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5 FINANCIAL STATEMENTS OF THE BUDAPEST STOCK EXCHANGE FOR THE YEAR

6 Table of Contents Balance Sheet 3 Income Statement 5 Notes to the 2012 Annual Report 6 Business Report 34 2

7 Statistical Code Company s Registration Number HUF '000 Denomination a b c d 1 A. LONG-TERM ASSETS I. Intangible assets Capitalized value of formation, promotion and restructuring expenses Capitalized value of research and development Rights, representing assets Intellectual products Goodwill Advences and prepayments on intangible assets Value correction of intangible assets II. Tangible assets Buildings and related concessions and similar rights Plant machinery Other equipments and fittings, vehicles Assets in course of constructions Prepayments made on fixed assets Value correction of tangible assets III. Invested financial assets Shares Securities Long term loan Securities signifying a long-term creditor relationship B. CURRENT ASSETS I. Stocks Raw materials and consumable goods Work in progress Finished goods Merchandise Prepayments made on stocks II. Receivables Trade debtors Receivables from affiliated undertaking Receivables from independent undertakings Bills receivalble Other debtors III. Securities Paticipation in affiliated undertaking Other participation Own shares, own partnership shares, reexchangable shares Debt securities held for sale IV. Cash and cash equivalents Cash Current account C. ACCRUED INCOME AND PREPAYMENTS Accrued income Prepayments Equity and accrued and deferred assets of deferred expenditures TOTAL ASSETS Budapest, 16 May,

8 Statistical Code Company s Registration Number HUF '000 Denomination a b c d 48 D. SHAREHOLDERS' EQUITY I. Share capital thereof: ownership shares repurchased at face value II. UNPAID ISSUED CAPITAL III. Capital reserve IV. Retained earnings V. NON DISTRIBUTABLE RESERVES VI. REVALUATION RESERVE VII. Net profit for the year E. PROVISIONS Provisions for expected liablities Provisions for costs in the future Other provisions F. LIABILITIES I. Subordinated liabilities Subordinated libilities to affiliated undertaking Subordinated libilities to independent undertaking Subordinated libilities to other economic entities II. Long-term liabilities Long-term loans Convertible bonds Debts on the issue of of bonds Investment and development credits Other long-term credits Long-term liabilities to affiliated undertaking Long-term liabilities to independent undertaking Other long-term liabilities III. Short term liabilities Short-term loans thereof: convertible bonds Prepayments received from customer 79 Trade accounts payables Bills payable Short-term liabilities to affiliated undertaking Dividends Other short term liabilities G. ACCRUED EXPENSES AND DEFERRED INCOME Deferred income Accrued expenses Deffered revenues TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Budapest, 16 May,

9 Statistical Code Company s Registration Number HUF '000 Denomination a b c d 1 Net domestic sale Net external sale I. Revenues from stock exchange activities Change in self-manufactured stocks Own work capitalized 0 0 II Own performance capitalized 0 0 III. Other revenues thereof: write-back of loss in value Cost of materials Values of services utilized Other costs Cost of good sold Sub-contracted services IV. Material-type costs Wages and salaries Ther employee benefits Contributions on wages and salaries V. Staff costs VI. Depreciation VII. Other expenses thereof: loss in value A. OPERATING PROFIT (LOSS) Dividend received 0 0 thereof: from affiliated undertakings Capital gains on investments 0 0 thereof: from affiliated undertakings Interest and capital gains on financial investments 0 0 thereof: from affiliated undertakings Interests received thereof: from affiliated undertakings Other incomes from financial transasrions VIII Income from financial operations Losses on financial investments 0 0 thereof: to affiliated undertakings Interest payable and and similar changes 0 0 thereof: to affiliated undertakings Losses on shares, securities and bank deposits Other expenses on financial transactions IX Expenses of financial operations B. FINANCIAL RESULT C. ORDINARY PROFIT (LOSS) X Extraordinary income 0 0 XI. Extraordinary expenses 0 0 D. EXTRAORDINARY PROFIT (LOSS) 0 0 E. PROFIT BEFORE INCOME TAX XII. Income tax F. PROFIT (LOSS) AFTER INCOME TAX Retained earnings for dividend Approved dividend G. NET PROFIT FOR THE YEAR Budapest, 16 May

10 BUDAPEST STOCK EXCHANGE PRIVATE COMPANY LIMITED BY SHARES NOTES TO THE 2012 ANNUAL REPORT 6

11 GENERAL COMPANY INFORMATION Name of Company: Budapesti Értéktőzsde Zártkörűen Működő Részvénytársaság (Budapest Stock Exchange Private Company Limited by Shares) Address of Company: H-1062 Budapest, Andrássy út 93. Company s Registration No.: Cg Data of persons authorised to sign the report on behalf of the Company: Zsolt Katona, CEO Address: H-1181 Budapest, Fürst Sándor u. 11. Attila Tóth, Deputy CEO Address: H-1112 Budapest, Rétalja lejtő 14. The person charged with the management of bookkeeping tasks and the preparation of the annual report: Ildikó Auguszt (address: H-1138 Budapest, Róbert Károly krt. 18/C, registration No ). Data of the Auditor KPMG Hungary, Audit, Tax and Advisory Services Limited Liability Company HU-1139 Budapest, Váci út 99. Company registration No.: Data of the person responsible for the audit: Dr. Ferenc Eperjesi (mother s maiden name: Erzsébet Kiss) H-1039 Budapest, Ady Endre út 20. Start date of engagement: April 29, 2011 End date of engagement: May 31, 2014 Form of operation: Private Company Limited by Shares 7

