Facts and Figures. Profile. Result before taxes and annual profit

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2 Facts and Figures Profile Steubing AG is an independent securities trading bank headquartered in Frankfurt am Main. 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 main business activities comprise trading and electronic order routing of listed shares, bonds, certificates and warrants. Additional business areas include the activities as specialist for shares and bonds traded on the Frankfurt Stock Exchange, Integrated Orderflow Management (IOM), Designated Sponsoring, Sales, Research as well as Capital Markets/Corporate Advisory. Moreover, SDB Steubing Derivatives Brokerage GmbH founded together with IDC AG in 2007 offers independent competence in the field of structured products. At the end of 2010/2011 financial year the Group employed some 60 members of staff. 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) and Frankfurt Main Finance e.v., an initiative to strengthen Frankfurt as a financial center. Result before taxes and annual profit (in k) 2009/ /2011 Gross profit before cost of trading 22,822 25,369 Gross profit after cost of trading 18,689 20,805 Result before taxes and allocation of the General Banking Risk Fund 1,864 4,455 Annual net profit 1,168 2,038 30

3 Preface Dear Shareholders and Business Partners, At first sight the world in our past financial year would appear to have been in passably good order. Between 1 July 2010 and 30th June 2011 the DAX put on 22% or more, rising to 7, points. In the same period the MDAX climbed more than 35%. On the other hand, the dynamic pace of development in the first six months of our financial year weakened appreciably in the second half. Having climbed almost 16% in the first half-year, in the second half the DAX rose by just 6.7%. This welcome development in the indices cannot, however, disguise the fact that in our financial year 2010/2011 the financial markets were once again plagued by uncertainty and reticence, as demonstrated by the development in stock market turnover. While XETRA turnover in a year-on-year comparison remained practically unchanged at a level of 2.6 trillion, turnover on the floor in Frankfurt actually declined by 8% to around 385 billion. The plethora of positive news from the German economy in particular was virtually ignored by market participants. Instead, their attention was drawn to the negative reports on the euro debt crisis and the potential results of the banking stress tests. We are therefore all the more pleased to be able to report to you today that our financial year 2010/2011 concluded with a result that was at the very least satisfactory. Despite the fact that for the first time in the past financial year we were required to allocate some T 866 to a separate item heading for the General Banking Risk Fund, our pre-tax earnings at 3.59 million were more than 92% higher and our net income for the year at 2.04 million was almost 75% higher than in the year before. Without this allocation, our pre-tax earnings would have amounted to 4.46 million (+139%) and our net income for the year to 2.90 million (+149%). This result is the product of a combination of the close relationships developed over many years with our clients, the quality and breadth of our products and services, and strict cost management. As much as we had hoped that given the rapid recovery in the global economy following the Lehman crisis the financial markets, too, would soon be restored to normal, we must now anticipate a different scenario. In view of the dramatic sovereign debt situation facing individual countries, in combination with declining growth in the global economy, this crisis mode will for a long time to come remain the new normality. There will no more be a miracle cure for the debt crisis in the eurozone than for the debt problems facing the USA and Japan. It was recently speculated that in an ironic twist the rapidly growing emerging markets with their huge foreign exchange reserves would hasten to rescue the old industrial nations, in order in the process to suppress the appreciating value of their own currencies. Now we see that the BRICs too, for example, are unable to decouple themselves from developments in the global financial markets. Foreign investors, themselves embroiled in crisis, are withdrawing funds from these countries too on a large scale in order to release urgently needed liquidity. In the meantime, some countries already perceive a need to prop up their currencies. As politicians now meet to discuss the state-enforced recapitalisation of their banks in advance of a European state potentially declaring bankruptcy, the discussion as to the future role of banks is becoming ever more heated. Not to mention the growing resentment among taxpayers at having to once again ride to the banks rescue. Typically, lawmakers would respond to such a development by imposing even stricter regulation on the financial system. Unfortunately such impositions generally do not distinguish between major banks and smaller institutions that are more akin to SMEs. Consequently, for smaller institutions in particular, the room for manoeuvre within the triangle comprised of competition, market and regulation is becoming even more restricted. We ourselves are unable to escape this development. Nevertheless, we shall stand by our earnings-oriented corporate strategy in combination with strict cost management. As in the past, this includes offering a strongly demand-oriented range of services. Thanks to our extremely sound equity position and our diversified client- and earnings-oriented business model, we are confident that we can more than hold our own, also in a distinctly changing environment. The Management Board and Supervisory Board of Steubing AG therefore plan to continue their traditionally shareholderfriendly dividend policy and will propose that the Annual General Meeting taking place in Frankfurt on 13 December 2011 approve a dividend of 0.60 per share. Last but not least we would like to take this opportunity to thank our shareholders for their loyalty and solidarity. A particular word of thanks is due also to our employees whose commitment and professionalism have enabled us to achieve a satisfactory result despite the difficult market conditions. None of this would, however, have been possible without the confidence of our customers, and it is to them that we express our greatest thanks. The Management Board Dr. Jochen Grossmann Alexander Caspary 31 Kai Jordan

