Geschäftsbericht 2012/2013. Annual Report 2012/2013.

Transcription

1 Geschäftsbericht 2012/2013 Annual Report 2012/2013

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), Fixed Income, Designated Sponsoring, Institutional Customer Support, Research, Equity/Debt Capital Markets and investment management for the Steubing German Mittelstand Fund I (SGMF). As of 30 June 2013 the group employed a staff of 63 Steubing AG is a member of the Federal Association of Securities Companies on the German Stock Markets (bwf e.v.), the Securities Trading Companies Compensation Fund (EdW), the Frankfurt Institute for Risk Management and Regulation (FIRM), and Frankfurt Main Finance e.v., an initiative designed to strengthen Frankfurt as a financial centre. Result for financial year 2012/2013 (in k) 2011/ /2013 Gross profit before cost of trading 17,292 19,913 Gross profit after cost of trading 14,359 17,410 Result from ordinary activities Net income

3 Preface Dear Shareholders and Business Partners, It would give us much pleasure indeed were we able to report to you at this point that issues such as the sovereign debt crisis, the wave of regulation or phenomena such as the indices are rising but stock market turnover is falling now belong to the past. We would indeed be happy to note that the financial world was once again as it was in the time before the collapse of Lehman. Unfortunately, this is not the case. Crisis remains the new business as usual. And because this situation is now normal and the financial markets have changed fundamentally, we shall refrain from lament. We must accept the situation, analyse its essential elements and undercurrents and continuously review and realign our corporate strategy in order that at the year-end we may present a balance sheet which gives our shareholders, customers and employees cause for satisfaction. Over the past financial year we have been successful in doing so: without the allocation required by the regulatory authorities to a separate item heading for the General Banking Risk Fund (as per Section 340e, Para 4 of the German Commercial Code (HGB), the BilMoG rule ) in the amount of around 1.04 million, our annual surplus for the past year of 765,000 would have been even more positive. Our proposal to the annual general meeting to pay a dividend of 1 per share is also in part explained by this BilMoG rule: since the General Banking Risk Fund is akin to equity, which is in turn strengthened by this allocation even as the annual surplus is markedly reduced, it is from our perspective reasonable that this detriment should be compensated for out of capital reserves. The political conditions in Germany constitute a second essential argument. From a fiscal perspective the climate is likely to change, which however ought not to be to the detriment of our shareholders. The underlying bases for a successful financial year in 2013/2014 are in no way put at risk: with an equity ratio of 89.9% on the closing date of 30 June 2013, Steubing AG is excellently placed. The new financial year will be at least as challenging as the year now behind us. We shall continue to pursue our successful strategy in the Fixed Income segment as well as in our primary market business, where staffing levels have been increased accordingly. Our positioning in the field of Debt Capital Markets has developed strongly, with the result that we now regularly provide companies with a full A to Z support service in planning, structuring and placing bond issues. In addition, with the Steubing German Mittelstand Fund we have designed a product which in our view will add positive momentum to the development of the SME bond segment. For all the adjustments in our strategy, we remain true to the roots of Steubing AG, and we shall continue, reliably and sustainably, to offer our services to institutional customers in our day-to-day brokerage business. The crisis has happened, strategies must change accordingly and we would be delighted if you were to accompany us along this path in financial year 2013/2014. And may we also at this point express our thanks to our staff for their strong commitment and their loyalty. Yours sincerely, The Management Board Alexander Caspary Kai Jordan 29

4 Balance Sheet as of 30 June 2013 ASSETS EUR Fiscal Year EUR Prior Year EUR k 01. Cash reserve a) Cash on hand 25, , Receivables from banks a) Payable on demand 34,068, ,882, b) Other receivables 3,301, ,369, ,648, Receivables from customers 364, thereof: in financial services institutions EUR (EUR 0.00) 04. Shares and other variable-yield securities 1,050, ,050, Trading assets 5,615, ,380, Equity investments 176, , thereof: in financial services institutions EUR 5, (EUR 5,000.00) 07. Shares in affiliates , Intangible assets a) Purchase franchises, industrial and similar rights and assets and licenses in such rights and assets 59, , Proberty and equipment 458, , Other assets 2,101, ,838, Prepaid expenses 203, , Excess of covering assets over pension and similar obligations 169, , Total assets 47,593, ,688,

