OREANDA-NEWS. Significant progress with the implementation of the orderly resolution plan of the Group ; performance in line with the plan's trajectory

Target scope reached at the beginning of 2014 ; entity disposals in line with the undertakings stated within the framework of the resolution of the group

Annual net result Group share of EUR -1,083 million ; annual net recurrent result of EUR -669 million

Considerable reduction of the funding cost during the year 2013

Negative impact of EUR -393 million from accounting volatility elements, in particular the first application of the IFRS 13 accounting standard

Strengthening of the solvency, due to a decrease in weighted assets : CAD ratio at 22.4% as at 31 December 2013

Launch of the 'Company Project', aimed at defining an operating model in line with the Group's mission

Sharp improvement of the funding structure

Implementation of the funding guarantee from the Belgian, French and Luxembourg States

Strong dynamic of the guaranteed funding programs

Reduction of the proportion of central bank funding by 32.6% in favour of market funding

The year 2013 was marked by an improvement of the economic situation, greater in the United States than in the euro zone. In Europe, although growth still remains weak and the reduction of public debt is still a priority, the sovereign debt crisis seems now to have dissipated. Against that background, the European Central Bank continues to support the economy, with an accommodating monetary policy, whilst its US counterpart has announced its desire to return to a more conventional policy.

In 2013 the Dexia Group continued actively with the implementation of its orderly resolution plan, with the target scope set by the plan reached by the beginning of 2014. The entry into force of the new liquidity guarantee mechanism in January 2013 also enabled the Group to increase considerably the proportion of funding raised on the market and to reduce its use of central bank funding.

In line with current legislation, for the period ending 31 December 2013 Dexia is publishing a release in relation to the condensed annual consolidated financial statements. This release presents the more significant transactions and events during the 2013 financial year, as well as their impact on the Group's financial situation. The 2013 financial report for Dexia S.A. will be published in its entirety on 14 April 2014.

Points in relation to presentation of the 2013 annual consolidated financial statements for the Dexia Group

The financial statements of Dexia S.A. as at 31 December 2013 were established in accordance with the accounting rules applicable to a going concern, which assume a certain number of hypotheses explained within the framework of previous accounting closures.

These hypotheses of continuity rely on a business plan which served as the basis for the establishment of a resolution plan for the Dexia Group, a plan validated by the European Commission on 28 December 2012. The business plan contains a funding guarantee granted by the Belgian, French and Luxembourg States in an amount of EUR 85 billion in principal, without collateral requirement. This guarantee came into force on 24 January 2013.

It relies moreover on the hypothesis of a restoration of confidence on the capital markets enabling Dexia to increase the proportion of its funding raised on the markets and to reduce is central bank funding. From this perspective, the Group's funding structure evolved favourably in 2013, with successful issues under the Euro Medium Term Notes (EMTN) and US Medium Term Notes (USMTN) programs under guaranteed format, the successful implementation of short-term issue programmes under guaranteed format in the United States and in Europe and the obtaining of new short and medium-term secured funding.

The macroeconomic hypotheses underlying the business plan, validated by the Group's Board of Directors on 14 November 2012, were revised within the framework of a review of the entire annual plan. In particular, this update integrated lower interest rates, a longer exit from the crisis but a less severe shift of credit margins. It also took account of a revision of the funding plan on the basis of the latest observable market conditions as well as regulatory developments, including the definitive text of CRD IV, the implementation of the IFRS 13 accounting standard and the impact of the use of an OIS curve for the valuation of OTC derivatives. A new update of the plan will be performed in the 2nd quarter of 2014.

The business plan thus revised and ratified by the Group's Board of Directors on 6 August 2013 does not lead to any significant deviation over the term of the plan compared to the plan initially validated. Some uncertainties remain however, associated with its realisation. The plan is sensitive in particular to the evolution of interest rates and the credit environment, the unfavourable development of which would adversely affect Dexia's performance. It is also sensitive to regulatory developments, in particular the implementation of the IFRS 9 accounting standard of which is however not expected before 2017. Finally, the Group remains exposed to a liquidity risk and the realisation of the orderly resolution plan assumes that Dexia retains a robust funding capacity based in particular on investors' appetite for guaranteed debt.