ANNUAL REPORT 2015 EDMOND DE ROTHSCHILD (SUISSE) S.A.

Transcription

1 ANNUAL REPORT 2015 EDMOND DE ROTHSCHILD (SUISSE) S.A.

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3 Contents 5 11 Edmond de Rothschild (Suisse) S.A. 7 Message from the Shareholders 8 Message from the Executive Committee Corporate Governance 12 Introduction 13 Group structure and shareholders 15 Capital 17 Board of Directors 27 Executive Committee 33 Remuneration, profit-sharing and loans 34 Shareholders rights 36 Take-overs and defensive measures 37 Independent Auditors 38 Information policy 39 Edmond de Rothschild (Suisse) S.A. Group Financial Report 40 Key figures 41 Report of the Directors 45 Report of the statutory auditor 47 Consolidated balance sheet Consolidated profit and loss account Level of consolidated shareholders' equity Consolidated cash flow statement Notes to the consolidated financial statements 62 Balance sheet information 85 Edmond de Rothschild (Suisse) SA Financial Report 86 Key figures 87 Report of the Directors 92 Report of the statutory auditor 94 Balance sheet 96 Profit and loss account 97 Level of shareholders' equity Notes to the financial statements Pay Report 123 Addresses ANNUAL REPORT

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5 Edmond de Rothschild (Suisse) S.A. 7 8 Message from the Shareholders Message from the Executive Committee ANNUAL REPORT

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7 Message from the Shareholders This year, once again, global economic growth struggled due to slowdowns in emerging countries. China was, of course, at the heart of these concerns, given the troublingly high level of company debt in the country. However, China is undergoing a transformation, and the shift in the country's growth model to focus on consumption and the services sector is good news because it is the result of economic development. Still, liberalising Chinese financial markets creates instability within this transition and fuels financial volatility. The United States' hesitation when it comes to establishing monetary policy has also had an impact on the natural fluctuations in the prices of financial assets. Emerging countries have borne the brunt of this instability, for example with the dramatic fall in commodity prices. On the other hand, the European Central Bank's determination has allowed for increased growth in the euro area despite the political problems it faces. In 2015, we saw how important it is to take the decisions of monetary authorities into account in economic analyses. Now more than ever, monetary authorities play a role in the fluctuation of asset prices. Many of them have implemented negative interest rates, something that was unthinkable until recently. We must therefore accustom ourselves to this new economic and financial landscape, which calls for new methods of understanding and new instruments for handling changes. The economy has always been cyclical, but the frequency and amplitude of these cycles have become greater and greater. Beyond central bank intervention, technological disruptions are another explanation for these changes. These disruptions speed up change and bring about the convergence of different subjects and sectors in a worldwide context that has become, by definition, global. We live in a world where disruption has become the norm and where adaptability is both an essential value and the root of success. The financial sector, more than any other, has had to evolve. Due to the new restrictions placed on it by national governments and regulatory bodies as well as to its own self-awareness, it has changed to make finance a more responsible sector. We are convinced that these profound shifts will continue into the future. They represent a unique opportunity for our Group. This is even one of the keys to success for the bank of tomorrow being part of the world that surrounds it, creating growth, acting now to prepare for tomorrow, and innovating to create new possibilities. In 2015, we reached a new stage in our development. By directly taking on the executive management of our Group, we have placed development and market share expansion at the heart of our collective and individual priorities. We have always been certain that only Group unity will make us strong and attractive in the eyes of current and prospective clients. This is especially true at this delicate moment in time. Our size is an advantage in this changing environment. By highlighting our unique skills, we can capitalise on our strengths. Our expertise and ability to connect allow us to attract and retain clients. Our recent advances in economic research, real estate and private equity set us apart even more. Our human capital makes us unique, and our competitive spirit is what defines us. By making the most of our diversity and by investing in our employees' potential, skills and leadership, we will further develop our ability to anticipate market transformations and our clients' expectations. Our success is built on a quest for excellence, on a vision of responsible capitalism, on human values and on long-term commitment. By cementing the place that modernity and boldness have in our Group's culture, we demonstrate the strength of the iconic Rothschild name. In 2015, the Edmond de Rothschild Group's net inflows reached a historic high of over 10 billion Swiss francs. Even though the Swiss National Bank discontinued its minimum exchange rate and despite volatile markets and continual pressure on our margins, we were able to protect the profitability of our assets. Our financial results are the proof, right across our different geographic areas of activity: our Group is solid, full of fighting spirit, ready to work together to grow our business and committed to do everything needed for our continued modernisation. The year ahead will be full of ambition and challenges. We see 2016 as an opportunity to come even closer to our clients, to join with them in a substantive dialogue on the changing economic situation and its impact on their investments, to deliver results to them, and to give meaning to their goals. We are committed to our Group and optimistic about what lies ahead. Benjamin de Rothschild Ariane de Rothschild The higher the bar is raised, the higher standards will become, and the more the situation will favour independent and specialised actors like the Edmond de Rothschild Group. ANNUAL REPORT

