2013 Annual Report - Edmond de Rothschild Group · 2019-05-11 · This new world is no longer unipolar, bipolar or multipolar. For the first time, it is becoming "co-managed" by all

2013 Annual Report

La Compagnie Financière Edmond de Rothschild Banque

47, rue du Faubourg Saint-Honoré - 75401 Paris Cedex 08, France Telephone: +33 (0)1 40 17 25 25 Fax: +33 (0)1 40 17 24 02 Telex: Lacof 280 585 - Swift: COFIFRPP Website: www.edmond-de-rothschild.fr A public company with executive and supervisory boards and capital of €83,075,820 R.C.S. Paris B 572 037 026 Code NAF 2 : 6419 Z

4 | LA COMPAGNIE FINANCIERE EDMOND DE ROTHSCHILD BANQUE

2013 ANNUAL REPORT | 5

Contents

6 Message fromBenjamin and Ariane de Rothschild

8 Message from the Group CEO

12 Group key figures

14 Key figures

16 Management Report

16 Governance

18 Terms of office

22 Report of the Executive Board

42 Social and environmental information

57 Observations ofthe Supervisory Board

58 Consolidated Financial Statementsand Notes

108 Investments in subsidiariesand affiliates

110 Consolidated companies

112 Parent companyfinancial statements and notes

129 Parent companyfive-year summary

130 Reports of the Statutory

140 Resolutions


Message from Benjamin and Ariane de Rothschild to the Annual General Meeting of Shareholders

he effects of the 2008 crisis finally seem to be fading. The return of American growth, the recovery, albeit still cautious, in

Europe, and Japan's exit from deflation and stagnation, are beginning to convince these developed countries that they once again have a promising future. However, unemployment rates are still too high overall.

The current difficulties of emerging countries that are suffering from a lack of coordination of monetary policies at the global level, are, at the same time, still there to remind us that nothing can be taken for granted. For whilst major emerging countries are now facing huge capital flight as a result of the gradual exit from the Fed's accommodating monetary policy, which is providing renewed interest for American investments, it is also because a certain number of major structural reforms have not been carried out.

If the crisis has taught us anything, it is that good times, when growth is strong, have to be used to prepare for the future. In particular, we must not get carried away by easy money and the satisfaction of popularity-seeking promises. What is true in the public domain is naturally so in the private domain. The actions of a leader must not be completely focused on the present but also on succession to future generations.

Some countries have fully understood this. For the first time, we visited Norway earlier in the year, a country which has the world's richest sovereign fund with nearly $900 billion. This is one example. Other countries are preparing for the future by investing heavily in innovation. Indeed, let's consider the scope of the changes taking place. By 2020, 50 billion computer devices will be connected in the world! That's six devices per person, be they telephones, tablets, computers, or even cars and household equipment. This is not just a big change in household consumption; it's a real step towards the advent of a knowledge and information "sharing economy".

We can already begin to appreciate the many consequences of this digital revolution. First of all, its influence on our lifestyle and consumption habits. New business sectors are appearing, jobs are changing, and education is more essential than ever. Then, the exercise of power and leadership will also have to change. The top-down model is not enough today; it is sometimes even a-modern, even though the ability to make a decision remains absolutely crucial and decisive as regards competition.

There remains much to be said about the major transformations at work in the world. However, one providing the most hope is the veritable explosion of the world's middle class. Between 2010 and 2020, there will be over a billion more people, i.e. by far the largest increase in the history of mankind. In total, over the next thirty years, no less than three billion people, on all continents, will join the middle class.

The future is still bright, therefore, for world growth. Provided, however, that it is more balanced, thanks to improvements in economic, financial and monetary cooperation, and more inclusive, as growing inequalities are a major risk factor.

This new world is no longer unipolar, bipolar or multipolar. For the first time, it is becoming "co-managed" by all continents, without domination of one over the others, but with increased and sometimes brutal competition. In this new world, the challenges will be on a scale never seen before. Among the growth factors, infrastructure has always had a special importance. Now, needs are reaching unprecedented levels. In fact, we estimate at $57,000 billion the financing needs of infrastructures in the world between 2013 and 2030, 36% more than over the last eighteen years.

T


We are considering other infrastructure funds in various geographic regions, most likely this year. With interest rates remaining low, abundant liquidity in the world, increased prudence of traditional banks in granting loans, the economic recovery and the new needs we just mentioned, the time has come to construct, reconstruct and repair ports, airports, roads, bridges, railway lines, transport systems and also the social and energy infrastructures.

It is also by thinking of these major challenges of our time that our Group has decided to invest in projects in Africa and in the environmental field. The Group has entered into a partnership in Brazil, strengthened its operational hub in Hong Kong in the crosshairs of an eventual presence in mainland China, and we have launched strategic consideration initiatives on South East Asia, the Middle East and on cooperation with sovereign wealth funds.

Our Group is transforming because the world is changing. Also, and perhaps above all, because it would not be quite itself if it was not constantly on alert, taking initiatives and anticipating.

The asset management industry should be entrusted with one hundred trillion dollars of assets in 2020 compared to sixty-five trillion dollars today. This is a considerable opportunity for us and our clients, but it is also, as we have just said, a big responsibility as asset managers of tomorrow will have to be able to create a positive social and environmental impact, to meet expectations and ensure sustainable growth.

In our private banking business, we want more than ever to offer our clients solutions. This is why we will be present in the new territories of this changing world, to offer greater opportunities to those who put their trust in us. This is also why we will be more creative and innovative and why we will attract and train new talent. It is with recognised expertise in corporate finance, private equity, and project management that we will make the difference. The history of our family, the reputation of our Group and the trust of our clients compel us to do so. This year, the Group entities are brought together under the name Edmond de Rothschild, its founder, thus paying tribute to his visionary spirit and uniting its strengths to face the future.

As everyone is aware, for the Edmond de Rothschild group 2014 is dedicated to the spirit of conquest.

Benjamin de Rothschild CEO of the Edmond de Rothschild group

Ariane de Rothschild Deputy Chairman of the Edmond de Rothschild group


Message from the Group CEO To the Annual General Meeting of Shareholders

rust which was lacking the most in 2012, was the key to the improvement of 2013. Thanks to the concerted efforts of

Western policies, especially the central banks, trust was restored and, at the same time, risk aversion turned around.

Boosted by the American economic engine, improved business fundamentals led to the return to grace of developed countries. In contrast, emerging countries are now a source of concern and whereas international liquidity is starting to dry up, capital flows are moving towards Europe and the United States. Although the Western world is still heavily in debt, interest rates and the economy are being supported by the central banks, particularly the European Central Bank which, through its determination, has earned acclaim at the height of the crisis.

Thus, the year 2013 may perhaps have been the first year out of a crisis that shook the very foundations of the system. The road ahead is still long but whilst growth remains nascent in Europe and France, stock markets have reported excellent performances.

Ideally positioned since the end of 2012 in European assets, the Edmond de Rothschild Group has been rewarded for its strong convictions, in both private banking and in asset management. Always steadfast, sharing its values and commitment, the clients have put their trust in the Group and rightly so.

The past year, however, confirmed our forecast: despite signs of recovery and a rebound in equity markets, the crisis in Europe is not over yet and there are still concerns about emerging countries. The winners of tomorrow's world will therefore be, more than ever, the economic players who have been able to adapt to an entirely new situation.

A clear ambition for the Group

Convinced of the need to reform in order to maintain our development, we have continued to adapt our business model and our organisation. The roadmap provided by Ariane and Benjamin de Rothschild for the Group remains completely clear: our ambition is to become the key independent player in Wealth Management. We share the vision of a unified, resolutely international Group, weighing in at over CHF164 billion in assets.

Our Group, organised around its two core business, asset management and private banking, aims to serve the most demanding private and institutional clients from five major hubs: Paris, Geneva, Luxembourg and now London and Hong Kong which we will gradually reinforce.

This ambition is based on the strengths of the Edmond de Rothschild model: a unique asset and wealth management approach, a powerful brand synonymous with excellence, long-term support and values handed down from generation to generation.

As a sign of the strength of our project, we have been joined by many talented people. These people have come from different backgrounds and offer the shared characteristic of bringing an international vision to our core businesses and a strong culture of innovation.

T


Solid performance from the asset management division

In 2013, reduced risk aversion was positive for the equity and convertible bond markets. Knowing how to make the most of favourable market conditions, our managers reported remarkable performances: thus, our funds generated performances much higher than the indexes thanks to a management of convictions and quality stock-picking.

The high gross asset inflows reflect the trust of our clients, both in France and abroad. These results show that we have not developed at the expense of our performances - the Group's primary objective: on the contrary, it aims to sustain them and would not have been possible without the talent and constant commitment of our teams.

Sustained international development

Our development also requires proactive and controlled international growth. We have thus strengthened our presence in Hong Kong through a round of recruitment. A leading financial centre and gateway to all Asian markets, Hong Kong is now a major hub for our Group. We have also reaffirmed our presence in London. A Private Merchant Bank activity has been created there to provide our international business clients with solutions tailored to their professional and private wealth management. A new team was put in place for this purpose, and new offices were opened at 4 Carlton Gardens.

These changes are essential and are already paying off. We will, however, ensure that they do not dilute our specialities, and that they add to the continuity and respect of our DNA, particularly in private banking.

Success of the entrepreneur-focused private banking model

Whereas most banking institutions consider private banking as an improved extension of their retail bank, we remain more than ever attentive to issues specific to families and entrepreneurs - quite simply because our bank is itself a family business whose success has never wavered.

The private banking proximity model proved itself to be completely relevant through the action of two dynamics, which mutually strengthen each other: its international and regional presence as well as the development of the corporate advisory services. Family company directors thus benefit from extended comprehensive solutions, beyond borders. The strength of this organisation and the trusting relationships established with clients over time are a source of pride which, this year again, has led to significant asset inflows.

Innovation is at the core of our offering

Our Group is also recognised for its ability to innovate. The Strategic Investments Fund, whose first investments were made by our teams in 2013, attests to this capacity: faced with a complex regulatory situation, we have given a response to the French economy and to the balance sheet challenges of several major insurance players. We will continue this momentum with the launch of our infrastructure fund: we thus intend to address long-term considerable financing requirements in infrastructure in Europe. Our project management business, particularly in Africa, and our Private Equity funds strive for innovation putting finance at the service of the real economy.


2014 Outlook

2014 will enable our Group to take full advantage of the restructuring already undertaken and continue to roll-out its strategy.

To this end, we will continue to develop our asset management business. It is important for a Group such as ours to prove itself to the major international institutional clients. They have a very high standards and their asset allocation strategy is particularly sophisticated. To be ranked among them is a legitimate ambition for our Group. This is why we are gradually rethinking our range of flagship products in order to encourage the emergence of billionaire funds beyond the four we already have. Bringing our legal and regulatory engineering in line with the world's highest standards is also essential in this respect.

In private banking, we want to continue our positioning as a key player for entrepreneurs. Today, our bank is particularly adapted to business leaders: we want to continue to dedicate to them all the time necessary to understand their problems in detail. These are complex by nature since they combine family, asset and professional dimensions. We are able to consider all the challenges as regards development, asset securitisation, succession and mergers-acquisitions. We aspire to become the natural go-to partner for these entrepreneurs in Europe and abroad to provide them with bespoke solutions.

If we are approaching 2014 with optimism, it is because, driven by the vision and determined support of Ariane and Benjamin de Rothschild, we have a clear strategic focus and motivated teams. It is also because we have ensured, as we have made changes, that we have remained close to our clients and ensured continuity and the depth of this relationship.

Of all the performance indicators, the trust of our clients will remain, once again this year, the most essential in our opinion.

Christophe de Backer CEO of the Edmond de Rothschild Group



Group key figures at 31 December 2013

EDMOND DE ROTHSCHILD, A UNIQUE GROUP IN THE BANKING LANDSCAPEE Today, the Edmond de Rothschild group holds a unique position in the world of financial institutions. Indeed, it is firmly rooted in the new global environment and is cultivating values that many financial players have lost sight of. Family roots give the Edmond de Rothschild Group a particular sense of the long-term, which is reflected in the way it manages the assets of its clients: creativity does not exclude prudence and entrepreneurial audacity goes hand in hand with risk management. Our action is based on two powerful engines: Private Banking and Asset Management. The Group is also developing in the areas of Corporate Finance, Private Equity and Institutional & Fund Services.

THE EDMOND DE ROTHSCHILD GROUP TODAY The Edmond de Rothschild group offers a comprehensive service model for an international client-base of wealthy families, entrepreneurs and large institutions.

OUR CORE BUSINESSES

Private Banking Corporate Finance

Asset Management Private Equity Institutional & Fund Services

OUR ASSETS • The stability and solidity of an independent financial group• A unique relationship of proximity combined with the expertise

of an international group.• Proactive teams which monitor and analyse economic changes

to put together our offers.• Access to a complete range of financial products and services

THE EDMOND DE ROTHSCHILD GROUP IN FIGURES

CHF164 billion of assets (€133.6 billion)

47% Private Banking CHF77.6 billion of commitments (€63.176 billion) 10 booking centres in the world

53% Asset Management CHF86.5 billion of commitments (€70.438 billion) 6 management centres (Frankfurt, Geneva, Hong Kong, London, Luxembourg, Paris)

28.2% Capital Ratio (FINMA ratio)

2,774 employees as of 31/12/2013


INTERNATIONAL PRESENCE

America Europe and Mediterranean Basin Asia and Middle East

The Bahamas Germany Luxembourg China / Hong Kong Brazil Belgium Monaco United Arab Emirates Chile Spain Portugal Japan Uruguay France United Kingdom

Guernsey Switzerland Italy Israel


39,3%

8,5%15,4%

2,0%

6,9%

20,1%

7,7%

Key figures of La Compagnie Financière Edmond de Rothschild

at 31 December 2013

Shareholder base at 31 December 2013

La Compagnie Financière Edmond de Rothschild is 86.91% owned by Edmond de Rothschild S.A., the French holding company of the Edmond de Rothschild Group. Caisse de dépôt et placement du

Québec is also a shareholder in La Compagnie Financière Edmond de Rothschild, with 10.42%, and the balance is held by the Bank’s management teams.

Total loans and commitments managed

In billion of euros

Breakdown of assets managed by division and asset class (asset management subsidiaries)

Equities Convertible bonds Balanced (including funds of funds) Alternative management (hedge funds and funds of hedge funds) Private equity Fixed income and credit Structured product and management

Locations

France Bordeaux, Lille, Lyon, Marseille, Nantes, Paris, Strasbourg and Toulouse

International Asia: China Latin America: Chile Europe: Germany, Belgium, Spain, Italy Middle East: Israel

33,9

37,7

36,0 36,2

39,7

2009 2010 2011 2012 2013

Asset breakdown by business line

(in billions of euros)

Breakdown by asset class (asset management subsidiaries)

Private Banking € 14,0 bn

Asset Management€ 25,7 bn


CONSOLIDATED HIGHLIGHTS (in millions of euros)

Balance sheet 2011 2012 2013

Total assets 3,043 2,456 2,264 Group share of shareholders' equity* 335 331 319 Client loans 402 294 473 Client deposits 1,654 1,206 1,273

The robustness of the Bank’s financial position is reflected in the level of its Tier One and Core Tier One** ratios (11.2% and 11.8%, respectively, at the end of 2013).

Income statement 2011 2012 2013

Net banking Income 400 324 315

Gross operating Income 91 48 32

Net Income 59 30 25

Including Group share 53 25 20

Average headcount (number) 995 1,004 910

* Excluding net income for the year.

** These ratios are calculated, in accordance with prudential regulations on the basis of the consolidated equity of Edmond de Rothschild S.A., the Bank’s parent company.

Shareholders' equity (Group share)*

In millions of euros

Net banking Income***


Gross operating income


Net income (Group share)


Average headcount (number)

* Excluding net income for the year.

310 313

335331

319

09 10 11 12 13

303

408 400324 323

09 10 11 12 13

25

8591

4840

09 10 11 12 13

22

52 53

25 25

09 10 11 12 13

932

959

995 1004

910

09 10 11 12 13


Management Report Governance

La Compagnie Financière Edmond de Rothschild Banque is a limited company with supervisory and executive boards. This dual form of structuring the management bodies satisfies the principles of the Bank’s group corporate governance, with executive management functions clearly separated from supervisory tasks.

SUPERVISORY BOARD

Chairman Benjamin de Rothschild

Deputy Chairman René de La Serre

Members Ariane de Rothschild Véronique Morali Carlo de Benedetti Jean Dumoulin Jean Laurent-Bellue Maurice Lévy (until 11.09.2013) Daniel Trèves Christian Varin Edmond de Rothschild S.A., Represented by Christophe de Backer

Non-Voting Member François Boudreault

Honorary Deputy Chairman Victor Sasson (deceased on 07.12.2013)

Secretary Alain Benhamou

EXECUTIVE BOARD

Chairman Vincent Taupin (since 18.03.2014) Marc Samuel (until 18.03.2014)

Chief Executive Officer Marc Lévy (until 30.05.2013)

Members Jean-Hervé Lorenzi (since 18.03.2014) Patrice Dordet - Head of Private Banking Division (until 18.03.2014)

AUDITORS

Statutory Auditors Cabinet Didier Kling & Associés PricewaterhouseCoopers Audit

Alternate Auditors Dominique Mahias (since 30.05.2013) Marie-Paule Degeilh (until 30.05.2013) Boris Etienne


THE SUPERVISORY BOARD’S WORKSUPPORTED BY STANDING COMMITTEES

THE AUDIT COMMITTEE

The Audit Committee is comprised of people chosen from the members of the Supervisory Board. It meets at least once a quarter and is convened by its Chairman. It may request notification of all aspects necessary or appropriate to its task and hears all persons whose evidence is necessary or appropriate to its task.

The Audit Committee is made up of René de la Serre (Chairman), Véronique Morali, Jean Dumoulin and Jean Laurent-Bellue and its main tasks are: — to ensure that the accounting methods adopted for preparing

the parent company and consolidated financial statements are relevant and consistent from year to year and to verify the appropriateness of the accounting rules applied;

— to examine, before their presentation to the Supervisory Board, the parent company and consolidated financial statements as well as the budgets and forecasts;

— to oversee the quality and compliance with the internal control procedures and to appraise the information received from management, in-house committees and internal and external audits;

— to examine the internal audit department’s annual audit plan before its approval by the Board;

— to ensure compliance with applicable legal and regulatory provisions;

— to conduct an overall examination of the risk control system.

The Audit Committee met before each meeting of the Supervisory Board. It prepared a working programme, with the March and September meetings being devoted more particularly to examining the financial statements and hearing the Auditors. The other two meetings involved examining risks and the audit work on the one hand and internal control on the other. The Audit Committee reports on its work, opinions and recommendations to the Supervisory Board.

THE REMUNERATION COMMITTEE

The Remuneration Committee is made up of people chosen from the members of the Supervisory Board. It meets at least once a year and is convened by its Chairman or the Secretary of the Supervisory Board at the request of the Supervisory Board’s Chairman. The Remuneration Committee is made up of Benjamin de Rothschild (Chairman), Ariane de Rothschild, Véronique Morali and Christian Varin, and its main tasks are:

— to make recommendations to the Supervisory Board on the remuneration, in all its components, of every member of the Company’s Supervisory and Executive Boards;

— to comment on the company’s remuneration policy to the Supervisory Board and to make all appropriate recommendations on all remuneration and employee profit-sharing schemes.

