ANNUAL REPORT 2014 EDMOND DE ROTHSCHILD (SUISSE) S.A.

Transcription

1 ANNUAL REPORT 2014 EDMOND DE ROTHSCHILD (SUISSE) S.A.

2 Edmond de Rothschild (Suisse) SA Annual Report 2014

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4 Contents Edmond de Rothschild (Suisse) SA Message from Baron Benjamin de Rothschild 8 Message from the Executive Committee Corporate Governance 12 Introduction 13 Group structure and shareholders 15 Capital structure 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) SA Group Financial Report 40 Key figures 41 Report of the Directors 45 Report of the statutory auditor 47 Consolidated subsidiaries 51 Consolidation principles 53 Valuation policies 54 Consolidated balance sheet 56 Consolidated profit and loss account 57 Consolidated cash flow statement 58 Notes to the consolidated financial statements 85 Edmond de Rothschild (Suisse) SA, Geneva Financial Report 86 Key figures 87 Report of the Directors 92 Report of the statutory auditor Balance sheet 96 Profit and loss account 97 Notes to the financial statements Pay Report 115 Addresses ANNUAL REPORT

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6 Edmond de Rothschild (Suisse) SA 7 Message from Baron Benjamin de Rothschild 8 Message from the Executive Committee ANNUAL REPORT

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8 Message from Baron Benjamin de Rothschild Global growth proved disappointing in 2014 contrary to economic projections, particularly in emerging markets. At just over 3%, it was on a level with the two previous years demonstrating once again that the road to recovery since the outbreak of the financial crisis in September 2008 is a long one. The biggest event last year was ultimately the massive drop in oil prices. On a geopolitical level, this drop had the immediate effect of rebalancing growth prospects between developed economies and emerging economies a change that is more structural than it appears. Many large emerging countries suffer from structural imbalances that affect their development and undermine stability. The drop in oil prices has accelerated this trend. The situation has certainly improved for importing countries due to lower energy bills, which allow better control of production costs; however, these countries have also suffered from the growing trend toward deflation. Finally, 2014 will be remembered as the year that China became the largest economic power in the world. Of course this is not a surprise, but the speed with which it happened is remarkable. Faced with these major developments, we have chosen to create a more coherent Group and develop our spirit of conquest both in areas where we have operated for many years and in new emerging markets. And now, for once, I would like to introduce our annual report by focusing on the future rather than reviewing the past. In early 2015, I made the decision to further consolidate my family s position at the head of the Edmond de Rothschild Group. In January, the Board of Directors of our Group s holding company appointed my wife, Ariane, as Chairwoman of the Group Executive Committee, reflecting my desire for our family to play a more direct role in overseeing the Group s business. For my part, I will of course remain Chairman of our Group s Board of Directors, and I will actively support my wife and the Group s teams. Faced with an uncertain economic environment, increasingly stringent regulations and fierce competition, my family s commitment to our Group is deeper than ever before. In the last three years, we have made great progress towards melding our banks and financial services into a coherent Group, driven by a common vision, common goals and progressively common systems. The challenge we face today is to move beyond organisational factors so that we can return our Group s focus to its spirit of conquest. The year 2015 marks a new milestone in the history of our Group. Our goal is to reconcile what may seem to be two opposing forces: our passion for entrepreneurship and an environment that places a strong emphasis on controlling risk. By placing ourselves on the front lines of executive management, we as a family are demonstrating our commitment to making ourselves fully accountable for the next phase of our Group s development. Finally, I would like to add that for the first time in the history of the Rothschild family, the Executive Committee is chaired by a woman. Few financial institutions are or have been man- aged by a woman. I am delighted that Ariane accepted my proposal. In 2014, the Group s business remained buoyant despite a context of major change. I would like to take this opportunity to thank every one of the Group s employees, whose skills are invaluable. I know I can count on our employees to help build the robust and innovative group we strive to be and to position Edmond de Rothschild as a leader in the global financial sector. Benjamin de Rothschild Chairman of the Board of Directors Our decision was the result of careful consideration. ANNUAL REPORT