8 Message from the Executive Committee Despite the tough conditions faced by the private banking industry as a whole, 2015 was one of our best years ever as measured by the inflow of fresh money. This is an encouraging development for the new year getting under way but we have to remain vigilant, for the upheavals created by changing regulations and technology will continue to reshape the world of banking. They have given rise to numerous challenges including the automatic exchange of information, the new Financial Services Act in Switzerland, MiFID II in the European Union, mounting costs, a squeeze on profit margins, stiffer competition and looming sector consolidation. Overcoming these hurdles will require effort, daring and clear-sightedness. Our Group is determined to adapt to the changing landscape and build an institution that blends with it. We also want to consolidate our position as a front-runner with HNWs and UHNWs. Such changes mean redefining our business model. They require the support of our very foundations: personalised relationships with clients, top-quality investment advisory and fine financial health. To lay the groundwork for the future and ensure constantly enhanced customer service, the Group made substantial capital investments last year. Brimming with new talent, our teams are now better armed to grow our target markets. In International Private Banking as a whole, the fresh impetus that we put to work a little over a year ago is starting to pay off, mainly thanks to stepped-up collaboration between the Group s entities. The result is a broader range of services and solutions for the benefit of our clients. On the technological front, our project geared towards enhancing the quality of service and IT processes recently moved into the analysis and design stage. We are committing substantial resources to this major project, the aim of which is to boost our responsiveness and thus provide an optimal level of service. Adapting our Group to the increasing complexity and sophistication that changes are bringing to the financial industry is a prerequisite. To serve our clients best interests, we also have to demonstrate our ability to deal with particularly volatile market conditions and a macroeconomic context that became shakier in the reporting year saw the United States remain the engine of global expansion. Job creation and wage growth lent strong momentum to the American economy, counterbalancing the drag on its competitiveness due to the strong dollar. With overall conditions steadily returning to normal, the Federal Reserve finally raised its key lending rate in December, marking the first uptick in nearly a decade. Meanwhile the situation in the Euro Zone is improving. GDP growth has at last reached an acceptable level despite the political challenges the Continent is grappling with. The powerful monetary stimulus orchestrated by the president of the European Central Bank, Mario Draghi, has helped restore confidence among company executives, consumers and investors. On the other hand the ECB s unconventional policy measures have left the Swiss National Bank in an awkward position, forcing it to allow the franc to appreciate significantly. The strong disinflationary pressure that this has led to is a subject of concern. Even so Switzerland has managed to avoid recession, illustrating the fortitude of its economic model. The largely non-cyclical sectors in which Swiss companies excel and create high value input are still able to export, even though their products and services have become a bit more expensive. Moreover, some firms have not balked at taking drastic measures designed to preserve their competitiveness despite the franc s muscle flexing. Another important factor is that they have been able to find new export markets, particularly in Asia. Thus the success of their goods and services is not only dictated by the euro; it also depends on the movements of the US dollar and its associated currencies, which have all gained value in recent years including the yuan, despite its weakness in the past few months. In the emerging markets China remains the main source of activity, making a hard landing by its economy the major risk in With Brazil and Russia struggling to pull out of recession, trade among the emerging regions has strengthened China s influence. Analysts are scrutinising the sweeping economic transformation that the Beijing authorities have embarked on and the health of the services sector, which has so far remained resilient thanks to the rise of private consumption. Although 2015 ended without merriment in the markets, everyone was glad to leave behind the Greek debt crisis and the precipitous fall in oil prices. Yet 2016 has dawned as a year of high risk. Besides the potentially charged outcome of the Brexit referendum in the UK and the presidential election in the US, there is a danger of the slump in manufacturing deepening everywhere and in China especially. This alone is capable of generating very heavy volatility and more frequent stress periods in financial markets throughout the coming months. But we mustn t overlook the buoyancy of services the world over. This sector is riding healthy private consumption, itself 8 EDMOND DE ROTHSCHILD (SUISSE) S.A.

9 underpinned by job creation, resurgent lending and tame inflation. Wages are moreover on the rise, most notably in America, Britain and China. In this high-risk environment it is necessary to stand by our convictions more than ever. We believe that in 2016 bonds will no longer play the stabilising role that they did in the past with their assurance of yield. At the same time, given the heavy volatility and high valuations of equities, we will continue to show preference for investments that are asymmetric in relation to conventional strategies by concentrating on hard assets like real estate, as well as on unlisted shares and certain carefully selected hedge funds. Our Investment Partnerships unit, launched in 2015, now enables our core Private Banking business to tap into the entire Group s expertise in private equity and property markets. Risk management and diversification have always been at the heart of our investment philosophy and they will continue to guide our strategy this year. In addition to effective portfolio management, in a constantly changing international context, clients need to protect their net worth. With its solid engineering know-how, the Wealth Solutions unit of our International Private Banking division can provide assistance in wealth structuring, estate planning and the grooming of heirs. This last concern is given special consideration at the Next Generation seminar, catering to prospective heirs, which our Group hosts each year. The Edmond de Rothschild brand, values and fundamentals are unique, not only because our Group is family controlled but also because it is heir to a wealth management tradition spanning more than 200 years. The support and commitment of our shareholders is also unique. Our rock-solid balance sheet attests to the security and stability that we offer. Backed by a long-term vision, we are determined to see our actions guided by independent, impartial investment advisory, top-quality service and close-knit relationships that are tailored to clients individual needs. Innovation, too, is deeply embedded in our genes. We intend to build ever more sturdily on these strengths for the sake of our existing and future clients. Our future is promising. It is buttressed by our will to disseminate Concordia, Integritas, Industria the values associated with our name among our clients, shareholders and workforce. The first of these values symbolises the collective spirit, the second integrity in everything we do and the third our culture of excellence, innovation and constant improvement. We wish to thank our shareholders for their commitment and participatory spirit, our staff for their work in an environment fraught with complexity and, of course, our clients for their loyalty which we will strive to go on deserving. The Executive Committee ANNUAL REPORT

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11 Corporate Governance 12 Introduction Group structure and shareholders Capital structure Board of Directors Executive Committee 33 Remuneration, profit-sharing and loansprofits-sharing and loans Shareholders rights Take-overs and defensive measures Independent Auditors Information policy ANNUAL REPORT