5 Balance Sheet as of 30 June 2013 LIABILITIES AND EQUITY EUR Fiscal Year EUR Prior Year EUR k 01. Liabilities to banks a) Payable on demand 607, , Trading liabilities 916, ,227, Other liabilities 1,872, ,411, Provisions a) Tax provisions 541, , b) Other provisions 841, ,383, ,506, Fund for general banking risks 2,546, ,510, thereof allocation pursuant to Sec. 340e (4) HGB 1,035, Equity a) Subscribed capital 11,350, ,350, b) Capital reserves 23,217, ,127, c) Net retained profit 5,700, ,267, ,700, thereof profit carryforward EUR 25, (EUR 30,000.00) Total liabilities and equity 47,593, ,688,

6 Income Statement for the Period of 01 July 2012 to 30 June 2013 EUR Fiscal Year EUR Prior Year EUR 01. Interest income from a) Lending and money market business EUR 25, (EUR 210,107.49) b) Fixed-income securities and government-inscribed debt EUR 0.00 (EUR 169,339.10) 25, , Interest Expenses 14, , , , Current income from a) Shares and other variable-yield securities 98, , b) Equity investments 13, , , , Commission income 12,171, ,190, thereof: a) Brokerage income EUR 1,816, (EUR 2,130,895.49) 05. Commission expenses 5,631, ,182, thereof: 6,539, ,007, a) Brokerage expenses EUR 2,578, (EUR 2,871,347.05) 06. Income from trading book positions 14,132, ,618, thereof: aa) Securities EUR 13,673, (EUR 10,140,965.40) ab) Price differences from name-to-follow transactions EUR 458, (EUR 477,648.38) 07. Expenses from trading book positions 3,773, ,171, thereof: aa) Securities EUR 3,554, (EUR 3,985,151.05) ab) Options EUR 50, (EUR 0.00) ab) Price differences from name-to-follow transactions EUR 169, (EUR 186,627.38) 08. Other operating income 420, , General and administrative expenses a) Personnel expenses aa) Wages and salaries 6,490, ,081, ab) Social security, pension and other benefit costs 765, , thereof: for old-age pensions EUR 179, (EUR 167,086.03) Total personnel expenses 7,256, ,822, b) other administrative expenses 6,991, ,984, ,248, ,807, Amortization, depreciation and write-downs of intangible assets and property and equipment 162, , Other operating expenses 128, , amount carried over 2,903, ,

7 Income Statement for the Period of 01 July 2012 to 30 June 2013 EUR Fiscal Year EUR Prior Year EUR amount carried over 2,903, , Write-downs and allowances on receivables and certain securities as well as allocations to provisions for possible loan losses 27, Write-downs of equity investments, shares in affiliates and securities classified as fixed assets 3, , Allocations to the fund for general risks Sec. 340e HGB 1,035, , Result from ordinary activities 1,836, ,157, Income taxes 1,071, , Net income 764, ,347, Profit carryforward from the prior year 25,000 30, Appropriation of the capital reserves 4,910, ,917, Appropriation of the revenue reserves a) of other revenue reserves , Net retained profit 5,700, ,700,

8 Notes of Wolfgang Steubing AG Wertpapierdienstleister, Frankfurt am Main, for the fiscal year from 1 July 2012 to 30 June 2013 I. General Information on the Financial Statements and the Accounting and Valuation Policies The reporting period is the fiscal year from 1 July 2012 to 30 June Securities trading banks must comply with the supplementary regulations for certain types of businesses in accordance 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 fixed assets subject to wear and tear 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 2012/2013 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 movable assets costing between and 1, that are subject to wear and tear. 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 be discounted pursuant to Sec. 253 (2) HGB. Assets and liabilities denominated in a foreign currency are disclosed 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 less than 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. 21,608k was kept on these accounts as of the balance sheet date. 2. Receivables from customers The item Receivables from customers was reported under Other assets in the prior year in the amount of 296k and relates to receivables from services provided for customers. 3. 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, Result 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, Result as of 30 June , Statement of changes in fixed assets The statement of changes in fixed assets as of 30 June 2013 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. 5. 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 ,050, Trading assets 5,615, Trading liabilities 916, Equity investments , Shares in affiliates All but 157, 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 11, was recognized as the difference between unrealized gains and losses from most of the positions reported as financial instruments in the trading book in accordance with IDW AcP BFA 2 section 55. The risk discount was determined individually for two other securities positions due to the size of the positions and the low liquidity of the securities. The securities have a fair value of 3,815, including unrealized gains of 1,347, The total risk discount amounts to 756,