The Remuneration Committee has, in particular, examined the Bank’s remuneration policy, which was then put before the Supervisory Board and checked for compliance with the measures adopted in this context, in accordance with the regulations on this matter.


Terms of office

It is proposed that the Annual General Meeting of Shareholders should renew the appointments of Supervisory Board Members Messrs Benjamin de Rothschild, René Barbier de La Serre, Christian Varin and Mrs Ariane de Rothschild, who are reaching the end of their terms. Louis Roch-Burgard is proposed as a new member. A list of all members of the Supervisory and Executive Boards of the Bank, together with the positions held by each of them in other companies, is shown below.

SUPERVISORY BOARD Benjamin de Rothschild

• Chairman of :— Edmond de Rothschild Holding S.A. (Switzerland) — Holding Benjamin et Edmond de Rothschild, Pregny S.A.

(Switzerland) — Banque Privée Edmond de Rothschild S.A. (Switzerland) — Banque Privée Edmond de Rothschild Europe (Luxembourg) — La Compagnie Benjamin de Rothschild S.A. (Switzerland) — The Caesarea Edmond Benjamin de Rothschild Development

Corporation Ltd (Israel) — The Edmond de Rothschild Foundation (USA) • Chairman of the Board of Directors of Edmond de Rothschild

S.A.• Director of :----- La Compagnie Fermière Benjamin et Edmond de Rothschild

S.A. ----- 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, Société Française des

Hôtels de Montagne (S.F.H.M.).• Member of the Supervisory Board of Domaines Barons de

Rothschild (Lafite).

René de La Serre

• Director of:----- Edmond de Rothschild Holding S.A. (Switzerland) ----- Edmond de Rothschild S.A. ----- Aluthéa S.A.S. ----- iDealwine S.A. (since June 2013) • Non-Voting Member of the Board, Fimalac S.A.

Ariane de Rothschild

• Chairman of:----- Edmond de Rothschild Communications S.A.( Switzerland) ----- Administration et Gestion S.A. (Switzerland) ----- Strategic Committee Amethis Africa Finance (since June 2013)

• Deputy Chairman of the Board of Directors of:----- Edmond de Rothschild S.A. ----- Banque Privée Edmond de Rothschild Europe (Luxembourg) ----- OPEJ ----- Edmond de Rothschild Holding S.A. (Switzerland) ----- Banque Privée Edmond de Rothschild S.A. (Switzerland) ----- Holding Benjamin et Edmond de Rothschild Pregny S.A.

(Switzerland) • Deputy Chairman of the Supervisory Board, Société Française

des Hôtels de Montagne (S.F.H.M.)• Honorary Deputy Chairman of RIT Capital Partners (London)• Director of:----- Baronnes et Barons Associés (holding company of S.C.B.A.

Société Champenoise des Barons Associés) ----- La Compagnie Benjamin de Rothschild S.A. (Switzerland) • Member of the Supervisory Board of:----- SIACI Saint-Honoré ----- Milestone

Carlo de Benedetti

• Chairman of:----- Gruppo Editoriale L’Espresso S.p.A. (Italy) ----- Fondazione Rodolfo Debenedetti S.p.A. (Italy) ----- Fondazione TOG Together to Go Onlus (Italy) (since April

2013) • Honorary Chairman of:----- CIR S.p.A. (Italy) ----- COFIDE S.p.A. (Italy) ----- SOGEFI S.p.A. (Italy)

Jean Dumoulin

• Non-Voting Member of the Board of Edmond de RothschildAsset Management

Jean Laurent-Bellue

• Chief Executive Officer of Edmond de Rothschild-Holding S.A.(Switzerland)

• Chairman of EDRRIT (until 23.10.2013)• Deputy Chairman of the Supervisory Board of SIACI Saint-

Honoré


• Member of the Supervisory Board of:

----- Milestone ----- KPMG S.A. ----- KPMG Associés • Director of:

----- Banque Privée Edmond de Rothschild S.A. ----- Edmond de Rothschild S.A. • Non-excutive director of RIT Capital Partners PLC

Maurice Lévy

• Chief Executive Officer and Member of the Executive Committeeof Publicis Groupe S.A.

• Chairman of the Supervisory Board, Iris Capital Management• Member of the Médias & Régies Europe S.A. Supervisory Board

• Director of:----- Arts décoratifs (until March 2013) ----- Institut du Cerveau et de la Moelle épinière • Director of:

----- MMS USA Holding, Inc (USA) ----- MMS USA Investments, Inc. (USA) ----- MMS USA LLC Investments, Inc. (USA) ----- Zenith Optimedia Group Limited (UK) ----- BBH Holding Ltd (UK) ----- Jana Mobile, Inc (USA) • Member of the Management Board, Publicis Groupe U.S.

Investments LLC (USA)• Member of the World Economic Forum Foundation Board

(Geneva) (until August 2013)

Véronique Morali

• Chairman of the Webedia Executive Board (since July 2013)• Chairman of:

----- Fimalac Développement (Luxembourg) ----- Wefcos • Founding Chairman of TF Co (until 20.12.2013)• Director and Deputy Chairman of Fitch Group, Inc. (USA)• Director of:----- Edmond de Rothschild S.A.

----- Fimalac ----- Groupe Lucien Barrière ----- Financière Allociné (until July 2013) ----- Coca-Cola Enterprises Inc. (USA) ----- Fitch, Inc. (USA) • Member of the Supervisory Board of Publicis Groupe• Manager of:

----- Fimalac Tech Info ----- Fimalac Services Financiers • Member of the Governing Board of public interest institutions or

associations:

----- Founding Chairman of Association Force Femmes ----- Founding Chairman of Association Terrafemina ----- Member of the Elle Corporate Foundation (until 01.07.2013) ----- Réunion des musées nationaux et du Grand Palais des

Champs-Elysées (public institution)

----- Member of the association, Le Siècle ----- Representative of Multi Market Services France Holding on the

Wefcos shareholders committee

Daniel Trèves

• Chief Executive Officer, La Compagnie Benjamin de RothschildS.A. (Switzerland)

• Director of:----- Banque Privée Edmond de Rothschild Europe (Luxembourg)

----- Edmond de Rothschild Holding Limited ----- Edmond de Rothschild Communication S.A., Geneva

----- Treasury Investments (C.I.) Limited (Channel Islands) ----- Priquam Advisory Limited (Cayman Islands) ----- Associated Investors (British Virgin Islands) ----- Rolex Holding (Geneva) ----- Rolex S.A. (Geneva)

Christian Varin

• Chairman of :

----- Cobepa (Belgium) (until 26.04.2013) ----- Cobehold (Belgium) (until 26.04.2013) • Director of:

----- Aminter ----- D’Ieteren ----- Groupe Josi ----- Sapec (until 28.08.2013) ----- Helse ----- AEA (Singapore) ----- Yareal (Netherlands) ----- Gingko (Luxembourg) ----- Edmond de Rothschild S.A.

----- Banque Privée Edmond de Rothschild Europe (Luxembourg) • Member of the Supervisory Board, Edmond de Rothschild

Private Equity Partners (since 31.05.2013)

Edmond de Rothschild S.A.

• Director of:

----- Cogifrance ----- Financière Savoisienne (until 16.10.2013) ----- Financière Eurafrique

Christophe de Backer

• Chief Executive Officer and Chairman of the ExecutiveCommittee, Banque Privée Edmond de Rothschild S.A. (Geneva)

• Chairman of the Supervisory Board of Edmond de RothschildAsset Management (since 30.05.2013) (previously Chairman ofthe Board of Directors)

• Chairman of the Board of Directors of:----- Banque Privée Edmond de Rothschild Europe (Luxembourg)

----- Edmond de Rothschild (UK) Limited ----- Edmond de Rothschild S.A. ----- EDRRIT Limited (since 23.10.2013)


• Chief Executive Officer and Director of Edmond de RothschildS.A.

• Deputy Chairman of the Board of Directors of La CompagnieBenjamin de Rothschild

EXECUTIVE BOARD

Marc Samuel

• Deputy Executive Manager of Edmond de Rothschild S.A.• Chairman of the Board of Directors of:

----- Financière Boréale ----- Edmond de Rothschild SGR SpA (Milan) ----- Edmond de Rothschild Asia Limited (Hong Kong) ----- Edmond de Rothschild Asia Private Investors Limited

(Hong Kong) ----- Edmond de Rothschild (Israel) Limited (Tel Aviv) • Chairman of the Supervisory Board of:

----- Edmond de Rothschild Corporate Finance (until 30.04.2013) ----- Edmond de Rothschild Corporate Finance (ex. Edmond de

Rothschild Entreprises Patrimoniales (since 30.04.2013) • Deputy Chairman of the Supervisory Board of Edmond de

Rothschild Asset Management (previously Deputy Chairman ofthe Board of Directors, until 30.05.2013)

• Director of:----- Edmond de Rothschild (UK) Limited (London

----- EdRRIT Limited (London) (until 23.10.2013) • Member of the Supervisory Board:

----- Edmond de Rothschild Investment Partners ----- Edmond de Rothschild Capital Partners • Member of the Management Board, Edmond de Rothschild

Private Equity China Management SARL (Luxembourg) (until30.06.2013)

• Permanent Representative of Edmond de Rothschild S.A. on theBoard of Directors of:

----- Cogifrance ----- Financière Savoisienne (until 16.10.2013) • Representative of La Compagnie Financière Edmond de

Rothschild Banque, Chairman of the Supervisory Board ofEdmond de Rothschild Private Equity Partners (since30.05.2013) (previously Deputy Chairman of the SupervisoryBoard)

Marc Lévy

• Chief Executive Officer and Director of Banque Léonardo (since21.10.2013)

• Deputy Executive Manager of Edmond de Rothschild S.A. (until30.05.2013)

• Member of the Supervisory Board of:

----- Edmond de Rothschild Investment Partners (until 30.05.2013) ----- Edmond de Rothschild Capital Partners (until 30.05.2013) ----- Edmond de Rothschild Corporate Finance (until 30.04.2013) • Director of:

----- GIE Edmond de Rothschild Investors Assistance (until 30.05.2013) ----- Groupement Immobilière Financière (until 30.05.2013) ----- Edmond de Rothschild Asia Private Investors Limited (Hong

Kong) (until 27.06.2013)

----- Edmond de Rothschild S.G.R. SpA (Italy) (until 27.06.2013) ----- Edmond de Rothschild Investment Services Ltd (Israel) (until

27.06.2013)

----- Edmond de Rothschild Boulevard Buildings Ltd (until 27.06.2013) ----- Edmond de Rothschild Asia Limited (until 27.06.2013) • Member of the Management Board, Edmond de Rothschild

Private Equity China Management Sarl (until 30.06.2013)• Manager of

----- VP Assurances (since 29.11.2013) ----- VP Immobilier (since 29.11.2013) • Permanent representative of Edmond de Rothschild S.A. on the

Board of Financière Eurafrique (until 30.05.2013)• Permanent Representative of La Compagnie Financière Edmond

de Rothschild Banque on the Boards of:

----- Assurances Saint-Honoré Patrimoine (until 30.05.2013) ----- Edmond de Rothschild Entreprises Patrimoniales (until

30.04.2013) ----- Edmond de Rothschild Asset Management (until 30.05.2013) ----- Edmond de Rothschild Private Equity Partners (until

30.05.2013)

----- Financière Boréale (until 30.05.2013)

Patrice Dordet

• Chairman of the Board of Directors, Sélection Opportunités• Deputy Chairman of the Supervisory Board of Assurances Saint-

Honoré Patrimoine• Director of Edmond de Rothschild S.G.R. S.p.A. (Italy)• Member of the Supervisory Board, Edmond de Rothschild Asset

Management (director until 30.05.2013)• Representative of La Compagnie Financière Edmond de

Rothschild Banque, Deputy Chairman of the Supervisory Boardof Edmond de Rothschild Corporate Finance (ex. Edmond deRothschild Entreprises Patrimoniales) (since 30.05.2013,previously Member of the Supervisory Board)



Report of the Executive Board

In a still difficult economic and financial context, characterised by a progressive stabilisation, albeit weak, of the situation in Europe, strengthening of the American economy, and a slowdown in emerging economies, the net income attributable to equity holders of La Compagnie Financière Edmond de Rothschild was €20 million as of 31 December 2013, down 22.4% compared with 2012.

Assets under management ended the year slightly higher by 10% at €39.7 billion (against €36.2 billion at the end of 2012). The right direction of the financial markets, a corollary of particularly accommodating monetary policies and of historically low interest rates, particularly benefited asset management. After a 2012 marked by significant asset outflows, the total inflow was almost +€0.5 billion with inflow from private banking which continued to increase (+€0.8 billion) and an outflow from asset management which was down €0.3 billion.

The results presented below for the year 2013, take into account exceptional items which are non-recurring by nature (mainly the merger and reorganisation of two corporate advisory companies, a change in Group governance and provisions for impairment of the portfolio related to the private equity business). The different analyses, including the profitability of the various operating segments, are presented in light of these non-recurring items.

In thousands of euros 2013 2012 Change (%)

Net banking income 314,624 324,490 (3.0)%

Operating expenses (282,233) (276,448) 2.1%

- Personnel expenses (168,206) (157,634)

- Other operating expenses (100,439) (102,408)

- Depreciation, amortisation and impairment (13,588) (16,406)

Gross operating income 32,391 48,042 (32.6)%

Cost of risk 76 (837)

Operating income 32,467 47,205 (31.2)%

Share in net income of associates 2,837 2,220

Net gains or losses on other assets 480 (463)

Changes in the value of goodwill (794) -

Income (loss) before tax 34,990 48,962 (28.5)%

Income tax (10,449) (19,411)

Net income 24,541 29,551 (17.0)%

Net income attributable to minority interests (4,462) (4,488)

Net profit - Publishable net profit of the Group 20,079 25,860 (22.4)%

Cost income ratio* 85.4% 80.1%

* Personnel expenses and other operating expenses as a percentage of net banking income.


NET BANKING INCOME

At €314.6 million for 2013, net banking income is down 3% compared with 2012. This relative stability reflects diverging developments: — of commissions on commitments up +3.9% due to the increase

in average assets under management (+5.2%); — of commissions on flows (subscriptions and entry fees) down by

-3.9%; — a decline in the balance sheet activity of -55.3 % on 2012,

mainly due to provisions related to the impairment of certain lines of the own account portfolio related to private equity and, to a lesser extent, to a persistently low interest rate environment;

— an improvement in the contribution of the corporate advisory services on 2012.

The outperformance commissions are slightly down from 2012 (€15.1 million in 2013 compared to €15.4 million in 2012, or down 1.7%). Consequently, the gross margin is down, falling from 90bps to 83 bps.

OPERATING EXPENSES

Operating expenses came to €282.2 million for 2013, up +2.1% compared to 2012. Personnel expenses came to €168.2 million for 2013, up by +6.7% compared to 2012. Other operating expenses at €114.0 million were lower than 2012 (down 4.0%).

OPERATING INCOME

Changes in net banking income (NBI) and expenses resulted in an unfavourable leverage effect on the gross operating income, which came to €32.4 million, compared to €48.0 million in 2012. Under these conditions, the cost/income ratio rose to 85% against 80% in 2012.

Including a net positive cost of risk of +€0.01 million (-€0.8 million in 2012), consolidated operating income came to €32.5 million, against €47.2 million in 2012.

NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

The share in net income of associated companies increased by +€0.6 million to €2.8 million. This change is mainly due to the dynamism of the Banque de Gestion Edmond de Rothschild Monaco. At €4.5 million, minority interests were stable, reflecting the maintenance of overall income. The tax charge was down by 46.2% to €10.4 million as a result of non-recurring income of €4.9 million from Israeli withholding tax for 2010 and previous years. Net income - Group share came to €20.1 million, an fall of -22.4% compared to the previous year.


DIVISION OPERATIONS AND RESULTS

The Private Banking and Asset Management divisions posted improved performance in 2013 compared to 2012 particularly as a result of an increase in average commitments.

SUMMARY OF RESULTS AND CONTRIBUTION BY DIVISION

Private Banking Asset Management Other Activities and

Proprietary Trading

Group

In thousands of euros 2013 2012 2013 2012 2013 2012 2013 2012

Net banking income 89,597 85,737 219,643 219,027 5,384 19,726 314,624 324,490

Operating expenses (86,843) (83,073) (157,278) (174,000) (38,112) (19,375) (282,233) (276,448)

- Personnel expenses: (52,334) (50,357) (81,409) (90,953) (34,463) (16,324) (168,206) (157,634)

. direct (40,625) (38,371) (64,035) (71,873) (31,137) (14,243) (135,797) (124,487)

. indirect (11,709) (11,986) (17,374) (19,080) (3,326) (2,081) (32,409) (33,147)

- Other operating expenses (29,296) (28,016) (69,656) (73,359) (1,487) (1,033) (100,439) (102,408)

- Depreciation, amortisation and

impairment

(5,213) (4,700) (6,213) (9,688) (2,162) (2,018) (13,588) (16,406)

Gross operating income 2,754 2,664 62,365 45,027 (32,728) 351 32,391 48,042

Cost of risk 165 118 - (688) (89) (267) 76 (837)

Operating income 2,919 2,782 62,365 44,339 (32,817) 84 32,467 47,205

Share in net income of associates 2,751 2,289 86 (69) - - 2,837 2,220

Net gains or losses on other assets - - - - 480 (463) 480 (463)

Changes in the value of goodwill - - - - (794) - (794) -

Income (loss) before tax 5,670 5,071 62,451 44,270 (33,131) (379) 34,990 48,962

Cost income ratio* 91.1% 91.4% 68.8% 75.0% ns 88.0% 85.4% 80.1%

* Personnel expenses and other operating expenses as a percentage of net banking income (NBI).


Private Banking …………………………………………………………………………………………………………………………………………………………….

Highlights of 2013 • Over €14 billion under management in Private Banking with net inflows of €827 million• Reinforcement of the strategy aimed at entrepreneurs, based on a comprehensive range of bespoke services• Success of the model combing a sales network in the regions and strengthened synergies with corporate finance

…………………………………………………………………………………………………………………………………………………………

The Edmond de Rothschild Group in France offers a wide range of bespoke solutions designed to meet the needs of affluent private clients and business leaders: financial planning, legal and tax analysis, advice on life insurance, inheritance laws in the sale of family firms, mergers and acquisitions and philanthropy advisory. All of this know-how is coordinated by the private banker, the linchpin of the client relationship.

CONFIRMED POSITIONING AIMED AT ENTREPRENEURS

Private Banking inflows confirmed the relevance of our offering to entrepreneurs, based on an array of services targeting SMEs and their leaders (consulting, M&A, financial and wealth engineering, and private equity). This commitment to entrepreneurs has involved several partnerships. For the sixth year, the Bank has supported the Entrepreneur of the Year Award with EY and L'Express. This event is both a great opportunity to meet with entrepreneurs from across France, and an important way to raise our visibility. The Group also continued its partnership with Croissance Plus, through actions promoting women entrepreneurs.