12 Foundation The Budapest Stock Exchange, originally established on 19 June 1990, was registered by the Metropolitan Court of Justice as a Court of Registration on 30 June 2002 under No as a company limited by shares due to general succession. The subscribed capital of the Company upon the foundation totalled HUF 550 million, which consisted of registered ordinary shares issued in dematerialised form, with a par value of HUF 100 each, all conferring equal and identical membership rights. With its resolution No. 7/2003 dated 28 April 2003, the General Meeting decreased the share capital of the Budapest Stock Exchange Private Company Limited by Shares by withdrawing the shares of Garmond Capital Hungarian-American Service Providing Company Limited by Shares (i.e. by HUF 8,651,900 that is 86,519 shares with a par value of HUF 100 each). Thus the Company s subscribed capital fell to HUF 541,348,100. (Order No /24 of the Court of Registration, effective from 28 April 2003) Scope of activity Main scope of activity: Administration of financial markets Legal framework for the management of the Stock Exchange The conditions for the management of the Stock Exchange are stipulated in Act CXX of 2001 (hereinafter: the Act ). Accordingly, the Stock Exchange may not invest its free funds in the products listed and traded on the given stock exchange, excluding government securities and the shares issued by the Stock Exchange, the clearing house and central depository performing stock exchange settlements, and the financial holding company with a shareholding in the clearing house and the central depository. During its operations, the Stock Exchange may only establish such business associations or companies limited by shares and it can only have a holding in such business associations which have the purpose of promoting exchange activities or any supporting complementary activities. When the accounting procedures of the Stock Exchange are established, the provisions of Act C of 2000 on Accounting and Government Decree No. 348/2004 (XII.22.) must be taken into consideration. According to the rules on double-entry bookkeeping, the Stock Exchange prepares its annual report for the given business year with the last day of the business year (31 December 2012) as the balance sheet date. According to the Act on Accounting, the economic events that became known after the balance sheet date (31 December) but prior to the compilation of the annual report must be accrued. The last day for the receipt of items coming from external sources i.e. the balance sheet preparation date is 15 February The Stock Exchange is listed by Section 3 (1) 4 l) of the Act on Accounting under other organizations. The annual reporting and bookkeeping obligation of the Stock Exchange is stipulated by Government Decree No. 348/2004 (XII.22.). The system of accounts was compiled based on the above decrees and accounting requirements. In our system of accounts, we set out the accounting policy developed and applied by the Budapest Stock Exchange and the evaluation regulations on assets and liabilities. 8

13 The 2012 annual balance sheet and income statement of the Budapest Stock Exchange Ltd. will be available on the BSE s website ( after the Annual General Meeting. Rules of the Stock Exchange The essential rules of the organization and operation of the Budapest Stock Exchange Ltd. are included in the Statutes accepted by the General Meeting. According to the Act, the Budapest Stock Exchange is a self-regulating organization that develops regulations to specify the partial regulations on the operation of the Stock Exchange as well as the rights and obligations of the stock exchange traders and issuers. The Board of Directors is authorized to approve the regulations, which enter into force when ratified by the Hungarian Financial Supervisory Authority. The regulations of the Stock Exchange are available on the BSE s website ( under the Markets and Products/Regulations menu item. As of 15 February 2013, the valid regulations of the Stock Exchange were as follows. 1. REGULATIONS Regulations of the Budapest Stock Exchange Ltd. for Listing, Continued Trading and Disclosure on the Operations and Use of Remote Trading Nr. Date Nr. Date of the approval by the Board of of approval by the Supervisory Directors Authority 52/ /2012 September 7, 2012 November 12, 2012 EN-III-1156/2012 January 1, /2011 June 7, 2011 EN-III-888/2011 August 8, 2011 on the Code of Trading 55/2012 September 27, 2012 EN-III-1148/2012 December 20, 2012 on Section Membership on Exchange Regulation Procedures and on the Rules of Official Publications on the Rules of Conflict of Interest of Persons in Management Positions and Employees on the Operational Risk Management 4/2011 February 22, 2011 EN-III-597/2011 June 6, /2011 June 7, 2011 E-III-1008/2011 September 15, /2011 June 7, 2011 EN-III-1008/2011 September 15, /2010 September 15, 2010 EN-III-73/2010 October 28, 2010 Regulations of the Budapest Stock Exchange Ltd. Regulations on the Operation of BETa Market Regulations on the Use of BETa Remote Trading Nr. Date Reference no. of CEO resolution(s) to go into Effective date 2/BÉTa/2012 February 24, 2012 February 27, /BÉTa/2011 November 3, 2011 November 7,

