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Prospectus Rubrika Finance Company Designated Activity Company
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Prospectus Rubrika Finance Company Designated Activity Company (formerly Rubrika Finance Company Limited) (a designated activity company limited by shares incorporated under the laws of Ireland) Series 17 MXN 3,001,200,000 Secured Zero Coupon Linked Notes due 2022 Issue Price: 57.63 per cent. This Prospectus has been prepared for the purpose of giving information about the issue by Rubrika Finance Company Designated Activity Company (the “Company”) as issuer of the series of notes listed above (the “Notes”) and includes the sections of the Programme Memorandum dated 22 December 2014 (set out in full as the Appendix to this Prospectus) that are listed in “Relevant Sections of the Programme Memorandum” below. The Notes were issued on the terms set out in the section of the Programme Memorandum entitled Master Conditions (pages 81 to 148 inclusive), as supplemented or modified by the specific conditions prepared for the Notes which are set out in “Pricing Conditions” below (the “Pricing Conditions”) and by the provisions of any Global Note or Global Certificate representing the Notes. References in this Prospectus to the Programme shall be construed as referring to the Programme for the Issuance of Notes and Other Secured Obligations (the “Programme”), which was established by the Company executing a programme deed (the “Programme Deed”) and under which Programme the Notes are being issued. This Prospectus has been approved by the Central Bank of Ireland (the “Central Bank”), as competent authority under the Prospectus Directive 2003/71/EC (as amended) (the “Prospectus Directive”). The Central Bank only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. This Prospectus will be available on the Central Bank’s website (www.centralbank.ie). This Prospectus constitutes a “prospectus” for the purposes of the Prospectus Directive. Such approval relates only to the Notes as defined above which are to be admitted to trading on the regulated market of the Irish Stock Exchange plc (the “Irish Stock Exchange”) or other regulated markets for the purposes of Directive 2004/39/EC (the “Markets in Financial Instruments Directive”) or which are to be offered to the public in any Member State of the European Economic Area (the “EEA”). The Central Bank has neither reviewed nor approved this Prospectus in relation to any other notes issued by the Company. The Issuer is not and will not be regulated by the Central Bank as a result of issuing the Notes. Any investment in the Notes does not have the status of a bank deposit and is not within the scope of the deposit protection scheme operated by the Central Bank. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the official list (the “Official List”) and trading on its regulated market. Such market is a regulated market for purposes of the Markets in Financial Instruments Directive. The Notes will not be rated. A copy of this Prospectus will be filed with the Irish Companies Registration Office in accordance with Regulation 38(1)(b) of Prospectus (Directive 2003/71/EC) Regulations 2005 (as amended). ARRANGER AND DEALER J.P. Morgan Dated: 7 February 2017 The Company accepts responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Company, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. For the avoidance of doubt, the Company accepts such responsibility in respect of itself and its Programme, but does not accept any responsibility for any information contained in the Programme Memorandum which relates to any other issuer under that issuer’s programme for which responsibility is accepted by such other issuer as provided in the Programme Memorandum. No person has been authorised to give any information or to make any representations other than those contained in this Prospectus in connection with the issue or sale of the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Company or the Dealer. Neither the delivery of this Prospectus, nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof or that there has been no adverse change in the financial position of the Company since the date hereof or that any other information supplied in connection with the Notes is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. Neither the Arranger nor the Dealer undertakes to review the financial condition or affairs of the Company at any time. Neither the Arranger nor the Dealer has separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by the Arranger or the Dealer as to the accuracy or completeness of the information contained in this Prospectus, any Pricing Conditions or any other information provided by the Company in connection with the Notes. Neither the Arranger nor the Dealer accepts liability in relation to the information contained in this Prospectus, any Pricing Conditions or any other information provided by the Company in connection with the Notes. None of this Prospectus, any Pricing Conditions or any other information supplied in connection with the Notes constitutes investment advice. None of the Company, the Arranger, the Broker, the Dealer, the Trustee, the Counterparty (or any Credit Support Provider of such Counterparty), the Custodian or any Agent, or any subsidiary, holding or associated company of any of them (including any directors, officers or employees thereof) is acting as an investment adviser or providing advice of any other nature, or assumes any fiduciary obligation, to any investor in the Notes. None of this Prospectus, any Pricing Conditions or any other information supplied in connection with the Notes is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Company, the Arranger or the Dealer that any recipient of this Prospectus, any Pricing Conditions or any other information supplied in connection with the Notes should purchase any of the Notes. Each investor contemplating purchasing any of the Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness of the Company and of the tax, accounting, legal and regulatory consequences of an investment in any of the Notes for such investor. Each Noteholder takes full responsibility for its decision to purchase any Notes and the terms on which it does so. None of the Company, the Arranger, the Broker, the Dealer, the Trustee, the Counterparty (or any Credit Support Provider of such Counterparty), the Custodian or any Agent, or any subsidiary, holding or associated company of any of them (including any directors, officers or employees thereof) makes any representation or warranty whatsoever or accepts any responsibility with respect to the Outstanding Charged Assets for the Notes or the creditworthiness of the Underlying Obligor with respect to such Outstanding Charged Assets. The information in this Prospectus in respect of the Original Charged Assets and the obligor of the Original Charged Assets has been accurately reproduced from information published by or on behalf of the obligor of the Original Charged Assets. So far as the Company is aware and is able to ascertain from information published by the obligor of the (ii) Original Charged Assets, no facts have been omitted which would render the reproduced information inaccurate or misleading. In addition, none of the Company, the Arranger, the Broker, the Dealer, the Trustee, the Counterparty (or any Credit Support Provider of such Counterparty), the Custodian or any Agent, or any subsidiary, holding or associated company of any of them (including any directors, officers or employees thereof) makes any representation or warranty whatsoever or accepts any responsibility as to the effect or possible effect of the linking of any payments due under the Notes to the performance of any other entity or index. None of the Arranger, the Broker, the Dealer, the Trustee, the Counterparty (or any Credit Support Provider of such Counterparty), the Custodian or any Agent, or any subsidiary, holding or associated company of any of them (including any directors, officers or employees thereof) undertakes to review the financial condition or affairs of the Company during the life of the Notes or to advise any purchaser or potential purchaser of the Notes of any information coming to the attention of any of the parties which is not included in this Prospectus. Neither this Prospectus nor any Pricing Conditions constitute an offer of, or an invitation by or on behalf of, the Company, the Arranger or the Dealer to subscribe for, or purchase, any Notes. The distribution of this Prospectus or the Pricing Conditions and the offering or sale of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus or the Pricing Conditions come are required by the Company, the Arranger and the Dealer to inform themselves about and to observe any such restrictions. Notes may be sold by the Dealer from time to time to other purchasers in individually negotiated transactions at prices which may be negotiated at the time of sale and which may vary among different purchasers. The Notes are in bearer form and are subject to U.S. tax law requirements. The information set forth herein, to the extent that it comprises a description of certain provisions of the documentation relating to the transactions described herein, is a summary and is not presented as a full statement of the provisions of such documentation. Such summaries are qualified by reference to and are subject to the provisions of such documentation. The language of this Prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law. In this Prospectus, unless otherwise specified or the context otherwise requires, references to “U.S.$” and “U.S. dollars” are to United States dollars, references to “EUR”, “euro” and “€” are to the euro as specified in the Treaty on the Functioning of the European Union, references to “pounds”, “sterling”, “GBP” and “£” are to the lawful currency of the United Kingdom and references to “MXN” are to Mexican Peso. General Notice EACH PURCHASER OF NOTES MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN EACH JURISDICTION IN WHICH IT PURCHASES, OFFERS OR SELLS THE NOTES OR POSSESSES OR DISTRIBUTES THIS PROSPECTUS OR THE PRICING CONDITIONS AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED FOR THE PURCHASE, OFFER OR SALE BY IT OF THE NOTES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTIONS TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NONE OF THE COMPANY, THE ARRANGER OR THE DEALER (INCLUDING THE DIRECTORS, OFFICERS OR EMPLOYEES THEREOF) SHALL HAVE ANY RESPONSIBILITY THEREFOR. (iii) NOTES MAY BE SUBJECT TO RESTRICTIONS ON TRANSFER AND RESALE AS DETAILED IN THIS PROSPECTUS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT IN NOTES FOR AN INDEFINITE PERIOD OF TIME. Important Notice Regarding Certain United States Laws THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THE COMPANY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”) IN RELIANCE, WHERE APPLICABLE, ON THE EXCEPTION PROVIDED UNDER SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT. THE NOTES WILL BE OFFERED, SOLD AND DELIVERED AS PART OF THEIR DISTRIBUTION AND AT ALL OTHER TIMES ONLY OUTSIDE THE UNITED STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF (A) NON-U.S. PERSONS IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (B) ANY PERSON WHO IS A NON-UNITED STATES PERSON (AS DEFINED IN RULE 4.7 UNDER THE U.S. COMMODITY EXCHANGE ACT OF 1936 BUT EXCLUDING, FOR THE PURPOSES OF SUBSECTION (D) THEREOF, THE EXCEPTION FOR QUALIFIED ELIGIBLE PERSONS WHO ARE NOT NON-UNITED STATES PERSONS). REGARD SHOULD BE HAD TO APPENDIX A OF THE PROGRAMME MEMORANDUM WHICH SETS OUT CERTAIN INFORMATION REGARDING THE BOOK-ENTRY NATURE OF THE NOTES AND ALSO SETS OUT THE TRANSFER RESTRICTIONS APPLICABLE TO THE NOTES. IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY U.S. FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS PROSPECTUS OR ANY OTHER DOCUMENT PRODUCED IN CONNECTION WITH THE NOTES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES. Certain ERISA Restrictions EACH PURCHASER AND TRANSFEREE OF A NOTE, OR OF ANY INTEREST THEREIN, WILL BE DEEMED AND IN CERTAIN CIRCUMSTANCES WILL BE REQUIRED IN WRITING TO HAVE REPRESENTED, AGREED AND ACKNOWLEDGED THAT, AT THE TIME OF ITS ACQUISITION AND THROUGHOUT THE PERIOD OF ITS HOLDING AND DISPOSITION OF SUCH NOTE OR INTEREST THEREIN, (1) IT IS NOT, AND IS NOT USING THE ASSETS OF, (A) (i) AN “EMPLOYEE BENEFIT PLAN” (AS DEFINED IN SECTION 3(3) OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE FIDUCIARY RESPONSIBILITY REQUIREMENTS OF TITLE I OF ERISA, (ii) A “PLAN” TO WHICH SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) APPLIES, OR (iii) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” (AS DETERMINED PURSUANT TO THE “PLAN ASSETS REGULATION” ISSUED BY THE U.S. DEPARTMENT OF LABOR AT 29 C.F.R. SECTION 2510.3-101 AS MODIFIED BY SECTION 3(42) OF ERISA) BY REASON OF ANY SUCH EMPLOYEE BENEFIT PLAN’S OR PLAN’S INVESTMENT IN THE ENTITY (ANY SUCH PLAN OR ENTITY DESCRIBED IN (i), (ii), OR (iii), A “BENEFIT PLAN INVESTOR”) OR (B) A NON-U.S. PLAN, GOVERNMENTAL PLAN, CHURCH PLAN OR OTHER PLAN THAT IS SUBJECT TO ANY FEDERAL, (iv) STATE, LOCAL, NON-U.S. OR OTHER LAW OR REGULATION THAT IS SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (A “SIMILAR LAW”) UNLESS ITS ACQUISITION AND HOLDING AND DISPOSITION OF SUCH NOTE, OR ANY INTEREST THEREIN, WILL NOT CONSTITUTE A VIOLATION OF SUCH SIMILAR LAW, AND (2) IT WILL NOT SELL OR OTHERWISE TRANSFER ANY SUCH NOTE, OR ANY INTEREST THEREIN, TO ANY PERSON WITHOUT FIRST OBTAINING FROM SUCH PERSON THESE SAME FOREGOING WRITTEN REPRESENTATIONS, AGREEMENTS AND ACKNOWLEDGEMENTS. ANY PURPORTED TRANSFER TO A TRANSFEREE THAT DOES NOT COMPLY WITH SUCH REQUIREMENTS SHALL BE NULL AND VOID AB INITIO. (v) Table of Contents Risk Factors ................................................................................................................................................ 7 The Counterparty ........................................................................................................................................ 8 The Bank of New York Mellon..................................................................................................................... 9 Description of the Company ...................................................................................................................... 10 Irish Risk Factors ...................................................................................................................................... 11 Relevant Sections of the Programme Memorandum ................................................................................ 12 Terms of the Notes.................................................................................................................................... 14 Pricing Conditions ..................................................................................................................................... 15 Use of Proceeds........................................................................................................................................ 24 The Swap Agreement ............................................................................................................................... 25 Information relating to the Original Charged Assets ................................................................................. 26 General Information .................................................................................................................................. 27 Directors’ report and financial statements for the years ended 31 December 2013, 31 December 2014 and 31 December 2015 ............................................................................................................................. 28 APPENDIX – PROGRAMME MEMORANDUM ........................................................................................ 30 (vi) Risk Factors Prospective investors should refer to the section entitled “Risk Factors” contained in the Programme Memorandum (pages 29 to 65 inclusive). The amounts of the Company’s payment obligations under the Notes are dependent upon the credit of the Outstanding Assets and of the Counterparty. Investors must satisfy themselves as to the nature, identity and credit status of the Underlying Obligor of the Original Charged Assets and the Counterparty and the extent of the credit exposure taken. Default or similar events by, or in respect of, the Underlying Obligor of any Outstanding Charged Assets or by, or in respect of, the Counterparty or default or unscheduled payments with respect to any Outstanding Charged Assets or the failure of any Outstanding Charged Assets to pay in accordance with their expected payments schedule may cause the notes to redeem early. In addition, the notes may redeem early due to tax imposition and other events affecting the swap agreement and/or any outstanding charged assets. Any of these these events may cause significant losses to the Noteholders and may result in the Notes redeeming at zero. The Counterparty Prospective investors should refer to the section entitled “The Counterparty” (pages 150 to 151 inclusive) contained in the Programme Memorandum save for the following amendment to the sub-section entitled “J.P. Morgan Securities plc”, which shall be deleted and replaced with the following: “J.P. Morgan Securities plc J.P. Morgan Securities plc (“JPMS plc”) is incorporated in England and Wales and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. JPMS plc’s immediate parent undertaking is J.P. Morgan Chase International Holdings, incorporated in England and Wales. JPMS plc’s ultimate parent undertaking is JPMorgan Chase & Co., a Delaware corporation whose principal office is located in New York, New York. The parent undertaking of the smallest group in which JPMS plc’s results are consolidated is J.P. Morgan Chase (UK) Holdings Limited, incorporated in England and Wales. JPMS plc is a principal subsidiary of the JPMorgan Chase and Co. group in Europe, the Middle East and Africa. JPMS plc’s principal activities include underwriting bonds, equities and other securities, arranging private placements of debt and convertible securities, trading in debt, equity securities and derivatives, brokerage and clearing services for exchange traded futures and options contracts, prime brokerage and investment banking advisory services. JPMS plc has branches in Frankfurt, Paris, Milan, Zurich, Madrid and Stockholm and is a member of many futures and equity exchanges and clearing houses, including the London Stock Exchange. JPMS plc is an indirectly wholly owned subsidiary of JPMCB. See “JPMorgan Chase Bank, N.A.” above for additional information. The information contained in this section relates to and has been obtained from JPMS plc. The delivery of this Programme Memorandum shall not create any implication that there has been no change in the affairs of JPMS plc since the date hereof, or that the information contained or referred to in this section is correct as of any time subsequent to its date. The business address of JPMS plc is 25 Bank Street, Canary Wharf, London E14 5JP.” A32863487 8 The Bank of New York Mellon Prospective investors should refer to the section entitled “The Bank of New York Mellon” (pages 152 to 153 inclusive) contained in the Programme Memorandum save for the following amendment: (1) The fifth, sixth and seventh paragraphs within the section shall be deleted and replaced with the following: “The Bank of New York Mellon, a wholly owned subsidiary of The Bank of New York Mellon Corporation, is incorporated, with limited liability by Charter, under the Laws of the State of New York by special act of the New York State Legislature, Chapter 616 of the Laws of 1871, with its head office situated at 225 Liberty St, New York, NY 10286, United States and having a branch registered in England & Wales with FC No 005522 and BR No 000818 with its principal office in the United Kingdom situated at One Canada Square, London E14 5AL. The Bank of New York Mellon’s corporate trust business services a substantial amount of outstanding debt obligations from numerous locations around the world. It services all major debt categories, including corporate and municipal debt, mortgage-backed and asset-backed securities, collateralised debt obligations, derivative securities and international debt offerings. The Bank of New York Mellon’s corporate trust and agency services are delivered through The Bank of New York Mellon and The Bank of New York Mellon Trust Company, N.A. The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and service their financial assets, operating in multiple countries. The company is a leading provider of financial services for institutions, corporations and high-networth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide clientfocused team.” A32863487 9 Description of the Company In light of the requirements under the Irish Companies Act 2014, the Company converted to a Designated Activity Company in September 2016. Such conversion necessitated the adoption of a constitution incorporating the Company’s Memorandum of Association and Articles of Association (the “Constitution”) and also a change of name from “Limited” to “Designated Activity Company” which may be abbreviated to “DAC” in any usage after the Company’s registration by any person including the Company itself. The Programme Memorandum makes reference to the Company’s former name, – Rubrika Finance Company Limited. Prospective investors should refer to the section entitled “Description of the Company – Rubrika Finance Company Limited” (pages 228 to 230 inclusive) contained in the Programme Memorandum save for the following amendments: (1) References to “Rubrika Finance Company Limited” shall be deemed to be to “Rubrika Finance Company Designated Activity Company”. (2) The following sentence shall be inserted at the end of the first paragraph in the section entitled “General”: “The Company re-registered, under Section 56(1) of the Companies Act 2014, as a designated activity company limited by shares.” (3) The section