12 Corporate Governance Introduction This section of our Annual Report has been drafted in accordance with the relevant legal and stock exchange requirements, including the Swiss Code of Obligations (CO) and Directive on Corporate Governance (DCG) issued by SIX Swiss Exchange (SIX) on 1 September It also draws on the Swiss Code of Best Practice for Corporate Governance issued by Economiesuisse (SECO) on behalf of the Federation of Swiss Enterprises, as amended in The above-mentioned DCG was issued by SIX based on art. 35 of Switzerland s Financial Market Infrastructure Act (FMIA) and articles 1-6 and 49 et seq of SIX s Listing Regulations. The DCG covers communication on subjects relating to corporate governance. The DCG mainly apply to issuers incorporated in Switzerland whose equity securities are traded on SIX. It also draws on the Ordinance on Excessive Remuneration in Listed Companies (OER) of 20 November The major concerns underlying the above-mentioned regulations are to limit economic risks, safeguard companies reputations and promote responsibility. Corporate governance is anchored in a set of principles designed to protect shareholders by ensuring transparency, the issuance of clear information and a balance at the highest level between the company s executives, on the one hand, and its owners, on the other. At the same time, these principles uphold decision-making power and efficiency. The main information required by the SIX Guidelines is disclosed in the following pages and in the Remuneration Report. There are also cross-references to items included elsewhere in this report, our Bank s Articles of Association, which can be found on the Bank s website: / Investor Relations / General Information - Legal Documents. 12 EDMOND DE ROTHSCHILD (SUISSE) S.A.

13 1. Group structure and shareholders 1.1. Structure of the Edmond de Rothschild (Suisse) SA Group (the "Group") Presentation of the Group s operating structure Board of Directors Chair Baron Benjamin de Rothschild Vice-Chair Baroness Benjamin de Rothschild Secretary Jean Laurent-Bellue Members Luc J. Argand Rajna Gibson Brandon 1) François Hottinger Klaus Jenny Maurice Monbaron Philippe Perles 2) Jacques-André Reymond E. Trevor Salathé 3) 1) Until 29 April ) From 29 April ) Until 28 April 2016 From 29 April he will be replaced by Tobias Guldimann ir the latter is elected at the General Assembly on 28 April ) As per section al. 4 of the Bylaws the members of the Promotions Committee are the same as those of the Pay Committee 5) From 8 December ) From 5 June ) From 28 August 2015 He will be replaced in this capacity by Jean-Christophe Pernollet. Audit Committee Chair Klaus Jenny Vice-Chairman Jacques-André Reymond Members Jean Laurent-Bellue Maurice Monbaron E. Trevor Salathé 3) Pay Committee 4) Chairwoman Baroness Benjamin de Rothschild Secretary Jean Laurent-Bellue Members Luc J. Argand Klaus Jenny E. Trevor Salathé Nomination Committee 4) Chairwoman Baroness Benjamin de Rothschild Secretary Jean Laurent-Bellue Members Luc J. Argand Klaus Jenny E. Trevor Salathé Executive Committee Chairman and CEO Emmanuel Fievet Deputy Chief Executive Officers Luca Venturini Vice-Chairman Deputy Chief Executive Officer Sabine Rabald Deputy Chief Executive Officer Chief Administrative Officer Members Yves Aeschlimann Head of Legal and Compliance Emanuela Bonadiman 5) Head of Human Resources Jean-Christophe Pernollet 6) Chief Risk Officer Cynthia Tobiano Chief Financial Officer More information on the Board of Directors and Executive Committee can be found on pp. 17 et seq. and 30 et seq. of this report. Internal Audit Senior Vice-President Emmanuel Rousseau 7) Independent Auditors PricewaterhouseCoopers SA ANNUAL REPORT

14 1.1.2 Legal structure of Edmond de Rothschild (Suisse) SA Edmond de Rothschild (Suisse) SA is a joint-stock company traded on SIX (ISIN CH / Security number TK). Its stockmarket capitalisation at was CHF 1,494 billion. It is the only listed Edmond de Rothschild (Suisse) SA Group company Group legal structure The fully consolidated entities of the Edmond de Rothschild (Suisse) SA group are listed on pp of this report Owners of significant holdings and group of owners bound by voting agreements 2015 Par value Percentage of capital Owners of significant holdings and group of owners bound by voting agreements Major shareholders Percentage of voting rights (in CHF 000) (in %) (in %) EDMOND DE ROTHSCHILD HOLDING S.A. (1) 36, Rothschild Holding AG. Zurich 2) 3,800/ (1) The entire share capital of Edmond de Rothschild Holding SA is directly or indirectly controlled by members of the de Rothschild family. 17% of the company s share capital (representing 6.77% of voting rights) is owned by Baroness Edmond de Rothschild and 66.33% (representing 89.84% of voting rights) by Baron Benjamin de Rothschild. The financial statements of Edmond de Rothschild Holding SA are available on request in writing to the company (PO Box 5254, 1211 Geneva 11). (2) Rothschild Holding AG, Zurich is owned by 1) Eric de Rothschild, Paris; 2) David de Rothschild, Paris; 3) Alexandre de Rothschild, Paris; 4) Stéphanie Lifford de Buffévent, Paris; 5) Louise de Rothschild, Paris; 6) Financière de Tournon SAS, Paris; 7) Financière de Reux SAS, Paris; 8) Béro SCA, Paris; 9) Ponthieu Rabelais SAS, Paris; 10) Integritas BV, Amsterdam; 11) Rothschild Trust (Schweiz) AG, Zurich; 12) AYRE Corporation (1972) Limited, Amsterdam; 13) Edouard de Rothschild, Paris; 14) Holding Financier Jean Goujon SAS Paris; 15) Rothschild Concordia SAS, Paris; 16) Philippe de Nicolay, Paris; 17) Olivier Pécoux, Paris; 18) François Henrot, Paris; 19) Compagnie Financière Martin-Maurel SA, Marseille; 20) Eranda Foundation, UK; 21) PO Gestion SAS, Paris; 22) PO Commandité SAS, Paris 23) CD GFA SARL, Paris; 1.3. Cross-holdings 24) Christophe Desprez, Paris; 25) Nicolas Bonnault, Paris; 26) Laurent Baril, Paris; 27) Philippe Le Bourgeois, Paris ; 28) Maria de Rothschild, Paris; 29) Julia Footnick, Paris ; 30) Elisabeth Donovan, Paris; 31) James de Rothschild, Paris ; 32) Anna de Rothschild, Paris; 33) Pierre de Rothschild, Paris; 34) Alexandra Pécoux, Paris; 35) Emmanuelle Pécoux, Paris; 36) Maylis Pécoux, Paris (together persons/entities 1), 3) and 13) to 36) represent the PO-Group and together entities and persons 1) to 12) represent the RCSAS-Group); Rothschild Holding AG, Zurich owns 20,000 registered shares and 3,600 bearer shares of Edmond de Rothschild (Suisse) SA, Geneva, representing 8,44 % of the total share capital and 9.44% of voting rights. RCSAS Group owns a controlling interest in Rothschild Concordia SAS, Paris. The PO Group controls Rothschild & Co SCA (previously Paris Orléans SCA, which in turn controls Concordia Holding Sàrl, Paris). Concordia Holding Sàrl controls Rothschild Concordia AG, Zug, which in turn owns a controlling stake in Rothschilds Continuation Holdings AG, Zug. Rothschilds Continuation Holdings AG controls Rothschild Holding AG, Zurich, which owns a direct holding in Edmond de Rothschild (Suisse) SA, Geneva. Number of shares held 2015 Per cent stake in share capital * Per cent of total voting rights * (in %) (in %) Cross-holdings Rothschild Holding AG Zurich 10, * Direct and/or indirect holding by the parent company. 14 EDMOND DE ROTHSCHILD (SUISSE) S.A.

