Annual report 2006 - Dexia.com

Customer Relationships: EUR 62 million
This intangible asset has been valued with the Multi-Period
Excess Earnings Method.
Excess earnings can be defined as the difference between the
net operating cash flow after tax attributable to the existing
customers at the acquisition date and the required cost of
invested capital on all the other assets (contributory assets such
as fixed assets, core deposits, trade name, assembled workforce)
used in order to maintain the customer relationship.
Value is estimated through the sum of the discounted future
excess earnings attributable to these customers over the
remaining lifespan of the customer relationship.
The useful life of this intangible asset has been estimated to
8 years.
Impact of unallocated goodwill as of October 17, 2006
The tax rate in Turkey being 20%, the net of tax amount of
identified intangible assets amounts to EUR 191 million, or
TRY 352 million.
The remaining unallocated goodwill then stands at EUR 1,310
million, or TRY 2,411 million.
As from this date, the value of all assets and liabilities, including
identified intangible assets and unallocated goodwill, will
vary with the TRY exchange rate.
As this calculation has been done based on financial statements
with accounting rules and methods which are not yet
fully harmonized with Dexia accounting principles their value
may still change within the twelve months after the business
combination.
Financing of the purchase of DenizBank
To finance the acquisition of DenizBank, Dexia proceeded
with a share capital increase (EUR 1,2 billion), issued EUR
500 million of Perpetual Non-cumulative Guaranted Securities
qualifying as Regulatory Tier 1 capital and sold some stakes in
participations. Details of those transactions are reported in the
related notes to the financial statements.
DenizBank group contributed to net income attributable to
Dexia shareholders for EUR 32 million for the period from October
17 to December 31, 2006.
Acquisition of minority interests of DenizBank due to a
mandatory tender offer.
Dexia had no call options nor written puts towards the minority
shareholders at the moment of the business combination.
By taking the control of DenizBank, Dexia was required by Turkish
law to launch a mandatory tender offer on the remaining
shares of DenizBank listed on the Istanbul Stock Exchange. Compliant
to this law the timing, conditions and the fixing of the price
were taken out of the control of Dexia management. There was
no certainty about the result of this tender, as the remaining
shareholders had the choice to bring, or not, their shares to
the tender.
The tender started on December 4, 2006 and closed on December
22, 2006. The price was paid in TRY and Dexia hedged the risk of
fluctuation of the purchase price in TRY until the payment.
At the end of the tender, the shareholding of Dexia stood then
at 99.74%. This percentage remained unchanged since December
31, 2006.
The price paid for the shares acquired in the mandatory tender
offer has been compared with the percentage of equity
acquired as of December 31, 2006.
The purchase of minority interests was considered as a transaction
between shareholders and the difference between the
price paid and the equity acquired has been recorded as a
movement between Group equity and minority interests since
Dexia is applying the economic entity model.
This accounting treatment is disclosed in the Dexia accounting
rules (see point 1.22.1. – Positive Goodwill) and has been consistently
applied since the conversion of Dexia to IFRS.
In order to allow the comparison with companies having used
an alternative accounting treatment, the following additional
information is provided:
In millions of EUR
RAPPORT DE GESTION
CONSOLIDATED
FINANCIAL STATEMENTS
COMPTES SOCIAUX
Part of equity purchased (23.89%), including Q4 2006 result: 210
Price paid, including costs and hedging: 618
Difference between purchase consideration paid and equity acquired: 408
This amount of EUR 408 million has been deducted from the Group core shareholders’ equity, and is reported in the line
“Variation in scope of consolidation“ in the Statement of change in equity document.
B. Main disposals
Year 2005
On December 1, 2005 the Group disposed of 100% of the
share capital of Eural Banque d’épargne SA.
It was the only significant disposal in 2005.
Year 2006
On December 28 , 2006 the Group disposed of 100% of the
share capital of Banque Artesia Nederland.
It was the only significant disposal in 2006.
Dexia / Annual Report 2006 | 183