A N N U A L R E P O R T 2012 Index Index 04 History 07 Supervisory and Executive Board 08 Supervisory Board‘s Report (extract) 09 Executive Board‘s Report (extract) 13 Financial Statements 17 Notes to the balance-sheet and to the profit and loss statement (extract) 21 Balance-sheet 22 Profit and Loss Statement 23 Audit Certificate 24 Edition notice 3 History History Introduction On 1st of April 2012 Euro Yatırım Menkul Değerler A.Ş. Istanbul acquired Gries & Heissel Bankiers AG, Wiesbaden, which was founded 1987 in Berlin. In July 2012 the name of the bank was changed to Eurocity Bank AG and the headquarter was moved from Wiesbaden to Frankfurt am Main. As of end of 2012 the branch in Berlin was been closed. After termination of the private banking business and asset management a new strategy have been defined and implemented. The Bank began to build up a own securities portfolio and to extend loans to foreign companies. Simultaneously a new retail banking department established which focuses on collecting deposits from non-banks. Securities business for retail customers have been limited to online-brokerage. After the takeover of Gries & Heissel Bankiers AG the capital paid in has been raised from Euro 8 Mio to 13 Mio and in October 2012 to Euro 16 Mio. At the beginning of 2013 a further increase to Euro 20 Mio took place. 4 Euro Yatırım Menkul Değerler A.Ş. In 2001 Mr. Mustafa Şahin bought Yurt Menkul Kıymetler A.Ş., founded 1996 in Istanbul, from the Turkish Savings Deposit Insurance Fund. The name was changed to Euro Yatırım Menkul Değerler A.Ş.. Euro Yatırım Menkul Değerler A.Ş., headquarters located in Istanbul, is an investment company offering financial services such as trading of derivative financial instruments, stock certificates and bonds-bills, repurchase agreement and reverse repurchase agreement transactions, margin trading services, public offering and investment consultancy services with its 7 different authorization certificates (licenses). Euro Yatırım Menkul Değerler A.Ş., the leading company of the group, established 3 investment funds namely „Euro B Tip Yatırım Ortaklığı A.Ş.“ in 2006, „Euro Trend Yatırım History History Ortaklığı A.Ş.“ in 2007 and „Euro Kapital Yatırım Ortaklığı A.Ş.“ in 2010. Annual turnover of the 3 investment funds exceeded 220 Million Euro. The EURO group, in order to diversify its services to its clients, purchased Toprak Sigorta A.Ş. founded in 1995 on 15.01.2008 and changed its name to Euro Sigorta A.Ş.. The insurance company became a member of the EURO group. After a capital increase a team of 80 specialists provides various insurance products in different categories. Euro Yatırım Menkul Değerler A.Ş. the parent of the Euro Group was listed on the Istanbul Stock Exchange (İMKB) in 2010. In 2011 a capital increase took place. Euro Yatırım Menkul Değerler A.Ş. operates under the permission, applicable rules and auditing of the Capital Markets Board of Turkey, the supreme board authorized to regulate and audit the establishment and activities of the investment companies. Moreover because it is a public listed company at the İMKB, it is also under continuous auditing, monitoring and supervision of the Istanbul Stock Exchange. Detailed information on our main shareholder, Euro Yatırım Menkul Değerler A.Ş., is accessible on www.euroyatirim.com.tr , www.kap.gov.tr and www.imkb.gov.tr pages. 5 Milestones 1987 The Bank was founded in Berlin under the entity Gries & Heissel Bankiers AG. 1989 Frankfurt Branch Office was opened. 1990 Founders and Executives of the Bank were awarded the prize “The Best Entrepreneur of the Year”. History History 2000 Frankfurt Branch Office moved to Wiesbaden. 2004 Headquarter moved from Berlin to Wiesbaden. 2007 Gries & Heissel Bankiers AG celebrates its 20th anniversary. 2011 Sep Restructuring of the Bank 2012 April The bank was acquired by Euro Yatırım Menkul Değerler A.Ş.. The capital was increased from 8 Mio Euro to 13 Mio Euro. July Bank’s name changed to Eurocity Bank AG. August Bank’s Headquarter moved from Wiesbaden to Frankfurt am Main. October Paid in capital was increased from 13 Mio Euro to 16 Mio Euro. 2013 Further increase of the paid in capital from 16 Mio Euro to 20 Mio Euro. 6 Board Board Executive Executive and and and and Supervisiory Supervisiory Current members of the Supervisory Board from March 30th, 2013 Chairman Mr. Mustafa Şahin Vice Chairman Dr. Eberhard Weber Board Member Mr. Coşkun Arık Current members of the Executive Board from April 01th, 2013 Chairman Dr. Ismail Hakkı Ergener Board Member Mr. Veli Abudak 7 s Report Report s s Report Report s ’ ’ Report by the Supervisory Board (extract) At the beginning of 2012 the Supervisory Board of Gries & Heissel Bankers AG was formed by Dr. Roland Stanger, Mr. Jens-Ove Stier and Dr. Eberhard Weber. After the new majority shareholder Euro Yatırım Menkul Değerler A.