DISCRETIONARY MANAGEMENT, A SPIRIT OF INNOVATION AND EXCELLENCE

Discretionary management, one of the bank's core activities, has diversified whilst maintaining its fundamentals: asset protection and growth. It relies on a long-term favoured client relationship. Clients benefit from extensive means to contact their advisor or place orders. They have additional expertise in the Group to respond to their most sophisticated requirements, relying in particular on a multidisciplinary dedicated management team and a global investment strategy director. All of this relies on a modernised platform and the roll-out of an upgradable and more effective accounting tool.

A SERVICE OFFERING EVER-CLOSER TO CLIENT REQUIREMENTS

Private banking's offering has grown whilst providing more fine-tuning to better meet individual requirements. Thus, the most common services have been harmonised for a targeted clientele. The teams of bankers work hand in hand with the Corporate Advisory Services team, which allows them to create synergies to propose answers regarding succession, raising capital and ever faster and more efficient acquisitions. Finally, for clients wishing to remain independent in their management decisions, an Active Investment Advisory offering has been developed.

POSITIVE MOMENTUM IN LIFE INSURANCE

Assurances Saint-Honoré Patrimoine, an individual life insurance broker that is part of the Private Banking division, generated strong net inflows up by 35% over 2012. This division sets up tailored agreements and solutions in partnership with the main insurance companies in France and Luxembourg. Despite lower yields, the share of euro-denominated contracts remained high in 2013. The implementation of alternatives to euro funds enabled us, in particular, to limit this progression in relation to the life insurance market.

CONSOLIDATION OF REGIONAL PRESENCE AND INTERNATIONAL SYNERGIES

Private banking has firmly established its regional model with seven regional branches. To maximise the opportunities offered by the international coverage of the Group, the mechanisms of transversality between different countries have been strengthened.


GROWTH OF PRIVATE BANKING ABROAD

Private banking in Israel continues to develop with net asset inflows of €100 million in 2013, bringing its commitments to €631 million. The change in governance placing the activity under the management of Miki Kliger, assures real continuity. It particularly announced a strategy

dedicated to the ultra-high net worth individuals (UHNWI) segment, which is already paying off. Italian private banking posted promising organic growth, with an increase in commitments of 8.3%, raising them to almost €1.2 billion. Lending activity was launched there and should further increase the appeal of its offer.

BREAKDOWN OF PRIVATE BANKING RESULTS


Net banking income 89,597 85,737 4.5%


- Personnel expenses: (52,334) (50,357)

. direct (40,625) (38,371)

. indirect (11,709) (11,986)



Gross operating income 2,754 2,664 3.4%

Cost of risk 165 118

Operating income 2,919 2,782 4.9%

Share in net income of associates 2,751 2,289

Net gains or losses on other assets - -

Changes in the value of goodwill - -

Income (loss) before tax 5,670 5,071 11.8%


* Personnel expenses and other operating expenses as a percentage of NBI.


NET BANKING INCOME

The private banking model, based on closeness to and support for entrepreneurs, generated gross inflows of over €2.5 billion and net inflows of over €826 million. Average assets under management, for their part, also increased significantly (+9.3%) due to the dynamism of the sales teams and also a favourable market environment.

Revenue from private banking amounted to €89.6 million in 2013, an increase of 4.5% over 2012. Excluding the change in the Group's scope following the merger of Edmond de Rothschild Entreprises Patrimoniales with Edmond de Rothschild Corporate Finance, revenue was up 8% with stability of the gross margin at 66 bps (compared to 69 bps in 2012).

The increase in NBI and improved profitability of assets under management is explained by: — an increase in commissions on commitments of +11.9% over

2012 compared to an increase of +9.3% in average commitments compared to 2012 and a reinforced trend in the re-allocation of assets (arbitration of the interest rates range to the equity/convertible bonds range to reach +€372 million at the start of 2013)

— commissions on flows were slightly down (-5.2%) compared to 2012. Despite a lower turnover of individual securities, 2013 was primarily driven by an increase in subscription fees in connection with asset inflows and arbitration.

All told, net banking income for Private Banking contributed 28.5% to consolidated net banking income in 2013, against 26.4% in 2012.

OPERATING EXPENSES

Total operating expenses for Private Banking of €86.8 million in 2013 were up by +4.5% (+€3.8 million) compared to 2012 (€83.0 million). At €52.3 million, personnel expenses for Private Banking were up by +3.9% (+€2.0 million) over 2012, mainly due to the incorporation of the Advisory Desk teams. Other expenses were up slightly by 5.5% compared to 2012, related, in particular, to the incorporation of new teams and expenses related to the projects.

OPERATING INCOME

Improved NBI allowed absorbing the increase in overheads whilst generating a current gross operating result which, at 2.7 million, was up +3.4% over 2012. As a result, the cost/income ratio remained stable at 91%. As in earlier years, the cost of risk was marginal, reflecting the quality of this division’s commitments and risk management.

INCOME (LOSS) BEFORE TAX

Including the contribution from Banque de Gestion Edmond de Rothschild Monaco, Private Banking’s pre-tax income was €5.7 million in 2013, up by 11.8% over the previous year.


Asset Management …………………………………………………………………………………………………………………………………………………………….

Highlights of 2013 • Nearly €26 billion under management• Roll-out of the multi-specialist model based on six management centres• A transversal sales organisation starting to bear fruit from international clients• Significant sales success with institutional clients• Stronger coordination of the private equity teams• Exceptional fundraising of €192 million for BioDiscovery 4…………………………………………………………………………………………………………………………………………………………….

Third-party Asset Management is one of two strategic divisions at the Edmond de Rothschild group. Its offer covers all asset classes in the form of investment funds and dedicated management mandates. Available to both private and institutional clients, our range of funds is also marketed by many partner financial institutions (private banks, asset managers, insurance companies) as well as by independent financial advisors. Thanks to our sustained strategy of product innovation, we now have a range of funds that covers all asset classes. Our managers build their portfolios based on strong convictions which they formulate independently of changes in benchmark indices.

AN INTERNATIONAL MULTI-SPECIALIST

To satisfy the Group's asset management ambitions Edmond de Rothschild Asset Management adopted new governance with the arrival of Laurent Tignard, Global CEO Asset Management. Under the impetus of Philippe Uzan, Director of Long Only Management, Alexandre Col, Multi-management Director, and Mathieu Gilbert, Quantitative Management Director, management expertise is coordinated from six management centres (France, Switzerland, Germany, Hong Kong, Luxembourg, and the UK. All now rely on the same information system, the cornerstone of the organisational architecture. Globalisation and specialisation are brought together in a multi-specialist model relying on recognised expertise, such as equity management (European and American), bonds (convertible bonds and corporate debt), funds of hedge funds, currency overlay, asset allocation and even quantitative management. This offering is characterised throughout the group by a long-term performance objective through active management and strong convictions based on a tradition of research and innovation.

A POOLED SALES ORGANISATION

To best meet the needs of clients throughout the world and offer them, regardless of who they are, the same global offering and the same quality of service, a new sales organisation was put in place under the management of Guillaume Poli. Thanks to a cross-functional team of 50 salespeople, clients have a single entry point for the entire Group's offering. This organisation offers a perspective enabling the common problems of investors to be understood beyond borders. Pooling support resources, such as marketing or CRM, provides additional assistance to the sales approach.

... RESPONDING TO THE REQUIREMENTS OF AN INTERNATIONAL CLIENTELE

This new organisation has led to commercial success in the "core" markets of France, Switzerland, Germany and Italy and also on more "specific" markets such as the UK, Netherlands and Chile. The partnership with Nikko in Japan allowed raising €500 million thanks to the combined expertise of the Group. Likewise, the Hong Kong teams succeeded in selling convertible bond funds to Taiwan through their partnership with ManuLife. In Italy, the threshold of one billion euros of commitments under management was exceeded, attesting to a recognised ability to offer solutions adapted to institutional investors. Commitments in Israel also increased significantly, reaching a total of €1.5 billion. Indeed, the interest of institutional players is confirmed (alternative management, convertible bonds): the country posted the highest institutional market share of the Group and, since being created, has sold and marketed all of the Group's expertise. Finally, thanks to the cross-border sales approach, the fund Edmond de Rothschild US Value & Yield was able to be marketed across the private banking network of one of the major European banking groups.


STRONG CONVICTIONS FOR REMARKABLE PERFORMANCES

Based on conviction-based stock-picking, equity management was in the spotlight in a bullish market. With commitments of €1.2 billion and €1.5 billion respectively, the Edmond de Rothschild US Value & Yield fund and the range of convertible bonds once again responded to investor expectations. Positioned since the end of 2012 on European equities with a campaign entitled "Choose Europe", the Edmond de Rothschild Group not only benefited from a sharp rise in the indexes, but also delivered significant outperformance thanks to its active management. This resulted in a gross positive asset inflow, particularly on high-margin products, on a French market which, overall, recorded asset outflows. The flagship fund of the range, Edmond de Rothschild Tricolore Rendement, celebrated its 15th anniversary with commitments of €1.5 billion and annual performance of over 24%.

A RANGE OF CONSISTENTLY RECOGNISED FUNDS

In 2013, the asset management teams once again received several awards: — Agefi Actifs awarded an Actif d’or de la distribution to Edmond

de Rothschild Europe Synergy. — EDR Premiumsphere won Investissement Conseils’

management pyramid in the Best International Equities Fund category.

PERTINENT POSITIONING WITH INSTITUTIONAL CLIENTS

Thanks to the strong mobilisation of teams responding to requests for proposals, Edmond de Rothschild Asset Management responded to numerous requests from institutional players in France and abroad with notable success. Thus, two Italian mandates in diversified management were won; one for an amount of €160 million and the other for €230 million. In France, there were major subscriptions for existing institutional mandates.

A task force dedicated to sovereign funds was put in place to respond to the requirements of these high potential investors. By combining all the Group's strengths, solutions that are coordinated, consistent and high added value are now proposed to them.

A tailored sales approach, capitalising on international coverage, the solidity of the operational organisation and the multi-specialist synergies of the Group, allowed sovereign funds in Scandinavia and Asia to be approached.

Designed to encourage long-term investment in shares from companies which stand out due to their financial solidity, their ability to innovate and their visibility, the Strategic Investments Fund made its first investments in the capital of Arkema (6.05% stake) and the SEB Group (5.25% stake). This innovative vehicle allows institutional insurers to invest long-term in the capital of listed French companies, optimising further the regulatory requirements. The structuring and the management of the fund are handled by the Group's teams in Paris.


PRIVATE EQUITY

Private Equity recently added to its listed asset management activity, to give its private clients and institutional investors the opportunity to allocate a portion of their portfolios to a “medium-term” asset class that offers attractive returns and some decorrelation from the equity markets. This division is structured around 4 expertise: development capital, succession capital, Life Sciences and growth SMEs in China.

A French reference in private equity with over 25 years of experience and nearly €2 billion under management, this division deploys a strategy focused on supporting the entrepreneur and growing SMEs.

Exceptional success in biotechnologies BioDiscovery 4, the latest of a range of four capital investment funds dedicated to European companies in life sciences, raised €192 million, or 25% more than the previous fund. This exceptional closing position in a pure biotechnology sector where the amounts are generally less than €100 million testifies to the renewed trust of institutional investors and new relationships. However, the total amount of funds raised for specialised life sciences by Edmond de Rothschild Investment Partners, which has established itself as a key investor in Europe, came to approximately €450 million. Thanks to a team combining professionals from industrial and scientific backgrounds with financial experts, the fund identifies the best investment opportunities in France, with Allecra, and in Europe, with companies such as Complix, Oncoethix and JenaValve.

Sustained level of business in France and abroad

The Mid-Caps capital investment business was important. Winch Capital continued its divestments by selling its stakes in StarFlex, Manifesto and Saint-Aubin. For its part, Winch Capital 2 sold Fila but invested in Star Services, a French specialist in home deliveries, MCI, the world's no.1 in organising pharmaceutical and medical conferences, and Intescia (a spin-off of the media group Reed Business Information). As for Winch Capital 3, fund raising was initiated with an objective of €250 million.

The Cabestan Capital fund dedicated to small caps made four investments amounting to €16.5 million: Volta Expansion, Epsa, Smile and Iris Group. The fund was 42% called at year-end, with 9 portfolio lines. Fund holdings recorded solid performances over the year, particularly Edimark which returned to financial equilibrium, and Itesa and Marietton, thanks to their growth in earnings.

The EdR China fund had a great year for investments with three transactions effected. Following them, the fund completely ended its

investment period. Boosted by the success of this initial version, the EdR China 2 will be launched in 2014 with an objective of raising more than €100 million in 2014.

The EdR China fund had a great year for investments with three transactions effected. Following them, the fund completely ended its investment period. Boosted by the success of this initial version, the EdR China 2 will be launched in 2014 with an objective of raising more than €100 million in 2014.

The funds ERLF I, ERLF II and ERLSF were quite active in 2013 with two divestments, two acquisitions for portfolio lines and the spin-off from a stake in two separate companies. No new investment was made in 2013.


Stronger coordination The governance of Edmond de Rothschild Capital Partners was changed, with the Edmond de Rothschild Group increasing its stake to 100% of the capital of its subsidiary specialised in majority investments in Mid-Caps. Further to the resumption of the structure dedicated to Chinese private equity, Edmond de Rothschild Private Equity China, synergies were strengthened with ERES and Edmond de Rothschild Investment Partners.

Paris increased its international coverage with the recruitment of an Associate Director for Life Sciences in London and the concurrent opening of an office. International development continued in Milan through the exclusive partnership with Mast Capital Partners and in China with the Shanghai office. Thus, new synergies were created for the portfolio companies, such as the investment made in Sergent Major in China through Winch Capital.

BREAKDOWN OF ASSET MANAGEMENT RESULT


Net banking income 219,643 219,027 0.3%

Operating expenses (157,278) (174,000) (9.6)%


. direct (64,035) (71,873)

. indirect (17,374) (19,080)



Gross operating income 62,365 45,027 38.5%

Cost of risk - (688)

Operating income 62,365 44,339 40.7%

Share in net income of associates 86 (69)

Net gains or losses on other assets - -

Changes in the value of goodwill - -

Income (loss) before tax 62,451 44,270 41.1%


* Personnel expenses and other operating expenses as a percentage of net banking income.


NET BANKING INCOME

Assets under management at the end of the collective management period increased by almost €2.5 billion boosted mainly by the performance of the financial markets. In parallel, asset outflows fell to -€329 million, down 1.4%, particularly due to repeated commercial successes in particular on the Equities range (+€623 million) with a good orientation of the ranges US & International, Europe Equity and an increase in asset inflows during the second half on the convertibles' range. On the other hand, the diversified, funds of hedge funds and structured products ranges declined, marked by the lack of trust of investors for these asset classes.

NBI increased slightly by +0.3% over 2012 to be compared with average assets under management which were up by +3.1% compared to 2012 relating mainly to: — an increase in commissions on commitments: +2.0% over 2012

to be compared with the increase in average commitments, — a fall in turnover fees, -1.4% on 2012. As a result, the gross margin was 90 bps, down -2bps compared to 2012.

OPERATING EXPENSES

In 2012, Asset Management reduced its overhead expenses by -9.6% to €157.3 million. Personnel expenses for this division came to €81.4 million, compared to €91.0 million a year earlier. This -10.5% fall should be compared with the change in workforce further to the merger of the management companies Edmond de Rothschild Asset Management and Edmond de Rothschild Investment Managers. Other operating expenses for Asset Management (€75.9 million) also fell by -8.6% between 2013 and 2012. This change reflects the efforts made by the different asset management sectors to adapt their costs to an environment which remains highly uncertain.

OPERATING INCOME

With NBI stable at +0.3% and a -9.6% reduction in operating expenses, Asset Management posted a +38.5% increase in gross operating income for 2013, to €62.4 million. The cost/income ratio for this division stood at 69% in 2012, against 75% in 2012.


After the contribution from associates – mainly Edmond de Rothschild Limited in London and Zhonghai FMC – income before tax for the Asset Management division came to €62.5 million, up by +41.1% on the previous year.


Other Activities and Proprietary Trading CORPORATE ADVISORY SERVICES …………………………………………………………………………………………………………………………………………………….………

Highlights of 2013 • 24 transactions recommended by Corporate Finance• Strengthened synergies with private banking• Strengthening of the international network, with the opening of branches in Geneva and Madrid.…………………………………………………………………………………………………………………………………………………………….

The Corporate Finance teams of the Edmond de Rothschild Group advise clients on divestments, acquisitions, business valuations, financial engineering, strategic alliances, joint ventures and IPOs. They provide advisory services to companies and/or their shareholders under a schedule of obligations. Its strengths in serving businesses include independence, confidentiality, an absence of conflicts of interest, and an international network to assist clients in France and abroad.

ROBUST ACTIVITY IN A CHALLENGING ENVIRONMENT

After a low point in 2012, the mergers and acquisitions business in France recovered in 2013 but is still at levels below the historical highs. In this context, the Corporate Finance teams reported good performance with 24 transactions carried out, particularly cross-border ones. In particular, they assisted Fram in the sale of its hotel subsidiary in Spain and Dassault Systèmes in acquiring the control of a listed German company. Thanks to the cooperation with private banking, the sale of a business division of the Tagerim Group to the Foncia Group was successful.

STRENGTHENED SYNERGIES WITH PRIVATE BANKING

The Corporate Finance teams dedicated to supporting independent companies consolidated their expertise within the entity Edmond de Rothschild Corporate Finance and intensified the commercial conquest dynamic with Group's private banking division. This new organisation, which creates a significant amount of added value, can leverage the synergies with business clients, particularly family businesses. Investment bankers, private bankers and wealth engineers work together to provide business leaders with high added value, allowing for the incorporation of the strategic, industrial, wealth, legal and tax dimensions in all configurations of capital restructuring.

DEDICATED ADVISORY SERVICE WITH INTERNATIONAL REACH

The corporate advisory service responds to all corporate problems, regardless of the sector. Corporate Finance is global by nature and Edmond de Rothschild Corporate Finance naturally supports business leaders or their shareholders through its direct branches and partnerships throughout the world, regardless of their nationality or that of the company once Private Banking is set up. In particular, in May 2013, the Group opened up a corporate advisory service in Geneva and Madrid and is considering closer ties with the London teams at the start of 2014.


RESULTS OF OTHER ACTIVITIES AND PROPRIETARY TRADING


Net banking income 5,384 19,726 (72.7)%



. direct (31,137) (14,243)

. indirect (3,326) (2,081)



Gross operating income (32,728) 351 (9424.2)%

Cost of risk (89) (267)

Operating income (32,817) 84 (39167.9)%

Share in net income of associates - -

Net gains or losses on other assets 480 (463)

Changes in the value of goodwill (794) -

Income (loss) before tax (33,131) (379) 8641.7%

Cost income ratio* ns 88.0%

* Personnel expenses and other operating expenses as a percentage of net banking income (NBI).

NET BANKING INCOME

Corporate advisory services

Continued development in the second half of the year led to revenue of €10.6 million for the Corporate Advisory Services at the end of December, representing an increase of +€4.5 million over 2012 on a comparable basis.

