Annual Report 2007 - VEM Aktienbank AG

Annual Report 2007

At a glance
5-year-period financial figures
In EUR „000 2007 2006 2005 2004 2003
Net interest income 642 344 383 105 32
Commissions income 6,636 10,702 9,101 3,994 1,189
Trading result 1,513 2,847 9,343 944 269
Other operating income 1,327 5,577 178 410 344
Total operating income (net) 10,136 19,470 19,005 5,453 1,842
Financial investment result 715 470 233 78 8
Result from ordinary business activities 4,022 9,244 14,279 2,937 319
Annual surplus 2,249 6,057 8,748 1,734 319
Equity 35,906 32,136 25,677 7,350 2,643
Return on equity before tax 12.5% 35.4% 85.6% 64.9% 13.7%
NB:
Figures based on IFRS (beginning from 2004)
Return on equity: before tax, based on equity at end of financial year minus annual surplus
Performance record
One of the leading banks for public offerings:
Syndicate bank no. 1 (2000)*
Lead manager no. 1 (2001), no. 1 (2005)**, no. 1 (2007), no. 1 (2007)****
No. 1 for issue rights offers 2003/2004/2005/2007/2007*
No. 1 for listings 2004/2005/2007***
No. 2 in Designated Sponsoring 2007/2007*****
Notes:
All compared to the total number of transactions of public listed companies
* and *** Listings on the Frankfurt Stock Exchange
** Source: IPO-Statistic 2005 Going Public Magazine (01/06) and Corporate Finance Ranking Deutsche Börse
*** No more data available from 2007
**** Source: IPO-Statistic 2007 Going Public Magazine (01/08)
***** Source: Deutsche Börse Rating 3rd Q 2007

Table of contents
Letter to the shareholders 5
Key figures for the share 6
Report by the Supervisory Board 7
Corporate governance in VEM Aktienbank AG 10
Consolidated annual report for the financial year 2007 17
Consolidated companies 42
Consolidated accounts (IFRS) on 31 December 2007 42
Development of consolidated equity 2007 44
Consolidated profit and loss account (IFRS) 01/01/2007 to 31/12/2007 46
Cash flow statement 2007 47
Segment information 2007 48
Notes to consolidated accounts 2007 50
General details 50
Accounting and valuation policies 52
Balance sheet details 63
Details on profit and loss account 71
Other details 76
Board of Directors‟ statement 83
Auditor‟s report 84
Company information 85
Financial calendar 86
3

4
Erich Pfaffenberger and Andreas Beyer

Dear shareholders,
Letter to the shareholders
The past calendar year – our tenth full financial year – was once again an eventful one. New
challenges appeared in a turbulent market: a sluggish new issues business, a declining shares
market marked by the subprime crisis and increasing competitive pressure formed the setting for
our operational business.
In this context, it seemed an appropriate time to investigate strategic opportunities. Discussions
with high-ranking representatives of the globally active Computershare group have shown that by
working together the potential in assisting listed companies can be increased.
The fruitful and trust-building negotiations eventually led to a takeover bid on the part of the
Computershare group, marking a milestone in the development of VEM Aktienbank AG. The
Computershare group is the worldwide leader and sole global service provider for share-register
management and in this context it performs services for issuers that are very similar to our own.
We have gained a strong partner that is a source of reliability and financial strength. This is a
sensible strategic alignment that perceptibly differentiates us from the competition, because we
are in a position to offer a single source for practically all the possible services for listed issuers.
Computershare recognised VEM Aktienbank AG‟s strong market position with a premium of
approximately 36% over the average market price for VEM shares three months before the
announcement of the voluntary takeover bid. Not least because of the planned takeover, our share
price has shown substantial positive growth in the past financial year.
Today Computershare holds 92% of VEM Aktienbank AG. We look forward to a successful future
together.
Our thanks go to everyone who has contributed to the thriving success of the past financial year.
Munich, May 2008
VEM Aktienbank AG
The Board of Directors
Andreas Beyer Erich Pfaffenberger
5

Key figures for the share
Key figures for the share 2007
Equity book value per share EUR 3.61
Earnings per share EUR 0.23
Maximum and minimum rate 2007
Maximum (26/11/2007) EUR 6.30
Minimum (14/03 2007) EUR 4.23
Year-end rate EUR 6.22
Average market turnover / day (all stock exchanges) 443,098 shares
Number of shares (year-end status) 9,675,000
Average number of shares 9,607,895
Market capitalisation (year-end) EUR 60,178,500
Free float at year-end approx. 40%
Details on the share
Security ID number 760 830
ISIN DE0007608309
Market code VAB
Market notice Munich (regulated market/M:access)
Frankfurt (Open Market)
Stuttgart, Düsseldorf, Berlin-Bremen, Hamburg (open market)
Price development
6
XETRA (continuous trading)

In 2007, the supervisory board fulfilled the tasks
provided for by the laws and company articles. It
reported on a regular basis to the board of
directors, supervised the latter and was involved
in all decisions of a particular significance for the
firm. The board of directors informed the
supervisory board during the financial year 2007
on a regular, punctual and comprehensive basis
of all corporate issues relating to planning,
business development, risk situation, risk
management, strategic measures and important
business procedures and plans. The supervisory
board was provided with explanations when
business procedures did not correspond to the
established plans and targets. All measures
requiring approval and the firm‟s strategic plans
were discussed in detail. The supervisory board
cast its vote after thorough verification and
consultation where required by the laws, company
articles and internal procedures. The chairman of
the supervisory board was also informed of
important business events and decisions between
the supervisory board meetings and maintained
contact with the board of directors at all times.
Focus of the consultations with the
supervisory board
During the financial year 2007, the supervisory
board was informed about the current economic
and strategic situation of the bank, business
progress in the individual sectors, the
development of risk, active risk management and
new projects during five meetings and by means
of the regular distribution of documents. The
individual subjects were addressed and discussed
in detail by the board. All the members of the
supervisory board were present at all the
supervisory board meetings during the financial
year.
During the meeting of 28 March 2007, and
Report by the Supervisory Board
following in-depth private consultation and prior
discussion, the supervisory board approved the
annual financial statement of VEM Aktienbank AG
as of 31/12/2006.
The main issues addressed in subsequent
consultations included the draft invitation to the
annual general meeting and the planned
investment in the land development company
“Am Schönberg” GmbH.
In the second supervisory board meeting on 11
April 2007, the main business was the approval of
the consolidated accounts on 31 December 2006.
During the meeting following the annual general
meeting on 21 May 2007, discussions mainly
concerned current business developments and the
planned flotation of Fonterelli GmbH & Co. KGaA.
On 24 September 2007, the issues of the risk
situation against a background of the “subprime
crisis”, the application procedure for a full banking
licence, and the planned listing of Fonterelli GmbH
& Co. KgaA were discussed.
The final supervisory board meeting of the
financial year on 12 December 2007 focused on
planning for 2008, the status of the takeover
action by Computershare and the possible joint
statement of the board of directors and
supervisory board, as well as the board of
directors‟ risk report including the effects of the
first EdW (Entschädigungs-einrichtung der
Wertpapierhandelsunternehmen – Compensatory
Fund of Securities Trading Companies) special
payment as a result of the “Phoenix”
compensation case.
The supervisory board also carefully examined the
public takeover bid made by Computershare
Beteiligungs GmbH & Co. KG to the shareholders
of VEM Aktienbank AG. Deliberations on this point
7

led to the board of directors and supervisory
board‟s joint statement of 24 December 2007 on
this takeover bid.
from left: Dr. Alfred Krammer, Matthias Girnth, Olaf
Posten
The supervisory board consists of three ordinary
members including the chairman. These are:
Matthias Girnth, chairman
Olaf Posten, deputy chairman
Dr. Alfred Krammer, member
8

Audit of annual and consolidated
accounts
The auditor selected by the annual general
meeting of the previous year, Ernst & Young
accountancy and tax advisory firm, Stuttgart,
subsidiary in Eschborn/ Frankfurt am Main,
verified the annual accounts of VEM Aktienbank
AG and the consolidated accounts including the
annual report for the financial year 2007 and
issued an unlimited audit report.
The annual accounts of VEM Aktienbank AG, the
consolidated accounts, the annual report, the
suggested use of the balance sheet profit, the
board of directors‟ report on relations with
associated firms and the auditors‟ reports were
presented to all the members of the supervisory
board and verified by the same.
Consultations took place in the presence of the
auditors who reported on the principal results of
their audit in the supervisory board meeting and
answered questions. The supervisory board
approved the results of the audit. Following the
final results of its internal audit, the supervisory
board issued no objections to the annual accounts
of VEM Aktienbank AG and the consolidated
accounts and approved the annual accounts of
VEM Aktienbank AG and the consolidated
accounts; the annual accounts of VEM Aktienbank
AG were thus approved. The supervisory board
assented to the board of directors‟ suggestion
concerning the use of the balance sheet profit.
Changes in the board of directors
and the supervisory board
No changes were made to VEM Aktienbank AG‟s
board of directors. The term of office of both
Report by the Supervisory Board
directors runs to 30 September 2011.
There have also been no changes made to the
composition of the supervisory board during the
financial year 2007. All the members of the
supervisory board were reappointed at the annual
general meeting of VEM Aktienbank AG on 21 May
2007 for the period to the end of the annual
general meeting that will take a decision over
their release for the financial year 2011.
Corporate Governance
The requirements of the German Corporate
Governance Code were also of significance for the
supervisory board. The board of directors and the
supervisory board decided to comply in principle
with the recommendations of the Corporate
Governance Code. The declaration of conformity
according to § 161 of the German Stock
Corporation Act (AktG) was presented by the
board of directors and the supervisory board on
27 May 2007 and subsequently made available to
shareholders on the firm‟s website www.vemaktienbank.de.
The supervisory board thanks the board of
directors and all the employees within the group
for their dedicated work for our company.
Munich, May 2007
The supervisory board
Matthias Girnth
Chairman
9

Joint report by the board of directors and the supervisory board of VEM
Aktienbank AG as per para. 3.10 of the German Corporate Governance Code (as
amended on 14/6/2007)
Preamble
Corporate governance generally includes all the principles and values involved in successful, responsible
corporate management. Corporate governance is therefore extremely varied and includes compulsory and
optional measures such as the observance of laws and regulations (compliance), the observation of
recognised standards and recommendations and the development and respect of individual corporate
guidelines.
VEM Aktienbank AG has always placed a great deal of importance on corporate governance, which is
reflected in a corporate governance oriented towards long-term success, in close, targeted cooperation
between company management and supervision, and in transparency and clarity in corporate
communication.
Basis
The legal basis for corporate governance within VEM Aktienbank AG is particularly to be found in the
German Stock Corporation Act, the German Corporate Governance Code (as amended on 14/6/2007)
(hereinafter “DCGK”) and the Securities Trading Act. The relevant statutory provisions concerning combating
money laundering also apply and the bank‟s money laundering representative is responsible for
guaranteeing compliance with the same. Regulations concerning the governance and supervision of the
company can be obtained from the company articles agreed upon by the general meeting of VEM
Aktienbank AG.
In addition to these regulations established according to the laws and company articles, the company has
also introduced compliance directives and guidelines for personal account dealing for the issues and
securities business. The bank‟s compliancy representative is responsible for guaranteeing compliance with
these provisions.
Implementation of the DCGK recommendations
The company states in an annual declaration whether or with what limitations the recommendations of the
“Government Committee for the German Corporate Governance Code” presented by the federal justice
department in the official section of the electronic Federal Bulletin have been and will be observed.
This compliance statement from VEM Aktienbank AG‟s board of directors and supervisory board is published
on the company‟s website (http://www.vem-aktienbank.de), which also presents the no longer effective
compliance statements for the previous 3 years.
10

Report by the Supervisory Board
In accordance with the current compliance statement of 27 May 2008, the DCGK recommendations have
been and will be observed with the following limitations:
DCGK paragraph 2.3.2
The convening of a general meeting is published in the legally stipulated form and is easily accessible,
together with the convocation documents, on the company‟s website. No electronic notification is issued to
national and international financial service providers, shareholders or shareholders‟ associations.
DCGK paragraph 4.2.1
The board of directors does not have a chairman; the members of the board of directors possess equal
rights. The board member responsible for public relations is designated as the spokesman.
DCGK paragraphs 4.2.3, 4.2.4 and 4.2.5
The chairman of the supervisory board does not inform the general meeting about the main features of the
compensation system for the board of directors or the amendment of the same. According to the decision of
the ordinary general meeting of 23 August 2006, the individual board members‟ total compensation, divided
into performance-related and non performance-related elements including names, does not have to be
disclosed in the Notes to the annual accounts and in the consolidated accounts for a five year period. It
follows that there is no individual disclosure of the total compensation of each board member and no
explanation of the compensation system for the board members in the compensation report according to
paragraph 4.2.5 of the German Corporate Governance Code.
DCGK paragraphs 5.1.2 and 5.4.1
The supervisory board does not currently have any long-term succession planning in order to fill vacant
positions on the board of directors. Due to the fairly recent establishment of the firm, this has not yet been
planned. There are no age limits for members of the board of directors or the supervisory board.
DCGK paragraphs 5.3.1, 5.3.2 and 5.2
The firm‟s supervisory board is made up of three people in accordance with the company articles. Since a
committee must consist of at least two or, in the case of a decision-making committee, three members, the
establishment of committees would not render the activity of the supervisory board more efficient. The
supervisory board does not constitute a nominating committee.
DCGK paragraphs 5.4.2 and 5.5.3
The members of the supervisory board act in part as consultants or as supervisory boards for the firm‟s
competitors or customers. The supervisory board and the board of directors are informed of any conflicting
interests but no report is presented at the general meeting in view of the confidentiality of mandates.
Conflicting interests do not generally result in the termination of the supervisory board appointment,
although termination may be necessary in individual cases.
DCGK paragraph 6.3
In accordance with the legally prescribed ad-hoc publicity, the principle of equal treatment of the
shareholders is taken into account sufficiently in the information policy.
11

DCGK paragraph 7.1.2
The consolidated accounts are established, presented and made available to the public within the first four
months of the consolidated financial year for the previous consolidated financial year (§§290 para. 1 p. 2,
325 para. 4 p.1 of the German Commercial Code HGB). It was not possible to meet this deadline for the
2007 consolidated financial year. The consolidated accounts for 2007 will be published as soon as possible.
The half-year financial report will be made available to the public at the latest two months after the
reporting period, in accordance with the statutory regulations in § 37w WpHG (German Securities Trading
Act).
The “managers‟ interim notifications” required of domestic issuers according to § 37x WpHG will be made
available to the public during the period between ten weeks after the start and six weeks before the end of
the first and second halves of the financial year. If the company decides to establish quarterly reports
(according to the provisions of § 37w para. 2 Nos. 1 and 2, paras. 3 and 4 WpHG) instead of interim
notifications according to § 37x WpHG, these reports must be made available to the public at the latest two
months after the end of the first and third quarters of the financial year.
Implementation of the DCGK proposals
The DCGK proposals will be fulfilled with the exception of the divergences described below. These
divergences relate to the fact that either compliance with the corresponding proposal is not practicable due
to the current structure of the company, or that further benefits for the company‟s shareholders are
questionable.
DCGK paragraph 2.3.3
The company‟s representative of voting rights can only be contacted in principle until the day before the
general meeting. Shareholders present at the general meeting or their representatives have the possibility,
however, of also issuing instructions to the representative of voting rights at the meeting venue.
DCGK paragraph 2.3.4
It is not possible at present to follow the general meeting by means of modern communication media (e.g.
Internet) as proposed in paragraph 2.3.4.
DCGK paragraph 3.6
The proposal to hold regular separate discussions with shareholders and employees only concerns
codetermined supervisory boards in large firms.
DCGK paragraph 4.2.3
The variable components of the board of directors‟ compensation do not include any components with longterm
incentives and risks. The existing management contracts do not currently contain any regulations
limiting payments to a member of the board of directors to the equivalent of two years‟ salary including
fringe benefits in case of early termination of their activity on the board with no good cause.
12

Corporate Governance in VEM Aktienbank AG
DCGK paragraph 5.1.2
The firm‟s supervisory board is made up of three people according to the company articles. Since a
committee must consist of at least two or, in the case of a decision-making committee, three members, the
establishment of committees to prepare for the appointment of board members would not render the activity
of the supervisory board more efficient.
DCGK paragraphs 5.3.3 and 5.3.4
The above-mentioned explanations concerning para. 5.1.2 of the code apply accordingly to the suggestions
in paras. 5.3.3 and 5.3.4.
DCGK paragraph 5.4.6
The usefulness of the regulation suggested in para. 5.4.6, of appointing supervisory board members on
different dates for different periods, is disputed. The company is of the opinion that the activity of the
supervisory board becomes more efficient when the board operates for several years with the same
members. The members of the supervisory board of VEM Aktienbank AG are therefore elected each time
simultaneously and for the same period.
DCGK paragraph 5.4.7
The performance-related compensation of the supervisory board does not include any elements that relate
to the company‟s long-term success. Instead it is essentially based on the results of the company‟s ordinary
business activities, which are outlined in the consolidated accounts drawn up by the company according to
IAS/IFRS (International Financial Reporting Standards).
DCGK paragraph 6.8
Since most of the company‟s shareholders are from German-speaking countries, publications are currently
issued only in German.
Shareholders and general meeting
The shareholders of VEM Aktienbank AG acknowledge their rights at the general meeting and exercise their
voting rights in this context. Each share grants one vote. There are no shares with cumulative voting,
preferential voting or maximum voting rights.
The company‟s board of directors presents the annual accounts and the consolidated accounts at the
general meeting. The meeting decides upon the use of profits and the discharging of the board of directors
and the supervisory board, and generally appoints the auditor.
The general meeting also determines the company articles and aim of the company, amendments to the
company articles and essential corporate measures such as the issuance of new shares and convertible and
option bonds, and the authorisation for the company to acquire its own shares.
All the shareholders are authorised to take part in the general meeting, to express their opinions on the
items on the agenda and raise questions and proposals concerning the issues in hand.
13

Cooperation between the board of directors and the supervisory board
The board of directors and the supervisory board of VEM Aktienbank AG work in close cooperation for the
good of the company. The board of directors determines the strategic direction of the firm together with the
supervisory board and discusses with it the status of strategic implementation at regular intervals.
The board of directors informs the supervisory board on a regular basis in a comprehensive, timely manner
of all relevant planning and business development matters etc. relating to the firm.
Board of directors
The board of directors of VEM Aktienbank AG manages the firm under its own responsibility. It is committed
to the interests of the firm and the enhancement of its long-term value. It ensures compliance with the legal
provisions, works towards their being respected by the companies in the group and provides for appropriate
risk management and risk control within the firm.
No changes were made to the personal composition of the board of directors during the financial year 2007.
In its meeting of 27 June 2006, the company‟s supervisory board extended, ahead of time, the terms of
office of the board of directors‟ members Andreas Beyer and Erich Pfaffenberger by a further five years.
There were no conflicting interests between board of directors‟ members during the financial year 2007
within the meaning of para. 4.3 of the DCGK.
Supervisory board
The supervisory board of VEM Aktienbank AG advises and supervises the board of directors in the
management of the firm and is directly involved in decisions that are of particular significance for the
company. It evaluates the efficiency of the board of directors‟ operation once a year. The results of this
evaluation form the basis for the continued improvement of this body‟s work.
The composition of the supervisory board of VEM Aktienbank AG remained unchanged during the financial
year 2007. The board of directors and the supervisory board were informed of potential conflicting interests
of members of the supervisory board (within the meaning of para. 5.5 of the DCGK) during the financial year
2007.
14

