Annual Report of Euram Bank Vienna 2012/2013

eurambank

The key to growth and protection.


Change – driven by minds.

What is the origin of innovation – if not the mind?

What is the root of efficiency – if not reflection, anticipation, team thinking,

revolutionary thinking, lateral thinking?

We embrace change driven by minds.

Jointly: overcoming narrow limits of specialization.

With our partners and clients: sensitive to each personal need and idea.

In many countries: appreciating differences, yet transcending cultural divides.

Time and again: expanding the limits of traditional thinking.


Inspired.

Our services speak of continuity, reliability and stability.

Of expertise, mental agility and creativity.

We draw from many sources of inspiration: technical

innovation, deep analysis of business structures and

processes, life experience. Or simply: the needs and

wants of individuals. Sometimes the spark for a new

idea is an image, a phrase, a statement of a client -

or a line of a poem.

schtzngrmm

schtzngrmm

t-t-t-t

t-t-t-t

grrrmmmmm

t-t-t-t

s---------c---------h

tzngrmm

tzngrmm

schtzngrmm is one of the first so-called “speaking poems” by the Austrian lyricist Ernst Jandl. When the

poem was first published in 1957, it triggered an uproar – as did other publications by Jandl. One of the

things Ernst Jandl was accused of was spoiling young people. Today, more than ten years after his death,

he is a celebrated poet.

Source: Ernst Jandl, Poetische Werke, published by Klaus Siblewski

© 1997 Luchterhand Literaturverlag, Munich, part of Random House GmbH publishing group


Creative.

Creativity is a big word: used frequently, misused,

misunderstood – always open to interpretation.

To us, creativity means innovation in all business

areas. Innovation is crucial in a faster changing world.

Innovative solutions must be sustainable and stand

the test of time, in an ever more complex world.

Solutions which are precise in meeting clients’ needs.

And they do; they are; they work.

tzngrmm

grrrmmmmm

schtzn

schtzn

t-t-t-t

t-t-t-t

schtzngrmm

schtzngrmm

tssssssssssssss


Trusted.

Positive experiences create trust. Actions that build

confidence: an impressive performance, open and

transparent communication. Sometimes trust is simply

advanced: someone offers you trust without knowing

whether it will be justified, irrespective of whether you

can prove that you deserve it. Can we afford to disappoint?

Of course not. Trust and trusting is a question of mindset.

That is the tenor of our bank. Every day, every time.

grrt

grrrrrt

grrrrrrrrrt

scht

scht

t-t-t-t-t-t-t-t-t-t

scht

tzngrmm

tzngrmm


Focused.

Recent developments in the financial industry around

us gave pause for thought. First and foremost, they

made us focus on our core competencies. Reliable

private banking, pure asset management and innovative

card payment services are the solid foundation of our

daily business – based on excellent capital resources.

In addition to strong personal values, total commitment

to our clients and innovative strength. We have built

a reliable foundation – and we look forward to a

successful future.

t-t-t-t-t-t-t-t-t-t

scht

scht

scht

scht

scht

grrrrrrrrrrrrrrrrrrrrrrrrrrrr

t-tt


2012/2013 Annual Report

European American Investment Bank AG


Foreword by the Chief Executive Officer

Ever since the financial crisis, the financial

industry has been struggling to restore

trust and confidence. The question remains

why it took a disaster like 2008 to wake up

and cause industry and investors to reflect.

By now, many things have moved in the

right direction. A new general framework

of stricter rules and regulations disciplines

the financial industry. The banks’ business

models have come under scrutiny, their

risk profiles have been made transparent,

and there is a healthy tendency to refocus

on core competencies. In addition, banks

have been building up capital and emphasising

conservative liquidity management.

We successfully rose to the challenges in

the business year 2012/2013 and have implemented

the necessary steps. We have restructured

our equity participations favourably,

strengthened our core businesses,

and have advanced significant and promising

growth projects. Moreover, Euram

Bank’s capital resources continue to be excellent.

Trust and confidence simply cannot be

commanded – any call for trust triggers

suspicion and distrust. Trust needs to be

the general rule in guiding actions, not the

exception. Our daily task is to make the

“banking business” understandable and

transparent again, in everything we do.

Whenever you have questions, please do

not hesitate to contact us – we start by listening

closely to you.

Manfred Huber

Chief Executive Officer

September 2013


Corporate Bodies

| 4

Supervisory Board

Adolf Walter Höllmer

– Chairman

Dr. Erik Max Michael Obermayer

– Vice chairman

Dkfm. Senta Penner

Manfred Huber

Managing Board

Manfred Huber

Johannes Langer

Josef Leckel

Johannes Langer

Josef Leckel


Management Report

| 8

1. Business Development and

Economic Situation

Business Model

European American Investment Bank Aktiengesellschaft

(“Euram Bank") is an Austrian

bank specializing in Private Banking,

Asset Management and Card Payment Services.

Our customers are mainly wealthy

international private individuals and entrepreneurs,

as well as established institutional

investors. Our highly qualified employees

come from 6 different nations and

reflect Euram Bank's open-minded corporate

culture.

Euram Bank is 100% privately owned. The

majority – via Euram Holding AG - is held

by executives and members of their families

together with financial investors, a

fact which ensures a high level of continuity

and commitment for the bank and its

customers.

Viktor Popovic, who has built up the Corporate

Finance, Card Payment Services and

Investment Banking sectors since 2002,

relinquished his position as CEO effective

as of April 30, 2013. Manfred Huber, responsible

for Asset Management and Private

Banking, was appointed by the supervisory

board as new CEO. Josef Leckel joined

the managing board on April 15, 2013. He

has held executive positions in the banking

and finance sector for almost 30 years and

has set up several institutions and branches

from scratch, implementing the necessary

regulatory and operational processes

and successfully establishing Product

Management and Customer Service divisions.