Proprietary Trading

The decline of -€21.7 million from 2012 of revenue from proprietary trading was mainly marked by the provisions relating to the impairment of certain portfolio lines related to Private Equity and, to a lesser extent, to the fall in earnings from treasury and foreign exchange activities.

OPERATING EXPENSES

Corporate advisory services

The consolidation scope effect led to an automatic increase in operating expenses of +€3.2 million which includes +€2.4 million of personnel expenses.

Proprietary Trading

Operating expenses were up by +€13.3 million over 2012 due to: — An increase in personnel expenses related to exceptional items. — Other operating expenses were stable compared to 2012.


Income before tax for the "Other Activities and Proprietary Trading" segment declined significantly, to -€33.1 million.


OUTLOOK FOR 2014

In the context of a gradual exit from the crisis in Europe, the Edmond de Rothschild group is confirming its strong ambitions both in private banking and in asset management.

Private banking will accelerate its development in France and abroad with the arrival of Vincent Taupin, who is Chairman of the Executive Board of the French bank and becomes a member of the Group Executive Committee. As the model is based on regional presence, international coverage and synergies with the corporate advisory service will be strengthened whilst reaffirming its values of trust, discretion and proximity.

The globalisation of the asset management business line will intensify under the impetus of Laurent Tignard to develop its presence with its partners and institutional clients. Re-thinking our product range which started in 2013 will continue in 2014 to strengthen the Group's ability to have flagship funds with increased visibility and which can be sold in all markets by a multi-disciplinary sales force. The long tradition of product innovation will be continued in order to propose an ever-more performing offering to investors.

Again, sales development will be accompanied by a strengthening of numerous synergies in France and abroad.

INVESTMENTS IN SUBSIDIAIRIES AND AFFILIATES

During the year, La Compagnie Financière Edmond de Rothschild completed the following major transactions:

• Mergers by absorption :

— On 20 March 2013, backdated to 1 January 2013, the company Edmond de Rothschild Corporate Finance was merged by absorption by Edmond de Rothschild Entreprises Patrimoniales, with universal succession of corporate assets. This transaction required a prior capital increase of the absorbing company through the issue of new shares. The sole shareholder of Edmond de Rothschild Entreprises Patrimoniales,

La Compagnie Financière Edmond de Rothschild Banque, bought all the newly issued shares. Within the framework of this merger by absorption, the absorbing company Edmond de Rothschild Entreprises Patrimoniales changed its company name and, thus, assumed the name of the absorbed company, Edmond de Rothschild Corporate Finance. La Compagnie Financière Edmond de Rothschild Banque holds 100% of the capital of Edmond de Rothschild Corporate Finance.

— On 14 June 2013, La Compagnie Financière Edmond de Rothschild Banque, the sole shareholder of SH AURORE, decided to wind-up the latter through the universal succession of the company assets of SH AURORE to La Compagnie Financière Edmond de Rothschild.

— On 28 June 2013, La Compagnie Financière Edmond de Rothschild Banque, the sole shareholder of ERS, decided to wind-up the latter, through the universal succession of company assets of ERS to La Compagnie Financière Edmond de Rothschild.

• Acquisitions:

— During the year 2013, La Compagnie Financière Edmond de Rothschild Banque purchased their shares in this company from other shareholders of the subsidiary Edmond de Rothschild Investment Services Limited. La Compagnie Financière Edmond de Rothschild Banque holds as of 31 December 2013, 100% of the capital of Edmond de Rothschild Investment Services Limited.

— In October 2013, an investment was made in Eminvest and Valse Invest for 100% of their capital.

— Purchase of shares of Edmond de Rothschild Private Equity China Investment S.C.A. a company incorporated under Luxembourg law. The Bank held 28.02% of its capital as of 31 December 2013 against 22.63% on 31 December 2012.


CONSOLIDATED BALANCE SHEET

On 31 December 2013, the Group’s total consolidated balance sheet amounted to €2,264.5 million, down 7.8% compared to 31 December 2012 (€2,455.8 million). This change mainly reflects the decrease in repurchase agreements made with Group in-house funds as part of their cash management, due to the global economic and financial climate

ASSETS In thousands of euros 31.12.2013 31.12.2012

Cash, due from central banks and postal accounts 395,965 635,308

Financial assets at fair value through

profit and loss 250,488 346,805

Available-for-sale financial assets 477,163 377,424

Loans and receivables due from credit

institutions 306,790 417,354

Loans and receivables due from clients 473,069 294,220

Financial assets held to maturity - -

Current and deferred tax assets 159,664 192,810

Long-term assets 201,349 191,843

Total assets 2,264,488 2,455,764

LIABILITIES In thousands of euros 31.12.2013 31.12.2012

Financial liabilities at fair value through profit

and loss 317,985 349,538

Due to credit institutions 41,568 275,220

Due to clients 1,272,557 1,206,341

Current and deferred tax liabilities 252,787 223,070

Provisions 35,275 38,110

Subordinated debt - -

Group share of shareholders' equity 339,463 356,675

Net income attribuable to minority interests 4,853 6,810

Total liabilities 2,264,488 2,455,764

COMMITMENTS GIVEN AND RECEIVED BY THE GROUP

In thousands of euros 31.12.2013 31.12.2012

Commitments given

Loan commitments 123,059 139,788

Guarantee commitments 192,249 256,736

Commitments received



MAIN CHANGES IN CONSOLIDATED ASSETS

Cash, due from central banks and postal accounts records the Bank’s demand deposits with the ECB or the Banque de France. The significant reduction in this item is the result of the early repayment of the LTRO which took place in March 2013 for €250 million.

Total financial assets at fair value through profit and loss rose year-on-year, to €250.5 million at 31 December 2013, against €346.8 million at 31 December 2012. This item mainly includes short-term certificates of deposit from credit institutions (€36.1 million) used in the Bank’s cash management, as well as euro-zone government bonds acquired in the management of UCITS structured products (€15.4 million), futures derivatives carried at fair value and hedging the market risks associated with structured products (€30.1 million), and term loans from banks (€161.3 million), the largest share of which was with the Banque de France (€150.0 million). Note that, following the sale in 2011 of sovereign bonds of peripheral euro-zone countries, the Group, to date, no longer has any exposure to Greek, Italian or Spanish debt.


Available-for-sale financial assets, net of OTTI, were measured at fair value and came to €477.2 million at the end of 2013, up 26.4% over 31 December 2012 (€377.4 million). This rise is explained by the purchase of a negotiable debt instrument in the amount of €150 million within the framework of the investment of the Bank's excess cash with a 6-month maturity. This item also includes German government bonds (€59.6 million) and French government bonds (€15.9 million) which are hedged for interest rate risk. The balance of this item corresponds mainly to the lines of Group in-house UCITS held by Edmond de Rothschild S.A. in the context of pump-priming or sponsoring funds and by subsidiaries as part of their cash management.

Amounts due from credit institutions, made up of demand deposits (ordinary accounts and overnight loans) and collateralised repo transactions, declined to €306.8 million at the end of 2013 against €417.4 million at the end of 2012, down 26.5%. This change is mainly explained by a reduction in the volume of repo transactions - €278.8 million, partially offset by an increase in demand deposits for €168.3 million.

Transactions with clients (net of provisions), consisting of ordinary overdrafts and loans, were up 60.8% to €473.1 million at 31 December 2013 against €294.2 million at 31 December 2012. This change is mainly due both to the increase in overdraft current accounts of UCITS which, year-on-year, increased from €38.9 million to €102.5 million, and to the increase in current accounts excluding UCITS which recorded an increase of €66.7 million. Loans, for their part, increased by €48.5 million.

Current and deferred tax assets, down 17.2%, reflect the reduction in deposits made by the Bank for margin calls due to market trends.

Fixed assets came to €201.3 million at 31 December 2013 against €191.8 million at 31 December 2012. This item is mainly changing due to fixed IT developments.

MAIN CHANGES IN CONSOLIDATED LIABILITIES

Total financial liabilities at fair value through profit and loss amounted to €318.0 million at 31 December 2013, down 9.0% compared to 31 December 2012 (€349.5 million). This change was due mainly to the amount of structured issues, down by €94.5 million (€178.6 million at the end of 2013 against €273.1 million at 31 December 2012). At the same time, derivatives related to those issues also declined (€22.6 million against €41.1 million year-on-year). This movement is mainly offset by a loan of €100 million entered into with a Group counterparty having a weekly maturity.

Amounts due to credit institutions corresponded to current accounts, whose outstandings increased (€34.0 million at the end of 2013, against €12.6 million at the end of 2012). This item also includes, in 2012, a €250 million term loan from the ECB following the Bank's participation in the LTRO programme on 27 February 2012, which was repaid early in March 2013.

Amounts due to clients comprised demand and time deposits and savings accounts, and collateralised repo transactions with Group in-house funds as part of their cash management. All told, they increased by €66.2 million year-on-year, or +5.5% to come to €1.2726 billion euros as of 31 December 2013. This change is due to the rise in demand deposits +153.4 (from private clients, non-financial companies and mutual funds), as well as the reduction in repo transactions with the Group’s in-house funds, which totalled €96.2 million at the end of 2013 against €157.6 million a year earlier, combined with a lower volume of term credit accounts down €33.9 million.

Provisions fell from €38.1 million at the end of 2012 to €35.3 million as of 31 December 2013. This decrease is mainly due to the reversals of provisions related to the job protection plan under the reorganisation of the Asset Management activities, partially counterbalanced by an allocation to the Private Equity segment.


After, in particular, taking into account the 2013 result (€20.0 million), the partial redemption of the undated super-subordinated note that took place in August 2013 (nominal of €29.0 million), the equity of the Bank recorded a decrease of -4.8% to €339.5 million as of 31 December 2013.

Minority interests were relatively stable year-on-year (€4.9 million as of 31 December 2013 compared to €6.8 million at the end of 2012), mainly impacted by the redemption of the EdRCP securities previously held by the minority shareholders.

COMMITMENTS GIVEN AND RECEIVED BY THE GROUP

Loan commitments given to clients, which included commitments to invest in certain of the Group’s private equity funds, amounted to €123.1 million, against €139.8 million at the end of 2012.

Guarantee commitments given by the Group chiefly concern administrative and financial guarantees to clients and guarantee commitments to investors in structured, “formula” and “cushion” funds. Commitments by the Bank in favour of investors in structured funds to guarantee an initial net asset value or a rate of return linked to changes in an underlying (rate or index) totalled €97.2 million at 31 December 2013, against €171.1 million at 31 December 2012, down 43.2%, reflecting the net outflows of the structure management business.

Guarantee commitments received were from credit institutions and were stable at €20.3 million.

PARENT COMPANY FINANCIAL STATEMENT

PARENT COMPANY BALANCE SHEET

At 31 December 2013, the Bank’s total balance sheet stood at €2.20 billion, down 6.5%, against €2.35 billion in 2012.

The main balance sheet items, in thousands of euros, were as follows:

Assets 31.12.2013 31.12.2012

Cash accounts and interbank

operations 812,926 1,214,127

Loans to customers 599,176 411,565

Other financial accounts 201,876 262,832

Securities and fixed assets 585,318 465,031

Total 2,199,296 2,353,555

Liabilities 31.12.2013 31.12.2012

Cash accounts and interbank

operations 139,584 265,213

Client deposits 1,352,491 1,242,255

Borrowings represented by securities 181,885 292,412

Other financial accounts 233,282 263,764

Subordinated debt 21,732 51,719

Group share of shareholders’ equity 270,322 238,192

Total 2,199,296 2,353,555

On the asset side, cash accounts and interbank operations represented 37% of the Bank’s total balance. The total came to €813 million euros, against €1,214 million in 2012, a decline of €401 million or 33% following the repayment of the LTRO. Cash deposited with the ECB and the Banque de France amounted to €395 million at the end of 2013, or 18% of the Bank's total balance sheet, due to an environment of record low interest rates which continued in 2013. Current accounts with financial establishments increased significantly from €56 million at the end of 2012 to €222 million at the end of 2013.


Time deposits with credit institutions, which as of 31 December 2012 included collateralised repo transactions, came to €155 million at the end of 2013 (-€364 million). This change is due to the investment policy of monetary UCITS in a period of low interest rates.

Loans to clients came to €599 million at the end of 2013 against €412 million at the end of 2012, a decline of 46%. This relates mainly to loans granted to private clients (collateralised by securities) which mainly constitute a side line of wealth management.

Other financial accounts came to €202 million, compared with €263 million a year ago, a contraction of – 23%.

Securities and fixed assets amounted to €585 million at 31 December 2013 compared with €465 million at 31 December 2012, representing a 26% increase mainly due to short-term cash invested at the end of the year in negotiable debt instruments whose maturity is six months.

In liabilities, interbank transactions amounted to €140 million at the end of 2013 (€265 million at 31 December 2012). This reduction is mainly explained by the early repayment at the beginning of March 2013 of the loan taken out the previous year as part of the ECB LTRO programme.

Client deposits were up by 9% to €1.352 million at the end of 2013 compared with 1.242 million at the end of 2012. This change is mostly the result of the increase in demand deposits (both from private clients and from non-financial companies and UCITS). Further, there was a continued reduction in repo transactions with the UCITS of the Group which fell from €158 million in 2012 to €96 million at the end of 2013, further to the fall in interest rates.

Borrowing represented by securities amounted to €182 million, against €292 million year-on-year. This consisted mainly of Euro Medium Term Notes (EMTN) issued in connection with the structured products business.

Other financial accounts came to €233 million, against €264 million at the end of 2012, a decline of €31 million. This change is mainly due to income tax and to debts owed by the subsidiaries to the parent company within the framework of the group tax consolidation regime.

Subordinated debts, which amounted to €22 million at 31 December 2013 (€52 million at 31 December 2012), includes only the undated super-subordinated note issued by the Bank in June 2007, within the framework of strengthening the regulatory equity of the Group; this note was partially redeemed for €29 million nominal, in August 2013.

Elements relating to shareholders’ equity are as follows, in thousands of euros:


Capital 83,076 83,076

Reserves 130,522 130,522

Retained earnings 24,594 9,765

Total 238,192 223,363 (1) Before appropriation of net income for the year.

Net income for the year came to €32.1 million, against €14.8 million for 2012, an increase of 116.7%.


PARENT COMPANY INCOME STATEMENT

The Bank’s income statement is summarised as follows, in thousands of euros:

2013 2012

Net banking income 172,149 139,570

Personnel expenses (95,263) (59,328)

Other operating expenses (54,427) (61,884)

Depreciation (9,235) (8,275)

Gross operating income 13,224 10,083

Cost of risk 163 118

Net gains or losses on other assets 1,962 1,970

Extraordinary income or loss (255) 84

Extraordinary income or loss 17,036 2,574

Net income 32,130 14,829

Net banking income

At €172.2 million, the net banking income for 2013 is up by 23.3% over 2012 (€139.6 million).

This €32.6 million increase is mainly explained by the change in the item "revenue from the securities portfolio and other income" and, in particular, by the payment in 2013 of interim and additional dividends - distributed by the subsidiaries, particularly collective investment management subsidiaries. Revenue from the bank's available cash also improved due to the early repayment of the LTRO loan and the partial redemption of the undated super-subordinated note. The commissions on asset management increased slightly (+6% to 72.6 million euros), with the reduction in turnover fees being offset by the increase in financial fees. The entry fees received from subscription to UCITS units by clients were up by 16.4%. Trading transactions continued to be impacted by a historically low interest rate environment. As a result, this item was down €2.1 million in 2013, compared to 2012. Net banking income was also affected by allocations to provisions for private equity business. Net banking income was also impacted by allocations to provisions relating to the private equity segment.

Overhead expenses and depreciation At €159.0 million, overheads and depreciation increased by 22.8% compared to 2012 (€129.5 million).

The €29.4 million increase breaks down into: — An increase in personnel expenses of 60.6% (€95.3 million in

2013 compared to €59.3 million in 2012), related to the allowances for retirements in 2013 whereas the financial year 2012 recorded, on the other hand, high reversals of provisions;

— A 12.7% decrease in other operating expenses (€54.4 million in 2013 against €61.9 million in 2012);

— Lastly, depreciated amounted to €9.2 million in 2013, compared to €8.3 million in 2012, mainly, in particular, due to IT investments.

After overheads and depreciation, EBITDA amounted to €13.2 million, against €10.1 million in 2012.

Non-operating items

The net cost of risk came to a positive €0.2 million in 2013, against €0.1 million in 2012 reflecting the quality of the commitments of the Bank and its risk management policy.

Gains or losses on other assets, which stood at €2.0 million, consisted primarily of gains on the sale of Group securities net of provisions for impairment of financial assets.

As part of the Group's tax consolidation, income tax showed a positive balance of €17.0 million compared to €2.6 million in 2012.

Net income for the year came to €32.1 million, against €14.8 million for 2012, an increase of 116.7%.


SHARE CAPITAL

The share capital of €83,075,820 at 31 December 2013 is distributed as follows:

Edmond de Rothschild S.A. 4,813,272 representing 86.91%

Caisse de Dépôt et Placement du Québec 577,063 representing 10.42%

EdRRIT Limited 24,172 representing 0.44%

Various Group's employees shareholders 86,910 representing 1.57%

Other minority shareholders 36,971 representing 0.67%

Total 5,538,388 representing 100.00%

INFORMATION ON PAYMENTS TERMS (Articles L 441-6-1 and D 441-4 of the French Commercial Code)

At year-end 2013, the company’s payables to its suppliers are broken down by maturity as follows (in euros):

Payable schedule in

eurosGross amount Amount due

Accrued income

Within 30 days

Within 45 days

In more then 60

days

2012 1,123,277 645,400 421,788 56,089 - 2013 1,783,449 80,437 1,673,070 29,942 -


Social and environmental information COMPANY INFORMATION

One of the particularly important developments that occurred in 2013 was the change in the Human Resources philosophy. This reflects the real cultural change in the Group through the implementation of harmonised processes, unique for all employees, both in France and in the rest of the Group. This should enable the Group to strengthen transparency and equity to increase the motivation and commitment needed to achieve our collective ambition. The first Human Resources process on which we worked was the individual performance appraisal by putting in place a unified tool, thus contributing to the identity of the Edmond de Rothschild Group and assuring fair evaluation of performance. We also prepared for the harmonisation of another process: the salary review. If the Human Resources strategy aims to support employees in the transformation of the Group, in the long term it also wishes to attract the best talents, to develop and retain our employees as they are the primary source of wealth for the Edmond de Rothschild Group.

EMPLOYMENT

WORKFORCE

At 31 December 2013, the Bank and its subsidiaries employed 890 employees worldwide, with a total of 18 nationalities represented.

2013 2012

Employees in France 747 826

Employees outside France 143 148

Total employees 890 974

Employees in France include a very high proportion of 82% executives and senior management. This workforce is split evenly between men and women with women representing 48% of the workforce. 44% of executives are women, such that the companies of the Banking Group have kept to the commitment provided in the Bank's employee agreement of 31 January 2011 which planned this percentage for 2014. The average length of service continued to increase in 2013, from 8.7 to 9.5 years, with the average age climbing to 42.2 years against 41.2 years in 2012.