14 2. ORDERS Orders of the Budapest Stock Exchange Ltd. regarding the Professional Representation regarding the Schedule of Fees Applied by the Exchange regarding the Operational and Organizational Rules Nr. Date Nr. Date of the approval by the Board of Directors 28/2011 June 7, June, /2012 December 7, January 2, /2012 September 27, 2012 of approval by the Supervisory Authority - October 18, 2012 The Hungarian Financial Supervisory Authority also supervises whether the operation of the Budapest Stock Exchange Ltd. complies with the relevant legal rules and the Exchange s regulations. In order to fulfil this task, the person appointed by the Supervisory Authority is entitled to review and check the stock exchange trading on the terminal placed at the Supervisory Authority as well as to be present at the General Meeting of the Budapest Stock Exchange Ltd. and at the meetings of the Board of Directors and the Advisory Committees and to inspect the records of the Budapest Stock Exchange. The Board of Directors provides for the following in stock exchange orders: the fees charged by the BSE for those who use the services of the Stock Exchange, the Bylaw of Organization and Operation in respect of the Stock Exchange s work organization, the trading regulation of the free market system and the order of the representation of interest for stock exchange traders, issuers and investors. The rules of the operation of the multilateral trading facility are governed by a separate regulation adopted by the CEO. The Budapest Stock Exchange Ltd. has adopted the necessary mandatory regulations prescribed in the Act on Accounting as well as the stocktaking regulation for assets and liabilities and a cash management regulation. The methodology of evaluation assets and liabilities is found in the accounting policy. 10

15 ACCOUNTING PRINCIPLES An error is significant if the aggregate amount of the errors and the impact of errors established for the same year (meaning that values have to be added up), increasing or decreasing the equity or the results (regardless of their sign), reaches 2% of the balance sheet total for the given year or if 2% of the balance sheet total exceeds HUF 500 million, then their aggregate amount reaches HUF 500 million. Receivables in foreign funds must be recalculated into HUF at the middle exchange rate published by the account holding bank. Liabilities in foreign funds must be recalculated into HUF at the middle exchange rate published by the account holding financial institution and valid on the date of settlement. When evaluating receivables, in the case of receivables which were not paid by the balance sheet preparation date, the difference between the book value of the receivable and the amount expected to be collected must be determined based on the information available at the balance sheet preparation date. Impairment must be accounted for the difference but only when it proves to be permanent and is of a significant amount. In the case of receivables, impairment is significant if it exceeds 50% of the book value of the receivables. EVALUATION METHOD BALANCE SHEET Intangible assets Intangible assets must be recognised in the balance sheet at cost or at the book value less the accounted ordinary and extraordinary depreciation plus the reversed amount of the book value of the extraordinary depreciation, and advance payments made for intangible assets must be recognised at the transferred amount net of the deductible input VAT, at the book value increased by the reversed impairment. The purchased software applications were evaluated at net value. Tangible assets Tangible assets must be evaluated at cost in the balance sheet, less the applied depreciation, plus the amount of the reversal. Tangible assets were evaluated at net value. Investments were evaluated at the actual acquisition cost. 11

16 Investments BSE has the following investments: Central Clearing House and Depository (Budapest) Ltd. registered office: Budapest, VII. ker. Asbóth u number of issued shares: 420 nominal value of shares: HUF ownership share: 46.67% KELER Ltd s after-tax profit for 2012 will be HUF 2 billion. 3. Ownership structure of Central Clearing House and Depository (Budapest) Ltd. (HUF 000) Owners Subscribed Ownership capital share Budapest Stock Exchange Ltd ,67% Central Clearing House and Depository Ltd ,33% Total: ,00% KELER Central Counterparty Ltd. registered office: Budapest, VII. ker. Asbóth u ownership share: 11.9% KELER CCP Ltd s after-tax profit for 2012 will be HUF -76 million. 4. Ownership structure of KELER Central Counterparty Ltd. (HUF 000) Owners Subscribed capital Ownership share Shareholders' capital Budapest Stock Exchange Ltd ,90% Hungarian National Bank ,60% Central Clearing House and Depository Ltd ,50% Total ,00%

17 Calculation of depreciation Fixed assets were depreciated with the straight-line method as follows: The acquisition price of rights and concessions are amortized over their estimated useful lives according to the accounting policies of the stock exchange. Intellectual property and software are written off over 3 years, with a depreciation rate of 33%, except for intangible property received from a legal predecessor where the time of use at the legal predecessor must be taken into account when defining the period of depreciation. However, the remaining time of use cannot be shorter than 1 year, and depreciation must be accounted for the remaining period. Tangible assets are depreciated with the straight-line method from the date of putting into use, based on the gross value, taking into account the time of use except for tangible property received from a legal predecessor where the time of use at the legal predecessor must be taken into account when defining the period of depreciation. However, the remaining time of use cannot be shorter than 1 year, and depreciation must be accounted for the remaining period. Depreciation is accounted for on a monthly basis. Upon the calculation of depreciation, the following rates were applied: 5. Depreciation norms applied for assets capitalised after 1 January 1992 CWIP on rented properties 6,0 % Technical instruments, machinery, vehicles 14,5 % IT equipment 33,0 % Assets with an individual purchase price below HUF 100,000 (i.e. the amount allowed by Section 80 (2) of the Act on Accounting) are depreciated in one amount immediately when put into use. 13