9 Message from the Executive Committee Private banking is one of the few sectors of finance that is growing. It continues to expand worldwide, in line with the rising number and assets of high and ultra-high net worth individuals (U/HNWIs), especially in the emerging markets. But even as the number of U/HNWIs grows in emerging and newly emerged economies, competition between the world s financial centres is also increasing. The products and services offered by many of these centres are very different from those provided by traditional private banks. In fact, the banking universe is becoming ever more complex and sophisticated and it is changing at an accelerating pace. Regulations have become increasingly constraining. As a result of changes in banking secrecy, cross-border rules, FATCA, the arrival of a MiFID II and the automatic exchange of information, banks have been forced to rethink their business model and value proposal. Finally, new technologies are reshaping the landscape as well, with the increasing use of paperless communications between banks and clients and with the digitalisation of workflows. In response to all these changes, our Group also has to enhance its value proposition to clients by offering more advisory, transparent asset management choices and performances and clear-cut fees. Moreover, we have to continue demonstrating our independence and ability to align our interests with those of our clients, a principle that we know is greatly valued by our shareholders. Our Group has already changed considerably to adapt and thereby build an organisation that is not only in tune with its environment but also poised to meet future challenges. This indispensable process has mainly involved transforming our business model and complying with regulatory requirements. But it in no way alters the DNA of our Group. Personalised relations with clients, top-quality investment advisory and a rock-solid balance sheet remain our foremost concerns. Another of our priorities lies in bolstering the relevance and diversity of our offering, which we did in 2014 by developing a broader array of state-of-the-art services affording greater differentiation. These range from Multi-strategy Portfolio Management, Active Advisory and Private Equity to Risk Management, Corporate Finance and Currency Overlay. When it comes to conviction-based investments, our Group has pioneered biotechnology investing and economic development in Africa. Last year our private equity fund dedicated to financing local small and medium-sized businesses in Africa raised more than $530 million a remarkable feat. Another fund focused on European infrastructure projects exceeded 430 million at its first closing, positioning us among the front-runners in this segment. In 2015 we will further tap our spirit of innovation with projects covering all sectors of the real economy, from technology and healthcare to infrastructures and emerging markets. In alternative multimanagement, despite last year s challenging conditions we were ranked first worldwide out of 425 fund of hedge funds management companies. The prestigious magazine InvestHedge once again honoured the performance of our fund lines over a 12-year period. We are proud of this outstanding long-term track record, which rewards the work and expertise of our fund management teams. Alternative multimanagement, with its power to diversify risks and reduce volatility, continues to deserve its place in our portfolios. Finally, for clients seeking exposure to hard assets, we recently launched a vehicle that offers the merits of an investment in physical gold as well as counterparty security. We also bolstered our real estate offering by acquiring a majority stake in OROX Asset Management, a Swiss property fund. The global economic recovery gained momentum last year, particularly in the developed countries. The largest of these registered GDP growth close to their growth potential. In 2015 the United States will remain the world s main growth engine. Booming job creation and a general reduction in household debt will enable American consumers to open up their wallets further. Wages will start rising soon. By contrast, growth in the Euro Zone will remain subdued for fundamental reasons. Crushing public debt and unemployment across the Continent will continue to siphon off a large portion of wealth creation. Geopolitical tensions between Russia and the West over the Ukraine crisis are moreover curbing companies capital investment and exports, particularly in Germany. In China the economic downturn should not be too severe but it will nevertheless need to be monitored closely. Beijing is orchestrating a controlled slowdown as it tries to recast the country s economic model. The old formula driven by 8 EDMOND DE ROTHSCHILD (SUISSE) SA