15 2. Capital structure 2.1. Share capital 2015 Par value Number of shares Capital ranking for dividend (in CHF '000) (in CHF 000) (in CHF 000) Share capital Fully paid registered shares at CHF 100. par value 20, ,000 20,000 Fully paid bearer shares at CHF 500. par value 25,000 50,000 25,000 Total share capital 45, Specific indications regarding authorised and contingent capital Edmond de Rothschild (Suisse) SA has no authorised or contingent capital Change in share capital (in CHF '000) Change in share capital Fully paid registered shares at CHF 100. par value 20,000 20,000 20,000 Fully paid bearer shares at CHF 500. par value 25,000 25,000 25,000 Total share capital 45,000 45,000 45, Shares and non-voting certificates The 200,000 unlisted registered shares with a par value of CHF 100 and the 50,000 bearer shares with a par value of CHF 500 listed on the SIX confer the same entitlements in proportion to their par value, in accordance with art. 7 para. 2 and 3 of our articles of incorporation The registered and bearer shares are fully paid up. Under art. 6 para. 5 and 6 of the articles of incorporation, the restricted registered shares confer preferential membership rights: each share, regardless of its par value (art. 1 of the Articles of Association). Again in respect of membership rights, art. 18 para. 3 of the Articles of Association provides that each group of shareholders (i.e. the owners of bearer or registered shares) may demand to be represented on the Board of Directors by at least one member of its choice. This clause is sourced in article 709 (1) of the Code of Obligations, which provides that if there is more than one category of shares, the Articles of Association must provide for the election of at least one representative to the Board of Directors for each of them. ANNUAL REPORT

16 2.5. Dividend-right certificates Edmond de Rothschild (Suisse) SA has not issued any dividend-right certificates Transferability restrictions and registration of nominees Transferability restrictions and provisions governing dispensations Under art. 6 para. 5 of the Articles of Association, the Board of Directors may refuse the transfer of title to or use of registered shares on valid grounds, having due regard for either the corporate purpose or the Bank s desire to preserve its financial independence and, in particular, its family character. The Board of Directors may also refuse to enter shares in the share register if the buyer fails to warrant in writing that he/she is purchasing the shares in his/her own name and on his/her own behalf (art. 6, para. 6 of the Articles of Association). Finally, the Board of Directors may refuse to enter shares in the share register by offering to purchase the transferred shares on behalf of the Bank, other shareholders or third parties, at the shares actual value at the time their registration is requested (art. 6, para. 8 of the Articles of Association). 8 of the Articles of Association) Procedure and conditions for lifting the restrictions on transferability Any amendment to the provisions of Article 6 of the Articles of Association relating to the restrictions on transferring registered shares must be approved by at least two-thirds of the votes represented at a General Meeting and by an absolute majority of the face value of the shares represented (cf. Article 15.6 of the Articles of Association and Article 704 para. 1 of the Code of Obligations) Convertible bonds and options Edmond de Rothschild (Suisse) SA has not issued any convertible bonds or options. When registered shares are transferred by succession or under a matrimonial property settlement or foreclosure, the Board of Directors may only refuse to enter the shares in the share register if it offers to buy the relevant shares at their actual value (art. 6, para. 7 of the Articles of Association and art. 685b, para. 4 of the CO) Grounds for allowing exceptions during the reporting year No dispensations were granted in 2014 and none were requested Eligibility of nominees registration There is no percentage clause or provision in the Articles of Association allowing exceptions to the rules indicated in item (Article 6 of the Articles of Association) relating to the registration of nominees. 16 EDMOND DE ROTHSCHILD (SUISSE) S.A.