At 31 December 2013, 98% of employees in France were covered by a permanent contract; 48% of these positions were held by women.

MOVEMENTS

Of the 72 employees hired in 2013, 52 were under a fixed-term contract (including 30 summer interns). 58% concerned women. There were 150 departures, of which 51% were women and 22% were 45 years or older. This number also includes those leaving the company in 2013 following the job protection plan and voluntary early departure programme providing for the elimination of 66 jobs within the framework of the merger of Edmond de Rothschild Asset Management and Edmond de Rothschild Investment Managers. Employee turnover (calculated as the ratio of the number of open-ended contract departures to the monthly average workforce) was up 13% in 2013 against 9% in 2012.

The Bank and its subsidiaries are pursuing an active plan to attract young people to the business: the Bank employed 99 interns and 34 youth with work/study contracts in 2013, or approximately 70 staff at full-time equivalent.

Just like every year, the Edmond de Rothschild S.A. Group has developed partnerships with certain schools and training courses in order to establish a pool of young talent and participate actively in the vocational training of students. The Bank and its subsidiaries strengthened their presence at career fairs held by France’s elite graduate schools (grandes écoles) in 2013. Employees representing the core businesses of the Group attended 10 events, including at the following institutions: ESCP Europe, ESSEC Business School, Science Po Paris, Trium (a joint event for Ecole des Mines, Ecoles des Ponts and ENSTA), EDHEC, HEC, University of Paris-Dauphine and Reims Management School, and Rouen Business School.

RECENT GRADUATES

The Edmond de Rothschild group, mindful of the globalisation of its business, has also developed partnerships with schools and training courses in Switzerland, Luxembourg and also in Belgium, for example participating in events organised by HEC Liège, HEC Lausanne, Solvay University, University of Mons, Ecole Polytechnique Fédérale de Genève, and forum meet@uni.


SENIORS

In 2013, the share of employees aged over 50 slightly increased to 23%. The roll-out of development actions in favour of senior employees continued pursuant to the generation contract which extended the commitments made in the seniors' action plans established as of 1 January 2010. Since 2010, about forty experience interviews are held on average every year.

ORGANISATION OF WORKING TIME

Nearly 5% of the workforce – mostly women – has chosen to work part-time. All requests to switch to part-time were approved in 2013. Five employees in charge of IT security are part of a team that works in revolving shifts, including at night, as provided by the collective agreement in force. The level of absenteeism, 4.6%, fell slightly between 2012 and 2013*.

* number of working days of absence due to sickness in the year / open-ended contract and fixed-term

contract workforce (excluding alternates).

REMUNERATION POLICY

The Edmond de Rothschild group believes that strengthening the link between performance (individual and group) and reward, regardless of its components (salary, promotion, mobility) helps to strengthen transparency and equity so as to increase the motivation and commitment of employees - essential conditions for achieving our collective objectives. The Group formalised its remuneration policy in March 2010, in application of the French Ministerial Decree of 3 November 2009 and the professional standards of the French Banking Federation, issued on 5 November 2009, requiring financial institutions to guarantee a level of shareholders' equity that would not expose them to risk.

It has been amended to reflect the new provisions of the Ministerial Decree of 13 December 2010 and the joint provisions published [bank regulators] by the AFG, AFIC and ASPIM on 23 November 2010 on the remuneration policies of management companies. The variable remuneration of the Group's corporate officers, market operators and traders as well as internal control and risk management professionals, is now partially paid on a deferred and staggered basis under this system.

Precise rules for applying these principles are fixed each year, after analyses by the Finance, HR, Compliance and Risk Management departments, and validation by the Bank's Remuneration Committee. Our remuneration policy will be impacted in the coming months by the transposition of the Alternative Investment Fund Managers Directive (AIFMD), which entered into force on 22 July 2013 (to be applied in 2016 for variable remuneration paid for the financial year 2015), the Capital Requirements Directive (CRD4), which entered into force on 1 January 2014 (to be applied to variable remuneration paid

in 2015 for the financial year 2014), and the draft Undertakings for Collective Investment in Transferable Securities Directive (UCITS5). The main changes will concern the expansion of regulated staff in asset management businesses, the revision of pay structures for the employees concerned and the reinforcement of regulations on the control and publication of information about remuneration. Updating the remuneration policy will be subject to validation by the Remuneration Committee.

2013 2012

Annual payroll (in thousands of

euros) DADS

83,045 99,428

Percentage of fixed income increase 1.33% 2.60%

Bonus percentage of the fixed

income payroll on (31/12/(N-1))

36.15% 36.80%

Number of staff promoted to a

higher level

13 74

of which 54%

are women

of which 50%

are women

Payroll totalled €83 million, against €99.4 million in 2012, down 17%. In particular, it incorporates the reduction in workforce in 2013.

Under Articles L. 511-71 and L. 511-73 of the French Monetary and Financial Code introduced by the Banking Law of 26 July 2013 as modified by Order No. 2104.158 of 20 February 2014, notably transposing Directive 2013/36/EU known as "CRD IV", the ordinary general meeting must be consulted each year regarding the overall package of all types of remuneration paid during the previous financial year to persons performing the effective management of the company and to categories of personnel, including risk-takers, performing a control function, as well as any employee who, in view of their total revenue, falls within the same remuneration category and whose professional activities have a significant impact on the risk profile of the company or Group.

Shareholders will therefore be asked to issue an opinion on the remuneration paid out in 2013 to the aforementioned persons. Furthermore, Article L. 511-78 of the French Monetary and Financial Code transposing into French law the aforementioned CRD IV, now sets a limit on the variable component of 100% of the fixed component of total remuneration for the regulated population of the Group, unless approved otherwise by the general meeting up to a maximum ratio of 200%.

We are therefore going to put to the vote of the shareholders a resolution to approve a maximum ratio of 200% between the fixed and variable components of the total remuneration of each person belonging to the regulated population of the Group, with effect from any remuneration awarded for the financial year 2014, and until a decision is taken to the contrary.


SOCIAL RELATIONS

The last elections for employee representatives were held by the trade union (UES) in October 2011, to renew the terms of office of employees representatives and elected members of the Works Council. Members of these bodies are elected for 4 years. In 2013, 8 negotiations led to agreements within the UES. These were mostly agreements concerning the employee savings plan but these negotiations also covered other areas such as professional equality or the generation contract. In addition, the Works Committee and the Health and Safety and Working Conditions Committee are regularly informed and consulted about major projects involving the general functioning of UES entities and employee working conditions. The Works Committee also organises all social and cultural activities.

HEALTH, WELL-BEING AT WORK AND PSYCHOSOCIAL RISK PREVENTION

As regards accidents at work, in 2013 our frequency rate was 5.7 and our severity rate was 0.1 which represents 178 days lost out of 1, 216,499 hours worked1. Whilst no agreement was signed in 2013 with the trade union organisations on the specific subject of health and well-being at work, other agreements covered this issue particularly those concerning the generation contract or professional equality. In the context of preventing the stress which may be inherent in employment and changes in the working environment, the team leaders continued to be sensitive to this problem within the framework of new management training sessions. 29 managers, in three sessions, went on this training course in 2013. This action is being continued in 2014.

1 we calculate the frequency rate with the formula:

Number of lost-time accidents x 1,000,000

Number of hours worked

We calculate the severity rate with the formula:

Number of days compensated x 1,000

Number of hours worked

TRAINING

Developing technical/business and individual skills is a key element of the Human Resources strategy in order to support and prepare our employees and our Group for tomorrow's challenges. Career development, one of the main sources of commitment of our employees, is key to building the identity of the Edmond de Rothschild Group. In 2013, the Bank continued to strengthen its professional training programme for its employees and those of its subsidiaries. In all, 730 people signed up for training, representing €1.6 million, or 1.9% of payroll. The 2013 training plan continued with the actions started in 2012; it will continue in 2014 by taking consideration of the size of the Edmond de Rothschild Group whilst keeping the same guidelines in terms of developing the skills and expertise of employees. Most of the actions involve “personalised” training, the main objective of which continues to be supporting every employee in their professional development by offering content tailored to the specific needs of each activity and business.

France Group entities 2013 2012

Number of staff trained at least once during the year

63% 54%

Percentage of women among trainees 47% 46%

Total training hours 7,195 8,949

Annual budget for training (in thousands of euros) 1,608 1,919

share paid to the training insurance funds 40% 39%


EQUAL TREATMENT

An action plan on professional equality between men and women was adopted in 2012, after receiving a favourable opinion from the employee representative bodies. Several actions were undertaken in three areas: recruitment, training and professional promotion. A new key area of action was defined by the amendment of 22 February 2013: remuneration.

2013 2012

Percentage of women executives in France among total executives

43.80% 43.20%

Percentage of unclassified women executives in France among total unclassified executives 23.60% 23.50%

As such, in order to meet its target of 45% women managers by 2015 (exceeding the target set by the sector), the Bank strives to ensure the balanced promotion of men and women. It therefore offers certification courses aimed at women, and more specifically non-managers, which include a mechanism for validating knowledge gained by experience. Beyond this framework prompted by regulations, ensuring professional equality between men and women is a major concern of the Human Resources philosophy. A new annual performance review was rolled-out this year within the Group which includes a discussion between the employee and his or her manager about balancing work and private life. Lastly, an agreement on the generation contract mechanism was signed with the corporate partners on 16 December 2013, whose objective is to encourage the integration of young people in the company but also to improve the integration and maintenance in employment of the older employees. This agreement will apply for an initial period of three years during which particular attention will be paid to these populations in order to assure, particularly through interviews or training actions, that they enjoy equal treatment. In 2013, the number of handicapped workers fell by two full-time workers. The integration of handicapped employees is and remains one of our priorities for the coming years, particularly in terms of the arrangement of workstations.


49,8%

35,9%

8,4%5,9%

3,4%

16,6%0,3%

44,6%

0,0%17,1%

17,9%

External services Paper and

consumables

53%

46%

1%

FSC labeled paper

Other paper 100% recycled

paper

Electricity

Steam

Gas

Offices and fixed equipment

Froid

ENVIRONMENTAL INFORMATION

Actions to reduce the environmental footprint of the bank's activities continued to bear fruit during fiscal 2013, supporting the initiatives of the strategic plan for better control of operating expenses. The main results achieved this year were the reduction in greenhouse gas emissions by 6.3% and paper consumption by 19.4 tonnes.

Paper consumption 62,2 t

Year 2013 2012 2011 2010

Quantity of CO2 (tonnes)

8,667 9,249 10,752 9,532

Quantity of CO2 (tonnes/employee) 8.15 8.15 8.03 8.03

Greenhouse gas emissions

Consumed energy

ENVIRONMENTAL POLICY

The Sustainable Development Department coordinates the environmental initiatives taken by the Bank and its subsidiaries. It has been placed under the responsibility of the Human Resources Department of the Edmond de Rothschild Group since April 2013 in order to ensure cross-Group uptake of the environmental policy in all its entities.

Based on carbon footprint analyses (Bilan Carbone®) done since 2010, identifying the main sources of greenhouse gas emissions has led to the putting in place of monitoring indicators, awareness actions and selection criteria to manage the direct environmental impact of running our business. These actions supplement the current business continuity plans designed to prevent and manage the extreme risks to which banking operations are exposed. During 2013, the IT Department transferred from the bank's IT rooms to data centres offering a very high quality infrastructure. These centres, built and operated to meet our critical requirements, provide a secure and optimised technical environment. In environmental management terms, they particularly provide high added value solutions in electric power management and the air conditioning needs of the sites, thus contributing to our Green IT approach. On transport, the company car awarding and selection policy led to a continued improvement of the fleet according to environmental criteria, with a major reduction in the tax on company cars. Continuing with its cycle of awareness about the issues of biodiversity initiated in 2012, a third bee hive was installed in the immediate vicinity of our Parisian facilities. The honey collected and its packaging have attracted a large number of employees intrigued by this all natural Parisian production. A "discover bee-keeping" afternoon was also organised by the Works Council for children of employees. The Bank's employees are made aware of environmental matters and certain environmental activities, particularly through the Group's internal magazine. In April 2013, the environmental results of the Bank in France were notified to all Group employees in an EdR Mag article.

SUSTAINABLE USE OF RESOURCES

Paper consumption continued to fall and switching to the use of recycled or FSC labelled paper increased. Thanks to the collective effort of the Group's employees in France2 and to the optimisation of printing equipment, paper consumption in 2013 fell by 24% compared to 2012; since 2010 it has halved. The production of certain documents, such as the annual report, was rationalised, helping both to reduce costs and to reduce the use of paper. The commissioning of a new more functional extranet site for our clients also helped to accelerate the process of adopting electronic account statements and thus reduce printing. In 2014, a new purchasing policy will be put in place for the Edmond de Rothschild Group and this will take into account the environmental and social stakes as regards the practice of its suppliers and subcontractors and also the Group's impact on their activities. 2 The paper consumption presented here corresponds to France only.

Freight

8 668 t éq. CO2

8 822 MWh

Commuting and travel

Waste

Energy and air-


35,9%

0,5%

24,8%6,2%

4,2%

28,3%

0,0% Employees

Welfare/ Employees coverage/contingency

Shareholders

Profit reinvested in development and

equity consolidation

Suppliers and partners

Non recurring

49,0%51,0%

SRI shares positive selection

WASTE MANAGEMENT

The end of life of our IT equipment continued to be the subject of special attention. Depending on the type of equipment, specialised recycling companies were used to give a second life to computers which could be recycled or to make use of the components and materials contained in them. To a certain extent, donations to general interest associations were made in order to help them improve their IT equipment. Sorting bins were put in place in all of the Bank's sites in Paris so that employees can do responsible sorting. In 2013, 540 kilos of aluminium, 9 tonnes of plastic and 594 toner cartridges were sorted on site. As regards paper recycling, any document to be thrown away is put in the employees' individual bins and then transferred to secure containers. These are then processed by a specialised company, Shred-it. In 2013, 82.5 tonnes of paper were processed, equal to 938 trees saved.

CARBON REPORT

The carrying out of a carbon footprint analysis (Bilan Carbone®) on all our activities for the fourth consecutive year illustrates the importance attached to the regular monitoring of the results of our environmental actions. The reduction in greenhouse gas emissions in 2013 was mainly achieved by reducing air travel. This reduction also accompanied the reduction in the Bank's workforce. The relocation of the computer room previously located in the head office of the Bank will, over the coming years, lead to a sharp reduction in the building's electricity consumption. This will only be partially brought over to the new data centres whose design has, from the start, been considered in terms of energy efficiency.

ENTERPRISE COMMITMENTS IN FAVOUR OF SUSTAINABLE DEVELOPMENT 2013

2013 saw the continuation of commitments to the principles of the United Nations Global Compact, with the Bank favouring a long-term perspective in operating its Private Banking and Asset Management businesses. In this context, our support extends to the provisions of the fundamental conventions of the International Labour Organisation. Our commitments to sustainable development continued to be expressed through actions directly connected with our financial activities and the company's organisation.

TERRITORIAL, ECONOMIC AND SOCIAL IMPACT OF THE BANK'S ACTIVITIES

Breakdown of bank revenues by expense item or appropriation

323 M€

SOCIALLY RESPONSIBLE INVESTMENT

Assets managed using Ethical, Social, Governance (ESG) strategies*:

3 102 M€

i.e. 13.6% of assets managed by EdRAM

The assets under management of Edmond de Rothschild Asset Management according to the SRI strategies (Socially Responsible Investment) increased by 26% in 2013 thanks to the good performance of the SRI funds but also thanks to the reinforced trust of our existing clients this year, particularly with subscription in institutional mandates. Extra-financial analysis expertise, which initially focused on European zone securities, was extended in 2013 to the US zone with the implementation of a Best-in-Class selection process on North America at the request of an institutional client.

Edmond de Rothschild Asset Management continues to support the research of the Sustainable Finance and Responsible Investment Chair of the Ecole Polytechnique and of the Toulouse School of Economics. This year, Edmond de Rothschild Asset Management created a dedicated publication "SRI chronicles" published quarterly which showcases topics specific to responsible investment and highlights within each edition "the academic point of view", a contribution from a researcher on current topics. Edmond de Rothschild Asset Management continues to participate in the works of the AFG, the FIR and Eurosif on these subjects and in October 2013 sponsored the Novethic conference, dedicated to "ESG strategies for Responsible Investors" for the 2nd year in a row. Edmond de Rothschild Asset Management and Edmond de Rothschild Investment Partners are signatories of the United Nations Principles for Responsible Investment (UN-PRI). * Socially responsible investment by positive selection is based on the identification of the most successful companies in the area of ESG; this commitment relies on continuous dialogue with business leaders.

SRI shares commitment

Amortizations


SKILLS SPONSORSHIP AND PRO BONO MISSION: CLOSE COLLABORATION WITH THE EDMOND DE ROTHSCHILD FOUNDATIONS

For the third consecutive year, the Edmond de Rothschild Group has supported the PasserElles professional insertion programme deployed by the non-profit recruitment firm Mozaïk RH. This programme, designed for young female graduates from different backgrounds looking for employment, combines group workshops, individual coaching with recruitment professionals and personalised monitoring by a sponsor from one of the partner companies of Mozaïk RH. In this context, the Bank proposed to its entire staff to personally support one of these candidates. For the session which started in October 2013, 22 employees of the Bank - compared to 15 for the previous session - thus volunteered to be the mentor one of the young women selected or to run one of the workshops co-organised with Mozaïk RH. A base of three meetings with the accompanied young woman is recommended, in order to showcase her strengths, manage her network, prepare for interviews or for taking up employment.

The Bank also continued to invest in the Scale Up programme, created by the Edmond de Rothschild Foundation and the ESSEC to accelerate the change in scale of social enterprises. For the duration of the programme, the selected companies benefit from skills sponsoring provided by some of our employees on issues of strategy, finance and communication. This professional expertise completes the educational content of the programme, which aims to provide the management teams of these unique enterprises the tools needed to define, implement and finance their social business plan. In 2013, five social enterprise winners of this programme - Les Ateliers du Bocage, Les Soieries du Mékong, Gecco, Recyclivre and Tissons la Solidarité - were mentored by experts from the Bank from the corporate advisory services and private equity areas. There will be eight enterprises in 2014.

SOCIAL ENTERPRISE COLLABORATION POLICY

With the creation of the Scale Up programme, the Bank has turned more proactively toward some of these social enterprises with a view to supporting business models that combine social impact and financial sustainability. In addition to the collaborations initiated with Puerto Cacao and Extramuros, two enterprises from the 2010 Scale Up programme, one of which works in the manufacture and sale of fair trade chocolate and the other in the recycling of used materials to design promotional objects, there are the business relationships with ATF Gaia and Les Soieries du Mékong. ATF Gaia, winner of the 2011 Scale Up, is a company whose mission is to give a second life to electric and electronic equipment whilst respecting the environment and encouraging the employment of handicapped people. For their part, Les Soieries du Mékong, ScaleUp 2012, are specialised in the manufacture and sale of silk scarves hand-woven in Cambodia; they have been selected to design gifts for our clients.