18 6. Changes to intangible and tangible assets (HUF 000) Changes to the gross value of intangible and tangible assets Denomination Opening Interim Interim Closing Reclass. amount growth decrease amount I. Intangible assets I/1. Concessions and similar rights and assets I/2. Intellectual products I/2.1.WIP on intangible assets 0 0 II. Tangible assets II/1. Real estates II/1.1. Buildings 0 II/1.2. Buildings and related concessions and similar rights 0 II/1.3. CWIP on rented properties II/2. Cables 0 II/3. Technical equipments, machinery II/4. IT equipments II/5. Telecommunication equipments II/6 Other equipments and fittings II/7. Securities II/8. Vehicles II/9. Capital Work in Progress (CWIP) 0 II/10. Advance payments on CWIP 0 I-II. Total

19 Changes to the depreciation of intangible and tangible assets Denomination Opening Interim Interim Closing Reclass. amount growth decrease amount I. Intangible assets I/1. Concessions and similar rights and assets I/2. Intellectual products I/2.1.WIP on intangible assets II. Tangible assets II/1. Real estates II/1.1. Buildings 0 II/1.2. Buildings and related concessions and similar rights 0 II/1.3. CWIP on rented properties II/2. Cables 0 II/3. Technical equipments, machinery II/4. IT equipments II/5. Telecommunication equipments II/6 Other equipments and fittings II/7. Securities 0 II/8. Vehicles II/9. Capital Work in Progress (CWIP) 0 II/10. Advance payments on CWIP 0 I-II. Total

20 Changes to the net value of intangible and tangible assets Denomination Opening Interim Interim Closing Reclass. amount growth decrease amount I. Intangible assets I/1. Concessions and similar rights and assets I/2. Intellectual products I/2.1.WIP on intangible assets 0 II. Tangible assets II/1. Real estates II/1.1. Buildings 0 II/1.2. Buildings and related concessions and similar rights 0 II/1.3. CWIP on rented properties II/2. Cables 0 II/3. Technical equipments, machinery II/4. IT equipments II/5. Telecommunication equipments II/6 Other equipments and fittings II/7. Securities II/8. Vehicles II/9. Capital Work in Progress (CWIP) 0 II/10. Advance payments on CWIP 0 I-II. Total

21 Purchased inventories Purchased inventories were evaluated at the actual acquisition price except for print forms and other materials. Forms and other materials were fully accounted for as use of materials (cost) at the date of acquisition. Year-end closing inventories were evaluated at the actual acquisition price, based on the stocktaking. 7. Inventories (HUF 000) Description PR material Forms, other materials Library books Intermediated services Total inventories Accounts receivable Trade debtors must be recognised in the balance sheet at the known and accepted amount or at the book value decreased by the accounted impairment and increased by the reversed impairment. Receivables from employees and tax authorities were evaluated based on an item-by-item reconciliation with the sub-ledgers. 8. Inventories (HUF 000) Description Receivables from goods, delivery and services Corporate tax VAT Local tax Innovation contribution Other receivables Total receivables

22 9. Impairment accounted for receivables (HUF 000) Description Year of the accounting of impairment Amount of impairment % % % Total impairment on receivables in % 31 December 2012 Amount of impairment Cash Cash was recognised at the values of the last bank account statements of 2012 and the stocktaking of the cash desk. 10. Cash (HUF 000) Description Cash desk HUF accounts Fixed HUF deposits EUR accounts Fixed EUR deposits Total cash

23 Prepaid expenses and accrued income Expenses incurred before the balance sheet date which can only be accounted as cost for the period following the balance sheet date, and income which is only due after the balance sheet date but that should be accounted for the period closed by the balance sheet, as well as the amount not yet accounted for as an item decreasing the profit from the difference defined in Section 68 (1) of the Act on Accounting, must be recognised separately as prepaid expenses and accrued income. 11. Prepayments and accrued income (HUF 000) Description Interest on tied-up deposits and bank accounts due for the reporting period but not yet realised Transaction fee for December, 2011/ Fee for continued trading for the 4th quarter, 2011/ Vendor fees for 2011/ Other income Total accrued income Insurance Newspaper subscriptions Annual membership dues for international organisations 2011/ IBM IFX maintenance fee for Other Total prepayments Total prepayments and accrued income Equity Equity is recognised at book value. 12. Changes to equity (HUF 000) Denomination 2011 Additions Disposals 2012 Share capital Capital reserve Retained earnings Net profit for the year Net profit for the year Total shareholder's equity

