Annual Report 2014/2015. Geschäftsbericht 2014/2015.

Transcription

1 Annual Report 2014/2015 Geschäftsbericht 2014/2015

2 Facts and Figures Profile Steubing AG is an independent securities trading bank headquartered in Frankfurt am Main, Germany. The company was first founded in 1987 as Wolfgang Steubing GmbH Börsenmakler, a limited liability company, and became a public limited company in January The Company s business activities are founded upon trading and electronic order routing in listed stocks, bonds, certificates and warrants. Additional business areas include serving as a stock and bond specialist on the Frankfurt Stock Exchange, Integrated Orderflow Management (IOM), Designated Sponsoring, Institutional Customer, Support, Research, advisory of companies on capital market topics and investment management for the Steubing German Mittelstand Fund I (SGMF). As of 30 June 2015 the group employed a staff of 61 members. Steubing AG is a member of the Federal Association of Securities Companies on the German Stock Markets (bwf), the Securities Trading Companies Compensation Fund (EdW), the Frankfurt Institute for Risk Management and Regulation (FIRM), and a supporting member of Frankfurt Main Finance e.v., an initiative designed to strengthen Frankfurt as a financial centre. Result for financial year 2014/2015 (in k) 2013/ /2015 Gross profit before cost of trading 19,947 20,515 Gross profit after cost of trading 17,486 17,836 Result from ordinary activities 1,618 2,353 Net income 598 1,112 28

3 Preface Dear Shareholders and Business Partners, In drawing up our report this year, we can tell you that Steubing AG recorded a successful financial year in 2014/2015, ending the period with a result that represented a substantial improvement over the year before. Thanks not least to our efforts in streamlining processes and consistently managing costs, with gross earnings almost identical to the year before ( million vs million) we succeeded in increasing net income by around 77% to million. As has traditionally been the case over the 25 years of our company s history, securities trad ing and the associated business areas were largely responsible for this sound result. Without the allocation required by the regulatory authorities to the General Banking Risk Fund pursuant to 340e of the German Commercial Code, earnings before taxes would not have amounted to million as reported, but would have been some 830,000 higher that is to say, over 3 million. Nevertheless, we have made the full allocation to this balance sheet item which ranks as core capital on a par with equity. The law specifies that the Fund must amount to at least 50% of the average annual net earnings on the trading portfolio over the past five years. Assuming that annual net income remains positive in future, this means that we shall have a larger proportion of earnings available for potential dividend payments than was the case in the past financial year. In this context, it is planned at the forthcoming Annual General Meeting in December to propose a resolution aimed at restructuring the reserves of Steubing AG. By way of background, the intention is by structuring the reserves appropriately to give Steubing AG the opportunity in future to add flexibility and optimize its equity capital. It is proposed to divide the dividend payment into two parts. Naturally, we shall provide you with separate, detailed information both when issuing invitations to the Annual General Meeting and as part of the Management Board report at the Meeting. Nevertheless, we would like to take this opportunity to call this planned step to your attention. The Debt Capital Markets Team, whose tasks included the structuring and placement of SME bonds, left our company as of 30 September 2015 by mutual agreement. In the past financial year the team found itself confronted with an increasingly difficult environment in the market for bonds issued by SMEs. This decision, too, is part of the strategy pursued by Steubing AG in times of difficult market conditions, exacerbated by regulatory pressures and a further increase in high frequency trading, of focusing on the strengths in all aspects of securities trading that have characterized the company for almost three decades. In conclusion, we should like to express our thanks to our customers for their confidence in our services, to our shareholders for their solidarity with Steubing AG, and to our employees for their daily commitment. Yours sincerely, The Management Board Alexander Caspary Carsten Bokelmann 29

4 Balance Sheet as of 30 June 2015 ASSETS EUR Fiscal Year EUR Prior Year EUR 01. Cash reserve a) Cash on hand 28, , Receivables from banks a) Payable on demand 29,697, ,480,722,16 b) Other receivables 3,303, ,001, ,303, Receivables from customers 331, , Shares and other variable-yield securities 1,030, ,030, Trading assets 4,157, ,101, Equity investments 171, , Intangible assets 95, , Property and equipment 322, , Other assets 2,289, ,913, Prepaid expenses 213, , Excess of covering assets over pension and similar obligations 101, , Total assets 41,743, ,192,

5 Balance Sheet as of 30 June 2015 LIABILITIES AND EqUITY EUR Fiscal Year EUR Prior Year EUR 01. Liabilities to banks a) Payable on demand 580, ,583, Trading liabilities 337, ,062, Other liabilities 2,045, ,585, Provisions a) Tax provisions 72, , b) Other provisions 1,027, ,100, , Fund for general banking risks 4,214, ,384, thereof allocation pursuant to Sec. 340e (4) HGB 830, Equity a) Subscribed capital 11,350, ,350, b) Capital reserves 20,989, ,989, c) Net retained profit 1,124, ,464, ,850, thereof profit carryforward EUR ,00 (prior year: EUR ,00) Total liabilities and equity 41,743, ,192,