4 Balance Sheet as of 30 June 2011 ASSETS EUR EUR EUR Prior Year EUR k 1. Cash reserve a) Cash on hand 11, , Receivables from banks a) Payable on demand 23,663, ,479 b) Other receivables 13,546, ,210, , Dept securities and other fixed-income securities a) Bonds and debt securities aa) issued by other borrowers 8,626, ,626, , Shares and other variable-yield securities 1,855, ,855 4a. Trading assets 5,376, Equity investments 157, thereof: in financial services institutions EUR 5.000,00 6. Shares in affiliates 55, Intangible assets a) Internally generated industrial and similar rights and assets 0.00 b) Purchased franchises, industrial and similar rights, and assets and licenses in such rights and assets 87, c) Goodwill d) Prepayments , Property and equipment 299, Treasury shares Other assets 3,812, Prepaid expenses 328, Excess of covering assets over pension and similar obligations 70, Total assets 57,891, ,642 32

5 Balance Sheet as of 30 June 2011 LIABILITIES AND EQUITY EUR EUR EUR Prior Year EUR k 1. Liabilities to banks a) Payable on demand 621, , a. Trading liabilities 2,548, Other liabilities 2,117, ,134 4a. Deferred tax liabilities 16, Provisions a) Provisions für pensions and similar obligations b) Tax provisions 358, c) Other provisions 1,563, ,921, , Fund for general banking risks 866, thereof allocation pursuant to Sec. 340e (4) HGB: EUR 866, Equity a) Subscribed capital 11,350, ,700 Accounting par value of treasure shares: EUR 100, , b) Capital reserves 35,044, ,604 c) Revenue reserves ca) legal reserve cb) reserve for shares in a controling entity or majority shareholder cc) reserves required by the articles of incorporation and bylaws cd) reserve for treasury shares 650 ce) other revenue reserves 100, , d) Net retained profit/accumulated losses 3,405, ,799, ,703 thereof profit carryforward EUR 15,000 (prior year EUR 45,000) Total liabilities and equity 57,891, ,642 EUR EUR Prior year EUR k 1. Contingent liabilities a) Acceptances and endorsements b) Guarantees c) Assets pledged as collateral security for third-party liabilities Other obligations a) Commitments arising out of sale and repurchase transactions b) Placement and underwriting commitments c) Irrevocable loan commitments

6 Income Statement for the Period of 01 July 2010 to 30 June 2011 EUR EUR EUR Prior year EUR k 1. Interest incom from a) Lending and money market business 164, b) Fixed-income securities and government-inscribed debt 336, , Interest expenses 11, , Current income from a) Shares and other variable-yield securities 77, b) Equity investments 67, c) Shares in affiliates , Commission income 23,491, ,505 thereof: a) Brokerage income: EUR 11,638, Commission expenses 12,547,826,13 10,943, ,893 thereof: a) Brokerage expenses: EUR 10,397, a. Income from trading book positions 13,052, ,412 thereof: a) Securities EUR 9,217, ,048 b) Futures EUR c) Price differences from name-to-follow transactions EUR 4.3,826, ,364 d) Foreign exchange EUR 4 3.8, b. Expenses from trading book positions 4,444, ,608, ,539 thereof: a) Securities EUR 4,293, ,348 b) Futures EUR 4.293, c) Options EUR 4.295, d) Price differences from name-to-follow transactions EUR 4.102, e) Foreign exchange EUR 43.40, Other operating income 462, thereof: income from foreign currency translation EUR 4 3.4, General and administrative expenses a) Personnel expenses aa) Wages and salaries 7,404, ,570 ab) Social security, pension and other benefit costs 819, ,224, thereof: for old-age pensions EUR 07188, (prior year: EUR.07240,346.59) 10. b) Other administrative expenses 7,608, ,833, , Amortization, depreciation and write-downs of intangible assets and property and equipment 283, Other operating expenses 131, thereof: expenses from foreign currency translation: EUR 43.22, Allocations to the fund for general banking risks Sec. 340e HGB 866, Result from ordinary activities 3,533, ,915 amount carried over 3,533, ,915 34

7 Income Statement for the Period of 01 July 2010 to 30 June 2011 EUR EUR EUR Prior year EUR k amount carried over 3,533, , Extraordinary income 102, thereof: income from the application of transitional provisions of the BilMog: EUR , Extraordinary expenses 46, thereof: expenses from the application of transitional provisions of the BilMog: EUR , Extraordinary result 55, , Income taxes 1,551, thereof: expenses from the allocation of deferred taxes: EUR 16, Other taxes not disclosed unter item ,551, Net income / net loss for the year 2,037, , Profit / loss carryforward from the prior year 15, Appropriation of the capital reserves 909, Appropriation of the revenue reserves a) Of the legal reserve b) Of the reserve for shares in a controlling entity or majority shareholder c) Of the reserves required by the articles of incorporation and bylaws d) Ot the reserve for treasury shares 450, e) Ot other revenue reserves 442, , Income from the reduction in capital 11,350, Allocation to the capital reserves 11,350, Allocation to revenue reserves a) To the legal reserve b) To the reserve for shares in a controlling entity or majority shareholder c) To the reserves required by the articles of incorporation and bylaws d) To other revenue reserves 450, , , Net retained profit 3,405, ,703 35