17 3. Board of Directors 3.1. Members of the Board of Directors The Board of Directors is made up of 10 members, who in accordance with industry practice do not exercise an executive function within the Bank. Notwithstanding this, some of them do exercise managerial duties within the Group, or did so in the past. Baron Benjamin de Rothschild Chairman, French, 1963 Education / training 1984 Master in Business and Management, Peperdine University, California (US) Career Summary 1985 BP, Londres LCF Rothschild Group, Geneva and Paris (now the Edmond de Rothschild Group) 1989 Fondation de la Compagnie Benjamin de Rothschild Chairman Present duties Since 1997 Chairman of the Edmond de Rothschild Group Directorships Chairman of: - Edmond de Rothschild Holding S.A. (Switzerland) - Holding Benjamin et Edmond de Rothschild, Pregny S.A. (Switzerland) - Edmond de Rothschild (Suisse) S.A. - The Caesarea Edmond Benjamin de Rothschild Development Corporation Ltd (Israel) - The Edmond de Rothschild Foundation (USA) Chairman of Edmond de Rothschild SA and Edmond de Rothschild (France) Director of: - La Compagnie Fermière Benjamin et Edmond de Rothschild S.A. - La Compagnie Vinicole Baron Edmond de Rothschild S.A. - Rothschild Continuation Holdings A.G. (Switzerland) - La Compagnie Générale Immobilière de France (Cogifrance) - EBR Ventures Chairman of the Supervisory Board of Société Française des Hôtels de Montagne (SFHM) Member of the Supervisory Board of Les Domaines Barons de Rothschild (Lafite) Baroness Benjamin de Rothschild Vice-Chairwoman, French, 1965 Education / training 1984 A-levels, Kinshasa (Zaire) Nantes Academy 1988 BBA in Finance, Pace University, New York 1990 MBA in Financial Management, Pace University, New York Career Summary Financial analyst, then currency dealer at Société Générale, Australia and New York Currency dealer at AIG, New York. Helped launch Paris subsidiary and developed business in Europe Directorships Chairwoman of: - Edmond de Rothschild Communication - Administration et Gestion SA - Edmond de Rothschild (Europe) Vice-Chairwoman of: - Edmond de Rothschild SA - OPEJ - Holding Benjamin et Edmond de Rothschild, Pregny SA (Switzerland) Vice-President of the Supervisory Board of Edmond de Rothschild Asset Management (France) Vice-Chairwoman of the Supervisory Board of Société Française des Hôtels de Montagne (S.F.H.M.) Honorary Vice-Chairwoman of RIT Capital Partners (London) Director of: - Baron et Baronne Associés (holding company of S.C.B.A. Société Champenoise des Barons Associés) - Edmond de Rothschild (Suisse) S.A. - Edmond de Rothschild (France) - Edmond de Rothschild Private Equity SA Directorships Chairwoman of the Executive Committee of the Edmond de Rothschild Group Vice-Chairwoman of Edmond de Rothschild (Suisse) SA ANNUAL REPORT

18 Jean Laurent-Bellue Secretary, French, 1951 Education / training 1974 Institut d Études Politiques de Paris 1975 Bachelor's degrees in Literature and Law 1977 MBA HEC Career Summary Executive with the Compagnie du Midi Group Institut de Développement Industriel (IDI), first as a budget controller and later in charge of marshalling equity investments and managing the portfolio of holdings Various duties with the Crédit Commercial de France Group relating to corporate finance and private equity: : CEO of Nobel, in charge of investments 1993: Central Manager and a member of the Executive Board of CFF : in charge of corporate finance in Paris and London (Charterhouse Bank) : responsible for private equity in Paris and London (Charterhouse Development Capital) Member of the Executive Board of Crédit Lyonnais Group 2004 LCF Edmond de Rothschild Group (now Edmond de Rothschild Group) as a member of the Executive Board of La Compagnie Financière Edmond de Rothschild Banque and Chairman of the Executive Board of Edmond de Rothschild Corporate Finance Secretary-General of the Executive Board of Compagnie Financière Saint Honoré and Chairman of the Board of Directors of Edmond de Rothschild Corporate Finance Directorships Since 2015 Edmond de Rothschild Holding S.A., Pregny (Suisse) Board member and member of the Audit Committee Since 2011 Edmond de Rothschild S.A., Geneva Board member and member of the Audit Committee Holding Benjamin et Edmond de Rothschild, Pregny SA (Switzerland) Rotomobil, Pregny (Suisse) - Board member Edmond de Rothschild S.A., Paris - Board member and Chairman of the Audit Committee (since 2015) Edmond de Rothschild (France), Paris - Member of the Supervisory Board and Chairman of the Audit Committee (since 2015) Other Offices Since 1999 KPMG Associés, Paris - Member of the Supervisory Board Since 2005 KPMG, Paris - Member of the Supervisory Board Since 2015 Sisaho International, Paris - Member of the Supervisory Board Siaci Saint Honoré, Paris - Member of the Supervisory Board RIT Capital Partners PLC, London - Non-executive Director Luc J. Argand Member, Swiss, 1948 Education / training 1968 Diploma in Classical Studies, Collège Calvin (Geneva) University of Geneva 1972 Law degree Articled at Antoine Hafner Solicitors 1974 Admitted to the Geneva Bar 1976 MBA, INSEAD Career summary and Present duties Internships: Compagnie Financière Benjamin & Edmond de Rothschild, Goldman Sachs, New York, NMR, London Employment: Edmond de Rothschild (Suisse) S.A. Since 1982 Partner of Pfyffer & Associés Solicitors, Geneva Since 1986 Director of Banque Morval SA, Geneva Since 1993 Director of Edmond de Rothschild (Suisse) SA Director of Edmond de Rothschild Asset Management (Suisse) SA Director of Edmond de Rothschild Holding SA President of the Geneva Bar Association Since 1990 Arbitrator for the Court of Arbitration for Sport, Lausanne Member of the Geneva Magistrates Upper Council Since 2004 Member of the Geneva Notaries Supervisory Commission President of the Geneva Auto Show Since 2007 Chairman of the Board of Directors of Banque Syz & Co SA, Geneva 18 EDMOND DE ROTHSCHILD (SUISSE) S.A.