6 Income Statement for the Period of 01 July 2014 to 30 June 2015 EUR Fiscal Year EUR Prior Year EUR 01. Interest income from a) Lending and money market business EUR 6, (EUR 14,334.39) 6, , Interest Expenses 11, , , , Current income from a) Shares and other variable-yield securities 147, , b) Equity investments , , , Commission income 12,809, ,554, thereof: a) Brokerage income EUR 1,798, (prior year EUR 1,690,713.43) 05. Commission expenses 4,076, ,817, thereof: 8,733, ,737, a) Brokerage expenses EUR 2,975, (prior year EUR 2,517,963.86) 06. Income from trading book positions 11,909, ,492, thereof: a) Securities EUR 11,187, (prior year EUR 12,563,964.39) b) Price differences from name-to-follow transactions: EUR 721, (prior year EUR 1,928,374.80) 07. Expenses from trading book positions 3,605, ,113, thereof: a) Securities EUR 3,157, (prior year EUR 4,550,619.84) b) Price differences from name-to-follow transactions EUR 448, (EUR 1,563,100.32) 08. Other operating income 643, , thereof: income from foreign currency translation: EUR 10, (prior year EUR 9,046.40) 09. General and administrative expenses a) Personnel expenses aa) Wages and salaries 7,034, ,475, ab) Social security, pension and other benefit costs 917, , thereof: for old-age pensions EUR 258, (EUR 236, ) Total personnel expenses 7,952, ,347, b) other administrative expenses 6,349, ,403, ,301, ,751, Amortization, depreciation and write-downs of intangible assets and property and equipment 173, , Other operating expenses 119, , thereof: expenses from foreign currency translation: EUR 10, (prior year EUR 3,063.32) amount carried over 3,228, ,464,

7 Income Statement for the Period of 01 July 2014 to 30 June 2015 EUR Fiscal Year EUR Prior Year EUR amount carried over 3,228, ,464, Write-downs and allowances on receivables and certain securities as well as allocations to provisions for possible loan losses 45, Write-downs of and allowances on equity investments, shares in affiliates and securities classified as fixed assets , Allocations to the fund for general banking risks Sec. 340e HGB 830, , Result from ordinary activities 2,352, ,617, Income taxes 1,241, ,019, Net income 1,111, , Profit carryforward from the prior year 12, , Appropriation of the capital reserves ,227, Net retained profit 1,124, ,850,

8 Notes of Wolfgang Steubing AG Wertpapierdienstleister, Frankfurt am Main, for the fiscal year from 1 July 2014 to 30 June 2015 I. General Information on the Financial Statements and the Accounting and Valuation Policies The reporting period is the fiscal year from 1 July 2014 to 30 June Securities trading banks must comply with the supplementary regulations for certain types of businesses in accord - ance with Sec. 340 et seq. HGB [ Handelsgesetzbuch : German Commercial Code]. These financial statements were prepared in accordance with these regulations, in particular Sec. 340 (4) and Sec. 340a HGB. Reference is made to the RechKredV [ Verordnung über die Rechnungslegung von Kreditinstituten : German Bank Accounting Directive] dated 11 December 1998 regarding the forms mentioned in Sec. 340a (2) Sentence 2 HGB. The regulations of Sec. 252 et seq. HGB were applied in determining the carrying values of assets and liabilities. Following these regulations, items were valued at acquisition or production cost unless a lower value had to be stated in accordance with commercial law. Cash reserves, receivables from banks and customers and other assets are stated at nominal value. No bad debt allowances were necessary. Shares and other variable-yield securities held for investment purposes were valued in accordance with Sec. 253 (1) HGB. Financial instruments held for trading were stated at fair value less a risk discount in accordance with Sec. 340e (3) HGB. The special item Fund for general banking risks was set up pursuant to Sec. 340e (4) HGB. Equity investments were carried according to the modified lower of cost or market principle, being stated at either acquisition cost or, in case of permanent impairment, at the lower market value on the balance sheet date. Depreciation of depreciable fixed assets was charged over their useful lives. Details of depreciation can be found in the enclosed statement of changes in fixed assets. Low-value assets acquired in 2014/2015 with a value of up to were written off immediately. The Institution used the option under Sec. 6 (2a) EStG [ Einkommensteuergesetz : German Income Tax Act] and recognized a collective item for depreciable movable assets costing between and 1, This item will be depreciated on a straight-line basis over a period of five years. Prepaid expenses contain expenditure before the balance sheet date that relates to the next reporting period. Liabilities are stated at the settlement value. Provisions for uncertain liabilities were set up at the settlement value according to prudent business judgment. Pension commitments were valued on the basis of Prof. Klaus Heubeck s 2005 G mortality tables. There are no provisions with a residual term of more than one year that would have to be discounted pursuant to Sec. 253 (2) HGB. Assets and liabilities denominated in a foreign currency are reported using the reference rates of the European Central Bank on the balance sheet date. They are valued in accordance with Sec. 340h HGB. The regulations in Sec. 340f and Sec. 340g HGB were not applied. In accordance with Sec. 340e (4) HGB, the legally prescribed share of 10% of net income from trading book positions was allocated to the reserve pursuant to Sec. 340g HGB. 34