As in previous years, the marketing teams continued to select suitable enterprises to perform different printing and design works. In 2013, a total of almost 900 hours of work were entrusted to these specialised workshops. Apart from this collaboration with the social enterprises, the Bank's commitment to its stakeholders was accomplished through the daily exchanges taking place with its clients, employees and their representatives, suppliers and subcontractors, national authorities and those specific to the financial sector, and with the other economic players. In 2014, the Edmond de Rothschild Group will be looking into its processes of making commitments to stakeholders in the context of its sustainable development strategy.


FAIR TRADE PRACTISES

Absolute compliance with the rules laid down in the Code of Ethics issued to each employee and available on the Company extranet is an obligation enforced by the Compliance and Control department. This Code states, specifies and supplements the laws and regulations and the best ethical practices usually observed in France. Every employee must at all times carry out his or her activities with the loyalty, skill, care and diligence required, in the best interest of the clients and for the integrity of the market. The Code is based on the fundamental duty to know one’s client, to recall the Bank’s obligations in the fight against money laundering and the funding of terrorist activities. Also covered are the prevention of market abuse, the ethics provisions applicable to employees and the rules relating to the use of IT and communication resources. Since 2013, the Bank has been using an e-learning tool developed by the CFPB (Training Centre for Banking Professionals). Under the aegis of the French Banking Federation, the CFPB took the initiative to bring together the different banking sectors to build a new training tool for anti-money laundering and the financing and terrorism. With the assistance of the AMAFI and TRACFIN, the module-based training programme has been redesigned in a more proactive and fun sense, encouraging inductive leaning and good prevention practices identified by the profession. These learning courses are specific to each business line. Private Banking, Support, Asset Management, Insurance, and Investment Banking. 336 Bank employees, corresponding to 95.45% of the employees concerned, were trained with this e-learning tool in 2013.


REPORTING METHODOLOGY FOR SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION

1. Selection of indicatorsIn order to monitor the performance of the Sustainable Development approach initiated since 2011, the Bank identified the most relevant indicators as regards its activities and its areas of action, in reference to the implementing decree of Article 225 of the Grenelle Act 2, the principles of the United Nations Global Compact and different CSR recognised reference bases. Some key indicators were highlighted for their ability to facilitate the understanding of our environmental, social and societal challenges and the management of our actions: Environmental component: the carbon footprint analysis,

Bilan Carbone®, of all its activities, as an overall measure of greenhouse gas emissions, paper consumption, and direct energy consumption.

Social component: change in payroll, the training policy, and the percentage of women in management.

Societal component: SRI commitments. Some indicators required by the decree are not included in

the report insofar as the Banking department activities are not concerned by these issues: these are noted in the compliance table below.

2. Scope of the reportingThe environmental indicators cover all of the bank's group sites, unless otherwise indicated. Some missing data for calculating the Bilan Carbone®, mainly for sites outside France, have been estimated using extrapolation or equivalence. Apart from the total workforce and the payroll which concern the entire Bank and its subsidiaries, the social indicators relate to the workforce of the Bank in France.

3. Organisation, resources and controlThe Sustainable Development Department, which reports to the Director of Human Resources, a member of the Executive Committee of the Edmond de Rothschild Group, is in charge of coordinating the resources dedicated to managing the CSR indicators, in collaboration with the employees appointed by the subsidiaries and departments concerned. Specific tools and procedures, including the definition of each indicator and its calculation methodology, have been used: Managing environmental indicators relies on the Enablon

software whose functions cover the collection, consolidation and conservation of data.

The annual report on the greenhouse gas emissions of the Bank is prepared in accordance with the methodology of the Association Bilan Carbone, taking into account the direct and indirect emissions (scopes 1 and 2), excluding emissions related to the investments made. The social indicators are collected and consolidated by the Human Resources Department, taking into account the specificities of the employment regulations in each country (for example as concerns the equivalence of the status of "senior manager" for management positions held abroad).

The data related to the Bank's societal commitments are aggregated from the information submitted by the entities concerned according to three categories: sponsorship, responsible investments and responsible purchasing strategies.

The control and validation of the CSR indicators are assured by a mechanism involving three levels of responsibility, operational in the entities concerned, second level by the Sustainable Development Department and in fine by the Human Resources Department. This mechanism aims to guarantee the sincerity and consistency over time of the information contained in the reports.


Presence of environmental, social and societal information published in respect of the Grenelle 2 Law

Subject to the provisions of the third paragraph of Article R. 225-105, the Board of Directors or the Executive Board of the company which meets the conditions laid down in the first paragraph of Article R. 225-104 mentions in its report, pursuant to the provisions of the fifth paragraph of Article L. 225-102-1, the following information (Implementing Decree of the Grenelle 2 Law No. 2012-557 of 24 April 2012 on transparency requirements for companies as regards social and environmental issues):

This table refers to the page where the information is contained or explains why the information is not present.

COMPANY INFORMATION

a) Employment

- The total workforce and the breakdown of employees by gender, age and geographic zone

p.42

- Recruitments and redundancies p.42

- Remuneration and related changes p.43

b) Organisation of work

- Organisation of working time p.43

- Absenteeism p.43

c) Employee relations

- The organisation of social dialogue, particularly the procedures of informing, consulting and negotiating with personnel

p.44

- Report on collective agreements p.44

d) Health and safety

- Health and safety conditions at work p.44

- Report on agreements signed with the trade union organisations or the personnel representatives on health and safety at work

p.44

- Accidents at work, particularly their frequency and severity, and also occupational diseases

p.44

e) Training

- The training policies implemented p.44

- Total number of training hours p.44

f) Equal treatment

- The measures taken to encourage equality between men and women

p.45

- The measures taken to encourage the integration of handicapped people

p.45

- The anti-discrimination policy p.45

g) Promotion of and compliance with the provisions of the fundamental conventions of the International Labour Organisation related to:

- Compliance with the freedom of association and the right to collective bargaining

p.47

- Eliminating discrimination as regards employment and profession

- Eliminating forced or compulsory labour

- The effective abolition of child labour


ENVIRONMENTAL INFORMATION a) General environmental policy

- Organise the company to take into account environmental issues, and where appropriate the environmental evaluation and certification steps

p.46

- Employment training and information actions on protecting the environment

p.46

- The resources dedicated to preventing environmental risks and pollution

Given its tertiary activity, the EdR group is not exposed to any environmental or pollution risks

- The amount of the provisions and guarantees for environmental risks

Given its tertiary activity, the EdR group is not exposed to any environmental risks

b) Pollution and management of waste

- The measures to prevent, reduce or repair emissions into the air, water and soil seriously affecting the environment

Given its tertiary activity, the EdR group does not have any significant emissions into the air, water and soil

- Waste prevention, recycling and elimination measures

p.46

- Consideration of noise pollution and any other form of pollution specific to an activity

The activity of the EdR group is not likely to cause noise pollution or any other form of pollution specific to its activity

c) Sustainable use of resources

- Water consumption and water supply in accordance with local constraints

The activity of the EdR group focuses on financial services and does not significantly impact water consumption, which is limited to the daily consumption of employees. Monitoring of this indicator will be gradually implemented

- Consumption of raw materials and the measures taken to improve efficiency in their use

p.46

- Energy consumption and the measures taken to improve energy efficiency and the use of renewable energies

p.47

- The use of soil The activity of the EdR group focuses on financial services and does not significantly impact the use of soil; the premises are not located in sensitive zones

d) Climate change

- Greenhouse gas emissions p.46

- Adaptation to the consequences of climate change

Given its activity, the EdR group is not faced with direct consequences of climate change

e) Protection of biodiversity- The measures taken to protect or develop biodiversity

p.46

COMPANY INFORMATION a) Territorial, economic and social impact of the company's activities

- In terms of employment and regional development

p.47

- On the neighbouring or local populations

p48

b) Relations with stakeholders

- The conditions for dialogue with these persons or organisations

p48

- Partnership or sponsorship actions

p48

c) Subcontracting and suppliers

- Consideration in the company's purchasing policy of social and environmental issues

p.46

- The importance of subcontracting and consideration in relations with suppliers and subcontractors of their social and environmental responsibility

p.46

d) Fair trade practices

- The actions taken to prevent corruption

p.49

- The measures taken to encourage the health and safety of consumers

p.48

e) Other actions taken in favour of human rights

- Other actions taken in favour of human rights

p.48

Information not available


Report of one of the Auditors on the social, environmental and societal information included in the financial report Year ended 31 December 2013

Ladies and Gentlemen,

As statutory auditor of La Compagnie Financière Edmond de Rothschild SA, designated as an independent third party, whose accreditation application was accepted by the COFRAC, we hereby present to you our report on the consolidated social, environmental and societal information related to the financial year ended 31 December 2013, presented in the financial report (hereinafter the "CSR Information", pursuant to the provisions of Article L. 225-102-1 of the French Commercial Code.

COMPANY RESPONSIBILITY

It is the responsibility of the Executive Board of La Compagnie Financière Edmond de Rothschild to prepare a financial report containing the CSR information provided in Article R. 225-105-1 of the French Commercial Code, prepared in accordance with the Social Reporting Procedure and the Environmental and Societal Reporting Procedure used by La Compagnie Financière Edmond de Rothschild (hereinafter the "Reference Documents"), a summary of which is given in the financial report in the paragraph "Reporting Methodology for Social, Environmental and Societal Information" and which are available on request from the Sustainable Development Department of La Compagnie Financière Edmond de Rothschild.

INDEPENDENCE AND QUALITY CONTROL

Our independence is defined by the regulatory texts, the profession's code of ethics and the provisions provided in Article L. 822-11 of the French Commercial Code. Further, we have implemented a quality control system which includes documented policies and procedures to ensure compliance with the rules of ethics, rules of professional conduct and the applicable legal and regulatory texts.

RESPONSIBILITY OF THE STATUTORY AUDITORS

Based on our work, we are responsible for: - certifying that the required CSR information is presented in the

financial report or, in case of omission, is explained pursuant to the third paragraph of Article R. 225-105 of the French Commercial Code (Declaration of the inclusion of CSR Information);

- giving a conclusion of moderate assurance on the fact that the CSR information, overall, is presented, in all its significant aspects, in a sincere manner in accordance with the Reference Documents (Substantiated opinion on the sincerity of the CSR Information).

Our work was performed by a team of 4 people between 17 December 2013 and 3 April 2014, lasting approximately 2 weeks. To assist us in our work, we made use of our CSR experts. We conducted the work described below in accordance with the professional conduct standards applicable in France and with the Decree of 13 May 2013 laying down the terms and conditions in which the independent third party performs its mission and, concerning the substantiated opinion of sincerity, with the international standard ISAE 30001.

DECLARATION OF THE INCLUSION OF CSR INFORMATION

Based on interviews conducted with the managers of the departments concerned, we became aware of the explanation of sustainable development actions, depending on the social and environmental consequences related to the company's activity and its societal commitments and, where appropriate, the resulting actions or programmes. We compared the CSR information presented in the financial report with the list provided by Article R. 225-105-1 of the French Commercial Code. In the absence of some consolidated information, we checked that explanations were provided in accordance with the provisions of paragraph 3 of Article R. 225-105 of the French Commercial Code.

We have verified that the CSR information covered the consolidated group, namely the company and its subsidiaries within the meaning of Article L. 233-1 and the companies it controls within the meaning of Article L. 233-3 of the French Commercial Code with the limits specified in the chapter “ Reporting Methodology for Social, Environmental and Societal Information ". Based on this work and account taken of the limits mentioned hereinabove, we certify to the presence in the financial report of the required CSR information.

1 ISAE 3000 – Assurance engagements other than audits or reviews of historical financial information


SUSTANTIATED OPINION ON THE SINCERITY OF THE CSRINFORMATION

Nature and extent of the work

We conducted about decade interviews with around decade people responsible for preparing the CSR information in the departments responsible for the information gathering processes and, where appropriate, those responsible for the internal audit and risk management procedures, in order to: - assess the appropriate nature of the Reference Documents as

regards their relevance, their completeness, their reliability, their neutrality, and their ability to understand, taking into account, where appropriate, the best practices of the sector;

- confirm the implementation of a process for collecting, compiling, processing and checking to ensure the completeness and consistency of the CSR information and to understand the internal audit and risk management procedures relating to the preparation of the CSR information.

We determined the nature and extent of our tests and checks in accordance with the importance of the CSR Information in relation to the characteristics of the company, the social and environmental stakes of its activities, its sustainable development policies and sector-based best practices. For the CSR information that we considered the most important, identified in the Appendix to this report: - for the Compagnie Financière Edmond de Rothschild SA, parent

company, we consulted the documentary sources and conducted interviews to corroborate the qualitative information (organisation, policies, actions), we implemented analytical procedures on the quantitative information and checked, based on surveys, the calculations and the consolidation of the date and checked their consistency and their concordance with the other information contained in the financial report;

- as regards a representative sample of entities which we selected, depending on their activity, their contribution to the consolidated indicators, their base and a risk analysis, we conducted interviews to check the correct application of the procedures and to identify potential omissions and we implemented detailed tests based on sampling, consisting of checking the calculations made and reconciling the data from the supporting documents. The sample thus selected represents on average 84% of the workforce and 62 to 97% of the quantitative environmental information.

For the other consolidated CSR information, we evaluated their consistency in relation to our knowledge of the company.

Finally, we assessed the relevance of the explanations relating, if any, to the total or partial absence of some information.

We believe that the sampling methods and sample sizes we used by exercising our professional judgement allow us to make a conclusion of moderate assurance; assurance of a higher level would have required more extensive review works. Due to use of sampling techniques, as well as other limits inherent in the operating of any IT and internal audit system, the risk of non-detection of a significant anomaly in the CSR Information cannot be completely eliminated.

Conclusion

Based on our work, we have not revealed any significant anomaly likely to call into question the fact that the CSR Information, in its entirety, is presented sincerely in accordance with the Reference Documents.

Done at Neuilly-sur-Seine, on 22 April 2014

One of the Auditors of La Compagnie Financière Edmond de Rothschild PricewaterhouseCoopers Audit

Jacques Lévi Sylvain Lambert Partner Partner of the

Sustainable Development Department


ANNEX: LIST OF INFORMATION WE CONSIDERED THE MOST IMPORTANT

Quantitative social information

- Total workforce as of 31 December 2013, breakdown by gender and by geographic region, and percentage of employees under an open-ended employment contract;

- Recruitments and redundancies for cause; - Male-female equality - percentage of female executives and

women in management; - Number of hours of training, percentage of employees who

attended at least one training course in the year and percentage of women among the trainees.

Qualitative social information

- Organisation of working time; - Employee relations; - Remuneration policy. Quantitative environmental information

- Consumption of energy by source; - Business trips by train, plane and car; - Greenhouse gas emissions (scopes I, II and III). Qualitative societal information

- Territorial, economic and social impact of the company's activity and commitments managed in accordance with the ESG strategies;

- Enterprise collaboration policy; - Skills sponsorship and pro bono actions; - Fair trade practices .


Observations of the Supervisory Board

On the report of the Executive Board and on the financial statements for the year ended 31 December 2013

To the Shareholders,

In accordance with French law, the company’s Executive Board has submitted to us within the prescribed time limit, for our examination and review, the financial statements for 2013 together with its report to be presented to you at the Annual General Meeting.

We have examined the report and have no observations to make or any information to add concerning the company’s management or the financial statements for 2013. The financial statements are a confirmation of the information provided to us during the year.

We recommend that you approve these financial statements at the Annual General Meeting of Shareholders.

The Supervisory Board


Consolidated Financial Statements and Notes

IFRS CONSOLIDATED BALANCE SHEET In thousands of euros

Assets 31.12.2013 31.12.2012

Cash, due from central banks and postal accounts 3.1 395,965 635,308

Financial assets at fair value through profit and loss 3.2 250,488 346,805

Available-for-sale financial assets 3.3 477,163 377,424

Loans and receivables due from credit institutions 3.4 306,790 417,354

Loans and receivables due from clients 3.5 473,069 294,220

Financial assets held to maturity 3.6 - -

Current tax assets 13,948 7,690

Deferred tax assets 978 5,708

Accruals and other assets 3.7 144,738 179,412

Investments in associates 3.8 55,634 54,184

Tangible assets 3.9 38,584 36,501

Intangible assets 3.10 29,424 23,676

Goodwill 3.11 77,707 77,482

Total assets 2,264,488 2,455,764

Liabilities 31.12.2013 31.12.2012

Financial liabilities at fair value through profit and loss 3.12 317,985 349,538

Derivatives used for hedging purposes 3.13 7,612 10,465

Due to credit institutions 3.14 33,956 264,755

Due to clients 3.15 1,272,557 1,206,341

Borrowings represented by securities - -

Current tax liabilities 11,104 2,323

Deferred tax liabilities 1,672 2,462

Accruals and other liabilities 3.7 240,011 218,285

Provisions 3.16 35,275 38,110

Subordinated debt 3.17 - -

Shareholders’ equity 3.18 344,316 363,485

Group share of shareholders’ equity 339,463 356,675

. Capital stock and share premiums 201,195 230,195

. Reserves 102,092 93,409

. Unrealised or deferred gains and losses 16,097 7,211

. Earnings for the period 20,079 25,860

Net income attributable to minority interests 4,853 6,810

Total liabilities 2,264,488 2,455,764


IFRS CONSOLIDATED INCOME STATEMENT In thousands of euros

31.12.2013 31.12.2012

+ Interest and similar revenues 4.1 37,549 40,960

- Interest and similar expenses 4.2 (30,771) (37,796)

+ Fee income 4.3 398,438 391,271

- Fee income (expense) 4.3 (86,105) (88,502)

+/- Net gains or losses on financial instruments at fair value through profit and loss 4.4 12,349 11,409

+/- Net gains or losses on available-for-sale financial assets 4.5 (8,485) 5,721

+ Other revenues 4.6 7,390 9,195

- Other expenses 4.6 (15,741) (9,353)


- General operating expenses 4.7 (268,645) (250,013)

- Depreciation, amortisation and impairment of intangible and tangible assets (13,588) (16,406)


+/- Cost of risk 4.8 76 (837)

Operating income 32,467 55,649

+/- Share in net income of associates 3.8 2,837 (1,806)

+/- Net gains or losses on other assets 4.9 480 (462)

+/- Changes in the value of goodwill (794) -

Income (loss) before tax 34,990 53,381

- income tax 4.10 (10,449) (23,033)

Net income 24,541 30,348

- Net income attributable to minority interests (4,462) (4,488)

Net income attributable to equity holders of the parent 20,079 25,860

Earnings per share (in euro) 3.32 4.31

Diluted earnings per share (in euro) 3.29 4.13


CASH FLOW STATEMENT In thousands of euros

31.12.2013 31.12.2012

Cash flow from operations

Net income for the period 24,541 30,348

Net gain or loss on assets and liabilities held for sale (9,687) (5,721)

Net gain or loss on disposals (480) -

Net allocations to depreciation and provisions 29,900 (11,857)

Income from associates (2,837) 1,806

Reclassification of net gain or loss on financial instruments at fair value through profit and loss (12,349) (11,409)

Other unrealised income and expenses 692 4,254

Net gain/loss on financing activities - 860

Income tax expense (including deferred taxes) 10,449 23,033

Cash from operating activities before results on financing activities and taxes 40,229 31,314