10 Notes 6. 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. 7. Property and equipment Office equipment, furniture and fixtures are valued at 458, Treasury shares On 10 December 2009, 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. 9. Other assets Other assets comprise: EUR k Corporate income tax refund 1,233 Trade tax refund 855 Receivables from other investees and investors 13 Other receivables 1 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) 674 Employer s pension liability insurance (fair value) 843 Balance after offsetting 169 The calculation was based on the 2005 mortality tables of Prof. Heubeck using the projected unit credit method (PUCM) and an interest rate of 4.99%. Pension and salary increases are not taken into account as the pension commitment is for a fixed amount. 36

11 Notes 11. Statement of changes in provisions A statement of changes in provisions is enclosed as an exhibit. 12. Other liabilities Other liabilities are as follows: EUR k Bonus liabilities FY 2012/2013 1,283 Liabilities to suppliers 536 VAT 53 Total 1, 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. 14. Shares per class At the balance sheet date, the Company s capital stock was divided into 5,675,000 no-par bearer shares. 15. Allocations to and appropriation of reserves in EUR k 01 July 2012 Allocations Appropriation 30 June 2013 Capital reserves 28, ,910 23,217 Revenue reserves Legal reserve Reserve for treasury shares Total 28, ,910 23, 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 3,301 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 130,825.42; foreign currency liabilities to banks amount to 465, 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 15,555.94; other foreign currency liabilities amount to 58, The carrying values are calculated using the mean spot exchange rate on the balance sheet date. 37

12 Notes 18. 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 Company s net retained profit of 5,700, be appropriated as follows, subject to the resolution of the shareholder meeting: Distribution to the shareholders ( 1.00 per share) 5,675, 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 25, Net retained profit as of 30 June ,700, Derivatives The Company had no derivatives as of the balance sheet date. 20. 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 and Other operating expenses do 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. 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 charged for the fiscal year break down as follows: a) Audit services k 100 b) Audit-related services (Sec. 46 WpHG) thereof for the prior year: EUR 5k k 33 c) Other services k 20 38

13 Notes IV. Other Notes 1. Management Board The following individuals are members of the Institution s management board: Alexander Caspary, information technology graduate, Frankfurt am Main Kai Jordan, banker, Neu Isenburg Mr. Kai Jordan is a general manager of SDB Steubing Derivatives Brokerage GmbH. In addition, Mr. Jordan is a member of the management board of the bwf [ Bundesverband der Wertpapierfirmen e. V. : Federal Association of Securities Trading Firms] and a member of the supervisory board of Consultores Corporate Finance AG. The total remuneration of management in the reporting period amounted to 603k. The total remuneration of the former members of management amounted to 48k in the fiscal year. The pension provisions recognized for former members of management stood at 674k 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 2011/2012 paid in the reporting year was 147, 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 2013, 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 465, The contracts have an average term of 21 months. There are severance pay obligations under agreements with former employees. They are limited to 200, per year and a remaining total of 100, Average Number of Employees 59 persons were employed on average in fiscal year 2012/ 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 2013 Management Board of Wolfgang Steubing AG: Alexander Caspary Kai Jordan 39

14 Statement of Changes in Fixed Assets as of 30 June 2013 (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 2013 to 30 June June June 2012 EUR EUR EUR EUR EUR EUR EUR Software 182, , Vehicles 117, ,82 13, , Office equipment, fixtures and fittings , , , , , , ,21 Office equipment, fixtures and fittings 4, , formerly Hamburg IT equipment , , , , , , ,99 IT equipment formerly Hamburg 7.819,13 7, Standard software , , , , , ,00 Leasehold improvements 1,057, ,026, Low-value assets 5.483, , , , Low-value assets collective item , , , , , Shares in affiliates 55, , , , ,80 Equity investments 157, , ,57 157, Profit-sharing securities 1,855, , ,050, ,050, , , ,80 4, , ,33 1, , , , ,80 40