24 The subscribed capital of the Company upon the foundation totalled HUF 550 million which consisted of registered ordinary shares issued in a dematerialised form, with a par value of HUF 100 each, all conferring equal and identical membership rights. With its resolution No. 7/2003 dated 28 April 2003, the General Meeting decreased the share capital of the Budapest Stock Exchange Private Company Limited by Shares by withdrawing the shares of Garmond Capital Hungarian-American Service Providing Company Limited by Shares (i.e. by HUF 8,651,900 that is 86,519 shares with a par value of HUF 100 each). Thus the Company s subscribed capital fell to HUF 541,348,100. Based on the resolution No. 9/2013 of the Annual General Meeting of the Budapest Stock Exchange Ltd. which was held on 16 May of 2013, AGM approved a payment in dividend in the amount of HUF (HUF 105 /share) following the financial year Provisions Provision was recognized for severance payment obligations existing at the balance sheet date in an amount of HUF 22.4M. Liabilities Out of current liabilities trade creditors including VAT were evaluated at the acknowledged, invoiced amount; liabilities to employees and tax authorities were recognised in the balance sheet based on a reconciliation with the sub-ledgers. 13. Current liabilities (HUF 000) Description Liabilities on delivery of goods and services Taxes and contributions payable: Personal income tax Rehabilitation contribution Vocational contribution Car tax Innovation contribution 72 0 Social security contribution (to the Pension Insurance and Health Insurance funds) Healthcare contribution Pension funds Health funds Dividends paid from the 2011/2012 profit Other 8 3 Total liabilities

25 Accrued expenses and deferred income The following must be recognised separately as accrued expenses and deferred income: income received before the balance sheet date which will form the sales revenue of the period after the balance sheet date; costs and expenses for the period before the balance sheet date which will only be incurred and invoiced in the period after the balance sheet date; compensation claims, default interest and court costs enforced and submitted against the Stock Exchange between the balance sheet date and the balance sheet preparation date. The amounts of the accruals must be supported by accounting records (invoices, calculations, resolutions issued by the competent persons, etc.) which prove the legal nature and justification of such accruals. 14. Accrued expenses and deferred income (HUF 000) Description /2013 minimum section fees invoiced in 2011/ Other income for Data vending fees for Total deferred income Audit MMTS licence fee Other Bonus accrued to the debit of the 2011/2012 profit (with contributions) Total accrued expenses Total accrued expenses and deferred income

26 INCOME STATEMENT The results of the stock exchange activity were defined with the total cost method (version A) by decreasing the income in the business year by material-type, personnel and other expenses as well as depreciation. The annual reporting and bookkeeping obligation of the Stock Exchange is stipulated by Government Decree No. 348/2004 (XII.22.). In accordance with the government decree, the fees charged for the services recorded in the Fee Schedule were recognised as Income from exchange activities instead of Net sales. 15. Revenues (HUF 000) Description Revenues from listing fees Revenues from trading fees Revenues from information services Sub-contracted services Total revenues from stock exchange activities Description Domestic revenue from exchange activities Export USA Switzerland Japan Guernsey 63 0 Hong Kong Israel Norway Turkey European Union Export revenues from exchange activities Total net sales from exchange activities Description Revenue from the sales of tangible assets Income from training Income from the sponsorship of certain events Other income Default interest Total other income

27 Description Interest on fixed deposits Other interest Exchange gains Income from financial transactions Exchange loss Expenses of financial transactions Profit/loss from financial activities Material-type expenses As of 2001, if Section 123 (2) of the VAT Act requires that the input VAT of the service be divided proportionally, the non-deductible VAT must be accounted for under other expenses rather than as a cost. 16. Material-type expenses (HUF 000) Description Intermediated services Material costs Travel costs Repair, maintenance costs Communication and mail costs, newspapers Other rentals K2 licence fee Trading system licence fee Expert fees Training costs PR expenses Membership fees in international organisations Other services Internet access Deutsche Börse technical connection fees Costs related to the rented Andrássy út property: Rental Operating expenses Insurance premiums, duties, banking fees Total material-type expenses

28 17. Fees paid to KPMG for the audit and other services (HUF 000) Description Audit of the HAL annual report Audit of the IFRS financial statements Audit of consolidated reports Self-assessment report Transfer pricing document Tax advisory Total fees paid to KPMG Personnel costs In 2011, the average number of staff at the Budapest Stock Exchange was 59 and in 2012, 58. The average statistical staff number and wage costs did not include those on maternity leave or on unpaid leave. 18. Personnel-type expenses (HUF 000) Description Wage costs for full-time employees Honoraria for Board members Honoraria for Supervisory Board members Wage costs for off-payroll staff Wages for sick leave Other personnel-type expenses (contributions, fringe benefits, representation costs) Total personnel costs

29 Honoraria to the officers of the Budapest Stock Exchange Private Company Limited by Shares In accordance with resolution No. 10/2012 of the General Meeting held on 25 April 2012, the honoraria were as follows: Board of Directors 19. Honoraria of elected officers Chairman HUF /month Deputy Chairman HUF /month Members HUF /month Supervisory Board Chairman HUF /month Deputy Chairmen HUF /month Members of the SB HUF /month 20. Other expenses (HUF 000) Description Derecognition due to scrapping/impairment/lending losses Book value of the sold tangibal assets Provisions Other Tax obligation regarding the previous years Late payment and self-revision penalty, tax penalty Subsidies of certain team sports/performing arts organizations Innovation contribution Bank tax Local taxes and local business tax Supervisory Authority fee Non-deductible VAT on fixed assets Non-deductible VAT on costs Total other expenses