9 Notes II. Notes to the Balance Sheet 1. Receivables from banks The receivables include accrued interest as of 30 June They are due in up to three months. Time deposits of 3,562k have been pledged as collateral for the rental, exchange and other guarantees issued by banks To secure the claims under the clearing and settlement agreements, the Institution granted CACEIS Bank Deutschland GmbH a contractual right of lien on its trading and custody accounts maintained by this bank. 20,334k was kept on these accounts as of the balance sheet date. 2. Shareholdings in accordance with Sec. 285 No. 11 HGB Consultores Corporate Finance AG, with registered office in Haibach: Share of capital held 20.75% Capital stock 60, Book value 18, Net income/loss as of 31 December , SDB Steubing Derivates Brokerage GmbH, with registered office in Bad Homburg v.d.h.: Share of capital held 49.90% Capital stock 150, Book value 152, Net income/loss as of 30 June , Statement of changes in fixed assets The statement of changes in fixed assets as of 30 June 2015 was prepared in accordance with Sec. 268 (2) HGB and Sec. 34 (3) RechKredV. The statement of changes in fixed assets is attached as an exhibit. 4. Breakdown of listed and unlisted securities in Balance sheet item Listed Unlisted Debt securities and other fixed-income securities Shares and other variable-yield securities ,030, Trading assets 4,157, Trading liabilities 337, Equity investments , Shares in affiliates All but 152, of the securities held can be traded on a stock exchange. The securities included in trading assets exclusively comprise debt securities and other fixed-income securities and shares and other variable-yield securities. The risk discount of 363, was recognized as the difference between unrealized gains and losses from all of the positions reported as financial instruments in the trading book in accordance with IDW AcP BFA 2 section Valuation of negotiable securities at the lower of cost or market One position under shares and other variable-yield securities was recognized at the lower net realizable value, while the rest of this item was valued according to the modified lower of cost or market principle. The entire item Trading book was valued at fair value less a risk discount in accordance with Sec. 340e (3) HGB. 35

10 Notes 6. Property and equipment Office equipment, furniture and fixtures are valued at 322, Treasury shares On 12 December 2014, the shareholder meeting, pursuant to Sec. 71 (1) No. 7 AktG [ Aktiengesetz : German Stock Corporation Act], authorized the Institution, following the commencement of trade in the Institution s shares on a German stock exchange, to buy and sell treasury shares for trading purposes at prices that are not 10% higher or lower than the share s average closing price as quoted by the electronic trading system of the Frankfurt Stock Exchange (Xetra closing price) or a successor system on the three previous trading days. The shares acquired for this purpose may not exceed 5% of Steubing AG s capital stock at the end of any calendar day. The authorization was issued for a period of five years, beginning on the day the resolution was passed. This authorization was not used during the fiscal year. Furthermore, the shareholder meeting authorized the Institution (in accordance with Sec. 71 (1) No. 8 AktG) to buy and sell treasury shares at market conditions for other purposes. At market conditions means that once trade in the Institution s shares has commenced on a German stock exchange, the purchase or sale prices on the three previous trading days may not be more than 10% above or below the share s average closing price on XETRA. At market conditions before the commencement of trade means that the shares may be bought or sold at prices in line with a valuation system developed by a recognized audit firm, and that these prices do not exceed or fall below such values by more than 10%. The shares acquired for this purpose may not exceed 10% of the Institution s capital stock at the end of any day. The aim is to put the Institution in a position to acquire, when appropriate, businesses or investments by making a payment in kind (shares in the Institution) rather than by paying cash. For this reason, the shareholders statutory right to subscribe was excluded. No shares were purchased or sold in the reporting period 8. Other assets Other assets comprise: EUR k Corporate income tax refund 1,159 Trade tax refund 895 Receivables from other investees and investors 0 Other receivables 236 Total 2, Excess of covering assets over pension and similar obligations The pension provision was offset against the employer s pension liability insurance as follows: EUR k Pension provision under the BilMoG (settlement value) 700 Employer s pension liability insurance (fair value) 802 Balance after offsetting 102 The calculation was based on the 2005 mortality tables of Prof. Heubeck using the projected unit credit method (PUCM) and an interest rate of 4.31%. Pension and salary increases are not taken into account as the pension commitment is for a fixed amount. 10. Statement of changes in provisions A statement of changes in provisions is enclosed as an exhibit. 36

11 Notes 11. Other liabilities Other liabilities are as follows: EUR k Bonus liabilities FY 2014/2015 1,275 Liabilities to suppliers 284 Subsequent prepayments of corporate income and trade tax 453 Miscellaneous 33 Total 2, Capital Stock The Institution s capital stock is held solely in the form of bearer shares. It is divided into 5,675,000 no-par shares. The capital stock of 11,350, is fully paid in. 13. Shares per class At the balance sheet date, the Institution s capital stock was divided into 5,675,000 no-par bearer shares. 14. Allocations to and appropriation of reserves in EUR k 01 July 2014 Allocations Appropriation 30 June 2015 Capital reserves 20, ,990 Revenue reserves Legal reserve Reserve for treasury shares Total 20, , Schedule of times to maturity in accordance with Sec. 340d HGB in conjunction with Sec. 9 RechKredV in k The time to maturity breaks down as follows: Total Up to three Three months One to five More than months to one year years five years Other receivables from banks 3,304 3, Debt securities and other fixed-income securities Receivables from customers Foreign currency The total amount of receivables from banks denominated in foreign currency is 855,989.17; foreign currency liabilities to banks amount to 410, The carrying values are calculated using the mean spot exchange rate on the balance sheet date. The total amount of receivables from customers denominated in foreign currency is 130,847.76; other foreign currency liabilities amount to EUR The carrying values are calculated using the mean spot exchange rate on the balance sheet date. 37