Corporate Governance in VEM Aktienbank AG
The compensation granted to supervisory board members is specified in § 11 paras. 4 and 5 of the company
articles and in the financial year 2007was distributed between the individual members as follows:
Supervisory board member
Fixed
compensation
(in EUR)
Performance-based
compensation (in
EUR)
Total
(in EUR)
Matthias Girnth, Chairman 6,500 4,000 10,500
Olaf Posten, Deputy Chairman 5,000 4,000 9,000
Dr. Alfred Krammer 5,000 4,000 9,000
Total 16,500 12,000 28,500
The members of the supervisory board did not receive any compensation or other advantages for any
personal services during the financial year 2007.
Accounting and auditing
The consolidated accounts were drawn up according to the International Financial Reporting Standards
(IFRS) of the International Accounting Standards Board (IASB) applicable in the European Union. The IFRS
also include the still valid International Accounting Standards (IAS) and the interpretations of the
International Financial Reporting Interpretations Committee (IFRIC) – former Standing Interpretations
Committee (SIC). The individual financial statements of VEM Aktienbank AG are drawn up according to the
specifications of the German Commercial Code.
Individual and consolidated accounts are drawn up by the company‟s board of directors, verified by the
supervisory board and the auditor appointed by the general meeting, and subsequently confirmed and
approved by the supervisory board.
Transparency
Transparency is an essential requirement for the operation and efficiency of a capital market from the point
of view of the board of directors and supervisory board of VEM Aktienbank AG. All the recommendations
given in para. 6 of DCGK (“Transparency“) were therefore complied with during the past financial year.
During the financial year 2007, VEM Aktienbank AG published on its website under the heading Investor
Relations the following information on directors‟ dealings (ISIN DE0007608309):
15

Corporate Governance in VEM Aktienbank AG
Details on individuals
subject to disclosure
requirements (full
name or firm)
16
Basi
s*
Details on business subject to disclosure requirements
Buy /
sell Date Place**
Price
(in
EUR) Q.ty
Business
volume
(in EUR)
Erich Pfaffenberger 1 Buy 02/08/2007 FWB 4.50 1,000 4,500.00
Erich Pfaffenberger 1 Buy 03/08/2007 FWB 4.58 1,000 4,580.00
Erich Pfaffenberger 1 Buy 16/08/2007 FWB 4.50 3,500 15,750.00
Erich Pfaffenberger 1 Buy 16/08/2007 FWB 4.49 1,000 4,490.00
RBG*** 3 Buy 16/08/2007 XTR 4.50 500 2,250.00
RBG*** 3 Buy 16/08/2007 FWB 4.56 1,000 4,560.00
Ercih Pfaffenberger 1 Buy 17/08/2007 FWB 4.471 2,100 9,275.70
RBG*** 3 Buy 17/08/2007 XTR 4.335 2,000 8,670.00
RBG*** 3 Buy 20/08/2007 XTR 4.38 1,000 4,380.00
RBG*** 3 Buy 24/08/2007 XTR 4.40 1,747 7,686.80
BrunellCo GmbH 3 Buy 28/08/2007 XTR 4.34 3,332 14,475.24
RBG*** 3 Buy 29/08/2007 XTR 4.215 2,000 8,430.00
RBG*** 3 Buy 29/08/2007 FWB 4.28 1,000 4,280.00
Abano Capital GmbH 3 Sell 16/11/2007 OM 6.25 545,750 2,865,187.50
BrunellCo GmbH 3 Sell 16/11/2007 OM 6.25 470,882 2,943,012.50
Andreas Beyer 1 Sell 16/11/2007 OM 6.25 865,150 5,407,187.50
Erich Pfaffenberger 1 Sell 16/11/2007 OM 6.25 320,475 2,002,968.75
RBG*** 3 Sell 16/11/2007 OM 6.25 721,447 4,509,043.75
* Key:
1: Person with management duties: member of management body
2: Person with management duties: member of administrative or supervisory body
3: Legal person, company or establishment in close contact with a person with management duties
(function: member of management body)
** Key: FWB: Frankfurt; XTR: XETRA; OM: off market
*** RBG Rosental Beteiligungsgesellschaft mbH
On 31 December 2007, 2,923,704 shares in the company were held directly or indirectly by the
families of the two boards of directors, and 103,120, by the supervisory board.
Munich, 27 May 2007
VEM Aktienbank AG
The board of directors The supervisory board

Consolidated annual report for the financial year
2007
Financial year 2007
The global stock markets presented a mixed
picture in 2007. The predominantly positive mood
in world markets changed halfway through the
year, as the US mortgage crisis began to unfold.
Only the emerging-market stock exchanges have
been able to avoid this trend so far.
In Germany, the DAX impressed once again with
a strong performance. With an annual gain of
22%, the Blue Chip Index finished the fifth year in
a row with an imposing price increase. In 2007
the MDAX recorded a record level at just under
11,500 points, losing the gains from July onwards,
however, to post a year-on-year increase of only
4.9%, compared to +28.6% in the previous year.
The SDAX was affected even more strongly, and,
after price increases during the year, actually
closed the year with a loss of –6.8%. While in the
second half of 2007 the DAX survived the
turbulence in the financial markets unscathed with
a performance of 1%, the MDAX (-11%) and the
SDAX (-20%) experienced considerable selling
pressure. The US mortgage crisis particularly
affected financial bodies such as banks and
investment companies. Ultimately the whole stock
market suffered, however.
As can be seen from the indexes‟ development,
investments were concentrated in DAX stocks.
Correspondingly, the hole in the large caps‟
performance compared to the second-line stocks
did not close, but widened even further. Investors
continued to concentrate on the highly capitalised
stocks that guarantee a problem-free liquidity.
The already low liquidity of second-line stocks was
further reduced by this investor behaviour. This
development was inversely reflected in the Entry
Standard Index, which yielded a disappointing –
22.7% over the course of the year.
The 2007 issue market
According to a study from Ernst & Young, the
volume of worldwide IPOs reached a new record
value in 2007, with the amount raised by new
issues equal to USD 255bn The biggest IPOs
came from the emerging markets of Russia and
China, which also had the largest numbers of
IPOs.
In Germany a somewhat differentiated view of
the situation needs to be taken, however. AT EUR
7.5bn, the total volume of new issues (public
offers with securities prospectus in the regulated
market and the open market of the Frankfurt
Stock Exchange, without private placements) is
slightly under the previous year‟s level (EUR
7.6bn). But the number of IPOs dropped from 76
to only 49. More than half the issue volume came
from the three largest IPOs (Tognum AG,
Hamburger Hafen und Logistik AG, and
Gerresheimer AG). Tognum AG‟s IPO, with an
issue volume of EUR 2.01 bn, was also the largest
since the year 2000.
Larger issue volumes found buyers more easily
than smaller issues. As early as March of last
year, the financial newspaper Börsen-Zeitung
wrote (BZ 8 March 2007, p17) that smaller issues
were more difficult to place. Similarly to the
secondary market, positive stimuli for the primary
market largely failed to appear. In the context of
the weakness of the property stocks, no real REIT
IPOs made an appearance.
In the second half of 2007, the uncertainty in the
financial markets caused the influx of new firms to
stall. As a result of the drop in share prices and
the increased risk aversion of the investors, there
was clearly only a limited willingness on the part
of the capital market to make new capital
available to stock-market newcomers.
Nonetheless, there was no lack of offerings, since
numerous companies aspired to enter the stock
market. In the second half of the year the number
17

of cancelled IPOs accumulated, as placements
failed due to lack of demand. As an alternative, a
simple listing without capital increase was
increasingly chosen.
However, there was an increase in the absolute
number of stock-market newcomers. This can be
attributed to the unbroken boom of the Open
Market (the Frankfurt Stock Exchange‟s
Freiverkehr). On the Regulated Market of the
Frankfurt Stock Exchange, which since
1 November 2007 has incorporated both the
official and the regulated market, there have been
27 new entrants in the past year (previous year:
38), of which three were listings without capital
increase (figures do not include transfers from the
Open Market or other German stock exchanges).
With 182 (146) new entrants in the Open Market
(incl. Entry Standard), the latter‟s rapid
development continues. The previous year‟s
trend, which saw the Open Market as the
preferred listing segment, particularly for small
and micro caps, was reaffirmed in 2007.
We have been expecting and broadcasting this
development for years, and have taken a
corresponding strategic position. As a
consequence, in the annual survey of Going Public
Magazine, we were correct in our estimation of
the number of Open Market listings for the second
time (see issue 01/2008).
The Entry Standard as a quality segment of the
Open Market recorded an increase of 34
companies in the reporting period (figures do not
include transfers from the Open Market).
Altogether, by year‟s end, there were already 112
companies listed on it. The Entry Standard, which
was only created in October 2005, is the classic
entry segment for medium-sized enterprises. The
firms listed there have already gathered over
EUR 800m in new IPOs. In 2007, the issue
volume for public offers (without private
placements) was EUR 277m, which in the context
of the development of the secondary market is
18
quite respectable. The increased significance of
the Entry Standard can also be seen from the fact
that issues with a volume of over EUR 25m have
been placed on it. The largest placement was of
EUR 73m.
The picture for rights issues was as follows. The
domestic issuers listed on German stock markets
(including the Open Market) made 90 rights
issues (previous year: 84; source:
eBundesanzeiger). As in the previous year, it was
mainly small and medium-sized enterprises that
issued new shares. Among these, only the Merck
KGaA was a DAX company. These corporate
actions were underwritten by 29 (25) banks.
In 2007, listed companies (domestic issuers,
including the Open Market) made a total of 16
(previous year: 13) rights offers for the issue of
convertibles – underwritten by nine banks.
On the Frankfurt Stock Exchange, a total of 233
(previous year: 246) admission procedures (cashequity
and real-capital increases as well as
admissions of conditional capital). These
procedures were underwritten by 42 (39) banks.
Altogether the 2007 primary market lagged a little
behind expectations. The issue volumes are lower
than the previous year‟s values. The Entry
Standard and with it the whole Open Market have
gained further significance. VEM Aktienbank AG
made its mark on the market both with IPOs and
follow-on offerings.
Development of the VEM group
The following companies in the VEM Aktienbank
AG were consolidated in the year under review:
The financial services provider TradeCross
AG;
VEM Capital Management GmbH, which is

Consolidated annual report for the financial year
2007
also a general partner of Fonterelli GmbH &
Co. KGaA;
Janosch film & medien AG and its 85% and its
85% holding in Papa Löwe Filmproduktion
GmbH;
The land development company “Am
Schönberg“ GmbH.
The tougher stock-market environment was
reflected in the consolidated accounts. In addition
to the suboptimal shape of the stock markets as
described at the beginning, the intensified
competitive environment also contributed to this.
Our aim was to manage a large number of issues
and also to increase the issue volumes per
transaction. We were partially successful in this.
The largest issue volume was EUR 31.4m. Delignit
AG‟s IPO comprised a similar volume, although
this had to be significantly adjusted downwards
due to market conditions.
In the past financial year, VEM Aktienbank
AG managed seven IPOs with securities
prospectus, out of which six issuers chose the
Entry Standard. Furthermore, in 2007, VEM
managed a further eight Open Market listings.
Our subsidiary TradeCross AG carried out three
Open Market listings. This is evidence of our good
market position with regard to small cap IPOs. In
the Regulated Market of the Frankfurt Stock
Exchange, VEM Aktienbank AG successfully
conducted a total of twenty stock-exchange
admission procedures.
VEM Aktienbank AG is still the most active bank
in Germany in the support of listed companies
based on the number of transactions: VEM
managed 14 rights offers for new shares and five
for convertible bonds. In the area of listings, VEM
conducted twenty procedures last year. Our
market shares are as follows: rights offers for
shares 18.4%, rights offers for convertible bonds
31%, listings at the Frankfurt Stock Exchange
8.6%.
On 31 December 2007 VEM Aktienbank AG was
acting as a Deutsche Börse Listing Partner for 15
(11) Entry Standard firms. This function is
outlined in the Entry Standard statutes and
includes the continuous support of issuers.
In 2007 we were also mandated to handle the
banking services for two take-over bids.
We were able to maintain our position as a
Designated Sponsor in the electronic trading
system Xetra©. At the end of 2007 we were
managing 55 (59) securities* in Designated
Sponsoring, including our own shares. Deutsche
Börse once again gave our activity as Designated
Sponsor the highest rating (AA) for the financial
year as a whole. Compared with the total number
of securities managed, our company recorded a
market share of approximately 6.4% (7%). 44
(46) banks were involved in this field of business
at the end of 2007.
We see Designated Sponsoring as a
complementary service for our customers in the
context of being public. As a reaction to the
development of the secondary market, we have
no longer been following a strong expansion
strategy in this area of operations for several
months. That is due on the one hand to the
inherent price risks in this business and on the
other to the pressure on margins from new
competitors. We would like to continue to achieve
adequate and risk-appropriate revenues.
Despite the weakness in second-line stocks in
Germany, we achieved a positive trading result in
2007. After suffering a trading loss in the second
half of 2006, in 2007 we achieved relatively
constant positive contributions to operating
income practically throughout the entire year.
In the 2007 financial year, TradeCross AG
mainly assisted domestic and foreign companies
whose shares were listed on the Open Market
without securities prospectuses. TradeCross AG
was sold on 31 March 2008. The separation from
19

our subsidiary was accompanied by the
abandonment of our two-brand strategy in the
issues business.
Fonterelli GmbH & Co. KGaA was newly
established in the year under review. Fonterelli
GmbH & Co. KGaA acts as a classic private-equity
investment company and plans investments in
medium-sized enterprises. The work of putting
together portfolios is undertaken by VEM
Aktienbank AG.
* Source: DS statistics of Deutsche Börse AG, 4 th
quarter of 2007
The newly established VEM Capital
Management GmbH acts as a general partner
of Fonterelli GmbH & Co KGaA (Fonterelli), in
which VEM Aktienbank AG had a 100% holding on
the accounting date. Fonterelli is of strategic
importance to VEM, as through it we can build up
a pipeline to potential stock-market candidates.
With Fonterelli, the VEM group can make
increased use of opportunities in the co-insurance
business that were previously not available.
In November a public offering of Fonterelli shares
was made. In the course of the capital increase,
our share, with registration in the companies‟
register, sank to 49% on 3 January 2008. The
remaining shares are owned by diverse
shareholders. The company has been listed on the
Open Market of the Frankfurt Stock Exchange
since 7 January 2008.
Fonterelli has so far entered into two
participations. In one, 50% of PowerLED GmbH
shares were acquired to finance a management
buy-in. This company in turn has a 15% holding
in Licht und Optik Beteiligungsgesellschaft mbH
(L&O). L&O is active throughout the world in
selling specialised lamps and LED lighting
applications. With 18,000 customers in 80
countries, L&O achieved (2006) a turnover of
roughly EUR 17m.
20
In the other, Fonterelli participated in the pre-IPO
financing round of Classic Dream Properties Ltd.
This company is a Chinese real estate developer
who in its last financial year (ending 30 June
2007) achieved a profit for the year of roughly
EUR 5m and shows further interesting growth
prospects. Classic Dream Properties Ltd‟s shares
have been listed on the Open Market of the
Frankfurt Stock Exchange since 12 November
2007.
In 2007, as expected, Fonterelli made a loss due
to the company‟s creation.
The Janosch group possesses proprietary claims
to proceeds and partial rights of use of the entire
works of the painter, graphic artist and author
“Janosch” and manages the comprehensive usage
of a large part of his entire works. “Janosch” is
one of the best-known authors of children‟s books
in Germany and has received numerous
international awards for the approximately 300
children‟s books he has produced. The usage
covers the fields of licensing, claims to proceeds
and film production. The company receives a
significant cash inflow from these rights and,
thanks to the high level of popularity of the artist
and his work, enjoys a unique market position.
Papa Löwe Filmproduktion GmbH, in which
Janosch has an 85% holding, produces films and
TV series based on the Janosch characters.
On 5 December 2007, the shares of Janosch film
& medien AG were launched on the Open Market
of the Frankfurt Stock Exchange. By doing so, the
company created a fungibility for the over 800
free shareholders who have a holding of approx.
27% in Janosch film & medien AG. The
operational focuses of the past year were
increased sales activity and preparations for the
“Tigerente” jubilee year 2008. The Tigerente
(“tiger duck”) celebrates its 30 th birthday in 2008.
The celebrations will be accompanied by
numerous activities. The birthday year was

Consolidated annual report for the financial year
2007
ushered in before Christmas with a special edition
of the “Tigerente classics” by Beltz Verlag.
Janosch film & medien AG realises revenues
principally from proprietary claims to proceeds
from merchandising, book sales and other assets,
with merchandising contributing more than 80%
to total turnover. Janosch film & medien AG has
once again reported an annual net profit for the
financial year 2007, after a profit was made in
2006 for the first time in the firm‟s history. The
company is still pursuing a systematic economy
drive.
For the current year, Janosch film & medien AG‟s
board of directors is once again expecting a
positive annual result.
In the course of the company‟s public offering,
VEM Aktienbank AG reduced its share in
Janosch film &
medien AG marginally from 75% to 73%. For the
VEM group, Janosch film & medien AG is a
financial investment without any strategic
background.
The land development company “Am Schönberg“
GmbH is also a non-strategic investment. On 28
March 2007 (initial consolidation date), VEM
Aktienbank AG acquired 94% of the land
development company “Am Schönberg“ GmbH in
Augsburg, as well as claims against this company
amounting to EUR 1,877k. The purchase price
was made up of the transfer of a partial
debenture with a fair value of EUR 1,611k and a
payment of EUR 3k. Incidental acquisition costs
were incurred of EUR 9k. After evaluating the
assets and liabilities as well as the inclusion of
deferred tax assets due to existing reclaimable
tax-loss carry-forward, the result was a positive
difference amounting to EUR 86k, which was
booked as a goodwill asset in the consolidated
accounts. The company carries out the
preparation, development and commercialisation
of land in the municipality of Wenzenbach. The
consolidation of funds was carried out according
to the purchase method.
In the year under review, the VEM group‟s profit
and loss statement was burdened with an
extraordinary expense: the Compensatory Fund of
Securities Trading Companies (EdW), of which
VEM Aktienbank AG is bound by law to be a
member, levied an initial special payment in
connection with the collapse of Phoenix
Kapitaldienst GmbH. We have filed an objection to
this compulsory measure together with an
application for the suspension of its collection.
Profit situation
The VEM group receives most of its income from
commission proceeds and security trading. To this
is added, through the Janosch group, other
operating income from proprietary claims for
proceeds, licences and film production.
Commissions include remuneration for investment
activities, organisation and coordination of
investments, initial public offerings and the
assumption of placement guarantees as well as
investors‟ stock commissions. This item also
comprises issuer remuneration for Designated
Sponsoring and support services as a Deutsche
Börse Listing Partner.
As a result of the reduced investment activity,
commission earnings fell by 55% from EUR
18,355k to EUR 8,189k. Due to the reduced
involvement of selling agents, however,
commission paid decreased disproportionately by
80% from EUR 7,653k to EUR 1,553k.
The security trade was marked by a lengthy
consolidation phase of the majority of securities
managed in the Designated Sponsoring.
Nevertheless, the result is satisfactory. The net
21

yield from financial transactions stands at EUR
1,531k against EUR 2,847k in the previous year.
The balance of other operating income and
expenditure dropped from EUR 5,577k in the
previous year to EUR 1,327k. This drop stems
from reduced income from proprietary claims for
proceeds, licences and film production. The
special payment to the Compensatory Fund of
Securities Trading Companies (EdW), amounting
to EUR 698k, is also included.
It was possible to increase interest income from
EUR 688k the previous year to EUR 961k (+40%).
This stems essentially from the banking business.
At EUR 324k, interest expenditure is a little less
than the previous year (EUR 365k). The net
interest income therefore increased by 87%
compared to the previous year (EUR 344k) to EUR
642k. The total operating income (including
interest income, commissions income, trading
result and the balance of other operating income
and expenses) comes to a total of EUR 10,136k, a
drop of 52% compared with the previous year
(EUR 19,470k).
Personnel costs decreased by 9% to EUR 3,823k,
against EUR 4,204k.
At EUR 2,183k, other administrative expenditure
was 10% less than the previous year (EUR
2,414k).
Write-offs and allowances for intangible and
tangible assets account for EUR 417k of the
intangible assets.
The result of ordinary business activities
decreased by 56% from EUR 9,244k to EUR
4,022k, and is particularly connected with the
reduced investment activity.
The income tax charge decreased in proportion to
the result of ordinary business activities. The
22
annual surplus based on third-party shares
decreased from EUR 6,057k to EUR 2,249k (-
63%). The Janosch group has contributed a total
of EUR 135k to this result.
To conclude, it can be said that the decrease in
results during the year under review is principally
caused by a conspicuously lower commissions and
trading result, and that this reflects the difficult
market conditions.
Financial and assets position
At EUR 68,861k, the VEM consolidated accounts
total has decreased by 2% compared with the
previous year‟s EUR 70,388k. This decrease is
principally connected with the relatively large
volume of public offerings that were not yet
completely transacted in the previous year.
VEM refinances itself almost exclusively with
equity. Short-term collateral loans are used to
finance day-to-day business and overdrafts are
used if necessary; there are no long-term
liabilities with credit institutions.
Liquidity on the accounting date was EUR
14,654k.
The reported long-term liabilities with credit
institutions relate to a loan financing of the
Janosch group. To secure the interest rate risks, a
contract was concluded for an interest-rate
hedging instrument with a term of 30 April 2009.
In April 2008, under the terms of the contract, an
extraordinary redemption payment of the bank
loan was due, payable by Janosch film & medien
AG. There was not enough liquidity available for
this payment; against this background, a
refinancing was carried out by means of a
convertible bond, the success of whose placement
was in part guaranteed by VEM Aktienbank AG.

