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A NNUAL R EPORT 2005


Binck’s 2005 annual report and accounts relate to three business units: Retail, Wholesaleand Trading. Since 1 January 2006, the activities of the Wholesale business unit and theservices provided for professional clients by the Retail business unit have been transferredto a new business unit, Professional Services. As from 1 January 2006, therefore, Binck’sfinancial reporting will relate to the Retail, Professional Services and Trading business units.The Wholesale business unit is no longer referred to in the section entitled ‘Profile, missionand strategy’. More information on the reorganisation and the new Professional Servicesbusiness unit can be found in the sections ‘Chairman’s letter’, ‘Report of the managementboard’, ‘Report of the supervisory board’ and ‘Personnel and organisation.’This document is a translation of the Dutch original and is provided as a courtesy only.In the event of any disparity the Dutch version shall prevail. No rights may be derived fromthe translated document.


1ContentsProfile, mission and strategy ......................................................................................................................................2Results in brief ................................................................................................................................................................3Key figures 2005 ............................................................................................................................................................4Chairman’s letter ...........................................................................................................................................................6Shareholder information .............................................................................................................................................8Important events of 2005 ...........................................................................................................................................11Report of the Management Board ..........................................................................................................................15Report of the Supervisory Board .............................................................................................................................26Corporate governance ................................................................................................................................................32Risk management ......................................................................................................................................................40In control statement ..................................................................................................................................................44Personnel and organisation ......................................................................................................................................46A n n u a l R e p o r t 2 0 0 5Financial statements 2005 Binck N.V.Consolidated balance sheet......................................................................................................................52Consolidated income statement..............................................................................................................53Consolidated cash flow statement .........................................................................................................54Consolidated statement of changes in equity ....................................................................................56Notes to the consolidated financial statements .................................................................................57Notes to the consolidated balance sheet .............................................................................................65Notes to the consolidated income statement.....................................................................................76Financial risk management ......................................................................................................................87Company balance sheet.............................................................................................................................91Company income statement....................................................................................................................92Company statement of changes in equity ...........................................................................................93Notes to the company financial statements.......................................................................................94Notes to the company balance sheet ....................................................................................................95Other informationAuditors’ report ..........................................................................................................................................103Statutory provisions in respect of priority shares(Articles 15 and 21 of the Articles of Association)..............................................................................104Statutory provisions in respect of appropriation of profit(Article 32 of the Articles of Association) ............................................................................................104Proposal for appropriation of the result..............................................................................................105


A n n u a l R e p o r t 2 0 0 5 2Profile, mission and strategyBinck corporate profileBinck provides securities services for different types ofinvestor. Its operations are split into three businessunits: Retail, Professional Services and Trading.Within the Retail business unit, BinckBank operates asan internet broker for private investors.Services for external independent investmentmanagers and stockbrokers, including banking servicesand securities order execution, are provided by theprofessional services business unit.The Trading business unit trades for its own account inequities, bonds and derivatives.MissionBinck’s mission is to provide investors with fullyautomated, cost-effective and high-quality onlineaccess, supported by its securities brokerage andtrading expertise, to international stock markets.We intend to retain our position as an independentspecialist and combine it with healthy growth,guided at all times by the interests of our clients,shareholders and staff.StrategyBinckBinck’s business strategy is to provide fast, effectiveand low-cost access to the leading stock exchangesaround the world for private, professional andinstitutional investors. This strategy relies on a highlevel of automation, and Binck aims to distinguishitself in this area from the majority of financialservice providers, in particular those in theNetherlands. Binck works constantly to ensuremaximum synergy between all of the business units,principally by sharing expertise, infrastructure andcosts.RetailWithin the Retail business unit, services for privateclients are provided by BinckBank. Its strategy in thismarket is to provide a wide range of high-qualityservices at very low rates. The client is central toBinckBank’s operation and client opinion is decisivewhen it comes to introducing new products orfurther upgrading its services.Professional ServicesWithin the Professional Services business unit,services for professional clients (investmentmanagers and stockbrokers) are also provided byBinckBank. Professional Services’ strategy is to offer acomprehensive range of services of high quality,based on an integrated online administration andtrading application. BinckBank both executes ordersinstructed by these clients and provides a completerange of fully automated securities administrationand reporting services. Professional Services aims tocombine high quality, low rates and an exceptionalstandard of service.TradingThe Trading business unit trades solely for its ownaccount and risk. Using automated systems andquantitative analysis software, the business unitseeks to maintain an edge over the average player.Trading focuses on specific markets where anattractive return on the invested capital can beearned at an acceptable level of risk. Its activities aresubject to a system of internally set limits. We aim tolimit the total investment in trading activities to 33%of the available capital.


3Results in briefNet profit in 2005 amounted to €13.6 millioncompared with €2.8 million in 2004, to which theRetail business unit made the largest contribution of€10.7 million. The Wholesale business unit reported aloss after corporation tax of €0.8 million. The 2005profit figure includes non-recurring income in theform of a liquidation payment from Vereniging voorde Effectenhandel (VvdE) of approximately €580,000and income from minority interests of approximately€80,000 in the period prior to the acquisition of theminority interest in AOT België N.V. It also includes anon-recurring release of approximately €700,000from tax provisions in favour of the Trading businessunit.When comparing the result with the 2004 figure, itshould be noted that the Trading business unit’sprofit for that year was adversely affected bysubstantial non-recurring reorganisation charges.The greatly improved result can be attributed mainlyto the rapid expansion of the client base, the hightransaction volume generated in Retail, the explosivegrowth in funds entrusted (and, consequently, thesubstantially wider interest margin) and the positiveresult achieved by Trading. Total revenues werealso substantially higher, rising to €50.2 million in2005 compared with €40.0 million in 2004, whileexpenses were lower, falling to €31.5 million in 2005as against €35.1 million in 2004.To keep the company’s growth on track, Binck continuedto invest – as it had in 2004 – in its systemsand organisation. Investments in property, plant andequipment totalled €1.6 million in 2005, comparedwith €2.0 million in 2004.Income statement 2005 2004 2003 2002 2001(€ 1,000,-)Revenues 50,191 39,965 24,556 27,412 65,585Expenses (31,521) (35,051) (39,186) (44,072) (45,345)Operating profit before income tax 18,670 4,914 (14,630) (16,660) 20,240Income tax expense (5,142) (1,606) 5,259 7,793 (6,815)A n n u a l R e p o r t 2 0 0 5Profit for the year 13,528 3,308 (9,371) (8,867) 13,425Minority interests 81 (500) (906) (566) 46Net profit 13,609 2,808 (10,277) (9,433) 13,471Employees at year-end 170 187 272 289 308When comparing the results for the years 2001–2005, it should be noted that the figures for the years 2001–2003 have not been prepared in accordance with IFRS.


Key figures 2005Financial information by business unit (x € 1,000)Retail Wholesale Trading Total2005 2004 2005 2004 2005 2004 2005 2004Interest 5,893 2,844 29 59 103 61 6,025 2,964Income from securities and participatinginterests 7 (8) 2,754 (1) 2,754Commission 21,354 11,389 1,215 4,012 22,569 15,401Finance income 269 55 21,274 18,846 21,598 18,846Total revenue 27,523 14,233 1,299 4,071 21,369 21,661 50,191 39,965Salaries and employee benefits (5,354) (3,863) (1,726) (1,853) (13,594) (16,252) (20,674) (21,968)Amortisation and depriciation (1,124) (623) (206) (202) (307) (1,370) (1,637) (2,195)Other operating expenses (5,405) (3,916) (560) (1,322) (3,245) (5,650) (9,210) (10,888)Total expenses (11,883) (8,402) (2,492) (3,377) (17,146) (23,272) (31,521) (35,051)Operating profit before income tax 15,640 5,831 (1,193) 694 4,223 (1,611) 18,670 4,914Income tax expense (4,927) (2,036) 376 (131) (591) 561 (5,142) (1,606)Profit for the year 10,713 3,795 (817) 563 3,632 (1,050) 13,528 3,808A n n u a l R e p o r t 2 0 0 5 4Minority interests 81 (500)Net profit 13,609 2,808


5C HAIRMAN’ S LETTERS HAREHOLDER INFORMATIONI MPORTANT EVENTSA n n u a l R e p o r t 2 0 0 5


Chairman’s letterA n n u a l R e p o r t 2 0 0 5 6Dear shareholder,On behalf of the Management Board, we herebypresent our report on the company’s results in 2005.2005 was a very good year for Binck N.V. in allrespects. The organisational changes made inprevious years in the course of implementing of ourstrategy have created a solid financial base. With anefficient structure and highly automated businessprocesses, we are now growing rapidly while keepingcosts tightly under control. In 2005, our strategyyielded an exceptionally good net profit of €13.6million.As in 2004, the Retail business unit made the largestcontribution to profit in 2005. Retail significantlystrengthened its commercial position last year andfurther upgraded its core product – online brokeragefor private investors – with the addition of severalinnovative features. We see evidence of a growingtrend in consumer demand towards good quality atlow cost. This heightened cost and quality awarenessis prompting more and more private investors toswitch to BinckBank, and this was reflected in growthof no less than 65% in BinckBank’s client base lastyear. Encouraged by the positive stock marketsentiment, our clients were also very active in 2005.Faced with changing conditions on the institutionalmarket and increasing competition, which translatedinto lower margins, the Wholesale business unit wasunable, despite its untiring efforts, to achieve itsprofit target. In view of the sustained decline inWholesale’s results, with little prospect ofimprovement, it was decided to embark on areorganisation and lower our aspirations for thebusiness unit. Wholesale’s activities have now beentransferred to a new Professional Services businessunit, which will cater for our professional clients.More details are given in ‘Report of the ManagementBoard’.reorganisation exercises undertaken in recent years,again posted an excellent result in 2005. Through itscombination of disciplined trading, a high level ofrisk-awareness and specific trading strategies,coupled with a propitious stock market climate, thebusiness unit made a substantial contribution toprofit.Steps were taken in 2005 to expand our clientservices into Belgium, and early this year our branchin Antwerp will open for business. We share ourBelgian team’s enthusiasm and are looking forwardto a successful future there for Binck.Since the adoption of a more structured investorrelations policy, which we announced in 2005, Binckshares have been covered officially by the analysts ofthree leading players, our website has been updatedand we shall be providing more comprehensiveinformation by publishing quarterly reports as from2006. There will also be webcasts of the conferencecalls with analysts when our half-year and full-yearfigures are published, and of the Annual GeneralMeeting of Shareholders on 27 March.Binck N.V. has developed far faster than expected intoa strong business with an attractive proposition,which has necessitated a number of managementand organisational changes. Thierry Schaapsucceeded André Teeuw as Chairman of theManagement Board on 1 January 2006 and therehave been several management changes and relatedreallocations of responsibilities in connection withthe operational reorganisation. More details can befound on page 47. We are confident that, followingthis reorganisation, our company will be wellequipped to sustain growth in a constantly changingenvironment, in 2006 and the years beyond. As prooffor our confidence, we are proposing to invite theshareholders to approve a final dividend for 2005 of€0.16, in addition to the interim dividend of €0.06which has already been distributed.The Trading business unit, where staffing levels havebeen reduced significantly by the extensiveBinck’s excellent performance in 2005 was due firstand foremost to the confidence our clients place in us


and the energy and unconditional commitment ofour staff, on whom the success of our companydepends. The Management Board owes them a greatdebt of gratitude. The valuable advice and professionalsupervision provided by our SupervisoryBoard were also instrumental in raising our companyto a new level, for which we thank them mostsincerely. Last but not least, we thank you, ourshareholders, for your confidence and loyalty.Kind regards,André Teeuw, Chairman of the Management Boarduntil 31 December 2005Thierry Schaap, Chairman of the Management Boardsince 1 January 2006Amsterdam, 3 March 2006A n n u a l R e p o r t 2 0 0 57André Teeuw (left) and Thierry Schaap (right).


Shareholder informationBinck N.V. sharesBinck N.V. ordinary shares are listed on EuronextAmsterdam. There were 30,837,403 ordinary shares inissue on 31 December 2005. The 50 priority shares arenot listed. No new shares were issued in 2005.Authorised and issued capitalOrdinary shares Year-end 2005 Year-end 2004Authorised 100,000,000 100,000,000Issued 30,837,403 30,837,40335030025020015010050comparable activities. These are Ameritrade, E-Trade,Comdirect, Swissquote and Boursarama.Relative PricesA n n u a l R e p o r t 2 0 0 5 8Priority shares Year-end 2005 Year-end 2004Authorised 50 50Issued 50 50Binck N.V. shares, which are traded continuously onEuronext Amsterdam, were in great demand amonginvestors in 2005. The combination of robust growthin the client base, significant improvement in theresults and several new developments benefited bothshare price and turnover. Average daily turnoverincreased from 61,368 in 2004 to 214,121 in 2005. Dueto the increase in price and turnover, Binck N.V. shareswill be included in the Amsterdam SmallCap Index(AscX) as from 2 March 2006.The performance benchmark for Binck’s share price isan index composed of a number of internationalcompetitors which engage in more or less01-1-2005 1-7-2005 29-12-2005Binck AScI Index Binck Peer Group IndexBinck10,009,008,007,006,005,004,003,002,001,000,001-1-2005 1-7-2005 29-12-2005Daily share turnover in 2005High (5 August) 2,190,851Low (12 May) 11,014Average 214,121Figures per share in € 2005 2004 2003 2002 2001Profit in € 1) 4) 0.45 0.10 (0.42) (0.39) 0.55Dividend in € 0.22 0.05 - - 0.22Dividend yield in (%) 2.4 1.6 - - -Net asset value 2) 3) 1.81 1.50 1.89 2.22 2.88Year-end price 9.15 3.20 1.37 1.70 3.87Year-end price/earnings ratio 20.3 29.1 - - 7.01) Based on the average number of outstanding shares during the year.2) The 2004 profit had been adjusted downwards by € 343,000 in compliance with IFRS.3) An interim dividend of € 0.06 was paid in October 2005.4) Based on the number of shares at year-end, before proposed dividend.


9Stock options in issue on 31 December2005The following staff stock options had been issued on31 December 2005:Year of issue Exercise No. ExercisablepriceuntilDividendUnder the company’s dividend policy, 6% of thenominal value is paid on the priority shares(50 x €0.10 x 6%). The priority shareholder thendetermines what proportion of the profit is to beretained. This sum is not distributed to theshareholders, but is added to the company’s reserves.A n n u a l R e p o r t 2 0 0 52003 € 2.24 100,000 October 20072004 € 3.15 25,000 December 2009The company itself owns Binck N.V. shares, that areheld principally to operate the staff stock option plan.No staff stock options have yet been exercised.The remainder of the profit is placed at the disposalof the General Meeting of Shareholders, whichmeans that it can choose whether to distribute theremaining profit, add it to reserves or a combinationof the two. Distributions may, according to theprovisions of the Articles of Association, be paid incash or entirely or partially in ordinary shares.


A n n u a l R e p o r t 2 0 0 5 1 0The priority shareholder will place the remainder ofthe profit at the disposal of the General Meeting onlyif the total net annual profit exceeds 5% of Binck’sshareholders’ equity and only if doing so would not,in the priority shareholder’s view, reduce the company’sliquidity and capital adequacy to insufficientlevels. If, with due observance of these conditions, aproportion of the profit is placed at the disposal ofthe General Meeting, the priority shareholder willaim in principle for a payout ratio of 50% of the netearnings per share.On the above basis, an interim dividend of €0.06 (netof 25% dividend tax) was declared in 2005 as acharge on that year’s profit. This interim dividendamounted to approximately 30% of the earnings pershare for the first half of 2005. The shareholders willbe invited to approve a final dividend of € 0,16.Major shareholdersTwo shareholders disclosed interests of over 5%pursuant to the Major Holdings in Listed CompaniesDisclosure Act (Wet Melding Zeggenschap in terbeurze genoteerde vennootschappen) as at31 December 2005. These were Boron Investments(10.2%) and J. Kluft (5.0%).As announced in the prospectus of 21 April 2004, theshareholdings of Kalo Bagijn and Thierry Schaap aresubject to lock-up arrangements. Pursuant to theprovisions of the Major Holdings in Listed CompaniesDisclosure Act as it applies to Management Boardand Supervisory Board members and in accordanceDividend historywith those arrangements, the personal holdingcompanies of Kalo Bagijn and Thierry Schaap gavenotification of a sales transaction on 8 November2005, relating to all of the 650,000 Binck N.V. sharesavailable for sale. The sale was effected after consultationwith the company. The shares were placeddirectly with a major investor. The remaining holdingof Kalo Bagijn and Thierry Schaap together amountsto 6.3%.Financial calendar 200627 March 2006 15:00 General Meetingof Shareholders18 April 2006 08:00 Publication offirst-quarterfigures1 August 2006 08:00 Publication ofhalf-year figures1 November 2006 08:00 Publication ofthird-quarterfiguresInvestor RelationsJonneke van StaverenTel: +31 20 522 0372Fax: + 31 20 320 4176e-mail: IR@binck.cominternet: www.binck.comDividend EPS EPS in %2005* € 0.22 € 0.45 48.90%2004 € 0.05 € 0.10 45.45%2003 € 0.00 (€ 0.42) 0.00%2002 € 0.00 (€ 0.39) 0.00%2001 € 0.22 € 0.55 40.00%* Subject to the approval of the General Meeting of Shareholders.


Important events of 200511 February BinckBank launches the new version of BinckTrader, an integrated trading, price and technicalanalysis package for highly active investors.23 March In a Beurs.nl survey, BinckBank is rated the best broker for the second year in succession. BinckBank isthe top scorer in several areas, including customer service, reliability and user-friendliness.29 April Binck N.V. acquires the remaining 42% shareholding in AOT België N.V. and liquidates the derivativesposition.1 May BinckBank launches BinckLite, the simplified version of the service package without extras such asstreaming prices and order depth, at a flat fee of €11.50 per transaction.5 August Client accounts exceed €1 billion and Binck announces an interim dividend of €0.06. The client baseincreases to over 26,500.1 September In a survey by Consumentenbond, the Dutch consumer organisation, BinckBank is rated as thecheapest broker in the Netherlands for the long-term investor. The survey also reveals that, in termsof the cost to the long-term investor, there are still wide variations between banks.19 October BinckBank announces that its client base has passed the 30,000 mark. It is also announced thatAndré Teeuw, the Chairman of the management board, is to stand down early because the businessis developing faster than expected.1 November The annual BinckBank Investment Day attracts a record number of visitors (almost 900).One innovation in 2005 is that visitors to the event can also compete for the Binck Bull & Bear Award2006.16 November BinckBank is granted a licence to open a branch of Commissie voor het Bank-, Financie- enAssurantiewezen (CBFA) in Belgium and announces that it will introduce services for Belgian privateinvestors in the first quarter of 2006.30 November The management board and supervisory board announce their intention to appoint Pieter Aartsen tothe management board at the General Meeting of Shareholders on 27 March 2006.1 1A n n u a l R e p o r t 2 0 0 514 December In Beursplaza’s survey of the services provided by online brokers, BinckBank is rated the best Dutchinternet broker.


A n n u a l R e p o r t 2 0 0 5 1 2


1 3R EPORT OF THE MANAGEMENT BOARDA n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 1 4T.C.V. (Thierry) Schaap,Chairman of the Management Board(1971 – Dutch nationality)After serving as General Manager of BinckBanksince 2000, Thierry Schaap was appointed to theManagement Board of Binck N.V. at the AnnualGeneral Meeting of Shareholders on 6 May 2004.From 1996 to 2000, he was employed by IMGHolland, where he was responsible for theInvestment Management and Research departments.In 2000 he was jointly responsible for the formationof Binck Brokers N.V. (later BinckBank). He is currentlyChairman of the Management Board of Binck N.V.,with responsibility for Finance, Operations, Trading,IAD, Risk Management, Human Resources, InvestorRelations, Legal and IT.K.J. (Kalo) Bagijn,member of the Management Board(1971 – Dutch nationality)After serving as Commercial Manager of BinckBanksince 2000, Kalo Bagijn was appointed to theManagement Board of Binck N.V. at the AnnualGeneral Meeting of Shareholders on 6 May 2004.From 1996 to 2000, he was employed by IMGHolland, ending his career with that company asHead of Private & Institutional Clients. In 2000 hewas jointly responsible for the formation of BinckBrokers N.V. (later BinckBank). He is currently amember of the Management Board of Binck N.V.,with responsibility for Retail, Professional Services,Communication and Public Relations.Number of shares Binck N.V. 978.281Number of shares Binck N.V. 978.281