entitled “Directors of the Company” shall be deleted and replaced with the following: “Directors of the Company Name Principal Occupation Outside the Company David McGuinness Employee of the Administrator Carmel Naughton Employee of the Administrator The Company, acting on its own and without input or influence from the Dealer(s), any service providers, the Trustee or any other person, has selected the directors listed above. The business address of each of the directors of the Company is Deutsche International Corporate Services (Ireland) Limited, 6th Floor, Pinnacle 2, Eastpoint Business Park, Dublin 3, Ireland.” A32863487 10 Irish Risk Factors Prospective investors should refer to the section entitled “Irish Risk Factors” (pages 258 to 260 inclusive) contained in the Programme Memorandum save for the following amendments: (1) References to the Irish Companies (Amendment) Act 1990 (as amended) shall be deemed to be to the Irish Companies Act 2014 (2) The following shall be inserted immediately after the sub-section entitled “Taxation position of the Company” on page 260 of the Programme Memorandum: “Anti-Tax Avoidance Directive The Anti-Tax Avoidance Directive (“ATAD”) was adopted as Council Directive (EU) 2016/1164 on 12 July 2016 and must be implemented by all European Union Member States by 1 January 2019. When implemented, it is possible that the ATAD may affect the tax treatment of the Company and / or the Notes. However, in the absence of implementing legislation, the possible implications of the ATAD are unascertainable.” A32863487 11 Relevant Sections of the Programme Memorandum The following information contained in the Programme Memorandum (set out in the Appendix to this Prospectus) is relevant in respect of the Notes and investors should have regard to such sections. The following sections of the Programme Memorandum form part of this Prospectus, save that any statement contained therein shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a statement contained herein modifies or supersedes such statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The table below sets out the relevant page references for the relevant sections of the Programme Memorandum to which prospective investors should have regard. Section Page(s) Preamble pp. (i) – (vii) Overview pp. 10–28 Risk Factors pp. 29–65 Conflicts of Interest pp. 66–67 Commonly Asked Questions pp. 68–80 Master Conditions pp. 81–148 The Counterparty (note the amendments in the section entitled “The Counterparty” in this Prospectus) pp. 150–151 The Bank of New York Mellon (note the amendments in the section entitled “The Bank of New York Mellon” in this Prospectus) pp. 152–153 Description of the Company – Rubrika Finance Company Limited (note the amendments in the section entitled “Description of the Company” in this Prospectus) pp. 228–230 Irish Company Taxation p. 255–257 Irish Risk Factors (note the amendments in the section entitled “Irish Risk Factors” in this Prospectus) pp. 258–260 The Swap Agreement pp. 268–279 The Custody Agreement pp. 280–281 Calculation Agent and Determination Agent p. 282 Taxation Considerations pp. 283–292 ERISA Considerations pp. 293–296 Subscription and Sale pp. 297–304 General Information pp. 305–306 Appendix A Non-U.S. Distribution p. 307 Book-Entry Clearance Procedures pp. 308–310 Summary of Provisions relating to the Notes while in Global Form pp. 311–316 Transfer Restrictions pp. 317–320 Glossary of Defined Terms pp. 372–377 A32863487 12 The parts of the Programme Memorandum not listed in the table above are either not relevant for an investor or are covered elsewhere in this Prospectus. Such parts of the Programme Memorandum do not form part of this Prospectus, and have not been reviewed or approved by the Central Bank. Full information on the Notes is only available on the basis of the combination of the provisions set out in this document, including the information from the Programme Memorandum listed in the table above and the Pricing Conditions. Prospective investors who have not previously reviewed all such information should do so in connection with their evaluation of the Notes. The Principal Paying Agent and/or each Paying Agent on behalf of the Company will provide a paper copy of the Prospectus and the Programme Memorandum, free of charge, on request by an investor in any Note or beneficial interest therein. Any such request should be directed to the Principal Paying Agent or the relevant Paying Agent at the specified office of the Principal Paying Agent or the relevant Paying Agent, as the case may be, shown on the final page of this Prospectus. Any reference to websites in this Prospectus is for information purposes only and such websites shall not form part of this document. A32863487 13 Terms of the Notes The Notes issued by the Company are subject to the Master Conditions set out in the Principal Trust Deed in effect on 22 December 2014 in respect of the Company’s Programme for the Issuance of Notes and other Secured Obligations, as reproduced in the section of the Programme Memorandum entitled “Master Conditions” (pages 81 to 148 inclusive) and set out herein, and also to the Pricing Conditions, in each case as the same may be supplemented or modified by the provisions of any Global Note or Global Certificate (including any legend or capitalised text thereon) representing the Notes (see the section of the Programme Memorandum entitled “Summary of Provisions relating to the Notes while in Global Form” (pages 311 to 316 inclusive). A32863487 14 Pricing Conditions RUBRIKA FINANCE COMPANY DESIGNATED ACTIVITY COMPANY (formerly Rubrika Finance Company Limited) Series 17 MXN 3,001,200,000 Secured Zero Coupon Linked Notes due 2022 (the “Notes”) under the Programme for the Issuance of Notes and other Secured Obligations PART A – CONTRACTUAL TERMS The Notes are Regulation S Notes subject to Non-U.S. Distribution. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and are in bearer form and subject to U.S. tax law requirements, and no person has registered nor will register as a commodity pool operator of the Company under the U.S. Commodity Exchange Act of 1936 and the rules of the Commodity Futures Trading Commission thereunder. The Notes may not at any time be offered, sold or delivered in the United States or to, or for the account or benefit of, any person who is (x) a U.S. person (as defined in Regulation S under the Securities Act) or (y) not a Non-United States person (as defined in Rule 4.7 under the U.S. Commodity Exchange Act of 1936, but excluding, for the purposes of subsection (D) thereof, the exception to the extent that it would apply to persons who are not Non-United States persons). For a description of certain further restrictions on offers and sales of the Notes and distribution of the offering documentation with respect to the Notes, see the Programme Memorandum (as defined below). The Notes will not be rated. THE NOTES ARE COMPLEX INSTRUMENTS THAT INVOLVE SUBSTANTIAL RISKS AND ARE SUITABLE ONLY FOR SOPHISTICATED INVESTORS WHO HAVE SUFFICIENT KNOWLEDGE AND EXPERIENCE AND ACCESS TO PROFESSIONAL ADVISERS AS THEY SHALL CONSIDER NECESSARY IN ORDER TO MAKE THEIR OWN EVALUATION OF THE RISKS AND THE MERITS OF SUCH AN INVESTMENT (INCLUDING WITHOUT LIMITATION THE TAX, ACCOUNTING, CREDIT, LEGAL, REGULATORY AND FINANCIAL IMPLICATIONS FOR THEM OF SUCH AN INVESTMENT) AND WHO HAVE CONSIDERED THE SUITABILITY OF THE NOTES IN LIGHT OF THEIR OWN CIRCUMSTANCES AND FINANCIAL CONDITION. EACH PROSPECTIVE INVESTOR IN THE NOTES SHOULD HAVE SUFFICIENT FINANCIAL RESOURCES AND LIQUIDITY TO BEAR ALL OF THE RISKS OF AN INVESTMENT IN THE NOTES. OWING TO THE STRUCTURED NATURE OF THE NOTES THEIR PRICE MAY BE MORE VOLATILE THAN THAT OF UNSTRUCTURED SECURITIES. THE AMOUNTS OF THE COMPANY’S PAYMENT OBLIGATIONS UNDER THE NOTES ARE DEPENDENT UPON THE CREDIT OF THE OUTSTANDING ASSETS AND OF THE COUNTERPARTY. INVESTORS MUST SATISFY THEMSELVES AS TO THE NATURE, IDENTITY AND CREDIT STATUS OF THE UNDERLYING OBLIGOR OF THE ORIGINAL CHARGED ASSETS AND THE COUNTERPARTY AND THE EXTENT OF THE CREDIT EXPOSURE TAKEN. A32863487 15 DEFAULT OR SIMILAR EVENTS BY, OR IN RESPECT OF, THE UNDERLYING OBLIGOR OF ANY OUTSTANDING CHARGED ASSETS OR BY, OR IN RESPECT OF, THE COUNTERPARTY OR DEFAULT OR UNSCHEDULED PAYMENTS WITH RESPECT TO ANY OUTSTANDING CHARGED ASSETS OR THE FAILURE OF ANY OUTSTANDING CHARGED ASSETS TO PAY IN ACCORDANCE WITH THEIR EXPECTED PAYMENTS SCHEDULE MAY CAUSE THE NOTES TO REDEEM EARLY. IN ADDITION, THE NOTES MAY REDEEM EARLY DUE TO TAX IMPOSITION AND OTHER EVENTS AFFECTING THE SWAP AGREEMENT AND/OR ANY OUTSTANDING CHARGED ASSETS. ANY OF THESE EVENTS MAY CAUSE SIGNIFICANT LOSSES TO THE NOTEHOLDERS AND MAY RESULT IN THE NOTES REDEEMING AT ZERO. COMPANY DIRECTORS BY PURCHASING THE NOTES, THE NOTEHOLDERS THEREBY RATIFY THE SELECTION OF EACH MEMBER OF THE BOARD OF DIRECTORS OF THE COMPANY, AS IDENTIFIED BELOW, AND CONFIRM THAT SUCH RATIFICATION IS BEING MADE WITHOUT SELECTION OR CONTROL BY JPMORGAN CHASE & CO. OR ANY OF ITS SUBSIDIARIES. DIRECTORS OF THE COMPANY NAME PRINCIPAL COMPANY OCCUPATION OUTSIDE David McGuinness Employee of the corporate administrator Carmel Naughton Employee of the corporate administrator THE The Notes issued by the Company will be subject to the Master Conditions set out in the Principal Trust Deed in respect of the Company’s Programme for the Issuance of Notes and other Secured Obligations and reproduced in the Programme Memorandum dated 22 December 2014 (the “Programme Memorandum”), and also to the following terms, in each case as the same may be supplemented or varied by the provisions of any Global Note or Global Certificate (including any legend or capitalised text thereon) representing such Notes. Terms defined in these Pricing Conditions shall have the same meanings for the purposes of the Master Conditions. Terms used herein but not defined herein shall have the meanings given to them in the Master Conditions. In the event of any inconsistency between these Pricing Conditions and the Master Conditions, these Pricing Conditions shall govern. THESE PRICING CONDITIONS DO NOT CONSTITUTE FINAL TERMS FOR THE PURPOSES OF ARTICLE 5.4 OF DIRECTIVE 2003/71/EC (AS AMENDED, INCLUDING BY DIRECTIVE 2010/73/EU, THE “PROSPECTUS DIRECTIVE”). (Note: headings are for ease of reference only) Company: Rubrika Finance Company Designated Activity Company Series Number: 17 Tranche Number: 1 Currency of Denomination: Mexican Peso (“MXN”) Relevant Currency: MXN Aggregate Principal Amount: MXN 3,001,200,000 Trade Date: 1 November 2016 A32863487 16 Issue Date: 22 November 2016 Issue Price: 57.63 per cent. The Issue Price shall be payable in USD at an exchange rate of MXN 18.811 per USD 1, being USD 91,945,753.02. Original Charged Assets: The “Original Charged Assets” shall comprise USD 35,000,000 in principal amount of an issue by NIBC Bank N.V. of Republic of Indonesia Credit Linked Notes due 2022 (ISIN: XS0248938127), to be purchased on or about the Issue Date and identified below: Underlying Obligor: NIBC Bank N.V. Asset: Republic of Indonesia Credit Linked Notes due 2022 ISIN: XS0248938127 Coupon: Zero Coupon Maturity: 20 June 2022 Currency: USD Governing Law: English Law Address: Carnegieplein 4 2517 KJ The Hague The Netherlands Country of Incorporation: The Netherlands Business Activities: Corporate Banking activities and Consumer Banking activities Listed on the following stock exchanges: Regulated Market of the Luxembourg Stock Exchange Swap Agreement(s): Yes. Credit Support Annex: No Counterparty: J.P. Morgan Securities plc Dealer: J.P. Morgan Securities plc Initial Broker: J.P. Morgan Securities plc Custodian: The Bank of New York Mellon SA/NV, London Branch Calculation Agent: Not Applicable. Paying Agent: The Bank of New York Mellon, London Branch Condition 1 (Form, Denomination and Title) Form of Notes: Bearer Notes Temporary Global Note exchangeable for Permanent Global Note or Definitive Bearer Notes: Yes, exchangeable for Permanent Global Note in the circumstances specified in the Temporary Global Note. A32863487 17 Certificates to be Issued: Not Applicable New Global Note: No Global Certificate under Safekeeping Structure: New Denomination(s): Not Applicable MXN 2,500,000 (the “Minimum Denomination”) and each integral multiple of the Calculation Amount in excess thereof up to and including MXN 4,990,000. No Notes in definitive form will be issued with a denomination above MXN 4,990,000. Calculation Amount: MXN 10,000 Condition 4 (Security) Substitution of Original Charged Assets pursuant to Condition 4(i): Not permitted Condition 6 (Interest) Interest Basis: Zero Coupon Fixed Rate: Not Applicable Floating Rate: Not Applicable Condition 10 (Redemption and Purchase) Scheduled Maturity Date: 21 June 2022, subject to adjustment in accordance with the Following Business Day Convention. Maturity Date: “Maturity Date” means: (i) if the Original Charged Assets have been redeemed at their Redemption Amount (as defined in the terms and conditions of the Original Charged Assets) on 20 June 2022 (subject to adjustment in accordance with the business day convention applicable to the Original Charged Assets), the Scheduled Maturity Date; and (ii) if the Original Charged Assets have not been redeemed at their Redemption Amount (as defined in the terms and conditions of the Original Charged Assets) on 20 June 2022 (subject to adjustment in accordance with the business day convention applicable to the Original Charged Assets), the Revised Maturity Date. A Noteholder will not receive any compensation as a result of the Maturity Date falling after the Scheduled Maturity Date. “Revised Maturity Date” Business Day following, as Business Day (as defined in the Original Charged A32863487 18 means the first Payment appropriate: (i) the second the terms and conditions of Assets) following the Repudiation/Moratorium Evaluation Date (as defined in the terms and conditions of the Original Charged Assets); (ii) the Grace Period Extension Date (as defined in the terms and conditions of the Original Charged Assets); or (iii) the Postponed Maturity Date (as defined in the terms and conditions of the Original Charged Assets), in each case on which the Original Charged Assets are redeemed at their Redemption Amount (as defined in the terms and conditions of the Original Charged Assets). Business Day Convention: Following Business Day Convention Condition 11 (Redemption Amount and Early Redemption Amount) Redemption Amount: (i) if no Currency Hedging Mismatch Event has occurred, the Denomination of the Note; and (ii) if a Currency Hedging Mismatch Event has occurred, the Denomination of the Note minus the Additional Costs. “Currency Hedging Mismatch Event” means that, in the determination of the Determination Agent, there is a difference between the FX Maturity Rate (as defined in the terms and conditions of the Original Charged Assets) applied under the terms and conditions of the Original Charged Assets and the exchange rate between USD and Indonesian Rupiah (“IDR”) applied in market standard USDIDR forwards and swap transactions. “Additional Costs” means an amount in MXN determined by the Determination Agent equal to each Note’s pro rata share of any additional costs or losses incurred (expressed as a positive number) or gains made (expressed as a negative number) by the Counterparty in connection with its hedging positions in respect of the Notes and/or the Swap Agreement arising from the occurrence of a Currency Hedging Mismatch Event. Early Redemption Amount: Condition Talons) 12 (Payments Standard Early Redemption Amount. and Payment Business Day Centre(s): London, New York, Mexico City and Singapore Other Distribution Type: Non-U.S. Distribution Talons for future Coupons or Receipts to be attached to Definitive Bearer Notes (and dates on which such Talons mature): No Noteholder Representative: Applicable. A32863487 19 “Noteholder Representative” means, from the Issue Date to and until the occurrence of a Noteholder Representative Replacement Event, ZZ Vermogensverwaltung GmbH (the “Initial Noteholder Representative”) and, following each Noteholder Representative Replacement Event, the Replacement Noteholder Representative. Where: “Noteholder Representative Replacement Event” means where a person or persons, on providing evidence satisfactory to the Company, the Counterparty and the Determination Agent of its or their beneficial ownership of 100 per cent. of the outstanding principal amount of the Notes (the “100% Beneficial Owner(s)”), appoint a replacement Noteholder Representative (the “Replacement Noteholder Representative”) by delivery of a valid Noteholder Representative Replacement Notice to the Transaction Parties. Upon delivery of a valid Noteholder Representative Replacement Notice, the appointment of the previous Noteholder Representative shall terminate and the Transaction Parties shall be entitled to treat the Replacement Noteholder Representative as the Noteholder Representative. The Transaction Parties, including the Counterparty, shall be entitled to assume that the Noteholder Representative from time to time is validly appointed, may rely on communications and notices given by the Noteholder Representative without making any investigation as to the validity of such appointment, and shall have no liability to the Noteholder(s) for acting in reliance on any such communications or notices. “Noteholder Representative Replacement Notice” means a notice delivered by the 100% Beneficial Owner(s) to the Transaction Parties to appoint the Replacement Noteholder Representative and in respect of which the 100% Beneficial Owner(s) has/have provided evidence satisfactory to the Company, the Counterparty and the Determination Agent of its or their beneficial ownership of 100 per cent. of the outstanding principal amount of the Notes. Notices: Any notice from the Noteholder Representative and any Noteholder Representative Replacement Notice shall only be validly delivered where: (i) the Noteholder Representative or, in the case of a Noteholder Representative Replacement Notice, the 100% Beneficial Owner(s) has/have obtained confirmation (written, by email or by telephone) A32863487 20 from the Determination Agent that it has received such notice; and (ii) Further additions or variations: the notice contains all relevant information required to be specified by these Pricing Conditions. Original Charged Assets Early Redemption A new Condition 10(h) shall be deemed to be inserted as follows: “Original Charged Assets Early Redemption If: (i) an Original Charged Assets Early Redemption Event; or (ii) a Longstop Date Event occurs, then the Company shall redeem all but not some only of the Notes at their Early Redemption Amount on the Early Redemption Date. Notice of any such redemption shall be given to Noteholders in accordance with Condition 17 as soon as practicable after the Determination Agent gives notice of such occurrence to the Company. For the avoidance of doubt, an Original Charged Assets Early Redemption Event or a Longstop Date Event may occur after the Scheduled Maturity Date of the Notes. The Early Redemption Date may accordingly be later than the Scheduled Maturity Date of the Notes. No additional amount of interest shall be payable in respect of any such delay.” The final paragraph of Condition 4(d) (Method of Liquidation of Outstanding Assets prior to enforcement of the security) shall be amended by inserting the words “or 10(h)” after the words “Conditions 10(b), 10(c), or 10(d)”. The first paragraph of Condition 10(a) (Final redemption) shall be amended by inserting the words “or Condition 10(h)” after the words “Condition 10(d)”. Condition 25 (Definitions) shall be amended by inserting the words “, Condition 10(h)” after the words “Condition 10(d)” in the definition of “Early Redemption” and inserting the words “or Condition 10(h)” after the words “Condition 10(c)” in the definition of “Liquidation Event” The following shall be deemed to be added to Condition 25 (Definitions): ““Longstop Date” means 21 July 2022, subject to adjustment in accordance with the Following Business Day Convention. “Longstop Date Event” means that the Original Charged Assets have not been redeemed on or before the A32863487 21 Longstop Date. “Original Charged Assets Early Redemption Event” means that, in the determination of the Determination Agent, the Original Charged Assets have been declared due for redemption prior to, as appropriate: (i) their Maturity Date (as defined in the terms and conditions of the Original Charged Assets); (ii) the second Business Day (as defined in the terms and conditions of the Original Charged Assets) following their Repudiation/Moratorium Evaluation Date (as defined in the terms and conditions of the Original Charged Assets); (iii) their Grace Period Extension Date (as defined in the terms and conditions of the Original Charged Assets); or (iv) their Postponed Maturity Date (as defined in the terms and conditions of the Original Charged Assets), including, without limitation, as a result of a Credit Event (as defined in the terms and conditions of the Original Charged Assets), other than as a result of a Charged Assets Default.” Liquidation of Outstanding Assets Notwithstanding Condition 4(d) (Method of Liquidation of Outstanding Assets prior to enforcement of the security), during an OCA Liquidation Period and prior to the Liquidation of the Outstanding Charged Assets, the Broker shall request and, if obtained promptly following such request, consider a firm bid price in respect of the entire Outstanding Charged Assets from the Noteholder Representative. The following shall be deemed to be added to Condition 25 (Definitions): ““Noteholder Representative” means the entity specified as such in applicable Pricing Conditions.” Signed for and on behalf of the Company By………………………………………… (Authorised signatory) (representative of the Principal Paying Agent acting on behalf of the Company) A32863487 22 PART B – OTHER INFORMATION For the avoidance of doubt, the other information contained in this Part B of the Pricing Conditions does not form part of the Conditions. Listing and admission to trading: Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market. No assurance can be given that such listing will be obtained and/or maintained. Rating: Not Applicable Method of issue of Notes: J.P. Morgan Securities plc as individual Dealer at 25 Bank Street, Canary Wharf, London E14 5JP, United Kingdom. Post-issuance Reporting: The Company does not intend to provide any postissuance reporting. Authorisation: The issue of the Notes was authorised by a resolution of the board of directors of the Company passed on 21 November 2016. Dealers’ Commission(s) (Syndicated Issue): None Members of syndicate (Syndicated Issue): Not Applicable Common Code: 151637914 ISIN: XS1516379143 Details of additional/alternative clearing systems: Not Applicable Intended to be held in a manner which would allow Eurosystem eligibility: No Whilst the designation is specified as “No” at the date of these Pricing Conditions, should the Eurosystem eligibility criteria be amended in the future such that the Securities are capable of meeting them, the Notes may then be deposited with one of Euroclear or Clearstream, Luxembourg as common safekeeper. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met. A32863487 23 Use of Proceeds The net proceeds of the Notes will be used by the Company in acquiring the relevant Original Charged Assets specified in the applicable Pricing Conditions and making payments under the Swap Agreement relating thereto. A32863487 24 The Swap Agreement Prospective investors should refer to the section entitled “The Swap Agreement” contained in the Programme Memorandum (pages 268 to 279 inclusive), as supplemented or modified below. The Swap Agreement is documented by a confirmation dated 21 November 2016 entered into pursuant to the Master Swap Agreement with an effective date of 22 November 2016. The Master Swap Agreement incorporates the terms of the 1992 ISDA Master Agreement (Multicurrency – Cross Border) as published by the International Swaps and Derivatives Association, Inc. (formerly the International Swap Dealers Association, Inc.) (“ISDA”) (but amended to reflect the provisions described below). The confirmation incorporates the 2006 ISDA Definitions and sets out the payment provisions described below. The Swap Agreement, and any non-contractual obligations arising out of or in connection with it, will be governed by the laws of England. The Swap Agreement sets out certain payments to be made from the Company to the Counterparty and vice versa. Payments by the Company under the Swap Agreement will be funded from sums received by the Company in respect of the Outstanding Charged Assets. The Counterparty is J.P. Morgan Securities plc of 25 Bank Street, Canary Wharf, London E14 5JP. J.P. Morgan Securities plc has securities listed on the London Stock Exchange. The payments required between the Company and the Counterparty under the Swap Agreement are designed to ensure that following the making of such payments the Company will have such funds, when taken together with remaining amounts available to it from the Outstanding Charged Assets, as are necessary for it to meet its obligations: (i) to purchase the Original Charged Assets; (ii) to make payments of any Early Redemption Amount or Redemption Amount due in respect of the related Notes; (iii) to make payment of certain fees and expenses to Agents, accountants, auditors or other service providers which fees and expenses are associated with or are attributable to such Notes; and (iv) to make payment of any fees payable to any manager, administrator or adviser providing a service or performing a function with respect to the Swap Agreement or the Notes. The Counterparty’s obligations are guaranteed by JPMorgan Chase Bank, National Association (“JPMCB”). JPMCB has securities admitted to trading on the regulated market of the London Stock Exchange. See also the section of the Programme Memorandum entitled “JPMorgan Chase Bank, N.A.” in the chapter entitled “The Counterparty” (page 150). For so long as the Notes issued by the Company remain outstanding, physical or electronic copies of the Master Swap Terms and the Confirmation will be available during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) for inspection by the relevant Noteholders at the registered office of the Company and the specified office of the Principal Paying Agent. A32863487 25 Information relating to the Original Charged Assets To the extent that the information contained in this section has been reproduced from the underlying documentation relating to the Original Charged Assets, it has been accurately reproduced from such underlying documentation. So far as the Company is aware and able to ascertain from information published by the obligor of the Original Charged Assets, no facts have been omitted which would render the reproduced information inaccurate or misleading. The following information and any other information contained herein relating to the Original Charged Assets with respect to the Notes is a summary only of certain terms of the Original Charged Assets. Prospective purchasers of the Notes should make their own independent investigations and enquiries into the Original Charged Assets and the obligor(s) in respect thereof. The Original Charged Assets with respect to the Notes are comprised, in each case, as more particularly detailed below. Original Charged Assets: USD 35,000,000 in principal amount of an issue by NIBC Bank N.V. of Republic of Indonesia Credit Linked Notes due 2022 Information relating to the issuer of the Original Charged Assets Issuer of Original Charged Assets: NIBC Bank N.V. Registered address: Carnegieplein 4, 2517 KJ, The Hague, The Netherlands Country of incorporation: The Netherlands Description of business/principal activities: Corporate Banking Banking activities activities and Consumer Information relating to the Original Charged Assets Description/nature of assets: Republic of Indonesia Credit Linked Notes due 2022 Specified currency or currencies: USD Denominations: USD 100,000 Issue price: 100.00 per cent. Issue date: 10 April 2006 Interest: Zero coupon Maturity date: 20 June 2022 Redemption price: Credit Linked Redemption Listing: Regulated Market of the Luxembourg Stock Exchange Rating: Not applicable ISIN: XS0248938127 Governing law: English law A32863487 26 General Information (1) See the section of the Programme Memorandum entitled “Financial Statements” in the chapter entitled “Rubrika Finance Company Limited” (page 230). In addition, the Company has published its audited financial statements for the years ended 2013, 2014 and 2015. The Directors’ report and financial statements for the years ended 31 December 2013, 31 December 2014 and 31 December 2015 are reproduced in the section so entitled below. There has been no material adverse change in the financial position or prospects of the Company since 31 December 2015. (2) There has been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) since its incorporation which may have or has had since its incorporation significant effects on the financial position or profitability of the Company. (3) The estimated total expenses relating to the admission to trading is EUR 5,000. (4) Save as described under the "Conflicts of Interest" section of the Programme Memorandum, so far as the Company is aware, no person involved in the offer of the Notes has an interest material to the offer. (5) The Counterparty’s obligations are guaranteed by JPMorgan Chase Bank, National Association (“JPMCB”). JPMCB has securities admitted to trading on the regulated market of the London Stock Exchange. See also the section of the Programme Memorandum entitled “JPMorgan Chase Bank, N.A.” in the chapter entitled “The Counterparty” (page 150). A32863487 27 Directors’ report and financial statements for the years ended 31 December 2013, 31 December 2014 and 31 December 2015 [The remainder of this page is intentionally left blank] A32863487 28 KPMG Audit 1 Harbourmaster Place IFSC Dublin 1 Ireland Independent Auditor’s Report to the Members of Rubrika Finance Company Limited We have audited the financial statements (‘ ‘financial statements’ ‘) of Rubrika Finance Company Limited for the year ended 31 December 2013 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. This report is made solely to the company’ s members, as a body, in accordance with section 193 of the Companies Act 1990. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’ s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’ s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 6 the directors are responsible for the preparation of the financial statements giving a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Ethical Standards for Auditors issued by the Financial Reporting Council. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion: . the financial statements give a true and fair view, in accordance with WRSs as adopted by the EU, of the state of the Company’ s affairs as at 3 1 December 20 1 3 and of its profit for the year then ended; . the financial statements have been properly prepared in accordance with the Companies Acts 1963 to 2013. KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International cooperative I’ KPMG lnternational”l, a Swiss entity Independent Auditor’s Report to the Members of Rubrika Finance Company Limited (continued) Matters on which we are required to report by the Companies Acts 1963 to 2013 We have obtained all the information and explanations which we consider necessary for the purposes of our audit. The financial statements are in agreement with the books of account and, in our opinion, proper books of account have been kept by the company. In our opinion the information given in the directors’ report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half of the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 31 December 2013 a financial situation which under Section 40(1) of the Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the company. Matters on which we are required to report by exception We have nothing to report in respect of the provisions in the Companies Acts 1963 to 2013 which require us to report to you if, in our opinion the disclosures of directors’ remuneration and transactions specified by law are not made. Ailbhe Kenny for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 28 November 2014 1 Harbourmaster Place IFSC Dublin 1 Ireland Rubrika Finance Company Limited Directors’ report and audited financial statements For the financial year ended 31 December 2011 Registered number 362903 Rubrika Finance Company Limited Contents Page (s) Directors’ and other information 2 Directors’ report Statement of Directors’ Responsibilities - 5 6 7- 8 Independent auditor’s report 9 Statement of comprchcnsie income Statement of Itnancial position 10 Statement of changes in equity II 2 Statement of cash flows Notes to the financial statements 13 - 30 Rubrika Finance Company Limited Page 1 Directors’ and other information Directors Deirdre Glynn Cannel Naughton Registered Office (As from 6 November 2014) Pinnacle 2 Easipoint Business Park Dublin 3 Administralor & Company Secrelary Deutsche International Corporate Services (Ireland) Limited (UnOl 19 October 2014) ‘Asfrmn 20 October 2014) 5 l-larhounnaster Place Pinnacle 2 International Financial Services Cenire Easipoini Business Park Dublin I Dublin 3 Ireland Ireland Arranger & Swap Counlerparly J.P. Morgan Securities Limiled 125 London Wall London EC2Y 5AJ United Kinedom Trustee U.S Bank NA. 100 Wall Street Suiw 1600 New York NY 10005 United Slales of America Custodian, Banker & Principal Paying Agent The Bank olNew York Mellon One Canada Square London E13 SAL Uniled Kingdom Independent Auditor KPMG Chartered Accountants. Statutory audit firm I 1-larbounnaster Place lniernaiional Financial Senices Centre Dublin I Ireland Solicilon Matheson 70 Sir John Rogersons Quay Dublin 2 Ireland Bankers Bank ollreland Corporale Banking 2 Burlington Plaza Burlington Road Dublin 3 Ireland Deutsche Bank AG London 6 Bisliopsgate London, EC2P 2AT United Kingdom ti/plo 105 Nove,nher 2014) 5 1-larbounnaster Place Inlemational Financial Services Centre Dublin I Ireland Rubrika Finance Company Limited Page 2 Directors’ report The directors present the annual repon and audited Financial statements of Rubrika Finance Company Limited (the Company”) br the financial year ended 31 December2014. Principal aclivities and business review The Company is a limited Company incorporated in Ireland on 22 October 2002, registered number 362903. The Company has been established as a special purpose vehicle (“SPy”). The principal activities of the Company involves issuing debt securities that are backed by a segregated pool of collaterals. The Company has been established to issue series of notes (the “Notes”) and other obligations under its programme (the “Programme”) and carrying out its obligations in relation to such Notes and other obligations entered into in relation thereto. The Company has established the Programme pursuant to which it may issue, borrow under, buy, sell or enter into obligations in the form of Notes, loans, warrants or other obligations on the terms and conditions set out in (he information memorandum. The net proceeds of the issue of each Series of Notes has been used in or towards acquisition of the investment securities or provision of loans and/or in making payments under any agreements entered into wilh (lie Swap Counteqiarty ((he “Swap Agreements’) relating (hereto, unless othensise specified in the relevant Issue Terms- The Company has entered into a number of Series and each Series is governed by a separate supplemental programme memorandum. Each Series consists of an investment in collateral from the proceeds of the issuance of debt securities. Details of the Noles issued for each Series under the Programme are outlined in note 17 to the financial statements including the key lerms. The related financial assets held under cacti Series are described in notes 12 and 13 “hile description of the swaps entered into has been detailed under note 14 to ttie financial statements. A summan of the key risks regarding these financial instruments is outlined in note 23. General information regarding (lie Company is further described in note I to the financial statements. Series 2. 14 and 15 are listed on the main securities market of the Caman lstand Stock Exchange whereas Series II. 12 and 16 are listed on the main securities market of the Irish Stock Exchange. At the reponing date, the Company’s financial liabilities designated at fair value through profit or loss “crc concentrated in Participation Notes. Notes-linked to loan and Credit-linked Notes. Refer to note 17 for more details. Key performance indicators The Company is an SPV and its principal activity is to issue Notes, make investments and enter into derivative contacts. The best heochmark is prior year figures. The directors confirm that the key performance indicators as disclosed below in the financial statements are those that are used to assess the performance of the Company. During the financial year • the Company’s net gain on inestinent securities amounted to FUR l,92&935 (2013: EUR 1523,033): • theCompan’s interest receiableon loans andreceivables amountedto FUR 78.180,302 (20t3: FUR 9.324.239): • the Company’s net loss on debt securities issued, designated as liabilities at fair value through profit or loss amounted to EUR 522.809 (2013: EUR 10.891.619) and net loss on debt securities issued, measured at amonised cost amounted to FUR 78.180.302 (2013: FUR 938,132): • the Company’s net loss on deràative financial instruments amounted to ELtR t.402.l36 (2013: FUR 17.521): • the following Series of Noles “crc issued: Series IS L’SD 60.000.000 Fixed Rate Notes linked to a loan to the International Bank of Azethaijan due 2016 RUB 200,00t),000 Secured Fixed Rate Notes due 2023 Series 16 the foltowing Series of Notes was redeemed during the financial year: • USD 10.000,000 Singte Name Physically Settled Credit Linked Notes due 2018 Series 13 • the structure performed in accordance ‘ith the parameters set out in the multi-issuance programme and the performance is considered sat is Ibctonz As per the conditions specified in the Offering Circular Supptement, the Company has an option to redeem its Series of Notes early. Rubrika Finance Company Limited Page 3 Directors’ report (continued) Key performance indicators (continued) As at 31 December 2014: • the Company’s total Notes issued v,as EUR 441,086,521 (2013: EUR 351,103,870); the Company had 11w following Series of Notes in issue: • Description Series Type of notes Carried a, .4 ow,! ,sed cost Maturity date (‘CV Nominal 10-May-I 7 USD 100.000.000 26-Sep-18 USD l98,000.000 31-Oct-16 USD 211,000,000 Carried at fwr vIae Credit linked Notcs II EUR 10,000.000 12 17-Jun-16 Single Name Physically Settled Credit Linked Notes 12-Mar-I 8 Single Name Physically Settled Credit linked Notes Credit Linked Notes 13-Feb-23 Secured Fixed Rate Notes Credit linked Notes investments that the Company has in respect of each Series are included in notes 12 and 13. net liabilities of the Company was EUR 2.343 (2013: CUR 2.157): USD 10.000,000 RUB 200.000.000 Participation Notes 13 Notes linked to loan IS • • 16 the the Notes linked to loan Fked to Variable Rule Subordinated Loan Participation Notes Fixed Rate Note linked tou loan to the International Bank of AzerhaUan Fixed Rate Notes linked to a loan to (lie International Bank of Azerhaijan Credit events No credit events occurred during the financial year under revie’v. Future developments The directors expect that the present level of activity will he sustained for the foreseeable future. The Board will continue to seek new opportunities for the Company and will continue to ensure proper management of the current portfolio of Series of the Company. It is anticipated that while some Series will redeem or mature, it is also expected that ne’v issuances will he made. Going concern The Company’s financial statements for the financial year ended 31 December 2014 have been prepared on a going concern basis. Each asset or derivative is referenced with a specific Note, and any loss derived from the asset or derivative will be ultimately borne by the Noleholders. The directors anticipate that the loans and receivables and investment securities will continue to generate enough cash flow on an ongoing basis to tneet the Company liabilities as they fall due. The Notes in issue as at 31 December 2014 have maturities ranging between the years 2016(0 2023. There have also been new Series of Notes issued during the financial year and for these reasons, the directors believe that the going concern basis is appropriate. Business risks and principal uncertainties The Company is subject to various risks. The key risks facing the Company are set out in note 23 to the financial statements. Operational risk Operational risk is the risk of direct or indirect loss aristng from a wide variety of causes associated with the Company’s processes. personnel and infrastructure, and Frtim external Factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risk arises from all of the Companvs operations.. The Company was incorporated with the purpose of engaging in those activities outlined in the preceding paragraphs. All management and administration functions are outsourccd to Deutsche International Corporate Services (Ireland) Limited which has years of experience in tlus tield Results and dividends for the financial year l’he results for the financial year are set out on page 9. The directors do not recommend the payment of a dividend tbr the financial year (2013: nil). Changes in directors, secretan and registered office On 6 November 2011. the registered office of the Company changed its address from 5 1-larhourmaster Place, IFSC. Dublin I. Ireland to 6th Floor. Pinnacle 2. Easlpoint Business Park. Dublin 3. Ireland. There were no other changes in directors. seaetan and registered office during the period. Direclon, secretan and their intensb None of the directors and secretary ho held office on I January 2014 and 31 December 2014 held any shares in the Company at that date, or during the financial year. Except for the Administration agreement entered into by tlte Company with Deutsche International Corporate Services (Ireland) Limited, there were no contracts of any significance in relation to the business of the Company in which the directors had any interest, as defined in the Section 309 of the Companies Act 2014 at any time during the financial year. Rubrika Finance Company Limited l’age 4 Directors’ report (continued) Shares and shareholders The authorised share capital of the Company is EUR 10,000,000 divided into 10.000,000 shares of EUR I each of v.hich 3 are issued and unpaid. The issued shares are held in by Matsack Nominees Limited, Matsack Trust Limited and Matheson Services Limited (the “Share Trustees”) under the icons of a declaration of trust (the ‘Declaration of Trust”) under which the Share Truslees hold the benefit of Ihe shares on trust for charitable purposes. The Share Trustee has no beneficial interest in and derives no benefit from its holding of the shares. There are no other rights that pertain to the shares and (he shareholders. Corporate Governance Statement introduci,on The Company is subject to and complies with Irish Statute comprising the Companies Acts 2014 and the Listing rules of the Irish Stock Exchange ‘shich are applicable to the debt listed companies. The Company does not apply additional requirements in addition to those required by the above. Each of the service providers engaged by the Company is subject to their own corporate governance requirements Financial Reporting Process The Board of Directors (the “Board”) is responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company’s financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has established processes regarding internal control and risk management systems to ensure its effective oversight of the financial reporting process. These include appointing the Administrator, Deutsche International Corporate Services (Ireland) Limited, to maintain the accounting records of the Company