Consolidated annual report for the financial year
2007
The group equity on the balance sheet amounted
to EUR 35,906k on the accounting date (previous
year: EUR 32,136k). It has essentially increased
by the annual surplus of EUR 2,249k. On the
accounting date the subscribed capital amounted
to EUR 9,675k with capital reserves of EUR
3,822k, retained earnings of EUR 15,995k and a
consolidated profit of EUR 3,308k. The land
development company “Am Schönberg“ GmbH
reported negative equity, balanced out, however,
by sufficient hidden reserves in the real estate.
With the transfer of the entire balance sheet profit
to retained earnings, the capital resources of VEM
Aktienbank AG according to § 10 of the German
Banking Act KWG amounted to EUR 29,277k on
the accounting date and the reportable equity
rate (ratio between liable equity and weighted risk
assets) amounted to 146%. The group‟s equity
ratio on the balance sheet was equal to 51%.
At the time of drawing up the financial report, the
overall the assets, liabilities, financial position and
profit or loss position is satisfactory given the
background of continuing difficult market
conditions.
Holdings
EquityStory AG, in which VEM Aktienbank AG
has a 9% holding, offers comprehensive onlineinvestor-relations
services in the German-speaking
countries and provides extensive services to over
1,000 listed companies both at home and abroad
in the fields of disclosure requirements, financial
portals, audio and video presentations of investor
events, online financial reports and outsourced
websites.
The area of disclosure requirements is dealt with
by the subsidiary Deutsche Gesellschaft für Adhoc
Publizität mbH (DGAP). DGAP is an institution
involved in the organisation of statutory disclosure
obligations for listed companies and has been a
market leader since its establishment in 1996. The
main services it offers are ad-hoc reports and
directors‟ dealings notifications, as well as the
circulation of Corporate News and press releases.
The increasing regulation of the financial markets
fosters EquityStory AG‟s business. In addition, the
company made some selected acquisitions in
2007. EquityStory AG took over financial.de AG in
its entirety and incorporated its activities. Both
companies are active in the area of online
investor relations, resulting in synergies.
Furthermore the company has bought a 25%
holding in ARIVA.DE AG, which runs the Internet
portal ariva.de. This allowed it to enter the
lucrative Internet advertising market.
EquityStory AG‟s shares developed very
satisfactorily in 2007. With a price performance of
61.7%, EquityStory shares performed significantly
better than second-line stocks. Correspondingly,
our investment has increased in value
significantly.
In September 2007 VEM Aktienbank AG sold its
25% share in financial.de AG. The holding was
not yet classified as an asset held for sale in the
year-end accounts on 31 December 2006. The
board of directors only decided to sell during the
course of the 2007 financial year. The sale took
place in September 2007 initially against the
payment of a purchase price of EUR 742.5k. The
purchase price can be adjusted to the still-to-be
determined taxable income at the time of sale.
VEM derived a considerable return on the
transaction.
London branch
Our London branch was active in the organisation
of roadshows, which were carried out in support
of corporate actions. As a result of market
conditions, the investment business did not go
satisfactorily. In the 2007 financial year, two
23

people were employed locally, and their
employment relationship terminated on 27
December 2007. In future, business in London will
be carried out directly by competent personnel
from the Munich office.
Staff
Staff numbers including the board of directors
decreased from 48 on 31 December 2006 to 46
on the accounting date.
We ensure that our bank service has the
businesslike, organisational framework it requires.
Thanks to our qualified, motivated employees, we
are able to complete orders within the deadlines,
and with a high level of quality.
When we select our staff, we place emphasis on
highly trained, qualified staff. Skills and efficiency
are increased by targeted training measures.
Our staff policy focuses on the motivation of
employees and their long-term connection with
the firm. The availability and involvement of our
employees earns them particular recognition.
24
Risk report
The bank takes financial risks, without which
successful business would not be possible, in a
conscious, controlled manner in the context of its
business activity. In order to manage these risks,
the bank has introduced a risk monitoring and risk
management system that complies with the
requirements of the federal office for financial
service supervision and the German Stock
Corporation Act.
Risk monitoring and management is an essential
part of our business process and aims to
recognise risks at an early stage and deal with
existing risks in an appropriate manner.
In this, in addition to their functional separation,
the Controlling, Reporting and Legal departments
represent essential elements in the company‟s
organisational structure. The controls integrated
into the workflow management (particularly the
“second set of eyes” principle) and on-going
reporting help to identify the development of
individual risk positions and implement
appropriate measures in good time.
Comprehensive risk-related behavioural provisions
within the framework of work cycles limit potential
risks to a justifiable level.
All business processes liable to a special risk are
audited at least once a year by the internal audit.
The internal audit is outsourced and carried out
by a well-known auditing firm, which reports
directly to the board of directors, is not bound by
instructions and can carry out its tasks
independently from the operational business. The
basis for the internal audit activity is a three-year
revolving audit plan, which covers all the bank‟s
main business processes. The requirements of the
federal office for financial service supervision are
fulfilled with regard to the structure of the internal
audit.
The bank‟s internal risk management serves both

Consolidated annual report for the financial year
2007
to calculate the risk and to control the risk return.
The allocation of the risk capital is carried out
following a prior, detailed risk analysis – which
provides an indication of the required risk capital
for individual risks – and taking into account the
different risk contexts and the bank strategy.
Specific limits are determined following the
allocation of capital to the individual risk
categories. The fact that individual limits must be
readily operational on the one hand and
compatible with the overall limit on the other
hand has to be taken into account in this context.
The risk capital (limit) calculated according to
these requirements limits the risks of the
individual sectors. The accumulation of the risk
capital associated with the individual sectors
represents the admissible overall risk capital of
the bank and must not be exceeded.
All measures involved in the limitation of risks are
implemented in the context of an economically
viable ratio that takes into account the size of the
institute and the particular business model in an
appropriate manner, with an emphasis on
managing corporate actions. Allowance must also
be made for the fact that the board of directors is
directly involved in all major procedures due to
the size of the bank.
All the elements in the risk management process
are adapted to any changing conditions in real
time.
Within the framework of the regular risk analysis,
the bank has determined and, as far as possible,
quantified all existing risks. The risks have been
divided into the following main risk categories:
Market price risks
Counterparty risks
Liquidity risks
Operational risks
Other risks
This distribution guarantees consistency with the
Basel Accord system. By including the “Other
risks” item, it is also possible to include risks that
are not covered by other categories, but which
are significant for the institute, in an overall risk
evaluation.
All risks affecting the institute have been assessed
with a balanced, not too exhaustive level of detail
so that cause-based identification, analysis and
control measures are possible, and with them an
effective risk management.
The basis for the allocation of risk capital is a
prior evaluation of individual risks on the basis of
the potential for loss and probability of
occurrence. Below is a detailed evaluation of the
individual risks with high damage potential. The
risk analysis carried out for the year 2007
produced the following capital allocation:
Capital allocation to risk categories
[clockwise from the top]
10% Market price risks
1% Liquidity risks
62% Counterparty risks
2% Operational risks
2% Other risks
23% Contingency
The most significant risks within the abovementioned
categories are described below
together with possible reduction measures and
supervision methods.
25

Market price risks
Market price risks include potential losses that
may be incurred due to changes in prices in the
financial markets for our items in the trading and
investment book. Market price risks are made up
of the categories of share price risks and interest
rate amendment risks.
In order to fully evaluate market price risks and
the utilisation of the risk capital allocated for
market price risks, listed investments are also
included in the supervision and control
(independently of the balance sheet approach
which does not make the adjustment of the book
value compulsory in the case of a temporary loss
in value). Non-listed items in the investment
book, for which neither a stock exchange
quotation nor consolidation are carried out,
represent a limited portion and are therefore only
evaluated once a year.
VEM did not conduct any trading transactions in
precious metals or foreign currency during the
reporting period. Additional risks, such as the
foreign currency risk, are therefore monitored but
are not included in the market price risks, as the
items are less important.
Market price risk management
Market price risks are included and managed
within the trading business segment. The risk
controlling department monitors and reports on
market price risk situations to the trading sector
and the board of directors (trade and supervision)
and informs the board of directors immediately
about any major changes relating to risks.
26
Market price risk supervision
The supervision of risk items in the trading and
investment book is carried out by means of a
unified, multi-layered limit system, which limits
the loss potential stemming from market price
risks. The risk limits are approved annually by the
board of directors and must not be exceeded. If
these limits are exceeded, management is
immediately informed and their prompt reduction
is monitored. Limit adjustments based on the
specific situation of business policy for derived
partial limits are possible and may only be applied
according to the specified rules and within the
defined limits. The market price risk-controlling
department has immediate access to the portfolio
maintenance system and thus monitors the risk
situation intraday.
The management is informed on a daily basis of
the development of the market price risk, the
application of limits and the trading results.
The limits were not exceeded in any significant
manner in 2007.
The management is informed of the results of the
risk analysis and scenario considerations on a
quarterly basis.
Limitation of market price risks
In order to limit risks to a level that is
manageable for the institute, the following risk
limiting options were implemented: as the risk
limit, the bank‟s board of directors proposed a
total-loss limit – based on the balance sheet
equity and the business conducted during the
financial year – that can be absorbed by the
institute without further difficulties and without
putting it in a risky situation. A portfolio value at
which the defined loss limit would be totally
exhausted is determined for all items at regular
intervals on the basis of a market scenario. The
portfolio value determined according to this
method is used as an upper portfolio limit. On the

Consolidated annual report for the financial year
2007
basis of the upper loss and portfolio limits, further
limits were set in order to identify the causes of
increasing market price risks in good time and be
in a position to take appropriate action. Therefore
the number of items per trader and upper volume
and loss limits per individual security were limited,
creating a framework within which each individual
trader can determine his items at his own
discretion.
The limitation consists of ensuring that the dayto-day
P&L (realised + non-realised) never
exceeds the total loss limit. For the daily risk
evaluation and control, VEM conducts a sensitivity
analysis with the open trading portfolio including
the most extreme market scenarios and thus
determines hypothetical P&L values (non-realised)
for different market fluctuations.
The hypothetical P&L values are compared with
the day-to-day-P&L and monitored. If the set
thresholds are exceeded, the result of the trading
day concerned is examined in more detail.
The hypothetical P&L values from the sensitivity
analysis also serve to determine the market
fluctuations at which the absolute upper loss
limits set by the board of directors would be
reached.
The suitability of the risk measurement method is
checked on a regular basis.
The risk capital allocated for market price risks
amounts to 10% of the total allocated risk capital.
Sensitivity analyses on the accounting date
With regard to the market risk, a sensitivity
analysis was carried out on the accounting date.
The result for 2007, as for the previous year, is
constituted as follows:
27

Sensitivity analysis
31/12/2007 Interest-rate change +/-1% Price change +/-5%
P&L effect of interest-rate change P&L effect of price change
+1% -1% +5% -5%
In EUR „000 2007 PY 2007 PY 2007 PY 2007 PY
Debentures -64 -10 64 10 - - - -
Interest-rate
swaps
6 7 -6 -7 - - - -
Shares and
funds
- - - - 698 847 -698 -847
In addition, the effects on the variation in the revaluation reserve and on equity were calculated and
outlined in the following table:
Sensitivity analysis
31/12/2007 Interest-rate change +/-1% Price change +/-5%
28
Variation in revaluation reserve/equity
with interest-rate change
Variation in revaluation reserve/equity
with price change
+1% -1% +5% -5%
In EUR „000 2007 PY 2007 PY 2007 PY 2007 PY
Debentures -63 -8 63 8 - - - -
Interest-rate
swaps
6 7 -6 -7 - - - -
Shares and
funds
- - - - 629 803 -629 -803
Counterparty risks
A risk control and monitoring system appropriate
to the size of the institute was established to
determine counterparty risks. This system
provides for the identification, evaluation, control,
monitoring and communication of significant
counterparty risks.
As a securities trading bank focusing on the issues
business, VEM Aktienbank AG does not offer
credit in the traditional sense. All the same, some
asset items on the balance sheet are comparable
to credits and hold counterparty risks that
therefore have to be determined and monitored.
This relates essentially to the balance sheet item
of Receivables from Credit Institutes, which
includes cash accounts and fixed-term deposits
with other banks and the item of Other Assets,
which comprises delivery claims for shares or
redemption claims from as yet unregistered
capital increases.
Counterparty risks with credit institutes
Receivables from credit institutes mainly concern
receivables from domestic credit institutes and are
used for the settlement of payment transactions,
capital market transactions and trading business.
The non-domestic credit institutes concerned are
well-known credit institutes that operate
worldwide.
The counterparty risk of credit institutes is
generally categorised as low. Nonetheless, limits
were set for all institutes with which VEM holds

Consolidated annual report for the financial year
2007
accounts or invests fixed-term deposits or time
deposits. These limits are monitored daily and
verified for compliance. Specific protective
measures have also been agreed upon with
smaller individual institutes in order to minimise
the credit risk. VEM‟s receivables from credit
institutes are therefore distributed between
several institutes so that the non-payment of one
institute could be absorbed and the survival of
VEM guaranteed.
Compliance with limits is monitored to ensure that
the limit applied for each individual institute is
determined daily, and, if a level of 85% is
reached, a notification is issued in order to
respond to this high level and to take appropriate
steps. If the limits are exceeded (utilisation >
100%), management is immediately informed and
their prompt reduction is monitored. The limits
were not exceeded in any significant manner
during the reporting period.
Counterparty risks in issue management
Other assets principally include delivery claims for
shares or redemption claims from as yet
unregistered capital increases and receivables
from affiliated companies.
The management and implementation of
corporate actions constitutes the bank‟s core
business. The item Other Assets therefore varies
a great deal during the financial year according to
the volume and number of corporate actions
managed.
The determination and monitoring of the
counterparty risk from delivery claims for shares
or redemption claims from as yet unregistered
capital increases was implemented according to
the specific conditions of the institute.
Issue management is a different process with
each issuer. It is always the board of directors,
therefore, that decides upon the completion of an
issue and the assumption of a counterparty risk
(by transferring the capital increase amount to
the issuer).
The decision to complete an issue is reached after
detailed auditing procedures concerning the
documents of the firm planning the corporate
action. VEM works, where necessary, with the
support of external third parties in order to reduce
the risks involved in issue management. If a
prospectus is required for new shares listing, a
suitable third party conducts a legal due diligence
and if necessary a financial due diligence.
The period between the transfer of the capital
increase amount to the issuer and the entry of the
corporate action in the trade register is at the
centre of the counterparty risk during the
management of an issue procedure, and it needs
to be monitored and, as far as possible, reduced
and controlled. Since issue management is VEM‟s
core business, a large proportion of the risk
capital (approx. 58%) was allocated for this
purpose.
The transfer of the capital increase amount to the
issuer represents a considerable liquidity outflow
which is initially only covered by an unsecured
redemption claim and, following the entry of the
capital increase in the trade register, by a secured
claim (the delivery of new shares).
The institute has access to different possibilities
with regard to risk reduction. The aim is to limit
and / or significantly reduce the institute‟s risks
arising in the context of total issues relating to the
subscription (by VEM for third parties) by
implementing suitable measures.
In addition to the involvement of qualified,
experienced employees who complete the issue
procedure in a responsible manner and ascertain
the readiness of the issuer to make issues, for
instance, a maximum of 25% of the subscription
29

amount is transferred to the issuer prior to the
entry of the corporate action in the trade register.
To limit the risk, securities loan transactions are in
part also agreed with the issuer‟s majority
shareholders, making an advance delivery to the
subscriber possible. Thanks to the special
provision of the payment claims of the lender or
for the return, the bank is also sufficiently secured
by these measures during the issue procedure
against the issuer defaulting.
The management of each issue is an individual
process for which a proportion of the total
available risk capital is allocated. In the context of
determining the decision-making basis for the
completion of an issue, the board of directors and
competent staff members determine the risk
capital associated with each issue, taking into
account the quality of the issuer, the issue volume
and the use of risk-reducing measures.
If several issues are managed at the same time,
the total amount must not exceed the total
amount allocated for issue management.
Monitoring and daily project-list updating with the
on-going corporate actions ensure early
identification of a potential exceedance of the
allocated risk capital. If the allocation for
individual projects exceeds the total risk capital
for issue procedures, the escalation procedure is
applied in such a way that dates for corporate
actions are adjusted and overlaps are avoided.
Corporate actions are implemented in succession
and only when the previous ones have been fully
settled.
Exceedances and postponement of corporate
actions for this reason did not occur during the
reporting period.
Counterparty risks of other balance sheet
items
Other balance sheet items on the assets side that
are taken into account in the context of
30
monitoring and controlling counterparty risks are
the items Trading Assets, Financial Assets,
Customer Receivables and Receivables from
Affiliated Companies. The items Trading Assets
and Financial Assets are monitored and controlled
in connection with market price risks as
transactions principally involve stock exchange
transactions in which the equivalent has been
obtained or is to be obtained by payment versus
delivery or for which corresponding cover exists.
The counterpart catalogue for trading assets
therefore only includes domestic credit and
financial service institutes and XETRA trading
participants. Other counterparts are only
authorised subject to the agreement of the board
of directors. Business that is carried out for
customers, and for which no cover exists as yet,
is represented through market price risks until
settlement with the customer (generally delivery
versus payment).
Customer receivables include receivables from
issuers as well as institutional and private
customers from services provided in the context
of issuing, trading and consulting business. VEM
does not consider a separate limit system for this
asset item to be necessary. Larger customer
receivables (per individual customer) mainly occur
in the context of issue management. They are
generally settled with the customer upon payment
(of the last tranche) of the issue proceeds.
Consultancy services that extend over a long
period are settled as the project progresses, and
payment obligations are therefore spread over
several due dates in order to reduce the
counterparty risk for each individual customer.
Services for private customers are generally only
provided subject to prepayment. Customer
receivables stemming from trading business for
which no cover exists as yet are represented, as
already stated, through market price risks until
settlement with the customer (generally delivery
versus payment).