A n n u a l R e p o r t 2 0 0 5 1 6We announced in our 2004 annual report that wewere contemplating a legal merger. Since then,however, the rapid growth of the business and thework that this has entailed have forced us to give thisissue a lower priority. The purpose of a legal mergerwould be to simplify the organisation and it wouldhave financial and operational repercussions. Forexample, the Trading business unit would be takeninto account in monitoring compliance with thecapital requirements imposed on banks by theNederlandsche Bank. The Management Board andSupervisory Board will resume their preliminarystudies in 2006, in preparation for an informeddecision on this matter. Any proposal relating to alegal merger will in due course be submitted to theGeneral Meeting of Shareholders for approval.Retail: services for private andprofessional investorsThe Retail business unit operates under theBinckBank label as an internet broker for privateinvestors and provides banking and securities orderexecution services for professional clients (assetmanagers and stockbrokers). This business unit isresponsible for Binck N.V.’s core activity.As from 1 January 2006, our services for professionalclients are provided by the new Professional Servicesbusiness unit, which combines the equities andderivatives brokerage activities of the formerWholesale business unit and our professional orderexecution services. The Professional Services businessunit’s target market is Dutch independent investmentmanagers and stockbrokers, of which thereare around 100.The target market for our services for private clientsis formed by independent private investors, of whomthere are around 750,000 out of a total of 1.2 millionprivate investors in the Netherlands. Of the formergroup, around 450,000 currently invest online 1 .The number of online transactions by these investorsis growing, while the number of telephone ordersdeclines. As the distinction between internet andtelephone orders becomes increasingly blurred, ourtarget market will ultimately encompass all 750,000independent private investors.With its high degree of automation and its simpleand clearly defined procedures, Retail is equipped forrapid and controlled growth. Business processeswhich cannot be fully automated are subject to clearprocedures, to ensure that expenses rise less rapidlythan revenues.BinckBank was licensed in 2005 to open a branch ofCommissie voor het Bank-, Financie- andAssurantiewezen (CBFA) in Belgium. In the firstquarter of 2006, BinckBank’s Belgian subsidiary(Binck België N.V.) will introduce a range of servicesfully tailored to the needs of the Belgian privateinvestor. Binck België also targets independentinvestment managers and stockbrokers withcustodian bank services, including execution of thecomplete order process, some back-office servicesand reporting.The branch will be staffed by a Belgian team and aDutch Management Committee chairman. It islocated in Antwerp, but uses the Dutch infrastructure,including IT and back-office functions, to keep the costbase in Belgium low. The Belgian operations areexpected to reach break-even within a few years.Internet brokerage for private investorsWithin the Retail business unit, BinckBank operatesas an internet broker for private investors, via awebsite through which clients can invest at their discretionon all the major stock exchanges. The rangeof services was expanded in 2005 to give investors awider selection from which to choose the productthat best suits their needs. Depending on their clientprofile, they can choose between BinckLite,BinckActive and BinckTraderBinckTrader employs an advanced trading systemsimilar to those used by professional investors.Trading, prices and technical analysis are fullyintegrated in the new version of BinckTrader, whichwas launched in February 2005. Technical analysis1 TNS NIPO, 2006


has been incorporated on the basis of a partnershipwith ChartNet. The result is a sophisticated tradingsystem for very active investors, offering featureswhich make it unique on the Dutch market.This was followed in April 2005 by the launch ofBinckLite, which provides basic information and givesaccess to the stock market via a simple order screen.The flat fee of €11.50 makes Binck the cheapestinternet broker in the Netherlands. AlthoughBinckLite is our most basic product, it offerssignificantly greater functionality and better qualitythan comparable products offered by ourcompetitors.BinckActive, our core product, is adapted constantlyto client requirements and market developments.2005 saw the addition of a series of newfunctionalities, both major and minor. The principalupgrades related to SMS alerts, custom design ofportfolio summaries, a help centre and BinckQuote.At the beginning of the year, we offered clients theoption of receiving SMS alerts on the basis of price,time, news and technical analysis. We later gavethem the option of fully personalising their portfoliosummaries and set up an interactive online helpcentre to answer questions about BinckBank, thewebsite and investing. Lastly, BinckQuote was addedfree of charge to BinckActive, giving investors accessto real-time streaming trade information such asprices, graphs, news, portfolio summaries and anorder screen in a single application. Binck was thefirst player in the Netherlands to offer a such anadvanced trading application free of charge. The vastmajority (over 95%) of our clients invest usingBinckActive.In February, the range of stock exchanges supportedwas expanded with the addition of several Europeanmarkets (Austria, Germany, Ireland, Italy, Portugal andSpain), followed by new trading opportunities in theBobl and Bund futures on Eurex.Following the segmentation of the product range, amore refined fee structure was introduced in August,based on sliding scales of capital and activity level.A commission refund was introduced for optionstrading, based on the number of transactionsexecuted in a quarter. The effect of lower commissionincome was more than compensated by the growthin the client base and the higher transaction volumegenerated by our clients.The multimedia campaigns used by BinckBank to winnew clients focus on its low rates, responding toconsumers’ growing price-consciousness and qualityawareness.While this trend has been in evidence forsome time among customers of telecom companies,airlines and supermarkets, clients of financial serviceproviders have become increasingly price-consciousrecently. This heightened awareness has to someextent been facilitated by the internet, which makesit easy to compare consumer products on price andquality. The consumer is no longer impressed byimage-based campaigns, in which advertisers rely onthe power of a big name, and is increasingly optingfor the best quality at the lowest cost. Our slogan‘BinckBank, not big bank’ conveys the essence of ourpositioning. Although BinckBank’s success can beattributed entirely to its combination of low pricesand high product and service quality, the emphasis ofthe campaigns is on BinckBank’s low prices comparedwith competition and the savings which can be maderelative to the transaction fees charged by the majorbanks.Price is what makes investors become BinckBankclients, but price-conscious customers are often lessthan loyal. By offering consistently high quality atlow cost, however, we aim to turn them into loyalcustomers, or even ambassadors, of BinckBank. As ameasure of our success, a large percentage of ournew customers are referred by existing clients.Although our marketing campaigns are designedprimarily to win new clients, our 2005 campaign alsohelped to raise awareness of our name. The yearlysurvey commissioned by BinckBank from NIPO 1 foundthat assisted name recognition rose last year to 62%,from 58% in 2005, spontaneous recognition improvedfrom 30% in 2004 to 41% in 2006. Binck Bank was1 7A n n u a l R e p o r t 2 0 0 51 TNS NIPO, 2006


A n n u a l R e p o r t 2 0 0 5 1 8‘top of mind’ (the first name mentioned) for 16% ofrespondents, as against 1% in 2005. Marketingexpenditure in 2005 totalled approximately €1.5million.High quality, in both products and services, is part ofour marketing strategy. From the moment a newclient joins BinckBank, our strategy is to surprise himor her with the quality of our services and our clientcentredapproach. BinckBank staff understands theimportance of quality and customer focus and alwaysput the client’s wishes first. Client focus is an integralpart of our corporate culture and a guiding principleat all levels within the company. Regular surveysshow that BinckBank clients are happy with us: 97.1%say they are satisfied or very satisfied with BinckBankin general, while 97.6% say they are satisfied or verysatisfied with us as regards client-friendliness inparticular 1 . BinckBank’s services were also included insurveys conducted by several independent externalagencies in 2005. In a survey by Consumentenbond,the Dutch consumer organisation, BinckBank wasrated as the cheapest broker in the Netherlands forthe long-term investor. A survey by Beurs.nl foundthat BinckBank provided the best services and wewere rated in a Beursplaza survey as the best Dutchinternet broker.All BinckBank’s competitors in the Dutch financialservices market may be major banks, but we have aunique proposition which they cannot match. Apartfrom the fact that BinckBank is the only independentplayer whose core business is online brokerage, themajor banks are proving incapable of achieving thesame quality at such low prices. Although ourcompetitors have tried to match BinckBank on price,the major banks’ charges are still significantly higherthan ours on average. Our competitors have alsotried to match us at product level, but their productshave limitations compared with BinckBank’s: manycannot offer the same stability, speed or range offunctionalities and/or are not always available to awide public. Because the BinckBank systems havebeen designed and built to accommodate growth, wehave the capacity and flexibility to stay ahead of thecompetition without incurring disproportionatelyhigh costs. The major banks’ legacy systems, incontrast, cannot provide that capacity. Although ourcompetitors may go some way towards matching usin terms of price and product, replicating the Binckcorporate culture is not an option.Thanks to this strategy, 2005 brought a further 65%increase in the number of clients, to 32,800 by yearend,compared with 19,900 at the end of 2004. Fromclose monitoring of our client’s activities, we havefound that new clients are just as active as thosewho have been investing with BinckBank from thestart. The number of transactions executed by theRetail business unit increased by 100% in 2005 to1.2 million, compared with 0.6 million in 2004. Bincktherefore accounted for approximately 10% of theestimated total of 12 million transactions by Dutchprivate investorsin 2005. In the coming years, weexpect to extend our share of Dutch private-investortransaction volume to 15–20%. As from 2006, Binckwill be publishing the number of transactions on aquarterly basis.Services for professional investorsIn addition to its services for private investors, Retailalso provides services for professional clients (assetmanagers and stockbrokers). As a custodian bank,BinckBank executes orders on their instructionsand provides a complete range of fully automatedsecurities administration and reporting services.Our services for professional clients also combine lowprices and high quality. These services are based onan integrated online trading and administrationapplication (DBA).BinckBank’s fully automated front-office and backofficeapplication allows professional clients toconcentrate on their core business: relationshipmanagement and investment policy. BinckBank’sservices for these clients offer a similar combinationof high quality and very low prices, which is drivingtheir rapid growth. Last year also brought adevelopment on the professional services marketwhich worked in BinckBank’s favour, when the two1 BinckBank clientsurvey, 2005


largest custodian banks merged. This not only madeBinckBank the second largest player in the Dutchmarket but also, because many investment managersseek to spread risk by appointing two custodianbanks, expanded our growth potential.In a market comprising around 100 independentinvestment managers, Binck’s professional client basein the Netherlands grew 50% in 2005 to 45, from 30in 2004. The number of clients banking withBinckBank via these professionals increased 58.1% to3,660 at year-end, compared with 2,320 at the end of2004. These clients are included in the total Retailclient numbers (32,800 and 19,900, respectively)given above.In 2005, the services for professional clients (assetmanagers and stockbrokers) were provided by theRetail business unit. In view of the rapid growth inour services for this important client group, we decidedlast year to adopt a more focused approach tothis market segment by setting up a separateProfessional Services business unit, to standalongside Retail in the organisation. Responsibility forRetail and Professional Services has also been split atthe management level, so that maximum attentioncan be focused on growing both business units.As from 1 January 2006, the derivatives and equitiesbrokerage services provided by the former Wholesalebusiness unit have been transferred to ProfessionalServices. BinckBank Wholesale had been a respectedplayer on the international equities and derivativesmarkets since its formation. Its staff’s in-depthknowledge and considerable expertise have beendeployed since 1 January 2006 in our services forprofessional clients. This enables us to combine DBAand our existing order execution services with highqualityorder execution in the professional segment.This addition to our existing facilities has furtheroptimised our services for this segment.In 2006 we shall be investigating the possibility ofexpanding our range of services to include insourcingof the execution of securities orders andadministration (securities administration andpayments) for (smaller) banks.ResultsRetail reported a net profit of €10.7 million in 2005,compared with €3.8 million in 2004 (+182%). Totalincome rose to €27.5 million from €14.2 million in2004 (+94%). Reflecting the high level of automationand the simple, clearly defined procedures, expensesincreased only 42%, from €8.4 million in 2004 to€11.9 million in 2005.Retail’s funds entrusted rose in 2005 to €1.6 billion,from €0.7 billion in 2004 (+129%). The growinginterest margin is a major source of income for theRetail business unit, increasing in 2005 to €5.9million compared with €2.8 million in 2004 (+107%).Funds entrusted were initially invested only in callloans, but in 2004 we started assembling aninvestment portfolio which gave a wider interestmargin. This portfolio consists mainly of governmentbonds.A tightening of treasury policy in 2006 is expected toresult in a further widening of the interest margin,generating a growing flow of stable income.Wholesale: brokerage for institutionalinvestors and securities housesThe Wholesale business unit brokers securities andderivatives transactions for Dutch and foreign institutionalinvestors and securities houses.The business unit’s performance is dictated largely bymarket volatility, and in 2005 it again had to copewith significantly lower volatility on the optionsmarket, which translated into declining turnoversand commission income from derivatives brokeragefor the second year in succession. Although thequality of the order flow was high, trading volumefell sharply. Despite the good name and reputationwe have established over the years, growing competitionfrom large international players is leavinglittle room for local institutions such as Binck. As aresult, Wholesale’s formerly strong position in thederivatives market was further eroded in 2005, aprocess which was accelerated by large one-offtransactions by major players around ex-dividenddates in which brokers were not involved.1 9A n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 2 0A strategic decision was made in 2004 to offer institutionalclients electronic brokerage as well asvoice brokerage, in response to a growing trend onthe part of institutional investors to purchase independentresearch and order execution separately,thus creating a demand for low-cost order execution.In the Netherlands, however, this trend is developingtoo slowly to justify future investments and, as aconsequence, this business unit was unable to meetits financial and commercial targets in 2005.In view of this situation, it was decided to transferWholesale’s current activities, in a slimmed-downform, to the new Professional Services business unit.The staff’s expertise and experience are a valuablebonus for this business unit.ResultsWholesale posted a loss of €0.8 million in 2005,compared with a net profit of €0.6 million in 2004.Revenues declined to €1.3 million, from €4.1 millionin 2004. The business unit’s expenses totalled €2.5million in 2005, as against €3.4 million in 2004.Trading: trading for own account inequities, derivatives and bondsThe Trading business unit trades for its own accountin equities and bonds out of Amsterdam and inequities derivatives out of London (Liffe). Althoughtrading is of lesser strategic importance, it achievesgood results and delivers synergy benefits. Thebusiness unit trades actively on the leading stockmarkets in Europe and the US, executing a largenumber of transactions each day. This high tradingvolume places Trading in a strong position whennegotiating rates with stock exchanges and clearingorganisations, which enables us to keep our prices forRetail’s clients low. To a large extent, the businessunit uses the same facilities and systems as the restof the organisation.The highly motivated trading team, in which a goodbalance has been achieved between experience andcreativity, is supported by quantitative analysts. Theteam operates with a high degree of risk-awarenesswithin a fixed system of limits, employing advancedautomated systems. Trading positions are tracked inreal time and monitored by the Risk Managementdepartment.New trading strategies are submitted to andassessed by the Risk Management Committee on aregular basis and, if accepted, appropriate limits areset. This combination of disciplined trading and riskmanagement translates into a controllable andresponsible risk profile.Although the second half-year was less strong thanthe first, Trading posted a good profit in 2005.Equities tradingThe equities trading desk operates under its ownmemberships of the Euronext exchanges, Xetra andLSE and uses a local broker for trades on the otherEuropean exchanges and on NYSE and NASDAQ. Theequities team trades mainly in large caps and to alesser extent – and provided they are liquid – in midcaps on a day and overnight basis,. Day traders do nottake overnight positions. Overnight positions aregenerally traded in correlated spreads (companiesengaging in similar operations with listings ondifferent stock exchanges) and dual listings (stockswith, for example, Dutch and US listings). To generatethe maximum return while maintaining a responsiblerisk profile, the business unit’s trading strategiesare adequately diversified.Bond tradingThe bond trading team occupies a strong nicheposition in the market for odd lots (small blocks) ofgovernment loans and mainly investment-gradecorporate bonds. Binck acts as liquidity provider onthe Euronext exchanges and is market maker inalmost 800 different loans.Derivatives tradingTrading for own account in equities derivatives andunderlying securities is carried on by HillsIndependent Traders Ltd. in London, which has ahighly experienced and risk-aware trading team.The trading operations in London are under FSAsupervision. The team trades predominantly inequities derivatives which are listed on the Londonexchange.


Like the operations in the Netherlands, the UKactivities are under the central supervision of the RiskManagement department.ResultsIn line with expectations, the reorganisation of thetrading activities in 2003 and 2004 yielded substantialcost savings. As in 2004, the units remainingafter the reorganisation made a positive contributionto the result in 2005, most notably the equitiestrading operations based in Amsterdam. Tradingposted a net profit of €3.6 million in 2005, as againsta loss of €1.1 million in 2004. It should be noted thatthe 2004 result was adversely affected by substantialnon-recurring reorganisation charges. Total revenuesdeclined to €21.4 million, compared with €21.7million in 2004. Without the non-recurringreorganisation charges, expenses fell to €17.1 millionin 2005, compared with €23.3 million in 2004. Profitsharingwith the staff involved in the tradingactivities accounted for a significant share of thebusiness unit’s expenses in 2005. This performancerelatedprofit-sharing scheme cost €7.5 million in2005, compared with €4.9 million in 2004.The remaining 42% interest in AOT België B.V. wasacquired in 2005 and its market-making activitieswere terminated. The remaining derivatives positionwas liquidated and the staff were made redundant.Following the acquisition of 100% of the shares, thename of the company was changed to Binck BelgiëN.V. Under its new name, Binck België N.V. willoperate as a brokerage, executing securities ordersfor professional clients.IFRSBinck N.V.’s reporting since 1 January 2005 is inaccordance with International Financial ReportingStandards (IFRS). All figures given in this pressrelease, including comparative figures for 2004,comply with IFRS.On the basis of the current IFRS rules, the downwardadjustment to the 2004 profit is €343,000 and thedownward adjustment to equity as at year-end 2004is €148,000.The profit adjustment reflects the change in thetreatment of staff stock options (€98,000) and therealised gain (€245,000) on the sale of a subsidiary(AOT Australia Pty Ltd.), consisting entirely of thetranslation difference on foreign investments in2004. In addition to these profit elements, the equityadjustment reflects changes in the measurement ofthe investment portfolio (available for sale) and thesecurities position for trading purposes.OutlookAs expected, the Retail business unit’s contribution tototal revenues increased from 35% in 2004 to 55% in2005. As from 1 January 2006, only the services forprivate clients are grouped under Retail and reportedas such. Professional services are provided by thebusiness unit of that name and the Wholesalebusiness unit has ceased to exist. As from 1 January2006, therefore, Binck’s financial reporting will coverthree business units: Retail, Professional Services andTrading. The services provided in Belgium for privateand professional clients are grouped under the Retailand Professional Services business units, respectively.As before, our goal will be to provide high-qualityservices for all our clients at the lowest possible cost.Our intensely customer-focused business culture willcontinue to be a major asset, giving us an edge overthe competition. Investments in equipment andsystems, which are central to maintaining theguaranteed high quality of our services, are expectedto rise to around €2.5 million in 2006.Our goal in 2006 is to extend our already strongposition in the professional services market andthereby contribute tot the robust growth of thebusiness.Given the rapid growth of the organisation in recentyears, the Management Board is optimistic about thecompany’s financial prospects in 2006. Our strongfinancial base means that we are able to expandthrough organic growth.In the coming years, we hope to extend our share ofDutch private-investor transaction volume to 15–20%.2 1A n n u a l R e p o r t 2 0 0 5


The Belgian operations are expected to reach breakevenwithin a few years.Thanks to the company’s high level of automationand the economies of scale which that brings,revenue growth will be accompanied by a muchslower rise in expenses. Due to the nature of ouractivities, however, we are sensitive to sentiment onstock markets around the world. 2005 was anexceptionally good year for the stock market, withthe AEX up more than 25%. This benefited our results,but negative market trends could equally have hadan adverse effect.In accordance with the company’s dividend policy, thecoming General Meeting of Shareholders will beinvited to approve a final dividend of €0.16.Amsterdam, 3 March 2006A n n u a l R e p o r t 2 0 0 5 2 2Thierry Schaap, Chairman of the Management BoardKalo Bagijn, Member of the Management Board


Kees Scholtes (1945), VoorzitterDe heer Scholtes werd in januari 2001 benoemd totcommissaris bij BinckBank N.V. en werd tijdens de AvAvan 6 mei 2004 benoemd tot lid van de raad vancommissarissen van Binck N.V. voor een termijn vandrie jaar. De raad van commissarissen heeft de heerScholtes benoemd tot Voorzitter van haar raad.Nationaliteit: Nederlandse.De heer Scholtes is momenteel Project Directeur bijde oprichting van de Stichting Financiële Dienstverlening,commissaris bij IBUS Company N.V.,bestuurder van financieringsmaatschappij ColonadeB.V. en voorzitter van de beleggingscommissie van deKunst- en Cultuur Pensioen- en Levensverzekeringsmaatschappij.De heer Scholtes in voormaligbestuurder van Postbank N.V., NMB Postbank N.V. enING Bank N.V., lid van het Executive Committee vanING Asset Management en commissaris van diversebeleggingsfondsen van Postbank N.V., NMB PostbankN.V. en ING Bank N.V. Daarnaast was de heer Scholtesvoorheen commissaris voor Parcom N.V., BaringsPrivate Equity Holding, Necigef en NIEC CDCLabouchere Securities Services (thans DexiaSecurities Services) en bestuurslid van deAmsterdamse Effectenbeurs en European OptionsExchange (het huidige Euronext). De heer Scholteswas tevens project directeur bij de oprichting van hetR EPORT OF THE DutchSSecurities S UPERVISORY Institute. B OARDAantal aandelen Binck N.V.: 02 3A n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 2 4F.l.t.r.: Fons van Westerloo, Hans Brouwer, Kees Scholtes, Charles LangereisHans Brouwer (1944)Mr. Brouwer was appointed to the Supervisory Boardof BinckBank N.V. in January 2001 and to theSupervisory Board of Binck N.V., for a term of threeyears, at the General Meeting of Shareholders on 6May 2004.Nationality: Dutch.Mr. Brouwer represents NPM-Capital on theSupervisory Boards of Keesing InternationalPublishers, Koninklijke JPC and Van MeijelAutomatisering. He is Chairman of the SupervisoryBoard of Koninklijke Hauseman & Hötte and amember of the Supervisory Board of Nobel van Dijk& Partners. Mr. Brouwer is also a member of theExecutive Committees of Stichting LeerstoelEffectenrecht (Chair of Securities Law Foundation) atthe University of Groningen and Stichting Verenigingvoor de Effectenhandel (Amsterdam Stock ExchangeAssociation). He is Chairman of Stichting Amindhoand Stichting Jazzorchestra of the Concertgebouwand a member of the Advisory Committee ofProfessional Vision.Mr. Brouwer is a former General Manager ofAmsterdam Exchanges (Euronext) and is Chairman ofthe Supervisory Board of NLK Kas.Binck N.V. shares held:0Charles Langereis (1948)Mr. Langereis was appointed to the Supervisory Boardof Binck N.V., of which he is currently Vice-Chairman, in1999 and was reappointed in 2005 for a term of fouryears.Nationality: Dutch.


Mr. Langereis is a partner in Spigthoff Advocaten enBelastingadviseurs, Amsterdam, part-time Professorof Tax Law at Leiden University, former Chairman ofthe Netherlands Association of Tax Lawyers andConsultants (Vereniging van Advocatenbelastingdeskundigen),chairman of the TaxationCommittee of the Free Democratic party (VVD) andDeputy Justice of the Court of The Hague. Mr.Langereis is also a member of the Supervisory Boardof Koopman International BV and a member of theAdvisory Council of Lombard Odier Darier HentschEMS Plus Rentefonds.Binck N.V. shares held: 651,063Kees Scholtes (1945), ChairmanMr. Scholtes was appointed to the Supervisory Boardof BinckBank N.V. in January 2001 and to theSupervisory Board of Binck N.V., for a term of threeyears, at the General Meeting of Shareholders on6 May 2004.The Supervisory Board has appointed Mr. Scholtes asits Chairman.Nationality: Dutch.Mr. Scholtes is currently acting as project manager inthe formation of Stichting Financiële Dienstverlening(Financial Services Foundation), member of theSupervisory Board of IBUS Company N.V., a memberof the Executive Board of finance house Colonade B.V.and Chairman of the Investment Committee ofKunst- en Cultuur Pensioen- en Levensverzekeringsmaatschappij.Mr. Scholtes has been a member of theExecutive Boards of Postbank N.V., NMB Postbank N.V.and ING Bank N.V., a member of the ExecutiveCommittee of ING Asset Management and a memberof the Supervisory Boards of several Postbank N.V.,NMB Postbank N.V. and ING Bank N.V. investmentfunds. Mr. Scholtes has also been a member ofthe Supervisory Boards of Parcom N.V., Barings PrivateEquity Holding, Necigef and NIEC CDC LabouchereSecurities Services (now Dexia Securities Services)and a member of the Executive Committees of theAmsterdam Stock Exchange and European OptionsExchange (now Euronext). Mr. Scholtes also acted asproject manager in the formation of the DutchSecurities Institute.Binck N.V. shares held: 0Fons van Westerloo (1946)Mr. Van Westerloo was appointed to the SupervisoryBoard of BinckBank N.V. in January 2001 and to theSupervisory Board of Binck N.V., for a term of threeyears, at the General Meeting of Shareholders on 6May 2004.Nationality: Dutch.Mr. Van Westerloo is CEO of RTL Nederland and amember of the Operational Management Committeeof RTL Group. He is also a member of the Board ofDirectors of CLT-UFA, Chairman of the BertelsmannSynergy Committee Benelux, a member of theAdvisory Council of DDB Amsterdam/Result,Chairman of the Broadcast Business Club, a memberof the General Council of the Netherlands Institutefor Classification of Audiovisual Media, a member ofthe Executive Committee of Media Academie, amember of the Advisory Council of EntertainmentStudies Hogeschool in Holland and a member of theExecutive Committee of IP Nederland.Mr. Van Westerloo has been CEO of SBS BroadcastingB.V., General Manager of RTL 5 and Deputy GeneralManager of AVRO.Binck N.V. shares held: 02 5A n n u a l R e p o r t 2 0 0 5