Josef Leckel is responsible for the divisions

Card Payment Services, Alternative

Investments and IT. Johannes Langer will

continue to serve as Chief Financial Officer.

Business Development

The slackening trend in the Eurozone,

which got significantly worse during the

last quarter, clearly lost momentum in the

first quarter of 2013. Since late March

2013, international financial markets were

strongly influenced by changing economic

growth signals and – as a consequence –


alternating expectations as to future monetary

policies across the Atlantic. Moreover,

major central banks further loosened

their already expansive monetary policy,

including a reduction of the key interest

rate in the Eurozone. Initially, these relaxing

measures led to a worldwide decrease

in the yield return on long-term bonds. In

May, however, interest began to rise again

worldwide based on positive economic

data. In addition, there was mounting expectation

that the US monetary policy

could probably be tightened sooner than

previously assumed. Towards the end of

the second quarter of 2013, however, the

US Federal Reserve’s confirmation that its

policy would remain accommodative in the

near future led to a slowdown and partial

reversal of the interest increase.

Despite the difficult economic environment,

we continued to meet the expectations

of our customers and were rewarded

with their confidence, thanks to the experience

and dedication of our staff and the

excellent performance in all our investment

strategies. Our prudent management

of the assets entrusted to us, our competence

and our long term experience in advising

our customers in all investment

matters have proven very successful in an

environment undergoing structural change.

The Private Banking division was strongly

affected by the resignation of a team of

client advisors. Our remaining dedicated

Private Banking team with the support of

the entire staff superbly coped with this

very difficult situation showing strong

commitment and enthusiasm. The Europportunity

Bond Fund managed by our

Asset Management department was awarded

with the best bond fund distinction

(5 stars) by “FWW Fundstars", an independent,

internationally renowned fund

rating agency. Our Card Payment Service

division continued its extremely profitable

development following a successful internal

restructuring in 2010. A project developed

with local partners was successfully

sold to an Austrian financial institution.

Our equity holding business was subject to

a fundamental restructuring process. The

planned sale of the 53.5% share in White-

Concierge Limited was successfully completed

during the business year 2012/2013.


| 10

Euram Bank Asia Limited, in which Euram

Bank holds a 51% stake, withdrew from

Dubai in the second half of 2012. On July

30, 2012, Euram Bank filed an application

with the Dubai Financial Services Agency

(DFSA) for a voluntary return of the license

of Euram Bank Asia Limited, which was

approved on October 31, 2012, thus initiating

its quiet liquidation. Three of Euram

Bank’s holdings (Euram Invest Holdings I

GmbH, Euram Invest Holdings II GmbH

and Euram Invest Holdings Vier GmbH)

are currently in liquidation, the shares

held in these companies were either dissolved

or sold.

The balance sheet total as of June 30, 2013

amounted to EUR 182.7 million, which is a

decrease of 51.5% on last year (June 30,

2012: EUR 376.9 million). Receivables

from customers declined by 68.9% on last

year to EUR 76.1 million (June 30, 2012:

EUR 244.5 million), and liabilities to customers

were also down 57.3% to EUR

149.9 million (June 30, 2012: EUR 351.3

million). These declines are the result of

the termination of a business model in

2011, which was carried out in cooperation

with Euram Bank Asia Limited. The business

model supported Indian companies in

the issuance of Global Depositary Receipts

at the Luxembourg Stock Exchange. Due to

the underlying structure (100% collateralization

of lendings by deposits and securities),

the ending of that business model

noticeably affected the balance sheet total.

GDR transactions in the total value of USD

202 million were terminated in the fiscal

year 2012/2013.

Euram Bank's operative result was remarkable

in the fiscal year 2012/2013. At EUR

13.7 million, its operating income was

only marginally lower than last year’s

(June 30, 2012: EUR 13.9 million). The significant

decline in net interest income

from EUR 3.5 million (June 30, 2012) to

EUR 1.8 million, which was due to low interest

levels and the ending of the above

mentioned business model, was more than

compensated by the sale of the 53.5%

share in WhiteConcierge Limited. Operating

expenses amounted to EUR 10.7 million

(June 30, 2012: EUR 11 million), the

operating result rose to EUR 3 million

(June 30, 2012: EUR 2.8 million).


| 12

Income from the release of value adjustments

of receivables and of accruals for

contingent liabilities and for credits risks

amounted to EUR 178.7 thousand (value

adjustments for receivables in the amount

of EUR 440.2 thousand were recognized as

of June 30, 2012), value adjustments for

securities and for investments and shares

in affiliated companies amounted to EUR

34.8 thousand (June 30, 2012: EUR 912.4

thousand).

As a result, the profit from ordinary activities

remarkably amounted to EUR 3.1

million (June 30, 2012: EUR 1.5 million).

Financial and Non-Financial Key

Performance Indicators

Euram Bank's capital resources continue to

be excellent. Eligible capital pursuant to

Section 23 of the Banking Act amounted to

EUR 15.2 million (June 30, 2012: EUR 15.2

million) and thus by far exceeded the capital

requirement of EUR 5.4 million (June

30, 2012: EUR 6.1 million). At 37%, the

equity ratio thus considerably exceeded

the statutory minimum level (June 30,

2012: 30.6%). Own funds consist entirely

of Tier 1 capital. The cost/income ratio was

78.2% compared to 79.7% last year.

In the fiscal year 2012/2013 Euram Bank

generated net profits of EUR 3.4 million.

Upon the respective resolution adopted by

the shareholders in the general assembly

meeting to be held in October 2013, Euram

Bank intends to distribute a dividend of

EUR 3.3 million – i.e. 21.8% of the capital

of EUR 15,261 million.