12 Notes 17. Proposal for the appropriation of profit Proposal by the management board to the supervisory board for the appropriation of net retained profit in accordance with Sec. 170 (2) AktG: The management board proposes that the Institution s net retained profit of 1,124, be appropriated as follows, subject to the resolution of the shareholder meeting: Distribution to the shareholders ( 0.18 per share) 1,021, Less dividends on treasury shares 0.00 Allocation to the revenue reserves in accordance with Sec. 58 (3) Sentence 1 AktG 0.00 Profit carryforward to new account 102, Net retained profit as of 30 June ,124, The total amount barred from distribution in accordance with Sec. 268 (8) HGB comes to EUR 101, and stems entirely from the recognition of covering assets at fair value. 18. Derivatives The Institution had no derivatives as of the balance sheet date. 19. Contingent Liabilities There are no contingent liabilities pursuant to Sec. 251 HGB. III. Notes to the Income Statement 1. Amortization, depreciation and write-downs Amortization, depreciation and write-downs are disclosed in the statement of changes in fixed assets attached as an exhibit. 2. Other significant items Other operating income contains a refund of the BaFin contribution of 200k. This item is out-of-period income. Other operating expenses does not contain any significant items. 3. Breakdown of income taxes All income taxes are attributable to ordinary business activities. 4. Deferred taxes Taking into account all differences between the statutory balance sheet and the tax accounts and the comparison of the resulting deferred tax assets and deferred tax liabilities, the Institution has net deferred tax assets. This is due to the fact that the pension provision is valued differently under commercial and tax law. The tax rate used for the valuation was 31.1%. The Institution did not make use of the option under Sec. 274 (1) HGB to recognize net deferred tax assets. 5. Auditor s fees The total auditor s fees (excluding VAT) charged for the fiscal year break down as follows: a) Audit services k 79 b) Audit-related services (Sec. 46 WpHG) thereof for the prior year: EUR 0k k 21 c) Other services k 26 38

13 Notes IV. Other Notes 1. Management Board The following individuals are members of the Institution s management board: Alexander Caspary, management board member responsible for trading, Frankfurt am Main Kai Jordan, management board member responsible for risk, Neu Isenburg, until 31 January 2015 Christoph Bokelmann, management board member responsible for risk, Frankfurt/Main, since 1 April 2015 Mr. Kai Jordan was a general manager of SDB Steubing Derivatives Brokerage GmbH and a member of the management board of the bwf [ Bundesverband der Wertpapierfirmen e. V. : Federal Association of Securities Trading Firms]. In addition, Mr. Jordan is a member of the supervisory board of Consultores Corporate Finance AG. Mr. Carsten Bokelmann is a member of the management board of the bwf. The total remuneration of management in the reporting period amounted to EUR 949k. The total remuneration of the former members of management amounted to EUR 48k in the fiscal year. The pension provisions recognized for former members of management stood at EUR 700k as of 30 June Supervisory Board The following individuals are members of the supervisory board: Wolfgang Steubing, banker, Frankfurt am Main (Chairman) Frank Wiebols, former attorney/notary, Frankfurt am Main (Deputy Chairman) Ernst J. Neumeier, tax advisor/legal counsel, Maintal Christoph Bokelmann, Managing Partner of Christoph Bokelmann GmbH, Frankfurt/Main Achim Vandreike, former mayor, Frankfurt am Main Dietmar Schmid, Chairman of the Supervisory Board of BHF Bank AG, Frankfurt/Main Total remuneration for fiscal year 2014/15 amounted to EUR 146, Off-balance sheet obligations Pursuant to Sec. 251 HGB: As of balance sheet date, there were no liabilities as defined by Sec. 251 HGB that had not been accounted for in the balance sheet. Other off-balance sheet obligations: As of 30 June 2015, there were obligations from rental agreements for office space and garages, as well as from leases. As of the balance sheet date, the total obligation was 426, The contracts have an average term of 15 months. 4. Average Number of Employees 61 persons were employed on average in fiscal year 2014/ Equity investments requiring disclosure There are no equity investments requiring disclosure as defined under Sec. 160 (1) No. 8 AktG. Frankfurt am Main, Germany, September 2015 Management Board of Wolfgang Steubing AG: Alexander Caspary Carsten Bokelmann 39

14 Statement of Changes in Fixed Assets as of 30 June 2015 (Gross) Acquisition and Additions Reclassifications Accumulated Amortization, Book value Book value production costs Disposals amortization, depreciation and depreciation and write-downs write-downs Write-ups from 01 July July June 2015 to 30 June June June 2014 EUR EUR EUR EUR EUR EUR EUR Software 182, , Vehicles 117, , Office equipment, fixtures and fittings 1,149, , , , , , , Office equipment, fixtures and fittings 4, , formerly Hamburg IT equipment 749, , , , , , , IT equipment formerly Hamburg 7.819,13 2, , Standard software 568, , , , , , , Leasehold improvements 1,057, ,037, , , Low-value assets 23, , , Low-value assets collective item 67, , , , ,667,00 24, , Equity investments 171, ,57 171, Profit-sharing securities 1,754, , ,030, ,030, ,854, , ,960, , ,619, , ,

15 Statement of Changes in Provisions in Fiscal Year 2014/ July 2014 Utilization Reversal Allocation 30 June 2015 EUR EUR EUR EUR EUR 1. Pensions provisions Tax provisions Trade tax 319, , , Corporate income tax 294, , , , , , Other provisions Bookkeeping expenses 60, , , , EDW allocation 4, , , , Other expenses, London branch Vacation entitlements 66, , , , Other 442, , , , , Audit and financial statement costs 200, , , , , , , , , ,027, ,387, ,131, , , ,100,

