The markets of tomorrow need new structures.

Transcription

1 The markets of tomorrow need new structures.

2 Page 02 Annual Report 2014 Contents FinTech Group AG at a glance Key figures of FinTech Group AG 5 Letter of the Executive Board to the shareholders 8 Report of the Supervisory Board 12 Group Management Report 22 Consolidated Financial Statement 50 Group Annex 60

3 Page 4 Annual Report 2014 Key figures Key figures of FinTech Group AG Change Operational business Executed transactions Number 6,023,210 5,486, % Number of customers Number 134, , % Tot. transactions per customer/year Number % Customer assets under management millions 4,043 3, % of which: Custodial asset volume millions 3,236 2, % of which: Deposit volume millions % Result Net commission income K 15,819 14, % Net interest income K % Administrative expenses K 32,819 14, % EBITDA K -8, % EBIT K -9,543-1, % Net profit / net loss for the year K -7,593-1, % Balance sheet Balance sheet total K 93,893 50, % Equity K 44,746 30, % Equity ratio in % % Employees as of 12/31/2014 Employees Number %

4 next generation finance from 21st-century technologies to new opportunities fintech is the revolution of the financial industry

5 Page 8 Annual Report 2014 Letter of the Executive Board Letter of the Executive Board Dear shareholders, At the latest when you took a look at this Annual Report, you probably noticed a significant change in our 2014 fiscal year: flatex Holding AG has become FinTech Group AG. The change of a company name or of a strong and successful brand is significant. I would like to explain in more detail below why this is important for the realization of our vision. the contrary, these measures have been well received by shareholders, as they are growth-oriented and conducive to our common strategy. We are delighted with this confirmation, because it gives us a good feeling for a successful future. In this sense I wish you and our company a successful 2015 fiscal year. A variety of modern technologies has been introduced into our daily routine, making our lives easier and more convenient in many ways in almost every respect. Only one area remained largely outside of this influence the financial sector. Kulmbach in spring 2015 Against this backdrop and the existing opportunities, the vision emerged to form a company that could revolutionize finance with innovative technologies. Through the acquisition of a majority interest in XCOM AG, an IT innovator for the financial services sector with its subsidiary biw Bank AG, we have created the perfect fit and thus the foundation for a powerful FinTech company. The name FinTech Group AG describes what we are: a consortium of established, successful, and innovative business models that together represents more than the sum of its parts. A one-stop shop for start-ups and ideas that without us would fail due to the stringent regulatory requirements of the supervisory authorities. Frank Niehage Chairman of the Executive Board For us, FinTech Group is more than just a name it s a promise. A promise to you, our customers and partners, which you can experience with us as shareholders in the coming years. Together with you we want to become the leading financial services technology company in Europe. That both we and the financial market believe in us is demonstrated not least by the share price of FinTech Group AG. Within twelve months, the price has risen by more than 100 percent. Several capital increases have not harmed the share price on