Material Events after the Balance

Sheet Date as of June 30, 2013

No material events occurred after the balance

sheet date as of June 30, 2013, which

could have affected the presentation of the

Bank's assets and liabilities, financial condition

and results of operation.


2. Forecast Development and Risks

Outlook 2013/2014

In the fiscal year 2013/2014 we expect

further stabilization and growth and hence

increase in income from our Private Banking

business. The outstanding performance

of our funds should lead to more

substantial volume in Asset Management.

Promising new Card Payment Services

projects are close to completion. Together

with our partners we are currently developing

further projects in the field of cardsupported

payment transactions.

Material Risk and Uncertainties

The interim order issued by the Securities

and Exchange Board of India (SEBI) on

September 22, 2011, which accuses Euram

Bank of having breached the rules of conduct

of the Indian Stock Exchange as FII

licensee is still in force. Euram Bank continues

to cooperate with all authorities involved

and urges a fast clarification of the

matter.

In February 2012, an Indian company filed

a complaint with the Vienna Commercial

Court, to obtain a declaratory judgment

against Euram Bank. Euram Bank and the

Indian company disagree as to the authenticity

of a pledge agreement dated March

2010 between the Indian company and

Euram Bank and whether Euram Bank is

therefore entitled to use the pledged credit

balance on the Indian company's account

with Euram Bank to secure a loan which

Euram Bank has granted to a borrower. In

reliance on that pledge agreement, Euram

Bank refuses to transfer the Indian

company's credit balance to that company's

other accounts. Euram Bank has obtained

an opinion from a sworn and court-certified

expert for forensic graphologic examination

in order to clarify whether the signature

on the pledge agreement between

the Indian company and Euram Bank is an

authentic signature of the Indian company's

authorized representative, or whether it

might be forged as the Indian company

claims. The expert concluded that the signature

on the pledge agreement between

the Indian company and Euram Bank is an


| 14

authentic signature of the person authorized

by the Indian company and not a

forgery. Two court hearings took place in

this case in the fiscal year 2012/2013. The

court has however not yet treated the main

allegation of the Indian company, which is

to “clarify the pledge agreement's lack of

authenticity". Based on the above mentioned

expert opinion, Euram Bank assumes

that the court will decide in favor of Euram

Bank.

On January 2, 2013, Euram Bank learned

that a US citizen brought an “action for

damages" against Euram Bank before the

United States District Court for the District

of North Carolina in August 2011. The

plaintiff argues that in December 2002 he

participated in a transaction planned, promoted

and marketed by Euram Bank. Having

investigated the plaintiff's income tax

return, the Internal Revenue Service (IRS)

denied the plaintiff the right to offset his

losses. Euram Bank refuted and entirely

rejected all claims and accusations of the

plaintiff and made available to the District

Court of North Carolina through US counsel

all relevant documents, which prove

that Euram Bank has not planned, promoted

or marketed those transactions at any

point in time. Euram Bank considers it unlikely

having to accept any financial responsibility

for this case. Consequently,

Euram Bank has not made accruals for litigation

risks in its June 30, 2013 financial

statements.

3. Risk Reporting

Euram Bank applies the standard method

set out in Section 22a of the Banking Act

to calculate its credit risk. Euram Bank

grants loans in the context of existing customer

relationships and subject to full collateralization,

either through cash deposits

or through securities held with Euram

Bank, taking into account appropriate

conservative lending limits. Euram Bank

does not invest in derivative financial instruments.


Furthermore, Euram Bank does not engage

in trading for its own account. Securities

held as current assets are exclusively held

for resale to customers and not with the

intention to take advantage of short-term

price and interest fluctuations.

The liquidity risk is limited by largely

matching maturities. Customer deposits

are mainly invested according to maturities,

and demand deposits are invested up to

a maximum of one week with a selected

group of other banks. Interest rate risks

are controlled upon advice from the Asset/

Liability Management Committee (ALCO)

which issues recommendations for asset/

liability management. The results are evaluated

and discussed on a monthly basis.

The recoverability of collateral provided

for collateralized loans is reviewed automatically

on a daily basis.

Due to Euram Bank's geographical focus,

the operational risk is the most significant

risk. The money laundering risk is mitigated

by implementing an analytical antimoney

laundering, compliance and risk

solution. The AML solution allows us to

identify unusual, unexpected and suspicious

customer patterns and transactions,

and the Compliance Officer is automatically

warned in case of any significant

suspicious patterns. Besides identifying

suspicious situations, this AML solution

supports the investigation, further processing

and documentation of identified cases.

Each step is completely documented in

compliance with audit guidelines and can

be reviewed and verified at any time by

means of reporting tools.

To limit its legal risk, Euram Bank closely

cooperates with a renowned law firm and

uses this firm's expertise in connection

with the launch of new products, transactions

and lines of business.

In the process of operational risk management,

guidelines for the identification,

evaluation and monitoring of risks are up-


| 16

dated on an annual basis. Daily risk management

was incorporated into business

and administration sectors. This business

partnership model ensures close monitoring

and guides the staff to a high awareness

of operational risks.

We apply the base indicator method pursuant

to Section 22j of the Banking Act

(BWG) in conjunction with Section 182 of

the Solvency Regulation to calculate our

operational risk.

In compliance with the pillar II/Basel II requirements,

“ICAAP" measures were adopted.

Euram Bank issues a risk strategy

which is updated on an annual basis. As

provided in the risk strategy, the risk bearing

capacity analysis compares the available

risk coverage with potential risks. That

analysis is prepared on a quarterly basis

and is submitted to the managing board

and the supervisory board as part of the

risk report.