Income tax paid (3,131) (33,464)

Net increase/decrease from transactions with credit institutions 272,412 489,480

Net increase/decrease from transactions with clients (112,559) (339,892)

Net increase/decrease from transactions in other financial assets and liabilities (74,374) 43,172

Net increase/decrease from transactions in other non-financial assets and liabilities 58,303 60,091

Net cash generated by operations 180,880 250,701

Funds from investing activities

Purchases of tangible and intangible assets (21,051) (14,698)

Purchases of long-term financial assets (18,566) (77,456)

Change in guarantee deposits - -

Dividends received from associates 1,379 2,658

Disposals of long-term assets 15 611

Net cash generated by investing activities (38,223) (88,885)

Funds from financing activities

Increase/decrease in cash generated by financing activities (250,004) (108,729)

Increase/decrease in cash from transactions with shareholders (27,505) (48,415)

Net cash generated by (used in) financing activities (277,509) (157,144)

Effect on cash and cash equivalents of changes in exchange rates 3,098 3,113

Net change in cash and cash equivalents (131,754) 7,785

Net balance on cash and amounts due from central banks 635,308 21,371

Money-market funds qualified as cash equivalents 108,599 118,924

Net balance on demand deposits with and loans from credit institutions 86,011 681,838

Cash and cash equivalents at beginning of the year 829,918 822,133

Net balance on cash and amounts due from central banks 395,965 635,308

Money-market funds qualified as cash equivalents 69,360 108,599

Net balance on demand deposits with and loans from credit institutions 232,839 86,011

Cash and cash equivalents at end of the year 698,164 829,918

Change in net cash (131,754) 7,785


STATEMENT OF CHANGES IN EQUITY In thousands of euros

31.12.2012 Capital

increase Appropriation of net income

Other changes

31.12.2013

Interest of equity holders of the parent in:

– Capital 83,076 - - - 83,076

– Share premiums 98,244 - - - 98,244

– Equity instruments (undated super–subordinatednotes)

48,875 - - (29,000) 19,875

– Interest on equity instruments (undated super–subordinated notes)

(10,354) - - (2,153) (12,507)

– Elimination of treasury shares - - - - -

– Other reserves 103,763 - 25,860 (15,024) 114,599

Unrealised or deferred gains/losses on available–for–sale financial assets

7,211 - - 8,886 16,097

– 2012 net income 25,860 - (25,860) - -

Subtotal 356,675 - - (37,291) 319,384

– 2013 net income - - - 20,079 20,079 Total attributable to equity holders of the parent 356,675 - - (17,212) 339,463

Minority interests in: - - - - -

– Reserves 2,322 - 62 (1,993) 391

– 2012 net income 4,488 - (4,488) - -

– 2013 net income - - - 4,462 4,462

Total minority interests 6,810 - (4,426) 2,469 4,853

STATEMENT OF NET INCOME AND GAINS (LOSSES) RECOGNISED DIRECTLY IN EQUITY In thousands of euros

2013 2012

Net income 24,541 30,348

Translation adjustment (791) (62)

Deferred outflows from change in fair value of hedging derivatives (*) (139) (467)

Change in fair value of available-for-sale financial assets (*) 9,003 1,166

Actuarial gains or losses on defined-benefit plans (*) (43) (1,687)

Total gains and losses recognised directly in equity 8,030 (1,050)

Net income and gains and losses recognised directly in equity 32,571 29,298

Attributable to equity holders of the parent 28,136 24,876

Attributable to minority interests 4,435 4,422

(*) Net of tax


Notes to the Consolidated Financial Statements NOTE 1 – PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

1.1. BACKGROUND

In compliance with EU Regulation 1606/2002 of 19 July 2002 concerning the application of international accounting standards by entities issuing debt securities for public trade, La Compagnie Financière Edmond de Rothschild Banque prepared its financial statements to International Financial Reporting Standards (IFRS) for the first time in 2007, for the purposes of its debt securities. (International Financial Reporting Standards). The financial statements were approved by the Executive Board on 12 March 2014 and reviewed by the Supervisory Board and the Audit committee on 17 and 18 March 2014.

1.2. CONFORMITY WITH ACCOUNTING STANDARDS

In the consolidated accounts presented as of 31 December 2013, the Group applies the amendment to IFRS 7 "Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities" adopted by the European Union on 29 December 2012 (note 3.18). This amendment does not have any impact on the evaluation and accounting of the transactions. Since 1 January 2013, the Group has applied the standard IFRS 13 "Fair Value Measurement" adopted by the European Union on 29 December 2012. The application of this standard has not had any impact on the financial statements of 2013. The entry into force of other mandatory standards had no effect on the 2013 financial statements. The Group did not opt for early application of any new standards, amendments or interpretations adopted by the European Union where their application in 2013 was only optional. On 20 December 2013, the European Union adopted the amendment to IAS 39 "Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting", applicable no later than the financial years starting 1 January 2014. The Group is currently analysing the potential impacts of the application of these standards on its consolidated accounts.

1.3. USE OF ESTIMATES

The preparation of financial information involves the use of estimates and assumptions regarding future circumstances. In addition to using available information, the establishment of estimates necessarily requires a certain element of judgement, particularly as regards the following:

— impairment of variable-income financial assets, classified as “Available-for-sale assets”;

— impairment tests performed on intangible assets; — impairment tests performed on investments in associates; — determining whether a market is active for the purposes of using

a value measurement technique. Moreover, the Group considers that among the other main accounting aspects requiring use of judgement, the most important concern provisions, pension commitments and share-based payments.

1.4. CONSOLIDATION METHODS

The consolidated financial statements are prepared on the basis of the separate financial statements of La Compagnie Financière Edmond de Rothschild Banque and all subsidiaries controlled by the Bank or over which it exercises significant influence.

• Fully consolidated companies

Companies under the exclusive control of La Compagnie Financière Edmond de Rothschild Banque are fully consolidated. Full consolidation entails taking up the financial statements of these companies item by item, eliminating inter-company transactions and reflecting the minority interests in the results for the period and in equity. Separate entries are made for minority interests in net assets and in earnings, with clear delineation in the consolidated balance sheet and income statement. IFRS defines the exclusive control of a subsidiary as the power to direct its financial and operating policies in order to obtain benefit from its activities.


Such control results from: — direct or indirect ownership of the majority of voting rights in the

subsidiary, taking into consideration potential voting rights; or — the power to appoint and dismiss members of the subsidiary’s

board of directors, executive board or supervisory board, or to hold power over the majority of voting rights at meetings of those bodies; or

— the power to exercise dominant influence over a subsidiary by virtue of the Articles of Association or under an agreement.

• Share in net income of associates

Companies over which the Group exercises significant influence are accounted for by the equity method. Significant influence is defined as the power to participate in the financial and operating policy of a subsidiary but not to control those policies. Significant influence is often exercised by representation on the Board of Directors, Executive Board or Supervisory Board, participation in strategic decisions, interchange of managerial personnel or dependence on technical information. Significant influence is presumed to exist when a company holds, directly or indirectly, at least 20% of the voting rights in a subsidiary. Investments in associates are initially stated at cost including attributable goodwill and subsequently adjusted to reflect changes in the Group’s share in net assets. Gains and losses on transactions between the Group and associates are eliminated to the extent of the investment, unless the transaction results in permanent impairment of the asset transferred.

• Special purpose entities

Separate legal entities created specifically to manage a transaction or group of similar transactions (“special purpose entities”) are consolidated when they are in substance controlled by the Group, even when the Group holds no investment in the capital. The principal criteria for assessing whether the Group controls a special purpose entity are any of the following, which can be fulfilled on its own: — the entity’s business is conducted exclusively on behalf of the

Group, so that the Group obtains benefits from the SPE’s operation; or

— the Group has the decision-making and management powers to obtain the majority of the benefits of the entity’s ordinary activities; such power may have been delegated by setting up an “autopilot” mechanism; or

— the Group has rights to obtain the majority of the benefits of the special purpose entity; or

— the Group retains the majority of the risks relating to the special purpose entity. Two entities meeting these requirements have been consolidated: “Groupement Immobilière Financière”, and “Edmond de Rothschild Investors Assistance”.

1.5. CHANGES IN THE SCOPE OF CONSOLIDATED COMPANIES

Edmond de Rothschild Entreprises Patrimoniales absorbed Edmond de Rothschild Corporate Finance on 30 April 2013 with backdated effect from 1 January 2013. Following the merger, Edmond de Rothschild Entreprises Patrimoniales changed its name and is now Edmond de Rothschild Corporate Finance. On 18 october 2013, the Bank acquired the entire share capital of Valse Invest and Eminvest, French investment trusts, within the framework of the change in governance of Edmond de Rothschild Capital Partners. On 28 June 2013, the Bank decided to absorb ERS through succession of assets. The transaction took effect following the opposition period for creditors, on 1 August 2013.

1.6. CONSOLIDATION PRINCIPLES

• Reporting dateThe consolidated financial statements were prepared on the basis of the separate financial statements of each Group company at 31 December 2013.

• Elimination of inter-company transactionsElimination of intercompany transactions. All payables, receivables, commitments, revenues and expenses resulting from transactions between fully consolidated companies are eliminated, as are intercompany profits and losses on sales of assets. Dividends received from consolidated companies are eliminated from consolidated earnings.

• GoodwillBusiness combinations completed before 1 January 2010 The Group accounts for business combinations by the purchase method. The acquisition cost is measured as the total fair value, at the date of acquisition, of the assets remitted, liabilities incurred or transferred and equity instruments issued in exchange for control over the enterprise acquired, plus any costs directly attributable to the acquisition. At the acquisition date, the assets, liabilities, off balance sheet items and contingent liabilities of the acquired entities that are identifiable under IFRS 3 “Business Combinations” are measured individually at fair value, whatever their purpose.


The analyses and expert assessments necessary for initial measurement of these items, and any corrections resulting from new information, must take place within 12 months of the date of acquisition. Upon the first consolidation of an investment, the difference between the acquisition cost of shares and the adjusted share in net assets acquired is allocated between corrections to the values of balance sheet items and to the obligations of the consolidated company, and recognition of intangible assets that meet the criteria defined in IAS 38. The residual balance is treated as goodwill. Positive goodwill isreported in the consolidated balance sheet under the heading “Goodwill”. Negative goodwill is immediately recognised in profit and loss. If the Group increases its percentage interest in an entity it already controls, the acquisition of further shares gives rise to recognition of additional goodwill, determined by comparing the purchase price for the shares and the share in net assets acquired. Goodwill is carried in the balance sheet at historical cost. Goodwill on acquisitions of associates is included under the heading “Investments in associates”.

Business combinations completed after 1 January 2010 The rules set out above have been modified by the adoption of the revised IFRS 3. The main changes are as follows: — contingent liabilities of the acquired entity are only recorded in

the consolidated balance sheet if they represent a current obligation at the date of acquisition of control, and their market value can be reliably estimated.

— costs directly related to the business combination constitute a separate transaction from the combination itself and are recognised in profit and loss.

— any contingent consideration is included in the purchase price at its market value on the acquisition date. After the 12-month evaluation period following the business combination, changes in the value of any contingent consideration classified as a financial liability are recognised in profit and loss.

— on the date of the acquisition of control of an entity, any previously held interest in the latter is re-measured at market value through profit and loss.

In the case of a step acquisition, goodwill is determined by reference to market value at the date of acquisition of control, and not by reference to the assets and liabilities acquired at each exchange transaction.

Measurement of goodwill

The Group regularly reviews goodwill and carries out impairment tests at least once a year, or whenever there is evidence of impairment. At the date of acquisition, goodwill is allocated to one or more cash-generating units likely to obtain benefits from the acquisition. Any impairment of goodwill is determined by reference to the recoverable amount of the cash-generating unit(s) to which it is allocated. When the recoverable amount of the cash-generating unit is lower than its book value, an irreversible impairment loss is recorded in the consolidated income statement, under the heading “Changes in the value of goodwill”.

• Deferred taxesDeferred taxes are recognised when temporary differences are identified between the values of balance sheet assets and liabilities for reporting and tax purposes, and these differences will affect future tax payments. Deferred taxes are determined using the liability method. Under this method, deferred taxes are adjusted when tax rates are changed and the ensuing difference is taken to profit and loss. Deferred tax assets are only recognised when it is likely that the consolidated company will have sufficient taxable income to utilise the deferred tax asset within a given time horizon.

• Translation of foreign currency financial statementsThe Group’s consolidated financial statements are prepared in euros. The financial statements of entities whose functional currency is other than the euro are translated into euros using the closing rate method. Under this method, all assets and liabilities, both cash and non-cash, are translated at the closing rate which is the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate during the period. Translation gains or losses, both on balance sheet and income statement items, are recognised, for the portion attributable to the Group, in shareholders’ equity under “Translation adjustment”, and for the portion attributable to third parties, under “Minority interests”.

• Commitment to buy out the shares of minorityshareholders in fully consolidated companies

Apart from purchase commitments to beneficiaries of free share allocation plans and stock option plans, the Group may make commitments to buy out the shares of minority shareholders in certain fully consolidated Group subsidiaries.


The Group’s purchase commitments under these undertakings are optional commitments (in the form of sales of put options). The strike price of these options is calculated using a formula predefined contractually when the entities were acquired. For purchase commitments concluded through 31 December 2009, under IAS 32, IFRS 3 and IAS 27, the Group recognises as a liability the put options sold to the minority shareholders in exclusively controlled entities. This liability is initially recognised at the estimated strike price of the put options. The consideration of this liability is offset against minority interests, and any balance credited to goodwill. Subsequent changes to this liability due to changes in the options’ strike price and in the carrying amount of the minority interests are fully written down by adjusting the amount of goodwill (partial goodwill method).

NOTE 2 – ACCOUNTING POLICIES, VALUATION METHODS AND EXPLANATORY NOTES

• Conversion of transactions in foreign currencies

Monetary assets and liabilities in foreign currencies are translated into euros using the official rates of exchange as published by the Banque de France at the balance sheet date. Unrealised foreign exchange gains and losses are recorded in profit and loss. Spot foreign exchange transactions are measured at the official spot rates at the end of the year. The resulting gains and losses are recorded in profit and loss. Forward exchange contracts are measured at the rate for the residual term at the balance sheet date, with the impact of changes in fair value taken to profit and loss. Non-monetary assets in foreign currencies, particularly investments in non-consolidated subsidiaries and affiliates denominated in foreign currencies, are recorded in the balance sheet at the euro equivalent of their historical cost in foreign currency, using exchange rates prevailing at the date of acquisition or subscription. Unrealised foreign exchange gains and losses related to these assets are only recognised in profit and loss upon disposal or recognition of impairment, or when the fair value is hedged for foreign exchange risk.

Financial assets and liabilities Upon initial recognition, financial assets and liabilities are stated at fair value including acquisition costs (except for financial instruments recognised at fair value through profit and loss). They are classified in the categories described below:

Loans and receivables — Loans made to clients in the course of commercial banking

activities are included in the balance sheet item “Transactions with clients”. They are initially measured at fair value, and subsequently adjusted at the closing date to amortised cost based on the effective interest rate, which takes into consideration cash flows resulting from all the contractual terms of the instrument. Impairment losses may be recorded on these items (see section on “Impairment of financial assets”). This category also includes securities received under resale agreements.

— The value of securities received under resale agreements for cash is recognised for the relevant amount of cash received. Remuneration on these agreements is recorded in profit and loss using the amortised cost method.

— After initial recognition, transactions with credit institutions not originally designated as “at fair value through profit and loss” are subsequently carried at amortised cost based on the effective interest rate. Remuneration related to securities received under resale agreements with banks is recorded using the amortised cost method in the same way as resale agreements with financial clients.

Financial assets and liabilities at fair value through profit and loss These instruments include a very small proportion of assets held for trading, carried at fair value at the closing date, with changes in fair value recorded in profit and loss under the heading “Net gains or losses on financial instruments at fair value through profit and loss”. This item also includes non-derivative financial assets and liabilities that the Group has designated from the outset as “at fair value through profit and loss” under the fair value option allowed by IAS 39 in the amendment adopted by the European Union on 15 November 2005. The Group’s objectives in applying this option are as follows: — to apply fair value measurement to certain hybrid instruments in

order to avoid separate embedded derivatives, which need distinct reporting. Structured EMTNs and BMTNs (euro medium-term notes and negotiable medium-term notes) issued by the Bank belong to this category;

— to eliminate or significantly reduce discrepancies in the accounting treatment of certain financial assets and liabilities. La Compagnie Financière Edmond de Rothschild Banque therefore carries all forward cash management operations at fair value through profit and loss. The Bank’s cash management applies the following principles:


1. conclusion of forward loans and borrowings with banks orfinancial clients;

2. acquisition or issuance of negotiable debt securities on theinterbank market;

3. where necessary, hedges of each of these items using aninterest rate derivative.

When an item carried at amortised cost is hedged by a financial asset that would be classified as an available-for-sale asset, with changes in fair value recorded in equity, use of the fair value option can eliminate the distortion that arises from different accounting treatments for financial assets and liabilities that share the same interest rate risk, and experience changes in fair value that tend to be mutually offsetting. Similarly, when an interbank loan not originally recognised as a hedging relationship undergoes the same changes in fair value (due to exposure to interest rate risk) but in the opposite direction, use of the fair value option can reduce the distortion that would have arisen from recording the loan at amortised cost and the derivative at fair value through profit and loss. Finally, this category of financial assets and liabilities includes the positive or negative fair values (without offsetting) of derivatives that have not been designated as hedging instruments.

Financial assets held to maturity “Financial assets held to maturity” comprise fixed-income, fixed-maturity securities that the Group is able and willing to hold to maturity. They are measured upon acquisition at amortised cost, with inclusion of any premiums and discounts reflecting the difference between the acquisition value and redemption value of such stock, and including acquisition expenses. Income received on these securities is reported in profit and loss under the heading “Interest and similar revenues”.

Available-for-sale financial assets “Available-for-sale financial assets” comprise fixed-income or variable-income securities that do not belong to the above two categories, i.e. they are non-derivative financial assets to be held for an undetermined period, which the Group may sell at any time. At the reporting date, available-for-sale financial assets are stated at fair value with the impact of changes in value, excluding accrued or vested income, in a specific line of equity, “Unrealised or deferred gains and losses”. When such financial assets are sold or permanently impaired, and only in such cases, the Group recognises the changes in fair value in profit and loss under the heading “Net gains or losses on available-for-sale financial assets”. Revenues on variable-income securities classified as available-for-sale financial instruments are also recorded under the same heading.

Revenues on fixed-income securities in this category are classified as “Interest and similar revenues on financial instruments”.

• Reclassification of financial assets

On 15 October 2008, the European Union adopted the amendments to the IAS 39 standards "Financial Instruments: recognition and measurement" and IFRS 7 "Financial instruments: disclosures".

The standard provides for the following asset reclassifications: — Out of the category “Financial assets measured at fair market

value through profit and loss”, for a non-derivative financial asset no longer held for sale in the near future:

. into the “Loans and receivables” category where the asset falls into that category at the reclassification date, and the Group is able and willing to hold it for a foreseeable future or to maturity; . into other categories when justified by rare circumstances and provided the reclassified assets fulfil the conditions applicable to the receiving portfolio.