8 Notes to the Financial Statements as of 30 June 2011 of Wolfgang Steubing AG I. General Information on the Financial Statements and the Accounting and Valuation Policies The period under review is the fiscal year from 1 July 2010 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 BilMoG [ Bilanzrechtsmodernisierungsgesetz : German Accounting Law Modernization Act] was applied for the first time in the preparation of the balance sheet as of 30 June An adjusted balance sheet was prepared as of 1 July The prior-year disclosures were adjusted to reflect the new balance sheet items Trading assets and Trading liabilities (cf. no. 20). 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, fixed-income securities and other assets are stated at nominal value. No write-downs 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 and shares in affiliates were carried according to the modified lower of cost or market principle, being stated at either 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 2010/2011 with a value of up to were written off immediately. A collective item was recognized for low-value 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. 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. 36

9 Notes II. Notes to the Balance Sheet 1. Receivables from banks The receivables include prorated interest as of 30 June They are due in less than three months. Time deposits of 3,562k are pledged as collateral for the rental and exchange guarantees issued by banks. To secure the claims under the clearing and settlement agreements, the Company granted CACEIS Bank Deutschland GmbH a contractual right of lien on the trading and custody accounts maintained by this bank. 17,918k was kept on these accounts as of the balance sheet date. 2. Shareholdings Sec. 285 No. 11 HGB Mars Siebenundreissigste Vermögensverwaltungs AG, with registered office in Frankfurt am Main: Share of capital held % Share capital 50, Book value 55, 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 2011 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 8,626, Shares and other variable-yield 1,855, Trading assets 5,376, Trading liabilities 2,548, Equity investments 157, Shares in affiliates 55, All but 157, of the securities held can be traded on a stock exchange. The risk discount of 107, was recognized as the difference between unrealized profits and losses from all 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 The entire item Debt securities and other fixed-income securities was valued according to the strict lower of cost or market principle. The entire item Shares and other variable-yield securities 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. 6. Property and equipment Office equipment, furniture and fixtures are valued at 299,

10 Notes 7. Treasury shares On 10 December 2009, the shareholder meeting, pursuant to Sec. 71 (1) No. 7 AktG [ Aktiengesetz : German Stock Corporation Act], authorized the Company, following the commencement of trade in the Company 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 then the share s 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 5 years, beginning on the day the resolution was passed. This authorization was not used during the fiscal year. Furthermore, the shareholder meeting authorized the Company (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 Company 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 auditing 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 Company s capital stock at the end of any day. The aim is to put the Company in a position to acquire, when appropriate, businesses or investments by making a payment in kind (company shares) rather than by paying cash. For this reason, the shareholders right to subscribe was excluded. No shares were bought or sold in accordance with Sec. 71 (1) No. 8 AktG in the period under review. A total of 50,000 shares pursuant to Sec. 71 (1) No. 2 AktG are still disclosed at a total price of 550, These shares account for 0.88%, or 100,000.00, of the capital stock and are shown as deductions from subscribed capital on the face of the balance sheet in accordance with Sec. 272 (1a) HGB. The difference between the nominal value and the accounting par value of 450, was offset against the freely available reserves in accordance with Sec. 272 (1a) HGB. 8. Other assets Other assets comprise: EUR k Life reinsurance claims 1,306 Corporate income tax refund 1,254 Trade tax refund 808 Receivables from other investees and investors 67 Other receivables 377 Total 3, 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) 677 Employer s pension liability insurance (fair value) 747 Balance after offsetting 70 The calculation was based on the 2005 mortality tables of Prof. Heubeck using the projected unit credit method (PUCM) and an interest rate of 5.23%. Pension and salary increases are not taken into account as the pension commitment is for a fixed amount. 38

11 Notes 10. Statement of changes in provisions A statement of changes in provisions is enclosed as an exhibit. 11. Other liabilities Other liabilities are as follows: EUR k Bonus liabilities FY 2010/2011 1,606 Liabilities to suppliers 448 VAT 47 Withholding tax Sec. 50a EStG [ Einkommensteuergesetz : German Income Tax Act] 16 Total 2, Capital Stock The Company s capital stock is held solely in the form of bearer shares. It is divided into 5,675,000 no-par shares. On 14 December 2010, the shareholder meeting resolved to reduce capital by 11,350, The amount of 11,350, freed up through the capital reduction was allocated to the freely available revenue reserves. The capital stock of 11,350, is fully paid in. 13. Shares per class At the balance sheet date, the Company s capital stock was divided into 5,675,000 no-par bearer shares. 14. Allocations to and appropriation of reserves in EUR k Difference due to the 01 July 2010 Allocations Appropriation BilMoG 30 June 2011 Offsetting Capital reserves 24,604 11, ,045 Revenue reserves Legal reserve Reserve for treasury shares Total 25,697 11,900 1, , Schedule of times to maturity Sec. 340 d HGB in conjunction with Sec. 9 RechKredV in EUR 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 13,547 13, Debt securities and other fixed-income securities 8,626 5,731 2,895 Receivables from customers Foreign currency The total amount of receivables from banks denominated in foreign currency is 720,839.90; foreign currency liabilities to banks amount to 596, The carrying values are calculated using the mean spot exchange rate on the balance sheet date. The total amount of other assets denominated in foreign currency is 3,070.36; other foreign currency liabilities amount to The carrying values are calculated using the mean spot exchange rate on the balance sheet date. 39