Report of the Supervisory BoardA n n u a l R e p o r t 2 0 0 5 2 6Following the merger of the former AOT and EffectenbankBinck, the organisation has been furtherstreamlined in the past year and is now even betterpositioned to achieve its objectives. The SupervisoryBoard is gratified to note that the performance of thepost-merger organisation has exceeded expectations.The challenge now is to sustain this positive trend.As a modern, innovative and relatively young company,Binck has again proved that it is capable ofleading the field, both in product development andproduct differentiation and in responsiveness toopportunities arising on markets which are relevantto its operations. Its success is built on its efficientlystructured organisation and the drive, commitmentand quality of its management and staff.A remuneration policy for the company’sManagement Board has been adopted and anincentive plan has been introduced for qualifyingemployees. The company’s Articles of Associationhave been revised in line with the Dutch CorporateGovernance Code (henceforth referred to as the‘Code’) and relevant new legislation. A study toassess the desirability of a legal merger of Binck N.V.and BinckBank N.V. and possibly other subsidiaries isstill on the agenda.The Supervisory Board is responsible for overseeingthe policy pursued by the Management Board andthe operations under its direction. It is also the dutyof the Supervisory Board to advise the ManagementBoard, in the best interests of the company and itsstakeholders.Here we report on the activities of the SupervisoryBoard in the past year and provide the informationprescribed by the Code.shareholder. At the Annual General Meeting in 2005,Messrs. Teeuw and Langereis were reappointed tothe Management Board and Supervisory Board,respectively.The Supervisory Board is composed such that themembers are able to act independently, both of oneanother and of the Management Board or any otherparticular or partial interest, within the frameworkimposed by the Supervisory Board’s profile. TheSupervisory Board considers that the independencecriteria defined in best-practice provision III.2.1 of theCode have been met.The members of the Supervisory Board againachieved an almost 100% attendance record last year,a good habit which is applauded by the Chairman,who takes the view that force majeure is the onlyacceptable reason for missing a meeting. Access tothe members of the Management Board andSupervisory Board for consultation betweenmeetings was excellent.Because the process of merging, integrating andreorganising the former AOT and BinckBank was progressingfaster than expected, Mr. Teeuw decided lastyear to stand down from the Management Board,but agreed to allow Binck to benefit from hisexpertise and experience until 1 May 2007, bycontinuing his association with the company as anadvisor to the Management Board and SupervisoryBoard. In this capacity, he will be concerned primarilywith issues of a strategic nature. The SupervisoryBoard is sincerely grateful to Mr. Teeuw for thevaluable contributionhe has made to our company and we take thisopportunity to thank him for his efforts on thecompany’s behalf.Composition of the Management Boardand Supervisory BoardThe members of Binck’s Management Board andSupervisory Board are appointed by the GeneralMeeting of Shareholders on the basis of a nonbindinga list of candidates drawn up by the priorityMr. Schaap, who succeeded Mr. Teeuw as Chairman ofthe Management Board on 1 January 2006, is ideallysuited to this post, being one of BinckBank’s cofounders.It is our intention to propose Mr. P. Aartsenfor appointment to the Management Board at the2006 Annual General Meeting of Shareholders, thus


increasing the number of members of theManagement Board to three again, namely Messrs.Schaap, Bagijn and Aartsen. The latter will focus inparticular on the new Professional Services businessunit. The Management Board is currently assisted bytwo General Managers who, with the Board, form theManagement Committee.Activities in 2005The Supervisory Board’s close involvement with thecompany’s business is evidenced by the fact that itheld seven regular meetings in 2005 and theChairman, accompanied on each occasion by one ofthe members, attended many informal meetingswith the Chairman of the Management Board. TheAudit Committee also held four meetings. TheSupervisory Board’s schedule in 2006 will beessentially similar. The members of the SupervisoryBoard insist on being kept informed of the company’sactivities.The joint meetings discussed the strategy for 2006and subsequent years. The objective will be to continuegrowing the online brokerage services forprivate clients in the Netherlands while the Retailbusiness unit’s presence in Belgium is still at thestart-up phase. The services for professional clientswill continue to be expanded within the ProfessionalServices business unit. The success of the chosenstrategy will obviously depend to some extent on themarket conditions, but the Supervisory Board andManagement Board are confident that it is still theright one.The papers produced for the meetings of theSupervisory Board and its joint meetings with theManagement Board were circulated in good time andwere of a good standard. The papers provided thebasis for efficient, well-informed and substantivediscussion, which is essential to prudent andreasoned decision-making.The agendas of the Supervisory Board meetingscovered a wide and varied range of issues.Informative presentations on all aspects of company’sbusiness were given by fully-briefed membersof the Management Board. The Supervisory Board’sdiscussions covered strategic, operational andorganisational issues. The company’s strategy andrisk exposure were discussed on several occasions, aswere the findings of the Management Board’sevaluation of the structure and operation of theinternal risk management and control systemsand any significant changes. The Board met anumber of employees who report directly to theManagement Committee, as partners in discussionsof important issues which helped to give theSupervisory Board members a better understandingof the organisation.The joint meetings of the Supervisory Board and theManagement Board were conducted in an openand collegial atmosphere, allowing ample scope forconstructive criticism, which was helpful to theSupervisory Board in discharging its supervisory andadvisory responsibilities. The Chairman’s conduct ofthe meetings was considered satisfactory by thoseattending them.In the absence of the Management Board, theSupervisory Board discussed the functioning of theSupervisory Board itself and of its individualmembers and the conclusions to be drawn. Takingthe above considerations into account and exercisingthe necessary discretion, this examination addressedthe profile, composition and competence of theSupervisory Board and that of its individualmembers.Likewise in the absence of the Management Board,the Supervisory Board discussed the functioningof the Management Board and of its individualmembers, again taking the above considerations intoaccount. The Supervisory Board came to theunanimous conclusion that the Management Boardas a whole and its individual members had againperformed well in the past year.Functioning of the Management BoardThe Management Board functioned last year as aclose-knit professional team whose individualmembers performed their tasks to an extremely highstandard and were able to focus particular attentionon the specific areas allocated to them whiledischarging their broader responsibilities. The2 7A n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 2 8exchange of specific information on these areasbetween the individual members of theManagement Board and between the ManagementBoard and Binck’s Supervisory Board was prompt andof good quality, enabling those concerned to performtheir tasks satisfactorily. The allocation ofresponsibilities among the members of theManagement Board was found to be balanced andeffective. There was some degree of professionalcross-fertilisation between the members of theManagement Board. By exchanging expertise andexperience intensively and proactively, the membersof the Management Board were able, each from theperspective of their individual backgrounds, to putthe collegial principle of management into practice.Key features of 2005 remunerationpolicyGeneralThe remuneration policy (‘Remuneration policy2005’), which has been posted on the company’swebsite (www.binck.com), was adopted at theAnnual General Meeting of Shareholders on 21 April2005. The key features of the remuneration policy2005, its implementation in 2005 and the proposedchanges which the 2006 Annual General Meeting ofShareholders will be invited to adopt are outlinedbelow.Remuneration policy 2005Under the remuneration policy 2005, theremuneration received by the members of theManagement Board of Binck N.V. consists of a fixedelement and a variable element, as a reward for theirshort-term and medium/long-term performance,consisting of a bonus and a number of Binck N.V.shares. The fixed remuneration received by theChairman (Mr. Teeuw) is approximately one-thirdhigher than that of the other members of theManagement Board.According to the remuneration policy 2005, thenature of individual members’ work on behalf of theBoard and their length of service may be taken intoaccount in determining the composition of theremuneration packages received by the members ofthe Management Board and setting the relatedperformance criteria. In the case of Mr. Teeuw, theemphasis is on short-term criteria and remunerationelements, whereas for the two other members of theManagement Board, Messrs. Schaap and Bagijn, theemphasis is on medium/long-term objectives andremuneration elements.According to the 2005 remuneration policy, otherregular elements such as health insurance do not inprinciple form part of the remuneration package,and nor do secondary benefits such as company cars.The members of the Management Board are inprinciple eligible for the defined-contributionpension plan which applies to the majority of theemployees.As regards the variable element, if the members ofthe Management Board meet the annual budgetsapproved by the Supervisory Board, they qualify for abonus approximately equivalent to one year’s fixedsalary spread over two years. Under the 2005remuneration policy, the Supervisory Board may, at itsdiscretion, apply a maximum uplift of 25% to thebonus if justified by the results. If the target is notfully achieved, due for example to externalcircumstances beyond the Management Board’scontrol,the Supervisory Board may, at its discretion, awardthe Management Board members a cash bonus of amaximum of 25% of basic salary.Under the 2005 remuneration policy, the members ofthe Management Board qualify for an award of BinckN.V. shares if growth in earnings per share in therange 15– 25% is achieved in the period 2005–2007.The base year is 2004, when earnings per share,adjusted for exceptional factors, stood at €0.15.Earnings here refers to profit after tax.Members of the Management Board who areexpected to stay with the company for an extendedperiod may opt to receive part of their cash bonus inshares (‘optional shares’). These shares cannot besold for three years. Additional shares (‘free shares’)may be awarded if longer-term targets are achieved.The 2005 remuneration policy states that, for the


period 2005–2007 and each three-year periodthereafter, one free share will be awarded for everytwo optional shares held if earnings per share growby more than 50% and one free share will beawarded for each optional share held if earnings pershare grow by more than 100%.Under the 2005 remuneration policy, Messrs. Schaapand Bagijn can have a minimum of 25% and amaximum of 100% of their cash bonus paid in theform of optional shares. The number of sharesawarded on this basis will be determined by theclosing price on the day of award. The income tax dueon the part of the bonus paid in Binck N.V. shares willbe paid by the company. If some or all of these sharesare sold within three years, the income tax paid willbe refunded to the company by the ManagementBoard member concerned. The free shares must beheld for five years or until termination of service ifwithin five years.Implementation of 2005 remuneration policyMr. TeeuwMr. Teeuw’s remuneration for the period 1 January–1 October 2005 was determined by the contract ofemployment for the period 1 October 2003–1 October2005 which was signed at the time of hisappointment. Mr. Teeuw’s remuneration for theperiod 1 October – 31 December 2005 was determinedwith reference to the remuneration policy 2005.For 2005, Mr. Teeuw’s gross annual salary wasunchanged at to €300,000. The bonus for the period1 January 2005–30 September 2005 was €300,000gross (equivalent to nine months of a full-year bonusof €400,000, the agreed figure for outperformanceof the approved budget by 25% or more). For theperiod 1 October–31 December 2005 his variable payin accordance with the remuneration policy was€37,500. No redundancy terms have been agreedwith Mr. Teeuw and no provision is made for hispension.Messrs. Schaap and BagijnThe remuneration received by Messrs. Schaap andBagijn for the period 1 January – 31 December 2005was determined with reference to the remunerationpolicy, except that, having regard to the nature of hisduties, Mr. Bagijn has the use of a company car underarrangements similar to those applying to thecompany’s commercial staff, for which theremuneration policy does not strictly provide.Messrs. Schaap and Bagijn received a gross annualsalary of €210,600. Their variable remuneration, as areward for meeting the predetermined annualbudget, was €131,625 gross, including the maximumuplift of 25% awarded by the Supervisory Board inrecognition of the good results. Messrs. Schaap andBagijn are members of the defined-contributionpension plan which applies to the majority of theemployees.In consultation with the Supervisory Board, Messrs.Schaap and Bagijn chose to take 50% of their variableremuneration (€65,812.50) in optional shares. Theincome tax due on this remuneration will be paid bythe company.Proposed changes to the remuneration policyWith regard to the determination and disclosure ofthe remuneration of members of the ManagementBoard, the Code requires all material changes in theremuneration policy to be submitted to the GeneralMeeting of Shareholders for adoption.Given the definition in the Code, it is not always easyto determine whether such a change is material. Inthe interests of maximum transparency, therefore,Binck N.V. will in principle submit all changes in anadopted remuneration policy to the General Meetingof Shareholders for adoption.In the light of the foregoing, it is our intention tosubmit several changes in the remuneration policyfor adoption by the 2006 Annual General Meeting ofShareholders. One of the principal aims of thisproposal is to enable the remuneration policy as itcurrently applies to Messrs. Schaap and Bagijn toapply also to future members of the ManagementBoard, whether they serve as chairman, vicechairmanor member. The remuneration policy willthen no longer be related to individuals and willapply identically to all members of the ManagementBoard, thereby making it a policy in the true sense.2 9A n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 3 0We propose to restrict the proportion of the cashbonus which members of the Management Boardcan receive in the form of optional shares to aminimum of 25% and a maximum of 50% (instead of100%). The date of award of optional shares will bethe date on which the company publishes the pressrelease announcing the results for the past year.CommitteesThe Supervisory Board has appointed an AuditCommittee from among its members. The committeeconsists of Messrs. J.K Brouwer (Chairman), Ch.J.Langereis and C.J.M. Scholtes.The Audit Committee is responsible for overseeingthe implementation and operation of the system ofinternal control and risk management andmonitoring the implementation of the externalauditors’ recommendations and the functioning ofthe internal audit department. Supervision of thecompany’s financial reporting is the responsibility ofthe Supervisory Board.The Audit Committee met four times in 2005. Allmeetings are attended by a member of theManagement Board of BinckBank. The former ChiefFinancial Officer of BinckBank, Mr. H.J.J.M. Schoofs,attended three of the meetings. His successor,Mr. Schaap, attended two of the meetings.The Internal Audit department, the staffing of whichwas discussed at the meeting on 20 October 2004,performed several internal audits and updated therisk analysis. The meetings of the Audit Committeewere attended by both members of staff of thisdepartment, Messrs. R.J.H. Stappers and B.A. Nederlof.comments and recommendations by the InternalAudit department, and hence by the AuditCommittee, are discussed in the section entitled ‘Riskmanagement’.The Audit Committee also discussed compliance withthe recommendations made by the external auditorsin their long-form report on the 2004 audit.In conclusion2005 was a successful year for the company.The merger of the former AOT and BinckBank cameto fruition and, thanks to the excellent leadershipprovided by the Management Board and the othermanagers and the commitment and expertise of allthe staff, the main commercial targets were met. Thecompany’s operations were extensively rationalised,with a view to controlling costs, and new activitieswere developed to sustain the positive trend aseffectively as possible.All that remains is for us to thank the ManagementBoard and all the staff for their effort andinvolvement.Amsterdam, 3 March 2006The Supervisory BoardC.J.M. Scholtes, ChairmanJ.K. BrouwerCh.J. LangereisA.M. van WesterlooThe work of the Internal Audit department is basedon a risk analysis and audit schedule compiled bythe Internal Audit department and approved by theAudit Committee. The audits performed by theInternal Audit department and the findings andrecommendations were discussed at the meetings ofthe Audit Committee. The general conclusion wasthat the internal control measures and theorganisational safeguards in respect of the riskscovered by the analysis were adequate. Specific


3 1C ORPORATE G OVERNANCER ISK MANAGEMENTI N CONTROL STATEMENTA n n u a l R e p o r t 2 0 0 5


Corporate GovernanceIntroductionCorporate governance has been a current topic lastyear. The principles of good governance expounded inthe Dutch Corporate Governance Code of 9 December2003 (the ‘Code’) have had a major impact onrelationships between the various stakeholders inlisted Dutch companies and the end of thistempestuous period in the evolution of corporategovernance is not yet in sight.The Code has assumed the status of law, in the sensethat all listed companies are now required to includein their annual reports a statement of compliancewith the Code’s principles and best-practiceprovisions as they apply to their management andSupervisory Boards. If they have not complied withthose principles or best-practice provisions and/or donot intend to do so in the current or next financialyear, they are required to state the reasons in theirannual report (the ‘comply or explain’ principle).The way in which Dutch listed companies implementan effective and transparent system of checks andbalances is influenced by evolving social values anddevelopments on the capital market. The CorporateGovernance Code Monitoring Committee has beenset up to address this issue. Its responsibilitiesinclude ensuring that the Code is kept up-to-dateand operable, thereby maintaining a high standard ofcorporate governance. In December 2005, theCorporate Governance Code Monitoring Committeepublished a report on compliance with the Code andmade a number of recommendations.According to best-practice provision 1.1 of the Code,the broad outline of the corporate governancestructure of the company must be explained in aseparate chapter of the annual report, partly byreference to the principles set forth in the Code. Inthis chapter, the company must also expressly statethe extent to which it applies the best-practiceprovisions of the Code and, if it does not, why and towhat extent it does not apply them. As mentionedabove, the ‘comply or explain’ principle has beenenshrined in law.Best-practice provision 1.2 of the Code requires thateach substantial change in the company’s corporategovernance structure or the company’s compliancewith the Code be submitted to the General Meetingof Shareholders for discussion under aseparate agenda item.As a young, modern and innovative company, Binckagrees in large measure with the principlesexpounded in the Code, which have received broadsupport. The proposed procedure for adoption of theCode by Binck was discussed at the Annual GeneralMeeting of Shareholders on 21 April 2005 and wasimplemented in the course of last year, inter alia viaamendment of the Articles of Association. Therehaving been no substantial change in Binck’s corporategovernance structure and/or compliance withthe Code since then. Best-practice provision 1.2 of theCode is therefore not applicable.The main features of Binck’s corporate governancestructure are explained below, where applicablegiving the reasons for departure from the Code’sprovisions and using as a basis the classification ofthe principles and best-practice provisions employedin the Code.A more detailed description of Binck’s application ofthe Code is given in a separate annex, which hasbeen posted on the company’s website(www.binck.com) to give Binck’s shareholders andother stakeholders access to information on how thecompany puts into practice the standards of goodcorporate governance embodied by the Code.Legal structureGeneralBinck is a public limited liability company which islisted on Euronext Amsterdam. Binck has severalDutch and foreign subsidiaries.The Dutch subsidiaries are subject to supervision byboth the Nederlandsche Bank (‘DNB’) and theAuthority for the Financial Markets (‘AFM’). Two


subsidiaries, BinckBank N.V. and Binck Securities B.V.,are licensed as a credit institution and securities institution,respectively. All foreign subsidiaries aresubject to supervision by local securities regulatorsand hold the requisite licences.A Compliance Officer has been appointed at centrallevel who is responsible for monitoring compliancewith the applicable codes of conduct and relatedsecurities legislation and regulations. These codesof conduct reflect the values, such as integrity andtrustworthiness, to which Binck attaches greatimportance.SharesBinck’s authorised capital consists of listed ordinaryshares and 50 priority shares, each with a nominalvalue of €0.10. The priority shares, which areregistered, are not listed on the stock exchange andare held by the Stichting Prioriteit AOT (the ‘priorityshareholder’). Further information on the position ofthe priority shareholder is given below in thischapter. No depositary receipts have been issued forBinck shares.Issue of sharesThe issue of shares requires a resolution of theGeneral Meeting of Shareholders, which may assignthis authority to another corporate body for amaximum of five years. Save as provided otherwiseby law, each shareholder will have a pre-emptiveright to issues of ordinary shares in proportion to thetotal amount of his shares.Shareholders have no pre-emptive right to shareswhich are issued a) to employees of the company or agroup company or b) for payment other than in cash.The pre-emptive right may be restricted or suspendedby a resolution of the General Meeting.Pre-emptive rights can also be restricted orsuspended by the corporate body referred to above, ifit has been designated by resolution of the GeneralMeeting, for a maximum of five years, as authorisedto restrict or suspend pre-emptive rights .If less than half of the issued capital is represented atthe General Meeting, a resolution by the GeneralMeeting to restrict or suspend pre-emptive rights, todesignate authority to do so or to withdraw suchdesignation requires a majority of at least two-thirdsof the votes cast. Such resolutions may only beadopted by the General Meeting on a motion by thepriority shareholder.Voting rightsEach Binck share confers the right to cast one vote.Except where a larger majority is prescribed by law orthe Articles of Association, resolutions are adoptedon a simple majority of the votes cast. For example,Binck’s Articles of Association state a resolutionto suspend or dismiss a member of the ManagementBoard or the Supervisory Board requires a majority ofat least two-thirds of the votes cast, which togetherrepresent more than half of the issued capital.The Supervisory Board’s approval is required forresolutions by Binck’s Management Board, pursuantto the Articles of Association, to set a registrationdate when convening meetings of shareholders.Binck sets registration dates and thus complies withbest-practice provision IV.1.7 of the Code.Shareholder structureThe investors who have given notification of theirholdings in Binck pursuant to the Disclosure of MajorHoldings in Listed Companies Act (Wet MeldingZeggenschap) 1996 are listed on page 10 of thisannual report. Binck is not aware of any othershareholder with a holding of 5% or more. Noshareholder contracts exist between Binck and themajor shareholders referred to above.A total of 1,303,251 Binck shares were issued to thepersonal holding companies of Messrs. Schaapand Bagijn. in connection with the sale to Binck inMay 2004 of their shares in BinckBank N.V., subject toa phased lock-up arrangement. Under thisarrangement Messrs. Schaap and Bagijn, via theirpersonal holding companies, may sell their shares inthe first year and up to a maximum of 25%, 50% and75% in the second, third and fourth years after thedate of the transaction. As from the fifth year fromthe date of the transaction, the personal holdingcompanies of Messrs. Schaap and Bagijn are allowed3 3A n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 3 4to sell up to 100% of the shares acquired in thattransaction. On 7 November 2005 after close oftrading, Messrs. Schaap and Bagijn, via their personalholding companies, sold 25% (or 650,000) of theBinck shares issued to them in connection with thattransaction.Legal mergerConsideration of the desirability of a legal mergerbetween Binck and BinckBank and other subsidiarieshas not been a priority so far, but this matter will beaddressed in the near future. It has been more importantfor the company to commit its humanresources fully to the achievement of its strategicgoals. Any decision to undertake such a merger willbe for the General Meeting of Shareholders.Management BoardTwo-tier management structureBinck has a two-tier management structure, whichmeans that the executive and supervisory functionsare assigned to different corporate bodies – theManagement Board and the Supervisory Board.Binck believes that this structure ensures anadequate system of checks and balances, wherebythe Management Board is responsible for the day-todayrunning of the company and its short-term,medium-term and long–term strategy, while theSupervisory Board oversees and advises theManagement Board. As from 1 January, theManagement Board is assisted by two GeneralManagers who, with the members of theManagement Board, constitute the ManagementCommittee.Shared membershipThe Management Boards of Binck and its subsidiariesshare a common membership, i.e. the majority of themembers of Binck’s Management Board are alsomembers of the Management Boards of Binck’ssubsidiaries. This arrangement is conducive toconsistent corporate policy and strategy.RemunerationPrinciple II.2 and the related best-practice provisionsof the Code recommend that the remunerationreceived by members of the company’s ManagementBoard should be sufficient to enable the company torecruit and retain qualified and expert individuals.This is achieved by developing a system of objectivemeasurement criteria, which are defined in aremuneration report drawn up and published by theSupervisory Board. This report, or at any event theremuneration policy which it embodies, will for thetime being guide the Supervisory Board whendetermining the various components of the paypackages of individual members. In accordance withthe principle set out in the Code concerning thedetermination and disclosure of remuneration andSection 135, subsection 1, of Book 2 of the NetherlandsCivil Code, this remuneration policy 2005 wasadopted by the Annual General Meeting ofShareholders on 21 April 2005. The remunerationreport referred to above has been posted on thecompany’s website (www.binck.com).By retrospectively evaluating the outcome of theremuneration policy for the individual members ofthe Management Board, the shareholders and otherstakeholders in Binck are well placed to reach aninformed opinion on remuneration, both collectiveand individual. This will ensure a practical andbalanced result, with the shareholders being able toexert significant influence on the remuneration ofManagement Board members, without shareholders’meetings turning into debates on the pay received byindividuals.Best-practice provision II.2.10 of the Code specifiesthe information to be provided by the SupervisoryBoard in its overview of the remuneration policyplanned for the next financial year and subsequentyears. Binck complies with this best-practice provisionif and to the extent that it does not relate tocompetitive-sensitive information, such as financialand commercial objectives. The Management Boarddoes not consider it to be in the interests of thecompany or its stakeholders to disclose suchinformation. The same reservation applies topublication of the main elements of contractsbetween Management Board members and thecompany immediately they are signed, as required bybest-practice provision II.2.11 of the Code, if and to the


extent that this relates to competitive-sensitiveinformation.Stock options/sharesBest-practice provision II.2.3 of the Code treats theallocation of shares for no financial consideration asa form of variable remuneration. According to theCode, the purpose of a variable element should be toreinforce the Management Board members’long-term commitment to the company and thefurtherance of its interests. According to the Code,this can be achieved by requiring Management Boardmembers who are allocated shares for no financialconsideration to undertake to retain them for at leastfive years or until termination of their employment.Since these shares are allocated for no financialconsideration, the best-practice provision requiresthat allocation be dependent on the achievement ofclearly quantifiable and challenging targets whichhave been defined in advance. The performancecriteria must be stated in the remuneration report.Under the remuneration policy 2005 embodied in theremuneration report, members of the ManagementBoard may opt to receive part of their cash bonus inshares, which must be retained for three years.Depending on the achievement of a specifiedpercentage rate of growth in net earnings per share,additional shares may be awarded for no financialconsideration, at the rate of one Binck share for everyone Binck share or every two Binck shares thusacquired and retained.In the opinion of the Supervisory Board, this methodof remuneration adequately reinforces theManagement Board members’ long-termcommitment to the company and the furtherance ofits interests. By giving Management Board membersthe choice of receiving part of their cash bonus inshares, the allocation of shares (for a financialconsideration) is – indirectly – linked to theachievement of predetermined, clearly quantifiableand challenging targets. Because they receive part oftheir cash bonuses in shares, they are effectivelybuying their optional shares out of their bonuses. Thetargets are not disclosed because they involvecompetitive-sensitive information, such as financialand commercial objectives, and disclosure would notbe in the interests of the company or itsstakeholders. Shares are awarded for no financialconsideration depending on the achievement of aspecified percentage rate of growth in net earningsper share. These shares must be retained for at leastfive years or until termination of employment.Regulations embodying rules on the ownership ofand transactions in securities by Management Boardmembers other than those issued by their ‘own’companyOne of the recommendations of best-practiceprovision II.2.6 of the Code is that the SupervisoryBoard should adopt regulations embodying rules onthe ownership of and transactions in securities byManagement Board members other than thoseissued by their ‘own’ company. These regulationsshould be posted on the company’s website.Binck complies with this best-practice provision, butfor practical reasons has integrated these regulationsinto the Management Board regulations.After approval by the Supervisory Board, the latterregulations were adopted by the Management Boardat the end of 2004 and have been posted on thecompany’s website (www.binck.com). The regulationshave therefore been adopted indirectly by theSupervisory Board and the requirements of bestpracticeprovision II.2.6 of the Code have been met.The Management Board members are also boundby the company’s current regulations, which theyhave agreed to observe, on insider trading, pricesensitiveinformation and personal investmenttransactions.Suspension/dismissalPursuant to Binck’s Articles of Association, aresolution of the General Meeting to suspend ordismiss a member of the Management Board orSupervisory Board requires a majority of at leasttwo-thirds of the votes cast, representing more thanhalf of the issued capital.According to best-practice provision IV.1.1 of the Code,it must be possible for a resolution to dismiss amember of the Management Board or Supervisory3 5A n n u a l R e p o r t 2 0 0 5