Ş. purchased the SupervisoryBoard SupervisoryBoard shares of Gries & Heissel Bankiers AG, Dr. Ismail Ergener and Mr. Veli Abudak were appointed to the Executive Board by the Supervisory Board on 30th of March 2012. The Supervisory Board held regular meetings and was fully informed by the Executive Board about the essential methods of the business. FTA Finanz-Treuhand AG Wirtschaftsprüfungsgesellschaft as the auditing company audited and confirmed the financial statement including notes and management reports for the financial year 2012 and an unqualified audit opinion was given. The annual account was drawn up according to the rules of the commercial code. The financial statements and the draft of the audit report were sent to all members of the Supervisory Board in a timely fashion. The Supervisory Board has discussed the financial statements and the notes to the balance-sheet and the profit and loss statement of the bank in a meeting dated 27th of June 2013. The auditors participated in the meeting analyzed the fundamental audit results and were available to answer questions. The financial statements were deeply discussed with members of the Executive Board as well as with the representatives of the auditing company. After a final audit by the Supervisory Board no objections against the annual accounts were given and therefore the Supervisory Board agreed to the results of the annual accounts. The Supervisory Board has endorsed the annual account established by the Executive Board on the 31st December, 2012. The annual account of the 31st December, 2012 of the Eurocity Bank AG was hereby stated. For the Supervisory Board Frankfurt, 3rd July, 2012 8 (Chairman) Report by the Executive Board (extract) The fiscal year of 2012 was strongly marked by the various economic ups and downs: the price of oil, the strong gold and the escalation of the debt crisis in the Euro-zone, especially Report price of oil, the strong gold and the escalation of the debt crisis in the Euro-zone, especially Report s s ‘ ‘ the “bailout” in Greece and the possible consequences in other countries provided sources of insecurity. The monetary policy of the European Central Bank (ECB) seemed to be a panacea for Western Europe and created a calculated optimism. The ECB reacted to the Board Board intensified tensions of the financial markets with a continuous expansion of the liquidity supply to banks and the decrease of base interest rates to a historical low of 0.5%. Growth was generally denied to industrialized countries, whilst the recovery in emerging Executive Executive countries showed certain vigor. Even if, in comparison to other industrialized countries, Germany could show a small economic revival in the year 2012, it received a set back at the end of the year in the last quarter, as the export of goods diminished considerably in comparison to the import of goods. In the fiscal year, the German gross domestic product has increased by merely +0.7% in comparison to the previous year. Whilst in 2012 some industrialized countries with unresolved problems of debt had to fight with a consequential worsening of insecurity, the Turkish economy was able to grow by 2.5%. Despite the decelerated growth of economy in Turkey the upward trend of Turkish foreign trade was able to continue also in 2012. The total volume of foreign trade is USD 393 billion, and has increased by four times in comparison to the total volume in 2000 when it was USD 82.3 billion. Germany and Turkey are two of the countries where our main sphere of activity is situated. Thus the economic development of these countries is especially emphasized. The most relevant Turkish export industry was the car production. The most significant import goods were oil and gas. In 2012 Germany was again Turkey’s most important trade partner. This development shows the increasing importance of our niche and the target group of companies which deal with trade between Germany and Turkey. In Turkey the number of German companies and Turkish companies with German participation has meanwhile increased to more than 4.800. The activity of those companies include industrial production, sales-distribution and all kinds of services. Companies owned by entrepreneurs with Turkish origin (about 75.000) employ around 375.000 people in Germany with a yearly profit of around EUR 35 billion. The approximately 3.5 Million inhabitants in Germany, with Turkish roots, are the target group of our products in the area of asset management, which we would like to build up gradually in the coming months and years. The liquidity provided by the central banks was the reason for considerable price increases in the equity market, so that over the year the DAX index could register an increase of 29% to 7612 and the EURO STOXX 50 of 19.2% to 2625.