30 TRANSACTIONS WITH RELATED PARTIES Related party Name: CEESEG Aktiengesellschaft Registered office: WIEN WALLNERSTRASSE 8. ÖSTERREICH Tax number: EU Tax No: ATU Company registration No.: FN f Court of registration: Commercial Court of Vienna Registered office of court of registration: Marxergasse 1a, 1030 Vienna Ownership share: % Name: Registered office: Tax number: WIENER BÖRSE AG WIEN WALLNERSTRASSE 8. ÖSTERREICH EU Tax No: ATU Transactions with related parties Amount Description HelpDesk sevices ,00 Revenues from Wiener Börse AG ,00 Technical accession fee after FIDESSA PLC ,00 Technical accession fee after SIX Telekurs Ltd ,00 Technical accession fee after Sungard Financial System (France) SAS ,00 Technical accession fee after Interactive Data (Europe) Ltd ,00 Technical accession fee after NYSE Technologies SAS ,00 Technical accession fee after VWD ,00 Miss Values links 3 600,00 Expenses related to services of Wiener Börse AG ,00 Manager liability insurance (BSE master D&O insurance) 3 150,00 Expenses related to services of CEESEG AG 3 150,00 26

31 CORPORATE TAX In accordance with the obligation to file a returns, we have adjusted the tax base as follows: 22. Calculation of corporate tax (HUF 000) Description 2012 Items increasing pre-tax profits: Amount accounted for as depreciation in the tax year in accordance with the Act on Accounting Impairment loss recognized for receivables in the tax year Not recognized costs/annex 3 (entertainment, business gifts, assets transferred free of charge) Imposition of tax penalty, late payment penalty in final resolution 50 Amounts accounted for as expenses and assessed as a result of the self-revision, tax audit 188 Total items increasing the tax base Items decreasing pre-tax profits: Depreciation in accordance with tax law % of revenues accounted among pre-tax results in the tax year based on the royalty received Long-term donation provided to a public-benefit organization, 20% of the support 120 Total items decreasing the tax base Corporate tax Profit/loss before taxation Total items decreasing pre-tax profits Items increasing pre-tax profits Tax base Corporate tax till HUF 500 million (10%) from HUF 500 million (19%) Calculated corporate tax Tax benefit for the subsidy of certain team sports/performing arts organizations Total corporate tax Corporate tax prepayment in

32 SECTION MEMBERSHIP The number of section members at the Budapest Stock Exchange Ltd. totalled 39 as of 31 December At the end of 2012, 26 members in the equities section, 22 members in the debt securities section, and 21 members in the derivatives section (futures market - 21 members, options market - 13 members) and 6 members in the commodities section had trading rights. At the end of the year there were 16 members in the BÉTa Market. Granting Section Memberships in 2012 To JP Morgan Securities plc. in the Debt Securities Section (2 May 2012) Termination of section membership in 2012 The termination of section membership of the iforex Befektetési Szolgáltató Zrt. in the Equities Section (1 January 2012) 28

33 23. List of section members Futures Options 1 Agribróker Tőzsdeügynöki Kft X - 2 Agrokont Brókerház Részvénytársaság X - 3 BNP Paribas S.A. - X BUDA-CASH Brókerház Zártkörűen Működő Részvénytársaság X - X X - X 5 Citibank Europe plc Magyarországi Fióktelepe - X CIB Bank Zrt. X X X F - X 7 CODEX Értéktár és Értékpapír Zártkörűen működő Részvénytársaság X - X - - X 8 CONCORDE Értékpapír ZRt. X X X X DB Securities Spólka Akcyjna X Deutsche Bank AG Magyarországi Fióktelep - X EQUILOR Befektetési Zártkörűen Működő Részvénytársaság X X X X X X 12 ERSTE Befektetési Zrt. X X X X - X 13 FHB Kereskedelmi Bank Zártkörűen Működő Részvénytársaság X X Goldman Sachs International - X Hungarograin Tőzsdeügynöki Szolgáltató Zrt. X - X X X X 16 HUNGÁRIA ÉRTÉKPAPÍR Befektetési és Értékpapírkereskedelmi Zrt. X - X - X X 17 IKR-Bróker Tőzsdeügynöki Kft X - 18 ING Bank N.V. Magyarországi Fióktelepe X X F IPOPEMA Securities Spólka Akcyjna X J.P. Morgan Securities plc - X Jefferies International Limited - X KBC Securities Magyarországi Fióktelepe X X X - - X 23 Kereskedelmi és Hitelbank Zrt. - X Magyar Takarékszövetkezeti Bank Zrt. X X X X MKB Bank Zrt. X X X F - X 26 Nomura International Plc - X OTP Bank Nyrt. X X X X - X 28 QUAESTOR Értékpapírkereskedelmi és Befektetési Nyrt. X - X X - X 29 Raiffeisen Centrobank AG X - X X Random Capital Broker Zártkörűen Működő Részvénytársaság X - X - - X 31 RAIFFEISEN BANK Zrt. X X X X - X 32 REÁLSZISZTÉMA Értékpapír-forgalmazó és Befektető Zrt. X - X - - X 33 Société Générale SA - X Solar Capital Markets Értékpapír Kereskedelmi Zártkörűen Működő Részvénytársaság X - X - - X 35 SPB Befektetési zrt. X X 36 STRATEGON Értékpapír Zártkörűen Működő Részvénytársaság X - X The Royal Bank of Scotland plc - X UniCredit Bank Hungary Zártkörűen Működő Részvénytársaság X X X X WOOD & Company Financial Services a.s. X F: Suspended the right to trade X: It has the right to trade - :It has not the right to trade Section member Equities section Debt Securities Derivatives section Commodity section BÉTa Market 29

