companies
Subsidiaries
companies
Receivables from related parties
Loans to related companies
1,389,770
0
0
1,389,770
Receivables from related companies
1, 337,668
11, 457
39,900
1,286,311
Current accounts
479,121
0
669
478,452
Short-term loans
649,531
0
39,231
610,300
Factoring
209,016
11, 457
0
197, 559
Total receivables from related parties
2, 727, 438
11, 457
39,900
2,676,081
Payables to related parties
Payables to related companies
1,479,753
598,164
4,992
876,597
Current accounts
832,339
198,164
2,841
631,334
Fixed-term deposits
647, 414
400,000
2,151
245,263
Other payables to related parties
847
0
0
847
Total payables to related parties
1,480,600
598,164
4,992
877,444
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 companies
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
50
24 Interest income and expenses
At 31 December 2023
in TEUR
Total
Parent Subsidiaries Associated Third parties
Interest income
Interest income from financing activities at amortised cost
68,690
0
0
68,660
30
Interest income from financing leasing activities at amortised cost
3,118
0
0
3,118
0
Interest income from liquid assets at amortised cost
53,951
5
149
29,104
24,693
Interest income from current accounts
29,258
5
149
29,104
0
Interest income from bank accounts, time deposits and money market funds
24,693
0
0
0
24,693
Interest income from financial instruments at fair value through profit or loss
21,817
0
0
4,613
17,204
Interest income from interest rate and cross-currency swaps
20,524
0
0
4,613
15,911
Other interest income from financial instruments
1,293
0
0
0
1,293
Total interest income
147, 576
5
149
105,495
41,927
Interest expenses
Interest expenses for current accounts and time deposits
34,663
12,187
16
22,434
26
Interest expenses for bonds issued
38,108
2,769
0
0
35,339
Interest expenses from financial instruments
23,988
404
0
5,683
17,901
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
21,998
0
0
4,556
17, 442
Other interest expenses from financial instruments
1,990
404
0
1,127
459
Other interest expenses (third parties)
714
0
0
3
711
Total interest expenses
97, 473
15,360
16
28,120
53,977
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 or loss
15,693
0
0
5,011
10,682
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
51
Annual Report 2023 Würth Finance Group
25 Income tax expense
in TEUR
2023
2022
Deferred tax assets on cash flow hedges
1,265
1,651
Deferred tax assets
1,265
1,651
For other details see the consolidated Financial Statements, Note 15 Income tax.
26 Other assets
in TEUR
2023
2022
Receivables from third parties
4,301
1,605
Other assets
157
176
Total other assets
4,458
1,781
27 Bonds issued
For details see the consolidated Financial Statements, Note 8 Bonds issued.
28 Other liabilities
in TEUR
2023
2022
Payables for deliveries and services
2,629
8,793
of which to third parties
1,782
651
of which to related parties
847
8,142
Compensation-related liabilities
3,222
3,137
Other liabilities
1,122
1,050
Total other liabilities
6,973
12,980
Other accrued expenses and deferred income primarily comprise accruals for services received but not invoiced during the
financial year.
52
29 Equity
Foreign
Issued
Additional
Retained
Cash flow
currency
in TEUR
capital paid-in capital
earnings hedge reserve
translation
Total
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
At 1 January 2023
16,000
5,000
387, 503
–7, 327
38
401,214
Net profit for the year
0
0
79,069
0
0
79,069
Foreign currency translation
0
0
0
0
141
141
Cash flow hedge accounting
0
0
0
2,304
0
2,304
Remeasurement gain /(loss) on defined benefit plans
0
0
–3,439
0
0
–3,439
Deferred taxes on cash flow hedges
0
0
0
–386
0
–386
Total comprehensive income for the year
0
0
75,630
1,918
141
77, 689
Dividend payments
0
0
–25,000
0
0
–25,000
At 31 December 2023
16,000
5,000
438,133
–5,409
179
453,903
The Board of Directors proposed to allocate the net income of TEUR 79,069 to retained earnings.
30 Payables to banks
The payables to banks refers to current account debt.