10 competitive yuan depreciation and real estate investment is being gradually sloughed off and replaced by a new one geared more towards private consumption. The authorities will try to apply measured stimulus. It will all be a matter of control. The halving and more of crude oil prices, between June and December 2014, will give a sizeable boost to GDP growth worldwide. But on the other hand, it will also depress inflation rates and in 2015 central banks will have to factor this into their monetary policies. In the Euro Zone, Japan and even China, they will have to do more by lowering short-term interest rates, if that is still possible, and by pumping massive doses of liquidity into the financial system via asset-purchase programmes. In the US, after weaning the markets off these injections in 2014, the Federal Reserve will continue to normalise its monetary policy during the current year. Expectations of a highly probable rise in the US federal funds rate are tracked carefully by analysts and are bound to result in repeated market spasms. The upshot is that monetary policies will continue to have a powerful impact on borrowing costs and risk premiums. On the whole, demand for bonds should remain relatively strong, preventing yields from rising quickly. The dollar should appreciate further at the expense of the euro and the yen, in particular. The markets extreme sensitivity to monetary policies has buoyed equity benchmarks tremendously in recent years. Multiples have escalated even though earnings forecasts have been revised relentlessly downward. The S&P 500, for example, rocketed 213% between March 2009 and December 2014, whereas the constituent companies profits rose only 62% during the same period. If stockmarkets are to keep on climbing in 2015, earnings will have to improve. If there is one major risk, it is of an erosion of investor confidence. Trends have been disconnected from fundamentals for several years now and investors view this situation complacently, to borrow terms used in turn by the Bank for International Settlements and the US Federal Reserve. More recently, the International Monetary Fund weighed in, noting investors optimism. In any event, our portfolio managers have to find ways of generating sustainable, risk-adjusted returns in an environment marked by artificially high valuations. The higher asset prices go, the more difficult it will be to secure strong performances. strives to enhance returns by innovating, broadening the universe of investable assets and, in a world marked by variable and unstable relationships between the various asset classes, by better managing risk in general. Given the magnitude of market distortions due to the massive interventions of central banks, we firmly believe that portfolio diversification, though necessary, is no longer enough to mitigate risks. Risk management therefore lies at the heart of our investment philosophy and our profession as bankers. Our decades of experience in this area will prove more useful than ever this year. Edmond de Rothschild is a unique Group, distinguished by our shareholder s commitment and local management. Differentiation is our watchword. In the aftermath of the crisis, the banking industry as a whole committed to reviewing its model and the size of its players. As has always been the case and now more than ever, we are convinced that there is a place for players on a human scale who place client relationships and impartial investment advisory at the heart of their concerns. We continue to stand by the values of our shareholders and remain committed to our fiduciary responsibility vis-à-vis our clients. Modernising a Group such as ours is a long-term project. It is indispensable in order to serve our clients professionally and effectively in today s and tomorrow s world. At Edmond de Rothschild, we can claim a true legitimacy in our field, thanks to our name, our history and the values of our shareholder s family. By asserting our long-term vision, our pursuit of performance, our innovative spirit and our social responsibility, we will succeed in preserving this heritage. We wish to thank the Group s shareholders for their patience and commitment, our teams for the work they perform in a complex environment and, of course, our clients for their loyalty, which we will strive to continue to deserve. The Executive Committee In this context, preserving and developing our clients wealth remains our fundamental purpose. Our Investment department ANNUAL REPORT

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

13 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 2014, containing standards for corporate governance. The above-mentioned DCG was issued by SIX based on art. 8 of Switzerland s Stock Exchanges and Securities Trading Act (SESTA) and articles 1-6 and 49 et seq of SIX s Listing Regulations. 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 decisionmaking 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 and Bylaws, which can be found on the Bank s website: / About Us / Investor Relations Legal Documents. 12 EDMOND DE ROTHSCHILD (SUISSE) SA

14 1. Group structure and shareholders 1.1. Group structure Presentation of the Group s operating structure Board of Directors Chairman Baron Benjamin de Rothschild Vice-Chairwoman Baroness Benjamin de Rothschild Secretary Jean Laurent-Bellue Members Luc J. Argand Veit de Maddalena 1) Rajna Gibson Brandon 2) François Hottinger Klaus Jenny Maurice Monbaron Jacques-André Reymond E. Trevor Salathé 1) = until 29 April ) = until 29 April ) = from 29 April 2014, replacing Rajna Gibson Brandon 4) = As per section al. 4 of the Bylaws the members of the Promotions Committee are the same as those of the Pay Committee 5) = Executive Committee as constituted since 2 October ) = From 29 April 2014, replacing François Maendly. Audit Committee Chairman Klaus Jenny Vice-Chairman Jacques-André Reymond Members Jean Laurent-Bellue Maurice Monbaron 3) E. Trevor Salathé 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 5) Chairman and Chief Executive Officer Emmanuel Fievet Deputy Chief Executive Officers Luca Venturini Vice-Chairman; Deputy Chief Executive Officer in charge of Private Banking Sabine Rabald Deputy Chief Executive Officer Chief Administrative Officer Members Yves Aeschlimann Chief Compliance 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 Jean-Christophe Pernollet 6) Independent Auditor PricewaterhouseCoopers SA ANNUAL REPORT