Vienna, September 6, 2013

The Managing Board

Manfred Huber

Johannes Langer

Josef Leckel


BALANCE SHEET as of June 30, 2013

| 18

ASSETS June 30, 2013 June 30, 2012

EUR EUR THOUSAND EUR

1. Cash in hand, balances with central

banks and post office banks 41,270,246.84 37,750

2. Claims against credit institutions 54,886,937.36 46,896

a) repayment on demand 50,299,046.18 23,198

b) other loans and advances 4,587,891.18 23,699

3. Loans and advances to customers 76,068,063.55 244,546

4. Stocks and other

non fixed income securities 4,724,581.03 9,909

5. Participations 1,938,207.00 33,523

6. Shares in affiliated companies 972,609.63 1,007

7. Intangible fixed assets 56,604.43 57

8. Tangible assets 182,090.35 196

hereof: land and buildings used by

the credit institution in the course

of its own business (EUR 0.00)

9. Other assets 2,276,534.63 2,556

10. Prepayments and accrued income 361,841.20 454

182,737,716.01 376,894

11. Foreign assets 100,090,441.18 292,763


LIABILITIES June 30, 2013 June 30, 2012

EUR EUR THOUSAND EUR

1. Liabilities to credit institutions 7,247,470.83 3,073

a) repayable on demand 2,622.11 73

b) with agreed maturity dates

or period of notice 7,244,848.72 3,000

2. Liabilities to customers (non-bank) 149,934,606.71 351,301

a) Other liabilities

aa) repayable on demand 124,806,928.62 323,253

bb) with agreed maturity

or period of notice 25,127,678.09 28,048

3. Securitised liabilities 1,531,520.45 1,905

4. Other liabilities 2,059,794.53 2,321

5. Accruals and deferred income 125,604.85 140

6. Provisions 3,250,078.93 2,526

a) provisions for severance payments 174,466.04 254

b) provisions for taxation 0.00 275

c) other provisions 3,075,612.89 1,997

7. Subscribed capital 10,045,712.61 10,046

8. Capital reserves 1,920,350.77 1,887

a) tied-up 1,886,813.16 1,887

b) free 33,537.61 0

9. Profit reserves 2,634,904.17 2,635

a) other reserve 2,634,904.17 2,635

10. Liability reserve pursuant

to § 23 para 6 Banking Act 660,500.00 660

11. Net Profit 3,327,172.16 401

182,737,716.01 376,894

1. Contingent liabilities 3,376,387.83 3,968

2. Fiduciary Deposits 2,516,231.01 2,581

3. Own funds to be taken into

account pursuant to § 23 15,204,863.12 15,171

4. Required own funds

pursuant to § 22 para 1 5,428,248.00 6,148

5. Liabilities abroad 151,253,387.43 346,777


Profit and loss account for 2012/2013

| 20

PROFIT AND LOSS ACCOUNT June 30, 2013 June 30, 2012

EUR EUR THOUSAND EUR

1. Interest and interest-like earnings 2,631,758.66 5,435.4

hereof: fixed interest securities EUR 0,00

2. Interest and interest-like expenditures -848,856.45 -1,980.0

I. NET INTEREST EARNINGS 1,782,902.21 3,455.4

3. Earnings from securities

and participations 139,895.98 94.3

4. Earnings from commissions 48,427,972.38 17,331.2

5. Expenditures from commissions -43,178,945.63 -9,874.4

6. Earnings/expenditures from financial transactions -136,836.42 -123.8

7. Other operating earnings 6,634,253.31 2,988.5

II. OPERATING EARNINGS 13,669,241.83 13,871.3

8. General administrative expenditures

a) personnel expenditures -6,041,976.54 -5,038.9

aa) wages and salaries -5,234,812.67 -4,120.6

bb) payment of legal social levies

and compulsory contributions -675,343.36 -651.7

cc) other social expenditures -45,039.91 -52.9

dd) expenditures for old-age

care and assistance -120,566.99 -109.1

ee) endowment of the severance

compensation provision 33,786.39 -104.6

b) Other administrative expenditures

(overhead) -4,135,476.72 -5,612.3

-10,177,453.26 -10,651.2


PROFIT AND LOSS ACCOUNT June 30, 2013 June 30, 2012

EUR THOUSAND EUR

9. Value adjustments of the assets listed

in asset items 7 and 8 -136,008.97 -154.9

10. Other operating expenditures -377,690.90 -242.5

III. OPERATING EXPENDITURES -10,691,153.13 -11,048.6

IV. OPERATING RESULT 2,978,088.70 2,822.7

11. Balance of value adjustments and earnings from the

dissolution of value adjustments of claims and allocations

to/from provisions for contingent liabilities and credit risks 178,692.06 -440.2

12. Balance of earnings and expenditures from value adjustments

of securities valued like financial investments as well as

of participations and shares held in affiliated companies -34,878.58 -912.4

V. RESULT OF ORDINARY BUSINESS OPERATION 3,121,902.18 1,470.1

13. Income and earnings tax 204,714.63 -541.8

VI. ANNUAL SURPLUS 3,326,616.81 928.4

14. Change of reserve 0.00 -536.0

VII. ANNUAL PROFIT 3,326,616.81 392.4

15. Profit carryforward / loss carryforward 555.35 8.2

VIII. NET PROFIT 3,327,172.16 400.6


Notes

| 24

to the financial statements of European American

Investment Bank Aktiengesellschaft

(“Euram Bank") as of June 30, 2013.

The financial statements as of June 30, 2013

were prepared according to the provisions of

the Accounting Act in compliance with the

special provisions of the Banking Act.