Consolidated annual report for the financial year
2007
Customer receivables within the Janosch group
mainly concern domestic licence partners with
good or very good creditworthiness. Furthermore,
a calculated advance is generally agreed upon
when a licence is issued, which considerably limits
the counterparty risk.
The maximum risk resulting from financial instruments can be quantified as follows:
In EUR „000
Book value as
equivalent for
max. default
risk
Receivables from
credit institutes
Receivables from
customers
Financial
investments
Trading assets
31/12/ 31/12/ 31/12/ 31/12/ 31/12/ 31/12/ 31/12/ 31/12/
2007 2006 2007 2006 2007 2006 2007 2006
27,098 37,175 3,892 2,819 4,507 3,581 15,894 14,651
On the accounting date, the following financial assets were depreciated:
Book value
31/12/2007
Depreciation
31/12/2007
Book value
31/12/2006
Depreciation
31/12/2006
Receivables from customers 463 275 351 222
Financial investments 430 170 128 44
Trading assets 6,604 1,062 5,755 1,400
Liquidity risks
Liquidity risks include the (short-term) liquidity
risk in the narrower sense, the refinancing risk
and the market liquidity risk. The short-term
liquidity risk concerns the risk of VEM failing to
fulfil its payment obligations in time or to the full
extent. The refinancing risk concerns the risk that
the resources required for refinancing may not be
obtained or not obtained in time or obtained at a
higher cost. The market liquidity risk concerns the
risk that liquidity reserve assets may not be
liquidated or not liquidated in time or only with
deductions.
The Cash Management department controls
liquidity.
VEM monitors the available liquidity on a daily
basis and presents regular liquidity overviews for
an appropriate period that compare the forecast
inflows of resources with the forecast outflows.
For this purpose and in order to determine the
liquidity indictors according to principle II, VEM
has established an overview that contains all
contracts, the associated financial obligations and
the earliest possible cancellation. With the help of
this overview and the other on-going costs, the
required liquidity is determined on a monthly
basis. Two scenarios are considered. On the one
hand, the amount of liquidity required from
income is determined so that the inflows and
outflows can be balanced. On the other hand, an
unusual scenario is considered whereby no further
liquidity inflows occur during the current month.
31

The available liquidity must be sufficient to cover
the outflows on the last day of the month.
Additional liquid resources, minus a generous
contingency, that remain available each day, are
invested and are available in addition to the
existing liquidity reserves to cover scenarios in the
following month.
Liquidity risks within the Janosch group based on
the existing external financing share are
particularly significant. Liquidity inflows and
outflows are planned on a monthly basis in order
to guarantee the applicable interest and
redemption rates. The interest change risk
32
was limited by hedging until 30 April 2009. The
refinancing risk was also considerably limited by
the extension of the financing period until 2015.
Because VEM invests liquidity surpluses in fixedterm
deposits with short maturities (max. 90
days) or in daily tradable fixed-rate securities or
bonds from public issuers or issuers with an
external rating of at least A, the potential loss
(reduced proceeds due to early disposal or high
interest rates on the basis of short-term financing
via overdrafts) is not considered to be particularly
significant. The probability of loss is rated as low
since liquidity outflows are continually monitored
and the unusual scenario whereby no liquidity
inflows are received is taken into account.

Consolidated annual report for the financial year
2007
Overall the liquidity risks category has been
allocated a correspondingly low risk capital
(approx. 1% of the total risk capital).
VEM was able to cover liquidity outflows at all
times during the reporting period. The daily
available resources were allotted in good time so
that regrouping at the same time as the liquidity
outflows was only occasionally necessary. The
above-mentioned additional measures to cover
liquidity outflows (the early release of fixed-term
deposits of invested liquidity surpluses or the
acceptance of an overdraft) were not necessary
during the reporting period.
Maturity breakdown
Up to 3 months From 3 to 12 months Over 12 months
In EUR „000 31/12/2007 31/12/2006 31/12/2007 31/12/2006 31/12/2007 31/12/2006
Receivables
from credit
institutes
Receivables
from
customers
Recoverable
income
taxes
Sum of
receivables
In EUR
„000
Liabilities
with
credit
institutes
Customer
liabilities
Income
tax
liabilities
Sum of
liabilities
27,098 37,175 0 0 0 0
2,351 2,511 1,540 294 0 0
0 0 1,498 1,437 681 467
29,449 39,686 3,038 1,731 681 467
Up to 3 months From 3 to 12 months Over 12 months
31/12/2007 31/12/2006 31/12/2007 31/12/2006 31/12/2007 31/12/2006
4,494 1,623 859 563 3,500 4,400
15,875 24,149 624 0 0 0
0 80 91 0 445 419
20,369 25,852 1,574 563 3,945 4,819
33

Operational risks
The “operational risks” category describes all
operational risks that could result in a case of loss
for the institute.
Operational risks are identified at least once a
year and evaluated according to the possibilities
for risk reduction in view of the potential
associated loss and likelihood of occurrence. In
the context of the evaluation of individual
operational risks, the limitation of the potential
loss (e.g. by taking out appropriate insurance) or
the reduction of the likelihood of occurrence (e.g.
by implementing appropriate measures) are taken
into account accordingly. If operational risks with
high potential losses are identified, these risks are
considered in more detail even if the likelihood of
their occurrence is low.
The product of the likelihood of occurrence and
the corresponding potential loss is the risk capital
required for the individual operational risk. The
risk capital required for the operational risks
corresponds to the sum of the individual risks
without taking into account any risk-reducing
correlations. Following the identification and
evaluation of the individual risks, the “operational
risks” category was allocated 2% of the total risk
capital available.
Appropriate control instruments were defined for
monitoring and identifying operational risks.
Operational risks essentially include IT risks, staff
risks and risks stemming from internal and
external business operations.
IT risks
IT risks relate to the availability, efficiency and
reliability of the IT system. They also include IT
administration risks, IT- / software-licence risks
and risks of external hacker attacks and viruses
that can affect internal and external business
operations. In order to limit these risks,
emergency concepts have been developed, backup
systems created and IT availability guaranteed
34
by agreeing on response times with system
suppliers. In order to prevent external
hacker attacks and viruses, the operating systems
are protected by a multi-layered firewall
architecture and a so-called demilitarised zone. IT
administration risks are limited by employing
reliable staff (including their substitutes). IT- /
software-licence risks are limited by continual
updates and appropriate licence administration.
The measures applied are verified on a regular
basis by including IT/EDP processes in the
internal audit.
Staff risks
The individual risks included in the staff risks
category are essentially the absence of staff, lack
of staff, recruitment, commitment of employees
and the implementation skills in internal and
external business operations. VEM has
implemented various measures in order to limit
staff risks. They include adequate substitution
regulations, the establishment of sufficient
numbers of qualified staff, and the regular
training and education of staff.
Risks relating to business operations
Various internal and external influences and
associated risks can affect the regular execution
of business operations. Internal influencing
factors include the possible theft, manipulation or
misuse of internal information. The risk of the
disruption of business operations is limited by
appropriate means such as data protection, partial
data accessibility and the verification of employee
reliability. External influencing factors include
break-ins, theft, vandalism and natural and
unnatural catastrophes. The possible
consequences of the disruption of business
operations by external influencing factors are
limited by precautionary measures, emergency
plans and financially by means of appropriate
insurance.
Significant cases of loss relating to operational

Consolidated annual report for the financial year
2007
risks are immediately analysed to determine their
causes and corresponding risk reduction measures
are implemented as far as possible. No major
cases of loss occurred during the reporting period.
Smaller losses occurring over the course of the
year were assimilated in the compilation of loss
cases and analysed, and appropriate measures
were taken for the prevention of the loss
occurring in the future.
Other risks
The “Other Risks” category essentially includes
legal, reputation and strategic risks, as strategic
and reputation risks according to figure 644 of the
Basel Accord do not form part of operational risks.
Similarly to operational risks, other risks are also
identified at least once a year and evaluated
according to the potential associated loss and the
likelihood of their occurrence, taking into account
the possibilities for risk reduction. The risk capital
required for other risks corresponds to the sum of
the values determined for the risk capital required
for the individual risks. Following the identification
and evaluation of the individual risks, the “Other
Risks” category was allocated 2% of the total
available risk capital.
Legal risks
Legal risks concern in particular the risks relating
to the enforcement of contractual claims and the
application of assets and liabilities procedures for
enforcing or defending such claims, as well as
liability risks – particularly the risks relating to
liability for statements made in prospectuses. VEM
employs several fully qualified lawyers in the field
of securities issuing and maintains a legal
department with the aim of reducing legal risks
through risk-sensitive action, and where possible
preventing the occurrence of cases of loss.
Possibilities for risk-prevention action include in
particular the careful processing of projects and
contracts by qualified staff, by appropriate liability
exclusions and risk information in business
transactions and contracts whenever possible or
even essential. Through appropriate levels of due
diligence relating to the legal and economic
situation of the issuers and the involvement of
experienced lawyers / auditors in the
establishment of the prospectus, the risks relating
to liability for statements made in the prospectus
are kept at a level which is manageable for the
bank. Insurance policies have been taken out
wherever possible to cover the financial
consequences of liability risks and financial losses.
VEM is a member of the German Compensatory
Fund of Securities Trading Companies (EdW),
which is financed through the assessment system.
The compensation case of Phoenix Kapitaldienst
GmbH is currently pending with EdW. On the
basis of a bankruptcy plan, an amicable
clarification of open legal questions is to be
provided, particularly relating to the amount at
which investor receivables can be fixed. EdW‟s
possible indemnification is dependent on this and
on the extent of the bankruptcy estate. Possible
indemnification of approximately 200 million euros
has been identified in public. This corresponds to
approximately 50 times the annual contribution to
EdW. VEM might face special contributions of
approximately EUR 5 million as a result. The
continuation of the compensation procedure is
currently completely open as this event of loss
calls into question the basic viability of the EdW
concept and its compliance with EU law. Due to
this unclear situation, VEM does not yet consider
it necessary to create provisions for possible
special contributions, with the exception of the
already granted first special contribution.
The liquidator of Baumhaus Medien AG, Frankfurt
a. M. issued a complaint at the end of 2005
against Janosch film & medien AG in connection
with a transfer of rights completed in 2001. The
scope of the rights involved is of little importance
but the amount in dispute is considerable. We are
optimistic about the possibility of dismissing the
35

complaint. If the complaint were to be accepted
contrary to this estimation, the costs incurred
would, however, weight heavily on the company‟s
liquidity. According to German copyright, it is
possible for an author to cancel the granting of
rights of use for future works or to reclaim rights
if they are not exercised. On the basis of the
contractual situation and the works already
created by Mr Janosch and comprehensively
exploited by the Janosch group, we nevertheless
estimate the associated financial risk to be low.
Before VEM Aktienbank AG purchased its shares,
the land development company “Am Schönberg“
GmbH had surrendered Eigentümerbriefgrundschulden
(owner‟s certificated land charges)
amounting to EUR 1,580k as security for the
liabilities of the former sole shareholder. The
latter filed for bankruptcy on 3 March 2008, and
the insolvency proceedings were opened on 11
April 2008 on a decision of the Local Court. For
now, an initial receivable amounting to approx
EUR 160k was registered, which is being
contested by “Am Schönberg“ GmbH. It is not
known at the moment what the actual extent is of
third-party receivables secured by these land
charges or to what extent they are enforceable by
law towards “Am Schönberg“ GmbH. Because of
the insolvency proceedings, however, there is a
risk that the surrendered land charges will have to
be honoured in full.
Reputation risks
With initial public offerings, the bank managing
the IPO is faced with a reputation risk. An
unsuccessful IPO can be detrimental for the
issuing bank, as public opinion relates price losses
to the bank‟s service. Even if this criticism is often
completely unfounded, public opinion may
nevertheless be negative and this can make
winning future mandates more difficult.
Strategic risks
Strategic risks mainly relate to the risk that the
36
bank‟s management fails to recognise significant
market and competition developments and trends
in time or evaluates them incorrectly. Strategic
decisions based on incorrect evaluations can
subsequently prove unfavourable for the bank‟s
development. For this reason, the management
continually studies the market and the position of
VEM in this environment. The bank‟s business
strategy is verified on a regular basis and
adjusted where necessary to changing framework
conditions.
For more than two years now, competitive
pressure has been increasing. The newly arrived
market players – often start-up banks – try to win
market share with special offers. Furthermore,
established universal banks that have been
operating for decades are appearing on the
market with services for small caps. Attempts to
compete with such offers would, in our opinion,
probably fail and result in the medium term in
existing customers demanding the adaptation of
their conditions to the special offer for new
customers. This concerns both the field of
Designated Sponsoring and the issue of securities.
A high-quality service can only be provided,
however, when the remuneration is appropriate to
the level of risk. VEM is therefore standing by its
established price policy and will continue to strive
to enhance the attractiveness of its own offers in
order to comply with quality expectations and be
considered in the market as a high-quality
provider. This can also result in mandates being
assigned to other banks.
Our activity as a Designated Sponsor is
characterised by the obligation to present
continuous quotes in Xetra® on the basis of
which other market players can trade. The market
maker‟s risk in terms of organising profitable
trading for his own account is increased in
markets that only move in one direction over a
long period. The market maker‟s risk is generally
compensated for by the so-called spread (trading

Consolidated annual report for the financial year
2007
margin). However, Deutsche Börse sets the
maximum spread, which represents a risk for the
Designated Sponsor. The low-liquidity and
extremely news-orientated trade in second-line
stocks represents a particular risk if the
Designated Sponsor is not able to conclude the
opposite side of his position.
This can result in trade losses. If, for issues, the
placement volume is not fully placed, the bank
managing the issue is often faced with sales
pressure in its function as Designated Sponsor.
This can lead to an increased risk in trade, which
must be taken into account and monitored when
evaluating market price risks.
Even if the placement has been successful, that is
the issue is fully placed with an oversubscription,
price losses can be considerable in the secondary
market, if stock-market sentiment changes
abruptly. In the 2007 financial year, we were
unexpectedly faced with a situation of this kind.
As a result of this type of situation, a flotationmanaging
bank can find itself obliged to put
capital at risk, in order to stand up to the market
trend. This can result in considerable losses.
The Computershare group has recently purchased
more than 91% of VEM Aktienbank AG in the
context of a takeover bid. Computershare is
pursuing strategic goals with this takeover bid.
VEM Aktienbank AG is to be integrated into the
Computershare group of companies with its
existing business areas, producing synergies such
as in the area of cross selling. In this present
early stage, there is no experience to indicate to
what extent this strategy will be successful.
Capital allocation
For capital allocation, the institute uses only its available equity, which has evolved as follows during the
year under review:
In EUR „000 01/01/2006
31/12/2006 /
01/01/2007 31/12/2007
Subscribed capital 3,870 9,675 9,675
Capital reserves 9,631 3,041 3,822
Revenue reserves 3,866 10,576 18,102
Consolidated profit 8,310 7,867 3,308
Total VEM shareholdings 25,677 31,159 34,907
Third-party shares 0 977 999
Total equity capital 25,677 32,136 35,906
The institute has complied with the regulatory compulsory registration (according to § 10 of the German
Banking Act KWG) concerning the appropriateness of capital resources. It has determined this according to
requirements and has always satisfied the minimum capital-base requirements.
37

The total fixed risk capital is made up of the total
of the allocated risk capitals for the individual
risks identified within the institute. In addition, a
suitably large contingency is defined, which can
be utilised, if necessary, for one (or more) of the
identified risk categories.
The unallocated equity capital serves as an equity
contingency for unforeseen risks and is sufficiently
large to ensure the survival of the institute and
continue to satisfy the external minimum capital
requirements if all the allocated risk capital is
utilised.
Utilisation of allocated risk capital
In the 2007 financial year, the individual risk
categories were drawn on as follows:
Max. utilisation of allocated risk capital
[clockwise from the top]
13% Operational risks
19% Other risks
57% Market-price risks
0% Liquidity risks
54% Counterparty risks
Overall the capital allocated to each risk capital
was sufficient at all times and there were no
exceedances or cases of too-high utilisation that
would have led to the escalation procedure being
applied and appropriate measures being
introduced or even to the contingency being used.
38
Organisational and legal basis
The share capital of VEM Aktienbank AG amounts
to EUR 9,675,000.00, divided into 9,675,000 nopar-value
bearer shares.
The families of the board of directors‟ members
Andreas Beyer and Erich Pfaffenberger together
hold a total of 30.0% of the company‟s shares
directly and indirectly. The Beyer family holds
17.5% and the Pfaffenberger family 12.5%. On
31 December 2007, Computershare Beteiligungs
GmbH & Co. KG held a 30.48% share of the VEM
Aktienbank AG.
On 16 November 2007, Computershare
Beteiligungs GmbH & Co. KG concluded a
purchase agreement with the directors Andreas
Beyer and Erich Pfaffenberger for all directly and
indirectly held shares. The purchase was subject
to the condition precedent that no prohibition
would be issued by financial regulators.
The shareholders listed below have the joint right
to delegate one third of the number of
supervisory board shareholder members
determined according to the company articles to
the supervisory board at their discretion:
Mr Andreas Beyer,
Stöckelhuber Treuhandgesellschaft mbH,
tax consultancy company
Mr Klaus Schneider,
Ms Christine Schneider,
Mr Erich Pfaffenberger,
Ms Annette Pfaffenberger,
Ms Barbara Beyer
The delegation right is exercised according to a
joint declaration to the company, represented by
the board of directors. The shareholders
authorised for delegation have the right to

Consolidated annual report for the financial year
2007
appoint a representative for the company who
exercises the delegation right for them. If the
above-mentioned shareholders contribute their
shares to a single company, the delegation right
will be transferred to this company.
The board of directors is authorised to increase
the share capital in one or several turns until 23
August 2011, with the approval of the supervisory
board, by issuing new ordinary shares in the form
of no-par-value shares in return for cash and / or
non-cash capital contributions by a maximum of
EUR 4,837,500.00 (2006 authorised capital).
The board of directors is authorised to decide
upon the exclusion of shareholders from the
subscription right, with the agreement of the
supervisory board. The subscription right can be
excluded in particular in the following cases:
to exclude peak amounts from the
shareholders‟ subscription right,
in the case of capital increases in return for
non-cash capital contributions, particularly in
the form of firms and parts of firms or other
assets,
in the case of capital increases in return for
cash capital contributions if the share amount
advanced is not significantly lower than the
market price and the shares issued excluding
the subscription right do not exceed a total of
10% of the share capital,
to issue employee shares to employees of the
company and its associated firms and
to grant holders of convertible bonds and / or
covered warrants issued by the company a
subscription right for new shares within the
scope they would be entitled to after the
exercising of their conversion or option right,
but only insofar as the shares have not already
been granted on the basis of conditional
capital.
The share capital has been conditionally increased
by up to EUR 4,837,500.00 in up to 4,837,500 nopar-value
bearer shares (2007 conditional capital).
The conditional capital increase is only completed
to the extent to which the holders of convertible
bonds and / or covered warrants issued by the
company or its direct or indirect subsidiaries on
the basis of the authorisation decision of the
general meeting of 21 May 2007 in return for cash
make use of their conversion or option rights or
holders of convertible bonds comply with their
conversion obligation and provided that own
shares are not used as payment. The new shares
shall participate in the profit from the start of the
financial year in which they are created by the
exercising of conversion or option rights or the
fulfilment of conversion obligations. The board of
directors is authorised to determine further details
of the conditional capital increase and its
execution, with the approval of the supervisory
board.
The board of directors is authorised to acquire
and dispose of own shares of the company for the
purpose of security trading. The trading portfolio
of shares acquired for this purpose must not
exceed 5% of the company‟s share capital at the
end of each day.
The purchase price of a share (excluding
secondary acquisition costs) must not exceed the
daily closing price of the trading day preceding
the purchase of no-par-value shares of VEM
Aktienbank AG in XETRA trade (or a comparable
replacement system) on the Frankfurt Stock
Exchange by more than 15% or fall below this
level by more than 30%. In individual cases, an
excess or deficit of up to 50% may be authorised
if this is necessary to enable the company to fulfil
its obligations towards third parties, particularly
on the basis of its position as Designated Sponsor
or Market Maker.
The authorisation has been accorded until the
next ordinary general meeting – which, according
39

to § 120 para. 1 AktG (German Stock Corporation
Act), is to rule on the release of the members of
the board of directors and of the supervisory
board for the financial year 2007 – and until 31
October 2008 at the latest. The board of directors
is also authorised to acquire the company‟s own
shares for purposes other than security trading up
to a level of 10% of the company‟s share capital.
The purchase price of a share (excluding
secondary acquisition costs) must not exceed the
daily closing price of the trading day preceding
the purchase of no-par-value shares of VEM
Aktienbank AG in XETRA trade (or a comparable
replacement system) on the Frankfurt Stock
Exchange by more than 10% or fall below this
level by more than 10%.
The authorisation has been accorded until the
next ordinary general meeting – which, according
to § 120 para. 1 AktG (German Stock Corporation
Act), is to rule on the release of the members of
the board of directors and of the supervisory
board for the financial year 2007 – and until 31
October 2008 at the latest.
The board of directors is authorised, with the
approval of the supervisory board, to dispose of
own shares acquired on the basis of this or
another authorisation by means other than the
stock exchange or through an offer to all
shareholders pro-rata to their participation in the
company. This authorisation applies in particular
to, but is not limited to, the following cases:
when the shares are disposed of at a price that
is not significantly lower than the market price
of company shares of the same structure at
the time of the disposal. In this case, the
number of shares to be disposed of combined
with shares issued at a similar time on the
basis of an authorisation for a capital increase
with a subscription right exclusion according to
§ 186 para. 3 p. 4 AktG (German Stock
40
Corporation Act) must not exceed the limit of
10% of the total share capital;
in order to be able to offer the company‟s
acquired own shares to third parties within the
context of amalgamations with companies, or
the acquisition of firms or holdings;
in order to use the acquired own shares for
the fulfilment of option or conversion rights or
conversion obligations stemming from
conversion bonds or covered warrants issued
by the company.
The shareholders‟ subscription right concerning
these shares is excluded in this context.
The board of directors is also authorised to collect
the own shares acquired on the basis of this
authorisation with the agreement of the
supervisory board without any further decisions
by the general meeting.
The board of directors of VEM Aktienbank AG is
made up of two or more people. The supervisory
board determines the number of members
according to § 8 of the company articles. The
board of directors is appointed by the supervisory
board for a maximum period of 5 years. The
appointment and dismissal of the board of
directors is determined according to the statutory
provisions of §§ 84, 85 of the German Stock
Corporation Act.
The general meeting must issue a decision for the
amendment of the company articles of VEM
Aktienbank AG according to §§ 119 para. 1 No. 5,
179 of the German Stock Corporation Act. The
supervisory board may decide upon amendments
to the company articles according to § 18 of the
company articles, which only apply to the version
concerned.
In addition to expenses relating to their activities,
each member of the supervisory board receives