15 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 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. Par value Percentage of share capital Percentage of voting rights 1.2. Major shareholders (at ) (in CHF 000) (in %) (in %) Major shareholders Edmond de Rothschild Holding SA (1) 36, Rothschild Holding AG, Zurich (2) 3, (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 ; 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 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 owned Percentage of share capital Percentage of voting rights 1.3. Cross-holdings (in %) (in %) Cross-holdings Rothschild Holding AG, Zürich 10, *Direct and/or indirect holding by the parent company. 14 EDMOND DE ROTHSCHILD (SUISSE) SA

16 2. Capital structure Par value Number of shares Capital ranking for dividend 2.1. Share capital (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 Changes in share capital (in CHF 000) Share capital Fully paid registered shares with a par value of CHF ,000 20,000 20,000 20,000 Fully paid bearer shares with a par value of CHF ,000 25,000 25,000 25,000 Total share capital 45,000 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. 15 para. 1), entitles the owner to one vote at the Annual General Meeting. 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. ANNUAL REPORT

17 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) Eligibility of nominees There are no percentage clauses or other provisions that create exceptions from the rules stated in section (see art. 6 of the Articles of Association) regarding the registration of nominees Procedure and conditions for lifting transferability restrictions Any amendment to the provisions of the articles of Association relating to registered share transferability restrictions (art. 6 of the Articles of Association) must be approved by a two-thirds majority of the votes represented at the Annual General Meeting and by an absolute majority of the par value of the shares represented (art. 15 para. 6 of the Articles of Association and art. 704 para. 1 of the Swiss 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 granting dispensations during the reporting year No dispensations were granted in 2014 and none were requested. 16 EDMOND DE ROTHSCHILD (SUISSE) SA

18 3. Board of Directors 3.1. Members of the Board of Directors The Board of Directors is made up of 10 1) 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, Career summary 1985 BP, London Peperdine University, California (US) LCF Rothschild Group, Geneva and Paris (now the Edmond de Rothschild Group) 1989 Fondation de la Compagnie Benjamin de Rothschild Present duties Since 1997 Directorships Chairman Chairman of the Edmond de Rothschild Group Chairman of: Edmond de Rothschild Holding SA (Switzerland) Holding Benjamin et Edmond de Rothschild, Pregny SA (Switzerland) Edmond de Rothschild (Suisse) SA Edmond de Rothschild (Europe) Edmond de Rothschild Asset Management (Suisse) SA (Switzerland) The Caesarea Edmond Benjamin de Rothschild Development Corporation Ltd (Israel) The Edmond de Rothschild Foundation (USA) Edmond de Rothschild (France) Director of: La Compagnie Fermière Benjamin et Edmond de Rothschild SA La Compagnie Vinicole Baron Edmond de Rothschild SA 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 (Zaïre) 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 Directorships Chairwoman of: subsidiary and developed business in Europe EDR Communication Administration et Gestion SA Vice-Chairwoman of: Edmond de Rothschild Holding SA (Switzerland) Edmond de Rothschild SA Edmond de Rothschild (Suisse) SA Edmond de Rothschild (Europe) (Luxembourg) OPEJ 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: Holding Benjamin et Edmond de Rothschild, Pregny SA (Switzerland) Baron et Baronne Associés (holding company of SCBA Société Champenoise des Barons Associés) Edmond de Rothschild (France) Member of Supervisory Board of: SIACI Saint-Honoré Milestone 1) = at 31 December 2014 ANNUAL REPORT