16 Management Report of Wolfgang Steubing AG Wertpapierdienstleister, Frankfurt am Main, for the fiscal year from 1 July 2014 to 30 June 2015 I. General The Institution was established as Wolfgang Steubing GmbH in Its name was changed to Wolfgang Steubing AG Wertpapierdienstleister (hereinafter Steubing AG) by notarized deed dated 28 January This change of legal form became effective upon entry in the commercial register on 25 May 1999 under HRB no The Institution has qualified as a securities trading bank since January 2000 and has a dependent branch office in Frankfurt am Main, Börsenplatz 4, which is not registered in the commercial register. The Institution s core business is trading in and electronic order routing for listed equities, bonds, certificates and warrants. Steubing AG acts as a broker on all German stock exchanges, enables orders to be executed on XETRA and has direct online access to approximately 50 international trading venues. The Institution has many years ex - perience in trading foreign shares. Its other business areas in the reporting period were: Acting as a specialist for shares and bonds on the Frankfurt Stock Exchange, including ensuring that around 950 domestic and foreign equities are liquid and readily tradable on the XETRA platform. Integrated order flow management (IOM) featuring integrated management of the entire order process from order placement all the way through to innovative clearing and settlement solutions. Designated sponsoring, for which Steubing AG has consistently received the highest ranking (AA) to date. Bondinvest as an off-exchange bond trading platform ( on which over 3,000 corporate, bank, government and sovereign bonds are constantly listed and offered for trading. Institutional customer business comprising a wide range of services for institutional investors, international banks and trading desks, from organizing roadshows through to placing new issues. Research including macroeconomic analyses, corporate and industry reports from the steel, electronics, mechanical engineering, industrial and automotive sectors as well as daily morning news. Equity capital markets, where Steubing AG independently and expertly helps small and medium-sized companies prepare and implement IPOs and capital increases. Debt capital markets, providing end-to-end process support for issuing SME bonds, from assessing capital market maturity through coordinating the documentation and approaching investors to placement and the start of trading in the bonds. Investment management services for Steubing German Mittelstand Fund I (SGMF). Steubing AG is a member of the bwf [ Bundesverband der Wertpapierfirmen e.v. : Federal Association of Securities Trading Firms], the EdW [ Entschädigungseinrichtung der Wertpapierhandelsunternehmen : Compensatory Fund of Securities Trading Companies], the FIRM [ Frankfurter Institut für Risikomanagement und Regulierung : Frankfurt Institute for Risk Management and Regulation] and is a sponsoring member of Frankfurt Main Finance e.v., an initiative to strengthen Frankfurt as a financial center. 42

17 Management Report II. Business Performance Steubing AG closed fiscal year 2014/2015 on a positive note and improved its performance markedly on the prior year. While gross profit remained on a par with the prior year, earnings before taxes increased by 45.46% to 2,353k, thanks also to rigorous cost management. This translated into net income for the year of 1,112k (up 86.03%). Approximately 830k was allocated to the fund for general banking risks prescribed by Sec. 340g HGB. The environment for Steubing AG s core business areas securities trading, integrated order flow management and our specialist activity on the floor of the Frankfurt Stock Exchange was dynamic. The major stock indices recorded significant growth over the past 12 months. The DAX climbed 11.31% after breaking the mark of 12,000 points for the first time on 16 March The TecDAX surged by 26.01%. The buoyant mood on the stock exchange did not halt at the primary market either, which has seen five companies, Tele Columbus AG, Ferratum Oyj, windeln.de, Sixt Leasing AG and Siltronic AG being upgraded to the Prime Standard segment of the Frankfurt Stock Exchange since January As the crisis in Greece kept volatility high, turnover figures trended positively. The total volume traded on XETRA grew by some 26.64% in the reporting period to 2,77 trillion. For the first time, floor trading on the Frankfurt Stock Exchange was steady on the prior year again at approximately 210b, marking a turnaround in the trend of decreas - ing volumes. The designated sponsoring division, in which Steubing AG now acts as liquidity generator for almost 10 securities in the XETRA trading system, recorded another slight increase. The debt capital markets (DCM) segment successfully closed three transactions during the second six months: the Neue ZWL GmbH corporate bond ( 25m, February 2015), the increase in the UBM Development AG bond ( 25m, March 2015) and the private placement of the Jung, DMS & Cie. Pool GmbH bond ( 15m, June 2015). On the equities side, Steubing AG displayed its placement strength and managed the capital increase of HELMA Eigenheimbau AG as sole lead manager ( 9.6m, March 2015). The research division raised its visibility further and more than doubled recommendations in the fiscal year. Numerous new companies such as Aixtron AG, LPKF Laser & Electronics AG, NORMA Group, Wacker Neuson SE or Paragon AG have been added to the list of shares covered by our analysts, which now numbers around 30. Steubing German Mittelstand Fund I recovered following a moderate reshuffling of the portfolio and stabilized its market price at above the 90% mark. However, the market environment for this fund remains challenging. In addition, Steubing AG is working on the integration of further orderflow providers for the offexchange direct trading platform Bondinvest. As of 30 June 2015, Steubing Derivatives Brokerage GmbH (SDB) discontinued operations. The feasibility of this joint venture operated with IDC AG (Independent Derivatives Consulting) had diminished over the last few years due to the ongoing deterioration of the derivatives trading environment. One SDB employee was transferred to Steubing AG to allow us to continue to offer in Steubing AG s portfolio the established services of bank and issuer-independent advisory, full screening of nearly all derivatives traded in Germany and engineering and pricing of innovative structures to our institutional customers. Carsten Bokelmann was appointed as management board member responsible for risk as of 1 April He succeeded Kai Jordan, who left the Company s management board as of 31 January Carsten Bokelmann has worked for Steubing AG in a number of functions for the last 14 years and was previously executive manager and head of internal audit. Steubing AG believes that this personnel decision will put it in a good position to navigate the challenges it will face in the future, which include increasing regulation of the securities business. Hanns-Adrian Braun has also been appointed as a new executive manager. 43