Consolidated annual report for the financial year
2007
fixed compensation of an annual amount of EUR
5,000.00 (basic compensation) payable at the end
of the financial year; the chairman receives EUR
6,500.00.
From 1 January 2006 onwards, each member of
the supervisory board receives variable
compensation in addition to the basic
compensation. The variable compensation is
dependent on the result of the company‟s
ordinary business activities, as reported in the
consolidated accounts drawn up by the company
according to IAS/IFRS (International Financial
Reporting Standards). For every EUR
1,000,000.00 of the result declared for ordinary
business activities before the deduction of the
board of directors‟ performance-related
compensation and the supervisory board‟s
variable compensation, each supervisory board
member receives the amount of EUR 1,000.00
euros. The variable compensation is payable after
the approval of the consolidated accounts for the
financial year concerned. If the company does not
establish consolidated accounts during a financial
year according to IAS/ IFRS, the supervisory
board‟s variable compensation will be calculated
for this financial year
on the basis of the result of ordinary business
activities, as reported in the annual statement
published by the company. The variable
compensation is payable in this case after the
determination of the annual statement for the
financial year concerned.
The company reimburses each supervisory board
member the turnover tax applied to their
compensation. The company takes out liability
insurance (D&O insurance) for the bodies of the
company, including members of the supervisory
board, with appropriate insurance amounts and
settles the corresponding premiums.
The total compensation of the supervisory board amounted to 43,500.00 euros for the financial year 2007.
They were distributed as follows between the individual members:
In EUR Fixed Variable Total
Matthias Girnth, Chairman 6,500 4,000 10,500
Olaf Posten, Deputy Chairman 5,000 4,000 9,000
Dr. Alfred Krammer 5,000 4,000 9,000
Total 16,500 12,000 28,500
Each member of the board of directors receives a
basic monthly salary that is payable at the end of
each month after the application of statutory
deductions. Each member also receives additional
benefits, notably in the form of the use of
company cars, insurance and other non-cash
benefits.
Each member of the board of directors also
receives variable (performance-related)
compensation. The variable compensation
depends on the result of the company‟s ordinary
business activities, as reported in the consolidated
accounts drawn up by the company according to
IAS/IFRS (International Financial Reporting
Standards).
41

The board of directors‟ total compensation for the
financial year 2007 amounted to EUR 1,159k. This
included performance-related elements amounting
to EUR 756k.
The company‟s general meeting of 23 August
2007 decided that the individualised statements of
the board of directors‟ compensation will not be
disclosed for the period from 2007 to 2010.
Events after the accounting date
On 23 January 2008, the conditions precedent
from the purchase agreement concerning all the
shares in VEM Aktienbank AG held directly and
indirectly by the directors Andreas Beyer and
Erich Pfaffenberger were fulfilled and the
purchase agreement was executed.
In January 2008, VEM Aktienbank AG signed,
with a prospective buyer, a sales contract
concerning all the shares of TradeCross AG, with
effect from 31 March 2008. A purchase price was
agreed of the reported equity, to be calculated on
31 December 2007, plus an agio. The agio has
already been paid by the buyers.
42
Strategy
The acquisition of a majority share in VEM
Aktienbank AG by Computershare will play an
important part in setting the direction for our
company‟s forward strategy. Together with our
new major shareholder, we are examining what
possibilities exist for a closer collaboration.
The Computershare group (“Computershare”) is a
listed company with a market capitalisation of
around EUR 3.0bn and approx. 10,000 employees
in 20 countries. Computershare is the worldwide
leader and only global service provider for shareregister
management and a leading provider for
listed limited companies and technologies for the
global securities industry. Its range of services
includes solutions for listed companies, investors,
staff, securities markets and other financial
institutions.
In Germany, Computershare is also a market
leader as service provider for issuers. It offers
comprehensive, integrated services in the areas of
AGM services, share-register management,
employee participation programmes, document
outsourcing and communication solutions. These
being-public services around shares and company
communications offer a cross-selling potential that
in the future will open shared business
approaches. It is also conceivable that
Computershare will market bank services from
VEM.
VEM Aktienbank AG expects to receive its full
bank licence from the competent financial
regulators this year. This will have no direct
influence on our business policies, but will allow
us greater flexibility. Furthermore, it will open up
new options for the VEM group.
The activities begun in the Chinese market in the
last year have led to VEM becoming one of the
most active providers of public offerings of

Consolidated annual report for the financial year
2007
Chinese companies in Germany. Even though the
Chinese market appears to be extremely volatile,
we want to hold on to our advisory services.
Our strategy with regard to Fonterelli is to enter
into investments with the available funds. In this
connection, the LED market, in which Fonterelli
has already indirectly invested, seems to us to be
a lucrative future market, in which we can
envisage further engagements.
The non-strategic group companies Janosch film
& medien AG and “Am Schönberg” GmbH are not
expected to remain in the group in the long term.
Outlook
The current situation in the stock markets is
shaped by various risk factors that are affecting
prices. The greatest uncertainty relates to the
trend of economic activity. Furthermore the
magnitude of the US mortgage crisis is still
unclear and difficult to estimate.
The difficult situation in the secondary markets is
expected to have a significant effect on the
primary market. This particularly applies to
companies with a market capitalisation of under
EUR 100m. The placement business is suffering in
the current nervous market situation, as public
offerings are being squeezed immediately after
allocation in the secondary market. This applies
above all to small caps. If this situation continues,
we shall carry out more listings without
placements. The demand from firms for public
offerings is unchanged. This year, too, we are
seeing significantly more than 100 public
offerings.
At the start of the first quarter of 2008, the
German stock market experienced its biggest
slump since September 2001; the German indexes
came under massive price pressure. There is still
a large demand for investment on the part of
institutional investors; however, shares, and in
particular those of small caps are currently being
avoided, because there is not enough liquidity in
the secondary market. We shall therefore adapt
our positions in the securities business to market
conditions and continually check to what extent
risks are acceptable. In a market situation of this
kind, we shall not be counting on any further
growth in Designated Sponsoring. Nevertheless,
we shall make the most of any opportunities and
decide on a case-by-case basis which mandates
we want to sponsor.
In the 2008 stock market year, we are seeing a
consolidation of the shares market and are
anticipating a sideways movement at best. We
have positioned ourselves well even for depressed
markets. We have sufficient equity and can offer
our customers all-round, high-quality support.
There is sufficient demand for our services
independently of the markets.
Our performance cannot be separated from the
state of the stock markets. We do not expect any
improvement in our result of operations from the
banking business in these unsettled markets. The
results trend from Fonterelli is characterised by
the shares‟ performance. Due to their manageable
size, they will not significantly affect the group.
We expect Fonterelli to be able to generate a
more or less balanced result of operations in the
current year, and Janosch film & medien AG
should be able to make a positive contribution to
the group. A contribution to results from the land
development company “Am Schönberg” GmbH
will essentially depend on the possible charges
(which at the moment can not yet be conclusively
estimated) arising from the provision of security
for the liabilities of the former sole shareholder.
Apart from these possible charges, we expect a
positive result. Monitoring the market is therefore
of immense importance, in order to be able to
offer customers appropriate services that can lead
43

to important business stimuli during the fiscal
year. In 2008 we want to carry on from the
previous year‟s result. For 2009, we are counting
on a more stable environment and rising earnings.
Our equity yield rate is expected to be above the
44
Munich, 15 May 2008-07-14
VEM Aktienbank AG
The Board of Directors
average of comparable banks.
Andreas Beyer Erich Pfaffenberger

Consolidated annual report for the financial year
2007
VEM Aktienbank AG – Consolidated accounts (IFRS) on 31 December 2007
31/12/2007 31/12/2006 Variation
Assets Note(s) EUR ‘000 EUR ‘000 in EUR ‘000 in %
Cash reserves (33) 6 6
Receivables from credit
institutes (15) (34)
27,098 37,175 -10,077 -27%
Customer receivables (15) (35) 3,892 2,819 1,073 38%
Provision for risks (16) (36) -275 -222 -53 24%
Trading assets (17) (37) 15,894 14,651 1,243 8%
Financial assets (18) (38) 4,507 3,581 926 26%
Tangible assets (19) (39) 248 294 -46 -16%
Intangible assets (20) (40) 7,556 7,728 -172 -2%
Income tax assets (28) (41) 2,180 1,904 276 14%
Other assets (21) (42) 7,501 2,452 5,049 206%
Assets of disposal groups
classified as held for sale
(63) 254 254
Total assets 68,861 70,388 -1,527 -2%
45

31/12/2007 31/12/2006 Variation
Liabilities Note(s) EUR ‘000 EUR ‘000 in EUR ‘000 in %
Liabilities with credit institutes (23) (43) 8,853 6,586 2,267 34%
Customers liabilities (23) (44) 16,499 24,149 -7,650 -32%
Trading liabilities (24) (45) 3,343 2,727 616 23%
Provisions (25) (46) 287 478 -191 -40%
Income tax liabilities (28) (47) 536 499 37 7%
Other liabilities (26) (48) 3,348 3,813 -465 -12%
Liabilities associated with assets
held for sale (63)
46
89 89
Equity (49) (50) 35,906 32,136 3,770 12%
VEM shareholder equity 34,907 31,159 3,748 12%
Subscribed capital 9,675 9,675
Capital reserves 3,822 3,041 781 26%
Other retained earnings 15,995 9,187 6,808 74%
First-time application
reserves
1,101 1,101
Revaluation reserves 1,006 288 718 249%
Group profit 3,308 7,867 -4,559 -58%
Minority interests 999 977 22 2%
Total liabilities 68,861 70,388 -1,527 -2%

VEM Aktienbank AG - Development of consolidated equity 2007
In EUR „000
Status 31/12/2005 /
01/01/2006
Transfer of group profit to retained earnings
Subscribed capital
3,870
Group
Capital reserves
9,631
Capital increase from company resources 5,805 -5,805
Acquisition/disposal of own shares -785
Changes in consolidated group
Release of revaluation reserves
Annual surplus
Status 31/12/2006 /01/01/2007
Adjustment from previous year
Status 31/12/2006 /01/01/2007
Transfer of group profit to retained earnings
Capital increase from company resources
9,675
3,041
9,675 3,041
Acquisition/disposal of own shares 781
Changes in consolidated group
Net earnings from cash-flow hedge
Additions to revaluation reserves
Annual surplus
Status 31/12/2007 9,675 3,822
47

48
Other
2,755
Retained earnings Equity
First-time
application
1,101
Re-
valuation
10
Total
3,866
Group
profit
8,310
6,432 6,432 -6,432
9,187
1,101
VEM
shareholder
25,677
Minority
interests
Total
Equity
25,677
-785 -785
-68 -68 743 675
278 278 278 278
288
10,576
5,892 5,892 234 6,126
7,702
30,994
977
31,971
165 165 165
9,187 1,101 288 10,576 7,867 31,159 977 32,136
6,808
6,808
-6,808
781 781
7 7
4 4 4 7 4
714 714 714 714
2,249 2,249 15 2,264
15,995 1,101 1,006 18,102 3,308 34,907 999 35,906

VEM Aktienbank AG – Consolidated profit and loss account (IFRS)
for the period from 1 January to 31 December 2007
01/01–
31/12/2007
01/01–
31/12/2006
Group
Variation
Note(s) EUR ‘000 EUR ‘000 in EUR ‘000 in %
1. Interest income (52) 642 344 298 87%
2. Net commission income (53) 6,636 10,702 -4,066 -38%
3. Trading result (54) 1,531 2,847 -1,316 -46%
4. Financial investments result (55) 715 470 245 52%
5. Administrative expenditure (56) -6,006 -6,618 612 -9%
6. Write-offs and allowances for
intangible and tangible assets
(57) -539 -3,969 3,430 -86%
7. Other operating income (58) 4,671 7,675 -3,004 -39%
8. Other operating expenditure (59) -3,344 -2,098 -1,246 59%
9. Provision for risks (61) -284 -109 -175 161%
10. Result from ordinary business
activities
4,022 9,244 -5,222 -56%
11. Income tax on the result of
-1,765 -2,953 1,188 -40%
ordinary business activities (62)
12. Annual surplus 2,257 6,291 -4,034 -64%
13. Result after taxes from the
discontinued operation
7 0 7 100%
14. Results of minority interests -15 -234 219 -94%
15. Annual surplus after minority
interests
Number of shares (average) (64) 9,585,654 9,607,895
Undiluted earnings per share
(EUR)
(64) 0.23 0.63
Result per share from continuing
operations
(64) 0.23 0.62
2,249 6,057 -3,808 -63%
49

VEM Aktienbank AG – Cash flow statement 2007
50
In EUR „000 2007 2008
Annual surplus from continuing operations 2,257
Annual surplus from the discontinued operation 7
1. Annual surplus 2,264 5,892
2. Write-offs, allowances and write-ups for receivables, tangible assets,
intangible fixed assets and securities held as long-term investments
-105 4,012
3. Other non-cash expenditure / income
Expenditure for taxes on income 1,768 3,145
Others 572 -471
4. Profit/loss from disposal of tangible assets and securities held as longterm
investments
0 1
5. Other adjustments (balance) -3 0
6. = Subtotal 4,496 12,579
7. Customer receivables -1,122 -670
8. Trading assets -1,243 150
9. Other assets from ordinary business activities -2,118 1,691
10. Liabilities
With credit institutes 390 -4,176
With customers -8,069 17,247
11. Trading liabilities 617 -1,151
12. Other liabilities from ordinary business activities -1,090 -1,748
13. Payments of taxes on income -2,044 -7,919
14. = Cash flow from ordinary business activities -10,183 16,003
15. Payments received from outflows of
Financial assets 1,024 57
Tangible fixed assets 1 0
Intangible fixed assets 0 0
16. Payments made for investments in
Financial assets -1,306 -1,071
Tangible fixed assets -67 -172
Intangible fixed assets -159 -1
17. Payments made for the acquisition of consolidated firms and other
business units
-7 290
18. = Cash flow from investment activities -514 -897
19. Changes in funds from other financing activities 781 -785
20. = Cash flow from financing activities 781 -785
21. Variation in cash and cash equivalents (total of 15, 20, 23) -9,916 14,321
22. Cash and cash equivalents at start of period 37,181 22,860
23. = Cash and cash equivalents at end of period 27,265 37,181

VEM Aktienbank AG – Segment information 2007
Segment reporting financial year 2007
Trade / DesignatedSponsoring
Group
Issues
business
Segment income from other segments 0 286
Segment income from third parties 3,596 4,401
Total segment income 3,596 4,687
Results from ordinary business activities 926 962
Segment assets 18,276 17,648
Segment liabilities 7,462 18,625
Additional details on segments subject to reporting
In EUR „000
Investments in tangible and intangible assets in the reporting
period
97 114
Scheduled write-offs of segment assets 84 79
Other expenditure with no cash effects 1,474 1,301
Segment reporting financial year 2006
Trade / DesignatedSponsoring
Issues
business
Segment income 4,511 8,617
Results from ordinary business activities 1,606 5,939
Segment assets 28,352 5,986
Segment liabilities 17,541 13,356
Additional details on segments subject to reporting
In EUR „000
Investments in tangible and intangible assets in the reporting
period
88 84
Scheduled write-offs of segment assets 82 63
Other expenditure with no cash effects 990 596
51

Land
development
(Am Schönberg)
Land
development
(Am Schönberg)
52
Media utilisation
(Janosch)
Other /
consolidation Continuing
operations
Discontinued
operation
-129 0 129 0 -286
1,857 2,144 1,941 14,195 367
1,728 2,114 2,070 14,195 81
14 133 1,986 4,021 10
5,975 8,936 17,772 68,607 254
5,997 5,063 -4,281 32,866 89
14
1 289
Media utilisation
(Janosch)
Other /
consolidation Continuing
operations
Discontinued
operation
0 7,115 1,311 21,554 484
0 810 786 9,141 103
0 9,874 24,731 68,943 1,445
0 6,119 1,216 38,232 185
0 11,528
0 581
0 3,243