53
Annual Report 2023 Würth Finance Group
31 Personnel expenses
The average number of staff (in FTEs) employed by the com-
In 2023 and 2022, no other forms of compensation
pany in 2023 was 67 (2022: 64), of whom 51 were work-
(post-employment benefits or other long-term benefits,
ing outside the Netherlands (2022: 49).
termination benefits, share-based payments) were paid to
key management.
The key management comprised the Managing Directors of
the company.
In financial year 2023, fees of TEUR 350 were paid to
members of the Board of Directors (2022: TEUR 320).
Remuneration for the Managing Directors of the company
totalled TEUR 1,579 in the year 2023 (2022: TEUR 1,089).
For more details see the consolidated Financial Statements,
Note 14 Personnel expenses.
32 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
2023
2022
Ernst & Young
Audit of the Financial Statements
280
270
Other audit engagements
52
110
Total
332
380
The fees stated above for the audit of the Financial Statements are based on the total fees for the audit of the 2023 Financial
Statements, regardless of whether the procedures were already performed in 2023.
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, 24 April 2024
B. van Odijk ¹
R. Fust
P. Guzinski
Managing Director
Managing Director
Managing Director
¹ The original set of this annual report has not been signed by B. van Odijk due to illness, as of the signing date 24 April 2024.
55
Annual Report 2023 Würth Finance Group
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 2023
included in the annual report
Our opinion
We have audited the financial statements 2023 of Würth Finance International B.V. based in Amsterdam, the Netherlands.
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 2023 and of its result and its cash flows for 2023 in accordance with International Financial
Reporting Standards as adopted by the European Union (EU-IFRSs) 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 2023 and of its result for 2023 in accordance with Part 9 of Book 2 of the Dutch Civil Code
The consolidated financial statements comprise:
• the balance sheet as at 31 December 2023
• the following statements for 2023: the income statement, the statement of comprehensive income, the statement of changes
in equity and the cash flow statement
• the notes comprising material accounting policy information and other explanatory information
The company financial statements comprise:
• the company balance sheet as at 31 December 2023
• the company income statement for 2023
• 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 10.7 Million (2022: EUR 10.5 Million)
Benchmark applied
0.5% of total amount of bonds issued as at 31 December 2023
Explanation
We determined materiality based on our understanding of the company’s
business and our perception of the financial information needs of users of
the financial statements. We considered that total amount of the issued
bonds is the most appropriate benchmark to reflect the primary
operations of the company. We determined materiality consistent with
prior financial year.
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, included the appropriate skills and competences
which are needed for the audit of a listed finance company. We have made use of specialists in the area of income tax.
57
Annual Report 2023 Würth Finance Group
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 in 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 the managing directors’ process for responding to the risks of fraud and monitoring the
system of internal control and how the board of directors exercises oversight, as well as the outcomes.
We refer to Section “Risk management and control” of the annual report for the managing directors’ 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 of the Würth Group and the SpeakUp reporting system. 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 and
misappropriation of assets. 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.
We addressed the risks related to management override of controls, as this risk is present in all companies. For these risks we
have performed procedures among other things 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 “Assumptions and estimates” in Note 2 to the consolidated financial statements, including the
expected credit losses.
Furthermore, we have used data analysis to identify and address high-risk journal entries and evaluated the business rationale
(or the lack thereof) of significant extraordinary transactions and transactions with related parties. We also evaluated whether
transactions with related parties were accounted for at-arm’s length and in accordance with transfer pricing documentation.
We did not identify a risk of fraud in revenue recognition, other than the forementioned risks related to management override of
controls.
We considered available information and made enquiries of relevant managing directors, internal audit, legal, compliance,
the group auditor of Würth Group and the board of directors.