19 Jean Laurent-Bellue Secretary, French, 1951 Education / training 1974 Institut d Études Politiques de Paris 1975 Licences in Literature and Law 1977 MBA from the Hautes Etudes Commerciales 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 : 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 Present duties Since Group Secretary-General at Edmond de Rothschild Jan Holding SA, Geneva Member of the Board of Directors of Edmond de Rothschild (Suisse) SA and Member of the Supervisory Board of EDR SA, Paris Other Offices Since 1999 Director and member of the Supervisory Board of KPMG Associés Since 2005 Director and member of the Supervisory Board of KPMG SA and KPMG Associés (SA) Since 2008 Member of the Supervisory Board of Edmond de Rothschild Private Equity Partners Luc J. Argand Member, Swiss, 1948 Education / training 1968 Diploma in Classical Studies, Collège Calvin (Geneva) University of Geneva 1972 LLM, University of Geneva Articled at Antoine Hafner Solicitors 1974 Admitted to the Geneva Bar 1976 MBA, INSEAD Career summary and Present duties Trained at La Compagnie Financière Benjamin & Edmond de Rothschild; Goldman Sachs, New York; NMR, London Worked for Edmond de Rothschild (Suisse) SA, Geneva 1982-present Partner of Pfyffer & Associés Solicitors, Geneva Since 1986 Director of Banque Morval SA, Geneva 1993-present Director of Edmond de Rothschild (Suisse) SA, Geneva Director of Edmond de Rothschild Asset Management (Suisse) SA, Geneva Director of Benjamin and Edmond de Rothschild, Pregny SA (Switzerland) President of the Geneva Bar Association President of the Geneva Bar Association 1990-present Arbitrator for the Court of Arbitration for Sport, Lausanne Member of the Geneva Magistrates Upper Council 2004-present Member of the Geneva Notaries Supervisory Commission President of the Geneva Auto Show Since 2007 Director of Banque Syz & Co SA, Geneva 18 EDMOND DE ROTHSCHILD (SUISSE) SA

20 Veit de Maddalena 1) Member, Swiss, 1967 Rajna Gibson Brandon 2) Member, Swiss, 1962 Education / training 1982 Licence in Commercial and Industrial Sciences (Business administration), University of Geneva 1987 PhD, summa cum laude, Economic and Social Sciences (Specialization in Finance), University of Geneva Academic experience Professor of finance at HEC, University of Lausanne Director of the Master s programme in Banking and Finance at HEC, University of Lausanne Professor of Finance at the Swiss Banking Institute, University of Zurich Since 2001 Director and Assistant Director of the National Centre of Competence in Research, Financial Valuation and Risk Management (FINRISK) Since 2006 Research Director at the Swiss Finance Institute (SFI) Since 2008 Professor of Finance at the University of Geneva and Chairholder at the Swiss Finance Institute Since 2009 Director of Geneva Finance Research Institute, University of Geneva Regulatory bodies Member of the Swiss Takeovers Board Member of the Swiss Federal Banking Commission Directorship Since 2000 Director of Swiss Re Since 2012 Director of Edmond de Rothschild (Suisse) SA 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 Present duties Since 1970 Director of Edmond de Rothschild (Suisse) SA, Geneva 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 2010 Director of Bolux Sicav, Luxembourg Since 2012 Director of J.C.E. Hottinger AG, Zurich 1) = position held until 29 April 2014 His/her personal data can be found in previous annual reports available on the Bank s website: under the heading About Us / Library / Annual Reports. 2) = until 29 April 2015 ANNUAL REPORT