General information
Group
> 1 Information about the company
VEM Aktienbank AG is a public company whose head offices are in 80331 Munich, Rosental 5, registered in
Germany in the trade register of the district court of Munich under number HRB124255.
The purpose of the firm is:
The acquisition and disposal of financial instruments in its own name and for the account of third parties
(financial commission business), the acceptance of financial instruments at its own risk for placement or
acceptance of guarantees of the same value (issues business), the placement of business through the
acquisition and disposal of financial instruments or their evidence (investment agent), the acquisition and
disposal of financial instruments on behalf of and for the account of third parties (acquisition agent), the
administration of individual assets invested in financial instruments for third parties with a scope of decisionmaking
(financial portfolio administration), the acquisition and disposal of financial instruments in the
context of proprietary trading for third parties (proprietary trading) and the provision of all kinds of services
relating to securities. Transactions requiring authorisation according to the German Banking Act (KWG) other
than those referred to in § 1 para. 1 p. 2 No. 4, 10, para. 1a p. 2 No. 1, 2, 3, 4 KWG may not be carried out.
The firm is also involved in the field of electronic data processing: the provision of all kinds of services in the
EDP sector, the purchase and sale of hardware and software, the provision of services on and for the
Internet, particularly the sale of advertising space on the Internet, the structuring of Internet presence and
the associated consultancy, the operation of a technical Internet platform, the provision of financial and
economic services, particularly the provision of information on the Internet, the organisation and creation of
advertising space and Internet marketing as well as media planning, the placement and activation of all
kinds of advertisements in online, print and other media and the placement and activation of airtime,
particularly on the radio and television.
The acquisition, maintenance, administration and sale of majority and minority holdings in firms and firms
with a similar aim and trading with these holdings and firms.
> 2 Consolidated accounts according to IFRS
The consolidated accounts on 31 December 2007 of VEM Aktienbank AG were drawn up according to the
International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB)
as applicable in the EU. The IFRS also include the still-valid International Accounting Standards (IAS) and
the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) – formerly the
Standing Interpretations Committee (SIC).
The consolidated accounts and the accounts of the firms included in the consolidated accounts were drawn
up on 31 December 2007 and audited by the auditing companies Ernst & Young AG and Ebner, Stolz,
Mönning GmbH. The financial year corresponds to the calendar year. The reporting currency is the euro and
all amounts are given in thousands of euros (euro „000) unless stated otherwise. Various items on the
balance sheet and profit and loss account are summarised in order to enhance clarity. These items are
53

presented separately and explained in the notes to the consolidated accounts.
With regard to the risks according to IFRS 7, we refer to the disclosure of the risk report included in the
annual report.
The consolidated accounts drawn up according to the IFRS on 31 December 2007 have a discharging effect
according to § 315a of the German Commercial Code HGB. The consolidated annual report fulfils the
requirements of § 315 paras. 1 and 2 HGB (German Commercial Code) and contains the consolidated risk
report according to § 315 HGB and IAS 32.
> 3 Applicable provisions
The following IFRS/IAS were observed in the compilation of the consolidated accounts on 31 December
2007:
IFRS 3 Business combinations
IFRS 5 Non-current assets held for sale and discontinued operations
IFRS 7 Financial instruments: disclosures
IAS 1 Presentation of financial statements
IAS 2 Inventories
IAS 7 Cash flow statements
IAS 8 Accounting policies, changes in accounting estimates and errors
IAS 10 Events after the balance sheet date
IAS 11 Construction contracts
IAS 12 Income taxes
IAS 14 Segment reporting
IAS 16 Property, plant and equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee benefits
IAS 20 Accounting for government grants and disclosure of government assistance
IAS 21 The effects of changes in foreign exchange rates
IAS 23 Borrowing costs
IAS 24 Related Party Disclosures
IAS 27 Consolidated and separate financial statements
IAS 28 Investments in associates
IAS 30 Disclosures in the financial statements of banks and similar financial institutions
IAS 32 Financial instruments: presentation
IAS 33 Earnings per share
IAS 36 Impairment of assets
IAS 37 Provisions, contingent liabilities and contingent assets
54

IAS 38 Intangible assets
Notes to consolidated accounts 2007
IAS 39 Financial instruments: recognition and measurement
> 4 Published, not yet binding applicable standards and interpretations that have not been
applied in advance
The recently published or revised standards and interpretations referred to below, whose application is only
compulsory after the end of the financial year 2007, have not been and are not applied in advance.
IFRS 8 “Operating segments“ will replace IAS14 “Segment reporting” and must be applied for financial years
that begin on or after 1 January 2009. The effects of this standard cannot be judged conclusively at present.
Accounting and valuation policies
> 5 Standard accounting within the group
The individual financial statements of the firms included in the consolidated accounts are drawn up
according to IAS 27 on the basis of the standard balancing and evaluation policies.
Group accounting is carried out in euros.
> 6 Consistency
The accounting and valuation policies applied essentially correspond to the methods applied in the previous
year, with the following exceptions:
In the financial year, the group applied the new and revised IFRS standards and interpretations listed below.
The application of these revised standards and interpretations had no consequences for the group‟s assets,
liabilities, financial position and profit or loss situation. However, they did lead to additional disclosures, and
in some cases to changes in the reporting methods.
> IFRS 7 Financial instruments: disclosures
> Change to IAS 1 Presentation of financial statements
The main changes are as follows:
IFRS 7 Financial instruments: disclosures
This standard requires disclosures that enable users of the financial statements to evaluate the significance
of the financial instruments for the group‟s financial position and performance, as well as the nature and
extent of risks arising from these financial instruments. The new disclosures resulting from this can be found
throughout the entire financial statement. Its application had no consequences for the group‟s assets,
liabilities, financial position and profit or loss situation. The relevant comparative information was adjusted.
IAS 1 Presentation of financial statements
This change resulted in new disclosures that enable users of the financial statements to evaluate the group‟s
objectives, policies and processes for managing capital.
55

7 Error correction
When the consolidated accounts were drawn up for the 2007 financial year, errors in the 2006 period were
ascertained. All the errors concern deferred tax liabilities.
The error correction affects the following entries for the 2006 period.
Reduction in the income tax obligations and provision for income tax of EUR 165k. As a result the
consolidated profit and equity increased by EUR 165k.
The earnings per share increased by EUR 0.02.
The comparative information in the present financial statements was adjusted appropriately.
> 8 Discretionary decisions, assumptions and estimates
Accounting and valuation according to IFRS calls for discretionary decisions, assumptions and estimates for
certain balance sheet items that affect the entry and evaluation in the balance sheet and profit and loss
account. They are carried out according to the applicable standard on the basis of the most recent reliable
information available, historical experiences and expectations with regard to future events that appear
reasonable in the given circumstances. The actual amounts obtained may differ from these estimates.
Assumptions and estimates are required in particular in the following cases:
in the purchase price assessment and determination of goodwill in the context of acquisitions,
in the assessment of the need for and the measurement of a write-off relating to intangible assets and
tangible fixed assets
in the assessment of the recoverability of deferred tax assets
An impairment test is carried out annually on intangible assets on the basis of income planning covering
several years and based on the assumption of growth rates specific to the business sector for the
subsequent period. Any changes in these key factors may possibly result in higher or lower write-offs.
The recognition and measurement of Other Provisions is based on the assessment of the probability of an
outflow of resources, and on past experience and circumstances known at the accounting date. The actual
outflow of resources may therefore differ from the figure included in Other Provisions.
Deferred tax assets are entered in the accounts on the basis of the estimate concerning the future
recoverability of tax advantages, i.e. when there is sufficient tax income. The actual tax situation in future
periods may differ from the assessment made at the date the deferred tax assets are recognized.
56

Notes to consolidated accounts 2007
> 9 Companies to be consolidated
The consolidated accounts include, in addition to VEM Aktienbank AG as the parent company, the following
companies as fully consolidated companies:
In EUR „000 Holding share
Fully consolidated companies:
TradeCross AG, Munich 100%
VEM Capital Management GmbH, Munich 100%
Fonterelli GmbH & Co. KGaA, Munich 100%
Land development company “Am Schönberg” GmbH, Augsburg 94%
Janosch film & medien AG, Berlin 73%
Papa Löwe Filmproduktion GmbH, Munich 62%
Holding in Janosch film & medien AG
VEM Aktienbank AG has held a share of 73% of Janosch film & medien AG since last year. Janosch film &
medien AG possesses proprietary claims to proceeds and partial rights of use in the entire works of the
painter, graphic artist and author “Janosch“ and generates income from the use of these rights and claims.
Janosch film & medien AG has an 85% holding in Papa Löwe Filmproduktion GmbH. The company produces
films and television series on the basis of the Janosch characters.
Purchase of the land development company “Am Schönberg“ GmbH in 2007
On 28 March 2007 (initial consolidation date) VEM Aktienbank AG acquired 94% of the land development
company “Am Schönberg“ GmbH, Augsburg, as well as claims against this company amounting to EUR
1,877k. The purchase price was made up of the transfer of a partial debenture with a fair value of EUR
1,611k and a payment of EUR 3k. Incidental acquisition costs were incurred of EUR 9k. After evaluating the
assets and liabilities as well as the inclusion of deferred tax assets due to existing reclaimable tax-loss carryforward,
the result was a positive difference amounting to EUR 86k, which was booked as a goodwill asset in
the consolidated accounts, and fully written off at the end of the financial year in the context of an
impairment test. The company carries out the preparation, development and commercialisation of land in
the municipality of Wenzenbach.
The consolidated result contains a proportionate result for the land development company “Am Schönberg“
GmbH amounting to EUR 35k. Under the assumption that the purchase of the land development company
“Am Schönberg“ GmbH had already taken place on 1 January 2007, the VEM group‟s operating result would
have amounted to EUR 10,108k and the consolidated result before third party shares, EUR 2,229k.
Formation of Fonterelli GmbH & Co. KgaA and VEM Capital Management GmbH in 2007
At the beginning of July 2007, VEM Aktienbank AG formed Fonterelli GmbH & Co. KGaA together with its
general partner VEM Capital Management GmbH. Fonterelli GmbH & Co. KGaA acts as a classic privateequity
affiliated company and plans investments in medium-sized companies. VEM Aktienbank AG has a
100% holding in both companies as at 31 December 2007. The VEM group‟s result contains a loss of EUR
142k from Fonterelli GmbH & Co. KgaA and a profit of EUR 2k from VEM Capital Management GmbH.
57

Disposal of financial.de AG in 2007
In September 2007, VEM Aktienbank AG sold its 25% share in financial.de AG. In the consolidated accounts
on 31 December 2006, the holding was evaluated as an associated company as per IAS 28, according to the
equity method, and was not yet classified as an asset held for sale. The board of directors only decided to
sell during the course of the 2007 financial year. The sale took place in September 2007 against the
payment of a purchase price of EUR 743k. The sales contract provides for an adjustment of the purchase
price to the declared taxable result at the time of sale. Currently a pre-tax profit of EUR 444k is indicated
from the sale.
> 10 Consolidation principles
The capital consolidation is carried out according to the purchase method. This involves offsetting the
acquisition costs of an associated firm against the proportionate equity at the time of the acquisition. In
order to determine the equity, the assets and liabilities of the acquired firm are assessed at their fair value
on the acquisition date.
A positive difference between the higher acquisition costs for the acquired firm and the proportionate equity
is entered as a business value or goodwill in the balance sheet under intangible assets. This business value
or goodwill is only written down in extraordinary circumstances in accordance with lAS 36 (impairment-only
approach). The impairment test is to be carried out once a year.
A negative difference is immediately entered as proceeds.
An acquired firm is included in the consolidated group from the date on which the group actually takes over
control. A firm leaves the companies to be consolidated in the event of a sale, a specific disposal plan or if
VEM Aktienbank AG no longer exercises a controlling influence.
The initial consolidation is carried out on the acquisition date; expenditure and income in the profit and loss
account are subsequently and proportionately incorporated in the consolidated accounts after the initial
consolidation date.
Receivables and liabilities as well as income and expenditure between firms that are included in the
consolidated accounts are settled within the context of the consolidation of debts or the consolidation of
income and expenditure; interim results recorded within the group are eliminated.
> 11 Currency conversion
Business transactions in foreign currencies are converted at the rate in force on the transaction date.
Monetary assets and liabilities in foreign currencies are converted at the rate in force on the accounting
date.
> 12 Revenue recognition
Commissions revenue is recorded when the service is performed. Trading revenue is realised when the risk
is transferred to the trading partner. Dividend revenue is recorded when the shareholder‟s right to receive
payment is established. Interest is included in accordance with the accruals concept. Other revenue is
recognized when it is probable that the economic benefits will flow to the group and the amount of revenue
58

can be reliably measured.
Notes to consolidated accounts 2007
> 13 Financial instruments
A financial instrument is a contract that simultaneously results in a financial asset for one firm and a financial
liability or equity instrument for another. On the date of receipt, all financial instruments are to be allocated
to a category that is significant for the subsequent valuation.
Financial assets and liabilities within the VEM group are currently entered on the trading date and are
divided between the following categories:
Trading assets and trading liabilities
This category includes financial instruments and derivative financial instruments that have been acquired
with a short-term disposal intention or sold with a short-term buy-back intention and are therefore classified
as being for trading purposes (“Held for Trading” category). They are evaluated on the acquisition date at
their acquisition cost and subsequently at their fair value. Profits and losses stemming from the assessment
are entered through profit or loss under the trading result in the profit and loss account along with actual
profits and losses. Listed and non-listed shares included under trading assets stemming from capital
increases that have not yet been transferred to the subscriber are entered at their acquisition costs
corresponding to the fair value.
Receivables
This category includes non-derivative financial instruments with fixed or definable payments that are not
listed on an active market and have not been acquired with a short-term re-disposal intention. They are
entered in the accounts at their acquisition cost.
Available for Sale
This category includes all other non-derivative financial instruments that cannot be allocated to any of the
other categories. This essentially concerns fixed-rate securities, shares and investments referred to under
financial assets. They are accounted for on the acquisition date at their acquisition cost and subsequently at
their fair value. The assessment result is entered under a separate equity item that does not affect net
income (revaluation reserve). In the event of the disposal or dissolution of an available-for-sale portfolio, the
corresponding share of the revaluation reserve is released and entered in the profit and loss account.
Accounting for hedging instruments
To secure the interest rate risks stemming from loan liabilities, a contract was concluded for an interest-rate
hedging instrument with a term of 30 April 2009. The valuation difference is recognised in equity, resulting
in neither profit nor loss.
Other financial liabilities
This category includes all other financial liabilities that are not included in the trading liabilities category. This
includes in particular liabilities with credit institutes and customers, tax liabilities and liabilities in the staff
sector. They are entered in the accounts at their acquisition cost carried forward.
59

14 Fair value of financial instruments
The fair values of all the financial instruments of VEM Aktienbank AG entered in the consolidated accounts
according to IFRS for 2005 and 2007 correspond to the stated book values. This concerns the items cash
reserves, receivables from credit institutes, customer receivables, trading assets, financial assets, other
assets, liabilities with credit institutes, customer liabilities, certified liabilities, trading liabilities and other
liabilities.
> 15 Receivables
Receivables from credit institutes and customer receivables are entered at their nominal amount. Identifiable
individual risks are accounted for by means of appropriate allowances. Receivables from credit institutes also
include interest accrued from these receivables.
> 16 Allowances (provision for risks in the credit business)
The deferred provision for risks of receivables includes all losses and other provisions for receivables that are
subject to recognisable risks. Adequate provisions for these risks are established according to the principles
of commercial prudence. The judgement of the extent to which the agreed payments are actually provided
represents a decisive criterion for the valuation.
> 17 Trading assets
The trading assets include securities of the trading portfolio. Trading assets are essentially evaluated at their
fair value with the exception of listed and non-listed shares stemming from capital increases which have not
yet been transferred to the subscriber. These are entered at their acquisition cost, which corresponds to
their fair value. All realised and non-realised profits and losses generated in the context of trading assets are
entered under the trading result in the profit and loss account.
> 18 Financial assets
Financial assets are evaluated as Available-for-Sale financial instruments. They are initially measured at their
acquisition cost. In the context of stock acquisitions, loans granted were granted below the standard interest
level. The amount resulting from the discontinuation with the standard interest was taken into account with
the acquisition cost. The proportional write-up over the life of the loan is recognised in the financial
investments result.
The subsequent assessment is made at fair value, if this can be measured reliably. Changes in market value
for financial assets are disclosed in the revaluation reserve and only flow into the result when a profit or loss
is realised. If it is not possible to reliably measure a fair value, they are entered in the accounts at their
acquisition cost. They are written down to the lower fair value in the event of anticipated lasting impairment
losses. The discounted expected future payment inflows are used to determine the fair value. Write-ups are
applied in the absence of grounds for impairment. Interest income and allowances as well as write-ups are
entered in the financial investments results.
60

Notes to consolidated accounts 2007
> 19 Tangible assets
Tangible assets are entered in the accounts at their carried-forward acquisition cost, reduced by scheduled
straight-line write-offs corresponding to the expected useful life. The write-off period for tangible assets
corresponds to the predicted useful life within the firm, which may be shorter than the economic useful life
and is between three and ten years. In the event of expected lasting impairments, write-downs are
undertaken. In the absence of grounds for impairments, write-ups corresponding to the maximum level of
carried-forward acquisition costs are undertaken. Write-offs of tangible assets are accounted for in general
administrative expenditure. The acquisition of tangible assets of low item-value, for reasons of materiality, is
entered under administrative expenditure with an effect on the profit and loss during the year of acquisition.
> 20 Intangible assets
Intangible assets include rights, particularly rights of use and proprietary claims for proceeds, and to a lesser
extent software. They are accounted for at acquisition or construction costs carried forward and reduced by
scheduled straight-line write-offs. The underlying useful life for rights corresponds to between 10 (rights of
use) and 50 years (claims for proceeds / development rights) and for software between two and three years.
The remaining useful life on the accounting date is 5-10 years for rights of use and 43 years for claims for
proceeds. The valuations of rights and write-off methods are verified at least once a year. In the context of
the application of the Impairment Test according to IAS 36, the book value is set against the attainable
proceeds. The attainable amount is the higher of the two amounts out of the net disposal price and the
value of use of an asset. The value of use is the cash value of the estimated future cash flow. When
determining the value of use, forecasts are based on reliable, defensible assumptions (best estimates). The
interest rate used to determine the cash value is 15.5% or 14.5%. Scheduled write-offs and impairments are
entered under write-offs and allowances for tangible and intangible assets.
Significant items are the rights of use held by Janosch film & medien AG relating to copyright to the Janosch
characters, with a book value of EUR 6,921k, and the film rights to the Janosch characters held by Papa
Löwe GmbH, with a book value of EUR 498k on the accounting date.
> 21 Other assets
Other assets essentially include delivery claims for shares from corporate actions if they are not entered in
the trade register and other delivery claims for securities and other assets. They are entered in the accounts
at their acquisition cost as carried forward. Furthermore, reserves held in the form of real estate are
included. These are measured with the lower of the two amounts out of the acquisition or production costs
and the net disposal value. The net disposal value is the estimated sales proceeds achievable in normal
course of business, minus the estimated costs to completion and the estimated marketing costs.
> 22 Assets held for sale
Assets that were originally intended to serve the company‟s purpose in the long term, and for which the
company management has taken a binding decision to sell before the accounting date, are disclosed
separately in the balance sheet as assets held for sale. Assets held for sale are evaluated at fair value minus
any disposal costs still accruing. On the accounting date the holding in TradeCross AG was disclosed as an
asset held for sale.
61

23 Liabilities
Liabilities are evaluated at their redemption or nominal amount. Liabilities with credit institutes include a
bank loan taken out by Janosch film & medien AG to finance Janosch rights, share delivery liabilities
stemming from subscriptions by credit institutes for capital increases of issues managed by us, liabilities
relating to commissions, and a current account.
> 24 Trading liabilities
Trading liabilities include delivery obligations from short sales of securities, insofar as they serve trading
purposes, negative fair values of derivative trade instruments and early deliveries of issues backed by
securities lending. Trading liabilities are basically accounted for at their fair value. This does not apply to
early deliveries of issues that are set against delivery claims towards issuers. They are entered at the issue
price, which corresponds to the fair value. All realised and non-realised profits and losses occurring in the
context of trading liabilities are entered under the trading result in the profit and loss account.
> 25 Provisions
Provisions are disclosed in accordance with IAS 37 for liabilities whose amounts and due dates are uncertain.
A provision should only be entered if:
the company has a current (legal or de facto) obligation due to a past event,
it is likely that an outflow of resources embodying economic benefits will be required to fulfil the
obligation and
a reliable estimation of the amount of the liability is possible.
> 26 Other liabilities
In addition to liabilities from deliveries and services, income tax on wages and salaries and social security
contributions, other liabilities include accrued liabilities according to IAS 37. This includes future expenditure
which is uncertain in terms of amounts or due dates but whose uncertainty is less significant than in the
case of provisions. Liabilities from outstanding invoices for received deliveries and services and short-term
liabilities with employees stemming from holiday or commission claims are covered by this category. Accrued
liabilities are entered at the amount of the expected claim.
> 27 Equity
Subscribed capital
VEM Aktienbank AG‟s share capital is disclosed in the subscribed capital
Capital reserves
Under capital reserves, the amount is indicated that is realised when shares are issued for more than their
nominal value. Profits or losses resulting from transactions in the company‟s own shares are also recognised
directly in the capital reserves.
Revenue reserves
Revenue reserves are made up of other reserves, reserves for first-time application and the revaluation
reserves.
62