Board member to be adopted by an absolutemajority of the votes cast, but it may be made acondition that this majority represents a givenproportion of the issued capital, which may notexceed one-third.supervising the Management Board. Binck appliesthis best-practice provision, but for practical reasons,some of these supervisory tasks have been assignedto the Supervisory Board as a whole and thus areincluded in the Supervisory Board regulations.A n n u a l R e p o r t 2 0 0 5 3 6Best-practice provision IV.1.1 of the Code was notimplemented when the Articles of Association wereamended in 2005, but may be implemented whenthey are next amended. In the interim, the membersof Binck’s Management Board and Supervisory Boardhave complied with the best-practice provision in theinterim, compliance is assured. The members ofBinck’s Management Board and Supervisory Boardalso, on a purely voluntary basis, complied with themajority and quorum requirements of this bestpracticeprovision in respect of any resolution of theGeneral Meeting to dismiss them.Supervisory BoardCommitteesPrinciple III.5of the Code recommends that allSupervisory Boards over a given size appoint an auditcommittee, a remuneration committee and aselection and appointments committee to performcertain tasks on behalf of and under theresponsibility of the Supervisory Board. If theSupervisory Board is too small to permit theappointment of such committees, the entireSupervisory Board is responsible for performing thetasks and functions of those committees as referredto in the best-practice provisions.Because its Supervisory Board does not have morethan four members, Binck has only appointed anaudit committee in accordance with therecommendation in principle III.5 of the Code. Thetasks and functions of the remuneration committeeand selection and appointments committeesdescribed in the best-practice provisions areapplicable in full, are performed by the entireSupervisory Board and are included as such in theSupervisory Board’s regulations.Best-practice provision III.5.4 refers to a number ofareas on which the audit committee should focus inIndependencePrinciple III.2 of the Code states that members of theSupervisory Board must be able to act critically andindependently of one another, of the (members ofthe) Management Board and of any particular andpartial interests. According to best-practice provisionIII.2.1, the Supervisory Board must not include morethan one member who is not independent within themeaning of best-practice provision III.2.2.The independence criteria referred to have been met.With regard to Mr. Langereis, it should be noted thathe, or the firm in which he is a partner, advises thecompany on tax law only on an occasional basis.Given the occasional nature of and modest financialinterest in these services and the eminentlyreasonable fee charged for them, there is no questionof any conflict of interest of any degree, here or inany other area, apart from those provided for in theCode.RemunerationPrinciple III.7 of the Code recommends that theremuneration of the Supervisory Board bedetermined by the General Meeting. A provision tothat effect is already included in Binck’s Articles ofAssociation. The principle further states that theremuneration of the Supervisory Board must not bedependent on the company’s results and the companymust not award options or shares toSupervisory Board members in that context.The remuneration of the members of Binck’sSupervisory Board has been determined inaccordance with these recommendations. Aresolution to amend the Articles of Association tobring them into line with the Code’srecommendations was adopted at an ExtraordinaryGeneral Meeting on 19 October 2005.


Regulations embodying rules on the ownership ofand transactions in securities by Supervisory Boardmembers other than those issued by their ‘own’companyOne of the recommendations of best-practice provisionIII.7.3 of the Code is that the Supervisory Boardshould adopt regulations embodying rules on theownership of and transactions in securities bySupervisory Board members other than those issuedby their ‘own’ company. These regulations have beenposted on the company’s website. Binck complieswith this best-practice provision, but for practicalreasons has integrated these regulations into theSupervisory Board regulations.Regulations were adopted by the Supervisory Boardin 2004 and have been posted on the company’swebsite (www.binck.com). Apart from the fact thatthe Supervisory Board has not adopted separateregulations, the requirements of best-practice provisionIII.7.3 of the Code have been met. TheSupervisory Board members are also bound by thecompany’s current regulations, which they haveagreed to observe, on insider trading, price-sensitiveinformation and personal investment transactions.MinutesAccording to best-practice provision IV.3.8 of theCode, the minutes of the General Meeting ofShareholders must be made available on request toshareholders within three months of the meeting,after which the shareholders must be given threemonths to comment on the report. The report mustthen be adopted in the manner prescribed by theArticles of Association.This best-practice provision only applies to Binck ifthe Chairman of the Management Board and/or theManagement Board itself does not decide to have anotarial record made of the meeting, or at least ofthe resolutions adopted by the meeting, in whichcase Binck will comply with the best-practice provision.If it is decided to have a notarial record madeof the meeting, or at least of the resolutions adoptedby the meeting, that record will have absoluteevidential force. In the absence of evidence to thecontrary, it will be accepted by all as an accuraterepresentation of the proceedings of the meeting.In that case, responses by shareholders will not beincluded in the record.External auditorsErnst & Young Accountants were appointed to auditthe annual accounts by the Annual General Meetingof Shareholders on 21 April 2005.In accordance with best-practice provision V.2.3 of theCode, the management and the Audit Committeemake a thorough assessment of the functioning ofthe external auditors at least once every four years.The main findings are communicated to the GeneralMeeting to assist in considering the nomination forappointment of the external auditors. Pursuant tothe Netherlands regulations on the independence ofauditors, one partner was rotated in 2004. Amaximum term of seven years was set for theleading auditor.Anti-takeover defencesStichting Prioriteit AOT (the ‘priority shareholder’)holds 50 priority shares in Binck N.V. Under theArticles of Association, the priority shareholder has acentral role in many important decisions.Management Board and Supervisory Board members,for example, are appointed from a non-binding listcandidates drawn up by the priority shareholder.A resolution to amend the Articles of Association canonly be adopted on a proposal of the priorityshareholder, and the priority shareholder determineswhat part of the (remaining) profits is to be added toreserves.In essence, the purpose of the priority shareholder isto counter any influence over Binck’s management oroperations which might be prejudicial to theindependence of the company and its relatedenterprise and to promote good governance of itsaffairs. The Executive Committee of the priorityshareholder has three members. Member A isappointed by Binck’s Supervisory Board, member B byBinck’s Management Board and member C bymembers A and B together. The incumbent membersA, B and C of the priority shareholder’s ExecutiveCommittee are Messrs. Scholtes (Chairman of Binck’sSupervisory Board), Schaap (Chairman of Binck’s3 7A n n u a l R e p o r t 2 0 0 5


A n n u a l R e p o r t 2 0 0 5 3 8Management Board) and Langereis (member ofBinck’s Supervisory Board), respectively.The question whether it was appropriate for thepriority shareholder to continue to hold the powersvested in it by the Articles of Association wasaddressed by the Management Board andSupervisory Board in 2004. They took the view thatthe decision on the future position of the priorityshareholder was closely linked with how theprovisions relating to public offers contained in theEC 13th Directive, which was adopted on 21 April2004, is implemented in Netherlands law.Among other things, the directive requires memberstates to introduce a mandatory public offer rule,which will apply for example in situations where anatural person or legal entity acquires securities that,directly or indirectly, confer a given percentageof the voting rights in a listed company and therebyacquires control. One purpose served by themandatory public offer is to ensure that theremaining shareholders also receive the additionalamount paid for each security over and above marketprice, because it obliges the bidder to pay theremaining shareholders the same price as was paidto acquire control.Another reason for introducing a mandatory offerrule is to protect the remaining shareholders againstabuse of power by the controlling shareholder.There are various ways in which the remainingshareholders might be disadvantaged. Thecontrolling shareholder might, for example, opposethe payment of a dividend, against the will of theother shareholders. Control might also be acquired byone of the company’s competitors, which could thenclose down the company’s operations in order toincrease its own market share.On 31 March 2005, the Ministry of Finance initiatedconsultation on the bill to implement the Europeandirective, which must become law by 20 May 2006 atthe latest. By the time the directive is implemented,it should have become clear in what situations, otherthan as already applicable to a limited extent underthe current rules, minority shareholders will have theright to sell their shares (whether or not via amandatory offer) and, if so, to what extent antitakeovermeasures under the Articles of Associationare still permitted (whether or not after a publicoffer has been made).Binck’s Management Board and Supervisory Boardtake the view that it is justifiable at present tomaintain the priority shareholder’s position, becauseit compensates to some extent the current absenceof a mandatory offer rule and protection againstabuse of power by a controlling shareholder.Maintaining the priority shareholder’s position alsohelps to maintain the continuity of Binck N.V. and itsgovernance by ensuring that due consideration isgiven to the interests of all stakeholders in thecompany.In the light of the foregoing, the Management Boardand Supervisory Board take the view that, in theinterests of all stakeholders in the company, thepriority shareholder’s present status be maintainedin any event until the directive is implemented inNetherlands law. The Management Board andSupervisory Board will not, therefore, take any actionto rescind or restrict the priority shareholder’spowers. After the directive has come into effect andhas been implemented, the issue will be reviewed bythe Management Board and Supervisory Board.The desirability of maintaining the current status ofthe priority shareholder under the Articles ofAssociation was discussed by the 2005 AnnualGeneral Meeting.ConclusionThe corporate governance structure and theproposed application of the Code were among theitems on the agenda of the Annual General Meetingon 21 April 2005. There has been no substantialchange in the company’s corporate governancestructure or its application of the Code since then,other than the amendments to the Articles ofAssociation which were adopted by the ExtraordinaryGeneral Meeting on 19 October 2005 to bring theminto line with the Large-Company RegimeAmendment Act (Wet aanpassing structuurregeling),which came into effect on 1 October 2005, and the


Code. The opportunity was also taken to make anumber of editorial and/or technical amendments tothe Articles of Association. Binck complies with theCode’s best-practice provisions, except as explained inthis chapter.A n n u a l R e p o r t 2 0 0 53 9


Risk ManagementA n n u a l R e p o r t 2 0 0 5 4 0Given its exposure to various risks in the course of itsoperations, Binck performs an annual risk analysis togain a better understanding of these risks andmonitor their development. How well we monitorand control risk depends on our organisationalstructure and the control measures we employ. Riskanalysis and risk control measures are subjected tointernal audit, the results of which are discussed inthe meetings of the Management Board and theAudit Committee and the meetings with theSupervisory Board. The risks are described in broadoutline below. Identifying risks and implementingand modifying the risk control measures is anongoing process within Binck.Credit riskCredit risk is the risk of a counterparty in a trade inand/or an institution issuing a financial instrumentfailing to honour its obligations, as a result of whichBinck incurs a financial loss.In its retail operations, Binck only lends againstreadily liquidated collateral, such as securities andbank guarantees. Given the nature of its lendingactivities and the collateral required, the credit risk islimited. The bulk of Binck’s lending is to naturalpersons and legal entities in the Netherlands.Where Binck lends against the collateral of securities,the lending limit depends on the liquidity andmarket value of the securities concerned. Lending ismonitored by the Risk Management departmentusing automated systems, based on real-time prices.The risk on lending operations can therefore relate tochanges in the value of the collateral (securities),system malfunctions (operational risk) andmalfunctions in credit monitoring procedures(operational risk).BinckBank also lends to banks and manufacturingindustry as a vehicle for investing client accounts.This lending is subject to internal counterparty limitson both amount and duration. Credit risk is reviewedperiodically.In its wholesale and trading activities, Binck isexposed to credit risk in respect of counterpartiesfailing to honour their obligations in over-thecounter(OTC) transactions, which are chiefly inequities and bonds. This risk is controlled byprocedural monitoring of settlements (position andtransaction reconciliation).Market riskMarket risk is the risk of movements in interest ratesand securities and derivatives prices. Binck has atrading portfolio and an investment portfolio.The trading portfolio comprises equities, bonds andderivatives, and movements in interest rates andsecurities and derivatives prices have a direct effecton its value and hence on Binck’s financial positionand results. To control the market risks on the tradingportfolio, Binck operates a system of internal limits,which are monitored by the Risk Managementdepartment. The Risk Committee meets regularly todiscuss the limit system and the risks relating to theexisting positions and limits and to consider andadopt proposals for new trading strategies. If the setlimits are exceeded, Risk Management takes actionimmediately and reports to the responsibleManagement Board member. In its role as liquidityprovider as part of its trading activities, Binck may becommitted in some cases to buy or sell securities.BinckBank’s investment portfolio consists of fixedincomesecurities, which are selected by theManagement Board. The value of the investmentportfolio may fluctuate due to movements in interestrates and changes in the issuer’s creditworthiness.Binck invests only in fixed-income securities rated atleast single-A by Standard & Poor’s. It is estimatedthat, as at year-end 2005, the value of the investmentportfolio would fall by approximately €700,000for an absolute rise of one percentage point in therelevant interest rate.


Interest-rate riskInterest-rate risk is the risk of movements in interestrates which might adversely affect futureprofitability.Binck manages this risk, as it relates to BinckBank’sbanking operations, by matching the durations ofclient accounts and investments within set limits.The investment portfolio is accordingly spread over arange of durations and includes floating-rate bonds.Liquidity riskLiquidity risk is the current and future risk of Binck’sfinancial position and results not being sufficientto enable the company to meet its short-termcommitments without incurring excessive costs and/or losses.Binck’s liquidity position as at year-end 2005 wassatisfactory. Binck also has a credit facility with otherbanks. Given the nature of Binck’s activities, there issome risk of liquidity shortage, for example whenrunning maximum trading positions or in the eventof incorrect settlement of securities transactions forwholesale clients, a high volume of lending to retailclients or a decrease in retail client accounts.Fluctuations in the volume of client accounts aremanaged by restricting the investment of thesefunds to short-term vehicles (mainly call loans).Liquidity risk is monitored by computing the liquidityposition on a daily basis, covering all activities.Currency riskCurrency risk is the risk of movements in the value ofitems denominated in foreign currencies due tomovements in exchange rates.Binck is exposed to currency risk in respect of theactivities of its associate based outside the eurozone.Exchange rate movements affect the revenue ineuros reported in the profit and loss account and thefinancial position shown in the balance sheet. It isBinck’s policy not to hedge these risks.Currency risks on trading and brokerage activitiesare hedged as soon as possible in accordance withinternal guidelines, unless a currency position istaken as part of a trading strategy approved by theRisk Committee.The currency position is monitored on a daily basis toensure that it stays within the set limits.Operational riskOperational risk is the risk of loss due to inadequatesystems, processes and procedures. The term coversgeneral operational risks, IT risks, risks relating tooutsourcing of business processes and integrity risks.Operational risk is generally the result of:• deficiencies in the daily processing and settlementof transactions with clients or other parties or inthe procedures and actions designed to ensureprompt detection of defects;• quantitative or qualitative deficiencies orlimitations in human resources;• deficient decision-making due to inadequatemanagement information;• incorrect application of internal controlprocedures.Operational risk is managed on a structural basisthroughout the organisation, via a series of internalmonitoring procedures including:• transaction and position reconciliation, includingmanagement reporting;• automated recording and execution of transactionsand related audit trails;• procedures for staff recruitment and mentoring andfunctional segregation and job descriptions for allemployees and departments;• clear reporting lines, recording of requiredmanagement information and periodic internalconsultation;• internal monitoring and internal audits, jobsegregation, mandatory application of the four-eyesprinciple to powers of attorney and authority toenter into binding contracts on behalf of thecompany;• effective reporting structures.4 1A n n u a l R e p o r t 2 0 0 5


IT risk is the current and future risk posed bydeficiencies in the technology employed to Binck’sfinancial position and results.Binck is heavily dependent on IT in general anddeficiencies in this area pose a significant threat toBinck’s financial position and results. The ITorganisation is designed to manage that risk andincorporates a series of internal monitoringprocedures covering IT policy, security policy, incidentmanagement, change management and availabilityand performance management. BinckBank also has afallback facility which it can use in emergencies.This fallback facility does not provide cover for theTrading business unit’s activities. Each year, Binckcommissions external agencies to audit and reporton has specific areas of its IT operations.business decisions, poor execution of businessdecisions or inadequate response to changes in thebusiness climate in general and the markets whichare relevant to the company in particular.International economic conditions affect stockmarkets around the world and hence the results onBinck’s operations. Reduced trading volumes cantranslate into reduced revenue from financialtransactions and interest and commission income.BinckBank operates in a highly competitiveenvironment in which its competitors, often verylarge financial institutions, have well establishedbrands and ample financial resources. Retainingexisting clients and attracting new ones is a highpriority for BinckBank, in which it makes substantialinvestments.A n n u a l R e p o r t 2 0 0 5 4 2Risks relating to outsourcing of business processesare current and future risks to the company’sfinancial position and results posed by third-partyprovision on a structural basis of services which arepart of its business processes.Binck has not outsourced any business processes, butvarious associates take services from one other,under internal service level agreements.Integrity riskIntegrity risk is the risk of harm to the company’sreputation and/or its financial position and resultsdue to inadequate compliance with applicablelegislation and regulations and internal standards,rules or codes of conduct.To control this risk, Binck imposes clear internalstandards and codes of conduct which are clearlycommunicated within the organisation. Binck hasappointed a compliance officer, for whom clearreporting lines have been defined a clear escalationprocedure has been implemented. Binck also hasprocedures in place for whistleblowers andmandatory reporting of suspicious transactions.Against the background of its long-term strategy,Binck measures all its business units against suchcriteria as strategic fit, profitability and synergy. In arapidly changing environment, this is an ongoingprocess.GeneralBinck’s Internal Audit department performs regularrisk analyses and internal audits of the implementationand functioning of the internal control and riskmanagement procedures. The Internal Auditdepartment reports its findings to the responsiblemanager, the Management Board, the AuditCommittee and the Supervisory Board. On the basisof the risk analysis, an internal audit plan is preparedand submitted to the Audit Committee for adoption.The plan provides for all identified areas of risk in allbusiness units to undergo an internal audit over atwo-year period. The plan also provides for follow-upaudits by the Internal Audit department to verifythat appropriate action has been taken with regardto deficiencies or areas requiring attention whichwere identified by previous audits. The Internal Auditdepartment updates the risk analysis annually toreflect new activities, procedures and findings.Strategic riskStrategic risk is the current and future risk to Binck’sfinancial position and results due to misjudgedA number of internal audits were performed in2005 within the retail and wholesale organisations(BinckBank), with the broad aim of making an


informed judgment of the internal managementprocedures and organisation in the identified areasof risk within BinckBank. The Internal Auditdepartment has also performed a risk analysis onand drawn up an audit plan for the operations whichBinck plans to start up in Belgium in 2006.A risk analysis and a number of internal audits wereperformed within the Dutch trading activities in2005, with the broad aim of making an informedjudgment of the internal management proceduresand organisation in the identified areas of risk.One deficiency is the absence of a fall-back facility inthe event of emergencies. The monitoring of limitswithin the trading systems (operational risk) is beingmore highly automated, which will help to controlrisks more effectively. A follow-up audit will beperformed in 2006 once the system modificationshave been implemented and the fall-back facility hasbeen provided.Because no risk analysis is available at present for thetrading operations in the UK, no internal audits havebeen performed on these operations. The businessprocesses are audited by the external auditors. Theprocedure employed by Binck is based on an internalcascade system, whereby a statement regarding thefunctioning of the local internal risk-managementprocedures and organisation is issued by the localmanagement. Binck will continue working in 2006 onintegrating the UK trading activities into the Binckorganisation and its procedures, thus facilitating thework of the Internal Audit department. As well asintegration, the functioning of the internalreconciliation processes employed within the UKtrading operations will also be the focus of particularattention in 2006.4 3A n n u a l R e p o r t 2 0 0 5


In control statementA n n u a l R e p o r t 2 0 0 5 4 4Closely monitoring company’s internal riskmanagement and control systems during 2005 hashelped us to identify significant risks which relatespecifically to Binck. These risks and the relatedcontrol measures are described in the ‘Riskmanagement’ section of this annual report. The lackof fall-back facilities for our trading activities and ourinability, in the absence of a risk analysis, to performinternal audits on our UK trading operations areissues on which action is being taken to enhancecontrol of potential risks.We are provided with periodic internal controlreports, including reports on positions held for ownaccount and risk in relation to internally-setmaximum position limits (market risk), lending inrelation to the value of the collateral (credit risk),transaction and position reconciliation (operationalrisk), client complaints and comments (operationalrisk) and availability of IT systems (operational risk).We also receive numerous regular reports on theprogress of our business, such as financial reports(including profit and loss account, balance sheet,debtors, solvency and liquidity position and relatedanalyses) and reports on the development of ourclient base.From our UK associate we receive financial reportsand market risk reports, as well as an annualstatement by local management on the functioningof the local internal risk management and controlsystems. The Internal Audit department submitsperiodic reports presenting the findings of theinternal audits it has performed on the basis of theaudit plan adopted by the Audit Committee. One ormore specific audits are also performed by externalagencies each year on specific areas such as the ITenvironment. All these reports are discussed in themeetings of the Management Board, other internalbodies such as the Audit Committee, and theSupervisory Board. The purpose of these meetings isto monitor the correct functioning of the internalcontrols during the financial year, so that action canbe taken where necessary.However well our internal risk management andcontrol system is designed, it can never give absoluteassurance that we shall always be able to meet ourobjectives in terms of strategy, operations, reportingand compliance with all applicable legislation andregulations. The reality is that human error isalways an element in decision-making and the costalways has to be balanced against the benefitswhen accepting risks and implementing controls.Even minor mistakes due to human error mayhave significant results, employees may conspireto circumvent internal controls and responsiblemanagers may ignore internal agreements.Given these limitations, which are inherent in allinternal risk management and control systems, andgiven the areas for improvement which have beenidentified, our assessment of the internal riskmanagement and control systems provides areasonable degree of assurance that:• we are able to keep track of our progress towardsBinck’s strategic and operational goals;• Binck complies with the applicable legislation andregulations;and, with regard to financial reporting:• the risk management and control systems provide areasonable degree of assurance that the financialstatements contain no material misstatements;• the internal risk management and control systemshave functioned properly in the past financial year.