6 Report of the Supervisory Board

7 Page 12 Annual Report 2014 Report of the Supervisory Board Report of the Supervisory Board Dear shareholders, In the following, the Supervisory Board informs you about its activities in fiscal year FinTech Group AG concluded the 2014 fiscal year within the scope of its objectives. Overall, the fiscal year was marked by two main factors: On the one hand, the strategic development of the entire business unit of online banking. On the other hand, the clear aim of the company to become a leading European provider of innovative technologies in the financial sector over the medium term. To this end, the foundation was laid with the successful rebranding of flatex Holding AG into FinTech Group AG as well as the hiring of additional highly qualified management talent. A strategically important milestone on the way to FinTech as a major player was reached in the past fiscal year with the majority acquisition of XCOM AG Group. In the fourth quarter of 2014, FinTech Group AG contractually secured an option to purchase more than 50 percent of XCOM AG, including its wholly-owned subsidiary biw Bank AG. The approval of Germany s Federal Financial Supervisory Authority and the Deutsche Bundesbank for the acquisition of this controlling interest had not yet been given as of December 31, 2014, but it was granted after the end of the fiscal year on 03/16/2015. In the future, the two corporate groups will become one of the largest European providers of innovative technologies for the financial sector. The business model is intended to rest on two pillars: transaction banking & in/outsourcing for third parties and retail online banking with own brands. As a publicly traded company, FinTech Group AG will bring together its established, successful activities with an innovative platform for disruptive and high-growth business strategies. As part of the successful capital increase in December 2014, 1,399,528 new shares were placed. The proceeds of EUR 13.1 million were mainly used to finance the majority acquisition of the XCOM Group. The new shares were issued under utilization of authorized capital and corresponded to ten percent of the share capital. In this context it is also important to mention that the analysts of Hauck & Aufhäuser added research coverage of FinTech Group AG and its stock. This means that our investors will have an additional independent and competent source of information in the future. The management aims to recruit more analysts to cover the company. Supervisory Board activities in 2014 In fiscal year 2014, the Supervisory Board monitored the activities of and provided advice to the Executive Board of FinTech Group AG in fulfillment of its duties required by law and the Articles of Association. The benchmark for this monitoring was the legality, correctness, appropriateness, and efficiency of management. The information transmission of the Executive Board to the Supervisory Board was carried out in a continuous, comprehensive, and timely manner both in written and oral report form. The Executive Board s reports included all essential information about the current situation of the company, in particular the corporate planning, strategic development, risk situation, and risk management. In addition, the Executive Board reported on essential business transactions and the development of the situation in regard to assets, finances, and earnings. The current situation of the company has been regularly reviewed by the Supervisory Board at the meetings of the Supervisory Board on the basis of written and oral reports of the Executive Board. The Supervisory Board must check for plausibility and critically examine and discuss reports issued by the Executive Board and other information. The Supervisory Board was directly involved at an early stage in all decisions of fundamental importance to the company. Business transactions whose implementation was subject to the approval of the Supervisory Board were carefully examined, discussed in detail with the Executive Board, and then decided by the Supervisory Board. In addition to meetings, the Supervisory Board Chairman was in continuous communication with the Executive Board, discussed strategy with it, and was informed about the business development as well as major events. Meetings and participation The Supervisory Board held a total of five Supervisory Board meetings in fiscal year All members of the Supervisory Board participated in all meetings. Two meetings were held in the first half of 2014, and two meetings were held in the second half.

8 Page 14 Annual Report 2014 Report of the Supervisory Board The topics of the Supervisory Board plenary meeting Regular topics of discussion in the plenary meeting were the sales and earnings development of FinTech Group AG and its major subsidiaries flatex GmbH, CeFDex AG, KochBank GmbH, Wertpapierhandelsbank (merged with CeFDex AG in 2014), and AKTIONÄRSBANK Kulmbach GmbH. This included in particular the financial situation, the quarterly written reports of the Executive Board on the risk situation, and significant developments in the areas of investments, partnerships, the operative customer business, and trading. Specifically, the following topics were discussed and the following resolutions were passed, among others, in the meetings of the previous fiscal year: At the meeting on Friday, February 21, 2014, the Supervisory Board initially had the Executive Board explain the preliminary results as of Tuesday, December 31, Then a decision was made in favor of a capital increase of Aktionärsbank, and key issues at the subsidiaries were reported on. At the meeting on Friday, May 23, 2014, the Supervisory Board had the Executive Board explain the annual financial statement as of Tuesday, December 31, 2013, and elucidate the management report. Then the auditor present reported his audit findings in detail. The audit of the annual financial statement and the management report by the auditor and the final examination by the Supervisory Board did not lead to any objections. The Supervisory Board approved the annual financial statement drawn up by the Executive Board after extensive discussion. In addition, the Supervisory Board approved the proposed allocation of earnings. With this, the annual financial statement was adopted. After that, the consolidated financial statement as of Tuesday, December 31, 2013, and the consolidated management report were explained by the Executive Board. Then the auditor present reported his audit findings in detail. The audit of the consolidated financial statement, the consolidated management report by the auditor and the final examination by the Supervisory Board also did not lead to any objections. The Supervisory Board approved the consolidated financial statement drawn up by the Executive Board after extensive discussion. Other points of discussion were decisions on the resolutions proposed by the Supervisory Board at the Annual General Meeting, approval of the draft agenda of the Annual General Meeting of the company, and the resolution on the report of the Supervisory Board at the Annual General Meeting for fiscal year The Supervisory Board was informed about the implementation of the capital increase from the Authorized Capital 2009, which had been previously approved by it on March 18, At the meeting on July 23, 2014, in addition to the election of a new Supervisory Board Chairman and his deputy, several contract conclusions were discussed and resolved. Following that, various personnel issues of FinTech Group AG and its subsidiaries were addressed. At the meeting on November 25, 2014, the Supervisory Board considered matters including the election of the Chairman and his deputy. In addition, topics related to the majority acquisition of XCOM Group, the strategic direction, and personnel issues were discussed and addressed, along with the figures, risk reports, audit reports, etc. of the group. On December 11, 2014, the Supervisory Board met again for a teleconference. At this meeting, approval of the decision of the Executive Board on the implementation of the capital increase resolved on December 2, 2014, from Authorized Capital 2014 was granted. In addition, the amendment of the Articles of Association after partial utilization of Authorized Capital 2013/III was approved. Organization of the Supervisory Board s work The Supervisory Board did not form any committees during the reporting period. With the exception of several resolutions which took place by way of circulation, all resolutions of the Supervisory Board were concluded in meetings. Composition of the Supervisory Board and Executive Board In accordance with the Articles of Association of FinTech Group AG, the Supervisory Board consists of three members. Members of the Supervisory Board are presently Mr. Martin Korbmacher (Chairman), Mr. Achim Lindner (Deputy Chairman), and Mr. Bernd Förtsch. During the reporting period, the following personnel changes took place in the Supervisory Board and Executive Board:

9 Page 16 Annual Report 2014 Report of the Supervisory Board With completion of the Annual General Meeting on July 18, 2014, Karl Matthäus Schmidt resigned as a Supervisory Board member. As a substitute member, Mr. Stefan Feulner was elected to the Supervisory Board by the General Meeting. Bernd Förtsch took over the chairmanship, and Mr. Lindner was elected as his deputy. At the end of the special meeting of shareholders on October 30, 2014, Mr. Feulner resigned as a Supervisory Board member. Mr. Martin Korbmacher was elected as his successor; he was elected Chairman on November 25, 2014, and Achim Lindner was chosen as his deputy. Thomas Schmidt resigned from the Executive Board of FinTech Group AG with effect from January 31, 2014, and fully dedicated himself to further development and expansion of the subsidiary AKTIONÄRSBANK Kulmbach GmbH until October At the end of 2014, Mr. Thomas Schmidt left the group. Effective August 15, 2014, Frank Niehage joined the Executive Board and was simultaneously appointed as Chairman of the Board of FinTech Group AG. Effective November 30, 2014, Stefan Müller resigned as a member of the Executive Board. He now is addressing new tasks within the company and continues to serve as a fully authorized representative. The Executive Board of FinTech Group AG is therefore currently composed of Mr. Frank Niehage. Annual and consolidated financial statement audit 2014 The auditing and tax consulting firm Schneider + Partner GmbH, Munich, audited the annual financial statement and consolidated financial statement drawn up by the Executive Board as of Wednesday, December 31, 2014, along with the management report and the consolidated management report for fiscal year 2014, and provided each of them with an unqualified auditor s opinion. The annual financial statement as of Wednesday, December 31, 2014, for fiscal year 2014 was prepared according to generally accepted accounting standards (HGB); the consolidated financial statement and the consolidated management report were prepared in accordance with the Accounting Directive for Banks and Financial Services Providers (RechKredV). The documents of the financial statements (annual financial statement and management report of the company as well as the consolidated financial statement and consolidated management report), the proposed allocation of earnings of the Executive Board, and the auditor s reports were in each case promptly presented to the Supervisory Board for inspection. The Supervisory Board examined the documents of the Executive Board and the audit reports of the auditor, particularly with regard to legality, correctness, and appropriateness. At the meeting on the annual financial statement, the management report, the consolidated financial statement, and the consolidated management report on June 16, 2015, the auditor explained the audit results in detail in their main points and was available to provide additional information. The members of the Supervisory Board acknowledged the audit reports and audit opinions, critically assessed them, and discussed them as well as the audits themselves with the auditor, including questions about the type and scope of tests as well as the results of the audit. Here the Supervisory Board was able to convince itself of the correctness of the audits and audit reports. The Supervisory Board acknowledged and approved the audit findings. The Supervisory Board performed a final review of the annual financial statement, the consolidated financial statement, the management report, the consolidated management report, and the profit distribution proposal of the Executive Board, taking into consideration the reports of the auditor, and stated no objections according to the findings of its review. The Supervisory Board approved the annual financial statement and consolidated financial statement prepared by the Executive Board. With this, the annual financial statement was adopted. In its assessment of the situation of the company and the group, the Supervisory Board agrees with the Executive Board in its management report. The Supervisory Board concurs with the proposed allocation of earnings of the Executive Board.