independently of i.P Morgan Securities Limited (the ‘Arranger’), The Dank of New York Mellon (the “Custodian”) and U.S Dank N.A. (the “Trustee”). The Administrator is contractually obliged to maintain proper books and records as required by the Corporate Administration agreement. To that end the Administrator performs reconciliatioos of its records 10 those of the Arranger and the Custodian. The Administrator is also contractually obliged to prepare for review and approval by the Board the annual report including financial statements intended to give a true and fair view. Listed debt SPVs prepare annual financial statements which would have been reviewed by the board of directors before approving these. The Board evaluates and discusses significant accounting and reporting issues as the need arises. From time to time. the Board also examines and evaluates (lie Administrators financial accounting and reporting routines and monitors and evaluates the external auditors perfommoce, qualifications and independence. The Administrator has operating responsibility For internal control in relation to the financial reporting process and the Administrators report to the Board. Risk .1sse.csment The Board is responsible for assessing tIm risk of irregularities whether caused by fraud or error in financial reponing and ensuring the processes are in place for the timely identification of internal and external matters with a potential effect on financial reponing. The Board has also put in place processes to identify changes in accountiog rules and recommendations and to ensure that these changes are accurately reflected in the Company’s financial slatements. More specifically: The Administrator has a review procedure in place to ensure errors and omissions in the financial statements are identified and corrected. Regular training on accounting rules and recommendations is provided to the accountants employed by the Administrator. Accounting bulletins.., issued by Deutsche Dank AG, 1_ondon, an entity related to Deutsche International Corporate Services (Ireland) 1_imited, are distributed monthly to all accountants employed by the Administrator. - - - Co,ztrol A cavities The Administrator is contractually obliged to design and maintain control structures to manage the risks which the Board judges to he significant For internal control over financial reporting. These control structures include appropriate division of responsibilities and specific control activities aimed at detecting or preventing the risk of signilicant deficiencies in financial reporting for every significant account in the financial statements and the related notes in the Company’s annual report. A lomtvrtiig The Board has an annual process to ensure that appropriale measures are taken to consider and address the shortcomings identified and measures recommended by the independent auditors Given the contractual obligations on the Administrator, the Board has concluded that there is currently no oeed for the Company to have a separate internal audit thnction in order for the Board to perform effective monitoring and oversight of the internal control and risk management systems of the Company in relation to the financial reporting process. Rubrika Finance Company Limited Page 5 Directors’ report (continued) Corporate Governance Stalement (continued) Capital Structure No person has a significant director indirect holding of securities in the Company. No person has any special rights of control over the Company’s share capital. I-Iowever. collectively as a hoard, the Directors of the Company have authority to issue or buy hack shares of the Company. The directors confirm that share trustees have entered into a share trust agreement whereby they have agreed not to exercise their voting rights. With regard to the appointment and replacement of directors., the Company is governed by its Articles of Association. Irish Statute comprising the Companies Acts 2014 and the Listing Rules of the Irish Stock Exchange. The Articles of Association themselves may he amended by special resolution of the shareholders. The Company does not have any agreements that take effect, alter or terminate upon a change of control of the Company following a hid. The Company also does not have any agreements between itself and the directors or employees providing for compensation for loss of office or employment that occurs because of a hid. Powers ofthrectors The Board is responsible for managing the business affairs of the Company in accordance with the Articles of Association. The directors may delegate certain functions to the Administrator and other parties, subject to the supervision and direction by the directors. The directors have delegated the day to day administration of the Company to the Administrator. Audit committee The sole business of the Company related to the issuing of asset-hacked debt securities. In some series, it enters into certain derivatives to hedge out interest rate, currency and portfolio default risk exposure arising between asset and liability mismatches. Under Regulation 91(9)(d) of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 (the “Regulation”), which were published by the Irish Minister for Enterprise, Trade and Innovation on 25 May 2010, such a Company may avail itself of an exemption from requirement to establish an audit committee. Given the contractual obligations of the Administrator and the limited recourse nature of the securities issued by the Company, the Board of Directors has concluded that there is currently no need for the Company to have a separate audit committee in order for the Board to perform effective monitoring and oversight of the internal control and risk management systems of the Company in relation to the financial reporting process. Accordingly, the Company has availed itself of the e.\emption under Regulation 91(9)(d) of the Regulations. Accounting records The directors believe that they have complied with the requirements of Sections 281 of the Companies Act 2014 with regard to the books of account by employing an Adminstrator that employs an accounting personnel with the appropriate expertise and by providing adequate resources to the financial function. The books of account of the Company are maintained at 6th Floor, Pinnacle 2, Eistpoint Business Park. Dublin 3, Ireland. Political donations The Electoral Act, 1997 (as amended by the Electoral Amendment Political Funding Act, 2012) requires companies to disclose all political donations over €200 in aggregate made during a financial year. The directors, on enquiry, have satisfied themselves that no such donations in excess ofthis amount have been made by the Company during the financial year to 31 December 2014. Subsequent events Subsequent events have been disclosed in note 27 to the financial statements. Independent auditor KPMG Chartered Accountants, Statutory Audit Firm, have been appointed as auditors in accordance ‘vith Section 383(2) of the Companies Act 2014 for the financial year ended 31 December 2014 and have signified their willingness to continue in office. On behalf of the board QPQL\QO Deirdre Glynn Director Dale: 0711212015 Q4?\r Carmel Naughton Director Rubrika Finance Company Limited Page 6 Statement of Directors’ Responsibilities The directors are responsible for preparing the directors’ report and financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare the Company’s financial statemenLs in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Company and of its profit or loss for that year. In preparing these financial statements, the directors are required to: • select suitable accounting poitcies and then apply them consistently: • makejudgements and estimates that are reasonable and prudent • state “hether applicable Accounting Standards have been followed. suhjecL to any material departures disclosed and explained in the financial statements: and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company sill continue in business. The directors are responsible for keeping adequate accounting records “hich disclose ‘ith reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply ‘sith the Companies Act 2013. They have general responsibilitY for taking such steps as are reasonably open to them to safeguard tim assets olthe Company and to prevent and detect fraud and other irregularities. The directors are also responsible for preparing a Directors’ Repon that complies sith the requirements of the Companies Act 2013. Ct; Dcirdrc Glynn Director Date: 07Il2/2Ol Carmel Nnughton Director ‘fl KPMG Audit 1 Harbourmaster ?!ace IFSC Dublin 1 Ireland Independent auditor’s report to the members of Rubrika Finance Company Limited We have audited the financial statements of Rubrika Finance Company Limited (the “Company”) for the year ended 31 December2014 which comprise of the Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (WRS) as adopted by the European Union. Opinions and conclusions arising from our audit I Our opinion on (lie financial statements is unmodified In our opinion the financial statements: • give a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2014 and of its profit for the year then ended; • have been properly prepared in accordance with IFRS as adopted by the European Union; and • have been properly prepared in accordance with the requirements of the Companies Act 2014. 2 Our conclusio,zs on other matters on which we are required to report by (lie (‘ompanies Act 2014 are set out below We have obtained all the information and explanations which we consider necessary for the purposes of our audit. In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the financial statements are in agreement with the accounting records. In addition we report that, in relation to information given in the Corporate Governance Statement on pages 5 and 6, that: • based on knowledge and understanding of the company and its environment obtained in the course of our audit, no material misstatements in the information identified above have come to our attention; • based on the work undertaken in the course of our audit, in our opinion the description of the main features of the internal control and risk management systems in relation to the process for preparing the Company financial statements. and information relating to voting rights and other matters required by the European Communities (Takeover Bids (Directive 2004/25/EC) Regulations 2006 and specified by the Companies Act 2014 for our consideration; are consistent with the financial statements and have been prepared in accordance with the Companies Act 2014, the Corporate Governance Statement contains the information required by the Companies Act 2014. - - 3 We have nothing to report in respect of matters on which we are required to report by exception ISAs (UK & Ireland) require that we report to you if, based on the knowledge we acquired during our audit, we have identified information in the annual report that contains a material inconsistency vith either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading. 7 KPfAG. en Irish partnership and a member firm of the KPMG network of independent member firms affiriated with KPMC Inte,nationsl Cooperative KPMG Intennatienall, a Swiss entity I”” Independent auditor’s report to the members of Rubrika Finance Company Limited (Continued) 3 We have nothing to report in respect of na hen on which we are required to report by exception (Continued In addition, the Companies Act 20(4 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required by sections 305 to 312 of the Act are not made. Basis of our report, responsibilities and restrictions on use As explained more fully in the Statement of Directors’ Responsibilities set out on page 6, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014. Our responsibility is to audit and express an opinion on the financial statements in accordance with [rish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s Ethical Standards for Auditors. An audit undertaken in accordance with ISAs (UK & Ireland) involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Whilst an audit conducted in accordance with ISAs (UK & Ireland) is designed to provide reasonable assurance of identifying material misstatements or omissions it is not guaranteed to do so. Rather the auditor plans the audit to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial statements as a whole. This testing requires us to conduct significant audit work on a broad range of assets, liabilities, income and expense as well as devoting significant time of the most experienced members of the audit team, in particular the engagement partner responsible for the audit, to subjective areas of the accounting and reporting. Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. / / .4ilbhe Kenny for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm I Harhounnasrer Place !FSC Dublin I 7 December 2015 8 Rubrika Finance Company Limited Page 9 Statement of comprehensive income For the financial year ended 31 December 2013 Interest receivable on loans and receiyahles Net gain on investment securities Net loss on debt securities issued Net loss on derivative financial instruments Notes 5 6 7 8 Financial Year ended 31-Dec-14 ELTR Financial Year ended 3 1-Dec-13 78,180,302 1,924,945 (78,703,111) 1,4 02! 13 6) Ft It 9324,239 2,523,033 (11.829.751) (17,521) 210,362 (210.214) 120,439 (119,357) 248 1,092 (62) (273) 186 819 186 819 Operating resulic 9 I0 Other income Other expenses Profit before ta II Income lax expense Net profit for the financial year Other comprehensive income ‘rotal comprehensive income for the financial ‘ear *Halances in the prior year 1mw been adjusted to reflect current year presentation Refer to note 26. ‘the notes on pages 13 to 40 fonn an integral pafl of the financial statements. Rubrika Finance Company Limited Page It) Statement of financial position As at ii December 2(114 31-Dec-14 EVIl 31-Dec-li EVIl 12 13 14 15 16 19.842,759 42t).535, Rot) 1.175.479 6.876.116 1.105.678 4 49.5 3 5 .8 32 24,621,429 326,737,300 818,223 5.728821 958.982 358,864.755 17 14 18 441,086.521 467,517 7,979,451 449.533,489 351,103,87t) 1,073,082 6,685,646 358,862,598 19 3 2.330 2.343 3 2.154 2.157 449.535.832 358.864.755 Notes Assets Investment securities Loans and receivables Derivative financial assets Other receivables Cash and cash equivalents Total assets Liabilities and equity Liabilities Debt securities issued Derivative financial liabilities Other payables Total liabilities Equity Called up share capital presented as equity Retained earnings Total equity Total liabilities and equity On behalf of the hoard a2a Deirdre Clyno Director , Carmel Naughton Director / Date: 0711212(115 The notes on pages 13 to 40 form an integral part of the financial statements. Rubrika Finance Company Limited Page II Statement aichanges in equity For the financial year ended 31 December 2013 Retained earnings FUR 1,335 Total equity EUR ‘‘33% 819 819 - 819 819 Balance as at 34 December 2013 3 2,154 2.157 Balance as at I January 2014 3 2,154 2,157 186 186 186 186 2.340 2.343 Share capital EUR 3 Balance as at I ianualN 2013 Total comprehensive income for 11w Jinancial rear Net profit or loss Other comprehensive income - Tow! comprehensive income for the financial year Total comprehensive income for the financrnl lear Net profit or loss Other comprehensive income - Total comprehensive income for the financial year Balance as al 31 December 2014 - 3 The notes on pages 131040 tbrm an integral part of the financial statements. Rubrika Finance Company Limited Page 12 Statement of cash flows For the financial year ended 31 December 2013 Notes Cash flows from operating activities Profit helore tax Financial Year ended 31-Dec-13 Financial Year ended 31-Dec-13 EUR EL1R 24% 1,092 (78,180,302) (1.924,945) 78,703,111 1,402,136 (9,324,239) (2,523,033) 11,829,751 17,521 (19,388) 165,836 146,696 14 6. 696 55,294 414,853 471,239 471,239 A djnsiments for: Interest receivable on loans and receivables Net gain on investment securities Net loss on debt securities issued Net loss on derivative financial instruments S 6 7 8 A tovements in working capital (Increase)/Decrease in other receivables Increase in other payables Gas?; generatedfrom operating activities Net cash generated from operating activities Cash flows from investing activities Acquisitions of invesiment securities Investment in loan and receivables Loans terminated during the financial year Disposal of investment securities 12 13 13 12 Maturity of cash on deposit Cash receipts to Swap Counterparty - (44,923,507) - 7,793,000 (553,155) 29,144,779 (8,538,883) (28,591,624) 44,923,507 (7,793,000) 8,538,883 (21,431.195) 282,825,000 (313,093,000) (51,699,195) 46,696 471,239 958,982 487,743 1,105,678 958,982 - Cash flows from financing activities Interest paid* Issue oldebt securities Redemption of debt securities issued Net cash generated from/(used in) financing aclivilies 17 17 Increase in cash and cash equivalents Cash and cash equivalents at start of the financial year Cash and cash equivalents at end of the financial year 6 *Balances in the prior year have been adjusted to reflect current year presentation. Refer to note 26. The notes on pages 13 104(1 form an integral pan olthe financial statements. - 218,765,000 1,096,865 (767.728) 22,198,923 51,699,195 - Interest paid to Swap Counterparty* Interest received Net cash (used in)lgenerated from investing activities (26,017,865) (257,904,000) 94.328,000 Rubrika Finance Company Limited Page 13 Notes to the financial statements For the financial year ended 31 December 2014 Genenil information The Company is a limited Company incorporated in Ireland on 22 October 2002, registered number 362903. The Company has been established as a special purpose vehicle (“SPy”). The principal activities of the Company involves issuing debt securities thai are hacked by a segregated pool of collaterals. The Company has been established 10 issue series of notes (the “Notes”) and other obligations under its programme (the “Programme”) and carrying out its obligations in relation to such Notes and other obligations entered into in relation thereto. The Company has established the Programme pursuant to which it may issue, borrow under, buy, sell or enter into obligations in the fonn of Notes, loans, warrants or other obligations on the tenns and conditions set out in the information memorandum. The net proceeds of the issue of each Series of Notes has been used in or towards acquisition of the investment securities or provision of loans and/or in making payments under any agreements entered into with the Swap Counterparty (the “Swap Agreements”) relating thereto, unless othenvise specified in the relevant Issue Terms. The Company has entered into a number of Series and each Series is governed by a separate supplemental programme memorandum. Each Series consists of an investment in collateral from the proceeds of the issuance of debt securities. Details of the Notes issued for each Series under the Programme are outlined in note 17 to the financial statements including the key terms. The related financial assets held under each Series are described in notes 12 and 13 while description of the swaps entered into has been detailed under note 14 to the financial statements. A summary of the key risks regarding these financial instruments is outlined in note 23. Series 2, 14 and IS are listed on the main securities market of the Cayman Island Stock Exchange whereas Series II, 12 and 16 are listed on the main securities market of the Irish Stock Exchange. At the reporting date, the Company’s financial liabilities designated at fair value through profit or loss were concentrated in Participation Notes, Notes-linked to loan and Credit-linked Notes. Refer to note 17 for more details. 