19 Rajna Gibson Brandon 1) Member, Swiss, 1962 François Hottinger Member, Swiss, 1943 Education / training 1965 French Banking Association courses at the Sorbonne Trained at BNP (ex BNCI), Paris Trained in the commercial banking department of Banque Hottinguer & Cie, Paris 1968 Trained at Baring Bros, London Career Summary Managing partner of Banque Hottinger & Cie, Zurich Managing partner of Banque Hottinguer & Cie, Paris Managing partner of J.F.E. Hottinger & Co, Zurich Director of Banque Hugo Kahn AG, Zurich Limited partner of J.C.E. Hottinger & Co., Zurich Directorships Since 1970 Director of Edmond de Rothschild (Suisse) SA Since 1992 Director of Hottinguer Corporate Finance SA, Paris (formerly Jean-Philippe Hottinguer & Cie, Corporate Finance SA, Paris) Since 1992 Director of Messieurs Hottinguer Gestion Privée SA, Paris (formerly Jean-Philippe Hottinguer & Cie, Gestion Privée SA, Paris) Since 1995 Director of Bolux Sicav, Luxembourg Since 2010 Director of Bolux Sicav, Luxembourg Since 2012 Director of J.C.E. Hottinger AG, Zurich Klaus Jenny Member, Swiss, 1942 Education / training 1967 M. Sc. in Economics (major in banking), University of Saint Gallen) 1973 Ph. D. in Economics, University of Saint Gallen) 1975 LLM, Glaris Canton 1986 Program for Senior Executives, Massachusetts Institute of Technology Career Summary Credit Suisse / Credit Suisse Group from 1987 Member of the Executive Board Member of the Executive Committee Member of the Executive Board of Credit Suisse Group CEO Credit Suisse Private Banking Since 1999 Self-employed financial consultant for companies, institutions and private clients Directorships Since 2000 Maus Frères S.A. Since 2001 Téléverbier S.A. Since 2009 Assivalor S.A. Since 2009 Edmond de Rothschild Holding S.A. Since 2010 Edmond de Rothschild (Suisse) S.A. Stellavia S.A. Since 2014 Lombard Odier SCA Member of the Supervisory Board Director of a number of other companies and foundations of lesser importance 1) = position held until 29 April 2015 His/her personal data can be found in previous annual reports available on the Bank s website: under the heading Investor Relations / Results and Annual Reports. ANNUAL REPORT

20 Maurice Monbaron Member, Swiss, 1946 Education / training 1965 Diploma from the Neuchâtel Business School Sales representative for Montres Cortébert, Biel 1968 Baccalauréat in Commerce, Collège de Fribourg 1972 Bachelor's degree in Management Studies (HEC), University of Lausanne Career Summary American Express Bank (Switzerland) AG, credit analyst and commercial banking employee in Zurich, Deputy to Geneva Branch Manager, Basel Branch Manager, Geneva Branch Manager Deputy CEO of TDB American Express Bank, Geneva and a member of the Executive Board Crédit Lyonnais (Suisse) SA, Deputy CEO and from 1992 CEO. From 1996, Head of International Private Banking for the Crédit Lyonnais Group Directorships Since 2010 Sole Director of Hôtel Royal SA, Crans-Montana Since 2013 Director of Edmond de Rothschild (Suisse) SA Trade associations Director of the France-Swiss Chamber of Commerce and lndustry Philippe Perles 1) Member, Swiss and French, 1961 Education/training 1986 Bachelor s degree in Business studies, University of Geneva 1994 International Centre for Monetary and Banking Studies Career summary Member of the Executive Board Member of the Asset Allocation and Investment Commitment in Geneva, overseeing the bank s global investment policy Part of three-strong team managing global investment funds Beldex SA, Geneva, Managing Director, Head of Sales Development Sherwood Alliance SA, Geneva, Principal, Head of Sales and Product Development Geneva Business Consulting Sàrl, Geneva Partner, Head of Sales and Product Development Novel Management Services, Geneva Partner, Head of Sales and Product Development Satocao LDA, Sao Tomé-et-Principe, Founder and Managing Director Present duties depuis 2005 Noveo Conseil SA, Geneva, Paris and London, Founder and Principal, Head of Sales and Product Development Directorships Since 2002 Association Romande des Intermédiaires Financiers (ARIF), Geneva, board member Since 2012 Bedrock Real Time SA, member of the Board of Directors Since 2015 Edmond de Rothschild (Suisse) S.A., Geneva, member of the Board of Directors 1) Since 29 April EDMOND DE ROTHSCHILD (SUISSE) S.A.

21 Jacques-André Reymond Member, Swiss, 1937 Education / training 1959 Law degree, University of Geneva 1962 Master s in Commerce, University of Geneva 1963 Degree from the Institute of Comparative Law, New York University 1966 Admitted to the Geneva Bar 1973 Ph. D. in Law, University of Geneva Career Summary Articled at Shearman & Sterling, New York Articled at Helg, Picot, Grandjean, Geneva Worked for Lenz Solicitors Worked for and in 1972 became a partner of Sandoz, Mayor, Moreillon & Reymond Solicitors Professor of commercial and tax law at the Faculty of Law, University of Geneva, Dean from 1989 to 1993 Dean from 1989 to 1993 Present duties Solicitor, honorary professor at the University of Geneva, member of the Board of Directors of Edmond de Rothschild (Suisse) SA, member of the Board of Directors of Edmond de Rothschild Holding SA, and Vice-Chairman of the Audit Committee of Edmond de Rothschild (Suisse) SA E. Trevor Salathé 1) Member, Swiss and British, 1925 Education / training 1946 Law degree, University of Geneva 1948 Admitted to the Geneva Bar Career Summary Trainee with Martin Achard et Haissly, a Geneva law firm Admitted to the Geneva Bar Executive Assistant, Société Bancaire de Genève Managing Director of Edmond de Rothschild (Suisse) SA Directorships Edmond de Rothschild Holding SA, Geneva Edmond de Rothschild (Suisse) S.A. Edmond de Rothschild Asset Management (Suisse) SA Edmond de Rothschild (Lugano) SA Edmond de Rothschild (Europe) Edmond de Rothschild (Monaco) Edmond de Rothschild Gestion (Monaco) None of the Directors had a close business relationship with Edmond de Rothschild (Suisse) SA or with a Group company. 1) until 28 April 2016 From 29 April he will be replaced by Tobias Guldimann ir the latter is elected at the General Assembly on 28 April ANNUAL REPORT