Notes to consolidated accounts 2007
Minority interests
Minority interests in the equity of subsidiaries are disclosed as a separate item in the equity.
> 28 Taxes on income
Taxes on income are evaluated and entered in the accounts according to IAS 12. Deferred taxes are
determined according to the temporary concept relating to the balance sheet. According to this concept, the
valuation of assets and liabilities is compared in the balance sheet with valuations that are the taxation basis
of the associated company concerned. If differences in these valuations are not lasting but only result in
temporary value differences, deferred tax assets or deferred tax liabilities should be taken into account in
this context. The tax rates that are likely to apply at the time of the reversal of the value difference are used
to calculate deferred taxes. Deferred tax assets are entered if it is likely that the future tax advantage can be
utilised. The uncertainty surrounding the future utilisation of the tax advantage is taken into account by
safety deductions. On this basis, tax losses carried forward for Janosch film & medien AG, Fonterelli GmbH &
Co. KGaA and the land development company “Am Schönberg“ GmbH were only taken into account for an
amount that is highly likely to be used within a clear period of three years. No deferred tax assets were
entered for corporation tax losses carried forward for Janosch film & medien AG, Fonterelli GmbH & Co.
KGaA and the London branch amounting to EUR 22,687k.
> 29 Leases
A distinction is made between finance leases and operating leases according to IAS 17. A lease is classified
as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is
classified as an operating lease, on the other hand, if it does not transfer substantially all the risks and
rewards incidental to ownership.
All the firms included in the consolidated accounts are lessees and the existing leasing relationships are
classified as operating leases. The leasing property is therefore not entered in the balance sheet accounts;
the leasing rates are considered as rental expenditure and included under administrative expenditure.
> 30 Government grants and government assistance
Public subsidies are granted to VEM in the form of film promotion resources. Film promotion loans are
accrued on the liabilities side at the time of payment. Conditional redeemable loans are included under other
operating income if redemption is unlikely due to the expected occurrence of condition subsequent. In the
financial year there were no government grants or assistance. A remaining outstanding instalment of EUR
157k from film promotion resources granted in the previous year has been entered under other assets.
Altogether grants totalling EUR 2,334k are entered under contingent liabilities.
63

31 Details on the cash flow statement
The cash flow statement is determined according to the indirect method and presents the origin and use of
financial resources as well as the increase/decrease of cash and cash equivalents during the reporting
period. Cash and cash equivalents include receivables from credit institutes and cash reserves and contain
EUR 161k from TradeCross AG.
During the financial year the land development company “Am Schönberg“ GmbH was purchased and
incorporated into the consolidated accounts for the first time. The fair values for assets and liabilities were
as follows:
In EUR „000 Book value Fair value
Receivables from credit institutes 5 5
Customer receivables 2 2
Tangible assets 10 10
Income tax assets 0 336
Other assets 2,087 2,932
Liabilities with credit institutes -1,877 -1,877
Customer liabilities -459 -459
Income tax liabilities 0 -336
Other liabilities -669 -669
Minority interests 3 3
Owner‟s equity -898 -53
Goodwill 86
Purchase costs 33
The purchase costs consisted of the transfer of a partial debenture with a fair value of EUR 1,611k and a
payment of EUR 3k. Incidental acquisition costs were incurred of EUR 9k. In addition to the shares in the
company, receivables from the company with a fair value of EUR 1,590k were also acquired.
Purchase costs
In EUR „000
Partial debenture, evaluated at fair value 1,611
Cash payment 3
Acquired receivables -1,590
Costs directly attributable to the acquisition of the company 9
Total 33
Cash outflow by acquisition of the company
In EUR „000
Means of payment acquired with the subsidiary 5
Minus means of payment paid out -12
Outflow through the acquisition of the company -7
64

Notes to consolidated accounts 2007
Interest and dividends from ordinary activities included in the cash flow
In EUR „000 2007 2006
Interests and dividends received 966 727
Interest paid -324 -365
Total 642 362
In the context of Janosch film & medien AG‟s listing on the stock market, stocks were realised amounting to
2.6% at a price of EUR 89k. The realisation price was fully settled with payment instruments. The profit in
the group amounted to EUR 78k.
Of the cash and cash equivalents at the end of the period, EUR 1,871k are pledges as securities for VEM
liabilities and are not immediately freely available.
> 32 Information about segment reporting
Segment reporting is carried out on the basis of business segments that correspond to the organisational
structure of the VEM group. The main sub-activities are divided into four segments subject to reporting
requirements.
Issues business
VEM Aktienbank advises firms within the context of their planned or existing listing, structures corporate
actions, obtains securities from issues and places them with investors.
Trading / Designated Sponsoring
VEM Aktienbank deals with market and off-market trading in securities and derivatives in its own name both
for its own account and for the account of third parties, and it acts as an agent in this type of business. VEM
Aktienbank is also committed, for certain securities in the electronic Xetra trade, to quoting buying / selling
prices on a minimum level specified by the stock exchange and thus determining the liquidity of these
securities (Designated Sponsoring).
Media utilisation
Through the Janosch Group, VEM Aktienbank AG carries out the comprehensive utilisation of a large part of
the “Janosch” body of work. “Janosch” is one of the best-known authors of children‟s books in Germany and
has produced a wide range of different works. This utilisation covers the fields of licensing, claims for
proceeds and film production.
Land development
With the land development company “Am Schönberg” GmbH, VEM Aktienbank AG carries out the
preparation, development and commercialisation of land in Wenzenbach
For these segments, the directly and indirectly attributable expenditure and income are included in the
segment result and the additional necessary details are provided.
Other non-essential sub-activities and central functions which are neither directly nor reasonably indirectly
transferable are included in Other / Consolidation for the transfer to consolidated figures.
65

VEM Aktienbank essentially provides its services in Germany for domestic customers. No secondary
geographical segmenting is therefore provided at present.
Balance sheet details
> 33 Cash reserves
In EUR „000 2007 2006
Cash 6 6
Total 6 6
> 34 Receivables from credit institutes
In EUR „000 2007 2006
Due at call 19,547 17,346
With agreed term 7,551 19,829
Total 27,098 37,175
In EUR „000 2007 2006
Credit institutes in Germany 24,326 31,007
Credit institutes abroad 2,772 6,168
Total 27,098 37,175
Cash in bank amounting to EUR 500k was pledged as a security for liabilities recorded in the balance sheet.
For further obligations, further cash in bank amounting to EUR 1,371k was pledged as a security.
> 35 Customer receivables
In EUR „000 2007 2006
Receivables from services 2,987 2,337
Other receivables 905 482
Total 3,892 2,819
Receivables from services relate mainly to commissions stemming from services provided within the
framework of issues and consultancy work. All other receivables stem from payment obligations of
customers for the settlement of commercial transactions.
> 36 Credit volumes and development of provision for risks
In EUR „000 01/01/2007 Additions Release Consumption 31/12/2006
Receivables
from credit
institutes
66
37,175 - - - 27,098
Customer 2,819 - - - 3,892

eceivables
Provision for
risks
Notes to consolidated accounts 2007
-222 -323 39 231 -275
Total 39,772 -323 39 231 30,715
> 37 Trading assets
In EUR „000 2007 2006
Shares and other non-fixed-interest-rate securities
Shares 9,553 14,104
Bonds and investment shares 6,341 547
Of which:
Negotiable securities
listed 9,687 9,729
unlisted 823 634
Total 15,894 14,651
> 38 Financial assets
In EUR „000 2007 2006
Holdings 2,342 1,688
Equity-method investments 253 273
Shares and other non-fixed-interest-rate securities 1,377 1,140
Loans in connection with shares purchase 441 0
Bonds and other fixed-interest-rate securities 94 480
Total 4,507 3,581
The financial assets comprise two loans amounting to EUR 441k, which were awarded in connection with the
purchase of shares in a holding through Fonterelli GmbH & Co. KGaA.
The fair values of the financial assets correspond to the book values.
67

The VEM group possesses the following major holdings in non-consolidated firms:
In EUR „000
68
Holding
share
Balancesheet
equity Result*
EquityStory AG, Munich 9% 8,161 1,836
* Year-end accounts on 31 December 2007
> 39 Tangible assets
Tangible assets developed as follows during the financial year:
In EUR „000 2007 2006
Acquisition / production costs
Status 01/01 808 788
Inflows 76 171
Changes in consolidated group 0 10
Outflows -136 -161
Repostings 0 0
In EUR „000 2007 2006
Status 31/12 748 808
Depreciations
Status 01/01 514 541
Current write-offs 122 133
Write-ups during reporting year 0 0
Outflows -136 -160
Repostings 0 0
Status 31/12 500 514
Book values
Status 31/12 of previous year 294 247
Status 31/12 of reporting year 249 294
No grounds for write-downs have been identified. No write-ups based on previous impairments were applied
during the reporting year.

40 Intangible assets
Notes to consolidated accounts 2007
The intangible assets developed as follows during the financial year:
In EUR „000 2007 2006
Acquisition / production costs
Status 01/01 11,589 165
Inflows 245 1
Changes in consolidated group 0 11,518
Outflows -105 -95
Repostings 0 0
Status 31/12 11,729 11,589
Depreciations
Status 01/01 3,861 120
Current write-offs 417 3,836
Write-ups during reporting year 0 0
Outflows -105 -95
Repostings 0 0
Status 31/12 4,173 3,861
Book values
Status 31/12 of previous year 7,728 45
Status 31/12 of reporting year 7,556 7,728
Intangible assets underwent an impairment test according to IAS 36. The goodwill from the purchase of
shares in the land development company “Am Schönberg“ GmbH, amounting to EUR 86k, was completely
written off.
> 41 Income tax assets
In EUR „000 2007 2006
Actual taxes 1,408 578
Deferred taxes 772 1,326
Total 2,180 1,904
In the deferred taxes, EUR 739k account for tax-loss carry-forward
69

42 Other assets
In EUR „000 2007 2006
Delivery claims for shares from corporate actions 2,851 1,500
Delivery claims for other securities 0 629
Other assets 4,790 323
Total 7,501 2,452
The other assets contain reserves amounting to EUR 3,535k held in the form of real estate. Of this, real
estate with a book value of EUR 1.019k is pledged for third-party liabilities. Real estate with a book value of
EUR 900k is pledged as security for the performance of construction work. Furthermore the other assets
contain the premium and valuation adjustments for an interest-rate hedging instrument totalling EUR 13k.
> 43 Liabilities with credit institutes
In EUR „000 2007 2006
Due at call 4,584 1,623
With agreed term 4,269 4,963
Total 8,853 6,586
In EUR „000 2007 2006
Credit institutes in Germany 5,764 6,369
Credit institutes abroad 3,089 217
Total 8,853 6,586
A long-term loan amounting to EUR 4,900k with a term of 30 April 2015 is associated with variable interest
rates. The interest rate adjustment dates are 30 April and 30 October each year. The interest rate
adjustment risk is limited by an additional interest rate limiting transaction in the form of a maximum
interest rate agreement until 30 April 2009. The positive valuation difference of EUR 9k is disclosed minus
deferred taxes amounting to EUR 5k in the equity (cash-flow hedge).
> 44 Customer liabilities
In EUR „000 2007 2006
Customers in Germany 15,521 23,229
Customers abroad 978 920
Of which due at call 15,875 24,149
Total 16,499 24,149
70

45 Trading liabilities
Notes to consolidated accounts 2007
In EUR „000 2007 2006
Delivery obligations from security sales 1,744 1,540
Negative fair values of derivative financial instruments 133 187
Advance deliveries of issues 1,466 1,000
Total 3,343 2,727
A non-hedging interest-rate swap transaction for an amount of EUR 3,000k was decided upon during the
financial year 2006 for an amount of EUR 3,000k and a due date of 24 March 2015, which had a market
value of EUR -131k on the accounting date. The market value of the financial instrument was determined by
means of internal calculation models.
> 46 Provisions
In EUR „000 01/01/2007 Additions Release Consumption 31/12/2007
Legal and
consultancy
costs
Costs of
litigation
288 0 250 38 0
115 158 0 0 273
Other provisions 75 0 0 61 14
Total 478 158 250 99 287
Legal and consultancy costs relate to forecast costs for the enforcement of the bank‟s existing claims with
third parties or for the prevention of unjustified claims made against the bank. Costs of litigation relate to
the costs incurred for the legal enforcement or prevention of such claims.
> 47 Income tax liabilities
In EUR „000 2007 2006
Actual taxes 0 80
Deferred tax liabilities 536 419
Total 536 499
EUR 120k of deferred tax liabilities were settled directly against equity.
71

48 Other liabilities
In EUR „000 2007 2006
Accrued liabilities 2,339 1,339
Other liabilities 1,009 2,474
Total 3,348 3,813
Other liabilities essentially include liabilities from income tax on wages and salaries, deliveries and services.
> 49 Equity
Subscribed capital
In EUR „000 or units 2007 2006
Subscribed capital 9,675 9,675
No-par-value bearer shares 9,675,000 9,675,000
The proportionate amount of share capital allocated to each share amounts to EUR 1.00 per share.
Authorised capital
In EUR „000 or units 2007 2006
Authorised capital 4,837.5 4,837.5
No-par-value bearer shares 4,837,500 4,837,500
The board of directors is authorised, with the approval of the supervisory board, to increase the share
capital until 23 August 2011 by issuing new ordinary shares in the form of individual share certificates in
return for cash and/or non-cash capital contributions in one or several turns up to a total amount of
4,837,500.00 euros (2006 authorised capital).
Insofar as the shareholders are granted a subscription right, the shares can also be offered to a credit
institute or a firm acting according to § 53 para. 1 p. 1 or § 53 b para. 1 p. 1 or para. 7 of the German
Banking Act KWG with the obligation of offering them to the shareholders for purchase (indirect subscription
right). The board of directors is authorised, with the approval of the supervisory board, to decide upon the
exclusion of the subscription right of the shareholder. The subscription right may be excluded in particular in
the following cases:
a) to exclude maximum amounts from the shareholders‟ subscription right,
b) in the context of capital increases in return for non-cash capital contributions, particularly in the form of
firms and parts of firms or other assets,
c) in the context of capital increases in return for cash capital contributions if the share issue amount is not
significantly lower than the market price and the shares issued and excluded from the subscription right
do not exceed a total of 10% of the share capital,
d) to issue employee shares to the employees of the company and its associated firms and
e) to grant holders of conversion or option bonds issued by the company a subscription right for new
shares to the level which they would be granted after the exercising of their conversion or option right
but only if the shares cannot already be granted on the basis of a conditional capital.
72

Notes to consolidated accounts 2007
Authorised capital
In EUR „000 or units 2007 2006
Authorised capital 4,837.5 1,935
No-par-value bearer shares 4,837,500 1,935,000
The share capital is increased by up to EUR 4,837,500.00 divided into up to 4,837,500 no-par-value shares
(2007 conditional capital). The conditional capital increase is only completed to the extent that the holders of
conversion and / or option bonds issued by the company or its direct or indirect subsidiaries on the basis of
the authorisation decision of the general meeting of 21 May 2007 in return for cash make use of their
conversion or option rights or the holders of conversion bonds fulfil their conversion obligation in so far as
own shares are not used as a condition. The new shares shall participate in the profit from the beginning of
the financial year in which they are created by the exercising of conversion or option rights or by the
fulfilment of conversion obligations. The board of directors is authorised, with the agreement of the
supervisory board, to determine further details of the conditional capital increase and its implementation.
(46) Own shares
The company possessed no own shares on 31 December 2007.
Within the framework of the securities trading business subject to disclosure and in accordance with § 71
para. 1 No. 7 of the German Stock Corporation Act AktG, the company acquired 846,000 own shares at the
respective current rates of the day, at an average price of EUR 5.29 each and disposed of 962,544 own
shares at an average sale price of EUR 5.48 each in order to guarantee the liquidity of the market in its
shares. The profits or losses were directly included in the equity capital in accordance with IAS 32 and 33.
The highest daily amount of own shares stood at 197,642 shares during the reporting period (corresponding
to an amount of EUR 197,642.00 euros or 2.02% of the share capital).
Amounts in EUR
Number of
shares
Proportion of
share capital Share capital
Proportion of
share capital
Shareholding on 01/01/2007 116,544 116,544.00 9,675,000.00 1.20%
Adjustment of capital increase
from company resources
846,000 846,000.00
2007 purchases -962,544 -962,544.00
2007 sales 0 0 9,675,000.00 0%
Shareholding on 31/12/2007 103,044 103,044.00 9,675,000.00 1.07%
73

51 Maturity breakdown
In EUR „000
on 31/12/2007
Receivables from credit
institutes
74
Due at
call
Up to 3
months
3
months
to 1 year
1 to 5
years
More
than
5 years Total
19,547 7,551 0 0 0 27,098
Customer receivables 2,098 253 1,540 0 0 3,891
Trading assets 12,528 3,312 54 0 0 15,894
Financial assets 3,413 399 0 48 647 4,507
Income tax assets 0 0 1,498 681 0 2,180
Other assets 3,022 36 57 4,384 2 7,501
Total 40,608 11,551 3,149 5,113 649 61,070
Liabilities with credit institutes 4,494 0 859 2,500 1,000 8,853
Customer liabilities 15,875 0 624 0 0 16,499
Trading liabilities 3,213 6 19 65 41 3,344
Provisions 12 2 274 0 0 288
Income tax liabilities 0 0 91 445 0 536
Other liabilities 1,885 897 523 43 0 3,348
Total 25.479 905 2,390 3,053 1,041 32,868
In EUR „000
ON 31/12/2006
Receivables from credit
institutes
Due at
call
Up to 3
months
3
months
to 1 year
1 to 5
years
More
than
5 years Total
17,346 19,829 0 0 0 37,175
Customer receivables 2,125 386 294 14 0 2,819
Trading assets 9,727 4,924 0 0 0 14,651
Financial assets 2,728 569 10 274 0 3,581
Income tax assets 0 0 1,437 467 0 1,904
Other assets 1,557 40 225 630 0 2,452
Total 33,483 25,748 1,966 1,385 0 62,582
Liabilities with credit institutes 1,623 0 563 2,900 1,500 6,586
Customer liabilities 24,149 0 0 0 0 24,149
Trading liabilities 2,540 6 20 94 67 2,727
Provisions 0 75 403 0 0 478
Income tax liabilities 0 80 0 419 0 499
Other liabilities 2,337 1,006 416 54 0 3,813
Total 30,649 1,167 1,402 3,467 1,567 38,252

Notes to consolidated accounts 2007
The maturity breakdown shows the capacity of the bank to fulfil its payment obligations. In certain cases
this may call for an early disposal of assets. The classification of assets according to maturities is based on
their disposability rather than the existing disposal intention.
Details on profit and loss account
> 52 Interest result
In EUR „000 2007 2006
Interest received from
Credit- and financial-market transactions 961 688
Shares and other non-fixed-interest-rate securities 5 21
Interest payable for
Certified liabilities 0 0
Others -324 -365
Total 642 344
The interest result is produced entirely from the evaluation categories Loans and Receivables and Available
for Sale. The item does not contain any returns from impaired financial assets.
> 53 Commissions result
In EUR „000 2007 2006
Commissions received from
Issues business 4,304 12,118
Trading 2,526 1,828
Other consultancy business 1,359 4,409
Commissions paid -1,553 -7,653
Total 6,636 10,702
The provisions result does not contain any returns or expenditures relating to financial assets or financial
liabilities that are not evaluated at fair value through profit or loss.
> 54 Trading result
In EUR „000 2007 2006
Realised trading result 1,914 4,237
Non-realised trading result (balance of write-ups and write-downs) -383 -1,390
Total 1,531 2,847
75

55 Financial assets result
In EUR „000 2007 2006
Interest income from fixed-interest-rate securities 15 17
Financial assets adjustment -125 -45
Financial assets write-up 31 0
PowerLED GmbH equity-method evaluation -19 0
financial.de AG write-up 0 143
financial.de revenue 289 0
financial.de result 446 0
Negative difference from capital consolidation of Janosch AG 0 355
Janosch film & medien AG partial deconsolidation result 78 0
Total 715 470
The financial assets adjustment relates mainly to shares and other non-fixed interest rate securities.
> 56 Administrative expenditure
In EUR „000 2007 2006
Staff expenditure
76
Wages and salaries 3,542 3,947
Social security contributions 242 231
Expenditure for pension schemes and support 39 26
Other administrative expenditure 2,183 2,414
Total 6,006 6,618
The other administrative expenditure includes operating leases amounting to EUR 380k.
> 57 Write-offs and allowances for intangible and tangible assets
In EUR „000 2007 2006
Write-offs and allowances
Tangible assets 122 133
Software 61 27
Rights 270 3,809
Business value or goodwill 86 0
Total 539 3,969
> 58 Other operating income
In EUR „000 2007 2006
Janosch group sales revenue 2,332 5,744
Other 892 1,931
“Am Schönberg” inventory changes 1,447 0
Total 4,671 7,675