4 5P ERSONNEL AND ORGANISATIONA n n u a l R e p o r t 2 0 0 5


Personnel and organisationA n n u a l R e p o r t 2 0 0 5 4 6Binck N.V.’s organisational structureUntil 1 January 2006, Binck was organised into threebusiness units: Retail, Wholesale and Trading.This structure had come into being after the mergerof former AOT and former Effectenbank Binck inmid-2004. In 2005 and prior years, services for bothprivate and professional clients were provided by theRetail business unit. As the services to these twoclient groups have grown, it has become necessary toadopt a more focused approach.As from 1 January 2006, the services for professionalclients are being provided by a new business unit,Professional Services. From the same date, theactivities of the Wholesale business unit have beentransferred to the new business unit to supplementthe services to professional clients. As a consequenceof these changes, financial reporting from 1 January2006 onwards will relate to three business units:Retail, Professional Services and Trading.RetailBinckBank N.V.(100%)ProfessionalServicesBinck België N.V.(100%)Consideration will be given in 2006 to expanding therange of services for existing professional clients in2006 to include execution of securities orders andinsourcing of administration and payments for(smaller) banks.Action was taken in 2005 to further simplify theorganisation:• the 6.25% interest in Trader Team Ltd. was sold;• AOT Derivatives B.V. was wound up;• Seven Stars Ltd. was wound up and the shareswere transferred to Binck N.V., the latterthereby acquiring 100% of Hills IndependentTraders Ltd,;• HIT Securities Ltd. was wound up.Following these organisational changes, the structureis now as follows:Binck N.V.TradingBinck Securities B.V.(100%)BinckBank België(100%)Bewaarbedrijf BinckBankB.V. (100%)Hills IndependentTraders Ltd.(100%)Stichting EffectengiroBinck (100%)AOT Facilities B.V.(100%)


Management Board and personnelThis organisational realignment and the departure ofAndré Teeuw with effect from 31 December 2005have also necessitated a change in the compositionof the Management Board and a new organisationalstructure. On 1 January 2006, Thierry Schaapsucceeded André Teeuw as Chairman of theSupervisory Board. Mr. Teeuw had decided to standdown early because the process of merging,integration and reorganisation was progressingfaster than expected, but has agreed to allow Binckto benefit from his expertise and experience until 1May 2007 as an advisor to the company. Mr. PieterAartsen will join the company on 1 February 2006and, subject to the approval of the regulators andshareholders, will be appointed to the ManagementBoard of Binck N.V., increasing the number ofmembers to three:• Thierry Schaap (34), chairman, with responsibilityfor Trading, IAD, Risk Management, Secretariat,Human Resources, Investor Relations, Legal, Finance,Operations and IT;• Pieter Aartsen (41), with responsibility forProfessional Services (professional clients andinstitutional brokerage);• Kalo Bagijn (34), with responsibility for Retail(Netherlands and Belgium) and Public Relations.As from 1 January 2006, the Management Board willbe assisted by two General Managers, Messrs.R. (Rene) Schipper and R.J. (Rene) Veerkamp, who,together with the members of the ManagementBoard, will form the Management Committee (dayto-daymanagement). The responsibilities of theManagement Committee have been allocated asfollows:• Thierry Schaap : Trading, IAD, Human Resources,Investor Relations and Legal• Pieter Aartsen : Professional Services• Kalo Bagijn : Retail (Netherlands and Belgium)and Public Relations• Rene Schipper : Finance and Risk Management• Rene Veerkamp : Operations and IT.4 7A n n u a l R e p o r t 2 0 0 5From left to right: Kalo Bagijn, Rene Schipper, Pieter Aartsen, Rene Veerkamp, Thierry Schaap


The day-to-day management of Binck België N.V. isthe responsibility of a Management Committeeconsisting of Messrs. Nick Bortot (Chairman) andVincent Germyns.The members of the Management Board of BinckBelgië N.V. are:T. SchaapK. BagijnN. BortotV. GermynsMessrs. Bortot and Germyns are also responsible forthe day-to-day management of BinckBank’s Belgianbranch, but are accorded no status by the Articles ofAssociation.The members of the Board of Directors of HillsIndependent Traders Ltd. are:A.E. Teeuw (non-executive director and Chairman)S. Bishop (non-executive director)S. HillsJ. HaleBinck’s human resources policy is designed to attractand retain enthusiastic, motivated and talentedpeople, because they can supply the energy andexpertise needed to grow our organisation. As well asbeing one of Binck’s hallmarks, customer focus is oneof the selection criteria we apply when recruitingnew staff. Binck gives high priority to therecruitment, development and retention of talent.Our business is growing fast and clarity is essential,in both organisational structure and reporting lines,to ensure that opportunities, threats, ideas andchallenges are identified and discussed at an earlyA n n u a l R e p o r t 2 0 0 5 4 8SecretariatFinanceRisk ManagementPR/IRBinck N.V.Human ResourcesFacilitiesLegalITThierry Schaap,ChairmanKalo Bagijn,Management BoardPieter Aartsen,Management BoardBinckBank N.V. Binck Securities B.V. HIT Ltd.IAD/ComplianceEquities &BondsDerivativesOperationsRetailProfessionalServicesKwantitatieve ResearchPrivate clientsMarketing & CommunicationProfessional clientsBinck BelgiumInstitutional Brokerage


stage. This will enable Binck to sustain its controlledgrowth in the coming years.The number of employees decreased by 17 as at yearend2005, to 170 (2004: 187). The average numberof employees last year was 167 (2004: 234). The mainfactor in this decrease was the loss of a total of 33jobs at HIT Securities Ltd.Distribution of personnel by business unit(including foreign operations)Trading39%Wholesale9%Retail52%A n n u a l R e p o r t 2 0 0 54 9


A n n u a l R e p o r t 2 0 0 5 5 0


Financial statements 2005 Binck N.V.Consolidated balance sheet .....................................................................................................................................52Consolidated income statement .............................................................................................................................53Consolidated cash flow statement .........................................................................................................................54Consolidated statement of changes in equity ....................................................................................................56Notes to the consolidated financial statements .................................................................................................57Notes to the consolidated balance sheet .............................................................................................................65Notes to the consolidated income statement ....................................................................................................76Financial risk management ......................................................................................................................................87Company balance sheet ............................................................................................................................................91Company income statement ...................................................................................................................................92Company statement of changes in equity ...........................................................................................................93Notes to the company financial statements .......................................................................................................94Notes to the company balance sheet ....................................................................................................................95A n n u a l R e p o r t 2 0 0 5 5 1


Consolidated balance sheetNote 31 December 2005 31 December 2004x € 1,000 x € 1,000AssetsCash 1 7,685 2,198Banks 2 171,113 102,396Loans and receivables 3 124,764 62,386Interest-bearing securities 4 42,011 40,984Shares and other non-fixed-interest instruments 5 120,656 93,217Other investments 6 88 102Intangible assets 7 1,051 643Property, plant and equipment 8 1,829 2,296A n n u a l R e p o r t 2 0 0 5 5 2Tax receivables 9 4,870 1,991Other assets 10 21,010 17,442Prepayments and accrued income 11 3,600 2,096Total Assets 498,677 325,751Equity and LiabilitiesFunds entrusted 12 235,836 127,535Liabilities in respect of securities 13 111,353 91,452Other liabilities 14 84,031 50,433Accruals and deferred income 15 11,699 8,577Provisions 16 512 1,100443,431 279,097Equity attributable to equityholders ofthe parent 17 55,246 45,712Minority interests 17 - 942Total equity 17 55,246 46,654Total equity and liabilities 498,677 325,751


Consolidated income statementNote 2005 2004x € 1,000 x € 1,000RevenueInterest income 18 8,269 3,937Interest expense 18 (2,244) (973)Interest 18 6,025 2,964Income from securities and participatinginterests 19 (1) 2,754Commission income 20 34,090 25,005Commission expense 20 (11,521) (9,604)Commission 20 22,569 15,401Results on financial transactions 21 21,598 18,846Total revenue 50,191 39,965ExpensesSalaries and employee benefits 22 20,674 21,968Other operating expenses 23 9,210 10,888Depreciation and amortisation 24 1,637 2,195Total expenses 31,521 35,051Operating profit before income tax18,670 4,914Income tax expense 25 (5,142) (1,606)Profit for the year 13,528 3,308Attributable to:Equityholders of the parent 13,609 2,808Minority interests (81) 500A n n u a l R e p o r t 2 0 0 5 5 313,528 3,308Earnings per share (in €) 26 0.45 0.10Diluted earnings per share (in €) 27 0.44 0.10


Consolidated cash flow statement31 December 2005 31 December 2004x € 1,000 x € 1,000Cash flow from operating activitiesProfit for the year attributable to Binck N.V. shareholders 13,609 2,808Depreciation of intangible assets (24) 414 372Depreciation of property, plant and equipment (24) 1,223 1,823Other movements in non-cash items 263 420Impairment losses (24) - 282Movement in provisions (588) (7,199)A n n u a l R e p o r t 2 0 0 5 5 4Movements in:Banks (balances not available on demand) (14,221) 7,753Loans and receivables (50,128) (35,586)Interest-bearing securities (1,741) (6,432)Shares and non-fixed-interest instruments (27,439) 152,255Other assets, prepayments and accrued income (7,951) (3,906)Funds entrusted 108,301 7,699Liabilities in respect of securities 19,901 (56,677)Other liabilities, accruals and deferred income 35,165 (16,549)Net cash flow from operating activities 76,808 47,063Cash flow from investing activitiesInvestments in subsidiaries (1,446) (19,730)Disposals of subsidiaries 14 1,923Investments in interest-bearing securities 239 (29,772)Investments in intangible assets (822) (729)Investments in property, plant and equipment (756) (1,253)Disposals of property, plant and equipment - 13Other assets - 286Net cash flow from investing activities (2,771) (49,262)Cash flow from financing activitiesIssue of share capital - 12,647Profit-sharing bond 1,555 -Dividends paid-Final dividend for 2004 (1,527) --Interim dividend 2005 (1,832) -Net cash flow from financing activities (1,804) 12,647Cash flow 72,233 10,448


Consolidated cash flow statement (continued)31 December 2005 31 December 2004x € 1,000 x € 1,000Cash and cash equivalents at start of year 74,472 64,024Cash and cash equivalents at end of year 146,705 74,472Movement 72,233 10,448Cash and cash equivalents as presented in the consolidatedcash flow statement are shown in the balance sheet under thefollowing headings for the following amounts:Cash (1) 7,685 2,198Banks (excluding balances not available on demand) (2) 114,520 60,024Loans and receivables (‘call money’) (3) 24,500 12,250Total 146,705 74,472Cash flow from operating activities includes the following items:Taxes paid (8,021) 3,781Interest received 7,523 3,054Interest paid (2,048) (869)Commission received 33,911 24,928Commission paid (11,302) (9,603)A n n u a l R e p o r t 2 0 0 5 5 5


Consolidated statement of changes in equityNote Issued Share Reserve Unappor- Other Sub- Minority Totalshare premium own tioned reserves total interests equitycapital shares profit andretainedearnings1 January 2004 2,437 8,855 (1,121) - 35,373 45,544 5,159 50,703Result from financialassets available for sale 17 - - - - (19) (19) - (19)Conversion of foreigncurrencies 17 - - - - 41 41 - 41Result recognised directlyin equity - - - - 22 22 - 22Profit for the year - - - 2,808 - 2,808 500 3,308Total income and expense - - - 2,808 22 2,830 500 3,3305 6Issue of shares 647 12,290 - - - 12,937 - 12,937Issuing costs - (290) - - - (290) - (290)Acquisition of minorityinterest 17 - - - - (15,309) (15,309) (4,717) (20,026)A n n u a l R e p o r t 2 0 0 531 December 2004 3,084 20,855 (1,121) 2,808 20,086 45,712 942 46,654Impairment in value offinancial assets availablefor sale 4 - - - - (475) (475) - (475)Conversion of foreigncurrencies 17 - - - - 196 196 - 196Result recognised directlyin equity - - - - (279) (279) - (279)Profit for the year - - - 13,609 - 13,609 (81) 13,528Total income and expense - - - 13,609 (279) 13,330 (81) 13,249Payment of interimdividend 28 - - - - (1,832) (1,832) - (1,832)Payment of final dividend 28 - - - - (1,527) (1,527) - (1,527)Rights to shares granted 22 - - - - 263 263 - 263Acquisition of minorityinterest 17 - - - - (700) (700) (861) (1,561)Retained earnings transferredto other reserves 17 - - - (2,808) 2,808 - - -31 December 2005 3,084 20,855 (1,121) 13,609 18,819 55,246 - 55,246


Notes to the consolidated financial statementsGeneralBusiness activitiesBinck N.V. is a company established and domiciled inthe Netherlands, whose shares are publicly traded.Through its subsidiaries Binck N.V. provides brokingand internet broking services in securities andderivative transactions for private and professionalinvestors and also trades in shares, bonds andderivatives for its own account and risk. Binck N.V. andits relevant subsidiaries will henceforth be referred toas ‘Binck’.The consolidated financial statements of Binck for theyear to 31 December 2005 have been prepared by thecompany’s Management Board. The financialstatements for 2005 will be adopted at the GeneralMeeting of Shareholders on 27 March 2006.Presentation of financial statements and first-timeapplication of IFRSThe consolidated financial statements have beenprepared in accordance with the InternationalFinancial Reporting Standards (‘IFRS’) adopted by theInternational Accounting Standards Board andendorsed by the European Commission.The financial statements have been compiledapplying the historical cost convention, with theexception of financial assets and liabilities held fortrading purposes and financial assets available forsale, which are shown at fair value.Unless otherwise stated, the financial statements arein euros, with all amounts rounded off to the nearestthousand.have been prepared in accordance with theInternational Financial Reporting Standards (IFRS).The transition date for applying IFRS is 1 January2004. The comparative figures for 2004 have beenadjusted accordingly.The cumulative foreign currency translation reservewas set at nil on 1 January 2004 in accordance withthe exception provided for in IFRS 1 in respect of theopening balance sheet under IFRS. IAS 32 and 39 havebeen applied with effect from 1 January 2005. Binckhas not adjusted the figures for acquisitions madeprior to 1 January 2004. IFRS 2 has been applied inrespect of option rights that were granted after7 November 2002 and had not yet becomeunconditional on 1 January 2005.The equity shown in the financial statements as at1 January under Dutch GAAP is the equity under IFRSas at that date.As a result of the first-time adoption of the financialstatements under IFRS, the result for 2004 has beenadjusted as follows:Result for 2004 under Dutch GAAP 3,651Share options granted (i) (98)Sale of foreign subsidiaries (ii) (245)Result for 2004 under IFRS 3,308The above movements have no effect on equity.5 7A n n u a l R e p o r t 2 0 0 5Until the end of 2004, the financial statements wereprepared in accordance with generally acceptedstandards for financial reporting in the Netherlands(‘Dutch GAAP’). The financial statements for 2005


5 8A n n u a l R e p o r t 2 0 0 5As a result of the first-time adoption of the financialstatements under IFRS, equity at 1 January 2005 hasbeen adjusted as follows:Equity under Dutch GAAP/IFRS as at31 December 2004 45,860Revaluation of trading portfolio (iii) (129)Revaluation of financial assets availablefor sale (iv) (19)Equity under IFRS at 1 January 2005 45,712Notes on the changes:(i) Under IFRS, share based payments are recognisedas salaries and employee benefits at the time ofbeing granted and simultaneously recognised inequity. Options totalling € 98,000 were grantedin 2004. These are presented in the financialstatements in accordance with IFRS.(ii) The result of the sale of foreign subsidiariesrelates to the realisation, upon sale, of currencytranslation differences recognised in equity untilthe time of the sale.(iii) The revaluation of the trading portfolio relates tothe net open position being calculated on thebasis of the bid and offer prices under IFRS,whereas under Dutch GAAP these positions wereshown at mid-market prices.(iv) Under IFRS, investments available for sale areshown at fair value, with any impairment vis-à-viscost being recognised as a separate component ofequity. If an investment is sold, the transactionresult is recognised in the income statement. Thismethod of presentation was not applied underDutch GAAP. At the 2004 year-end, the differencebetween the cost and fair value of financial assetsavailable for sale amounted to € 19,000.The changes referred to in (iii) and (iv) relate to theapplication of IAS 39 from 1 January 2005.Cash flow statementThe transition to IFRS has not resulted in any changein the cash flow. Cash and cash equivalents comprisecash, amounts held at banks (excluding creditbalances not available on demand) and money heldon call, which is shown under ‘Loans and receivables’.Basis of consolidationThe consolidated financial statements include theassets and liabilities and the income and expenseitems of the company and its subsidiaries. Entitiesover which Binck has control are referred to assubsidiaries. Control is deemed to exist if Binck is able,either directly or indirectly, to govern the financial andoperational policies of the company so as to obtainbenefits from its activities.Subsidiaries are consolidated as soon as Binck obtainscontrol. If Binck ceases at any point to control asubsidiary, the subsidiary will no longer be consolidated.The consolidated financial statements include thefollowing subsidiaries:Owner- OwnershipshipName Country 2005 2004BinckBank N.V. Netherlands 100% 100%Binck Securities B.V. Netherlands 100% 100%Hounds Island LongTerm Leasing CV Netherlands 100% 100%AOT Derivatives B.V. Netherlands – 100%Binck België N.V. Belgium 100% 58%Seven Stars Ltd. UK – 100%Hills IndependentTraders Ltd. UK 100% 100%HIT Securities Ltd. UK – 100%


The subsidiaries AOT Derivatives B.V., Seven Stars Ltdand HIT Securities Ltd. were liquidated in 2005. Theremaining shares (42%) of Binck België N.V. werepurchased on 18 April 2005. This transaction is shownas a transaction between shareholders. Theconsolidated financial statements include the fullresults for the period following acquisition. Theminority interest relates to the share of the result andequity of Binck België N.V. not attributable to Binck –achieved in the period prior to acquisition – and isshown separately in the income statement and inequity in the consolidated balance sheet.Relationships between consolidated group companiesare eliminated in full in the preparation of theconsolidated financial statements.The accounting policies used by subsidiaries forlike transactions and other events in similarcircumstances and their reporting dates are the sameas applied by Binck.Significant accounting judgements and estimatesThe preparation of the financial statements involvesmaking assumptions and estimates on therecognition and valuation of assets and liabilities,contingent rights and liabilities and income andexpense items. The most significant assumptions forthe future and other key sources of estimationuncertainty at the balance sheet date that have asignificant risk of causing a material adjustment tothe carrying amount of assets and liabilities are theestimates made in respect of impairment losses onloans and other assets, the determination of the fairvalue of certain assets and liabilities and theprovisions.Accounting policies for valuationForeign currency translationThe consolidated financial statements are in euros,which is Binck’s functional and presentation currency.Items shown in the financial statements of eachentity are valued on the basis of the relevant entity’sfunctional currency. Transactions in foreign currenciesare converted on initial recognition at the functionalcurrency’s exchange rate on the transaction date.Assets and liabilities denominated in foreigncurrencies are converted at the exchange ratesprevailing on the balance sheet date. Differencesrelating to movements in exchange rates arerecognised in the income statement.At the reporting date, the assets and liabilities areconverted into Binck’s presentation currency (euros) atthe exchange rate prevailing on the balance sheetdate and, in the case of the income statement, at theweighted average exchange rate for the year. Thesedifferences are recognised directly in a separatecomponent of equity. If a foreign group company issold, the deferred cumulative amount included inequity for the relevant company is recognised in theincome statement. The results of financialtransactions and costs shown in the incomestatement are converted into euros at the exchangerate prevailing on the transaction date.Financial assets and liabilitiesIn accordance with IAS 39, items under these headingsare classified as either financial assets at fair value,through profit or loss, held-to-maturity investments,loans and receivables or as available for sale financialassets, as appropriate. Binck determines theclassification of its financial assets after initialrecognition and, where allowed and applicable, reevaluatesthis designation at each financial year-end.5 9A n n u a l R e p o r t 2 0 0 5