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 Company s net retained profit of 3,405, be appropriated as follows, subject to the resolution of the shareholder meeting: Distribution to the shareholders ( 0.60 per share) 3,405, Less dividend on treasury shares 30, Allocation to the revenue reserves in accordance with Sec. 58 (3) Sentence 1 AktG 0.00 Profit carryforward to new account 30, Net retained profit as of 30 June ,405, Derivatives The Company had no derivatives as of the balance sheet date. 19. Contingent Liabilities There are no contingent liabilities pursuant to Sec. 251 HGB. 20. Prior-year figures To improve comparability, the prior-year figures of the trading book were adjusted to reflect the new disclosure requirements under the BilMoG. The held-for-trading securities of 976k disclosed under the item Shares and other variable-yield securities in the prior year were reclassified to the new item Trading assets. The buy-in obligations for securities of 392k disclosed under the item Other liabilities in the prior year were reclassified to the new item Trading liabilities. III. Notes to the Income Statement 1. Income or expense from trading book positions The BilMoG has led to the former income statement items Income and expense from financial transactions being replaced by the new items Income and expense from trading book positions. Only those transactions are included in the new item that an institution conducts on its own initiative and for its own account in order to benefit from future price fluctuations. These transactions have to be distinguished from all transactions based on customer orders and transactions that are mostly of a service nature. If those transactions can be clearly documented as being mostly of a service nature, the income or expense from transactions in the interests of customers is therefore disclosed under commission income and expenses. As these items were permissibly disclosed under the income or expense from financial transactions in the prior year, the prioryear figures for the four income statement items are not comparable. 2. Amortization, depreciation and write-downs Amortization and depreciation are disclosed in the statement of changes in fixed assets attached as an exhibit. No write-downs were charged. 3. Other significant items Other operating income and Other operating expenses do not contain any significant items. 40

13 Notes 4. Breakdown of income taxes Of the taxes on income, 1,533, is attributable to ordinary business activities while 17, is attributable to the extraordinary result. 4. Auditor s fees The total auditor s fees charged for the fiscal year break down as follows: a) Audit services k 84 b) Audit-related services k 40 IV. Other Notes 1. Management Board The following individuals are members of the Company s management board: Dr. Jochen Grossmann, economics graduate, Haibach Alexander Caspary, information technology graduate, Frankfurt am Main Kai Jordan, banker, Neu Isenburg Dr. Jochen Grossmann is a member of the supervisory board of the following companies: Tosca, Tosca Opportunity, Tosca Mid Cap, Tosca Emerging Markets (formerly Tosca Asia/Africa), Tosca Metriks, Tosca Infrastructure, Tosca Focus. 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]. The total remuneration of management in the fiscal year amounted to 964k. The total remuneration of the former members of management amounted to 250k in the fiscal year. The pension provisions recognized for former members of management stood at 677k 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 2009/10 paid in the reporting year was 149, 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. 41

14 Notes Other off-balance sheet obligations: As of 30 June 2011, 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 669, The contracts have an average term of 17 months. There are severance pay obligations under agreements with former employees. They are limited to 200,000 per year and a remaining total of 100, Average Number of Employees 63 persons were employed on average in fiscal year 2010/ 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 2011 Management Board of Wolfgang Steubing AG: Dr. Jochen Grossmann Alexander Caspary Kai Jordan 42

15 Statement of Changes in Fixed Assets as of 30 June 2011 (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 2011 to 30 June June June 2010 EUR EUR EUR EUR EUR EUR EUR Software 221, , , Vehicles 117, , , , , Office equipment, fixtures and fittings 1,116, , , , , , , Office equipment, fixtures and fittings formerly Hamburg 4, , , , IT equipment 744, , , , , , , IT equipment formerly Hamburg 8, , Standard software 913, , , , , , Leasehold improvements 1,047, , ,014, , , , Low-value assets 5, , , , , Low-value assets collective item 26, , , , , , Shares in affiliates 55, , , Equity investments 157, , , Profit-sharing securities 1,855, ,855, ,855, ,275, , ,667, , ,454, ,665, ,

16 Statement of Changes in Provisions in Fiscal Year 2010/ July 2010 Utilization Reversal Allocation 30 June 2011 EUR EUR EUR EUR EUR 1. Pensions provisions 631, , Tax provisions Trade tax 324, , , , Corporate income tax 207, , , , , , , , Other provisions Bookkeeping expenses 60, , , , , EDW allocation 463, , , , , Other expenses, London Branch 5, ,000, Vacation entitlements 74, , , , Other 345, , , , , Audit and financial statement costs 180, , , , , ,127, , , ,139, ,563, ,291, ,159, , ,497, ,921,