2 Basis of preparation (a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) and its interpretations as adopted by the EU and as applied in accordance with the Companies Acts 2014. The accounting policies set out below have been applied in preparing the financial statements for the financial year ended 31 December 2014, the comparative information presented in these financial statements are for year ended 31 December2013. The Company’s financial statements for the financial year ended 31 December 2014 have been prepared on a going concern basis. Each asset and derivative transaction are referenced with a specific Note, and any loss derived from the asset or derivative will be ultimately borne by the Noteholders. The directors anticipate that the investment securities will continue to generate enough cash flo’v on an ongoing basis to meet the Company liabilities as they fall due. The Notes in issue as at 31 December 2014 have maturity ranging from 2016 to 2023. For this reason, the directors believe that the going concern basis is appropriate. (b) Basis of measurement The financial statements have been prepared on the historical cost basis except for the tbllowing: • Financial assets designated at fair value through profit or loss are measured at fair value • Derivative financial instruments are measured at fair value and • Financial liabilities designated at fair value through profit or loss are measured at fair value. The methods used to measure fair values are discussed further in note 4. (c) Functional and presentation currency These financial statements are presented in Euro (EUR). The Company’s functional currency is the United States Dollar (USD) as this is the primary economic environment in which the entity operates. The issued share capital of the Company is denominated in EUR. however the loans and receivables, deposits and debt securities are denominated in USD. The directors of the Company believe that USD most faithfully represents the economic effects of the underlying transactions, events and conditions. I-lowever, the presentation currency has remained the same. Rubrika Finance Company Limited Page 13 Notes to the financial statements (continued) For the financial year ended 31 December 2014 2 Basis of preparation (enalinued) Use of estimates and judgements (d) The preparation of financial statements in conformity with IFRS requires management to make judgements. estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are bused on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making thejudgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in hich the estimate is revised if the re’ision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Delails of material judgements and estimates have been further described in accounting policy 3(g) ‘Financial instruments” and noles 4 and 2310 the financial statements. Rev estimates & judgeinenis on ,‘ecoverub,/ni of Loans and Receivables The estimates and underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are recogntsed in the period in %hich the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Details of material judeements and estimates have been further described in accounttng policy note 3(g) “Financial instruments” and note 23 to the financial statements. key sources of estimation uncertainty The determination of fair value for financial assets and liabilities for hich there is no obsenable market price requires the use of valuation techniques as described in note 23 to the tinancial statements. For financial instruments that trade infrequently and hake little price transparency, fair value is less objective, and requires vaning degrees ofjudaement depending on liquidity, concentration. uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. Critical accounting judgements in applying accounting policies The Company’s accounting policy on fair alue measurements is discussed under note 3(g) “Financial instruments”. Critical accounting judgements made in applying the Company’s accounting policies in relation to valuation of financial instruments is as folloss: I ‘aluaziw, offinancial ,n.ctnnnents The Company measures fatr values ustng the following htcrarchv of methods: Quoted market price in an acti’e market for an identical instrument. • • Valuation techniques based on obsenable inputs. This categon includes instruments valued using: quoted market prices in active markets for simtlar instruments: quoted prices for similar instruments in tnarkcts that are considered less than active: or other valuation techniques where all significant inputs are directly or indirectly obsenable from market data. Valuation techniques using significant unobservable inputs. This categon includes all instruments where the valuation • technique includes inputs not based on obsenable data and the unobservable inputs could have a significant eftbct on the instrument’s aluation. This categot includes instruments that are valued based on quoted prices for similar instruments here significant unohsenable adjustments or assumptions are required to reflect differences het’een the instruments. (e) New standards, amendments or inlcrprctations (0 Effactive for aimual periods beginning mi I Januun’ 2014 A number of new standards and interpretations are effecive for annual periods beginning on or after I Januan 2014. Of these, the following “crc of relevance to the Company and were considered for adoption: The amendments to lAS 32 Financial Instruments: Presentation (Offsetting Financial Assets and Financial Liabilities) clarify the otThetting criteria in lAS 32 by revising the guidance on when an entity currently has a legally enforceable right to sec-off and when gross settlement is considered to he equivalent to net settlement. Based on the new requirements, the Cotnpany assessed that at this time no revisions to its previous approach to offsetting of Fnancial assets and financial liabilities arises in the statement of financial position. IFRS to Consolidated Financial Statements establishes a ne’v control-based model for consolidation that replaces the existing requirements of both lAS 27 and SIC-12 Consolidation Special Purpose Entities. Under the ne’v standard an investor controls an investee when (i) t has exposure to variable returns from that investee (ii) it has the power over relevant activities of the invcstee that affect those returns and (iii) there is a link between that power and those variable returns. The standard includes specific guidance on the question of whether an entity is acting as an agent or principal in its involvement with an investee. The assessment of control is based on all facts and circumstances and is reassessed if there is an indication that there are changes in those facts and circumstances. - Rubrika Finance Company Limited Page 15 Notes to the financial statements (continued) For the financial year ended 31 December 2014 2 Basis of preparat on (continued) New standards, amendments or interpretations (continued) (e) (1) Effectivefor unmialpenods beginning on 1 January 2014 (continued) The Directors have assessed that IFRS 10 did not have an impact on the Company as it is a stand-alone entity with no interests that could potentially qualify as a suhsidian- interest. Therefore, based on the ne” requirements, the Company assessed that at this there “as no implications for the Financial statements. As the Company has no subsidiaries, the IERS 10 Amendment on Investment Entities does not apply. IFRS 12 Disclosure of Interests in Other Entities sets out more comprehensive disclosures relating to the nature, risks and financial effects of interests in subsidiaries, associates. joint arrangements and unconsolidated structured entities. Interests are idely defined as contractual and non-contractual involvement that exposes an entity to variability of returns from the performance of the other entity or operation The Directors have assessed that IFRS 12 did not have any impact on the Company as the Company does not hold any Interest in Other Entities (H) Effectit’efor annual periods beginn lug after I January 2014 The Directors have set out helow both the upcoming EU endorsed and un-endorsed accounting standards, amendments or interpretalions. Effective date (period beginning)’ Description 1 Februan’ 201?’ Defined Benefit Plans: Employee Contributions (Amendments to lAS 19) I Febman 2015’ Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 20112013 Cycle I Januan’ 2016 Amendments to IFRS I I: Accounting for acquisitions of interests in Joint Operations I January 2016 IFRS 13: Regulaton’ Deferral Accounts I January 2016 Amendments to lAS 16 and lAS 38: Clarification of acceptable methods of depreciation and amoflisation I January 2016 Amendments to lAS 16 Property, Plant and Equipment and lAS 41 Bearer Plants I January 2016 Amendments to lAS 27 Equity method in Separate Financial Statements I January 2016 Amendments to IFRS 10 and lAS 28: Sale or contribution of assets between an investor and its associate orjoint venture I January 2016 Amendments to IFRS 10. IFRS 12 and lAS 28: Investment Entities: Applying the Consolidation Exception I January 2016 Amendments to lAS 16 and lAS 38: Clarification of Acceptable Methods of Depreciation and Amnnisaiion I Januan 2016 Amendments to lAS I: Disclosure Initiative I Januan’ 2016 Annual Improvements to IFRSs 2012-2014 Cycle I Januan’ 2017 Rcvenue with customers from contracts IFRS IS: I January 2018 IFRS 9 Financial Instruments (2009, and subsequent amendments in 2010 and 2013) ‘Where new requirements are endorsed the EU effective dale is disclosed. For un-endorsed standards and interpretations, the IASB’s effective date is noted. Where any of the upcoming requirements are applicable to the Company, it ‘sill apply them from their EU effecthe date. “ EU endorsed The Directors have considered the new standards, amendments and interpretations as detailed in the above table and does not plan to adopt these standards early. The application of all of these standards, amendments or interpretations will he considered in detail in advance of a confinned effective date by the Company. The Directors have concluded that the following may he relevant and are still reviesing the impact of the upcoming standards to determine their impact. lAS 23 Related Party Disclosure: This improvement relates to the identification of an entity providing key management personnel (KPM) senices to the reporting entity being a related pan” of the reporting entity. Rubrika Finance Company Limited rage 16 Notes to the financial statements (continued) For the financial year ended 31 December 2014 2 Basis of preparation (continued) Ntis standards, amendments or interprttalmns (continued) (e) (ii) Effecth’efor emma! periods beginning after I January 2014 (continued) Amendments to lAS I: Disclosure Initiathe: These amendments to lAS I Presentation of Financial statements address some of the concerns expressed about existing presentation and disclosure requirements and ensure that the entities are able to use judgement where applying lAS I. The amendments relate to the following: materiality, order of the notes. subtotals, accounting policies and disazgregation. The impact olthese amendments are currently under consideration by the Company. IFRS 9 Financial Instruments issued on 24 July 2014 is the IASU’s replacement of lAS 39’s Financial Instruments: Recognition and Measurement. The Slandard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting 3 Significuni accounting policies Net gain on investment securities (a) Net gain on investment securities relates to investments and includes coupon receipts, all realised and unrealised fair value changes and foreign exchange differences. Any gains and losses arising from changes in fair value of the investment securities are recorded in the Statement of compreltensive income. Details of recognition and measurement of Financial assets are disclosed In the accounting policy of financial instruments (note 3(g)). Realised gains and losses are recomiised on disposal of financial assets. “hen the disposal price is not equal to the carrying vaiue of the asset. (b) Net loss on debt securities issued Net loss on debt securities issued and includes coupon payments, all realised and unrealised fair value changes arid foreign exchange differences, Any gains and losses arising from changes in fair value of the debt securities issued which are designated at fair value through profit and loss are recorded in the Statement of comprehensive income. Details of recognition and measurement of financial liabilities are disclosed in the accounting policy of financial instruments (note 3(g)). Realised gains and losses are recognised on redemption of the debt securities issued when the redemption price is not equal to the carrytng value of the debt secuntitsi-sued. (c) Net loss on derivative financial instruments Net loss on derivative financial instruments relates to the fair value movements on swaps held by the Company and includes net derivative incomeexpense. realised. unrealised fair value movements and Ioreien exchange differences. Any gains and losses arising from changes in fair value of the derivative financial instruments are recognised in the Statement of comprehensive income. Details of recognition and measurement of derivative financial instruments are disclosed in the accounting policy of financial instruments (note (d) Impairment on loans and receivables Impairment on loans and receivables relates to the impairment movcments on loans and receivables held by the Company as at 31 December 2014. (e) Other income and cpenses All other income and expenses are accounted for on an accruals basis. (I) Income tax expense Income tax expense is recognised in the Statement of comprehensi’.e Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity consistent with the accounting for the item to which it is related. Current tax is the expected tax payable on the taxable income for the Financial year, using tax rates applicable to the Company’s activities enacted or substantively enacted at the reporting date, and adjustment to tax payable in respect of previous years. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can he utilised. Deferred tax assets are reviewed at each reporting date and are reduced 10 the extent that it is tio longer probable that the related tax benefit “ill be realised. Rubrika Finance Company Limited Page 17 Notes to the financial statements (continued) For the financial year ended 31 December 2014 3 Significant accounting policies (continued) Financial instruments (g) The Financial instruments held by the Company include the Following: • Investment securities: • Loans and receivables; • Derivative Financial instrumenLs classified as held For trading: and Debt securities issued. • Cutegorisation A Financial asset or financial liability at fair value through profit or loss is a financial asset or liability that is classified as held-fortrading or designated at Fair value through profit or loss. (Investment securities, debt securities issued and derivathe financial instruments). Designation at fair value through profit or loss upon initial recognition The Company has designated certain financial assets and liabilities at Fair value through profit or loss when either: • The assets or liabilities are managed, evaluated and reported internally on a fair value basis: The designation eliminates or significantly reduces an accounting mismatch hich would otherwise rise: or • • The asset or liability contains an embedded derivative that significantly modifies the cash flows that would othenvise be required under the contract. These include financial assets and financial liahiliiies that are not held for trading, such as collaterals purchased and the Notes issued These financial instruments are designated on the basis that their fair value can he reliably measured and their performance has been evaluated on a Fair value basis in accordance with the risk management and/or investment strategy as set out in the Company’s offering document. The Company has designated its financial assets at fair value through profit or loss and financial liabilities at fair value through profit or loss. Derivative financial instruments that are not designated and effective as hedging instruments are classified as held for trading. Loans and receivables The Company has classified the loans held as loans and receivables. Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables, Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would he immaterial. Investment securities All investment securities held by the Company are designated at fair value through profit and loss upon initial recognition when they eliminate or significantly reduce an accounting mismatch, which would othenvise arise in relation to financial liabilities as explained below. Dern’ctiive financial in.cirumenis Derivative financial instruments include all derivative assets and liabilities that are not classified as trading assets or liabilities, When a derivative is not held for trading and is not designated in a qualifying hedge relationship, all changes in its fair ‘alue are recognised immediately in the Statement of comprehensive income as a cttmponent of net income on dertvatise financial instruments carried at air value, Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently retneasured to their fair value at the end of the reporting period. The resulting gain or loss is recognised in the Statement of comprehensive income immediately. A derivative with a positive fair value is recognised as a derivative financial asset; a derivative with a negative fair value is recognised as a derivative financial liability. Debt securities issued All debt securities issued are initially measured at fair value and certain debt securities are destgnaied as liabilities at fair value through profit or loss when they either eliminate or significantly reduce an accounting mismatch, or contain an embedded derivative that significantly modifies the cash flows that would otherwise he required under the contract. For some of the Series which invested in loans and receivables, the debt securities issued are subsequently measured at amortised cost using the effective interest methodology to record interest expenses. Rubrika Finance Company Limited Page 1% Notes to the financial statements (continued) For (he financial year ended 31 December 2013 3 Significanl accounting policies (continued) (g) Financial instruments (continued) Debt seenrities issued (continued) initial recognition The Company initially recognises all financial assets and liabilities on the trade date at which the Company becomes a party to the contractual provisions of the instruments at fair valuc Any transaction costs are accounted for in the Statement of Comprehensive income. From the trade date, any gains and losses arising from changes in fair value of thc financial assets or financial liabilities at fair value through profit or loss are recorded in the Statement of comprelienshe incomc. Subsequent ineasurenwnt Alter initial measurement, the Company measures financial instruments which are classified at fair value through profit or loss at their fair value. Subsequent changes in the fair value of financial instruments designated at fair value through profit or loss are recognised directly in the Statement of comprehensive income. The fair value of financial instruments’s based on their quoted market prices on a recognised exchange, or sourced from a reputable hroker/counterpaay. in the case of non-exchange traded instruments, at the reporting date nithout any deduction for estimated future selling costs. Derecognition The Company derecognises a financial asset shen the contractual rights to the cash ions from the asset expire. or it transfers the nghts lo receive the contractual cash finns on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability. The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. Offietting Financial assets and liabilities are set oil and the net amount presented in the Statement of financial position ;shen, and only when, the Company has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions. Specific Instruments Cash and cash equivalents Cash and cash equivalents including cash held at banks are subject to insignificant risk of changes in their fair salue, and are used by the Company in the management of its short term commitments. There are no other restrictions on cash and cash equivalents. Cash and cash equivalents are carried at amnrtised cost in the Statement of financial position. Identification and i,leasurenlent of unpairment At each reporting dale the Company assesses whether there is objective evidence that financial assets not carried at lair value through profit or loss are impaired. A financial asset or a group of financial assets is iare impaired shen objecti’.e evidence demonstrates that a loss e;ent has occurred after the initial recognition of the assets, and titat the loss event has an impact on the future cash flows of the assets that can be estimated reliably. Objective e’idence that financial assets are impaired can include significant financial difficulty of the borrower or issuer, default or delinquency by a horoner. restructuring of a loan or advance on terms that nould not otherwise he considered, indications that a borrower or issuer will enter bankruptcy or other obsen-able data relating to a group of assets such as adverse changes in the payment status of hnrroners or issuers, or economic conditions that correlate with defaults. Impairment losses on assets carried at amonised cost are measured as the dilTerence betneen the can ing amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognised in the Statement of comprehensie income, Interest on impaired assets continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the Statement of Comprehensive income.The Company isrftes oil financial assets carried at amonised cost when they are determined to he uncollectable. Rubrika Finance Company Limited Page 19 Notes to the financial statements (continued) For the financial year ended 31 December 2014 3 Significant accounting policies (continued) (Ii) Share capital Share capital is issued in Euro (EUR). Dividends are recognised as a liability in the period in which they are approved. (i) Other receivables Other receivables do not carry any interest and are short-term in nature and have been revie’ved for any evidence of impairment. Other receivables are accounted at amortised cost. U) Other pnyables Other payahles are accounted at amonised cost. (k) Segment reporting An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity). The Company’s business involves the repackaging of bonds and other debt instruments, on behalf of investors, which are bought in the market and subsequently securitised 10 avail of potential market opportunities and risk return asymmetries. The Company has only one business unit and all administrating and operating functions are carried out and reviewed by the Administrator and Company Secretary’, Deutsche International Company Services (Ireland) Limited. The Company’s principal activity is to invest in financial instruments which are the revenue generating segment of the Company. The Chief Operating Decision Maker (CODM) of the operating segment is the Board. The Company is a special purpose vehicle whose principal activities are the issuance of Notes and investment in securities. The CODM does not consider each underlying Series of Notes as a separate segment, rather they look at the structure as a whole. Based on that fact, the directors confirm that there is only one segment. (I) 4 Foreign currency transaction Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting dale are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in the Statement of comprehensive income. Determination of fair values The Company’s investments, derivatives and certain debt securities issued are carried at fair value on the Statement of financial position. Usually the fair value of the financial instruments can he reliably determined within a reasonable range of estimates. The carrying amounts of all the Company’s financial assets and financial liabilities at the reporting date approximated their fair values. ‘[he determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks aflècting the specific instrument. Critical accounting judgements in applying the Company’s accounting pulicies Critical accounting judgements made in applying the Company’s accounting policies in relation to valuation of financial instruments is further described in note 23. Fair value measurement principles The following methodologies have been applied in determining the fair values of each class of Notes: ParticiØation Notes for Series 2 Investment- The methodology applied to loans of Series 2 are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except tin short term receivables when the recognition of interest would he immaterial. Notes- Due to the limited recourse aspects of the Notes, the value will be equal to the value of the loan. Rubrika Finance Company Limited Page 20 Notes to the financial statements (continued) For (he financial year ended 31 December 2013 3 Delermination of fair values (continued) Fair value measurement principles Credit-linked Notes for Series 11, 12 and 16 Investments The methodology applied to fair value the investmenls is to use the values provided on Bloomberg (where available) or by J.P Morgan Securities Limited ((he “arranger”). J.P Morgan Securities Limiled use different inputs to value these investments, such as bloomberg data and reuters dala. discount rate, recovery rate, default rate and proprietan’ models which are developed from recognised models, - Saps for Series II and 2- The methodology applied to fair value the credit delimIt swaps. are obtatned from the S”ap Counterpartv. 