6 0A n n u a l R e p o r t 2 0 0 5Financial assets and financial liabilities at fair value,through profit or lossFinancial assets and financial liabilities are regardedas being held for trading purposes if they are acquiredwith the aim of being sold or repurchased in the shortterm. On initial recognition the financial asset andliabilities are shown at fair value and any subsequentfinancial change is recognised in the incomestatement, with the exception of investments in ownequity instruments for which no quoted fair-valueprice is available on an active market and the value ofwhich cannot be reliably determined. All derivativesare regarded as being held for trading purposes.Derivatives are financial instruments requiring no oronly a limited net initial investment and where futuresettlement is dependent on movements in certainexchange rates or prices (e.g. an interest rate or theprice of a financial instrument), such rates and pricesbeing the ‘nominal value’. Any profits or losses oninvestments held for trading purposes are recognisedin the income statement.Derivatives and items included as financial assets atfair value, through profit and loss, are referred to asthe ‘trading portfolio’.Held-to-maturity investmentsFinancial assets with fixed or determinable paymentsand a fixed maturity date are regarded as investmentsto be held to maturity if Binck specifically intends andis in a position to hold them until maturity. Suchinvestments are shown at their amortised cost,calculated using the effective interest method, lessany impairment in value.Loans and receivablesLoans and receivables are financial assets with fixedor determinable payments that are not quoted in anactive market. These shall be measured at theiramortised cost, using the effective interest method.Gains and losses are recognised in the incomestatement when the loans and receivables arederecognised or impaired, as well as through theamortisation process.Available-for-sale financial assetsAvailable-for-sale financial assets are those financialassets that are designated as being available for saleor are not included in one of the above categories.After initial recognition avaiblable-for-sale financialasets are measured at fair value. Any gain or loss isshown as a separate component of equity until theinvestment is derecognised or it is determined to beimpaired. At such time, the cumulative gain or losspreviously shown in equity is included in the incomestatement.Recognition of financial assets in the balance sheetFinancial assets bought and sold in accordance withstandard market conventions are recognised at thetransaction date of the relevant purchase or sale.Assets, loans and receivables held to maturity arerecognised in the balance sheet upon acquisition. Oninitial recognition, financial instruments are assignedto a specific category, and this determines the way inwhich they are recognised in the financial statementsat the time.A financial asset is no longer shown in the balancesheet if the contractual rights to the cash flows haveexpired or been transferred. A financial liability is nolonger shown in the balance sheet when performanceto which the liability relates has been completed,discontinued or expired.Determination of fair valueThe fair value of a financial instrument is based onthe market price if there is an active market for thatinstrument. Financial assets are shown at the bidprice, while financial liabilities are shown at the offerprice and ‘risk off-settting’ positions are shown at themid-price, excluding transaction costs. If no market


price is available, the fair value of the financialinstrument is estimated on the basis of the mostrecent commercial transactions in the market or thecurrent market value of another, essentially similarinstrument or by using pricing models or bydetermining the present value of the cash flows.Offsetting of financial instrumentsFinancial assets and liabilities are set off against eachother and the net amount is presented in the balancesheet when there is a legally enforceable right to setoff the amounts and an intention to settle on a netbasis, or realise the asset and settle the liabilitysimultaneously.Impairment of financial assetsAt each balance sheet date, Binck assesses whetherthe value of a financial asset or group of financialassets is impaired. If so, the extent of the impairmentwill be determined as follows for held-to-maturityinvestments, loans and receivables and assetsavailable for sale.Assets carried at amortised costsIf there is objective evidence, based on individualassessment, that the value of a loan or receivable orheld-to-maturity investment shown at amortised costis impaired, the amount of this loss is shown as thedifference between the book value of the asset andthe present value of the estimated future cash flows(excluding future credit losses that have not beenincurred) discounted at the financial assets originaleffective interest rate (i.e. the effective interest ratecalculated on initial recognition). The amount of theloss is recognised in the income statement. If theamount of an impairment loss subsequentlydecreases and this decrease can be objectively relatedto an event occurring after the impairment wasrecognised, the previously recognised impairment losswill be reversed, providing the book value of the assetdoes not exceed the cost less depreciation on thereversal date.Available-for-sale financial assetsIf the value of an available-for-sale financial asset isimpaired, an amount equal to the difference betweenits cost (less any repayments of principal and anydepreciation) and the current fair value (less anyimpairment losses previously recognised in theincome statement) is transferred from equity to theincome statement. Reversals of impairment lossesrelating to equity instruments shown as available forsale are not recognised in the income statement.Reversals of impairment losses relating to debtinstruments are reversed through in the incomestatement, if the increase in the fair value of theinstrument can be objectively related to an eventoccurring after the previous impairment loss wasrecognised in the income statement.DerivativesBinckBank executes derivatives transactions on behalfof its clients and holds the resultant positions.Financial settlement with the clients concerned inrespect of such transactions and positions is effectedimmediately. The clients have lodged adequatecollateral with Binck to cover the positions held.Intangible assetsIntangible assets acquired separately are measured oninitial recognition at cost. Subsequently they areshown at cost less cumulative amortisation and anycumulative impairment in value. Binck’s intangibleassets are software that has been acquired. The periodand method for amortising an intangible asset with aspecific useful economic life is assessed at each yearendat least. Software is amortised at a rate of 33.3% ayear.6 1A n n u a l R e p o r t 2 0 0 5


6 2A n n u a l R e p o r t 2 0 0 5Property, plant and equipmentThis item comprises assets designed to be used in thelong-term performance of Binck’s activities. It includesfixtures, fittings and equipment in the company’spremises and computer hardware. These assets arestated at cost less cumulative depreciation and anycumulative impairment in value. Depreciation is basedon cost and calculated on a straight-line basis over theuseful economic life of the asset. Both the usefuleconomic life and the residual value of the asset arereviewed annually. The annual depreciationpercentages are 14.3% (fixtures and fittings), 20%(equipment) and 33.3% (computer hardware).Other assetsReceivables included in this item are shown at valueless an allowance for uncollectible items.Cash and cash equivalentsCash and cash equivalents in the balance sheetcomprise cash at banks and in hand and short-termdeposits (‘call money’) with original maturities ofthree months or less.Impairment in value of assetsThe value in use of Binck’s assets is reviewed on eachbalance sheet date in order to establish whether thevalue has become impaired. If so, the recoverableamount of the asset is estimated. Impairment isrecognised if the book value of an asset or cashgeneratingunit exceeds the recoverable amount.Repurchase of own sharesOwn equity instruments which are reacquired(treasury shares) are deducted from equity. Gains orlosses on the purchase, sale, issue or withdrawal ofBinck’s own equity instruments are not recognised inthe income statement.Other liabilitiesAll loans are shown on initial recognition at the fairvalue of the consideration received less directlyattributable transaction costs. After initial recognition,interest-bearing loans are subsequently shown atamortised cost calculated using the effective interestmethod.ProvisionsA provision is recognised if (i) Binck has a presentobligation (legal or constructive) as a result of a pastevent; (ii) it is probable that an outflow of resourcesembodying economic benefits will be required tosettle the obligation and (iii) a reliable estimate canbe made of the amount of the obligation. If Binckexpects some or all of a provision to be reimbursed,the reimbursement is recognised as a separate assetonly when reimbursement is virtually certain. Theexpense relating to any provision is presented in theincome statement net of any reimbursement. If theeffect of the time value of money is material,provisions are discounted at a rate as applied for taxpurposes that reflects, where appropriate, the risksspecific to the liability. Where discounting is used, theincrease in the provision due to the passage of time isrecognised as a borrowing cost.PensionsBinck has two pension plans based on definedcontributions for members of its Management Boardand employees. Under these plans, a percentage ofemployees’ fixed salary (less the contribution-freethreshold) is paid to the insurance company operatingthe schemes. The percentage payable is age-related.The difference between the two pension plans offeredis that Binck does not pay any pension contributionsfor employees directly involved in own-accounttrading (‘traders’), whereas contributions are made forother employees and the Management Board. Pension


contributions are recognised in the year to which theyrelate.Share-based paymentsMembers of Binck’s Management Board receiveremuneration in the form of share-based payments.Commission income and expenseThis item comprises commission, excluding interest,received or receivable from third parties and paid orpayable to third parties respectively, whether on anon-recurring or more regular basis, in respect ofservices provided .The cost of equity-settled transactions is measured byreference to the fair value at the date on which theyare granted. The cost of equity-settled transactions isrecognised, together with a corresponding increase inequity, over the period in which the performanceand/or service conditions are fulfilled, ending on thedate on which the relevant employees become fullyentitled to the award (i.e. the date on which theserights become unconditional). The cumulativeexpense recognised for equity-settled transactions ateach reporting date reflects the extent to which thevesting period has expired and Binck’s best estimateof the number of equity instruments that willultimately be vested. The expense charged to theincome statement for a period reflects the movementin cumulative expense recognised at the beginningand end of that period.Accounting policies for determination ofthe resultGeneralIncome and expense items are recognised in theperiod to which they relate, subject to the aboveaccounting policies for valuation. Revenues arerecognised if it is probable that their economicbenefits will flow to Binck and the revenue can bereliably determined.Interest income and expenseInterest income and expense are recognised in theyear to which they relate.Securities and participating interestsSecurities and participating interests is recognised inthe year to which it relates. Dividends received fromother investments are recognised upon entitlement toreceive the dividend. Any realised movement in thefair value of other investments is also included in thisitem.Results on financial tansactionsFinancial instruments held for trading purposes areshown at fair value. Any movements resulting fromthis method of valuation are recognised in the resultson financial transactions in the income statement.This result includes the result of price movements,exchange rate movements, interest, transaction costsand exchange and clearing costs directly attributableto trading activities.DividendsDividends are recognised in the year in which therelevant dividend is declared payable.TaxesCorporation tax is calculated on the basis of thestandard rates applying in the countries in which theresults were achieved, with account being taken ofany relief available in these countries. Unused taxlosses carried forward are attributed a value only if itis probable that taxable profits will be available in thefuture against which such unused tax losses and taxcredits can be applied.6 3A n n u a l R e p o r t 2 0 0 5


Transactions with related partiesThe Management Board and the Supervisory Board ofBinck are regarded as key management. Transactionsconducted with related parties are eliminated in thepreparation of the consolidated financial statements.In 2005, Binck paid an amount of € 12,000 to theAmsterdam-based lawyers and tax advisers SpigthoffAdvocaten en Belastingadviseurs, in which one of themembers of the company’s Supervisory Board is apartner. No other transactions, other than chargespassed on at cost, were conducted between Binck andits subsidiaries during the year.A n n u a l R e p o r t 2 0 0 56 4


Notes to the consolidated balance sheet31 December 2005 31 December 2004x € 1,000 x € 1,000Assets1. Cash 7,685 2,198This item includes all cash in legal tender, including foreign bank notesand coins, and any credit balances available on demand from theDutch Central Bank.2. Banks 171,113 102,396This item includes all cash and cash equivalents that relate to thebusiness activities held by credit institutions supervised by the bankregulators.This item comprises:Credit balances available on demand 114,520 60,024Credit balances not available on demand 56,593 42,372The credit balances available on demand have maturities of less thanthree months. Credit balances not available on demand serve partly ascollateral for the delivery risk of securities. Interest is received on thesebalances at a variable rate based on the daily Eonia rate.171,113 102,3963. Loans and receivables 124,764 62,386This item comprises receivables due from clients in the private sector,including overnight loans and receivables on current account that arecollateralised by securities and bank guarantees.The amount shown comprises the following:Cash equivalentsCall money 24,500 12,250Other:Receivables collateralised by securities 78,132 36,723Receivables collateralised by bank guarantees 772 1,008Receivables due from banking clients in respect of‘short’ option positions21,360 12,405A n n u a l R e p o r t 2 0 0 5 6 5100,264 50,136124,764 62,386


31 December 2005 31 December 2004x € 1,000 x € 1,000The receivables relating to call money have maturities of less than3 months, while the other receivables have unspecified maturities. Theinterest rate applying to receivables shown under ‘Loans andreceivables’ is based on Eonia.Movements during the year under review were as follows:Position as at 1 January 62,386 31,150Movement in call money 12,250 (4,350)Movement in receivables collateralised by securities 41,409 27,945Movement in receivables collateralised by bank guarantees (236) (287)Movement in short option positions held by clients 8,955 7,928Balance as at 31 December 124,764 62,386As at 31 December 2005, an amount of € 17,500 (2004: € 15,000) wascharged against this item. Receivables were not written down in 2005.4. Interest-bearing securities 42,011 40,984A n n u a l R e p o r t 2 0 0 5 6 6This item comprises:Held to maturity:Government bonds 20,917 21,156Available for saleOther bonds 8,141 8,616Trading portfolio 12,953 11,212All the above securities are listed and used in part to cover marginrequirements. The fair value of the held-to-maturity portfolio at the2005 year-end was € 21.1 million (2004: € 21.3 million).Bonds available for sale are of unspecified maturities. The interest onthese instruments is revised every 3 months on the basis of theprevailing 10-year interest rate on government bonds. In 2005,movements in the fair value of assets available for sale resulted in anamount of € 475,000 being recognised directly in equity(2004: € 19,000). No instruments were sold in 2005 and so noamounts were transferred from equity and recognised in the incomestatement.42,011 40,984The held-to-maturity portfolio includes share premium of € 0.9million (2004: € 1.2 million) that is still to be amortised. The intereston government bonds held to maturity is determined on the basis ofthe effective interest method on acquisition.


31 December 2005 31 December 2004x € 1,000 x € 1,0005. Shares and other non-fixed-interest instruments 120,656 93,217This item comprises:Securities trading portfolio 59,583 59,026Derivatives trading portfolio 6,081 9,196Long option positions held for banking clients 54,992 24,995The positions held in the trading portfolio are in listed securities andare used in part to cover margin requirements and securities lending.‘Long option positions held for banking clients’ are held in Binck’sname for the account and risk of the relevent clients120,656 93,2176. Other investments 88 102Other investments as at 1 January 102 102Result from sale of other investments (8) -Sale of other investments (6) -Other investments as at 31 December 88 102The 6.25% interest in Trader Team Ltd was sold in 2005.The remaining investments consist of a 5% share in the capital of TripleAssets Vermogensbeheer B.V. and a 15% share in the capital of D&OVermogensbeheer B.V.7. Intangible assets 1,051 643Movement during the year under review were as follows:SoftwareSoftwareBook value as at 1 January 643 286Investments 822 729Amortisation for the period (414) (372)Book value as at 31 December 1,051 643A n n u a l R e p o r t 2 0 0 5 6 7


31 December 2005 31 December 2004x € 1,000 x € 1,000As at 1 JanuaryCost 2,179 1,450Cumulative amortisation (1,536) (1,163)Book value 643 286As at 31 DecemberCost 3,000 2,179Cumulative amortisation (1,949) (1,536)Book value 1,051 643A n n u a l R e p o r t 2 0 0 5 6 8


31 December 2005 31 December 2004x € 1,000 x € 1,0008. Property, plant and equipment 1,829 2,296Movements during the year under review were as follows:Fixtures Fittings and Totalequipment Computer hardwareBook value as at 1 January 2005 1,357 939 2,296Investments 219 534 753Disposals - - -Depreciation (683) (540) (1,223)Impairment - - -Exchange rate movements 3 - 3Book value as at 31 December 2005 896 933 1,829As at 1 January 2005Cost 6,512 2,466 8,978Cumulative depreciation andimpairment (5,155) (1,527) (6,682)Book value 1,357 939 2,296As at 31 December 2005Cost 6,734 3,000 9,734Cumulative depreciation andimpairment (5,838) (2,067) (7,905)Book value 896 933 1,829Movement during 2004 were as follows:Fixtures Fittings and Totalequipment Computer hardwareBook value as at 1 January 2004 2,993 694 3,687Investments 508 745 1,253Disposals (198) - (198)Depreciation (1,323) (500) (1,823)Impairment (623) - (623)Exchange rate movements - - -Book value as at 31 December 2004 1,357 939 2,296As at 1 January 2004Cost 6,202 1,721 7,923Cumulative depreciation andimpairment (3,210) (1,027) (4,237)A n n u a l R e p o r t 2 0 0 5 6 9Book value 2,992 694 3,686As at 31 December 2004Cost 6,512 2,466 8,978Cumulative depreciation andimpairment (5,155) (1,527) (6,682)Book value 1,357 939 2,296


31 December 2005 31 December 2004x € 1,000 x € 1,0009. Tax receivables 4,870 1,991This item relates tot the off-setting of tax losses attributable to 2004against tax paid in the past and dividend tax-off settable in 2005 lesscorporation tax due for 2005. There were no deferred tax assets orliabilities as at 31 December 2005.10. Other assets 21,010 17,442Other assets have maturities of less than one year and comprise:Loans and receivablesLicences and permits 146 293Receivables relating tot securities sold, but nog yet delivered 20,313 16,289Other receivables 551 86021,010 17,442A n n u a l R e p o r t 2 0 0 5 7 0The licences and permits relate tot the F-permits received as a resultof the stock exchange merger in 1997. These permits provide for aten-year exemption from registration charges or reimbursement oftransaction charges up to a certain amount for each permit. The fairvalue of these items is determined on the basis of the futurereimbursement expected. The final reimbursement payment will bein respect of 2006.11. Prepayments and accrued income 3,600 2,096This item comprises:Interest receivable 1,957 1,211Commission receivable 360 181Prepaid expenses 1,283 7043,600 2,096


31 December 2005 31 December 2004x € 1,000 x € 1,000Equity and liabilities12. Funds entrusted 235,836 127,535This item comprises credit balances held by banking clients.13. Liabilities in respect of securities 111,353 91,452This item comprises the short positions in securities. All the securitiesare listed. The item can be analysed as follows:Trading portfolio- Fixed-interest securities 3,842 2,062- Shares and other non-fixed-interest securities 86,151 76,985Short positions in derivatives held by clients 21,360 12,405111,353 91,45214. Other liabilities 84,031 50,433Liabilities relating to financial instrumentsOwed to banks - 5,513Owed in respect of securities bought, but not yet delivered 21,493 14,992Owed to clients in respect of long positions in derivatives 54,992 25,033Profit-sharing bond 1,555 -Loan notes 1,194 1,20479,234 46,742Other liabilitiesTaxes and social security 182 2,090Other 4,615 1,601The profit-sharing bond is a loan provided by a group of employees. Ithas a maturity of three years and three months from 1 October 2005 to31 December 2008. Repayment of the loan may be made anddemanded without notice and without penalty. If repayment of theloan is demanded during the calendar year, the lenders are not entitledto receive interest in respect of that year. Interest is paid only inrespect of the amount lent and at Binck’s disposal for the full calendaryear. A schedule for interest payments has been agreed, with theinterest rate payable being dependent on Binck’s net profit and varyingbetween 0% and 15%. The interest payable is calculated at the end ofeach year and recognised in the result for that year. The interest rateapplying for the fourth quarter of 2005 was 3.75%, and the relevant4,797 3,69184,031 50,433A n n u a l R e p o r t 2 0 0 5 7 1


31 December 2005 31 December 2004x € 1,000 x € 1,000interest will be payable after adoption of the financial statements bythe General Meeting of Shareholders.The amount stated under loan notes refers to Binck’s share in loannotes issued by third parties. These notes, on which the interestpayable is based on LIBOR, are in principle repayable on demand.15. Accruals and deferred income 11,699 8,577This item comprises:Salaries and employee benefits 8,252 6,232Accrued stock exchange and transaction costs 640 598Accrued interest 401 205Other 2,406 1,542Total 11,699 8,57716. Provisions 512 1,100A n n u a l R e p o r t 2 0 0 5 7 2Onerous contracts 512 614Reorganisation - 486The movement in the provision for onerous contracts during the yearunder review was as follows:512 1,100Balance as at 1 January 614 1,194Released to the result - (433)Other releases (102) (147)Balance at 31 December 512 614The provision for onerous contracts has been formed in respect ofrented office space, where the costs of the rental contract are higherthan the economic benefits expected to be generated by the contract.The period for which the provision has been formed is equal to theduration of the rental contract, which expires on 1 October 2010, butwill be reduced accordingly if the economic benefits of the contract aredeemed likely to exceed the costs.


31 December 2005 31 December 2004x € 1,000 x € 1,000The movement in the provision for reorganisation during the year wasas follows:Balance at 1 January 486 855Charged to the result - 1,111Released (486) (1,480)Balance 31 December - 486The amount released from the provision for reorganisation relates tothe costs of winding up the activities of HIT Securities Ltd. and AOTDerivatives B.V. These activities were terminated in 2005.17. Equity 55,246 45,712Share capital of issued and paid up capital 3,084 3,084A total of 30,837,403 ordinary shares were in issue, each with anominal value of €0.10. The share capital is fully paid up. There wereno movements in share capital in the year under review.Stichting Prioriteit AOT owns 50 priority shares, each with a nominalvalue of €0.10.Share premium reserve 20,855 20,855The share premium is exempt from tax and in principle freelydistributable.Reserve own shares (1,121) (1,121)There were no movements in this item during the year under review.As at 31 December 2005, 296,855 shares had been repurchased at anaverage price of €3.78. The cost of purchasing and selling thecompany’s own shares are recognised in equity. The share price at the2005 year-end was €9.15 (2004: €3.20).Unapportioned profit 13,609 2,808A n n u a l R e p o r t 2 0 0 5 7 3Balance as at 1 January 2,808 -Transferred to retained earnings (2,808) -Result for the year 13,609 2,808Balance as at 31 December 13,609 2,808


31 December 2005 31 December 2004x € 1,000 x € 1,000Other reserves and retained earnings 18,819 20,086These comprise;(i) Foreign currency translation reserve 237 41(ii) Reserve for unrealised results (494) (19)(iii) Retained earnings 19,076 20,064(i) Foreign currency translation reserve18,819 20,086Balance as at 1 January 41 -Movement 196 (204)Recognised in income statement owing to sale of subsidiary - 245Balance as at 31 December 237 41A n n u a l R e p o r t 2 0 0 5 7 4The foreign currency translation reserve comprises exchange ratedifferences relating to the translation of the financial statements offoreign subsidiaries at the year-end. The subsidiary AOT Australië Ltd.was sold in 2004. Upon sale, the deferred cumulative amount ofexchange rate differences included in equity for AOT Australië Ltd. wasrecognised in the income statement.(ii) Reserve for unrealised resultsBalance as at 1 January (19) -Result from financial assets available for sale (475) (19)Balance as at 31 December (494) (19)This reserve comprises the movements in the fair value of financialassets available for sale. There were no sales in 2005 and so noamounts were taken from equity and recognised in the incomestatement.(iii) Retained earnings 19,076 20,064Balance as at 1 January 20,064 35,373Acquisition of a minority interest (700) (15,309)Rights to shares granted 263 -Payment of final dividend for 2004 (1,527) -Payment of interim dividend for 2005 (1,832) -Appropriation of profit for previous year 2,808 -Balance as at 31 December 19,076 20,064


The retained earnings are in principle freelydistributable.The acquisition of a minority interest refers to theacquisition in 2004 of the remaining shares in OneTwo Invest Holding B.V. (and indirectly, therefore, inBinckBank N.V.) and is recognised in ‘Retainedearnings’ because of being a transaction betweenshareholders within a group.that date was 31 January 2006, when the closing priceof Binck shares was €10.21. On that basis, 12,980shares were issued to the Management Board on3 March 2006. The shares issued to the ManagementBoard have been deducted from ‘the reserve ownshares’ in 2006.In 2005, the remaining shares in the minority interestAOT België N.V. were acquired. This, too, was atransaction between shareholders within a group andso is recognised in ‘Other reserves’. AOT België B.V.’sname was changed in 2005 to Binck België N.V.Share options grantedAs at 31 December 2005, the following options onshares in the company had been granted to membersof the Management Board and/or employees:• 100,000 options at €2.24, expiry date 10 October2007;• 25,000 options at €3.15, expiry date 21 December2009.These options were granted in 2004, when they had atotal value of €98,000. This valuation is based on theBlack & Scholes formula for valuing options, whichuses the share prices on the previous 150 trading daysto calculate volatility, and an interest rate of 3%. Therelated expense is shown under ‘Salaries andemployee benefits’. No options were exercised in 2004or 2005. No options were granted or expired in 2005.Rights to shares grantedAs part of the variable element of Management Boardremuneration, optional shares of €131,625 have beenissued to the members of the Management Board.The price at which these optional shares are madeavailable is determined with reference to the closingprice on the day on which Binck’s annual figures arepublished. In the case of the annual figures for 2005,A n n u a l R e p o r t 2 0 0 5 7 5


Notes to the consolidated income statement31 December 2005 31 December 2004x € 1,000 x € 1,00018. Interest 6,025 2,964This includes all income and expense items relating to the lending andborrowing of money, providing they are of a similar nature to interest,as well as interest income and expense relating to bank creditbalances or loans and receivables on current account, unless such loansare used to fund the trading portfolio.This item comprises the following:Interest incomeInterest on call money 2,158 1,657Interest on current account lending to banking clients 3,919 1,498Interest on financial assets available for sale 311 62Interest on held-to-maturity financial assets 661 134Interest on bonds in the trading portfolio 644 230Other interest income 576 356A n n u a l R e p o r t 2 0 0 5 7 6Other interest income relates to credit balances held at creditinstitutions.Interest expense8,269 3,937Interest paid on funds entrusted 1,163 738Other interest expense 1,081 235Other interest expense relates to debit balances held at creditinstitutions.2,244 97319. Securities and participating interests (1) 2,754Dividends 7 5Result from securities and participating interest (8) 2,749(1) 2,754This item comprises dividends received and realised movements in thefair value of other investments. In 2004, securities and participatinginterest included the dividend on and proceeds of the sale of theshares in The London Stock Exchange (€2.7 million).