10 Page 18 Annual Report 2014 Report of the Supervisory Board Examination of the report of the Executive Board on relations with affiliated companies The report prepared by the Executive Board in accordance with 312 AktG on relations with affiliated companies (dependency report) for fiscal year 2014 was submitted to the Supervisory Board together with the audit report prepared by the auditor. The auditor examined the dependency report and issued the following unqualified audit opinion in accordance with 313 AktG: The Supervisory Board thanks the members of the Executive Board and the employees of FinTech Group AG and its subsidiaries for the services provided and the efforts over the past fiscal year. For the Supervisory Board Kulmbach, Tuesday, June 16, 2015 Based on our audit and assessment, we confirm that 1. the information in the report is correct, 2. in the legal transactions listed in the report, the payment of the company was not unreasonably high. Martin Korbmacher Chairman of the Supervisory Board The Supervisory Board examined the dependency report of the Executive Board and the audit report of the auditor. The Supervisory Board in particular believes that the audit report as well as the audit performed by the auditor meet the legal requirements. The Supervisory Board examined the dependency report in particular for completeness and accuracy, and was also satisfied that the group of affiliated companies was determined with due care and necessary precautions to identify the reportable legal transactions and measures were taken. Indications that would be the basis of objections to the dependency report were not found in this review. The Supervisory Board approves the results of the audit of the dependency report by the auditor. According to the final results of the examination by the Supervisory Board, there are no objections to be raised to the declaration of the Executive Board at the end of the dependency report.

11 Group Management Report

12 Page 22 Annual Report 2014 Management Report Management Report of FinTech Group AG (formerly: flatex Holding AG) A. Fundamentals of the group Headquartered in Kulmbach, FinTech Group AG (formerly flatex Holding AG) is a publicly traded, future-oriented company that holds stakes in the field of the financial services industry in its portfolio. The subsidiaries operate with their own strategy and brand in Germany and Austria. Relevant target groups are addressed with appropriate marketing and sales strategies. FinTech Group AG performs key functions for the subsidiaries in the Group. The resulting increase in efficiency means lower costs in the Group structure and higher returns for shareholders. B. Macroeconomic and sectoral conditions I. The German economy as a whole Thanks in part to the oil price lows, the German economy is picking up again after a period of weakness in recent months. In particular, private consumption and increasing investments are providing momentum, as the Kiel Institute for World Economy (IfW) forecasts in its latest estimate for 2015 and Accordingly, economic output in Germany will increase by 1.7% in the new year and by 1.9% in 2016 compared with 1.5% in the current year. First, private consumption in particular will have a stimulating effect. Purchasing power is growing thanks to higher net income and the dramatic fall in oil prices. Disposable income of private households will increase by 3.7% next year (2014: 2.7%). It is primarily an increase in net wages by 4.4% (3.7%) that is contributing to this. In addition to the usual salary increases, the introduction of the minimum wage and the increase in social benefits (including the mothers pension and retirement at 63) are already noticeable. The price decline in oil temporarily offsets domestic inflation, so that at the turn of 2014/2015, rising incomes are translated into greater purchasing power practically on a one-to-one basis, explains Stefan Kooths, Head of the IfW Forecast Center. Already in the final quarter of the current year, a sharp rise in consumer spending is expected. If oil prices continue to remain low, which is assumed in the forecast, the positive purchasing power effects are likely to radiate far into the coming year. Business investment will gradually drive the economy, as interest rates remain low when demand picks up. German exports are turning out to be robust in a difficult international environment, and the falling oil price will lead to noticeably improved conditions in the coming year. II. The macroeconomic situation According to the IfW forecast, the dynamics of the global economy will gradually strengthen over the next two years. The increase in world production calculated on the basis of purchasing power parities will increase from 3.4% this year to 3.7% and 3.9% respectively in 2015 and In particular, monetary policy that remains very expansionary on the whole and the decline in oil prices are stimulating economic activity in the private sector. For the United States, growth rates in the gross domestic product of 3.2% and 3.5% respectively are expected over the next two years. III. Financial markets After two extremely strong years, the DAX rose by only 2.6% in 2014, closing at 9806 points at the end of the year. Although the DAX climbed to a new all-time high of 10,093 points, it could not remain at this level against the backdrop of concerns about the political crisis in Greece, the economic difficulties in Russia, and the ever-falling price of oil. In the United States, the performance was much better: The Dow Jones was up 8.8%, the S&P %, and the Nasdaq Composite 15%. The good performance of the indices in the United States is mainly due to the strong economic situation. The MDAX was 2.2% higher for the year, ending 2014 with 16,966 points. The Tec- DAX did best of all: Compared to January 1, 2014, it was 17.5% higher. Many experts are optimistic for 2015, although they expect high volatility. Investors could take a wait-and-see attitude due to a possible end of the Greek austerity and