3.1’. Morgan Securities Limited. “ho may use a variety of different valuation techniques including use of arm’s length market transactions. reference to the current fair value of another instrument that is substantially the same, discounted cash flow techniques propriety valuation models, credit spreads. recoven- rates or any other aluarion tecltnique that provides a reliable estimate of prices obtainable should the instrument be traded. Swaps Series 16 includes a Total Return S”ap tTRS) and a Cross Currency Swap (CCS). The methodology applied to fair value the swap projects cash flows is by discounting the valuation date using a discount factor interpolated off a zero coupon yield cun’e of the respective currency. Significant inputs into these models are directly or indirectly obsenable from market data. - Notes- Due to the limited recourse aspects of the Notes. the value ‘sill be equal to the value of the underlying collateral and saps. Votes-linked to loan for Series 14 and IS Investment- The methodology applied to the loans of Series II and 15 are measured at amonised cost using the effective inlerest metht,d. less any impairment. Interest income is recognised by applying the effective interest rate, e.\cept for short term receivables vhen tite recognition of interest would he immaterial. Notes- Due to the limited recourse aspects of the Notes. the value will he equal to the value of the loan. 5 Interest receivahie on loans’’,tnd receivables Interest receivable on loans and receivables Analysed as follows: Coupon receipts Foreign cchange gain/(loss) on loans and receivables 6 Net gain on investment securities Net gain on investment securities Analysed as folhm 5: Coupon receipts Net gaiat loss) on inestment securities Foreign cchange gain on cash on deposits Financial Year ended 31-Dec-t4 FUR 78,180,302 Financial Year ended 31-Dec-13 EUR 9,324,239 29,305,309 4H,874.993 78,180.302 2t),502,939 (11,178,700) 9.324.239 Financial ‘ear ended 31-Dec-14 FIR 1,924.945 Financial \‘ear ended 31-Dec-13 FIR 2.523.033 1.031,113 893.532 1.181,369 (1.396.136) 2,735,000 2.523.033 - 1924,935 Rubrika Finance Company Limited Page 21 Notes to the financial statements (continued) For (he financial year ended 31 December 2014 7 Net loss nfl debt securities issued Net loss on debt securities issued Analysed as follows: Atfair ,‘aluc Coupon payments Net gain/(Ioss) on debt securities issued at fair value At amurused cost Coupon payments Net foreign exchange (loss)/gain on debt securities issued at ainorlised cost S Net loss on derivative financial instruments Net loss on derivative financial instruments Analysed as follows: Net derivative expense Net (loss)!gain on derivative financial instruments 9 Oilier income Foreign exchange gain on bank accounts Other income Bank interest It) Oilier expenses Arranger fee Legal fees Professional fees Audit fees Administration expenses Tax fees Bank charges Foreign exchange loss on cash in hank Auditors remuneration in respect of the financial year: (excioding VAt) Audit of individual Company accounts Other assurance services Tax advisory services Other non-audit services Financial Year ended 31-Dec-13 EUR (78,703.111) Financial Ycarended 31-Dec-13 EUR (11,829,751) (805,658) 282,849 (8,711,049) (2,1 %t),570) (29,305,309) (48,874,993) (78,703,111) (12,116,832) I 1.1 78,700 (11,829,751) Financial Ycar ended 31-Dec-13 EUR (1,402,136) Financial Year ended 31-Dec-13 ELR (17.521) (225,755) (1,176,381) (1,402,136) (859.527) 842,006 (17,521) Financial Yearended 31-Dec-13 EtR 113,944 96,111 407 210,462 Financial Year ended 31-Dec-13 Et’R Financial “ear ended 31-Dec-14 ELTR (103,039) (52,728) (22,929) (15,000) (11,771) (4,600) (147) Financial Year ended 31-Dec-13 EIiR - 120.235 214 120,449 - (210.214) (29,804) (39,359) (15,000) (12,134) (4,600) (402) (18.058) (119,357) ELR 1 5,000 EUR I 5,00t) 4,600 4,600 19,600 19,600 - Rubrika Finance Company Limited l’age 22 Notes to the financial statements (continued) For the financial year ended 31 December 2013 II Income lax expense Profit before tax Financial Year ended 31-Dec-13 EIR 248 Financial Year ended 31-Dec-13 (62) (62) (273) (273) Current tax at 25% Current tax charge FUR 1,092 ‘[he Company will continue to be taxed al 25% (2013: 25%) in accordancewith Section 110 of theTaxes Consolidation Act, 1997. 12 31-Dec—13 Investment securities Financial assets 31-Dee-I) ELK FUR 19,842,759 24.621 ,4_9 Financial asseLs have upon initial recognition been designated at fair value through profit or loss in accordance ith the accountine policies set out in note 3. 31-Dec-13 31-Dec-14 Maturity analysis of financi-al assets FUR ELK Within I year 24.621,429 I 8.059.407 More than I year and less than 5 years 1.783,352 More than 5 years 19.832.759 24.621,429 — — - At beginning of the financial year 31-Dec-13 FUR 24.621.329 Cash transactions Additions during the financial year Disposals during the financial year (7,793.000) Non Cash transactions Additions during the financial year 2.120.798 Movement in financial assets - - 26,017.865 - - 893.532 (1.396.436) 19.832,759 23,621.429 Net changes in fair value during the financial year At end of the financial year il-Dec-I) UK The earning value of the assets olthe Company represents their maximutn exposure to the credit risk. [he credit risk is eventually transferred to the Ssap Counterpany or [he Noteholders through the indkidual tenns of each Series in issue. ‘[he financial assets are held as collateral ft,r each Series of debt securities issued by the Company as per note 17, Refer to note 23(h) ‘or a description of the credit risk. concentration risk and currency risk disclosures relating to financial assets. Details olthe nominal values and terms oleach Series is disclosed below: Maturity t)ale Series Description Interest rate hasis :ttjair value Credit linked Notes 17-Jun-16 Fixed 5,25% II Romania 5,250% Notes 12-Mar-18 12 Fixed 4,50% [he Export-Import Bank olKorea ofMYR 500,000,000 Conventional Medium Tenn Notes - - 16 4,50% RUB collateral Securities USD 2,878.000 o15.95% fixed rate bonds issued by VimpelCom Holdings liv Fixed - 5.95% 13-Feb-23 CCY 31-Dec-14 Nominal Source CC’s’ il-Dec-li Nominal Source CC’s’ FUR 10,000,000 10,000,000 MYR 31,000,000 31,000,000 USD 2,878,000 - Rubrika Finance Company limited Page 23 Notes to the financial statements (continued) For the year ended 31 December 2013 12 Investment securities (continued) The table below describes the type olstructured entities that the Company does not consolidate hut in which it holds an interest under IFRS 12. I ?mpelcon; iloklmgs B. I’ Type orstructured entity Special Purpose Vehicles (SPV) Nature and Purpose Interest held by the SPV Vimplecom holdings DV. is a special purpose financing Investment in Notes vehicle which issues debt guaranteed by Vimplecom Amsterdam DV.. The Company is a subsidia of Vimplecom Amsterdam. Investee details below are as at 31 December2014: 13 Insestee CC\ Outstanding issued amount of invest cc Source CCV VimpelCom lioldings B.V USD 1,000,000,000 Loans and receivables Loans and receivables Maturity analysis of loans and receivables Within I year More than I year and less than 2 years More than 2 years and less than 5 years More than 5 years Movement in loans and receivables At beginning of the Financial year Nominal Source CCV Fair value FUR 2,878,000 1.783.353 3 1-Dec-14 3 1-Dec-13 FUR 420,535,800 326,737,300 31-Dec-13 FLit 31-Dec-13 FUR 171.328.200 246,207,600 326.737.300 420,535.800 326.737.300 31-Dec-13 FUR 326,737.300 31-Dec-13 F Uk - FUR 174,340,000 Cash lransac’floos Investment in loans during the financial year Loans terminated during the financial year Foreign exchange mntement on loans and receivables At end of the Financial year 43.921507 - 48.873.993 420.535,800 257,903.000 (93.328.000) ( I 1.178.700) 326,737.300 The portfolio of hDldings is made up of the following: Series 2: Loan to Inlemational Bank of Azerbaijan Due 2017: Series 14: Senior loan to the International Bank of Azerhaijim due 2018; and Series IS: Senior loan tothe International Bank of Azerhaijan due 2016. The Company has loans and receivables due from lotemational Bank of Azerhaijan. The audited consolidated tinancial statements (the “tinancial statements”) of the International Bank of Azerhaijan (iRA”) disclose that International Bank of Azerhaijan has made a profit after tax of FUR 32.188275 (2013: FUR 75.159.510). l’he effective pro’.ision rate of IRA against its debtors has increased 9.8% (2013: 9.7%). The Cash balance increased by LLIR 170.110000 from 2013 to 2014. In addition, the total assets and total liahilites increased by 20%. The canying value of the assets of the Company represents their maximum exposure to he credit risk. The credit risk is eventually transferred to the Noteholders. Rubrika Finance Company Limited Page 23 Notes to the financial statements (continued) For the financial year ended 31 December 2013 13 Loans and receivables (continued) Details of the nominal values and terms of each Series is disclosed below: Series Description Interest rate Maturity Date hasis I o,t,orrtccd cost CCV 31-Dec-14 Nominal Source CCV 31-Dec-13 Nominal Source CCI Paructpanon Notes 2 Loan to International Bank of Azerhaijan 8.40% 10-May-17 USD 100,000.000 100,000,000 Fixed 7.75% 23-Sep-18 LSD 198.1)00.1)1)1) 198.000.000 Fixed 31-Oct-16 USD 21 I,000.OOt) 15 1.000,000 Fixed - Notes 1,,thed to senior loans 14 15 14 Loan to International Bank of Azerhaijan Loan to International Bank ofAzerbaijan - Derivative financial instruments Movement in derivative financial instruments Al beginning of the tinancial year Non cash movements in swap transactions Cash movements in s”ap transactions Net changes in lair value during the financial sear Al end of the financial year Derivative financial assets Derivative financial liabilities Credit default swaps Total return swaps (including cross currency swap) - 7.20% 31-Dec-14 FL’R (254.859) 2.139.2(12 (1.176.381) 7(17.962 31-Dec-13 EUR - (1.096.865) 842 .006 (254,859) 31-Dec-13 EUR 1,175.479 (467.5(7) 707,962 31-Dec-13 EUR 818,223 (1,073,082) 31-Dec-13 FIR 564.580 113.382 707.962 31-Dec-13 Elk (254,859) (254,859) - (254,859) ‘Ihe table above relates to the fair value of the derivative financial instruments as at year end, excluding any collateral postings as at 31 December 2014. The Company enters into a dethati’c contract for each Series issued either to reduce mismatch between the amounts payable in respect of the debt securities and return from the inwstment securities held as collateral, to create a risk profile appropriate for the inestor Or to mitigate its exposure to market risk (interest rate risk and currency risk) within the Company. The rationale behind entering into these instruments is to provide an asset risk profile sshich is suited to the needs of tite in’estors (the holders of debt securities). J.P Morgan Securities Litnited (the “Arranger”) also provides funding 10 meet expenses incurred by the Company. Swap transactions The below swap transactions have been entered into by the Company and may. in certain cases, create exposure to risk as opposed to mitigating risk. Credit Default Swaps As part of certain Series programmes. the Company has entered into a number of Credit Default Swap Agreements with JR Morgan Securities Limited for Series II and 12 in exchange for the receipt of premium income for the relevant Series. The Company has sold credit proteclion on a nutnher of reference entities. (the “Reference Obligations”). By entering into the Credit Default Swap Agreements, the Company is exposed to the risk that the Reference Portfolio underperfnrms resulting in the dethult of the underlying entities (the “Reference Entities”). Series 13 Notes ‘sere fully redeemed and terminated its s’ap agreement sith Jr Morgan Securities Limited during the financial >ear ended 31 December 2014. Rubrika Finance Company Limited Pace 25 Notes to the financial statements (continued) for (lie financial year ended 3! December 2013 14 Derivative financial instruments (continued) Swap transactions (continued) Credit Defaufr Swaps (continued) The Noteholders are exposed to the performance of the reference enlities in the portfolio (the ‘Reference Portfolio”) that is, Ihe ability of the Company to mccl its obligations under the Notes will depend on the receipt by it of payments of interest and principal under the Collateral Assets, as “elI as payments o’ed to the Company by the Swap Counterpanv under the terms of the s”-ap. Consequently, an inestor is exposed not only to the occurrence of Credit Events in relation to any of the Reference Entities comprised in the Reference Portfolio to which the investor is linked (the ‘Specified Portfolio”), hut also to the ability of the Company issuing the investments (the “Asset Issuer”), and the Swap Counterpanv to perform their respective obligations to make payments to the Company. The aggregate liability of the Company under the Credit Default Swap Agreements for individual Series shall not exceed the aggregate of the eligible investment securities for those Series. No payment calls under the Credit Default Swaps were made during the financial year. In the event of an issuance of a credit event notice with respect to the Reference Portfolio, the Company will pay an amount as defined in the Credit Default Swap Agreements from the assets of that Series to which the Credit Default Swap Agreement relates. As a consequence of defaults in reference obligations., the nominal is proportionally reduced by the relevant financial liabilities. Credit Events No credit events occured during the financial year and upto the financial statements were approved. Under the Credit Default Swaps, there is exposure to a wide range of countries and various industries. Details of the Credit Default Swap for each Series is detailed below: Series CCI Notional Maturity date Reference Enthy Iteadroom Country lndusln II EUR 10.000.000 10,000,000 Croatia Sovereign 12 USD 10.000.000 10,000.000 England Financial Seniccs 16 RUB 200,000,000 200,000,000 Russia Financial Services Series II 12 13 16 17-Jun-I 6 Republic of Croatia 12-Mar-IS Lloyds TSR Rank PLC and any successnrs 13-Feb-23 Vimpel Communications OJSC - Credit events occurances to 31 December 2014 No No No Payment required under Credit Default Swap agreement No No No No 31-Dec-13 Fair ‘aluc EtR (467,517) 1.032,097 143,382 707,962 31-Dec-13 Fair Value Elk (1,073081) 422,391 395,831 - (254,859) Total return swaps Series 6 has a Total return swap (“TRS”) in place. The TRS are bilateral financial transactions where the countearty swap the total return of a single asset or basket of assets in exchange for periodic cash flows and a guarantee against any capital losses A TRS is similar to a plain vanilla swap except die deal is structured such that the total return (cash lows plus capital appreciation and! or depreciation) is exchanged. rather than just the cash flo’s. A Lw feature ofa TRS is that the parties do not transfer actual ownership of the assets. Cross Current,’ snaps For Series 16. the Company limits its exposure to currency risk by also entering into cross currency swap agreenwnts. The Company is exposed to movements in exchange rates between EUR. its functional currency and Russian Ruble (RL’R) for Series 16. 15 Other receivables Accrued interest Prepaid expenses Unpaid share capital VAT recoverable 31-Dec-13 EITR 6,844,567 19,48t) 31-Dec-13 Elk 5,716,660 3 12.066 6.876.116 3 2.158 5.728.821 - Rubrika Finance Company Limited rage 26 Notes to the financial statements (continued) For the financial year ended 31 December 2014 16 Cash and cash equivalents Cash at bank 31-Dec-13 FUR 31-Dec-13 EITR 1,105,678 1305.678 958.982 95 8,982 The Company’s cash at bank are held witlh The Bank of New York Mellon (4%), Deutsche Bank AG London (14%) and Bank of Ireland Corporate Banking (82%). Refer to note 23(h) for credit risk disclosure relating to cash and cash equivalents. 17 Debt securities ksued Debt securities issued: -At fair value -At amonised cost 31-Dec-14 31-Dec-13 SR l1’k 20.550,721 42 (1,5 3 5 .8 00 441.086,521 24.3 66.5 70 326.73 7.3t}tl 351.103.870 Debt secggrjfk’s issued affair ta/gte — Debt securities issued for Series 11,12 and 16 are designated at fair value through profit or loss when the related investment securities and derivatives are fair valued or when they contain embedded derivatives that significanlly modify cash flows that otherwise would be required to he separated. The Company’s obligations under the debt securities issued and related derivative financial instruments are secured by the investment securities as per notes 12 and I]. The investors’ recourse per Series is limited to the assets of thai particular Series. They have an option for early redemption. In the event that accumulated losst pro’e not to be recoerahle during the life of the Company, then this “ill reduce the obligation to the holders of the debt securities by an equivalent amount. Movement in financial liabilities 31-Dec-14 31-Dec-13 FIR At beginning of the tinancial year FIR 24.366.570 1.26t),00t) 24,921,000 Von cash Cash Irrn;sacflans Issue of financial liabilities - Cash t,’ansactions Redemption of financial liabilities (7,793,000) Fair value movements At end of financial year (282,849) 20,550,721 24,366,570 Maturity anatysis 31-Dec-14 ICLR 31-Dec-li FUR (554,430) Within I vt—ar More than I year and less than 2 years More than 2 years and less than 5 ears More than 5 years I 0.222.482 8,401.504 1.926.735 20.550.721 - 24.366.57t) - 24.366.570 Rubrika Finance Company Limited I’age 27 Notes to the financial statements (continued) For (lie financial year ended)! December 2013 17 Debs securities issued (continued) Debt securities issued lucid at amorrised cost Debt securities issued for Series 2, 14 and IS are held at amorosed cost. — Movement in debl securilics Issued Al beginning of the Financial year 31-Dec-13 ELTR 326,737,300 31-Dec-13 Kilt 390.370,000 44,923.507 257,904.000 (3)3.093.000) Cash transactions Issue oluinancial liabilities Redemption pa’ ments - Foreign exchange mosemenis At end of financial year 48.874,993 420.535,800 (8.443.700) 326,737,300 31-Dec-14 LUll 31-Dec-13 Lilt 174.328,200 246,207,600 326,737.300 420.535.800 326.737.300 31-Dec-13 31-Dec-13 Nominal Source CCV Nominal Source CCI 10,000.001) 10,000.000 200.000.000 l0.OOt).000 Maturity analysis Within I year More than I year and less Ihan 2 years More than 2 years and less than 5 years More than 5 years - The debt securities issued at 3! December2014 are as follows: Series Type of Notes Interest Rate Maturity l)a(c CCV Basis .iifair ,‘olu,e II 12 6 13 Credit linked Credit linked Credit linked Credit linked Notes Notes Notes Noles Fixed-3.lS% 3M USD Liihnr + .90% Fixed 8.40% 3M USD Libor + 3.10% 17-Jun-16 12-Mar-IS 13-Feb-23 20-Jun-IS EUR USD RUB L’SD I 0.000,00t) I 0.000.OOt) 200,000.000 8.30% 7.75% 7.20% 10-May-17 26-Sep-IS 3 1-Oct-16 USD USD USD 100,000,000 198.000,000 21 1.000,000 100.000.000 I 98,00t).000 151,001)001) 31-Dec-13 % 77 IS 5 100 31-Dec-13 - - It amortused COSt 2 II 15 Participalion Notes Notes linked 10 loan Notes linked io loan Fixed Fixed Fixed - - - Types of financial liabilities Notes linked to loan Participation Noles Credil linked Noles 72 21 7 100 A description of the principal lpes of debt securities issued is as follows: Credit linked Votes in respect ofSeries 11. 12 and 16 Under these Series, the Company uses Ihe nominal amount of the Notes issued to enter into swap agreements with 3.!’ Morgan Securilies Limited. 3.1’ Morgan Securiltes Limited then used the Notes proceeds to invest in the respectie collaterals for each specified Series The Company will pay any income receied from the collateral (0 (he Ssap Counterpart. In return, the Swap Counlerpany undertakes (0 pay the Company amounts equal to the interest payable on the Notes issued. Participation Miles in respect ofSeries 2 A fixed-income securily thai permits investors lo buy portions of an outstanding loan or package of loans. The Noteholders participate. on a pro rita basis, in collecting interest and principal payments. Notes linked to loan in respect of Series 13 and 15 ‘Ike Company issued noles linked lo loan in resepct of Series 14 and IS. Under these Series, (he Noteholders have secured (heir investments with the corresponding loans that have been entered into. Rubrika Finance Company Limited Page 26 Notes to the financial statements (continued) For the financial year ended 31 Decemher 2014 16 Other payahles 31-Dec-13 EUR 31-Dec-13 EI’R 6,601,760 1,03 1,583 212,807 103,239 7,979,451 5,496,708 890,408 219,952 78,305 273 6.685,646 Called up share capital presented as equity 31-Dec-14 31-Dec-13 .4 uthonsed: 10,000,000 ordinary shares of BURl each Kilt I 0,00t),000 EUR l(1,000,00t) EL1R FUR 3 3 Interest payable Deferred income Net swap payable Accrued expenses Corporation tax payable 19 62 Issued and unpaid 3 ordinary shares of FURl each unpaid - 20 On nenhip of the Company Maback Nominees Limited, Matsact Trust Limited, and Matheson Sen ices Limited each hold one share each in (lie Compan. All shares are held In Ernst for charity under the terms of declarations of trust. The share Trustees have appointed a Board of Directors to run the day to day acthities of (he Company. The Board of Directors have considered the issue as to ‘ho is (he ultimate Controlling Party. It has been determined that the control of (lie day to day activities of (he Company rests with the Board. The Board consists of two independent Directors. 