The fraud risks we identified, enquiries and other available information did not lead to specific indications for fraud or suspect-
e
d 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 written
representations 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” in 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 financial
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 inade-
quate, 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 comprehensiv
e
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 2023 the loans to related companies
Our audit procedures included, amongst others,
Based on procedures performed, we did not identify
amount to EUR 1,390 million, the receivables from related
evaluating the appropriateness of the company’s
evidence of material misstatement in the valuation of loans to
companies amount to EUR 1,298 million and the allowance accounting policies related to recognition of expected
related companies and receivables from related companies.
for expected credit losses amounts to EUR 4,8 million.
credit losses in accordance with of IFRS 9 “Financial
Instruments”. We evaluated whether the accounting
The allowance for expected credit losses represent the
policies and methods applied for making estimates have
company’s best estimate of expected credit losses (ECL) on been applied consistently. We also evaluated the design
these loans and receivables at balance sheet date. The
of internal controls of the processes underlying the
company records an allowance for ECL for all loans. In
estimation process insofar relevant to our audit of the
accordance with IFRS 9, a three-stage model is used to
financial statements.
calculate the ECL, which takes into account the change in
credit quality since initial recognition using different
We have performed the following substantive procedures
impairment models. A shift from Stage 1 to Stage 2 reflects with respect to the correct calculation
a significant increase in credit risk. The ECL allowance is
of the allowance for expected credit losses:
based on the credit losses expected to arise over the life of
•
Confirming our understanding of the company’s data,
the asset, unless there has been no significant increase in
assumptions and method used to determine the
credit risk since origination, in which case the allowance is
expected credit losses on the loans to related
based on the 12 months’ expected credit losses. The ECL
companies and receivables from related companies.
calculation is probability-weighted using a combination of
•
We verified that management measured the allowance
probability of default (PD), exposure at default (EAD) and
for expected credit losses, taking into consideration the
loss given default (LGD). The LGD applied is 60%, based on
external credit rating of Würth Group and events
input from Moody’s and Bloomberg. The PD is based on the
subsequent to 31 December 2023.
PD of Würth Group as stated in the Global Corporate
•
Recalculation of the expected credit losses and
Average Cumulative Defaults Rates from Bloomberg as at
challenging the key assumptions in the model, i.e. the
31 December 2023, and pro rata calculated based on the
probability of default and loss given default rates. For
remaining term of the loans. Furthermore, loans to related
the year-end expected credit losses we have
companies have been granted a credit limit and are
evaluated the appropriateness of the LGD benchmark
constantly monitored, as disclosed in note 18 Financial
used and verified the PD used with the Global
instruments and risk management.
Corporate Average Cumulative Defaults Rates from
Bloomberg.
The loans to related companies and receivables from
related companies are material to the company’s balance
We have performed the following substantive procedures
sheet and we considered the related estimation uncertainty with respect to the correct staging to stage 1, stage 2
on expected credit losses.
(significant increase in credit risk) or stage 3 (objective
As such, we consider this a key audit matter.
indications of impairment):
•
Evaluation of the financial ability and determining that
The accounting principles and IFRS 9 disclosure on
the related companies have met their financial
impairment calculation and transactions with related
obligations towards to Würth Finance International
parties, including the expected credit losses, are disclosed
B.V. through the year by inspecting the net
in note 2 Accounting principles, note 4 Loans to related
indebtedness and equity levels as well as repayments
parties and note 18 Financial instruments and risk
of related party companies.
management.
•
We have inspected letters of comfort from
superordinate parent companies that guarantee the
outstanding amounts in the situation the related party
defaults.
•
Evaluation of the creditworthiness of those
superordinate parent companies that issued the letters
of comfort.
Evaluation of the accuracy and completeness of the
related disclosures in accordance with the relevant
paragraphs and application guidance of IFRS 7:
“Financial instruments: disclosures”
59
Annual Report 2023 Würth Finance Group
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.
The managing directors are 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.
The managing directors are responsible for preparing the annual report, including the financial statements, in accordance with
the RTS on ESEF, whereby the managing directors combine 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 accord-
ance 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 the managing directors and the board of directors for the financial statements
The managing directors are responsible for the preparation and fair presentation of the financial statements in accordance
with EU-IFRSs and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the managing directors are responsible for such
internal control as the managing directors determine 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, the managing directors are responsible for assessing the company’s ability
to continue as a going concern. Based on the financial reporting framework mentioned, the managing directors should prepare
the financial statements using the going concern basis of accounting unless the managing directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so. The managing directors 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 appro-
priate 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 dis-
closures made by the managing directors
• 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
61
Annual Report 2023 Würth Finance Group
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, 24 April 2024
Ernst & Young Accountants LLP
Signed by P. Sira
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