13 Page 24 Annual Report 2014 Management Report uncertainty about the monetary policy stance of the ECB. Over the long term, many analysts expect a rising DAX, thanks to a growing U.S. economy. Analysts interviewed by the Reuters news agency see the benchmark index at 10,800 points by the end of the year. Experts predict parity with the dollar, that is, one dollar is equal to one euro. In 2014, the euro lost more than 11% against the dollar. While the U.S. economy is accelerating more and more, the economy in the euro zone is weakening. IV. Sectoral conditions Online banking and online brokerages in Germany are continuing to enjoy increasing popularity, which is not least due to the fact that customers using mobile devices can carry out banking transactions at any time and without geographical boundaries. Online banks are reforming the traditional banking sector, because they respond significantly faster and more effectively to customer requests and needs than would be possible for typical branch banks. For this reason, branch banks have increasingly turned their attention to the online business in recent years and founded online subsidiaries that act as additional competitors for companies operating exclusively online. Additionally, many smaller online brokers specialized in only a few or even just one product are meeting the demand of customers. Since there are limits to product diversity, the trend toward an all-in-one solution is increasing price competition. The consolidation that has already begun at online brokers is expected to continue in the coming years. The increase in customers taking advantage of online banking and brokerages has slowed compared to previous years. For potential customers, concern about cybercrime is likely to play a role that is just as important as continued low interest rates or the fluctuations in the financial markets that are in part quite substantial. For banks and brokers operating in the online brokerage area, volatility on the stock markets often means significantly higher revenue than in times of moderate markets or markets moving sideways. But it is precisely these hectic market phases in which private investors make poor investments due to limited experience, leading to greater caution afterwards. The many online trading customers are distributed among the four largest direct banks operating in Germany. In an environment of limited growth figures, other than through a compelling price new customers can only be won over if new standards such as easy-to-use platforms, convincing and efficient service, and stable technical infrastructure are fulfilled by the provider. The requirements for banks and brokers have continued to increase in the regulatory, legal environment, and this is also to be expected for the coming years through the revised Markets in Financial Instruments Directive ( MiFID II ), for example. C. Business development of the group The business development of the group is mainly determined by the activities of flatex GmbH, AKTIONÄRSBANK GmbH, and CeFDex AG. In the core online brokerage business, flatex GmbH achieved improved earnings with stable costs through an increased number of transactions and the expansion of new customer numbers. AKTIONÄRSBANK GmbH began operating on 02/04/2014. Despite intensive customer acquisition measures, the initial objectives for 2014 were not met, and the planning had to be readjusted. Under an agreement dated December 20, 2013, with effect from January 1, 2014, FinTech Group sold all shares in Kochbank GmbH to CeFDex AG under conditions precedent. The conditions precedent occurred on January 2, 2014, making the purchase effective. By an agreement dated April 30, 2014, with effect from January 1, 2014 (date of merger), KochBank GmbH as the transferring entity transferred its entire assets by dissolution without liquidation to CeFDex AG as the acquiring entity, without granting shares to CeFDex AG pursuant to 2 ff., 46 ff., and 60 ff. of the Transformation Act (UmwG, merger by acquisition). Registration of the merger in the commercial register was on May 27, With the implementation of the planned merger, the three new business areas Designated Sponsoring, Institutional Sales (Sales Trading / Brokerage), and Corporate Finance were added to CeFDex AG in the reporting year. Due to the cost-cutting measures carried out in 2013, CeFDex AG concluded fiscal year 2014 with a good operating result. flatex&friends GmbH and MYFONDS.DE GmbH, which offer Internet services related to financial markets, are of minor importance for the business development of the group.