31 December 2005 31 December 2004x € 1,000 x € 1,00020. Commission 22,569 15,401Commission comprises fees for services performed for and by thirdparties in respect of securities transactions and related services.The item can be analysed as follows:Commission income:Retail market commission 32,638 17,850Wholesale market commission 1,452 7,15534,090 25,005Commission expense:Retail market commission 3,692 3,010Stock exchange and clearing costs for retail market 7,592 5,627Stock exchange and clearing costs for wholesale market 237 96711,521 9,60421. Results on financial transactions 21,598 18,846This item comprises the following:Result from transactions in the trading portfolio 21,017 19,091Distribution from Amsterdam Stock Exchange Association 581 -Result of sale of foreign subsidiary - (245)The result from transactions comprises the results of transactions inthe trading portfolio relating to securities, derivatives and foreigncurrencies, as well as funding costs, dividends and stock exchange andclearing costs.The distribution from the Amsterdam Stock Exchange Association isthe liquidation payment received from the Association in 2005.The result of the sale of a foreign subsidiary relates to the realisationof the deferred cumulative amount recognised in equity for AOTAustralië Ltd.21,598 18,846A n n u a l R e p o r t 2 0 0 5 7 7


31 December 2005 31 December 2004x € 1,000 x € 1,00022. Salaries and employee benefits 20,674 21,968Wages and salaries 9,415 11,617Profit sharing and bonuses 8,606 6,455Pension contributions 596 486Social security charges 835 1,346Rights to shares granted 263 98Staff redundancy costs - 1,079Other salaries and employee benefits 959 887Pension contributions are the contributions paid for staff under thedefined-contribution pension plan.20,674 21,968A n n u a l R e p o r t 2 0 0 5 7 8Average number of employeesThe average number of employees in 2005, including members of theManagement Board, was 167 (2004: 234). The number at the 2005 yearendwas 170 (year-end 2004: 187).


Remuneration of Management Board and Supervisory Board DirectorsDetails of the remuneration paid to Management Board and Supervisory Board Directors in 2005 and their ownershipof shares in the company as at 31 December 2005 are provided below (x €1,000):Fixed Variable Pension Social Binckelement element contributions security sharesA.E. Teeuw 300 337 - 4 -T.C.V. Schaap 211 269 19 4 978.251K.J. Bagijn 211 269 19 4 978.251722 875 38 12 1.956.502C.J.M. Scholtes 31 - - - -J.K. Brouwer 27 - - - -Ch.J. Langereis 24 - - - 651.063A.M. van Westerloo 20 - - - -102 - - - 651.063Details of the remuneration paid to Management Board and Supervisory Board Directors in 2004 and their ownershipof shares in the company as at 31 December 2004 are provided below (x €1,000):Fixed Variable Pension Social Binckelement element contributions security sharesA.E. Teeuw 300 100 - 4 -T.C.V. Schaap 150 50 - 3 1,303,251(appointed 6 May 2004)K.J. Bagijn 150 50 - 3 1,303,251(appointed 6 May 2004)600 200 - 10 2,606,502C.J.M. Scholtes 15 - -(appointed 6 May 2004)J.K. Brouwer 12 - - -(appointed 6 May 2004)Ch.J. Langereis 18 - - 678,341A.M. van Westerloo 12 - - -(appointed 6 May 2004)A.H.J. Risseeuw 8 - - -(resigned 6 May 2004)F.E. Delbaen 6 - - -(resigned 6 May 2004)A n n u a l R e p o r t 2 0 0 5 7 971 - - 678,341In addition to the above, Mr Teeuw has been granted options on 100,000 Binck shares at an exercise price of €2.24.These options expire on 10 October 2007.


8 0A n n u a l R e p o r t 2 0 0 5As the process of acquiring, integrating andreorganising the former AOT and Effectenbank Binckwas completed earlier than expected, Mr Teeuwdecided to resign as a director of the companypursuant to the Articles of Association with effectfrom 1 January 2006. He has agreed to allow thecompany to continue benefiting from his experienceand knowledge by remaining as an adviser to boththe Management Board and the Supervisory Boarduntil 1 May 2007. His main involvement in thiscapacity will be in matters of a strategic nature. Thecontracts with the other two members of theManagement Board expire in May 2008.2005 remuneration policyUnder the 2005 remuneration policy, theremuneration received by the members of Binck’sManagement Board consists of a fixed element and avariable element. The latter is a reward for their shorttermand medium/long-term performance andconsists of a bonus and a number of Binck N.V. shares.The fixed remuneration received by the Chairman (Mr.Teeuw) is approximately one-third higher than that ofthe other members of the Management Board.According to the 2005 remuneration policy, the natureof individual members’ work on behalf of the Boardand their length of service may be taken into accountin determining the composition of the remunerationpackages received by the members of theManagement Board and in setting the relatedperformance criteria. In the case of Mr. Teeuw, theemphasis is on short-term criteria and remunerationelements, whereas the emphasis for the two othermembers of the Management Board, Messrs. Schaapand Bagijn, is on medium/long-term objectives andremuneration elements.According to the 2005 remuneration policy, otherregular elements such as health insurance do not inprinciple form part of the remuneration package, andnor do secondary benefits. The members of theManagement Board are in principle eligible for thedefined-contribution pension plan applying to themajority of the employees.The principle in respect of the variable element of theremuneration is that if the members of theManagement Board meet the annual budgetsapproved by the Supervisory Board, they qualify for abonus approximately equivalent to one year’s fixedsalary spread over two years.Under the 2005 remuneration policy, the SupervisoryBoard may, at its discretion, apply a maximum upliftof 25% to the bonus if justified by the results. If thetarget is not fully achieved, due for example toexternal circumstances beyond the ManagementBoard’s control, the Supervisory Board may, at itsdiscretion, award the Management Board members acash bonus amounting to a maximum of 25% of basicsalary.Under the 2005 remuneration policy, the members ofthe Management Board qualify for an award of BinckN.V. shares if growth in earnings per share in therange 15 – 25% is achieved in the period 2005 – 2007.The base year is 2004, when earnings per share,adjusted for exceptional factors, stood at €0,15.Earnings here refers to profit after tax.Members of the Management Board who areexpected to stay with the company for an extendedperiod may opt to receive part of their cash bonus inBinck shares (‘optional shares’). These shares must beheld for at least three years. Additional shares (‘freeshares’) may be awarded if longer-term targets areachieved.The 2005 remuneration policy states that, for theperiod 2005–2007 and each three-year periodthereafter, one free share will be awarded for everytwo optional shares held if earnings per share rise bymore than 50% and one free share will be awarded foreach optional share held if earnings per share rise bymore than 100%.


Under the 2005 remuneration policy, Messrs. Schaapand Bagijn can have a minimum of 25% and amaximum of 100% of their cash bonus paid in theform of optional shares. The number of sharesawarded on this basis will be determined by theclosing price on the day of award. The income tax dueon the part of the bonus paid in Binck shares will bepaid by the company. If some or all of these shares aresold within three years, the income tax paid will berefunded to the company by the Management Boardmember concerned. The free shares must be held forfive years or until termination of service if this occurswithin five years.Implementation of 2005 remuneration policyMr. TeeuwMr. Teeuw’s remuneration for the period 1 January –1 October 2005 was determined by the contract ofemployment for the period 1 October 2003 – 1 October2005, which was signed at the time of hisappointment. His remuneration for the period1 October – 31 December 2005 was determined on thebasis of the remuneration policy.Mr. Teeuw’s gross annual salary was unchanged at€300,000. The bonus for the period to 1 October 2005was €300,000 gross (equivalent to nine months of afull-year bonus of €400,000, the agreed figure foroutperformance of the approved budget by 25% ormore). For the period 1 October – 31 December 2005,Mr. Teeuw’s variable pay in accordance with theremuneration policy was €37,500, being the pro ratashare (3 months) of six months of salary. Noredundancy terms have been agreed with Mr. Teeuwand no provision has been made for his pension. Mr.Teeuw has been granted Binck share options. If theseoptions have to be sold before being exercised, anyincome tax due will be paid by Binck.policy, except that, given the nature of his duties,Mr. Bagijn has the use of a company car underarrangements similar to those applying to thecompany’s commercial staff. This means that part ofhis salary is paid in the form of a car allowance.Messrs. Schaap and Bagijn received gross annualsalaries in 2005 of €210,600. Their variable short termremuneration, as a reward for meeting thepredetermined annual budget, was €131,625 gross,including the maximum uplift of 25% awarded by theSupervisory Board in recognition of the good results.Messrs. Schaap and Bagijn are members of thedefined-contribution pension plan that applies to themajority of the employees.In consultation with the Supervisory Board, Messrs.Schaap and Bagijn chose to take 50% of their variableremuneration (€65,812.50) in optional shares. Theincome tax due on this remuneration will be paid bythe company.In addition to the above, an amount of €65,812.50each was reserved for Messrs. Schaap and Bagijn inrespect of the Management Board’s entitlement tofree shares.8 1A n n u a l R e p o r t 2 0 0 5Messrs. Schaap and BagijnThe remuneration received by Messrs. Schaap andBagijn for the period 1 January – 31 December 2005was determined with reference to the remuneration


31 December 2005 31 December 2004x € 1,000 x € 1,00023. Other operating expenses 9,210 10,888This item comprises the following:Marketing 2,392 1,521Premises 1,617 1,689Provision of information 1,739 1,714ICT 560 875Membership fees 381 527Services contracted out to third parties 1,518 1,513Impairment in value of assets - 282Other general costs 1,003 2,767Total 9,210 10,888The impairment in the value of assets in 2004 relates to the ending ofthe derivatives activities.A n n u a l R e p o r t 2 0 0 5 8 224. Amortisation and depreciation 1,637 2,195This item comprises amortisation and depreciation on:- intangible assets 414 372- property, plant and equipment 1,233 1,823Total 1,637 2,19525. Income tax expense 5,142 1,606The standard rate of corporation tax applying in the Netherlands in2005 was 31.5% (2004: 34.5%). The effective rate of tax in 2005 cameout at 27.6% (2004: 30.6%). The reconciliation of the standard andeffective rates of tax is as follows.Standard rate of tax 31.5% (34.5%)Lower standard tax on results achieved abroad (0.1%) (1.9%)Non-deductible losses abroad 1.0%Adjustment for previous years (3.8%)Profit exempt from tax in the Netherlands (1.0%) (2.0%)Effective rate of tax 27.6% 30.6%The adjustment for previous years relates to a tax liability recognised attoo high a level in the past. At the 2005 year-end, Binck België N.V. had atax loss of around €21 million that is eligible under current legislationto be carried forward for an unlimited period. Unused tax losses carriedforward are attributed a value only if it is probable that taxable profitswill be available in the future against which such unused tax losses andtax credits can be applied. The tax loss referred to above was valued atnil at the 2005 year-end.


31 December 2005 31 December 2004x € 1,000 x € 1,00026. Earnings per share 0.45 0.10The basic earnings per share are calculated by dividing the resultattributable to ordinary shareholders of the parent company by theweighted average number of ordinary issued shares during the year.The diluted earnings per share are calculated by dividing the resultattributable to ordinary shareholders of the parent company by thesum of the weighted average number of ordinary issued shares duringthe year and the weighted average number of ordinary shares thatwould have been issued if all the ordinary share options that coulddilute earnings had been converted into ordinary shares.The calculation of the earnings per share is based on the following:Profit for the year distributable to equityholders of the parent 13,609 2,808Weighted average number of ordinary shares 30,837,403 28,522,191less: repurchased shares 296,855 296,85530,540,548 28,225,336Earnings per share 0.45 0.1027. Diluted earnings per share 0.44 0.10Average number of ordinary shares less repurchased shares 30,540,548 28,225,336Number of options granted, but not yet exercised 125,000 125,000Average exercise price 2.42 2.42Average fair value 5.89 2.42Number of shares that would have been issued at fair value (51,358) (125,000)Weighted average number of ordinary shares adjusted for theeffect of dilution 30,614,190 28,225,336Diluted earnings per share 0.44 0.10A n n u a l R e p o r t 2 0 0 5 8 3


31 December 2005 31 December 2004x € 1,000 x € 1,000No other transactions in ordinary shares or potential ordinary shareswere conducted between the reporting date and the date ofcompletion of these financial statements.The members of the Management Board were awarded optionalshares in the amount of €131,625 in 2005. These optional shares wereissued at fair value and so do not dilute the earnings per share.28. Paid and proposed dividendDeclared and paid during the yearDividend on ordinary shares:Final dividend for 2004: €0.05 (2003: -) 1,527 -Interim dividend for 2005: €0.06 (2004: -) 1,8323,359 -A n n u a l R e p o r t 2 0 0 5 8 4Proposed for approval by the General Meeting of Shareholders(not recognised as a liability as at 31 December 2005)Dividend on ordinary shares:Final dividend for 2005: €0.16 (2004: €0.05) 4,886 1,52729. Contingent liabilitiesThe company has rental contracts for office premises in theNetherlands and Belgium. It has also entered into operational leasecontracts for periods of up to 48 months.The remaining periods to maturity of these liabilities are as follows:Less than one year 1,182One to five years 4,122Longer than five years 8830. Disclosure pursuant to Appendix X of the Listing and Issuing RulesIn the opinion of both Binck N.V. and the Board members of StichtingPrioriteit AOT, the company complies with the requirements of Article10 in Appendix X of the Listing and Issuing Rules of Euronext N.V.,Amsterdam.


31 December 2005 31 December 2004x € 1,000 x € 1,000Segment informationA segment is a part of Binck that either supplies specific products orservices (i.e. a business segment) or supplies products or services in aspecific economic area (i.e. a geographical segment) and is exposed todifferent risks and generates different revenues from other segments.The primary system of segmentation applied within Binck is based onactivities. The Retail business unit is an internet broker for privateclients. The Wholesale business unit provides professional services insecurities and derivatives transactions for Dutch and foreigninstitutional investors and securities houses. The activities of both ofthese business units are performed throughout the Netherlands. TheTrading business unit trades for its own account in equities, bonds andderivatives, both in the Netherlands and elsewhere.The secondary system of segmentation applied within Binck isgeographical, with a distinction being made between activities in theNetherlands and those elsewhere. All Dutch activities are classifiedunder the heading of ‘Netherlands’, while the others are classified as‘Foreign’. No transactions take place between the separate segments.The segmentation is shown in the following tables.A n n u a l R e p o r t 2 0 0 5 8 5


The segmentation is shown in the following tables.Financial information by business unitRetail Wholesale Trading Total2005 2004 2005 2004 2005 2004 2005 2004Interest 5,893 2,844 29 59 103 61 6,025 2,964Income from securities and participatinginterest 1) 7 (8) 2,754 (1) 2,754Commission 21,354 11,389 1,215 4,012 22,569 15,401Results on financial transactions 2) 269 55 21,274 18,846 21,598 18,846Total income 27,523 14,233 1,299 4,071 21,369 21,661 50,191 39,965Salaries and employee benefits (5,354) (3,863) (1,726) (1,853) (13,594) (16,252) (20,674) (21,968)Other operating expenses (5,405) (3,916) (560) (1,322) (3,245) (5,650) (9,210) (10,888)Depreciation and amortisation (1,124) (623) (206) (202) (307) (1,370) (1,637) (2,195)Total expenses (11,883) (8,402) (2,492) (3,377) (17,146) (23,272) (31,521) (35,051)Operating profit before income tax 15,640 5,831 (1,193) 694 4,223 (1,611) 18,670 4,914A n n u a l R e p o r t 2 0 0 5 8 6Income tax expense 3) (4,927) (2,036) 376 (131) (591) 561 (5,142) (1,606)Profit for the year 10,713 3,795 (817) 563 3,632 (1,050) 13,528 3,308Minority interests 81 (500)Result attributable to Binck N.V. shareholders 13,609 2,808Book value of assets 344,280 180,597 2,325 4,049 152,072 141,105 498,677 325,751Liabilities 323,673 169,357 1,999 2,906 117,759 106,834 443,431 279,097Investments 1,313 1,654 5 8 257 320 1,575 1,9821) The LSE shares sold in 2004 for €2.7 million are shown under Trading.2) The amount of €580,000 received in 2005 from the Amsterdam Stock Exchange Association has been shared between the three business units asfollows: 50% (Retail), 10% (Wholesale) and 40% (Trading).3) In the case of the Retail and Wholesale business units, the corporation tax charge for 2005 was calculated at the standard Dutch rate of 31.5%. Thefigure for 2005 includes an adjustment for previous years, in which a tax liability was shown at too high a level. This adjustment relates to tradingactivities and is consequently attributed to the Trading business unit.Financial information by business unitNetherlands Foreign Total2005 2004 2005 2004 2005 2004Total income 44,034 28,657 6,157 11,308 50,191 39,965Book value of assets 436,659 256,536 62,018 69,215 498,677 325,751Investments 1,447 1,875 128 107 1,575 1,982Depreciation and amortisation 1,571 1,867 66 328 1,637 2,195


Financial risk managementCredit riskCredit risk is the risk that a party trading a financialinstrument and/or the issuer of the instrument willfail to discharge an obligation relating to theinstrument and consequently cause Binck to incur afinancial loss. This credit risk is relevant to thefollowing items in the balance sheet: Banks, Loans andreceivables and Other assets.by monitoring settlements (i.e. by reconcilingpositions and transactions).Market riskMarket risk comprises three sorts of risk:• Currency risk• Interest rate risk• Price riskBinck’s retail activities involve it in providing loansand receivables. These credits are provided only ifsecured by readily marketable collateral such assecurities and bank guarantees. Given the nature ofthe loans and the collateral provided, the credit risk islimited. Most of these loans are provided to naturaland legal persons in the Netherlands. In the case ofloans collateralised by securities, the amounts lentdepend on the liquidity and market price of therelevant securities. Binck’s Risk Managementdepartment is responsible for monitoring lending.This department performs automated monitoring ofloans on the basis of real-time prices. The risks in thisform of lending are, therefore, the risk of a change inthe market price of the securities provided ascollateral, the risk of computer malfunctioning(operational risk) and the risk of credit monitoringprocedures functioning incorrectly (operational risk).In addition, Binck uses deposits and balances oncustomer accounts to fund loans to banks and clientsin industry, subject to internal limits that have beenset for both the level and duration of such lending toapproved counterparties. The credit risk resulting fromsuch lending is monitored in the form of periodiccredit reviews.In the case of its wholesale and trading activities,Binck is exposed to a credit risk if counterparties failto discharge their obligations in Over-the-Counter(OTC) transactions. Limits have been set forcounterparties. Most of these transactions are inshares and bonds. The risk in this respect is managedCurrency riskCurrency risk is the risk that the value of an itemdenominated in a foreign currency will fluctuatebecause of changes in foreign exchange rates. Thefollowing items in the balance sheet are exposed tocurrency risks: Banks, Interest-bearing securities,Shares and other non-fixed-interest securities, Otherliabilities and Funds entrusted.Binck has a currency translation risk because of theactivities of the associate based outside the eurozone. A fluctuation in the value of the relevant foreigncurrency has an impact on the value of the revenuesand equity in euros in Binck’s income statement andbalance sheet respectively. It is Binck’s policy not tohedge these risks.Currency risks relating to the company’s trading andbroking activities are hedged as soon as possible inaccordance with internal guidelines, unless a currencyposition is taken as part of a trading strategy that hasbeen approved by the Risk Committee. The currencyposition is monitored daily in order to ensure that itremains within the set limits. As at the 2005 year-end,positions were hedged internally in such a way thatthe company was not exposed to any significantcurrency risk.Interest riskInterest risk is the risk that future profitability will beaffected by fluctuations in interest rates. This riskapplies to the following items in the balance sheet;Banks, Loans and receivables, Interest-bearing8 7A n n u a l R e p o r t 2 0 0 5


8 8A n n u a l R e p o r t 2 0 0 5securities, Shares and other non-fixed-interestsecurities, Other liabilities and Funds entrusted.fixed-interest bonds held to maturity includes theshare premium still to be amortised as at 31 December2005. The bonds in the portfolio available for saleBinck manages this risk to the extent that it affects itsbanking activities by ensuring that interest periods onamounts placed with and by the company are alignedand maintained within certain set limits. The portfolioalso contains a balanced spread of differing maturitiesand includes bonds on which the interest coupons areadjusted periodically.have unspecified maturities, with the interest couponbeing reset every three months on the basis of theprevailing 10-year interest rates on governmentbonds. The bonds in the trading portfolio are listed,fixed-interest bonds that are normally held forperiods of less than one month in Binck’s tradingportfolio. The profit-sharing bonds pay variableinterest of 0 – 15%, as detailed in point 6.14 of theSummary of interest and repayment maturitiesCash, banks and loans and receivables (‘call money’)notes. Other interest-bearing financial instruments allhave maturities shorter than three months.have maturities of less than three months andinterest is paid on the balances at a variable ratebased on Eonia. Interest is charged on receivablescollateralised by securities at Eonia plus a variablesurcharge of 3-4 percentage points. The book value asat 31 December 2005 of Binck’s financial instrumentsexposed to an interest rate risk upon maturity areshown in the following table.The interest on financial instruments classified asPrice riskPrice risk is the risk that the value of a financialinstrument will fluctuate as a result of changes ininterest rates and the market prices of securities andderivatives. The following items in the balance sheetare exposed to this risk: Interest-bearing securities,Shares and other non-fixed-interest securities andOther liabilities.fixed-interest securities is fixed until the instrumentmatures. The book value at the maturity date of theWithin 1-2 2-3 3-4 4-5 More Total1 year years years years years than5 yearsFixed-interest securitiesInterest bearing securitiesBonds held to maturity - 4,007 4,232 4,053 4,373 4,252 20,917Bonds in trading portfolio 789 698 1,322 1,782 693 7,669 12,953Effective interest rate (%) 3-14 4-9 3-14 1-11 3-6 2-9 1-14Non-fixed-interest securitiesInterest bearing securitiesBonds available for sale - - - - - 8,141 8,141LiabilitiesOther liabilities (profit-sharing bonds) - - (1,555) - - - (1,555)Liabilities in respect of securities (trading portfolio) - (67) - (120) (1,473) (2,182) (3,842)Effective interest rate - 6 - 7 3-6 3-8 3-8


Binck’s trading activities mean it has a tradingportfolio of shares, bonds and derivatives.Fluctuations in interest rates and prices of securitiesand derivatives have a direct effect on the value of thetrading portfolio and, therefore, on the equity andresults of Binck. In order to manage the price risks inits trading portfolio, Binck has set up an internalsystem of limits, which are monitored by the RiskManagement department. The Risk Committee meetsperiodically to discuss and approve the system oflimits, the risks in existing positions and limits andproposals for new trading strategies. RiskManagement takes action immediately if any limitsare exceeded. This also includes compulsory reportingon all occasions to the responsible member of theManagement Board. Binck’s trading activitiessometimes also require it, as a market maker, topurchase or sell securities.underlying instrument, without taking any account ofmutual correlation between funds and long and shortpositions.The net position indicates the extent of the portfolio’ssensitivity to a percentage change in the underlyinginstrument, while taking full account of correlationbetween funds and long and short positions. Mostderivatives positions have a remaining time tomaturity of less than one year.Liquidity riskLiquidity risk is the risk of a current and future threatto Binck’s equity and results if the company wereunable at any time to meet its short-term paymentcommitments without incurring disproportionatecosts and/or losses. This risk applies in principle to allassets and liabilities in the balance sheet.8 9Binck has a portfolio of fixed-interest securities (someof which are held as investments to maturity, whileothers are investments available for sale). Theholdings in this portfolio are determined by theManagement Board. The value of the portfolio canfluctuate as a result of changes in interest rates andthe creditworthiness of the issuers of bonds. Binckinvests only in fixed-interest securities with aStandard & Poor credit rating of at least ‘A’. Theforecast possible fluctuation in the value of theportfolio at the 2005 year-end was a negative amountof approximately €700,000 for each absoluteincrease by one percentage point in the relevantinterest rate.Delta position of the derivatives portfolio (part of thetrading portfolio) in €'000:Gross position 265Net position (176)The gross position indicates the extent of theportfolio’s sensitivity to a percentage increase in theBinck’s liquidity position at the 2005 year-end wasvery comfortable. It also has a credit facility availableat banks outside the group. Its activities mean there isa risk of a liquidity deficit in the event, for example, ofmaximum trading positions, incorrect settlement ofsecurities transactions for wholesale clients, highamounts of lending to retail clients and a reduction indeposits and credit balances on retail clients’accounts.The periods for which deposits and credit balancesplaced with Binck are lent out to other parties arelimited and are mainly intraday or overnight. Thisenables the company to absorb fluctuations in thelevels of funds placed with it.The company determines its liquidity position daily,with all activities being taken into account, so as toensure that its liquidity risk is monitored andmanaged.A n n u a l R e p o r t 2 0 0 5