22 3.2. Other activities and vested interests To find out the other activities and interests of Board members, please refer to their personal data in section 3.1. We also point out that Luc J. Argand is Chairman of the Geneva Notaries Supervisory Commission Provisions relating to the number of positions that may be held (art. 12 para. 1 subpara. 1 OER) Under art. 12 para. 12 para. 1 subpara. 1 OER, article 19d of the Articles of Association of Edmond de Rothschild (Suisse) SA contains a provision on the maximum number of offices in other companies and organisations that directors may hold Elections and terms of office Pursuant to OER, the Chair (art. 9 ch. 3 of the Articles of Association) and members of the Board of Directors (art. 9 ch. 2 of the Articles of Association) are elected by individual ballot at the General Meeting. Their term of office is one year, regardless of their age, and ends at the conclusion of the next ordinary General Meeting after their election (art. 19bis of the Articles of Association). They may however be reelected. The Bank s revised Bylaws now provide for an age limit of 75 to be elected as a director. In accordance with the law, the Bank also provides in its Articles of Association that the members of the Pay Committee and the Independent Proxy be elected by individual ballot each year for a one-year term, like the Chair and the members of Board of Directors. The average age of the Directors is currently 68. The following table provides details of the length of Board members current terms: Directors Member of the Board of Directors since Term ends Baron Benjamin de Rothschild Baronne Benjamin de Rothschild Mr. Jean Laurent-Bellue * Mr. Luc J. Argand * Mr. François Hottinger * Mr. Klaus Jenny * Mr. Maurice Monbaron * Mr. Philippe Perles * Mr. Jacques-André Reymond * Mr. E. Trevor Salathé * Fulfil the independence requirements provided in FINMA circular 08/24 Supervision and internal control - banks Organisational structure The Board of Directors The current version of the Bank s Bylaws provide inter alia as follows: 1. In addition to its wealth management and securities dealing core business, the Bank operates as the parent company of a banking and financial group as defined in Swiss legislation and rules on banking. As a result, the duties and powers of the Bank s governing bodies have increased (art of the Bylaws); 2. The Bylaws and Articles of Association state the required level of skills, experience, diligence, availability, loyalty and independence for each governing body (art. 1.4., 3 and 4 of the Bylaws and art. 18 to 23bis of the Articles of Association); 3. The Bank points out that the members of its governing bodies must organise their personal and work relationships so as to avoid as much as possible any conflict of interests with the Bank and the banking and financial group of which it is the parent company (art , , and of the Bylaws); 22 EDMOND DE ROTHSCHILD (SUISSE) S.A.

23 4. Both for itself and for the banking and financial group of which it is the parent company, the Bank broadens the duties and reinforces the powers of the Audit Committee (art of the Bylaws) and the Internal Auditors (art. 4 of the Bylaws), as well as of the Compliance Office and Risk Management Department (art. 5. The Bank consolidates the systems used for internal monitoring, information management, reporting (art of the Bylaws) and risk management (art of the Bylaws); 6. The Board of Directors sets the credit-granting powers assigned to the governing bodies, the Credit Committee, the head of the Credit Department and his/her subordinates Breakdown of tasks within the Board of Directors The Board of Directors, made up of 10 members, is chaired by Baron Benjamin de Rothschild. Since 26 April 2012, Baroness Benjamin de Rothschild and Jean Laurent-Bellue respectively hold the offices of Vice-Chairman and Secretary. The Board of Directors operates as a collegial body (art of the Bylaws and art. 20 of the Articles of Association). Resolutions are passed by an absolute majority of the directors present and in the event of a tie, the Chairman has the casting vote. In special circumstances Board resolutions may be passed by circular as prescribed in the Bylaws Composition, powers and limitation of powers of the Board s committees In accordance with the Bank s Articles of Association and Bylaws, the Board of Directors is empowered to set up supervisory committees composed of its members. It has created an Audit Committee, a Pay Committee and a Promotions Committee. Audit Committee Under the Bylaws the Board of Directors has delegated part of its powers to an Audit Committee made up of at least three Board members. Their powers primarily include acting as a liaison unit between the Independent Auditors and the Board of Directors and supervising the activities of the Internal Auditors, the Compliance Office and the Risk Management Department. The Board has appointed five of its members (Klaus Jenny as Chairman, Jacques-André Reymond as Vice-Chairman, Maurice Monbaron, Jean Laurent-Bellue and E. Trevor Salathé) to form the Audit Committee. Fabienne Thionnet-Chevrier, Corporate-Affairs attorney and head of Corporate Governance is non-member Secretary. Most of these members meet the requirements regarding independence and all have the necessary skills and experience. The Chair of the Board shall have the rights and prerogatives provided in the law, the Articles of Association and the Bylaws (art of the Bylaws). The Chair must be informed regularly by the Chair or Vice- Chair of the Executive Committee on business development and the situation of the Bank and its subsidiaries. If the Chair and/or Vice-Chair of the Executive Committee hesitate to deem a matter as falling within the Executive Committee s jurisdiction, they must submit the issue to the Chair of the Board of Directors, who shall decide whether the matter should be handled by the Executive Committee or the Board. If the Chair is absent, his/her duties shall be exercised by the Vice-Chair of the Board or, failing this, by the oldest member. ANNUAL REPORT