17 Management Report on the Financial Statements as of 30 June 2011 in accordance with Sec. 264 (1) HGB I. General The Company 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 Company has qualified as a securities trading bank since January Its core business is the broking of German and foreign securities. This includes trading as a broker on the major German stock exchanges, executing orders on XETRA, acting as a specialist on the Frankfurt Stock Exchange, international trading, own-account trading and integrated order flow management. The Company is also involved in the sales, sales trading, designated sponsoring, research and capital markets/corporate advisory segments and engages in financial portfolio management to a minor extent. In its brokerage operations, the Company acts as a broker between market participants admitted to the exchanges in Hamburg, Hanover, Berlin, Düsseldorf, Frankfurt am Main, Munich and Stuttgart, and on the over-the-counter (OTC) market. The Company brokers all shares traded on these exchanges, e.g., DAX shares, MDAX shares, second-tier stock, foreign shares, warrants, bonds and OTC securities. Steubing AG regularly features high up on the trading volume ranking lists published by Deutsche Börse AG for the different market segments. As a specialist on the Frankfurt Stock Exchange (until May 2011: lead broker) the Company manages around 1,000 securities on the regulated market and the open market, where it acts as a liquidity provider. Since 5 August 2004, the Company has been authorized to trade in securities, with the exception of warrants, using the electronic trading system XETRA on the Vienna Stock Exchange. Steubing AG has been a member of the London Stock Exchange since July Membership of Euronext was acquired in February The Company has a dependent branch office in Frankfurt am Main, Börsenplatz 7-11, which is not registered in the commercial register. II. Business Performance The environment in the traditional core business of Steubing AG, securities trading, was difficult in fiscal year 2010/2011 and was shaped by uncertainty and a wait-and-see attitude. In the second six months in particular, market participants focused more on the negative news such as the debt crisis in the peripheral euro countries (mainly Greece), bank stress tests or the rapidly increasing level of national debt in the US and less on the positive news from the German economy. While the stock market indices recorded strong gains for the fiscal year as a whole, from January 2011 they failed to sustain the growth previously demonstrated. Germany s most important share index, the DAX, climbed 15.9% to 6, points in the first six months of the fiscal year, after which time it trailed off. Between January and June 2011, the DAX only rose by 6.68%, closing the fiscal year at 7, points. The uncertainty and the related reticence on the part of investors had an even more serious impact on stock market turnover. While turnover on XETRA was still above the prior-year level in each of the first three quarters of the fiscal year, the final quarter was significantly weaker, down 18%. In a year-on-year comparison, XETRA turnover was thus practically unchanged at a low level of EUR 2.6 trillion. The volume of floor trading on the Frankfurt Stock Exchange for the same period dropped by as much as 8% to around 385 billion. Nevertheless, Steubing AG, whose earnings traditionally correlate heavily with the development of stock market turnover, was able to increase its year-onyear gross profit by 10.7%. Steubing Derivatives Brokerage GmbH, a joint venture with Independent Derivatives Consulting AG, Bad Homburg (IDC AG), also performed respectably in the derivatives trading segment. By contrast, we parted with the small dealer team for products from the European derivatives exchange EUREX, a team which we had only just set up in the prior fiscal year. The changed market environment as well as regulatory changes such as bans 45

18 Management Report on short selling meant that no positive development was expected in this area. As already mentioned in our report as of 31 December 2010, our specialist activity on the Scoach derivatives exchange was terminated as of 31 March 2011 after we failed to agree with Scoach Europa AG on a remuneration structure that was acceptable to us. There are several reasons why we succeeded in recording a significantly better result than in the prior year despite the lack of growth in trading turnover. These include our high level of cost awareness as well as the quality of the services we provide and, building on this, the close customer relationships that we have nurtured over many years. In addition, the capital markets/corporate advisory segment that we have built up in recent years parallel to sales and research is gradually bearing fruit, although this business was battling a challenging environment. The number of IPOs rose globally to 1,458 in 2010/2011 with a volume of USD 296b. However, this increase was driven in the main by the emerging countries. In the prior year, USD 202b was generated from 1,050 IPOs worldwide. In the Prime Standard segment of the Frankfurt Stock Exchange, 10 companies ventured a public listing in the course of the fiscal year. However, the relatively large IPO price ranges as well as share price performance after the IPO are clear indicators of the continuing uncertainty and reticence on the part of investors on the capital markets. A further indicator is the fact that 98 IPOs were canceled around the world in the last quarter of the fiscal year alone. This is the highest cancellation rate since Nevertheless the capital markets/corporate advisory segment was able to work together with the sales, trading and research departments to complete several transactions successfully, thus making a positive contribution to earnings. For example, Steubing AG accompanied the capital increases at SAF Holland S.A. (EUR 140m, co-lead manager) and ItN Nanovation AG ( 11m, sole global coordinator), advised the management board of GSW Immobilien AG during the preparation and implementation of its IPO worth 468m, and implemented the share repurchase plan of IFA Hotels & Touristik AG. A great deal of public attention was paid to the bond issue ( 30m) of Golden Gate AG with Steubing AG acting as the sole lead manager. The bond was the first to be traded on the newly created Entry Standard segment for bonds on the Frankfurt Stock Exchange. Furthermore, our sales team succeeded in playing a much more active role in new bond issues than in the past. This has allowed us to carry out bond issues ourselves. In addition, Steubing AG organized a conference in Zurich in November 2010 in cooperation with Deutsche Börse AG and arranged its third investor conference in Frankfurt in June This involved seven companies including a DAX (ThyssenKrupp) and an MDAX company (BayWa) using presentations and one-to-one discussions to introduce their firms to around 70 investors and analysts. The number of participants was up once again on the prioryear level. Also, the research department started coverage for the shares of Rheinmetall AG (automotive supply and defense technology) and Aixtron SE, a provider of deposition equipment for the semiconductor industry. The portfolio of shares monitored and regularly commented upon by Steubing AG thus now comprises more than 30 stocks. Fundamental technical, legal and organizational changes were made in the order book management segment. In order to safeguard the future and competitiveness of the Frankfurt Stock Exchange, Deutsche Börse AG made several structural changes to floor trading as of 23 May 2011: XETRA Frankfurt 2 instead of XONTRO: Floor trading was migrated fully to the established XETRA Frankfurt 2 technology in order to make the stock exchange more attractive for foreign investors. Change to private law: In the past, the relationship between Deutsche Börse and lead brokers was subject to public law, but Steubing AG now (as a specialist) has a private-law relationship with Deutsche Börse AG. This is intended to improve the responsiveness and flexibility of the Frankfurt Stock Exchange. Streamlined performance concept: In order to keep its promise to investors regarding the quality of the marketplace ( The best of two worlds, see also Deutsche Börse AG has raised the performance criteria dramatically. For specialists, this entails a changed risk profile. Thanks to its personnel and technical resources, Steubing AG was well able to meet the challenges related to the migration as of 23 May The loss of income from XONTRO order routing to the stock market in Frankfurt as a result of the migration was partly compensated for by establishing and marketing our Integrated Order Flow Management (IOM) product in a targeted manner. Going forward, the migration should open up opportunities in view of the consolidation process expected in the industry. 46