21 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 1972 à 1998 Credit Suisse / Credit Suisse Group from 1987 Member of the Executive Board Member of the Executive Board Committee Member Executive Board of Credit Suisse Group CEO of Credit Suisse Private Banking Since 1999 Self-employed financial consultant for companies, institutions and private clients Directorships Since 2000 Since 2001 Since 2009 Since 2009 Since 2010 Since 2014 Maus Frères SA Téléverbier SA Assivalor SA Edmond de Rothschild Holding SA Edmond de Rothschild (Suisse) SA (Various other directorships for smaller companies and assignments for boards of charitable foundations) Lombard Odier SCA Member of the Supervisory Board 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 Licence 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 Present duties Since 2005 Since 2009 Since CEO. From 1996, Head of International Private Banking for the Crédit Lyonnais Group Vice-Chairman of the Board of Directors of Crédit Agricole (Suisse) SA Vice-Chairman of the Board of Directors of the International Centre for Monetary and Banking Studies, Geneva Trade associations Director of Edmond de Rothschild (Suisse) SA, Geneva Director of the France-Swiss Chamber of Commerce and lndustry and, since 2008, Chairman of the Board Director of the Association of Foreign Banks in Switzerland and, since 2006, Vice-Chairman of the Board Director of the Swiss Bankers Association 20 EDMOND DE ROTHSCHILD (SUISSE) SA

22 Jacques-André Reymond Member, Swiss, 1937 Education / training 1959 LLM, 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 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 Member, Swiss and British, 1925 Education / training 1946 LLM, University of Geneva 1948 Admitted to the Geneva Bar Career summary, present duties and directorships Trainee with Martin Achard et Haissly, a Geneva law firm Practising attorney in Geneva Executive Assistant, Société Bancaire de Genève Managing Director of Banque Privée SA, which became Edmond de Rothschild (Suisse) SA, Geneva Current directorships Edmond de Rothschild Holding SA, Geneva Edmond de Rothschild (Suisse) SA, Geneva Edmond de Rothschild Asset Management (Switzerland)SA, Geneva Edmond de Rothschild (Switzerland) Europe, Luxembourg Banque de Gestion 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. ANNUAL REPORT

23 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 under art. 12 para. 1 ch. 1 of OER As required by art. 12 para. 1 ch. 1 of OER, the Board of Directors of Edmond de Rothschild (Suisse) SA will propose an amendment to the Articles of Association at the 2015 General Meeting providing for the addition of an art. 19quater concerning the maximum number of offices that Directors may hold in other companies and organisations. The proposed wording will appear in the agenda of the General Meeting of Edmond de Rothschild (Suisse) SA to be published on 1 April 2015 in the FOSC Elections and terms of office Pursuant to OER, which came into force on 1 January 2014, 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 re-elected. In accordance with the law, the Bank also provides in its revised 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 67. The following table provides details of the length of Board members current terms: Directors Member of the Board since Baron Benjamin de Rothschild Baroness Benjamin de Rothschild * M. Jean Laurent-Bellue * M. Luc J. Argand * M me Rajna Gibson Brandon * M. François Hottinger * M. Klaus Jenny * M. Maurice Monbaron * M. Jacques-André Reymond * M. E. Trevor Salathé Term ends * Fulfil the independence requirements provided in FINMA circular 08/24 Supervision and internal control - banks Organisational structure 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) SA

24 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 of the Bylaws); 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. The Chair of the Board shall have the rights and prerogatives provided in the law, the Articles of Association and these 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 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 1), Jean Laurent-Bellue and E. Trevor Salathé) to form the Audit Committee. Fabienne Thionnet-Chevrier, Corporate-Affairs attorney and head of Corporate Governance was appointed non-member Secretary. Most of these members meet the requirements regarding independence and all have the necessary skills and experience. 1) = Since 29 April 2014 in replacement of Rajna Gibson Brandon ANNUAL REPORT

25 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 at least twice a year Working procedures of the Board of Directors The Board of Directors meets periodically and holds extraordinary meetings if necessary. In 2014 it met seven 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 Head of Legal & Compliance; 7. Report of the Audit Committee; 8. Report of the Pay Committee; 9. Words by independent Directors; 10. Any other business 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. 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) SA

26 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 non-transferrable 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). The Board of Directors has no official terms of reference. Its powers and those of its Committees are clearly delineated in the Bank s Articles of Association and Bylaws ( About Us/Investor Relations/ Legal Documents), which will be amended in 2014 to meet the requirements of the OEPLC 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 monthly 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. ANNUAL REPORT