Notes to consolidated accounts 2007
The inventory changes concern construction work in connection with the land preparation undertaken by the
land development company “Am Schönberg“ GmbH.
> 59 Other operating expenditure
In EUR „000 2007 2006
Material expenditure, services relating to Janosch group 2,549 2,097
Special payment
Compensatory Fund of Securities Trading Companies (EdW)
698 0
Other 97 1
Total 3,344 2,098
> 60 Total operating income
In EUR „000 2007 2006
Interest result 642 344
Commissions result 6,636 10,702
Trading result 1,531 2,847
Other operating income / expenditure 1,327 5,577
Total 10,136 19,470
> 61 Provision for risks
In EUR „000 2007 2006
Additions to provisions for risks 323 129
Release of provisions for risks -39 -20
Total 284 109
> 62 Taxes on income
In EUR „000 2007 2006
Actual taxes -1,893 3,145
Deferred taxes 128 -192
Total -1,765 2,953
Until 31 December 2007, public companies in Germany are liable to corporation tax amounting to 25% and a
solidarity surcharge of 5.5% of the corporation tax. A municipal trade tax is also applied, which is deductible
when the corporation tax is determined. From 1 January 2008, public companies in Germany are liable to
corporation tax amounting to 15% and a solidarity surcharge of 5.5% of the corporation tax. A municipal
trade tax is also applied, which is no longer deductible when the corporation tax is determined.
Taking into account the municipal percentage for trade tax, VEM Aktienbank AG is liable to a trade tax of
19.68% and with the deductibility of the trade tax, an overall tax rate of 40.86%, which is unchanged
compared with the previous year. From 1 January 2008, an overall tax rate of 32.98% is applicable.
77

In EUR „000 2007 2006
Result before tax 4,022 9,244
Applicable tax rate 40.86% 40.86%
Forecast taxes on income 1,643 3,777
Tax effects from
78
Tax-free income -278 14
Non-deductible expenditure 14 96
Permanent differences 136 -123
Aperiodic effects -42 -277
Tax losses carried forward -79 -360
Unused losses carried forward 361 0
Varying tax rates 10 -7
Other 0 -2
2006 adjustment 0 -165
Disclosed taxes on income 1,765 2,953
> 63 Discontinued operation
VEM‟s management decided during the 2007 financial year to abandon the two-brand strategy and, on 5
September 2007, signed a letter of intent for the sale of TradeCross AG. In January 2008, the sales contract
was concluded for all the TradeCross AG shares, with effect from 31 March 2008. TradeCross AG specialises
in public offerings without securities prospectuses and represents a part of the business segment issues
business. TradeCross AG is classified as a group of assets held for sale.
The TradeCross AG result is as follows:
In EUR „000 2007 2006
Interest result 11 31
Commissions result 47 417
Administrative expenditure -68 -366
Other operating income 22 36
Other operating expenditure -4 0
Provision for risks 0 -15
Results from ordinary business activities
from the discontinued operation
10 103
Taxes on income -3 -38
Result after taxes from the discontinued operation 7 65
The main groups of assets and liabilities of TradeCross AG, classified as held for sale, were made up as
follows on 31 December 2007:

Notes to consolidated accounts 2007
In EUR „000 2007 2006
Assets
Receivables from credit institutes 161 1,232
Customer receivables 51 211
Income tax assets 42 0
Others 0 2
Assets held for sale 254 1,445
Liabilities
Customer liabilities -39 -1
Income tax liabilities -5 -92
Other liabilities -45 -92
Liabilities that are in direct connection with assets
classified as held for sale
-89 -185
Assets that are in direct connection with the disposal group 165 1,260
The net cash flows of TradeCross AG are as follows:
In EUR „000 2007 2006
From ordinary business activities 14 -72
From financing activities -1,086 0
Net cash flows -1,072 -72
> 64 Earnings per share
In EUR „000 2007 2006
Annual surplus 2,249 6,057
Average number of shares 9,585,654 9,607,895
Earnings per share in EUR 0.23 0.63
From continuing operations
In EUR „000 2007 2006
Annual surplus 2,242 5,992
Earnings per share in EUR 0.23 0.62
79

Other details
> 65 Contingent liabilities and other liabilities
In EUR „000 2007 2006
Contingent liabilities 4,919 3,339
Other liabilities
80
Delivery liabilities from securities lending 6,987 18,318
Office rental agreements 851 1,109
Buy-back of securities 0 700
Other liabilities 524 569
Total 13,281 24,035
Contingent liabilities concern on the one hand existing redemption obligations for film promotion loans
received and recognised in current earnings, and conditionally redeemable subcontractor services. The
occurrence of requirements for possible redemption is not expected. They also include the liability from the
provision of securities for third-party liabilities. Land charges with a nominal value of EUR 1,580k were
created and possibly surrendered to secure liabilities of the former parent company of an affiliated company.
Office rental agreements relate to the bank‟s business premises; they were extended by a further 5 years in
October 2006. In 2007, additional office space was rented with the same term. Other obligations stem
mainly from rental, leasing, maintenance and usage agreements for technical equipment, facilities and
vehicles. The contractual terms are standard for the market.
Maturity breakdown
In EUR „000
on 31/12/2007
Due at
call
Up to 3
months
3
months
to 1 year
1 to 5
years
More
than
5 years Total
Contingent liabilities 0 0 0 4,919 0 4,919
Other liabilities
Delivery liabilities from
securities lending
6,987 0 0 0 0 6,987
Office rental agreements 0 0 65 786 0 851
Other liabilities 0 511 0 13 0 524
Total 6,987 511 65 5,718 0 13,281

Notes to consolidated accounts 2007
> 66 Financial instruments
The following table shows book values and fair values for all the financial instruments included in the
consolidated accounts, including the financial instruments allocated in the discontinued operation.
2007 2006
In EUR „000 Book value Fair value Book value Fair value
Financial assets
Cash reserves 6 6 6 6
Receivables from
credit institutes
27,098 27,098 37,175 37,175
Customer receivables 3,892 3,892 2,819 2,819
Trading assets 15,894 15,894 14,651 14,651
Investments 4,507 4,507 3,581 3,581
Financial liabilities
Liabilities with
credit institutes
8,853 8,853 6,586 6,586
Customer liabilities 16,499 16,499 24,149 24,149
Trading liabilities 3,343 3,343 2,727 2,727
The fair values were calculated in relation to the reporting date on the basis of the available market
information.
For securities handled on the stock markets and in the case of listed debt securities, reference is made to
the quoted market price.
In the case of receivables from credit institutes, customer receivables, liabilities with credit institutes and
customer liabilities, there are no divergences between book value and fair value.
With the evaluation of the trading assets and liabilities and investments, there are no differences between
book value and fair value.
81

The following table shows the classification of the book values of the financial instruments in the categories
of the IAS 39.
In EUR „000
Financial assets
82
Held
for
Trading
Loans and
Receivabl
es
Availabl
e for
Sale
Carriedforward
acquisition
costs Total
Cash reserves 6 6
Receivables from
credit institutes
27,098 27,098
Customer receivables 3,892 3,892
Trading assets 15,894 15,894
Investments 4,507 4,507
Other financial assets
Total 15,894 30,990 4,507 6
Financial liabilities
Liabilities with
credit institutes
8,853 8,853
Customer liabilities 16,499 16,499
Trading liabilities 3,343 3,343
Total 3,343 25,352
The entries for the profit and loss account contain the following contributions to operating income from the
categories of the IAS 39.
In EUR „000 2007 2006
Net result from financial assets or financial liabilities that are
evaluated at fair value through profit or loss
(Held for Trading)
Net result from financial assets held for sale
(Available for Sale)
1,531 2,847
715 470
Net result from credits and receivables -284 -109
Net results from financial liabilities that are evaluated
at the carried-forward acquisition costs
0 0

Notes to consolidated accounts 2007
> 67 Related party disclosures
Transactions with associated firms and individuals according to IAS 24 are generally carried out at market
prices.
In addition to expenses relating to their activities, each member of the supervisory board receives fixed
compensation of an annual amount of EUR 5,000.00 (basic compensation) payable at the end of the
financial year; the chairman receives EUR 6,500.00.
Each member of the supervisory board receives a variable compensation in addition to the basic
compensation. The variable compensation is dependent on the result of the company‟s normal business
activities that is stated in the consolidated accounts drawn up by the company according to the IAS/IFRS
(International Financial Reporting Standards). For every EUR 1,000,000.00 result declared for ordinary
business activities before the deduction of the board of directors‟ performance-related compensation and the
supervisory board‟s variable compensation, each supervisory board member receives the amount of EUR
1,000.00. The variable compensation is payable after the approval of the consolidated accounts for the
financial year concerned. If the company does not establish consolidated accounts during a financial year
according to IAS/ IFRS, the supervisory board‟s variable compensation will be calculated for this financial
year on the basis of the result of ordinary business activities that is stated in the annual statement published
by the company. The variable compensation is payable in this case after the determination of the annual
statement for the financial year concerned. The company reimburses each supervisory board member the
turnover tax applied to their compensation. The company takes out liability insurance (D&O insurance) for
the bodies of the company, including members of the supervisory board, with appropriate insurance
amounts, and settles the corresponding premiums.
The total compensation of the supervisory board amounted to EUR 28,500.00 euros for the financial year
2007. This was distributed as follows between the individual members:
2007 2006
In EUR Fixed Variable Total
Matthias Girnth, Chairman 6,500 4,000 10,500 15,500
Olaf Posten, Deputy Chairman 5,000 4,000 9,000 14,000
Dr. Alfred Krammer 5,000 4,000 9,000 14,000
Total 16,500 12,000 28,500 43,500
The members of the supervisory board did not receive any compensation or other benefits during the
financial year 2007 for personal services provided. The supervisory board held 103,120 company shares on
31 December 2007.
Each member of the board of directors receives a basic monthly salary which is payable at the end of each
month after the application of statutory deductions. Each member also receives additional benefits, notably
in the form of the use of company cars, insurance and other non-cash benefits. Each member of the board
of directors also receives variable (performance-related) compensation. The variable compensation depends
on the result of the company‟s ordinary business activities that is stated in the consolidated accounts drawn
up by the company according to IAS/IFRS (International Financial Reporting Standards).
83

The company‟s general meeting of 23 August 2006 decided that the individualised statements of the board
of directors‟ compensation will not be disclosed for five years, that is the period from 2007 to 2010.
No advances or credits were granted either to board of directors‟ or to supervisory board members.
> 68 Auditor’s fees
Ernst & Young AG accountancy and tax advisory firm and Ebner, Stolz, Mönning GmbH accountancy and tax
advisory firm were commissioned to audit the annual accounts of the incorporated companies and the
consolidated accounts. The auditor‟s fees entered as expenditure during the financial year can be broken
down as follows:
In EUR „000 2007 2006
Audit 174 169
Other certification and valuation services 15 23
Tax advisory services 7 0
Other services 0 8
Total 169 200
The audit concerns expenditure for the verification of the year-end accounts and the consolidated accounts.
Other certification and valuation services refer to additional certifications due to legal provisions for credit
institutes and securities service firms.
Ebner, Stolz, Mönning GmbH accountancy and tax advisory firm did not provide any tax advisory services for
the incorporated firms during the reporting period.
> 69 Employees
Average number of personnel during the financial year (excluding board of directors)
2007 2006
Full-time employees 38 32
Part-time employees 9 10
Total 47 42
84

Notes to consolidated accounts 2007
> 70 Supervisory board and board of directors
In the 2007 financial year, the board of directors consisted of the following members:
Andreas Beyer, business graduate
Erich Pfaffenberger, business graduate
The supervisory board consists of three members in accordance with the company articles. It was made up
as follows during the reporting period.
Matthias Girnth,
Bad Soden
Olaf Posten
Kronberg/Taunus
Dr. Alfred Krammer
Munich
Managing Director of
Acxit Capital Management GmbH in Frankfurt
Chairman
Lawyer Deputy
chairman
CEO of Petersen Krammer Jahn Rechtsanwalts-
Gesellschaft mbH, Munich
Membership of supervisory boards and other supervisory according to § 125 para. 1 section 3 of the German
Stock Corporation Act AktG:
Andreas Beyer BinTec Communications AG,
Nuremberg
Supervisory board Deputy chairman
Fimatrix AG, Munich Supervisory board Member
Janosch film & medien AG,
Berlin (since 13 April 2006)
Supervisory board Member, since 1
August
2007 Chairman
TradeCross AG, Munich Supervisory board Deputy chairman
Fonterelli GmbH & Co. KGaA,
Munich
(since 2 July 2007)
Supervisory board Chairman
Erich Pfaffenberger BinTec Communications AG,
Nuremberg
financial.de Ag, Friedberg
(until 2 October 2007)
Supervisory board Chairman
Supervisory board Chairman
TradeCross AG, Munich Supervisory board Chairman
Janosch film & medien AG, Berlin Supervisory board Deputy chairman
Matthias Girnth Impera Total Return AG, Frankfurt Supervisory board Chairman
Fonterelli GmbH & Co. KGaA,
Munich
(since 2 July 2007)
Olaf Posten Alloheim Senioren-Residenzen AG,
Dusseldorf
Supervisory board Deputy chairman
Supervisory board Chairman
Triton-Format AG, Hamburg Supervisory board Chairman
Fonterelli GmbH & Co. KGaA,
Munich
(since 2 July 2007)
Supervisory board
85

Dr, Alfred Krammer Nanostart AG, Frankfurt Supervisory board Chairman
86
AAA Aktionärsakademie AG, Munich Supervisory board Member
Ispex AG, Bayreuth Supervisory board Chairman
Inspire AG, Paderborn
(until 31 October 2007)
Supervisory board Chairman
> 71 Corporate Governance Code declaration
The board of directors and the supervisory board of VEM Aktienbank AG have presented the Corporate
Governance Code declaration prescribed according to § 161 German Stock Corporation Act AktG and made it
permanently available for shareholders on the bank‟s website.
> 72 Suggestion for the approval of the annual accounts and the use of the balance sheet profit
of VEM Aktienbank AG
The annual accounts of VEM Aktienbank AG drawn up according to the provisions of the German Commercial
Code and the German Stock Corporation Act are published in the electronic Federal Bulletin and published in
the company register.
For the financial year 2007, VEM Aktienbank AG as the parent company of the group records a balance sheet
profit of EUR 1,478,522.15 (previous year EUR 5,329,053.15). The board of directors suggested to the
supervisory board, in the context of the approval of the annual statements, that the following use of the
profit be suggested to the general meeting for the adoption of a resolution:
Transfer of the total balance sheet profit amounting to EUR 1,478,522.15 to retained earnings.
> 73 Release of the consolidated accounts for publication
The board of directors of VEM Aktienbank will present the consolidated accounts drawn up according to IFRS
to the supervisory board. The supervisory board is required to verify the consolidated accounts and to state
whether it approves them. The board of directors will present the consolidated accounts for publication
following a successful approval.
Munich, 15 May 2008
VEM Aktienbank AG
The Board of Directors
Andreas Beyer Erich Pfaffenberger

Board of Directors’ statement pursuant
to §37y WpHG in conj. with §37v para 2 no. 3 WpHG
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated
accounts give a true and fair view of the assets, liabilities, financial position and profit or loss of the group,
and the consolidated annual report includes a fair review of the development and performance of the
business and the position of the group, together with a description of the principal opportunities and risks
associated with the expected development of the group.
Munich, 15 May 2008
VEM Aktienbank AG
The Board of Directors
Andreas Beyer Erich Pfaffenberger
87

Auditors’ report
We have verified the consolidated accounts of VEM Aktienbank AG, Munich consisting of the balance sheet,
profit and loss account, the statement of changes in shareholders‟ equity, cash flow statement and notes –
in addition to the consolidated annual report for the financial year from 1 January to 31 December 2007. The
establishment of the consolidated accounts and the consolidated annual report in accordance with IFRS as
applicable within the EU and with the applicable trade law provisions according to § 315a para. 1 of the
German Commercial Code HGB is the responsibility of the legal representatives of the company. Our
responsibility is to express an opinion on the consolidated accounts and the consolidated annual report
based on our audit.
We conducted our audit of the consolidated accounts according to § 317 of the German Commercial Code
HGB taking into account the German principles for standard audits established by the German Auditors‟
Institute (IDW). On this basis, the audit is to be planned and implemented in such a way that misstatements
and violations which have a significant effect on the assets, liabilities, financial position and profit or loss
presented in the consolidated accounts based on the applicable accounting policies and the impression
presented by the consolidated annual report are recognised with a sufficient degree of certainty. In
determining the audit procedures, our knowledge of the business activities and economic and legal
environment of the group as well as expectations concerning possible errors are taken into account. In the
context of the audit, the effectiveness of the internal control system relating to accounting and evidence of
the details in the consolidated accounts and the consolidated annual report are evaluated above all on the
basis of sampling. The audit includes an appraisal of the annual accounts of the firms incorporated in the
consolidated accounts, on the deferrals and accruals of the consolidated group, on the accounting and
consolidation policies applied and on the fundamental assessments of the legal representatives as well as
the approval of the overall presentation of the consolidated accounts and the consolidated annual report. In
our opinion, the audit provides a sufficiently secure basis to express our opinion.
Our audit did not give rise to any objections.
In our opinion, which is based on the conclusions of the audit, the consolidated accounts are in accordance
with IFRS as applicable within the EU and the additional applicable trade law provisions according to § 315a
para. 1 of the German Commercial Code HGB and, with regard to these provisions, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the group. The consolidated annual report is in
line with the consolidated accounts, provides a fair presentation of the position of the group, and outlines
the opportunities and risks for future development.
Eschborn / Frankfurt am Main, 20 May 2008
Ernst & Young AG
Accountancy firm
Tax advisory firm
Griess Clausen
Auditor Auditor
88

Postal address
VEM Aktienbank AG
Postfach 330705
80067 Munich
Address
VEM Aktienbank AG
Rosental 5
80331 Munich
Tel.: +49 (0) 89/ 23 001 - 0 (head office)
Tel.: +49 (0) 89/ 23 001 - 200 (Investor Relations)
Fax: +49 (0) 89/ 23 001 - 111
Internet: http://www.vem-aktienbank.de
e-mail: info@vem-aktienbank.de
e-mail: ir@vem-aktienbank.de (Investor Relations)
Board of Directors
Andreas Beyer, Erich Pfaffenberger
Supervisory Board
Matthias Girnth (chairman)
Register
Munich District Court HRB 124 255
Bundesbank account: Deutsche Bundesbank, Munich branch
(sort code 700 000 00), account number 700 091 20
Company information
Admissions to trading: Xetra, Frankfurt Stock Exchange, Munich Stock Exchange, Vienna Stock Exchange
Functions: Deutsche Börse Listing Partner
Designated Sponsor in Xetra trade
Appointment as an issue expert according to § 4 para. 3 Regulations M:access
by the Munich Stock Exchange
Supervisory authorities:
Bundesanstalt für Finanzdienstleistungen (federal office for financial service supervision)
Member of: Federal association of security firms on German stock exchanges
(Bundesverband der Wertpapierfirmen an den Deutschen Börsen e. V.)
German compensatory fund of securities trading companies
(Entschädigungseinrichtung der Wertpapierhandelsunternehmen - EdW)
NB: Xetra © is a registered trademark of Deutsche Börse AG
89

Financial calendar
31 October 2008 Short Annual financial report 2008 (provisional date)
30 November2008 Financial report for first quarter of 2008 (provisional date)
VEM Aktienbank AG, Rosental 5, 80331 Munich
Tel. +49(0)89/23001-0
www.vem-aktienbank.de