19 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 Company had cash and cash equivalents of 37,222k with equity at 49,800k and the fund for general banking risks at 866k. This makes Steubing AG one of the financially strongest financial services institutions/securities trading banks in Germany. Results of operations Gross profit rose by 10.7% from 22,822k to 25,261k despite a year-on-year lack of growth in XETRA trading and the traditionally strong correlation between the earnings of Steubing AG and the development of stock market turnover. A main contributing factor here was the much improved net commission income from the placement and advisory business of the capital markets/corporate advisory and sales segments. The BilMoG [ Bilanzrechtsmodernisierungsgesetz : German Accounting Law Modernization Act] has led to the former income statement items Income and expense from financial transactions being replaced by the new items Income and expense from trading book positions. The income and expense from transactions in the interests of customers is therefore disclosed under commission income and expenses. As these items were permissibly disclosed under the income or expense from financial transactions in the prior year, the prior-year figures for the income statement items of commission income and commission expenses as well as for income or expense from trading book positions are not comparable. General and administrative expenses were cut by almost 2% on the prior-year level, with the result from ordinary activities up by around 85% on the prior-year figure as a consequence. The net income for the year improved by nearly 75% to 2,038k. 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 2011, the Company reported capital stock of 11,350k less the accounting par value of treasury shares of 100k, capital reserves of 35,045k and revenue reserves of 100k. Equity, including net retained profit and the fund for general banking risks, thus came to 50,666k in total as of 30 June This translates into an equity ratio of 87.5% as of the balance sheet date. For the first time, Steubing AG had to make an allocation to the special item for the fund for general banking risks in this fiscal year. Without this statutory obligation, the net income for the year would have amounted to 2,904k. This would be almost 149% higher than in the prior year. This is the result not only of the higher income from the placement and advisory business but also of the high level of cost consciousness and the resulting rigorous closure of operating units that consistently fail or will fail to make a profit. In light of this earnings development, which is very pleasing when considered in the context of the difficult market environment, the management and supervisory boards plan to propose to the shareholder meeting in Frankfurt in December 2011 a dividend of 0.60 per share for fiscal year 2010/2011 (prior year: 0.30) on the basis of the net retained profit of 3,405k. 47

20 Management Report IV. Employees Personnel expenses fell from 8,468k in the prior year to 8,225k in fiscal year 2010/2011 (down almost 3%). By contrast, the number of employees including the management board and two temporary staff members declined from 66 to 59, attributable to the dissolution of the Scoach and EUREX derivatives trading segments in the course of the fiscal year. As of 30 June 2011, 21 persons were employed in trading and broking, and 8 in sales and sales trading; there were 12 back office employees and 4 IT staff members. Four employees worked in research and one worked in investor/ public relations. There were two employees each in the internal audit and capital markets/corporate advisory 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 the BaFin [ Bundesanstalt für Finanzdienstleistungsaufsicht : Federal Financial Supervisory Authority] and Deutsche Bundesbank. The Company 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 Company 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 price risk Market price 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 price risk in accordance with the SolvV in the trading book at the close of daily trading therefore averaged only 3% to 4% of capital. Liquidity risk Liquidity risks are continually monitored by risk control and taken into account in calculating capital requirements. 40% to 70% 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 13% of total liabilities and equity. The liquidity ratio in accordance with the LiqV [ Liquiditätsverordnung : German Liquidity Ordinance] is on average around 8, i.e., the sum total of cash and cash equivalents is on average 8 times greater than the payment obligations. As long as these ratios are maintained, the liquidity risk is mathematically insignificant. Risk management The Company 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 48