34 24. Shareholders exceeding 5% stake Serial Ownership ratio Shareholder No. % Nr of shares 1 CEESEG AG 50,45% ÖSTERREICHISCHE Kontrollbank AG. 18,35% Magyar Nemzeti Bank 6,95% KBC Securities Mo. Fióktelepe 5,20% Total 80,95% Equity and profit per share (HUF 000) Description Shareholders' equity Share capital Capital reserve Retained earnings Net profit for the year Profit after taxation Number of issued shares Nominal value of share (HUF/share) Price per share at issue (HUF/share) Capital resources per share (HUF/share) Dividend (HUF/share) EPS (net profit / number of shares) HUF 207,73 106,48 ROE (profit after tax / (average of opening and closing value of the shareholders' equity ) 20,64% 10,56% 30

35 26. The financial, asset and income position The following indices show the development of the financial, asset and income situation of the Stock Exchange. Indices HUF'000 HUF'000 Income to equity (retained earnings for the year / = 0,27% equity) = 0,15% Index -46,54% Income to sales (retained earnings for the year / revenues from exchange activities) = 0,49% = 0,33% -31,34% Liquidity ratio (current assets inventories/ liabilities) = 112,03% = 145,76% 30,10% Capital adequacy Equity = 78,10% Balance sheet total = 84,05% 7,62% Assets to income (retained earnings for the year / = 0,21% balance sheet total) = 0,12% -42,46% Ratio of tangible assets Tangible assets = 1,02% Balance sheet total = 1,22% 18,86% Ratio of current assets Current assets = 19,75% Balance sheet total = 14,95% -24,28% Ratio of equity and liabilities Liabilities = 22,26% Equity = 12,05% -45,88% 31

36 27. EBITDA statement HUF 000 Denomination Operating revenues + transferred service Other income Extraordinary profit 0 0 Total revenue Operating costs and expenses without depreciation Earnings before interest and taxes Depreciation Subsidies of certain team sports/performing arts organizations Income from financial activities Bank tax Corporate tax Local community business tax PROFIT AFTER INCOME TAX Dividend NET PROFIT FOR THE YEAR Development expenses (HUF 000) No. Denomination Trading system Hardware Software Network connections XETRA Security system basic investments Data sales BSE internal developments Non-IT investments TOTAL Development expenses do not include VAT. 32

37 29. Cash flow (HUF 000) No. Description I. Cash flows from ordinary activities (Operating cash flow, rows 1-15) Profit/loss before taxation Booked amortisation Booked impairment and reversal Difference between the allocation and use of provisions Income from the sales of fixed assets Changes to trade payables Changes to other current liabilities Changes to accrued expenses and deferred income Changes to trade debtors Changes to current assets (excluding trade debtors, cash and securities) Overdue written off receivables Securities Changes to prepaid expenses and accrued income Taxes paid and payable Dividends approved II. Cash flows from investment activities (rows 16-17) Acquisition of fixed assets Sales of fixed assets III. Cash flows from financial activities (rows 18-23) Loans drawn 0 19 Cash received definitively 0 20 Bond repayment 0 21 Loan repayment 0 22 Cash transferred definitively Housing loan repayment IV. Changes to cash flows (rows +-,I. +-,II. +- III.) Opening Closing Securities at the end of the year (in HUF) 0 0 Cash at the end of the year (in HUF) Budapest, 16 May,