18 Management Report III. Economic Situation Financial position The financial position of Steubing AG was excellent and in order at all times. As of the balance sheet date, the In - stitution had cash and cash equivalents of 33,030k with equity at 33,464k and the fund for general banking risks at 4,215k. This makes Steubing AG one of the financially strongest financial services institutions/securities trading banks in Germany. Results of operations Gross profit after trading costs increased by 2% from 17,486k to 17,836k. Net commission income was virtually the same as in the prior year, while interest and investment income rose by 100% due to higher dividends. Net in - come from trading book positions was on a par with the prior year. Other operating income increased by 108% due to the refund of BaFin contributions. General and administrative expenses were down by 3%, leading to a year-on-year increase of 45% in the result from ordinary activities. The net income for the year increased from 598k to 1,112k. Net assets Assets and liabilities were valued in accordance with the relevant legal provisions. Nearly all assets can be liquidated at short notice. As of 30 June 2015, the Institution reported capital stock of 11,350k and capital reserves of 20,990k. Equity, in - cluding net retained profit and the fund for general banking risks, thus came to 37,679k in total as of 30 June This translates into an equity ratio of 90% as of the balance sheet date. Based on the net retained profit of 1,124k, the management and supervisory boards plan to propose to the shareholder meeting in Frankfurt in December 2015 a dividend of 0.18 for fiscal year 2014/2015 (prior year: 0.50). IV. Employees Personnel expenses increased from 7,347k in the prior year to 7,952k in fiscal year 2014/2015 (up 8%). The number of employees including the management board and six temporary staff members decreased from 64 to 61 in the reporting year. As of 30 June 2015, 24 persons were employed in trading and broking, and 9 in sales and sales trading; there were 12 back office employees and 5 IT staff members. Four employees worked in research and two worked in investor/public relations/financial portfolio management. There were a total of three employees in the internal audit and capital markets segments. Training was offered and provided to all employees. V. Non-financial performance indicators In order to keep abreast of competition, Steubing AG advocates and promotes the commitment, responsibility, entrepreneurial initiative, high professional competence and qualifications of each and every employee, allowing it to achieve its corporate goals and foster a high degree of identification with the Company 44

19 Management Report VI. Risks As a securities trading bank and specialist, Steubing AG is subject to external supervision by BaFin [ Bundesanstalt für Finanzdienstleistungsaufsicht : Federal Financial Supervisory Authority] and Deutsche Bundesbank. The Institution has set up various control mechanisms in order to manage and control limit compliance and the risk structure of its positions at all times. To meet its organizational duties, the Institution has set up an internal audit function to monitor the various areas and appointed an anti-money laundering officer. Counterparty credit risk Counterparty credit risks can arise from own positions held as well as from receivables from customers or counterparties. Since Steubing AG settles transactions quickly, the notional counterparty credit risk in the trading book in accordance with the CRR is regularly less than 3% of capital. The counterparty credit risk in the banking book is limited by the fact that only positions with a good rating are entered into. Moreover, management continually monitors the positions and their development. Market risk Market risk in trading can arise as price risks in proprietary trades or own positions from name-to-follow transactions. These risks are monitored by the risk management team during trading hours and kept to a minimum. The notional market risk in accordance with the CRR in the trading book at the close of daily trading therefore averaged only 2% to 3% of capital. Liquidity risk Liquidity risks are continually monitored by risk control and taken into account in calculating capital requirements. 70% to 80% of Steubing AG s assets regularly comprise receivables from other banks which themselves have ratings ranging from good to very good. Liabilities due within one year, on the other hand, only amount to 12% of total liabilities and equity. The liquidity ratio in accordance with the LiqV [ Liquiditätsverordnung : German Liquidity Ordinance] is on average around 10, i.e., the sum total of cash and cash equivalents is on average 10 times greater than the payment obligations. As long as these ratios are maintained, the liquidity risk is mathematically insignificant. Risk management The Institution uses modern IT technology to monitor positions. Limits are set for each trader. Positions are monitored several times a day and are reduced immediately if the limits are exceeded. General market risks, which exist at all times even in highly volatile markets, are minimized and mitigated by means of the specified limits and fast execution times. The aggregate risk is limited by continuous controls by the management board. Where banking book positions have been taken, the corresponding securities are subject to continual evaluation in the form of an analysis of the quarterly reports and general information on the respective companies. Contingency planning Several backups are made of all data, and in some cases data are also stored externally. Alternative equipment is available for use at all times in the event of a disruption to the computer systems. Operational risk Given the Institution s good human and technical resources, provision has been made for internal operational risks. The main external risks are failures of stock exchange systems, which have occasionally occurred in the past. The Institution also avoids risks as far as possible by having a diversified customer base. Derivative financial instruments No transactions involving options and futures were executed in the reporting period. 45