14 Page 26 Annual Report 2014 Management Report FinTech Group AG The fiscal year of FinTech Group AG was marked by the new strategy of becoming one of the leading financial services technologies companies in Europe over the medium term. In the future FinTech Group AG will offer online banking services across the entire financial services spectrum and develop and finance disruptive technologies and business models. To also reflect these expanded activities in the name, the name flatex Holding AG was changed to FinTech Group AG. The Annual General Meeting 2014 of flatex Holding AG, at which the company was renamed to FinTech Group AG, was held in Kulmbach on July 18, All items up for vote were approved. The accumulated profit in 2013 amounting to EUR 684, was carried forward onto new account in full. In addition, a special meeting of shareholders of FinTech Group AG was held in Kulmbach on October 30, 2014, at which the creation of conditional capital (Conditional Capital 2014) was the primary business. All items up for vote were also approved in this case. The accounting of FinTech Group AG as an individual company was according to German Commercial Code (HGB), while the accounting for the consolidated financial statement was according to the Accounting Directive for Banks and Financial Services Providers (RechKredV) on the basis of 340 i para. 3 HGB. During the fiscal year, there were significant changes in the associate companies. At AKTIONÄRSBANK Kulmbach GmbH (hereinafter AKTIONÄRSBANK), contributions to the voluntary capital reserve of more than KEUR 1,000 in February 2014 and KEUR 500 in August 2014 led to an increase in the investment book value. The increase in shares in CeFDex AG, Frankfurt am Main, also resulted from two allocations to capital reserves totaling KEUR 1,500. The book value of the shares in flatex GmbH, Kulmbach, increased by KEUR 100 to KEUR 324 due to an allocation to the capital reserve. As part of the successful capital increase in December 2014, 1,399,528 new shares were placed. The proceeds of EUR 13.1 million were mainly used to finance the majority acquisition of the XCOM Group. The new shares were issued under utilization of authorized capital and corresponded to 10% of the share capital. flatex GmbH The company is a discount online broker specializing in securities transactions and targets active, well-informed traders and investors acting and investing independently. The offer covers all security types, all German and many international stock exchanges, off-the-floor trading, and both CFDs and FX trading (currency trading). The service range is characterized by an inexpensive pricing model coupled with a focus on customer-oriented service. flatex is the brand of the financial services institution flatex GmbH, a 100% subsidiary of FinTech Group AG. The account and securities deposit management for the customers of flatex GmbH is with the Bank für Investments und Wertpapiere AG (hereinafter biw Bank AG), Willich, which is a member of the German Deposit Protection Fund. The number of customers has increased by 4% compared with the same period last year to 130,490. With flatex Germany, there are currently 124,035 customers, and with flatex Austria 6,455. Customer assets increased by 10%, from EUR 3,527 million to EUR 3,878 million. The transaction numbers rose by 6% over 2014, from 5,486,715 to 5,797,947 orders (Germany 5,499,607 orders, Austria 298,340 orders). flatex GmbH again received awards in fiscal year In the 2014 broker poll, flatex GmbH was able to take third place in three segments, in the categories of Online Broker, Certificate Broker, and Daytrade Broker. flatex GmbH continued to edge out the competition in an independent study of the German Society for Consumer Studies (DtGV) and news channel N24. In a test of 16 online brokers, flatex GmbH took first place. In the test, flatex GmbH was able to score points especially in customer service, transparency, and conditions. In April 2014 the magazine uro commissioned Germany s largest bank test, as it does every year. As in 2013 flatex GmbH took first place in the category Brokerage. The Vienna branch took up business operations in September After less than a year, it was closed on 07/31/2014. Despite local presence compared to the previous situation, only a small increase in key indicators could be seen, and the additional expense did not amortize. flatex GmbH has been and will continue to be active on the Austrian market at the Internet address but it will not have its own branch as was the case before 2013.