15 Statement of Changes in Provisions in Fiscal Year 2012/ July 2012 Utilization Reversal Allocation 30 June 2013 EUR EUR EUR EUR EUR 1. Pensions provisions Tax provisions Trade tax 189, , , , , Corporate income tax 169, , , , , , , , , , Other provisions Audit and financial statement costs 199, , , , , Bookkeeping expenses 63, ,000,00 1, , , Vacation entitlements 60, , , , EDW allocation 798, , , , , Other 383, , , ,000,00 544, ,506, ,413,585,36 43, , , ,864, ,752, , ,333, ,383,

16 Management Report of Wolfgang Steubing AG Wertpapierdienstleister, Frankfurt am Main, for the fiscal year from 1 July 2012 to 30 June 2013 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 experience in trading foreign shares. Its other business areas are: 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. 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, 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. Since July 2013, the Institution has provided 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 In view of the market conditions, Steubing AG reported a respectable result for fiscal year 2012/2013. Gross profit before trading costs increased by approximately 15% to 19.91m. As trading costs were reduced by just under 15%, gross profit net of these costs rose by around 21% to 17.41m. This led to earnings before taxes of 1.84m and net income for the year of approximately 765,000. This positive trend was already evident in the result as of 31 December 2012 ( 226k after taxes). The results reflect Steubing AG s successful corporate strategy in the fixed income and equities trading segments as well as its rigorous cost management. Excluding the allocations to the fund for general banking risks of 1.04m in the fiscal year required pursuant to Sec. 340e (4) HGB [ Handelsgesetzbuch : German Commercial Code], earnings would be even higher. The securities trading, integrated order flow management (IOM) and specialist trading segments on the Frankfurt Stock Exchange continued to face challenging market conditions. All indices recorded substantial gains and the DAX reached an all-time high of 8,531 points on 22 May The primary market in Germany also picked up. In addition to a constant flow of new SME bond issues, the equities side saw well-known companies such as LEG Immobilien and KION Group AG venture to go public. However, turnover remained a key factor for Steubing AG. Trading volumes on XETRA in fiscal year 2012/2013 ( 2.09t) and floor trading by specialists on the Frankfurt Stock Exchange ( b) were both down by around 20% year on year. Investor activity was muted due to persisting uncertainty surrounding the outlook for the eurozone, mixed indicators of economic development in the US and the continuing wave of regulation. The situation also remains difficult on the derivatives market, where turnover fell by more than 25% in calendar year Nevertheless, Steubing Derivatives Brokerage GmbH (SDB), a joint venture between Steubing AG and IDC AG, made a slightly positive earnings contribution, as did the XETRA bond trading business in which Steubing AG cooperates with Walter Ludwig Wertpapierhandels GmbH. The fact that Steubing AG achieved a positive result despite the conditions outlined above is attributable to various factors. Customers appreciate our high-quality services in the institutional customer business. These include preparing ideas-driven corporate and macroeconomic research, organizing investor conferences, roadshows and round table discussions with companies or providing support for managing other institutions own securities and portfolio management. Thanks to our established and extensive trading network, we demonstrated our prowess in placing new issues on several occasions. In addition, the capital markets segment successfully structured and executed a number of transactions together with the trading desks both on the equities side (support for capital increases by Alno AG, Formycon AG and ItN Nanovation AG, among others) and on the SME bond side (structuring and private placement of corporate bonds issued by Amadeus Vienna Campus Eigentümergesellschaft mbh). Finally, our good reputation in specialist trading led to us being engaged to support the IPOs of LEG Immobilien AG and KION Group AG. 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 Institution had cash and cash equivalents of 37,395k with equity at 40,267k and the fund for general banking risks at 2,547k. 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 21.25% from 14,358k to 17,410k. Net commission income declined by 7%, while interest and investment income was 76% lower than in the prior year due to current interest rate levels. 43