20 Management Report VII. Anticipated Development of the Company At the start of the new fiscal year, Steubing AG made a fundamental decision about its corporate strategy. In order to focus on its strengths in securities trading in times of ever tighter regulation and in light of the difficult market environment for SME bonds, Steubing AG will scale back its activities in debt capital markets to selected individual mandates in the future. The agenda of the state regulators remains extensive. There is news in this respect from the EdW and the Phoenix case. At the beginning of January, the Federal Administrative Court ruled in favor of the EdW in the first of the test cases pending before the court. Furthermore, the EdW announced in June that the special payments it began making several years ago for the Phoenix compensation cases will continue until at least There are innumerable other legal projects and initiatives. For example, MiFID II is expected to have an effect on the distribution of research services and related market practices. Under the draft act, research will be classified as an inducement in the future and will have to be systematically separated from the placement of customer orders. On 20 April 2015, the Council of the European Union approved the draft Fourth Anti-Money Laundering Directive. The new market abuse regulation is also scheduled to come into force in This will also affect issuers in the open market, who will be subject to harsher requirements regarding insider information law and ad hoc publicity in the future. Since regulatory competence is one of Steubing AG s strengths, we are confident of identifying poten tial business opportunities in some of the areas outlined above. Now that the markets are displaying greater volatility, Steubing AG is cautiously optimistic about its performance in the coming fiscal year 2015/2016 and is initially forecasting a development in line with fiscal year 2014/2015. We will put a keen focus on efficient cost management, which will be continually enhanced in order to equip the Company for unforeseen events that could negatively impact its earnings. In terms of the macroeconomic environment, the financial markets will continue to be affected by Greece. Debt relief for Athens will be unavoidable. The ongoing negotiations are revealing large fissures in the European Union and mon - etary union. The countries inclined towards leniency, with France at the helm, are sided against the austerity-first countries led by Germany. The latter side has prevailed. Future negotiations will show whether the Greeks prove worthy of the trust shown towards them in the form of a third bailout package with a volume of 86b. It will be a difficult path and we do not believe that Greece will succeed in meeting the demands of the creditor banks on which the financial aid program rests. Nonetheless, the progress achieved in negotiations has enabled the political parties to turn their attention towards other pressing issues. The same is true for the players on the capital markets. In essence, growth prospects for the eurozone and Germany are still good. The eurozone is benefiting from the recovery of ex-crisis countries such as Spain, Portugal and Ireland. Italy is also showing signs of stabilizing. Germany too will profit from these developments. Exports to the eurozone grew by 4.5% in the first four months. And exports to the formerly instable PIIGS were up by 6.7%. The US continues to top the list in terms of export growth. In the above period, the value of exports rose by 22.5% with the weaker external value of the euro accounting for most of this growth. However, German exports are encountering headwind from China. Calculated in US dollars and published by the Chinese customs authority, the value of German exports to China fell by 13.3% in the first six months of this year. While the weakness of the euro is one factor in this development, it is also an indication of China s misplaced industrial policy. First excess capacity was created in state-controlled conglomerates. Then a unique boom was triggered in the property market, creating a bubble that eventually burst. The third stage was the price bubble which inflated on the stock markets as they became grossly out of pace with the nation s economy and ultimately crashed. Huge amounts of capital were devoured by these processes since both price excesses were largely triggered by the trading activities of private investors financed by borrowed funds. These funds are now lacking to fuel consumer spending long term, thereby reducing China s dependency on exports and investment expenditure. This means that the government has failed to achieve its noble objectives. For these reasons, China has temporarily relinquished its role of growth engine for the rest of the world. 46

21 Management Report Once the listed companies publish their figures for the current quarter we will know the extent to which this trend has become manifest. This applies in particular to companies in the US and Germany because these two countries have a comparatively high affinity with China. Consequently, it is likely that the contribution of net exports to gross national product (GNP) will stagnate com pared to the prior year. In the past, the effect of the declining euro has been interpreted as a positive development in theory, with the weak euro having a favorable effect on demand for goods manufactured in the eurozone. However, this assumption is outdated. Today, intermediate goods are bought in the same currency areas in which German companies later sell their goods. This minimizes the currency risk, and depletes opportunities. Growth stems from the domestic market. The growing number of people in gainful employment will boost con sumer spending and make it the new growth powerhouse. Immigrants will provide additional stimuli for growth. Germany is the second most popular destination after the US. Adjusted for emigration, the number of immigrants increased by at least 470,000 last year. According to the Federal Labor Office, immigrants have a higher rate of employment than nationals. This will generate further growth potential. Housing construction is also increasing at a high rate. The ultra-expansionary monetary policy pursued by the European Central Bank which has resulted in extremely low mortgage rates is fueling housing construction. However, institutional investors from both Germany and abroad have also discovered German real estate as an investment opportunity due to the comparatively high returns. This has already led to price bubbles in some major conurba - tions. Investments in new equipment or machines will likely lag behind. The utilization of capacity at German industrial plants has not yet reached the level that has triggered new investment in the past. Investments will therefore focus on modernization and renovation. Readiness to invest should rise in the coming years. In sum, we expect GDP in Germany to grow by at least 1.7% this and next year, resulting in double-digit growth in the profits of German companies. German shares will therefore remain the favored instrument of investors. However, there will be little scope to in - crease yields further due to higher sector allocation and company selection requirements. VIII. Significant Events (after 30 June 2015) No events of significance for the Institution occurred after the balance sheet date. 47