1. GENERAL PRINCIPLES AND

INFORMATION ON ACCOUNTING

AND VALUATION

General Principles

The financial statements as of June 30,

2013 were prepared in compliance with

generally accepted accounting principles

and the general standard to present a true

and fair view of the company's assets and

liabilities, financial condition, and results

of operation.

The financial statements were prepared in

compliance with the principle of consistency

of presentation.

Assets and liabilities were valued in compliance

with the principle of individual valuation

and the going concern principle.

Compliance with the principle of conservatism

is ensured by recognizing only profits

realized on the balance sheet date and recognizing

all identifiable risks and impending

losses in the balance sheet.

According to Section 9 of the Corporate Income

Tax Act on taxation of corporate

groups, as of June 30, 2013, the group

consists of Euram Holding Aktiengesellschaft

as group parent and of Euram Bank

as group company. Taxes are allocated

using the stand-alone method.

The bank is organized as a stock corporation.

Euram Beteiligungverwaltung GmbH

(as transferring company) was merged

with Euram Bank (as acquiring company)

with retrospective effect as of June 30,

2012(“Downstream Merger", by maintaining

the book values pursuant to Section

202 (2) (1) of the Companies Act (UGB)).

The merger was approved by the Austrian

Financial Market Authority in May 2013.

Euram Bank is now wholly-owned by

Euram Holding Aktiengesellschaft. Prioryear

amounts were not adjusted, thus prior-year

figures are not comparable.


Foreign Currency Amounts

Pursuant to Section 58 (1) of the Banking

Act, amounts in foreign currency are

translated at the mean rates of exchange

on the balance sheet date.

Financial Instruments

in the Bank Book

Shares in hedge funds and two collateralized

loan obligations in the amount of

EUR 2.1 million (June 30, 2012: EUR 3.3

million) are held in the bank book.

Shares in Hedge Funds EUR thousand

1794 Commodore

Overseas Fund EUR 519

CFS I EUR 942

Sharpe Futures Fund EUR 682

Collateralized

Loan Obligations EUR thousand

Whitebark Pine I Ltd. EUR 3

Canal Point I Ltd. EUR 39

Lending Risks

Loans to customers amounted to EUR 76.1

million (June 30, 2012: EUR 244.5 million),

loans in an amount of EUR 23.9 million

(June 30, 2012: EUR 215.0 million) are

collateralized by deposits; the remaining

loans are mainly collateralized by mortgages,

deposits and/or securities.

Lendings

EUR million

Collateralized by

deposits EUR 23.9

Collateralized by

mortgages, deposits

and securities EUR 52.1

Non-collateralized EUR 0.1

Shares in affiliated companies

Euram Bank holds 100% in Euram Invest

Holdings I GmbH in Liquidation with its

registered office in Vienna, Austria, in

Euram Invest Holdings II GmbH in Liquidation

with its registered office in Vienna,

Austria, in Euram Invest Holdings 3 GmbH

with its registered office in Munich, Germany,

in Euram Invest Holdings Vier

GmbH in Liquidation with its registered

office in Vienna, Austria (the companies’

line of business being the management of

investments), and 51% in Euram Bank

Asia Limited in Liquidation with its registered

office in Dubai, United Arab Emirates.

In the fiscal year 2012/2013, the shares

in Euram Bank Asia Limited in

Liquidation were written down to EUR

537,5 thousand (30.6.2012: EUR 569,4

thousand).


| 26

In the fiscal year 2012/2013 no dividends

were distributed to Euram Bank, as in the

fiscal year 2011/2012. Pursuant to Section

238 (2) of the Companies Act, the equity

capital and the results of affiliated companies

of the last fiscal year can be summarized

as follows:

(in EUR thousand) Share Result last

Equity in Equity fiscal year

Euram Invest Holdings I GmbH

in Liquidation 196.3 100% -3,0

Euram Invest Holdings II GmbH

in Liquidation 103.6 100% -3,0

Euram Invest Holdings 3 GmbH 266.2 100% -48,2

Euram Invest Holdings Vier GmbH

in Liquidation 47.5 100% -8,1

Euram Bank Asia Ltd.

in Liquidation 1,053.8 51% -348,0


Participations

Besides the investment in the deposit guarantee

scheme (“Einlagensicherung der

Banken und Bankiers GmbH”), Vienna,

this item includes shares held in trust in

three (June 30, 2012: five) entities in the

amount of EUR 1.9 million (June 30, 2012:

EUR 33.5 million). In the fiscal year

2012/2013, the trust investments in

E.S.B.C., a.s. (EUR 3.1 million) and in Invecture

Group, S.A. DE C.V. (EUR 28.5 million)

were terminated.

Property, Plant and Equipment

Intangible fixed assets as well as property,

plant and equipment are valued at cost less

regular depreciation. Low-value items are

fully depreciated in the year of acquisition.

Regular depreciation is made on a straightline

basis.

Regular depreciation is based on the following

useful lives:

Company cars

Office furniture

Leasehold improvements

Office equipment

Software

Hardware

8 years

5 years

5 years

5 years

5 years

5 years

Accruals for Severance Payments

Accruals for severance payments are calculated

according to principles of financial

mathematics by applying an interest rate

of 4% and on the basis of an arithmetical

pension age of 60 years for women and 65

years for men. A fluctuation discount is

not applied.

Contingent Liabilities

Contingent liabilities contain financing

guarantees collateralized by securities or

by cash in the amount of EUR 0.2 million

(June 30, 2012: EUR 0.3 million), one noncollateralized

financing guarantee of EUR

0.6 million (June 30, 2012: EUR 0.6 million)

and guarantees to credit card companies

for the credit card limits granted to

Euram Bank customers in the amount of

EUR 2.6 million (June 30, 2012: EUR 3.0

million).

Credit Risks

This item includes undrawn credit facilities

of EUR 2.5 million (June 30, 2012: EUR 2.6

million).