18 Management Report Net income from trading book positions was up by 61% in the fiscal year. Other operating income rose by 8%. As general and administrative expenses were only 3% higher than the prior year, the Institution was able to increase the result from ordinary activities by around 259%. The net loss of 1,347k in the prior year improved to become net income of 765k in the fiscal year. 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 2013, the Institution reported capital stock of 11,350k and capital reserves of 23,217k. Equity, including net retained profit and the fund for general banking risks, thus came to 42,814k in total as of 30 June This translates into an equity ratio of 89.9% as of the balance sheet date. Based on the net retained profit of 5,700k, the management and supervisory boards plan to propose to the shareholder meeting in Frankfurt in December 2013 a dividend of 1.00 for fiscal year 2012/2013 (prior year: 1.00). IV. Employees Personnel expenses increased from 6,823k in the prior year to 7,256k in fiscal year 2012/2013 (up 6%). The number of employees including the management board and three temporary staff members rose from 57 to 63 in the fiscal year as six new staff were recruited for the debt capital markets and fixed income segments in June. As of 30 June 2013, 25 persons were employed in trading and broking, and 11 in sales and sales trading; there were 10 back office employees and five IT staff members. Two employees worked in research and three worked in investor/public relations/financial portfolio management. There were a total of five employees in the internal audit and capital markets segments. Training was offered and provided to all employees. V. 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 SolvV [ Solvabilitätsverordnung : German Solvency Ordinance] 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 SolvV in the trading book at the close of daily trading therefore averaged only 3% to 4% of capital. 44

19 Management Report Liquidity risk Liquidity risks are continually monitored by risk control and taken into account in calculating capital requirements. 60% 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 With the exception of two OTC options transactions, no transactions involving options and futures were executed in the reporting period. VI. Anticipated Development of the Company The formation of the new government in Italy under Prime Minister Enrico Letta has led to a paradigm shift in the eurozone, with strict austerity programs making way for measures to promote growth. Such action is to be accompanied by labor market reforms that aim to make the crisis-hit countries competitive again. Before the euro was introduced, these countries used currency devaluation to enhance their competitiveness. Now that the euro is in place, their only option is internal devaluation, which entails optimizing labor as a production factor and reducing the cost of employment. This not only affects hourly wages but also ancillary wage costs and their optimum allocation between labor and capital. Most of the member states being supervised by the troika comprising the European Commission, the European Central Bank and the International Monetary Fund have reformed their labor markets and just need growth to get their economies moving again. The Federal Republic of Germany is ready to help SMEs in these countries by entering into bilateral agreements. It offers loans via the KfW [Kreditanstalt für Wiederaufbau] to kick-start or increase production. The European Union is also making 6b available to tackle youth unemployment in the region. For all these efforts, we cannot overlook the fact that it will take decades to dismantle archaic structures and restore competitiveness. This problem is exacerbated by resistance to reforms in France and Italy, where the situation will probably have to get even worse 45