22 Audit Opinion We have audited the annual financial statements, comprising the balance sheet, the income statement and the notes to the financial statements, together with the bookkeeping system, and the management report of Wolfgang Steubing AG Wertpapierdienstleister, Frankfurt am Main, for the fiscal year from 1 July 2014 to 30 June The maintenance of the books and records and the preparation of the annual financial statements and management report in accordance with German commercial law are the responsibility of the Institution s management. Our respon - sibil ity is to express an opinion on the annual financial statements, together with the bookkeeping system, and the management report based on our audit. We conducted our audit of the annual financial statements in accordance with Sec. 317 HGB [ Handelsgesetzbuch : German Commercial Code] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards re quire that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the annual financial statements in accordance with [German] principles of proper accounting and in the management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Institution and expectations as to possible mis - statements are taken into account in the determination of audit procedures. The effectiveness of the accountingrelated internal control system and the evidence supporting the disclosures in the books and records, the annual financial statements and the management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the annual financial statements and management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the annual financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Institution in accordance with [German] principles of proper accounting. The management report is consistent with the an nual financial statements and as a whole provides a suitable view of the Institution s position and suitably presents the opportunities and risks of future development. Eschborn/Frankfurt am Main, 28 September 2015 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Müller-Tronnier German Public Auditor Arlt German Public Auditor 48

23 Report of the Supervisory Board In the past financial year 2014/2015 the Supervisory Board has performed the duties incumbent upon it under the law and in accordance with the articles of association and has regularly, promptly and continuously advised and supervised the management of Steubing AG. The economic situation of the company, its development prospects and investment projects, the market situation, regulatory requirements and all other business matters of material importance have been analysed in detail with the Management Board and internally within the Supervisory Board, in meetings and individual discussions. In addition to numerous discussions between the Supervisory Board Chairman and the Management Board, four ordinary meetings of the Supervisory Board and one Annual General Meeting were held with the following emphases: In August 2014 the Board discussed the development in the Debt Capital Markets business area and the expansion of the Research area. At the meeting in October 2014 the annual financial statements for financial year 2013/2014 were adopted and the agenda prepared for the Annual General Meeting which took place on 12 December 2014 in Frankfurt am Main. At the AGM the current Supervisory Board was re-elected for a new five-year term of office. In February 2015 the Supervisory Board concerned itself with the staffing of the Management Board, the contribution levied by the Securities Trading Companies Compensation Fund, as well as tax issues. In May 2015 the main focus was on personnel strategy as well as the announced closure of Steubing Derivatives Brokerage GmbH. In a separate meeting the internal audit report for the previous financial year (including risk analysis, accounting and reporting systems and the compensation system) was discussed with the auditor. The Supervisory Board noted the information presented with approval. The annual financial statements of Wolfgang Steubing AG Wertpapierdienstleister including the Management Report and the bookkeeping and reporting systems were audited by the auditors Messrs Ernst & Young GmbH of Eschborn, who on 28 September 2015 awarded a unqualified audit certificate. The auditors clarified the annual financial statements and the audit report with the Supervisory Board at a separate meeting. The Supervisory Board declared upon completion of its examination that it had no objections and approved the annual financial statements and management report prepared by the Management Board. No further resolutions were adopted by the Management and Supervisory Boards. In accordance with Section 172 Sentence 1 of the German Stock Corporation Act (AktG) the annual financial statements were thereby adopted. The Supervisory Board fully endorses the proposal by the Management Board for the appropriation of profit. The Supervisory Board would like to thank the Management Board and all employees of Wolfgang Steubing AG Wertpapierdienstleister for their successful efforts in the past financial year. Frankfurt am Main, 19 October 2015 The Supervisory Board Wolfgang Steubing (Chairman on the Supervisory Board) 49

24 Proposal of the Management Board for Allocation of Profits Pursuant to Sec 170 (2) of the Stock Corporation Act ( AktG ), the Management Board proposes that, subject to the resolution on the allocation of profits by the general shareholders meeting, the profits for the fiscal year 2014/2015 totaling 1,124, be allocated as follows: a) Dividend distribution to the shareholders, Sec. Code ,675,000 shares at ,021, b) Allocation to revenue reserves in accordance with Sec. 58 (3) sentence 1 AktG 0.00 c) Profit carryforward to new account 102, Net retained profit as of 30 June ,124, The total amount barred from distribution in accordance with Sec. 268 (8) HGB comes to EUR 101, and stems entirely from the recognition of covering assets at fair value. Frankfurt am Main, Germany, 15 October 2015 The Management Board Alexander Caspary Carsten Bokelmann 50

25 The Company Management Board Alexander Caspary Carsten Bokelmann Frankfurt am Main Frankfurt am Main Supervisory Board Wolfgang Steubing Frank Wiebols Christoph Bokelmann Ernst Neumeier Dietmar Schmid Achim Vandreike Frankfurt am Main (Chairman) Frankfurt am Main (Deputy Chairman) Frankfurt am Main Maintal Bad Homburg Frankfurt am Main Financial Year 01 July to 30 June Contact Goethestraße Frankfurt am Main Telephone +49.(0) Fax +49.(0) Auditors Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Mergenthalerallee Eschborn 51

26 Steubing AG Goethestraße Frankfurt am Main Telefon Fax info@steubing.com