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Fiduciary Receivables

Fiduciary receivables are included in the

following items:

--

Loans and advances to customers:

EUR 5.6 million (June 30, 2012: EUR

5.6 million)

--

Shares and other non-fixed income securities:

EUR 1.0 million (June 30, 2012:

EUR 1.2 million)

--

Participations: EUR 1.9 million (June

30, 2012: EUR 33.5 million)

Fiduciary Liabilities

Fiduciary liabilities are included in the following

items:

--

Liabilities to customers: EUR 7.5 million

(June 30, 2012: EUR 39.1 million)

--

Securitized liabilities: EUR 1.0 million

(June 30, 2012: EUR 1.2 million)

2. NOTES TO THE BALANCE SHEET

A. Presentation of Maturities

Receivables (not repayable on demand)

from banks and customers as well as payables

(not repayable on demand) to banks

and customers are summarized according

to remaining maturities as follows:

Receivables from banks EUR thousand

Up to 3 months EUR 4,588

More than 3 months

to 1 year EUR 0

More than 1 year

to 5 years EUR 0

More than 5 years EUR 0

Receivables from customers

Up to 3 months EUR 760

More than 3 months

to 1 year EUR 29,568

More than 1 year

to 5 years EUR 10,824

More than 5 years EUR 6,687

Payables to banks

Up to 3 months EUR 7,245

More than 3 months

to 1 year EUR 0

More than 1 year

to 5 years EUR 0

More than 5 years EUR 0

Payables to customers

Up to 3 months EUR 327

More than 3 months

to 1 year EUR 18,571

More than 1 year

to 5 years EUR 6,230

More than 5 years EUR 0


B. Securities

In the fiscal year 2012/2013, Euram Bank

did not hold any fixed-interest securities.

C. Shares and Other

Non-fixed-interest Securities

This item includes shares in investment

funds in the amount of EUR 1.8 million

(June 30, 2012: EUR 1.8 million) held as

fixed assets.

Current assets contain shares in hedge

funds in the amount of EUR 1.6 million

(June 30, 2012: EUR 2.3 million), two collateralized

loan obligations in the amount

of EUR 0.1 million (June 30, 2012: EUR 0.3

million), and shares in the “1794 Commodore

Overseas Fund" in the amount of EUR

0.5 million (June 30, 2012: EUR 0.7 million).

This item also includes investment

fund shares in the amount of EUR 0.5 million

(June 30, 2012: EUR 4.4 million), a

self-issued partial debenture in the amount

of EUR 70 thousand (June 30, 2012: EUR

250 thousand), and a self-issued certificate

in the amount of EUR 122 thousand (June

30, 2012: EUR 53 thousand). Furthermore,

shares in the amount of EUR 10 (June 30,

2012: EUR 10) are held in “Petrocapital

Resources PLC” as well as a bond of EUR

10 (June 30, 2012: EUR 0) in A-Tec Industries

AG.

Fixed Assets

EUR thousand

Europportunity Bond EUR 1,845

Current Assets

CFS I EUR 942

Sharpe Futures Fund EUR 682

Whitebark Pine I Ltd EUR 3

Canal Point I Ltd EUR 39

1794 Commodore

Overseas Fund EUR 519

Europportunity Bond EUR 290

USD Convergence Bond EUR 205

Advantage Stock EUR 8

Euram CLO Note I EUR 70

Euram Commodore

Index – Certificate

Euro Protected 2 EUR 122

5,75 A-Tec Industries EUR 0.01

Petrocapital

Resources PLC EUR 0.01

None of the items of fixed and current assets

are quoted on the stock exchange. The

listing of “Petrocapital Resources PLC" was

terminated in 2010.


| 30

In the fiscal year 2012/2013, Euram Bank

did not hold a securities trading book.

In the fiscal year 2012/2013, Euram Bank

held one share (“Petrocapital Resources

PLC").

D. Fixed Assets

The fixed-asset movement schedule is presented

as a separate schedule of the notes.

E. Other Assets

Other assets include corporation tax, value

added tax and capital gains tax receivable

from prepayments to the Tax Office for

Corporations (EUR 23 thousand / June 30,

2012: EUR 241 thousand), a pending repayment

(EUR 0.7 million / June 30, 2012:

EUR 0.5 million), fees charged for the management

of investment funds (EUR 0.3

million / June 30, 2012: EUR 0.5 million),

outstanding receivables (EUR 1.0 million /

June 30, 2013 EUR 185 thousand), a real

estate property which is not intended to be

held on a long term basis (EUR 250

thousand / June 30 2012: EUR 250

thousand).

F. Prepayments and accrued income

This item includes current salary payments

in the amount of EUR 102.7 thousand

(June 30, 2012: EUR 130.9 thousand), prepaid

insurance premiums, information and

maintenance expenses in the amount of

EUR 234.6 thousand (June 30, 2012: EUR

242.5 thousand), prepaid rent in the

amount of EUR 11.5 thousand (June 30,

2012: EUR 11.7 thousand) and other prepayments

in the amount of EUR 13.0

thousand (June 30, 2012: EUR 68.8

thousand).

G. Securitised Liabilities

This item contains self-issued bonds and a

self-issued certificate.

EUR thousand

Euram CLO Note I EUR 76

CFS Alternative

Investment Note I EUR 942

Euram Commodore

Index – Certificate

Euro Protected 2 EUR 513


H. Other Liabilities

Invoices already received but not yet paid

in respect of the fiscal year 2012/2013

amount to EUR 0.3 million (June 30, 2012:

EUR 0.4 million), liabilities to a data collection

company – profit share from ATM

business – amount to EUR 1.7 million

(June 30, 2012: EUR 1.4 million), liabilities

to an affiliated company from tax allocations

amount to EUR 5.5 thousand (June

30, 2012: EUR 0.5 million).