24 Pay Committee and Promotions Committee Under the Bylaws, the Board of Directors has delegated some of its powers to the Pay Committee, which must comprise at least three Directors. The powers of the Pay Committee include (i) drawing up regulations on remuneration; (ii) approving the overall pay package and level of bonuses for the Bank s staff; (iii) after consulting the CEO, submitting proposals to the Board of Directors regarding the remuneration of the members of the Executive Committee; and (iv) submitting proposals to the Board of Directors regarding the remuneration of the Directors for the tasks they perform in this capacity and as members of the Board s committees. Proposals relating to the remuneration referred to in subsections (iii) and (iv) shall be decided by the Board of Directors and then submitted to the General Meeting for approval (art. 9 ch. 6 and 7 of the Articles of Association). The Board of Directors has appointed five of its members to form the Pay Committee: Baroness Benjamin de Rothschild (Chairwoman), Jean Laurent-Bellue (Secretary), Luc J. Argand, Klaus Jenny and E. Trevor Salathé. This Committee holds meetings usually twice a year. The Promotions Committee is responsible for submitting a preliminary opinion to the Board of Directors regarding the appointment and removal of Directors, members of the Executive Committee and persons in charge of managing and representing the Bank Working procedures of the Board of Directors The Board of Directors meets periodically and holds extraordinary meetings if necessary. In 2015 it met six times. On average Board meetings last half a day. The Board of Directors works on the basis of files prepared by its secretariat and the Chair of the Executive Committee. Minutes are taken at Board meetings. They must be duly numbered and signed jointly by the Chair and the Secretary. The meetings follow a set agenda that mainly covers the following items: 1. Reading and approval of the minutes of the last meeting; 2. Word by the Chair of the Board of Directors; 3. Report of the CEO; 4. Report of the CFO; 5. Report of the CAO; 6. Report of the CRO; 7. Report of the Head of Legal & Compliance; 8. Report of the Audit Committee; 9. Report of the Pay Committee; 10. Work performed by independent directors; 11. Securities trading legislation; 12. Any other business The composition of the Promotions Committee is the same as that of the Pay Committee (art of the Bylaws). The preparatory, advisory and decision-making powers of the aforementioned Committees appear in the Bylaws and the Articles of Association. 24 EDMOND DE ROTHSCHILD (SUISSE) S.A.

25 3.6. Powers The Board of Directors is the Bank s highest governing body and is responsible for supervising and monitoring its operations. Under the statutes and the Articles of Association, it has the widest powers of oversight as regards how the Bank s business is managed. The Board has inter alia the inalienable and nontransferrable powers stated in art. 22 of the Articles of Association, namely to do the following: a) Examine and prepare proposals to be submitted to the General Meeting and execute its resolutions; b) Issue the necessary instructions and organisational regulations regarding the Bank s management and delineate the powers of the various governing bodies; c) Pass resolutions on all matters which, under the Bylaws, fall within the jurisdiction of the Board of Directors; d) Appoint and remove members of the Executive Committee and persons in charge of managing and representing the Bank; e) Appoint the independent auditors required by the Banking Act; f) Set the Bank s accounting and financial control principles and draw up the financial plan and financial report; g) Examine the reports of the independent auditors; h) Decide on all matters which, under the law and the Articles of Association, are not the responsibility of the General Meeting or any other governing body; i) Oversee the persons in charge of managing the Bank to ensure, inter alia, that they abide by the law, the Articles of Association, applicable regulations and instructions that have been given; j) Inform the judicial authorities if the Bank s exceeds the prescribed debt limits; k) Draw up the Pay Report. In addition to exercising the powers set out in art. 22 of the Articles of Association, the Board of Directors may decide on all matters assigned to it in art of the Bylaws. Aided by its committees, it sets the general strategy of the Bank and Group. It lays down the principles pertaining to organisation, management and control and ensures that they are applied. It supervises on a consolidated basis all the Swiss and foreign entities that together comprise the Edmond de Rothschild (Switzerland) Group. The Board of Directors has delegated oversight of the Bank s day-to-day business to the Executive Committee (see section 4 below) Information and control instruments Description of reporting by the Executive Committee At each meeting of the Board of Directors, the Chief Executive Officer and/or the Deputy Chief Executive Officers report on the major decisions taken by the Executive Committee and on the operations dealt with, presenting those matters that fall within the jurisdiction of the Board of Directors. However, the Chief Executive Officer and his Deputies may only participate in Board meetings in an advisory capacity. To help them perform their oversight obligations, at each meeting the members of the Board of Directors are given among other documents a progress report including mainly comments by the CEO, the summarised accounts of the various Group entities comparing actual business performance with the budget and, finally, a list of the Group s financial investments and holdings. At meetings the Board members also receive a quarterly report on risks noting, inter alia: the level of shareholders equity; major risks, if any; market, interest rate and counterparty risks in the banking industry; the level of cash reserves; and risks of a legal and reputational nature. The Board of Directors has also put facilities in place that are designed to monitor and supervise management at the Group level. These facilities are outlined on pp. 58 et seq. of this annual report. Between meetings of the Board of Directors and the Board Committee, the Chairman and Deputy Chairmen of the Executive Committee keep the Chairman of the Board of Directors regularly informed on major executive decisions. Other members of the Executive Committee, as well as other Bank executives, employees, internal auditors and external advisers or experts whose presence is needed, may also be invited to the meetings of the Board of Directors and the Board Committee. However, these persons may only participate in an advisory capacity. Its powers and those of its Committees are clearly delineated in the Bank s Articles of Association and Bylaws ( under the heading "Investor Relations/ General Information / Legal Documents). ANNUAL REPORT