21 Transactions i.i(h administrator and arranger Transactions with athnnuslrak,r During the financial year. FUR 11.771(2013: FUR 12,134) relating to administration services were paid to Deutsche International Corporate Services (Ireland) Limited As at 31 December2014, no amount is due to the administrator of the Company. Transactions with arranger JR Morgan Securities Lirniled, as Arranger. for each Series, paid the Company USD 300 per Series. In addition, all costs associated with the Company are paid by (he Arranger. During the financial year, a fee of FUR 11.771 (2013: FUR 12.133) relatingto administration services. FUR 15,000 (excluding VAT) (2013: FUR 15.000 (excluding VAT)) relating to audit fees and FUR 4.60(3 (excluding VAT) (2013: FUR 4.600 (excluding VAT)) relating to tax advisory fees “crc incurred by the Company. There sere no other transactions with the administrator or arranger that require disclosure in the financial statements. 22 Charges The Notes issued by the Series are secured by way ofa charge o’er the collateral purchased by (lie respective Series and by an assignment ofa fixed first charge of the Company’s rights, title and interest under respective swap agreements for the Series. All ol the financial assets designated at fair value through profit or loss on the Statement of Financial Position are held as collateral under each Series. The Charged Assets ma comprise bonds. notes, securities, covered bonds, commodities, the benefit of loans, equity interests (including shares and participating income notes). indices, other assets or contractual or other rights, carbon credits, insurance policies, partnership interests, swap rights or credit derivative products all as more particularly specified in the releant Supplemental Information Memorandum. The Charged Assets comprise those financial assets and deriative financial instruments detailed in notes 12, 13 and II respectively. Further details on tlte profile of both arc included in note 23. 23 Financial risk management Infrodu chin, and oven’k’w The Company has Credit-linked Notes, Notes linked to loan and Participation Notes, ‘lie proceeds from the issue of the Notes have been used to purchase various collaterals as disclosed in notes 12 and 13. ‘[he net proceeds of each Series will he used by (lie Company to purchase the Collateral in meeting certain expenses and fees payable in connection with the operations of the Company and the issue of the Notes as set out in the relevant Offering Circular Supplement relating to each Series, Rubrika Finance Company Limited Page 29 Notes to the financial statements (continued) for the financial year ended 31 December 2013 23 Financial risk management (continued) Introduction and rn’en’ww continued.l The Company was set up as a searegated multi issuance SPV which ensures that if one Series defaults, the holders of that Series do not have the ability to reach other assets of the Company. resulting in (he Company’s bankruptcy and the default of the other Series of Notes. The segregation criteria include the folloning: • The Company is a bankruptcy remote SPE, organised in Ireland: • The Company issues separate Series of debt obligations: • Assets relating to any particular Series of debt securities are held separate and apart from the assets relating to any other Series: • Each Series of debt securities, only the trustee are entitled to exercise remedies on behalf of the debt security holders: and • Each Series of issued debt securities are reviewed by a rating agency prior to issuance regardless of whether it is lobe rated or not. The Company is nol engaged in any other activities. Risk ,nanagementframet,’ork The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk managemeni framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits, Risk management policies and systems are reviewed regularly to reflect changes in markel conditions and the Company’s activities. The risk profile of the Company is such that market, credit, liquidity and other risks of the investment securities and derivatives held for risk management purposes are borne fully by die holders of debt securities issued. The Company has exposure to the folloving risks from ils use of financial instruments (a) Market risk: (h) Credit risk: and (c) Liquidity risk, TIte Company operates in an autopilot mode with the risk management framework agreed at the time of issuance of the Notes and included in the prospectus of each Series of Notes. The prospectus provides detailed infonnation 10 the Noteholders regarding their exposure to different risks as well as how such risks will lx, managed going forward until the maturity of Notes. The Board of Directors has responsibility to ensure compliance with the prospectus and execute different legal documents as the need arises. For some Series, the Company has eniered into a number of Series in the Programme. Each Series is governed by a separate Prospectus and consists of an investment in collateral from the proceeds of the issuance of financial liabilities. The Company has entered into Swap Agreetnents with .l.P Morgan Securities Limited. Refer to note 14 for a description of the different types of swaps entered into by the Company. The ultimate amount repayable to the Noteholders will he dependent upon the proceeds from the sale of the collateral and! or payment! receipt to! from the Swap Counterpady. This note presents information about the Company’s exposure to each of the above risks, the Company’s objectites, policies and processes for measuring and managing risk and the Company’s management of capital. (a) Market risk Market risk is the risk that the fair value or future cash liows of a financial instrument ill Iluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and oilier price risk. The Noteholders are exposed to the market risk of the assets portfolio. Market risk embodies the potential for both loss and gains and includes interest rate risk, currency risk and price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optitnising the returns on risk. (Q liz/crest rule risk Interest rate risk is the risk that the Company does not receive enough interest from the underlying investments It) secure interest payments on the Notes. ‘[here may be a timing mismatch between payments of inlerest on the Notes and payments of interest on the financial assets and, in the case of floating rate financial assets, the rates at which they hear interest may adjust more or less frequently, and on different dales and based on different indices than the interest rate of the financial liabilities. Rubrika Finance Company Limited l’age 30 Notes to (he financial statements (continued) For the Financial year ended 31 December 2014 23 Financial risk management (continued) Market risk (continued) (a) Interest rate risk conuizueth (I) The Noteholders are entitled to receive distributions from interest received on the assets to the extent of Funds available. All interest received on the underlying collateral portfolio is passed to the Noteholdem an&or Swap counteTanv. therefore the Company does not hear interest rate risk. At the reporting date, the inlerest rate risk profile of the Company’s interest bearing financial instruments “as: 31-Dec-14 Investment securities Loans and receivables Derivative financial assets Other receivables Cash and cash equivalents Total assets Floating rate Fixed nate Non-interest bea ring ‘l’ota I FUR EI’R 19.842.759 320,535,800 ELR EL’ ft 19.842.759 420535.800 1,175,479 6,876,116 1,105,678 44 9, 5 3 5.8 3 2 - 1,175,379 1,105,678 2.281,157 - - - - - 6.876.116 - 440,378,559 6,876.116 Debt securities issued Derivative financial liabilities Other payables lotal liabilities (92,948,239) (348,605,799) (7,979,451) (7,979,451) (441.1)86,521) (467,517) (7,979,451) (449,533,489) Net exposure (90.667,082) 91,772,760 (1,103,335) 2,343 Floating rate Fixed rate Non—interest bearing FUR Total 3t-Dec-13 (92,918,239) - - LL’It Investment securities Loans and receivables Derivative financial assets Other receivables Cash and cash equivalents Total assets (348,138.282) (467,517) - - 818,223 FUR 24,621,429 326,737,300 - - - 958.982 1,777.205 - 351.358.729 - - - - - 5,728,82 I - 5.726.821 FLTR 24,621.429 326.737,300 818,223 5.728.821 958.982 356.863,755 Debt securities issued Derivative financial liabilities Other paables Tntal liabilities (88,522,734) (263.654.218) (6.685,646) (6,685,646) (351.103,670) (1.073.082) (6.685,646) (358.862,598) Net exposure (86.745.529) 87.704.511 (956.825) 2.157 (87,449.652) (1,1)73,082) (263.654.218) - - - - Senstht’irs anals’s,s The sensitivity analysis belo’s has been determined based on the Company’s exposure to interest rates for interest heaiing assets and liabilities (included in the interest rate exposure tables above) at the reporting date, and the stipulated change taking place at the beginning of the inancial period and held constant throuchout the reporting financial year in the case ol instruments that have floating rates. Under Series II. 12 and 16. the net exposure from the floating and fixed raw instruments are offset by the Company entering into an interest rate stap with the Stsap Counterpany. A I 00 basis point increase or decrease represents management’s assessment of a reasonably possible change in interest rates. If interest rates had been 100 basis points higher and all other variables were held constant, the interest expense on the financial liabilities would have increased by FUR 936,620 (2013: FUR 873.240). Any such change in income generated from the financial assets and expense incurred From the financial liabilities will result in an equivalent Oct change in interest on derivatives for those Series that have swap agreements in place. Where there is no swap in place, the interest income is passed on to the Noteholders. Therebre, any change in the interest rates would not affect the equity or the profit or loss of the Company. Rubrika Finance Company Limited Page 31 Notes to the financial stalements (continued) For ihe financial year ended 31 December 2013 23 Financial risk management (continued) (a) Market risk (continued) (ii) Curre,,n’ risk Currency risk is the risk that the fair value or future cash linus ofa financial instrument sill fluctuate cause of changes in foreign exchange raies. The Company also mitigales its exposure to currency mainly by matching the Foreign currency assets with foreign currency liahililics and in cases of any net exposure, the Company has derivative financial instruments in place. The Company is exposed In movement in exchange rates between the Euro, its presentation currency, and certain foreign currencies namely US Dollars IUSD), Malaysian Ringgit (MYR), Pound Sterling (GBP) and Russian Ruble (RUB). The risk has been mitigated by entering into swap transactions and the impact of any fluctuations in the foreign currency rates will he passed onlo the Swap Counterparty. The Company’s exposure to foreign currency risk before and afler the impact of derivatives is as follows: 31-Dec-14 Investment securities Loans and receivables Other receivables Cash and cash equialents Total monetary assets Debt securities issued Oilier payables RIB ELfi - - Net esposure (1.941.654) Investment securities Debt securities issued Other payahles Total monetary liabilities Net esposure 7,369.407 - - Fetal monetary liabilities I_cans and receivables Cash on Deposit Derivative financial assets ‘l’otal moneta n assets CHI’ ELk - (1926,735) (14.919) (1.941.654) 31-Dec-13 NIVR [CUR 7,369,407 225,617 225,617 - - - - - - 7.369.407 225.617 Mill F LIt 6, 95 4,8 29 GIll’ FUR - - - - 6,954,829 - - - 6.954.829 226,471 226,471 - - - 226.47 I USD ELk 1.783353 32(1.535.800 6.46L993 826.890 429.608.036 43 7. 203 .060 (428,937,304) (6,3] 7.090) (435,354,393) (430.864.039) (6,432.009) (437.296.038) (5.746.358) (92.988) (SD Mill 6,906,601 326,737,300 5,716,660 727,990 340,088.551 lot a I Mill 13. 86 1,430 326,737.300 5,716,660 954,461 347.269,851 (341,416,952) (5.496,708) (346,913.660) (341,416,952) (6.825.109) 356.191 Total EL It 9.152.76(1 420.53 5.800 6.461,993 1,052.507 (5,496,708) (346.913.660) The Following significant exchange rates have been applied at year end: CSD: CUR GBP: CUR MYR: EUR RUB: CUR Closing rate 3l-I)ec-13 0.82620 1.28770 0.23600 0.013 90 31-Dec-13 0.72770 1.205(12 0.22170 002210 Sensilo’Th analysis The impact of any change in exchange rates is borne by the Noteholders. At 31 December 2014, had the CUR strengthened against USD, RUB and MYR by 1% with all other variables held constant, the fair value of the financial assets would have decreased by CUR 4,296,886 (2013: CUR 3,405,987). Rubrika Finance Company Limited Page 32 Notes to the financial statements (continued) For the financial year ended 31 December 2013 23 Financial risk management (continued) Market risk (conlinued) (a) (ii) Cunenn risk iconiimwd) This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the reporting dale. The analysis assumes that all other variables, in particular inlerest rates, remain conslant. (110 Price risk Price risk is the risk that the value of Financial instruments “ill fluctuate as a resull of changes in market prices (other than those arising from interesl tale risk or currency risk). shether caused by faclors specific to an individual inveslmenl. ils Company or all Factors affecting all instruments traded in the market. Other price risks may include risks such as equity price risk, commodity price risk, prepayment risk (i.e. the risk that one party In a Financial asset will incur a Financial loss because the other party repays earlier or later than expected), and residual value risk. The Company is exposed to price risk by investing in bonds and/or Notes and is also exposed under swap agreements trntlined in nole 13. l-lo’vever, any fluclualion in the value of financial assets designated al fair value through profit or loss held by the Company will be borne by the Noteholders 10 the exlenl not borne by Swap Counlerparly. The price risk is managed by monitoring the market prices of the Financial instwmenb. Iii ve.ciin cut see’, rities (By tI’pL’ 31-Dec-14 % 31-Dec-13 63 37 100 61 39 100 of Notes) Credit-linked Notes Lisled Unlisted Sensitivity analucis Any changes in the prices of the investment securities would not have any ciTed on the equity or net profit or loss of the Company as any fair value fluctuations in prices are ullimalely borne by the Noteholders. As at 31 December 2014, exposure to price risk relates directly In Ihe value of financial assets amounting to EUR 19,842.759 (2013: EUR 24,621,429). Price risk is actively managed by the invesling highly raled investments ensuring that we have priority of payment. An increase of 10% in the markel prices of the financial assels and derivalive financial instruments al the reporting dale would result in an equivalent increase in the fair values of the debt securities issued of EUR 34.108.652 (2013: ELIR 35,110.387). A decrease of 10% in the market prices of the financial assets and financial instruments at the reporting dale would result in an equivalent decrease in the Fair values of the Notes of FUR 44.108.652 (2013: FUR 35.110.387). Any changes in quoted prices or unquoted prices of the ineslnwnts held by the Company ‘could not have any elfecl on the equil or profit or loss of lhe Company as any fair value fluctualions are ultimalely borne by either the Svap Counlerpany or the Noleholders issued by the Company and as such no delailed sensilivily analysis has been pro’ ided. Rubrika Finance Company Limited Page 33 Notes to the financial statements (continued) For the financial year ended 31 December 2014 23 Financial risk management (continued) Credit risk (h) Credit risk is the risk of the financial loss to the Company if a Counterpartv to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s credit linked assets. The Company’s principal financial assets are cash and cash equi’ alents, other receivables, derivative financial instruments, investment securities and loans and receivables. “hich represents the Company’s maximum exposure to credit risk The Company limits its exposure to credit risk by only investing with counterpanies that have a credit rating defined in the documentation of the relevant Series. The risk of default on these assets and on the underlying reference entities is borne by the Counterpany of the assets, the Swap Counterpasty, or the holders of the debt securities of the relevant Series that tile Company has in issue, ‘[he Company invested in loans for Series 2, 14 and 15, in Noles for Series II and 12 and in bonds for Series 16. The Company’s maximum exposure to credit risk in the event that counterpanies fail to perform their obligations as at 31 December 2014 in relation to each class t,f recognised financial assets is the earning amount of those assets as indicated in the statement of financial position. 31-Dec-li 31-Dec-14 FIR EL’R Credit-Linked Votes 24.621.429 18.059,406 lrnestment in Notes 1.783,353 lnestment in Bonds 21,621,429 9.842,759 - Participation Notes Loan and receivables Notes linked to loan Loan and receivables Others Cash and cash equivalents 82,620,000 %2,620.OOt) 72,770,000 72,77t),000 337,915.800 337.915,800 253,967,300 253,967.300 6.876.116 LtOS.678 7,981,794 5.728,821 958,982 6.687.803 With respect to derivatie financial instruments. credit risk arises from the potential failure of the counterpatw to meet their obligations under the contract or arrangement. The Company’s maximum credit risk exposure to derivative instruments as at 31 December 2014 is disclosed in note 14. The debt securities issued is limited recourse to the assets of the particular Series and therefore the Noteholders are exposed to the credit risk of the Swap Counterparty and the isstters of the securities. tounterperty risk With respect to derivative financial instruments, credit risk arises from the potential failure of the counterpartv to meet their obligations under the contract or arrangement. lie Company’s maximum credit risk exposure to derivative instruments as at 31 December 2014 is disdosed in note 14, The Company is exposed to the credit risk of the Swap Counterpartv with respect to payments due under the Swaps. This risk is borne by the Noteholders who are subject to risk of defaults by the Swap Counteq,any as well as to the risk of defaults by the reference obligations. i_P Morgan Securities Limited is the eounterpanv on the swap transactions under Series 11.12 and 16. The directors are satisfied with the current exposure and monitor ratings of.f.P Morgan Securities Limited, as Swap Counterpany. i.P Morgan Securities Limited is the Swap Counterparty for the Series containing a Swap Agreement and has the I ilowing ratings Long term Short term Short term Ding term 2013 2013 2013 2013 A-I A-I Standard & Poor’s P-I Aa3 P-I Aa3 Moody’s Fl FR Fitch Rubrika Finance Company Limited I’age 33 Notes to the financial statements (continued) For the financial year ended 31 December 2013 23 Financial risk management (continued) Credit risk (conlinued) (h) Coutterpurn’ risk jco,,!inuL’d,) Credit quality affinancial assets Cash and earl, equnvleiiis The Company held cash and cash equivalents ofEUR Ll05,678 as at 31 December 2014 (2013: FUR 958.982). ihich represents iLs maximum credit exposure on these assets. The cash and cash equivalents are held with different banks and financial institutions. Cash balances are held with Bank of Ireland Corporate Banking which has the following ratings: Short term Long term 2014 2014 B BB+ Standard & Poor’s P-2 Baa2 Moody’s B 85+ Fitch Long term 2013 BB+ Ba2 BBS Short term 2013 B N-P F2 Long term 21)13 AA Aa2 AA Short term 2013 A-I+ P1 FI+ Long term 2013 Shari term 2013 A A-I A? P-I Fl— Cash balances are held with The Bank of New York Mellon “hich has the following ratings: Standard & Poor’s Moody’s Fitch Long term 2013 AA Aa I AA+ Shorl term 2013 A-V P1 FI+ Cash balances are held with Deutsche Bank AG London which has ihe following ratings: Short term Long term 2013 2014 A-I A Standard & Poo?s P-2 A3 Moody’s Fl A Fitch A+ Although Moody’s long term and short term credit rating of Deutsche Bank AG London changed from A? in 2013 to A] in 2(114 and from P-I in 2013 to P-2 in 2014 respectively and Fitch’s long term and short tenn credit rating of Deutsche Bank AG London changed fromA+ in 2013 to A in 2014 and from Fl+ in 2013 to Fl in 2014, Deutsche Bank AG London is highly rated. Financial assets The credit quality of investment securities that are neither past due nor impaired can be assessed to external credit ratings from rating a2encv (S&P). At the repodine dale. Lhe rating analysis of the investment securities was as follows: 31-Dec-13 % 3 1-Dec-13 % 37 3. Credit linked Votes A BBSBB 33 34 54 9 100 100 100 100 31-l)ec-13 % IOU 31-Dec-13 % lOt) - Participation Voles Not Rated Votes linked to loan Not Rated [he Company has loans and receivables due from International Bank of Azerhaijan which has the following ratings: Long term Short term Long term 2013 2014 2014 Ba3 N-P Ba3 Moody’s SB B SB Fitch Short term 2013 N-P B Rubrika Finance Company Limited Page 35 Notes to the financial statements (continued) For Ihe financial year ended 31 December 2013 23 Financial risk management (conhinued) Credil risk (continued) (I,) Credit quality offinanciul ussL’ls ftuirtinued,? Financial assets (continued) There ‘ere no credit events during the financial year. rflie credit quality of the collaterals are heIieed to be recoverable with respect to the followtng measurements: ability to pay interest enhanced fair values - - Concentration risk At the reporting dale, the Compuns loans and receivables and