20 Management Report before their governments see reason and bow to the need for reform. Nevertheless, the paradigm shift from pure austerity to labor market reforms accompanied by measures to promote growth will bolster the economy at least in the next two years. An economic recovery in Europe is vital for Germany. Up to now, exports to China and the US have more than offset weaker demand from Europe. China s plan to strengthen domestic demand for goods developed and produced internally is starting to bear fruit. In May 2013, the value of goods shipped from Germany to China fell by 12.2% year on year. In the first five months, the decline was 3.7%. During this period, 5.9% of Germany s total exports were made to China and 57.3% to Europe, which means that a relatively low level of growth in Europe would be sufficient to offset the expected continued decline in exports to China. Exports to the US are still growing but at a slower pace than in the prior year, which is not surprising in view of the record figure set last year. The US economy is now in a lasting and, above all, self-sustaining recovery that will lead to the phasing out of its extremely loose monetary policy. This will begin with the reduction of monthly securities purchases as this policy instrument is scaled back from extremely loose to merely loose. Only if inflation climbs above 2.5% and unemployment drops below 6.5% is a restrictive monetary policy likely to be introduced. As inflation was 1.8% and unemployment 7.6% in June 2013, it will be some time before the Federal Reserve tightens the reins and raises interest rates. We are therefore relaxed about the outlook for Germany in the coming two years. We expect economic growth of at least 1.5% per year, which will ensure further growth in employment and thus stimulate domestic demand. Exports are likely to increase by between 3.0% and 3.5%. Imports will see somewhat slower growth, which means that the contribution of net exports to gross national product (GNP) will increase again. Our expectations favor investments in equities since, with GDP growth of 1.5% plus X, German companies are likely to generate double-digit increases in profits. However, the situation is less attractive for investors in fixed-income securities in particular government bonds. Starting in the US, nominal interest rates will be adjusted to reflect economic growth and will therefore normalize. Since 2003, average real interest rates in Germany have been 1.8%. Assuming inflation of around 2%, the yield on 10-year German government bonds will increase to at least 3.8% in the next two years. As the shift in monetary policy is being led by the US, our preferred investment currency is the US dollar rather than the euro. In view of this macroeconomic environment, Steubing AG began the new fiscal year by continuing to sharpen its profile in the fixed income segment and recruited seven new employees. On the one hand, our goal is to further broaden our institutional customer base and expand our placement business. On the other hand, our debt capital markets segment now offers end-to-end support for corporate bond issues, covering the entire process from preparing the terms of issue through sounding investors to the IPO. Our new team has an extensive track record in SME bonds and is already working on a number of mandates that, depending on market conditions, are due to be implemented in the coming months. Another activity in the fixed income segment is the launch of Steubing German Mittelstand Fund I. This product is Steubing AG s first actively managed fund that invests exclusively in SME bonds in the Germany/Austria/Switzerland region. The sales prospectus for this UCITS 4 fund was approved by the Luxembourg authorities in mid-july and a two-week initial subscription period via Deutsche Börse AG ran from 29 July to 9 August Institutional investors may subscribe at any time. To ensure maximum transparency, the fund reports on its performance on a monthly basis. Information on all the fund s activities is available at In the Phoenix case, the EdW announced a fourth special payment to repay the loan granted by the federal government. As Steubing AG reported a net loss as of 30 June 2012 and is therefore unable to accept any further burden, the Institution has applied for its special payment to be set at 0. However, we see this as merely a postponement. In this area, the compensation system remains unsustainable. Steubing AG supports the announcement by Deutsche Börse AG that it intends to sharpen the profile of specialist trading on the floor of the Frankfurt Stock Exchange and to focus even more on the strengths of this trading model in its marketing. This initiative, which is entitled Börse Frankfurt, is a response by the exchange operator to the 46

21 Management Report decline in turnover in this segment over many years and to growing competition from other trading venues. The concept could also include consolidation within the group of specialists. As an established player that is well equipped with personnel, technology and capital, Steubing AG is ready and willing to actively support this process. The environment in which Steubing AG operates therefore remains shaped by various uncertain factors. In addition to those mentioned above, other factors include MiFID II, the financial transaction tax and the global consolidation of stock exchanges which was recently given fresh momentum by the merger of Bats and Direct Edge. Consequently, we are unable to make any concrete forecast for business development in the coming months. However, as Steubing AG has consistently proved in the past, macroeconomic and regulatory changes bring both risks and opportunities. We will therefore continue to systematically focus our expertise and experience on achieving a positive result for our shareholders, business partners and employees. VII. Significant Events (after 30 June 2013) No events of significance for the Company 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 2012 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 responsibility 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 require 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 misstatements 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 annual 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, 30 September 2013 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Müller-Tronnier German Public Auditor Haas German Public Auditor 48

23 Report of the Supervisory Board In the past financial year 2012/2013 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 2012 the focus was on various issues in the field of financial market regulation, for example the special levies by the Securities Trading Companies Compensation Fund, the plans for a financial transaction tax and the BaFin guidelines on risk. At its meeting in October 2012 the Board adopted the annual financial statements for financial year 2011/2012 and prepared the agenda for the Annual General Meeting which took place in Frankfurt am Main on 14 December In February 2013 the Board discussed the company s personnel strategy and the earnings situation at its joint ventures. In May 2013 the Supervisory Board turned its attention to corporate strategy and in particular to the continuing development in the Fixed Income business. 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 30 September 2013 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, 18 October 2013 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 2012/2013 totaling 5,700, be allocated as follows: a) Dividend distribution to the shareholders, Sec. Code ,675,000 shares at ,675, b) Allocation to revenue reserves in accordance with Sec. 58 (3) sentence 1 AktG 0.00 c) Profit carryforward to new account 25, Net retained profit as of 30 June ,700, Frankfurt am Main, Germany, 9 October 2013 The Management Board Alexander Caspary Kai Jordan 50

25 The Company Management Board Alexander Caspary Kai Jordan 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