38 BUDAPEST STOCK EXCHANGE PRIVATE COMPANY LIMITED BY SHARES BUSINESS REPORT FOR THE YEAR

39 Overview of 2012 Changes related to the Budapest Stock Exchange in brought a major milestone in the life of the Budapest Stock Exchange: on 25 th April 2012 the BSE General Meeting decided on the replacement of the cash market trading system to the Xetra trading system. The Xetra trading system is expected to be introduced on the cash market in the second half of In order to further boost liquidity, a new market maker model is also planned to be introduced on the equity market along with the replacement of the trading system. BSE introduced a new category (Category T ) in 2012 for companies entering the market via technical listing in order to enhance the transparency of the market. The restructured category system makes the distinction of categories easier as regards risk; moreover, it enhances the prestige of Category A and B. In 2012, the improving tendency regarding the number of new listings in the recent years, stopped. This was caused by the fact that several potential issuers postponed listing to a later date. In 2012, one technical listing was made (Business Telecom Plc., in Category B ), and in May 2012 secondary public offering was made by Masterplast Plc. During the year, three companies left BSE: Székesfehérvári Hűtőipari Plc., FOTEX Holding SE, TvNetWork Plc. Certificates are still popular among domestic retail investors, thus BSE welcomed the increase of product number in 2012 again: at the end of the year 56 certificates were available for trading including new underlying products. Regarding market and product development a highlight of the year was the extension of the product supply of the BETa Market by launching 13 new foreign shares; furthermore, investors can now trade with futures contracts on foreign securities. A new market maker also joined trading, which provides more liquidity on the market. Market tendencies Even if the Budapest Stock Exchange remained one of the most significant stock exchanges in the region in 2012, which is also underpinned by the highest share turnover velocity figure (52.7%) in the regional comparison, the negative global capital market trends affected the domestic market as well. The BUX index value increased by 7.1% compared to the previous year end, it reached its peak at 19,901 points on 6 February,

40 Chart 1: Relative performance of indices in 2012 (EUR) 135% BUX (Hungary) CETOP20 (CEE) DJ STOXX 600 (Europe) 130% 125% 120% 115% 110% 105% 100% 95% 90% 85% Table 1: Main indicators Average daily turnover in equities (HUFbn) Equity market capitalisation (HUFbn) Equity market capitalisation/gdp 31.7% 33.6% 32.4% 13.0% 21.9% 21.7% 17.1% 16.5%* Share turnover velocity** 69.3% 81.3% 105.5% 148.7% 90.0% 95.0% 83.9% 52.7% *Calculated based on 2011 GDP data * Calculation of share turnover velocity: Annual market turnover / market capitalization as at the end of the year Although turnover decreased both on the cash and on the derivatives markets, the Budapest Liquidity Measure (BLM) values reflect that the liquidity of the blue-chips did not deteriorate; moreover, in case of Egis some improvement was experienced. In case of BUX futures contracts with December maturity, however, liquidity measure changed negatively in accordance with turnover figures. 36

41 Table 2: Bid-ask spread, BLM values (for transaction value of EUR 20,000), turnover of blue-chips and BUX futures contract (maturity December) Bid-ask spread BLM1 Daily average turnover transaction value of EUR 20,000 (HUF million) OTP 0.10% 0.09% 0.17% 0.16% MOL 0.15% 0.17% 0.26% 0.33% MTELEKOM 0.22% 0.25% 0.38% 0.41% RICHTER 0.22% 0.22% 0.41% 0.43% EGIS 0.53% 0.35% 1.44% 0.96% BUX futures (maturity December) 0.11% 0.13% 0.76% 1.25% Cash market The cash market s capitalisation amounted to HUF billion by the end of 2012, of which the equities market was HUF billion. The Budapest Stock Exchange s equity market turnover dropped in 2012 in accordance with international tendencies: the market turnover decreased by 36.9% (in HUF), while there was a 24.9% drop on the European and 34.4% drop on the regional markets on average 1. Cash market turnover amounted to HUF billion (daily average: HUF 10.2 billion), of which equity market turnover represented HUF billion (daily average: HUF 9.9 billion). Almost all (99.7%) of the cash market turnover was accounted for by the Equities Section. The lowest decrease was experienced in certificates turnover, which is still quite popular among domestic retail investors. Chart 2: Breakdown of the cash market turnover in 2012 Government bonds 0.1% Mortgage bonds 0.1% Corporate bonds 0.1% Certificates 2.9% Investment fund shares 0.2% Equities 96.6% A 29.2% decrease was seen for the number of transactions, in average 154 thousand transactions were concluded per month. Regarding equity market concentration, still the top five blue-chips contributed 98% of the turnover. 1 Source: FESE, (based on the first eleven months, in EUR) 37

42 Chart 3: Concentration in equity turnover in 2011 Chart 4: Concentration in equity turnover in 2012 In the investor structure the proportion of foreign investors grew by 4 percentage points (48.1% on the basis of the first 10 months), while brokerage firms proprietary trading decreased by the same percentage (12.0% on the basis of the first 10 months). The proportion of domestic retail investors and institutional investors did not change significantly (the proportion of domestic retail investors was 31.1%, the proportion of domestic institutional investors was 8.8% on the basis of the first 10 months). An average 45.4% of households turnover was generated via internet based trading.. Derivatives market The turnover on the BSE s derivatives market decreased to HUF 1,862 billion by 31.9% compared to 2011, showing a slightly smaller drop than the turnover of cash market. This drop can be explained by the decline in the turnover of futures products; the highest decrease was seen in the turnover of index and equity based futures contracts: by 61.7% and 40.2% respectively. Although there was a 20.6% decrease in currency futures turnover, the turnover of currency based options at value showed an increase of 65.5%. As regards the number of contracts turnover of index and currency based futures dropped similarly to that above (-57.5% and -27.2% respectively), however, the fall in the number of equity based contracts was smaller (-24.3%). In the breakdown of turnover the proportion of currency based futures contracts increased to 66.2% by 10 percentage points. 38