financial assets designated at fair value through profit or loss were concentraled in the following asset types and geographical locations: By industry ‘Lypes of collaterals Credit linked Notes Financial 31-Dec-14 % 31-Dec-13 100 100 100 100 lot) IOU 31-Dec-13 % 31-Dec-13 37 54 9 - 28 44 100 lOU Participation Notes Financial Notes linked to loan Financial By G cog ra ph ira I Iota lion Country of origin Credit linked Votes Korea Romania Russia Virgin Island, Britain - 28 Participation Notes Az erbaij an 100 100 100 100 Notes linked to loan Azerhaijan Other receivables Other receivables mainly include interest receivable frotn loans and receivables and inveslmeol securities held by the Company at the financial year end. The credit rating and concentration of these investmenl securities at the reporting dale have been disclosed earlier in the lioaneial statements. (c) Liquidity risk Liquidity risk is the risk that the Company will encounter difficulry in meeting the obligations associaled with its financial liabilities (hat are settled by delivering cash or another financial asset and ihtis. the Company will not be able to meet its financial obligations as they fall due. [he Company’s approach to managing liquidily is to ensure, as far as possible. that it will alwas have suflicient liquidity 10 meet its liabilines when due, under both normal and stressed conditions. ivitltout incurring unacceptable losses or risking damage to (lie Company’s reputaiion. l’he Company’s obligalion to the Nntehnlders is limited to the net proceeds upon realisation of the collaleral of the Series and should the net proceeds he insuflicieni to make all payments due in respect of a particular Series of Notes. the oilier assets of the Company are not contractually required to be made available io mcci pa’menl and ihe deficit is instead home by Ihe Noteholders and the swap counterpany according to the priority of payments mentioned in Ihe agreements. Rubrika Finance Company Limited Page 36 Notes to the financial statements (continued) For the financial year ended 31 December 2013 23 Financial risk management (continued) (c) Liquidity risk (continued) The timing and amounts from realising the collateral of each Series is subject to market conditions. There were no liquidity issues experienced by the Company or the Swap Counterparty in respect to meeting obligations to Noteholders or to Swap Counterparty. The Company or the Swap Counterparty did not default on any of its contractual commitments during the financial year. The following are the contractual maturities of Financial assets and liabilities including undiscounted interest payments and excluding the impact of netting agreements: 3 1-Dec-13 Investment securities Loans and receivables Derivative financial assets Other receivables Cash and cash equivalents Debt securities issued Derivative financial liabilities Other payables Net amount 3 1-Dec-13 Investment securities Loans and receivables Derivative financial assets Other receivables Cash and cash equivalents Debt securities issued Derivative financial liabilities Other payahles Net amount Carrying Cross amount contractual cash flows EUR EU It 19,842,759 22,221,884 420,535,800 507,254,951 1,175,479 1,175,479 6,876,116 6,876,1 l6 1,105,678 1,105,678 (441,086,521) (548.2(11,520) (467.517) 17,549,206 (7.979,451) (7,979.451) 2.343 2,343 Less than one lear Between one to five years More than five years FUR 995,699 32,169,749 1,175,479 6,876,116 1,105,67% (32,895,068) (1,448.202) (7.979,451) flj{ l8, 84 8 3 8 475,085.202 FUR 2,377,804 Carrying Gross amount contractual cash flows EUR FUR 24,621,429 27,530.380 326,737,300 422,537,977 818,223 818,223 5,728,821 5,728,821 958,982 958,982 (351,103,870) (451,069,021) (1,073,082) I 82,44l (6,685.646) (6,685.646) 2,l57 2,157 Less than one year Between one to five l’ears More than five years FLIt FUR 26,514,183 397,347.187 FUR - - - - - - - 1,016.197 25,190,790 818,223 5,728,821 958,982 (25,905.076) (1,1 22.291) (6,685,646) - - - - - (511,770,107) 17,836,523 (3,536,345) 1,160,884 - - (425,163,945) l,304,732 - 2,157 2.343 - - - - - - The derivatives have been entered into to hedge the liquidity exposure on a Series by Series basis. The above table reflects derivative liability cash flows as being the cash tiows required to ensure that the contractual undiscnunted cash flows arising on the Company’s assets match the undiscounted cash flows arising on the Company’s liabilities. In line with the requirements under IFRS 7, the above assets and liabilities table shows principal balances and undiscounted interest cash flows over the life of the liabilities. (d) Fair values The fair value of a financial asset and financial liability is the amount at which it could be exchanged in an ann’s length transaction between informed and ‘villing parties, other than in a forced sale or liquidation. The carrying amounts of all the Companvs financial assets and financial liabilities at the reporting date approximated their fair values. Fair value is the amount for which an asset could be exchanged, or a liability settled. hetsveen knowledgeable, willing parties in an arms length transaction on the measurement date. The following are the contractual maturities of Financial assets and liabilities including undiscounted interest payments and excluding the impact of netting agreements: Rubrika Finance Company Limited Page 37 Notes (a the financial statements (continued) For (he financial year ended 31 December 2013 23 Financial risk management (continued) Fair values (continued) (d) The Company’s financial instruments carried at fair value are analysed below by valuation method. The different levels hate been defined as follows: Level I: Quoted market price in an acth-e market mr an identical instrument. Level 2: Valuation lechniques based on obsenable inputs. This categon includes inslniments valued using: quoied market prices in active markets for similar instruments quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly ohseahle from market data. Level 3: Valuation techniques using significant unobservable inputs. This categoiy includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant effect on the instrument’s valuation. This categoiy includes instruments that are valued based on quoted prices for similar instruments “here sicntficant unobsenahie adjustments or assumptions are required to reflect differences between the instruments. Refer to accounting policy in note 4 for more details on how the different classes of Notes are valued. Fair value hierarchy as at 31 Dec 2013 Level 3 Level 2 FIR EUR FIR 19,842,759 1,175,479 (2t).550,721) (367.517) (707.962) 707.962 ‘Fatal FUR 19.842,759 1,175,479 (20.550,721) (467.517) Fair value hierarchy as at 31 Dec 2013 Level 3 1_evel 2 FUR FUR 24,621,429 818,223 (24.366,570) (1.073.082) 253.859 (253.859) Total FUR 24,621.429 818,223 (24,366,570) (1.073,082) Level I Investment securities Derivative financial assets Debt securities issued Derivative financial liabilities - - - - - - - - - Level I ELR Investment securities Derivative financial assets Debt securities issued Derivative financial liabilities - - - - - - - - - - - Financial assets ,neasmued at Fair I ‘aloe based aim Level 3 31-Dec-14 FIR Balance at beginning of financial year Additions during the financial year Redemptions during the financial year Net changes in fair value during the financial year Balance at end of financial year 24,621,429 2,120,798 (7,793,000) 893 .53 19842,759 31-Dec-13 FUR 26,017.865 (1,396,436) 2 4. 62 1.429 Debt securities issued measured a? Fair I ‘ahme based an Level 3 31-Dec-13 FLU Balance at beginning ol financial year Issue of tinancial liabilities Redemption of financial liabilities Fair valtie movements Balance at end of financial year 24,366,570 4,260,000 (7,793,000) (282,849) 20.550,721 31-Dec-13 - 24,921,000 - (554,430) 24266,570 The total amount of gain or loss estimated using a valuation technique based on significant unobsenable data (Leel 3) that sas recognised in the Statement of comprehensive income is as follows: 31-Dec-li 31-Dec-14 FUR FUR (554,430) (282.849) Net fair value loss on debt securities issued (1,396,436) 893.532 Net fair value gain!(loss) on debt securities issued (1,950.866) 610,683 Rubrika Finance Company Limited Page 38 Notes to the financial statements (continued) For the financial year ended 31 December 2013 23 Financial risk management (continued) Fair values (continued) (d) The Company operates in a relati’.ely niche market serving a need for funding. It is titus difficult to obtain market observable information on which to calculate a lair value of its fixed rate financial aSSCLS and liabilities. Estimated fair values of financial fixed rate assets and liabilities have been discounted using the rate at which new loans here provided at during the financial 3ear ended 2013. The lair value of the Company’s assets has been estimated as EUR 9.842,759 (2013: EUR 24,621,429) while the fair value olits liabilities has been estimated as EUR 441,086,521 (2013: EUR 351,103.870). A significantly different amount may arise if alternative assutnptions were used in calculating lair value. In selecting this methodology, the Directors could not avail of a quoted market price as tltey are held by few stakeltolders and are rarely traded. It was considered that the value by reference to recent rates gave a more accurate rellectton of the situation and allo”ed both assets and liabilities to be assessed on a similar basis, Although the directors believe that their estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value as fir value estimates are made at a specific point in time, based on market conditions and information about the financial instrument, These estimates are subjective in nature and involve uncertainties and matters of significant judgement e.g. interest rates, volatility, credit spreads, probability of defaults, estimates cashflows etc and therefore, cannot he determined with precision. Sensitivity analysis Where the value of financial instruments is dependent on unobservable valuation models, appropriate models and inputs are chosen so that they are consislent with prevailing market evidences, A 10% change in the price of the financial asstes under Level 3 held by lheCompanw’ould increaseordecreasethe lairvalueasat3l December2013 by EUR 1.983,276 (2013: FUR 2,362.133). (e) Profile of Series of debt securities issued by the Company The following are the broad categories as at 3 1 December 20 I 4: No of Series Type of transaction ‘¼ 5 Inveslment securities FUR 19.832.760 Credit linked Notes 3 5 DehI securities issued Elk (20.550.721) Patlicipation Notes I 19 (82,620,000) 19 82,620,000 Notes linked to loan 2 76 (337,915,800) 76 337,915,800 100 (441.086.521) 100 440.378,560 Other liabilities Elk (456.808) Derivatives Elk 707.962 Other Assets Elk 436.807 Type of transaction No of Series Credit linked Notes Participation Notes Notes linked to loan I % (1,041.012) (5,366,747) (6.844,567) ‘ - 707.962 1.041.012 5,366.747 6.844,566 Rubrika Finance Company Limited Page 39 Notes to the financial statements (continued) For the financial year ended 31 December 2013 23 Financial risk management (continued) Profile of Series of debt securhies issued ly (he Company (conlinued) (e) The following are the broad catecories as at 31 December 2013: No of Series Type of transaction Credit linked Notes Notes linked to loan Type ofiransaction Credit linked Notes 7 21 (72.770.000) 2l 72.770.000 72 (253,967,300) 72 253.967.300 tOO (351,103,870) 100 351,358,729 Other liabilities FUR (405,366) Derivatives ELR (254,859) (899,922) - (4,411.372) - 3 Panicipation Notes 7 No of Series 3 Participation Notes Notes linked to loan Investment securities DR 24.621,429 Debt securities issued FIR (24.366,570) 7 (5.716.660) (254.859) Other Assets EL’R 305,366 899,922 4,411.372 5.716,660 Refer to other analysis pnnided by Series in note 14 lot derivative balances and 23(h) for other receivables, and note 1% for other pavables 23 Assets and liabilities not carried at fair value hut for which fair value is disclosed The directors consider the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values. Fair Carrying Fair Carrying value value value value El It FIR FUR FIR ,tt a,nortised cost 3 1-Dec-13 3 1-Dec-13 31-Dec-13 31-Dec-14 Financial assets 312,690,587 326.737,300 348,054.284 420.535,800 Loans and receivables 958,982 958,982 1.105,67 8 1.105.678 Cash and cash equivalents 5.728.821 5.728.821 6.876,116 6.876.116 Other receRahles Financial liabilities Other paahles Debt securities issued .1t aniortised cast Financial assets Loans and receivables Cash and cash equivalents Other receivables (7,979.451) (320,535.800) 2.333 Level I FUR - - - (7.979,451) (448.054,283) 2.343 (6,685.646) (326,737,300) 2.157 Fair value hierarchy asat 31 Dec 2014 Level 3 Level 2 EUR FUR - 1,105,678 6,876,116 448,054.284 - - (6.685.64 6) (312.690.587) 2.157 Total FUR 448,054.284 1.105,678 6.876,116 Financial liabilities Other paahles Debt securities issued - - - (7,979,351) - 2,343 - (448,054.283) - (7.979.451) (448,054.284) 2.343 Rubrika Finance Company Limited Page 30 Notes to the financial statements (continued) For the financial year ended 31 December 2013 23 Assets and liabilities not carried at fair value but for which fair value is disclosed (continued) Fair value hierarchy asat3l Dec 2(113 Level) Level 2 Icvel I FIR FIR FIR -li amortised cost [Thanual assets Loans and receivables Cash and cash equivalents Other receivables - - - - 958,982 5,728.821 326.737.30(1 - - Total Elk 326.737.300 958.982 5,728,821 Financial liabilities Other payahles Debt securities issued — (6,685,646) - - - 2,157 - (326,737,300) - (6,685,646) (326,737,300) 2,157 25 Capital management The Company view the share capital as its capitat. The Company is a special purpose vehicle set up to issue debt for the purpose of making investments as defined under the programme memorandum and in each of the Series memorandum agreements. Share capital of ELtR 3 sas issued in Itne with Irish Company Law and is not used For financin2 the Investment activities of the Company. The Company is not subject to any other eternallv imposed capital requirements. 26 Reclassification of cash flow and Statement of comprehensive income balances ReckissiJkation of cat!, flow balances In current year, the Company has presented interest on debt securities as cash flow from financing activities and derivative interest paid/received as investing activities. The prior year comparatives which disclosed derivative interest received/paid net of debt securities interest paid as operating cash flow, have been adjusted to reflect the current presentation. Revised Operating cash Ilows Deri ative Interest Operating cashflo”s Debt securities Interest — — Investing cashflows Derivati e Interest — Financing cashilows Debt securities Interest — 31-Dec-13 (767,728) (21,431,195) - Amended 76L728 21.431,195 31-Dec-13 - - (767,728) (767,728) (21.43L195) (21.431.195) Revised Reclassification ofStatement ofcomprelienswe income balances In current year, the Company has presented interest receivable on loans and receivables separate from interest receivable on investment securities on the face of the Statement of comprehensive income. The prior year comparative which included both interest receivable on loans and receiables and on investment securities, have been adjusted to retlect the current presentation. 31-I)ec-13 Interest receivable on loans and receivables Net (lnss)/gain on investment securities 27 - 11,847.272 Amended 9,324,239 (9,324,239) 31-Dec-13 9,324,239 2,523,033 Subsequent events Credit events No credit events occurred after the financial year end ‘[here were no other significant events afier year end up to the date of stuning this report that require disclosure and/or adjustment in the financial statements. 28 Approval of financial statements The Board ofdirectors approved these tinaneial statements on 07/I 2/2015 KPMG Audit 1 Harbourmaster Place IFSC Dublin 1 DOl F6F5 Ireland Independent Auditor’s Report to the Members of Rubrika Finance Company Designated Activity Company We have audited the financial statements (‘financial statements”) of Rubrika Finance Company Designated Activity Company for the year ended 31 December 2015 which comprise the Statement of Financial Position, the Statement of Comprehensive Income, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (IFRS) as adopted by the European Union. Our audit was conducted in accordance with International Standards on Auditing (ISAs) (UK & Ireland). Opinions and conclusions arising from our audit I Our opinion on the financial statements is unmodified In our opinion the financial statements: • give a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2015 and of its result] for the year then ended; • have been properly prepared in accordance with IFRS as adopted by the European Union; and • have been properly prepared in accordance with the requirements of the Companies Act 2014. 2 Our conclusions on other matters on which we are required to report by the Companies Act 2014 are set out below We have obtained all the information and explanations which we consider necessary for the purposes of out audit. In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the financial statements are in agreement with the accounting records. In our opinion the information given in the Directors’ Report is consistent with the financial statements and the description in the Corporate Governance Statement of the main features of the internal control and risk management systems in relation to the process for preparing the financial statements is consistent with the financial statements. In addition we report, in relation to information given in the Corporate Governance Statement on pages 4 to 5, that: • based on knowledge and understanding of the company and its environment obtained in the course of our audit, no material misstatements in the information identified above have come to our attention; • based on the work undertaken in the course of our audit, in our opinion the description of the main features of the internal control and risk management systems in relation to the process for preparing the Group financial statements, and information relating to voting rights and other matters required by the European Communities (Takeover Bids (Directive 2004/25/EC) Regulations 2006 and specified by the Companies Act 2014 for our consideration, are consistent with the financial statements and have been prepared in accordance with the Companies Act 2014, and the Corporate Governance Statement contains the information required by the Companies Act 2014. - - KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative I KPMG International), a Swiss entity Independent Auditor’s Report to the Members of Rubrika Finance Company Designated Activity Company (Continued) 3 We have nothing to report in respect of matters on which we are required to report by exception ISAs (UK & Ireland) requite that we report to you if, based on the knowledge we acquired during our audit, we have identified information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading. In addition, the Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required by sections 305 to 312 of the Act are not made. Basis of our report, responsibilities and restrictions on use As explained more fully in the Statement of Directors’ Responsibilities set out on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014. Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s Ethical Standards for Auditors. An audit undertaken in accordance with ISAs (UK & Ireland) involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Whilst an audit conducted in accordance with ISAs (UK & Ireland) is designed to provide reasonable assurance of identifying material misstatements or omissions it is not guaranteed to do so. Rather the auditor plans the audit to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the financial statements as a whole. This testing requires us to conduct significant audit work on a broad range of assets, liabilities, income and expense as well as devoting significant time of the most experienced members of the audit team, in particular the engagement partner responsible for the audit, to subjective areas of the accounting and reporting. Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the o in ions we have formed. 25 November 2016 Co/rn Clifford for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 1 Harbourmaster P/ace International Financial Services Centre Dublin I REGISTERED OFFICE OF THE COMPANY c/o Deutsche International Corporate Services (Ireland) Limited 6th Floor Pinnacle 2, Eastpoint Business Park Dublin 3 Ireland TRUSTEE PRINCIPAL PAYING AGENT DETERMINATION AGENT U.S. Bank N.A. 100 Wall Street Suite 1600 New York New York 10005 United States of America The Bank of New York Mellon, London Branch One Canada Square London E14 5AL United Kingdom JPMorgan Chase Bank, N.A. 25 Bank Street Canary Wharf London E14 5JP United Kingdom Custodian PAYING AGENT The Bank of New York Mellon SA/NV, London Branch One Canada Square London E14 5AL United Kingdom The Bank of New York Mellon SA/NV Dublin Branch Hanover Building, Windmill Lane Dublin 2 Ireland LEGAL ADVISERS To the Dealer as to English law To the Company as to Irish law Linklaters LLP One Silk Street London EC2Y 8HQ United Kingdom Matheson 70 Sir John Rogerson’s Quay Dublin 2 Ireland IRISH LISTING AGENT FOR THE PROSPECTUS The Bank of New York Mellon SA/NV, Dublin Branch Hanover Building Windmill Lane Dublin 2 Ireland A32863487 29 APPENDIX – PROGRAMME MEMORANDUM [The remainder of this page is intentionally left blank.] A32863487 30 "#$%#&''( )('$#&*+,' "#$%#&''( -$# ./( 011,&*2( $- 3$.(1 &*+ $./(# 4(2,#(+ 5678%&.8$*1 "#$% &'()*+,- .-#+ /"#$%#&''( )('$#&*+,'01 2$3+% $,4'5*6-$', ', +6(# ('*76,8 %7+($4$+& $, -#+ %+(-$', '4 -#$% 95'256**+ ;+*'56,&)* +,-$-<+& /=+%(5$7-$', '4 -#+ >'*76,80 .+6(# 6 /9$';&*<01 6,& ', +6(# >'*76,8?% 75'256**+ 4'5 -#+ $%%)6,(+ '4 ,'-+% 6,& '-#+5 %+()5+& '@<$26-$',% .+6(#A 6 /"#$%#&''(01B "#+ 95'256**+ '4 6,8 ',+ >'*76,8 $% %+7656-+ 45'* -#+ 95'256**+ '4 6,8 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