I. Accruals and deferred Income

This item mainly includes fees of EUR 0.1

million (June 30, 2012: EUR 0.1 million)

already received, but allocated to the fiscal

year 2013/2014.

J. Shareholder's Equity

1.) The share capital of EUR 10,045.7

thousand is divided into 270,000 share

units, each representing the same interest

in the share capital.

EUR thousand

Subscribed capital EUR 10,045.7

(Appropriated) reserve EUR 1,920.4

Retained earnings EUR 2,634.9

Liability reserve pursuant

to Section 23 (6)

Banking Act (BWG) EUR 660.5

3.) The net profit for the fiscal year

2012/2013 amounts to EUR 3,327.2

thousand (June 30, 2012: EUR 400.6

thousand).

K. Required own funds

Euram Bank uses the following methods to

calculate its required own funds:

Credit risk: Standard method

Operational risk: Basic indicator approach

The required own funds for the credit risk

amount to EUR 3,295 thousand (June 30,

2012: EUR 3,967 thousand).

2.) The shareholders' equity consists of the

following:


| 32

Pursuant to Section 22a (4) of the Banking

Act, 8% of the weighted receivables for

each class of receivable amount to:

EUR thousand

Receivables from central

states or central banks EUR 0

Receivables from

regional administrative

bodies EUR 0

Receivables from

institutions EUR 774

Receivables from

companies EUR 1,458

Retail receivables EUR 164

Receivables collateralized

by real estate properties EUR 0

Receivables in the form of

investment fund shares EUR 114

Other items EUR 785

The required own funds for the foreign

currency risk amount to EUR 0 (June 30,

2012: EUR 0).

The required own funds for the operational

risk amount to EUR 2,133 thousand (June

30, 2012: EUR 2,181 thousand).

L. Additional Disclosures

1.) Total amount of assets and liabilities in

foreign currency:

EUR million

Foreign currency

assets EUR 90.9

Foreign currency

liabilities EUR 90.4

2.) In the fiscal year 2012/2013, Euram

Bank was not restraint in the disposal of

assets (June 30, 2012: EUR 3.6 million).

3.) Receivables from affiliated companies

amount to EUR 4.4 million (June 30, 2012:

EUR 6.5 million).

4.) Liabilities to affiliated companies

amount to EUR 0.9 million (June 30, 2012:

EUR 0.5 million).

5.) Other accruals in the amount of EUR 3

million (June 30, 2012: EUR 2 million) include

accruals for bonuses, unconsumed

annual leave, legal, auditing and advisory

fees, as well as other expenses.

6.) Liabilities from the use of fixed assets

not recognized in the balance sheet amount

to EUR 402.2 thousand in the next year

(June 30, 2012: EUR 389.6 thousand), to

approx. EUR 2 million for the next five

years and are mainly related to rental payments

for the use of office space.


| 34

7.) The total volume of forward exchange

transactions not yet executed on the balance

sheet date can be summarized as follows:

June 30, June 30,

EUR million 2013 2012

Contracts

to buy EUR 0.5 EUR 0.4

Contracts

to sell EUR 0.5 EUR 0.4

3. NOTES TO THE INCOME

STATEMENT

With reference to Section 242 (1) of the

Companies Act, income will not be

itemized by geographical markets

pursuant to Section 64 (1) no. 9 of the

Banking Act.

With reference to Section 237 of the

Companies Act, other operating income

and other operating expenses can be

summarized as follows pursuant to

Section 64 (1) no. 12 of the Banking Act:

--

Other operating income mainly consists

of costs recharged to customers in the

amount of EUR 1.8 million (June 30,

2012: EUR 1.0 million), income from the

sale of an asset (“WhiteConcierge Limited")

in the amount of EUR 4.6 million.

The release of accruals in respect of the

fiscal year 2011/2012 amounts to EUR

6.3 thousand (June 30, 2012: EUR 0.2

million), and a VAT credit amounts to

EUR 0.2 million (June 30, 2012: EUR 0.2

million).

--

Other operating expenses recognized in

the fiscal year 2012/2013 in the amount

of EUR 377.6 thousand (June 30, 2012:

EUR 242.0 thousand) concern mainly

costs of external advisors and non-operating

interest.

There were no value adjustments on receivables

(June 30, 2012: EUR 440 thousand).

Income from the release of value adjustments

of receivables and of accruals for

contingent liabilities and for credits risks

amount to EUR 178.7 thousand (June 30,

2012: EUR 0.0 thousand) in the fiscal year

2012/2013.

Expenditures from value adjustments in

respect of securities as well as of investments

and shares in affiliated companies


amount to EUR 34.8 thousand (June 30,

2012: EUR 0.9 million) and mainly concern

the value adjustment for Euram Bank Asia

Limited in Liquidation (EUR 31.9 thousand)

and for Euram Invest Holdings II GmbH in

Liquidation (EUR 2.9 thousand).

“Taxes from income and earnings" in the

amount of EUR +204.7 thousand (June 30,

2012: EUR -0.5 million) recognized in the

profit and loss accounts, taking into account

tax allocations, adversely affect the

“Profit or loss on ordinary activities" in an

amount of +6.6% (June 30, 2012: -35.7%).

There were no allocations to revenue reserves

in the fiscal year 2012/2013 (June 30,

2012: EUR 536 thousand).

4. OTHER INFORMATION

1.) The Bank employed on average 32

(June 30, 2012: 36) employees in the fiscal

year 2012/2013.