21 Management Report 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 Company 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 Company also avoids risks as far as possible by having a diversified customer base. Derivative financial instruments In the reporting period, several test transactions involving options and futures were executed. No overnight positions were held and the most stringent limit and risk controls were applied. However, trading in derivative financial instruments has been discontinued. VI. Anticipated Development of the Company Thanks to our very strong equity base and our investment policy that is particularly liquidity oriented, we assume that the financial position will remain very strong and in order for the next two fiscal years. By contrast, it is much more difficult to forecast the results of operations, as all of the Company s activities hinge on the global macroeconomic development. Volatility on the capital markets increased dramatically this year on account of the debt crisis in Europe and the US. The additional support for Greece to the tune of EUR 109b, recently agreed but not yet ratified, along with the more flexible structure of the European Financial Stability Facility (EFSF), is aimed at ensuring that the wave of speculation against the euro will subside. However, in our view this is wishful thinking. Speculation against the euro will continue. Firstly, Greece will never be able to repay the debt, which has only been reduced marginally. Secondly, the volume of the EFSF will not be sufficient to prevent spillover effects on larger member states in the eurozone. This is why further steps will have to follow, including a significant top-up of the EFSF and debt forgiveness for Greece, in order to give the country a chance at least in the long term to rid itself of the structural crisis (too much state involvement, private sector too small). This will take decades, however, as has been demonstrated by the development in the former East German states. Even today, more than 20 years after German reunification, the German finance minister collects EUR 12b in solidarity surcharge each year since its introduction on 1 July 1991 in order to balance out the huge disparity in productivity between the eastern and western states by means of subsidies and investments. In addition to the debt and currency problems already mentioned, growth in China is beginning to tail off. The mood of purchasing managers has changed dramatically in recent months, implying a weakening of industrial activities in China. The restrictive monetary policy of China s central bank, the People s Bank of China (PBoC), is also showing an initial impact. Despite these obstacles we do not assume that the global economic upswing is at risk. For one, the Chinese authorities will not allow the performance of the labor market to be dampened significantly. Secondly, in the US there are indications of a third quantitative easing of monetary policy should the economic environment continue to weaken. Additionally, efforts to re-industrialize the US are ongoing in order to reduce the country s dependency on services. This trend is likely to favor demand for machines in particular, and that is an area in which Germany is a global market leader. 49

22 Management Report As a result, we see no cause to revise our growth prospects for Germany, in particular as the growth dynamic is also increasingly shifting from exports to domestic demand. This development is also reflected in the high demand for residential property. In the first five months of this year, new orders in this segment rose by 26% compared to the prior year. But demand in non-residential construction also climbed by 18.6%, indicating a high level of investment in new factories. Ultimately this safeguards employment and thus props up consumer spending. Due to the unexpectedly strong growth in the first quarter of this year, we have raised the forecast for real gross national product from 2.6% to 3%. Next year this figure is expected to decline slightly to 2.5%. However, this still corresponds to double the average growth rate since This dynamic will also be reflected in inflation, which this year is expected to reach a rate of almost 3%. The development of consumer prices in the coming year will depend on the wage and salary negotiations of the IG Metall trade union for workers in the metal and electrical industry, which covers mechanical engineering, electrical engineering and automobile construction. The last pay settlement was reached in 2010 and is effective until April The most recent wage increase as of 1 April 2011 amounted to 2.7% and was valid for 12 months. The recent development of the industries concerned can only be described as a boom. As a result, demands for salary increases are expected to be high, with the trade union looking to close a deal on an increase in excess of 5%. The magic word in this respect is second round effects. The European Central Bank (ECB) will react to such effects prior to the negotiations and raise interest rates. Its scope for doing so is limited, however, as the economic development in the eurozone as a whole is certainly not as robust as in Germany. Stringency measures in the high-deficit countries such as Portugal, Italy, Ireland, Greece and Spain (PIIGS) do not leave any room for aggressive monetary policy. This in turn is proof that a one size fits all monetary policy is not possible in the eurozone. Germany will benefit from this low-interest policy the ECB is thus forced to pursue. Nevertheless, the current turmoil and the related uncertainty may dampen future economic development. In a macroeconomic environment dominated by so many uncertainties, it is next to impossible to make a forecast of the results of operations for the next one to two fiscal years. Another major topic that will remain relevant in fiscal year 2011/2012 and beyond is the issue of regulation. In October 2011, the European parliament is to present a draft bill for amending the Markets in Financial Instruments Directive (MiFID). The aim of what is being referred to as MiFID II is to enhance investor protection by extending the MiFID to include securities services which are not currently covered and extending the transparency regulations including pre- and post-trade reporting to other financial instruments and trading exchanges. This revision by the legislator is a reaction, among other things, to the fact that more and more stock trading activities are not subject to the duty of trade transparency and are taking place in dark pools or over the counter (OTC). The Phoenix case is also a constant hot topic in regulation, as is the related question as to the viability of the EdW [ Entschädigungseinrichtung der Wertpapierhandelsunternehmen : Compensatory Fund of Securities Trading Companies]. In this context, Steubing AG was notified in June 2011 that a further special payment would be made to repay the second installment of the loan totaling 128m raised by the EdW from the Federal Republic of Germany. In the meantime, the application for a stay of execution in relation to the first special payment notice has been refused by the Berlin Administrative Court. The Court did not respond in any further detail to the question of whether the Phoenix case even constitutes a compensation case for the purposes of the EAEG [ Einlagensicherungs- und Anlegerentschädigungsgesetz : German Deposit Guarantee and Investor Compensation Act]. It can be assumed that the test case in this matter will now be heard before the Berlin-Brandenburg Higher Administrative Court in the next instance. We cannot shield ourselves from regulatory issues, which are somewhat impeding the results of operations. We are endeavoring to raise our earnings power further nonetheless, by continuously expanding and improving our range of products and services. In the specialist segment, for example, Steubing AG is currently working on establishing different cooperative relationships with other banks in order to provide issuers who want to be listed on the open market segment of the Frankfurt Stock Exchange with an offering that is suited to the new structure. Also, we had a very pleasing start to the new fiscal year, with two IPOs in the Prime Standard segment (Schwäbische Hüttenwerke (SHW) AG and Youbisheng Green Paper AG) for which the Company was commissioned to manage the stock as a specialist. 50