Financial instrumentsFair valueThe book value and fair value of all financialinstruments shown in Binck’s financial statements,including assets and liabilities classified as availablefor sale, are compared in the following table:The fair value of listed financial assets available forsale is based on market prices. The fair value of loansis determined by calculating the present value of theexpected future cash flows at the prevailing interestrates. The fair value of loans to other parties and otherfinancial assets is calculated on the basis of marketinterest rates.A n n u a l R e p o r t 2 0 0 5 9 0Book valueFair value2005 2004 2005 2004Financial assetsCash 7,685 2,198 7,685 2,198Banks 171,113 102,396 171,113 102,396Loans and receivables 124,764 62,386 124,764 62,386Interest-bearing securities 42,011 40,984 42,238 41,112Shares and other non-fixed-interest instruments 120,656 93,217 120,656 93,217Other investments 88 102 88 102Other assets 20,459 16,582 20,459 16,582Financial liabilitiesFunds entrusted 235,836 127,535 235,836 127,535Liabilities in respect of securities 111,353 91,452 111,353 91,452Other liabilities 79,234 46,742 79,555 46,742


Company balance sheet(before appropriation of profit)Note 31 December 2005 31 December 2004x € 1,000 x € 1,000AssetsBanks a 2,991 4,783Interest-bearing securities b 5,082 4,646Associates c 39,611 29,918Intangible assets d 243 33Property, plant and equipment e 854 1,246Tax receivables f 4,870 1,991Other assets g 6,092 5,810Prepayments and accrued income h 595 553Total assets 60,338 48,980Equity and liabilitiesOther liabilities i 3,195 1,959Accruals and deferred income j 1,385 563Provisions k 512 7465,092 3,268Equity:lShare capital 3,084 3,084Share premium reserve 20,855 20,855Reserve own shares (1,121) (1,121)Unapportioned result 13,609 2,808Other reserves and retained earnings 18,819 20,086A n n u a l R e p o r t 2 0 0 5 9 155,246 45,712Total equity and liabilities 60,338 48,980


Company income statement31 December 2005 31 December 2004x € 1,000 x € 1,000Profit of participating interests after taxes 12,863 5,721Profit after taxes 746 (2,913)Profit for the year 13,609 2,808A n n u a l R e p o r t 2 0 0 5 9 2


Company statement of changes in equityIssued Share Repur- Unappor- Other Sub- Minority Totalshare- premium chased own tioned reserves total interests equitycapital shares profit andretainedearnings1 January 2004 2,437 8,855 (1,121) - 35,373 45,544 5,159 50,703Result from financial assetsavailable for sale - - - - (19) (19) - (19)Conversion of foreigncurrencies - - - - 41 41 - 41Result recognised directlyin equity - - - - 22 22 - 22Result for the year - - - 2,808 - 2,808 500 3,308Total income and expense - - - 2,808 22 2,830 500 3,330Issue of shares 647 12,290 - - - 12,937 - 12,937Issuing costs - (290) - - - (290) - (290)Acquisition of minorityinterest - - - - (15,309) (15,309) (4,717) (20,026)31 December 2004 3,084 20,855 (1,121) 2,808 20,086 45,712 942 46,654Impairment in value offinancial assets availablefor sale - - - - (475) (475) - (475)Conversion of foreigncurrencies - - - - 196 196 - 196Result recognised directlyin equity - - - - (279) (279) - (279)Result for the year - - - 13,609 - 13,609 (81) 13,528Total income and expense - - - 13,609 (279) 13,330 (81) 13,249Payment of interim dividend - - - - (1,832) (1,832) - (1,832)Payment of final dividend - - - - (1,527) (1,527) - (1,527)A n n u a l R e p o r t 2 0 0 5 9 3Rights to shares granted - - - - 263 263 - 263Acquisition of minorityinterest - - - - (700) (700) (861) (1,561)Retained earnings transferredto other reserves - - - (2,808) 2,808 - - -31 December 2005 3,084 20,855 (1,121) 13,609 18,819 55,246 - 55,246


Notes to the company financial statements9 4A n n u a l R e p o r t 2 0 0 5GeneralBusiness activitiesBinck N.V. is a company established and based in theNetherlands. Its shares are publicly traded. Through itssubsidiaries Binck N.V. provides broking and internetbroking services in securities and derivativetransactions for private and professional investors andalso trades in shares, bonds and derivatives for its ownaccount and risk. Binck N.V. and its relevantsubsidiaries will henceforth be referred to as ‘Binck’.The company financial statements of Binck for theyear to 31 December 2005 have been prepared by thecompany’s Management Board and approved forpublication pursuant to the resolution of theManagement Board and Supervisory Board of 3 March2006. The financial statements for 2005 will beadopted at the General Meeting of Shareholders on27 March 2006.Presentation of financial statementsThe company financial statements have beenprepared on the basis of the requirements included inPart 9 of Book 2 of the Netherlands Civil Code andapplication of the accounting policies (IFRS) applied inthe consolidated financial statements. The balancesheet is presented in accordance with Model K forfinancial institutions. In accordance with theprovisions of Article 2:402 of the Netherlands CivilCode, the company income statement shows only theprofit of participating interest after taxes and otherprofit after taxes.Accounting policies for valuation and determinationof the resultGeneralDetails of the accounting policies applied for thevaluation and determination of the result can befound in the notes to the consolidated financialstatements and, unless otherwise stated, applyequally to the company financial statements.AssociatesAssociates and other group companies are shown attheir net asset value. The reporting dates of thesecompanies and the accounting policies applied totheir financial reporting are in accordance with thoseapplied by Binck to similar transactions and in eventsin similar circumstances.


Notes to the company balance sheet31 December 2005 31 December 2004x € 1,000 x € 1,000Assetsa. Banks 2,991 4,783This item includes all receivables that relate to the business activitiesfrom credit institutions supervised by the bank regulators. Thesereceivables are available on demand.b. Interest-bearing securities 5,082 4,646This item comprises bonds with unspecified maturities that areavailable for sale.c. Associates 39,611 29,918Movements during the year under review were as follows:Position as at 1 January 29,918 39,358Capital provided and acquisitions 1,643 19,608Exercise of options - (664)Disposals and dissolutions (1,569) (4,039)Dividend and repayment of capital (2,740) (14,317)Distribution to minority shareholders (700) (15,309)Result for the year 12,863 5,721Exchange rate differences and other movements 196 (281)Adjustments relating to first-time application of IFRS - (159)Position as at 31 December 39,611 29,918The majority interest in AOT België N.V. (the company’s name waschanged in 2005 to Binck België N.V.) was increased in 2005 to aninterest of 100%.Capital provided and acquisitions in 2004 relate primarily to theacquisition of the remaining shares in One Two Invest Holding B.V.,which owns all the shares in BinckBank N.V. The distribution tominority shareholders relates to the amount paid to BinckBank N.V.shareholders in excess of the latter’s net asset value in order to acquirefull ownership of BinckBank N.V. The company declared itself jointlyand severally liable for debts arising from legal acts of Binck SecuritiesB.V. at the end of 2005 in accordance with Article 403 of Part 9, Book 2,of the Netherlands Civil Code.A n n u a l R e p o r t 2 0 0 5 9 5


31 December 2005 31 December 2004x € 1,000 x € 1,000d. Intangible assets 243 33Movements during the year under review were as follows:SoftwareSoftwareBook value as at 1 January 33 141Investments 267 3Amortisation for the period (57) (111)Book value as at 31 December 243 33As at 1 JanuaryCost 409 406Cumulative amortisation (376) (265)Book value 33 141A n n u a l R e p o r t 2 0 0 5 9 6As at 31 DecemberCost 676 409Cumulative amortisation (433) (376)Book value 243 33


31 December 2005 31 December 2004x € 1,000 x € 1,000e. Property, plant and equipment 854 1,246Movements during the year under reviewwere as follows:Fixtures Fitting and Totalequipment computer hardwareBook value as at 1 January 2005 1,118 128 1,246Investments 206 63 269Impairment - - -Depreciation (653) (8) (661)Book value as at 31 December 2005 671 183 854As at 1 January 2005Cost 4,181 345 4,526Cumulative depreciation and impairment (3,063) (217) (3,280)Book value 1,118 128 1,246As at 31 December 2005Cost 4,387 408 4,795Cumulative depreciation and impairment (3,716) (225) (3,941)Book value 671 183 854Fixtures Fitting and Totalequipment computer hardwareBook value as at 1 January 2004 2,321 61 2,382Investments 320 78 398Impairment (569) - (569)Depreciation (954) (11) (965)Book value as at 31 December 2004 1,118 128 1,246As at 1 January 2004Cost 3,861 267 4,128Cumulative depreciation and impairment (1,540) (206) (1,746)A n n u a l R e p o r t 2 0 0 5 9 7Book value 2,321 61 2,38231 december 2004Cost 4,181 345 4,526Cumulative depreciation and impairment (3,063) (217) (3,280)Book value 1,118 128 1,246


31 December 2005 31 December 2004x € 1,000 x € 1,000f. Tax receivables 4,870 1,991This item relates to the off-setting of tax losses attributable to 2004against tax paid in the past and dividend tax offsettable in 2005 lesscorporation tax due for 2005, There were no deferred tax assets orliabilities as at 31 December 2005.g. Other assets 6,092 5,810Other assets have maturities of less than one year and comprise:Balances on current accounts with subsidiaries 5,943 5,405Other receivables 149 4056,092 5,810h. Prepayments and accrued income 595 553A n n u a l R e p o r t 2 0 0 5 9 8This item comprises:Interest receivable 22 -Prepaid expenses 573 553Equity and liabilities595 553i. Other liabilities 3,195 1,959Maturity < 1 year:Taxes and social security charges 82 139Other 364 616Total maturities < 1 year 446 755Maturities > 1 year:Profit-sharing bond 1,555 -Loan notes 1,194 1,204Total maturities > 1 year 2,749 1,2043,195 1,959


31 December 2005 31 December 2004x € 1,000 x € 1,000The profit-sharing bond is a loan provided by a group of employees. Ithas a maturity of three years and three months from 1 October 2005 to31 December 2008. Repayment of the loan may be made anddemanded without notice and without penalty. If repayment of theloan is demanded during the calendar year, the lenders are not entitledto receive interest in respect of that year. Interest is paid only inrespect of the amount lent and at Binck’s disposal for the full calendaryear. A schedule for interest payments has been agreed, with theinterest rate payable being dependent on Binck’s net profit and varyingbetween 0% and 15%. The interest payable is calculated at the end ofeach year and recognised in the result for that year. The interest rateapplying for the fourth quarter of 2005 was 3.75%, and the relevantinterest will be payable after adoption of the financial statements bythe General Meeting of Shareholders.The amount stated under loan notes refers to Binck’s share in loannotes issued by third parties. These notes, on which the interestpayable is based on LIBOR, are in principle repayable on demand.j. Accruals and deferred income 1,385 563This item comprises:Salaries and employee benefits 920 286Accrued interest 27 25Other expense items. 438 252Total 1,385 563k. Provisions 512 746Onerous contracts 512 614Reorganisation - 132The movement in the provision for onerous contracts during the yearunder review was as follows:512 746Position as at 1 January 614 1,194Released to the result - (433)Other releases (102) (147)A n n u a l R e p o r t 2 0 0 5 9 9Position as at 31 December 512 614


31 December 2005 31 December 2004x € 1,000 x € 1,000The provision for onerous contracts has been formed in respect ofrented office space where the costs of the rental contract are higherthan the economic benefits expected to be generated by the contract.The period for which the provision has been formed is equal to theduration of the rental contract, which expires on 1 October 2010, butwill be reduced accordingly if the economic benefits of the contract aredeemed likely to exceed the costs.The movement in the provision for reorganisation during the year wasas follows:Position as at 1 January 132 855Charged to the result - 757Released (132) (1,480)Position as at 31 December - 132A n n u a l R e p o r t 2 0 0 5 1 0 0The amount released from the provision for reorganisation relates tothe costs of winding up the activities of AOT Derivatives B.V. Theseactivities were terminated in 2005.l. EquityShare capital of issued and paid up capital 3,084 3,084A total of 30,837,403 ordinary shares were in issue, each with anominal value of €0.10. There were no movements in share capital inthe year under review.Stichting Prioriteit AOT owns 50 priority shares, each with a nominalvalue of €0.10.Share premium reserve 20,855 20,855The share premium is exempt from tax and in principle freelydistributable.Reserve own shares (1,121) (1,121)There were no movements in this item during the year under review.As at 31 December 2005, 296,855 shares had been repurchased at anaverage price of €3.78. The costs of purchasing and selling thecompany’s own shares are recognised in equity. The share price at the2005 year-end was €9.15 (2004: €3.20).


31 December 2005 31 December 2004x € 1,000 x € 1,000Unapportioned result 13,609 2,808Balance as at 1 January 2,808 -Transferred to retained earnings (2,808) -Result for the year 13,609 2,808Balance as at 31 December 13,609 2,808Other reserves and retained earnings 18,819 20,086These comprise:(i) Foreign currency translation reserve 237 41(ii) Reserve for unrealised results (494) (19)(iii) Retained earnings 19,076 20,06418,819 20,086(i) Foreign currency translation reserveBalance as at 1 January 41 -Movement 196 (204)Recognised in income statement owing to sale of a subsidiary - 245Balance as at 31 December 237 41The foreign currency translation reserve comprises the exchange ratedifferences relating to the translation of the financial statements offoreign subsidiaries into euros at the year-end. The subsidiary AOTAustralië Ltd. was sold in 2004. Upon sale, the deferred cumulativeamount of exchange rate differences included in equity for AOTAustralië Ltd. was recognised in the income statement.(ii) Reserve for unrealised resultsBalance as at 1 January (19) -Result from financial assets available for sale (475) (19)Balance as at 31 December (494) (19)A n n u a l R e p o r t 2 0 0 5 1 0 1This reserve comprises the movements in the fair value of financialassets available for sale. There were no sales in 2005 and so noamounts were taken from equity and recognised in the incomestatement.


31 December 2005 31 December 2004x € 1,000 x € 1,000(iii) Retained earningsBalance as at 1 January 20,064 35,373Acquisition of a minority interest (700) (15,309)Rights to shares granted 263 -Payment of final dividend for 2004 (1,527) -Payment of interim dividend for 2005 (1,832) -Appropriation of result for previous year 2,808 -Balance as at 31 December 19,076 20,064The retained earnings are in principle freely distributable.A n n u a l R e p o r t 2 0 0 5 1 0 2The acquisition of a minority interest relates to theacquisition in 2004 of the remaining shares in OneTwo Invest Holding B.V. (and indirectly, therefore,BinckBank N.V.) and is recognised in ‘Retainedearnings’ because of being a transaction betweenshareholders within a group.In 2005, the remaining shares in the minority interestAOT België N.V. were acquired. This, too, was atransaction between shareholders within a group andso is recognised in ‘Retained earnings’. AOT BelgiëB.V.’s name was changed in 2005 to Binck België N.V.Share options grantedAs at 31 December 2005, the following options onshares in the company had been granted to membersof the Management Board and/or employees:• 100,000 options at €2.24, expiry date10 October 2007;• 25,000 options at €3.15, expiry date21 December 2009These options were granted in 2004, when they had atotal value of €98,000. This valuation is based on theBlack & Scholes formula for valuing options, whichuses the share prices on the previous 150 trading daysto determine volatility, and an interest rate of 3%. Therelated expense is shown under ‘Salaries andemployee benefits’.No options were exercised in 2004 or 2005. Nooptions were granted or expired in 2005.Rights to shares grantedAs part of the variable element of Management Boardremuneration, optional shares of €131,625 have beenissued to the members of the Management Board.The price at which these optional shares are madeavailable is determined with reference to the closingprice on the day on which Binck’s annual figures arepublished. In the case of the annual figures for 2005,that date was 31 January 2006, when the closing priceof Binck shares was €10.21. On that basis, 12,980shares were issued to the Management Board on3 March 2006. The shares issued to the ManagementBoard have been deducted from ‘Own sharesrepurchased’ in 2006. In addition to the aboveoptional shares, an amount of €131,625 was reservedin 2005 for the cost of the Management Board’sentitlement to ‘free’ shares. The related expense isshown under ‘Salaries and employee benefits’.Amsterdam, 3 March 2006Management Board: Supervisory Board:T.C.V. SchaapC.J.M. ScholtesK.J. BagijnJ.K. BrouwerCh. J. LangereisA.M. van Westerloo


Other informationAuditors’ reportIntroductionWe have audited the financial statements of BinckN.V., Amsterdam, for the year 2005 (as set out onpages 51 to 102). These financial statements consist ofthe consolidated financial statements and the companyfinancial statements. These financial statementsare the responsibility of the company’s management.Our responsibility is to express an opinion on thesefinancial statements based on our audit.ScopeWe conducted our audit in accordance with auditingstandards generally accepted in the Netherlands.Those standards require that we plan and perform theaudit to obtain reasonable assurance about whetherthe financial statements are free of materialmisstatement. An audit includes examining, on a testbasis, evidence supporting the amounts anddisclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as wellas evaluating the overall presentation of the financialstatements. We believe that our audit provides areasonable basis for our opinion.Opinion with respect to the consolidated financialstatementsIn our opinion, the consolidated financial statementsgive a true and fair view of the financial position ofthe company as at 31 December 2005 and of the resultand the cash flows for the year then ended inaccordance with International Financial ReportingStandards as adopted by the EU and comply with thefinancial reporting requirements included in Part 9 ofBook 2 of the Netherlands Civil Code as far asapplicable.Furthermore we have established to the extent of ourcompetence that the annual report is consistent withthe consolidated financial statements.Opinion with respect to the company financialstatementsIn our opinion, the company financial statements givea true and fair view of the financial position of thecompany as at 31 December 2005 and of the result forthe year then ended in accordance with theaccounting principles generally accepted in theNetherlands and comply with the financial reportingrequirements included in Part 9 of Book 2 of theNetherlands Civil Code.Furthermore we have established to the extent of ourcompetence that the annual report is consistent withthe company financial statements.Amsterdam, 3 March 2006for Ernst & Young AccountantsC.G.J. de Lange RAdrs C.B. Boogaart RA1 0 3A n n u a l R e p o r t 2 0 0 5


1 0 4A n n u a l R e p o r t 2 0 0 5Statutory provisions in respect ofpriority shares (Articles 15 and 21 of theArticles of Association)The rights attached to the priority shares include theright to make non-binding nominations forappointment to the company’s Supervisory Board andManagement Board, as well as various other rights.The priority shares are held by Stichting Prioriteit AOT,Amsterdam. This foundation’s Board, which consists ofthree members, is appointed by the Supervisory Boardand Management Board of the company.The Board members of Stichting Prioriteit AOT are:C.J.M. ScholtesCh.J. LangereisT.C.V. SchaapStatutory provisions in respect ofappropriation of profit (Article 32 of theArticles of Association)1. The company may only make distributions to theshareholders if the company’s equity exceeds itsissued and paid-up share capital plus the reservesrequired to be held by law.2. Firstly – and only insofar as profits allow – anamount equal to 6% (six per cent) of the nominalvalue of the priority shares will be distributed onthese shares.3. The foundation will determine the extent to whichthe remaining profits will be transferred toreserves. Profits remaining after application ofsubsection 2 and the first sentence of thissubsection will be at the disposal of the GeneralMeeting of Shareholders. Any amounts notdistributed will be transferred to the company’sreserves.4. Withdrawals from distributable reserves may bemade pursuant to a resolution by the GeneralMeeting of Shareholders, subject to the priorconsent of the foundation.5. The Management Board may resolve to allow thecompany to make interim distributions, providingit demonstrates in the form of an interimstatement of assets and liabilities as referred toArticle 105.4 of Book 2 of the Netherlands CivilCode that it complies with subsection 1 above andsubject to the prior consent of the foundation. Thedistributions referred to in this subsection may bemade in cash, in shares in the company’s equity orin marketable rights thereto.6. The General Meeting of Shareholders may resolveto declare that distributions on shares other thaninterim distributions as referred in subsection 5 ofthis Article (whether at the shareholders’ discretionor otherwise) may, instead of being made in cash,be made fully or partly (whether at theshareholders’ discretion or otherwise) in:a. ordinary shares (which will, if desired andpossible, be charged to the share premium reserve)or marketable rights to ordinary shares, orb. equity instruments of the company ormarketable rights.A resolution as referred to in the previous sentencemay only be passed after being proposed by theManagement Board and approved by theSupervisory Board. A proposal to pass a resolutionas referred to in b will be submitted only afterconsultation with Euronext Amsterdam N.V.7. No distribution will be made to the company inrespect of shares it holds in its own capital or onshares for which the company holds depositaryreceipts.8. The calculation of the profit distributable on shareswill disregard shares that are not eligible, pursuantto subsection 7, for such distribution.9. Once a resolution to make a distribution has beenpassed, the amount will be declared payable withinfourteen days. An entitlement to receive adistribution will lapse five years after the date onwhich the amount is declared payable, and the saidamount will then revert to the company.


Proposal for appropriation of the resultStichting Prioriteit AOT has proposed transferring anamount of €6,891,000 to reserves. An interimdividend of €0.06 per share has already been paid inrespect of 2005. The remainder is at the disposal ofthe General Meeting of Shareholders. It is proposeddistributing this in the form of a final dividend of€0.16 per ordinary share.Profit for 2005 13,609less: transferred to other reserves 6,891less: interim dividend paid for 2005 1,832At shareholders’ disposal 4,886This proposal is not reflected in the balance sheet.A n n u a l R e p o r t 2 0 0 51 0 5


A n n u a l R e p o r t 2 0 0 51 0 6


A n n u a l R e p o r t 2 0 0 51 0 7ColophonTextBinck N.V., Amsterdam, The NetherlandsProduction and coordinationImprima de Bussy, Amsterdam, The Netherlands


A n n u a l R e p o r t 2 0 0 51 0 8


Binck N.V.Vijzelstraat 201012 HK AmsterdamNetherlandsCorrespondence addressP.O. Box 155361001 NA AmsterdamNetherlandsTel: +31 (0)20 606 26 66Fax: +31 (0)20 320 41 76Internet:www.binck.comBinck N.V., established in Amsterdam and entered in the Trade Register of the AmsterdamChamber of Commerce under no. 34 11 94 69.Investor RelationsTel: +31 (20) 522 03 72Email: IR@binck.com

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