2.) In the fiscal year 2012/2013, accruals

for severance payments and pensions for

executives amount to EUR 156.3 thousand

(June 30, 2012: EUR 156.0 thousand) and

to EUR 97.5 thousand (June 30, 2012: EUR

98.0 thousand) for other employees. In addition,

contributions in the amount of EUR

120.6 thousand (June 30, 2012: EUR 109.0

thousand) were paid to the company pension

fund.

3.) The total compensations to 4 (June 30,

2012: 3) members of the managing board

in consideration for their activities in the

fiscal year 2012/2013 amount to EUR 1.9

million (June 30, 2012: EUR 1.3 million);

the compensations paid to members of the

supervisory board in the fiscal year

2012/2013 amount to EUR 0.1 million

(June 30, 2012: EUR 0.1 million).

4.) In the fiscal year 2012/2013, Euram

Bank granted two loans in the amount of

EUR 144.4 thousand to executives (June

30, 2012: EUR 150.0 thousand).

5.) In the fiscal year 2012/2013, the managing

board consisted of the following individuals:

Viktor Popovic (until April 30, 2013)

Manfred Huber

Johannes Langer

Josef Leckel (since April 15, 2013)


| 36

6.) In the fiscal year 2012/2013, the supervisory

board consisted of the following individuals:

Dr. Erik Max Michael Obermayer

Chairman (until November 28, 2012)

Vice-Chairman (since November 29, 2012)

Adolf Walter Höllmer

Vice-Chairman (until November 28, 2012)

Chairman (since November 29, 2012)

Dkfm. Senta Penner

7.) Euram Bank is included in the consolidated

financial statements of the following

company:

Euram Holding Aktiengesellschaft

Wallnerstrasse 4

1010 Vienna, Austria

5. ADDITIONAL DISCLOSURES

In compliance with the Company's disclosure

requirements laid down in Section 26

of the Banking Act (BWG), it is noted that

the publication is available on the website

of Euram Bank (www.eurambank.com) at

Euram Bank / Publications and Disclosures".

Vienna, September 6, 2013

The Managing Board

Manfred Huber

Johannes Langer

Josef Leckel


Audit opinion

| 40

Report on the Financial Statements

We have audited the accompanying financial

statements, including the accounting

system, of European American Investment

Bank Aktiengesellschaft,

Vienna, for the fiscal year from July 1,

2012 to June 30, 2013. These financial

statements comprise the balance sheet as

of June 30, 2013, the income statement

for the fiscal year ended June 30, 2013,

and the notes.

Management’s Responsibility for

the Financial Statements and for

the Accounting System

The Company’s management is responsible

for the accounting system and for the preparation

and fair presentation of these financial

statements in accordance with

Austrian Generally Accepted Accounting

Principles. This responsibility includes: designing,

implementing and maintaining

internal control relevant to the preparation

and fair presentation of financial statements

that are free from material misstatement,

whether due to fraud or error;

selecting and applying appropriate accounting

policies; and making accounting

estimates that are reasonable in the circumstances.

Auditor’s Responsibility and Description

of Type and Scope of the

Statutory Audit

Our responsibility is to express an opinion

on these financial statements based on our

audit. We conducted our audit in accordance

with laws and regulations applicable

in Austria and Austrian Standards

on Auditing. Those standards require that

we comply with professional guidelines

and that we plan and perform the audit to

obtain reasonable assurance whether the

financial statements are free from material

misstatement.


An audit involves performing procedures

to obtain audit evidence about the amounts

and disclosures in the financial statements.

The procedures selected depend on the

auditor’s judgment, including the assessment

of the risks of material misstatement

of the financial statements, whether due to

fraud or error. In making those risk assessments,

the auditor considers internal

control relevant to the Company’s preparation

and fair presentation of the financial

statements in order to design audit procedures

that are appropriate in the

circumstances, but not for the purpose of

expressing an opinion on the effectiveness

of the Company’s internal control. An audit

also includes evaluating the appropriateness

of accounting policies used and the

reasonableness of accounting estimates

made by management, as well as evaluating

the overall presentation of the financial

statements.

We believe that the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Opinion

Our audit did not give rise to any objections.

In our opinion, which is based on

the results of our audit, the financial statements

comply with legal requirements and

give a true and fair view of the financial

position of the Company as of June 30,

2013 and of its financial performance for

the fiscal year from July 1, 2012 to June

30, 2013 in accordance with Austrian Generally

Accepted Accounting Principles.


| 42

Comments on the Management

Report

Pursuant to statutory provisions, the management

report is to be audited as to

whether it is consistent with the financial

statements and as to whether the other

disclosures are not misleading with respect

to the Company’s position. The auditor’s

report also has to contain a statement as to

whether the management report is consistent

with the financial statements.

In our opinion, the management report is

consistent with the financial statements.

Vienna, September 6, 2013

Ernst & Young

Wirtschaftsprüfungsgesellschaft m.b.H.

Mag. Andrea Stippl mp

Certified Public Accountant

Mag. Ernst Schönhuber mp

Certified Public Accountant


Euram Bank AG

Palais Esterházy

Wallnerstrasse 4

1010 Vienna, Austria

Tel. +43 1 512 38 80 0

Fax +43 1 512 38 80 888

office@eurambank.com

www.eurambank.com

This is a translation from German. In case of any

discrepancies between the English and the German

version the German text shall prevail.

Concept, design and production

die3 Agentur für Werbung und Kommunikation GmbH

Photographs

Michael Stelzhammer, Kurth Keinrath, Shutterstock

Print

Vorarlberger Verlagsanstalt


Euram Bank AG

Palais Esterházy

Wallnerstrasse 4

1010 Vienna, Austria

Tel. + 43 1 512 38 80 0

Fax + 43 1 512 38 80 888

office@eurambank.com

www.eurambank.com

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