23 Management Report In the capital markets/corporate advisory segment, we are working on several engagements that could be realized in the coming weeks and months depending on the general market situation and the individual due diligence. Steubing AG will continue to sharpen its profile in the sales and research segment. For example, the issue of a new direction in energy is currently on the research agenda. The overarching guideline is to offer our customers a highquality product that goes beyond mere maintenance research and reacts specifically to special situations on the markets. In addition, in association with Deutsche Börse AG we will stage the investor event High Tech Engineering Unternehmen stellen sich vor (an introduction to high-tech engineering companies) in Zurich on 1 December VII. Significant Events (after 30 June 2011) No events of significance for the Company occurred after the balance sheet date. VIII. Other We are monitoring very closely the intensifying competition between regulated marketplaces and multilateral trading facilities (MTFs). This includes the merger between Deutsche Börse AG (DBAG) and the New York Stock Exchange (NYSE) as well as the announced takeover of ChiX by Bats, which could be an indication that the supply of multilateral trading facilities has reached saturation and a new phase of consolidation is commencing. In our view, it is not yet possible to make a reliable forecast concerning the significance of the merger of DBAG and NYSE (if approved by the EU Commission and the regulatory authorities) for Frankfurt as a financial center. It is possible that both the stock exchange and parts of the share business will be subject to further internationalization tendencies. These potential changes entail certain risks for all market participants. However, it is quite possible that this will also lead to opportunities for Steubing as a partner and service provider to German and international institutions. 51

24 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 2010 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 Company 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 Company 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 Company 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 Company s position and suitably presents the opportunities and risks of future development. Eschborn/Frankfurt am Main, 23 September 2011 Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Müller-Tronnier Wirtschaftsprüfer (German Public Auditor) Hahn Wirtschaftsprüfer (German Public Auditor) 52

25 Report of the Supervisory Board In the past financial year 2010/2011 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 July 2010 the Supervisory Board discussed the earnings situation in the company s OTC derivatives/eurex business, the development outlook for the Scoach segment and the status of the XETRA Specialist model application procedure, the successor to lead broker-based floor trading on the Frankfurt Stock Exchange. At its meeting in October 2010 the Board adopted the annual financial statements for financial year 2009/2010 and reviewed the agenda for the Annual General Meeting held in Frankfurt am Main on 14 December 2010 not least in the light of the Accounting and Reporting Regulations Modernisation Act (BilMoG). In February 2011 the focus was on the personnel situation at Steubing AG, the new business areas of Integrated Orderflow Management and bond issue support services as well as various developments in the regulatory field. The bans on short selling, MiFID II and the policy on contributions to the securities trading companies compensation fund (EdW) were among the issues considered. In May 2011 the Supervisory Board addressed the status of projects in the Capital Markets/Corporate Advisory department, tax issues and the optimisation of organisational processes and documentation. In a separate meeting the internal audit report for the previous financial year (including risk analysis, accounting the reporting systems and the compensation system) was discussed with the auditor. The Supervisory Board noted the information presented with approval. The six-person Board has also regularly and continuously subjected its own working methods to review. Against the background of the constantly growing demands made on the activities of Supervisory Board members in recent years, the division of effort in addressing central areas of responsibility such business model and risk analysis, law, taxation and finance as well as the establishing and maintaining relationships with clients and cooperating partners has clearly proved its worth. 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 23 September 2011 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, Germany, 19 October 2011 The Supervisory Board Wolfgang Steubing (Chairman on the Supervisory Board) 53

26 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 2010/2011 totaling 3,405, be allocated as follows: a) Dividend distribution to the shareholders, Sec. Code ,675,000 shares at ,405, Less the amount nominally attributable to the 50,000 shares held by the company in treasury (and therefore not eligible to receive a dividend) 30, (This sum is included in the profit carryforward.) Subtotal: 3,375, b) Allocation to revenue reserves in accordance with Sec. 58 (3) sentence 1 AktG 0.00 c) Profit carryforward to new account 30, Net retained profit as of 30 June ,405, Frankfurt am Main, Germany, 18 October 2011 The Management Board Dr. Jochen Grossmann Alexander Caspary Kai Jordan 54

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