— out of the “Available-for-sale financial assets” category: . into the “Loans and receivables” category on the conditions previously stated for “Financial assets measured at fair market value through profit and loss”.; . into the “Financial assets held to maturity” category for assets having a maturity date.

• Impairment of financial assets

Financial assets carried at amortised cost At each balance sheet date, the Group assesses whether there is any objective evidence that a financial asset, taken individually, is impaired due to one or more events that occurred after the initial recognition of the asset (“loss event”), and the impact of that loss event (or those loss events) on the estimated future cash flows of the financial asset can be reliably estimated. If there is objective evidence of an impairment loss on loans and receivables or financial assets classified as financial assets held to maturity, the impairment is measured as the difference between the book value of the asset and the present value of estimated future cash flows recoverable after the effect of guarantees, discounted at the financial asset’s original interest rate. The amount of the impairment loss is included in “Cost of risk” in profit and loss, and the book value of the financial asset is reduced by recognition of impairment. Increases and decreases in impairment provisions due to changes in the probability of recovery are recorded in “Cost of risk”, while the reversal over time of the effects of this adjustment is treated as accounting revenues on impaired receivables, and is included in “Interest and similar revenues” in profit and loss.


Available-for-sale financial assets When there is objective evidence that an available-for-sale financial asset is permanently impaired, the impairment loss is recognised in profit and loss. In the case of a variable-income security quoted on an active market, a significant fall in price (by more than 20%) below the acquisition value or lasting for a prolonged period (more than 12 months) indicates the likelihood of impairment, leading the Group to perform a qualitative analysis. Where applicable, impairment is determined on the basis of the quoted price. When a non-permanent decline in the fair value of an available-for-sale financial asset has been recorded directly in equity under “Unrealised or deferred gains and losses” and there is subsequent objective evidence that the asset is permanently impaired, the Group recognises the cumulative unrealised loss previously recorded in equity in profit and loss under “Cost of risk” for debt instruments, and under “Net gains and losses on available-for-sale financial assets” for variable-income securities. The amount of the cumulative loss is the difference between the acquisition cost (net of any principal repayments and amortisation) and the present fair value, less any impairment loss previously recognised in profit and loss in respect of the relevant financial assets. Impairment losses recognised in respect of an equity instrument classified as available-for-sale are only reversed through profit and loss when the financial instrument is sold. Once impairment has been recorded on an equity instrument, any additional loss of value constitutes additional impairment. However, for debt instruments, impairment may be reversed through profit and loss if their value subsequently rises.

• Derivatives and hedges

IAS 39 requires all derivatives, except derivatives designated for accounting purposes as cash flow hedges (see below), to be stated at fair value with changes in fair value recognised in profit and loss. Derivatives are recorded in the balance sheet at the trade date. They are combined into two categories:

Trading derivative financial instruments Derivatives are automatically classified as held for trading unless they qualify for accounting purposes as hedging instruments. They are carried in the balance sheet under “Financial assets at fair value through profit and loss” when their fair value is positive, and under “Financial liabilities at fair value through profit and loss” when their fair value is negative. Changes in the fair value of derivatives are recorded in profit and loss under “Net gains or losses on financial assets at fair value through profit and loss”. Income and expenses recorded on interim payments of interest differentials or settlement of the final payment under the derivative contract are recorded in the profit and loss statement under “Interest and similar revenues” or “Interest and similar expenses”. Gains and losses resulting from early settlement of derivatives are recorded in profit and loss under “Net gains or losses on financial assets at fair value through profit and loss”.

Hedging derivative financial instruments To classify a financial instrument as a hedging derivative, the entity must document the hedging relationship from its inception. The documentation must identify the asset, liability or future transaction hedged, the nature of the risk being hedged, the type of derivative instrument used, and the valuation method to be used to assess the hedging instrument’s effectiveness. The designated hedging derivative must be highly effective in offsetting changes in the fair value or cash flows resulting from the hedged risk; this effectiveness is assessed at the inception of the hedge, then on an on-going basis throughout its duration. Hedging derivatives are reported in the balance sheet under “Hedging derivatives”. Depending on the nature of the hedged risk, the Group must designate the hedging derivative as a fair value hedge, a cash flow hedge or a hedge of a net investment in a foreign operation.

• Fixed assets

Operating fixed assets are carried in the balance sheet at cost. Tangible and intangible fixed assets qualifying for depreciation or amortisation are depreciated and amortised over their period of use in the Company.

Intangible assets Intangible assets primarily comprise purchased software and contract portfolios: — intangible assets with an unlimited useful life are subject to

annual impairment tests at the end of the second six months. These tests may be carried out at any time during the year, provided the date remains unchanged from one year to the next. For intangible assets first recognised during the current period, an impairment test is carried out before the end of the year.

— intangible assets with a limited useful life are carried at acquisition cost less cumulative amortisation and impairment. They are amortised over their useful life. The useful life is the shorter of the useful life as defined by law and the expected economic life of the asset.

— intangible assets are subject to impairment tests if events or new circumstances indicate a risk that the book value may be irrecoverable.

Tangible assets Equipment, furniture, fixtures and fittings are stated at cost, less any impairment. Depreciation is generally applied on a straight-line basis over the asset’s useful life, which is generally between 4 and 10 years.


Tangible assets are subject to impairment tests if events or new circumstances indicate a risk that the book value may be irrecoverable. Gains or losses on sales of operating assets are recorded under “Net gains or losses on other assets”. The Group’s fixed assets do not include any investment property.

• Financial liabilities at amortised cost

Debt instruments issued by the Group that are not classified as financial liabilities at fair value through profit and loss are initially measured at cost, which corresponds to the fair value of the amounts borrowed, net of transaction costs. At the balance sheet date, these liabilities are adjusted to amortised cost, using the effective interest rate method. Accrued interest on these liabilities is recorded in “Accrued interest and related payables”, with a counterpart entry in profit and loss.

Due to credit institutions and amounts owed to clients Amounts due to credit institutions and clients were broken down according to their initial duration or the nature of these amounts due: demand deposits and term deposits for credit institutions; special savings accounts and other deposits for clients. Liabilities related to securities delivered under demand or time repurchase agreements with credit institutions or clients are included in both these categories. They are recorded at the sale price of the securities. Securities delivered under repurchase agreements remain in their original category in the balance sheet assets and are valued under the specific rules for the relevant portfolio; income on these securities is also recognised as though they were still part of the portfolio.

Borrowings represented by securities Borrowings represented by securities mainly comprise non-negotiable certificates of deposit, interbank market securities, negotiable debt instruments and bond borrowings, but exclude subordinated notes, which are reported under “Subordinated debt”. Accrued interest payable on these securities is recorded in 'Accrued interest and related payables', with a counterpart entry in profit and loss. O • Provisions

With the exception of provisions for credit risks or employee benefits, provisions represent liabilities of uncertain timing and amount. Provisions are only established when the Group has a legal or constructive obligation towards a third party as a result of past events, and it is probable or certain that this obligation will cause an outflow of resources to the benefit of that third party without receiving any consideration of at least equivalent value. The amount of the expected outflow of resources is discounted to determine the amount of the provision where the effect of such discounting is material.

Increases and decreases in these provisions are recorded in profit and loss in the lines corresponding to the nature of the relevant future expenditure.

• Treasury shares

Treasury shares are shares in the parent company, La Compagnie Financière Edmond de Rothschild Banque, and its fully consolidated subsidiaries. Treasury shares held by the Group for any purpose are deducted from consolidated shareholders’ equity, and related gains or losses are eliminated from consolidated profit and loss.

• Income tax

La Compagnie Financière Edmond de Rothschild Banque and certain of its subsidiaries have opted to form a tax consolidation group. The parent company and the subsidiaries have agreed that the advantage or disadvantage arising from the tax consolidation (difference between the consolidated tax charge and the total of the tax charges of the companies calculated independently) is recognised immediately in the parent company’s income statement. Income tax for the year includes current and deferred taxes. Income tax is recorded in profit and loss, unless it relates to an item directly recorded in equity, in which case it is recorded in equity. Current taxes are the forecast taxes payable on taxable income for the period, calculated at the rates in force at the balance sheet date, and any adjustment of taxes due for previous years. Current tax assets and liabilities are offset when La Compagnie Financière Edmond de Rothschild Banque intends to pay the net amount and is legally authorised to do so. Deferred taxes are recognised based on timing differences between the book value and tax base of balance sheet assets and liabilities. As a rule, all taxable timing differences lead to recognition of deferred tax liabilities, whereas deferred tax assets are recognised where the probability exists of sufficient future taxable profit to utilise the deductible timing differences. Deferred tax assets and liabilities are offset when the entity is legally authorised to do so, provided they relate to the same tax consolidation group and are governed by the same tax authorities. Deferred taxes are not adjusted to present value. Deferred taxes related to actuarial gains and losses on defined-benefit plans are recorded directly in equity. Deferred taxes arising from the adjustment to fair value of available-for-sale assets and cash flow hedges (recorded directly in equity) are themselves recorded directly in equity and transferred to profit and loss when the increase or decrease in fair value is taken to profit and loss.


In France, the standard corporate income tax rate is 33.33%. Additionally, there is the general Social Security Contribution on earnings of 3.3% (after an allowance of €0.76 million) introduced in 2000 and an exceptional corporate income tax contribution applicable to profitable companies with annual revenues over €250 million, established for the 2011 and 2012 financial years and extended to 2014, whose rate increased from 5% to 10.7% with the Finance Act of 2014 for years ending 31 December 2013. Furthermore, the Second Supplementary Budget Act for 2012 established an additional 3% income tax on corporate dividends, regardless of the beneficiary. Long-term capital gains on investment securities are exempt, subject to taxation at ordinary rate of a share of the fees and charges of 12% of the gross amount of the capital gains. Moreover, under the scheme, parent companies and subsidiaries in which the investment is at least 5%, net income from investments is exempted, subject to taxation at ordinary rate of a share of the fees and charges of 5%.

For the 2013 financial year, the tax rate used to determine the deferred taxes of French companies was 38% for income taxed at the standard rate. For income taxed at the reduced rate, the rates used were 4.56% and 17.10%.

• Methods for determining the fair value of financialinstruments

Fair value is the amount for which an asset could be exchanged or a liability settled between parties giving their informed consent in an arm’s-length transaction. The Group distinguishes three categories of financial instruments depending on the consequences of the characteristics on the method of measuring their value, and it uses that classification for disclosing certain information in the Notes to the financial statements: Level 1 category: financial instruments that are quoted on an active market; Level 2 category: financial instruments whose value is measured by reference to observable parameters; Level 3 category: instruments whose value is measured by reference to parameters that are wholly or partly non-observable; a non-observable parameter is defined as a parameter whose value is measured by reliance on assumptions or correlations based neither on trading prices observable on the markets for the given instrument at the valuation date, nor on observable market data available at that date.

A financial instrument is regarded as quoted on an active market if prices are readily and regularly available from a stock exchange, broker, dealer, pricing service or regulatory agency and if those prices represent actual transactions regularly occurring in the market under arm’s length conditions.

Instruments traded on active markets When a financial instrument is traded in an active market and quoted prices are available for that instrument, the fair value of the financial instrument is represented by its market price.

Instruments not traded on active markets If the market for a financial instrument is not active, its fair value is determined using observable market data and valuation techniques. Depending on the financial instrument, these techniques use data from recent transactions and discounted future cash flow models based on rates applicable at the balance sheet date.

Structured liabilities and index-linked derivatives In determining the fair value of structured liabilities and the indexed component of index-linked derivatives, valuation parameters are not entirely observable. Therefore, the fair value of the financial instrument at the time of the transaction is deemed to be the transaction price, and the commercial margin is recorded in profit and loss over the life of the product. While structured liabilities are outstanding, since they are not quoted on an active market, the valuation parameters agreed with the counterparties at the instruments’ inception are not modified. For redemptions of negotiable debt securities issued, the fair value of the redeemed securities is the transaction price, and the portion of the commercial margin not yet recorded is recognised in the profit and loss statement.

Cash receivables and payables For fixed-rate liabilities, which generally mature within one year, when there is no active market, fair value is deemed to be the present value of future cash flows discounted at the market rates obtaining at the balance sheet date. These market rates are determined based on standard in-house valuation models, using issuance curves for deposit certificates. Similarly, for purchased securities that represent fixed-rate debt, fair value is determined by discounting expected future cash flows at market rates.

Loans and other financing to clients La Compagnie Financière Edmond de Rothschild Banque considers that the fair value of variable-rate loans subject to adjustment on a multi-year frequency can be considered equal to their book value. For loans with a variable rate adjusted once a year and fixed-rate loans, fair value is determined by discounting recoverable future principal and interest cash flows over the remaining life, at the interest rate on new lending during the year for loans of the same category with similar maturities.


Interest rate derivatives The fair value of interest rate derivatives and of the interest rate component of index-linked derivatives is determined on the basis of in-house valuation models incorporating observable market data. Thus the fair value of interest rate swaps is calculated by discounting future interest cash flows at the rates derived from zero-coupon swap curves.

Forward foreign exchange contracts Forward foreign exchange contracts are treated as financial derivatives and reported in the balance sheet at fair value, with changes in fair value taken to profit and loss. The fair value of a forward foreign exchange contract is determined by the forward rate for the remaining life at the balance sheet date.

• Cost of risk

For credit risk purposes, the cost of risk includes the provisions and reversals for value impairment of fixed-income securities and of loans and receivables due from clients and credit institutions, provisions and reversals on financing and guarantee commitments given, losses on receivables written off and amounts recovered on receivables formerly written off.

• Fees

The Group records fee income in profit and loss according to the nature of the services concerned. Fees received for non-recurring services are immediately taken to profit and loss. Fees for on-going services are recorded progressively in profit and loss over the duration of the service provided. Fees that are an integral part of the effective return on a financial instrument are treated as an adjustment to the effective return on the financial instrument.

• Employee benefit commitments

The Group recognises four categories of benefit as defined by IAS 19:

1. short term benefits, for which payments are immediatelyexpensed: remuneration, profit-sharing, employee-savings and paid leave.

2. Post-employment benefits, measured under an actuarialmethod and accrued are established for benefits paid under defined-benefit plans (except French compulsory defined-contribution plans, which are directly expensed): pension commitments, supplementary pension plan, and termination benefits for retiring employees.

Post-employment benefits are classified as either defined-contribution plans or defined-benefit plans, depending on the actual economic impact on the company. In defined-contribution plans, commitments are covered by contributions, which are recognised as expenses as and when they are paid to the independent pension bodies that manage subsequent payment of the pensions.

The Company’s obligation is limited to payment of a contribution, with no associated commitment concerning the amount of the benefits paid out. The contributions paid are included in the expenses of the period. In defined-benefit plans, the actuarial risk and investment risk are borne by the company. They cover several types of commitment, principally “additional supplementary” pension plans and termination benefits for retiring employees. A provision is recorded in liabilities to cover the total value of these pension commitments. These are valued annually by an independent actuary at the balance sheet date. In accordance with IAS 19, the Group uses the projected unit credit method to calculate its employee benefit commitments. This retrospective method uses projections of career-end salaries and proportions of final-benefit entitlements based on length of service, taking into account the employee’s probable future period of service with the Company, future remuneration levels, life expectancy and personnel turnover, based on actuarial assumptions. Actuarial gains and losses, determined for each plan, include the effect of differences between actuarial assumptions previously applied and the reality observed, and the effect of changes in actuarial assumptions.

The Group applies the “SoRIE” amendment to IAS 19 concerning the accounting method for actuarial gains and losses on defined-benefit pension plans. All such gains and losses are recorded in equity in the period in which they are recognised. When the plan is funded by assets, those assets are measured at fair value at the closing date and deducted from the value of the commitments recorded. The annual amount included in personnel expenses in respect of defined-benefit plans includes the following: — the additional benefits earned by each employee (current

service cost); — the interest cost resulting from the increase in the present

value of the obligation; — the expected return on investments in hedge funds; — amortisation of past service cost; — the effect of plan curtailments or settlements.

The Group recognises past service cost in expenses on a straight-line basis over the average period remaining until the benefit entitlements are vested. The past service cost refers to the increase in the present value of the commitment for services rendered in previous periods, resulting from the introduction of a new plan or changes occurring during the period.

3. other long-term benefits, measured in the same way as post-employment benefits and fully provisioned: these include long-service awards, time deposit savings accounts and deferred remuneration.


4. termination benefits, redundancy payments, and voluntaryredundancy payments. These benefits are fully covered by provisions once the agreement has been signed.

• Share based payments

IFRS 2 “Share-based Payment” requires transactions settled in shares and similar instruments to be reported in the income statement and the balance sheet. The Group’s share-based payment plans fall within the scope of IFRS 2 as settlement takes the form of allocation of equity instruments. This standard applies to plans awarded after 7 November 2002 (the date of publication of the exposure draft) for which rights had not yet vested at the date of transition to IFRS (1 January 2006 for La Compagnie Financière Edmond de Rothschild Banque Group). La Compagnie Financière Edmond de Rothschild Banque and its subsidiaries have awarded various share subscription option, share purchase option and free share allocation plans. Stock options and free shares are expensed and included “Personnel expenses”, with an offsetting entry in shareholders’ equity as and when rights become vested. The expense is measured based on the overall value of the plan at the date of award by the executive bodies. In exceptional cases where the employee receives the benefits immediately, the expense is recognised at the allocation date. If no market exists for the instruments concerned, mathematical valuation models are used. The Group itself measures options awarded at fair value upon initial allocation, applying the Black & Scholes model. This measurement is performed on a Group basis. The total plan expense is determined by multiplying the unit value of the option by the estimated number of options vested at the end of the vesting period, allowing for the probability of the beneficiaries remaining with the Company at that time. At each balance sheet date, the number of options expected to be exercised is revised to adjust the initially determined overall cost, and the expense recognised at the beginning of the plan is adjusted accordingly. Amounts received when options are exercised are credited to “Capital stock” (nominal value) and “Share premiums”.

• Cash-flow statement

The balance of cash and cash equivalents consists of the net balances on cash and amounts due from central banks and postal accounts, and on demand deposits with and loans from credit institutions. Changes in cash generated by operating activities reflect cash flows generated by the Group’s business, including cash flows related to financial assets held to maturity and negotiable debt securities. Changes in cash generated by investing activities result from cash flows related to acquisitions and disposals of consolidated subsidiaries and associates and acquisitions and disposals of real estate. Changes in cash related to financing activities comprise cash inflows and outflows from operations with shareholders, cash flows related to subordinated debt and bonds, and borrowings represented by securities (other than negotiable debt instruments).

• Earnings per share

Earnings per share are calculated by dividing the net income attributable to ordinary shareholders by the weighted average number of shares outstanding during the period, excluding treasury shares. Diluted earnings per share reflect the impacts of potential dilution on earnings and the number of shares resulting from the exercise of options under the various plans (free share allocations, share purchase and subscription options) instituted by La Compagnie Financière Edmond de Rothschild Banque and its subsidiaries, in accordance with IAS 33. No account is taken of plans that have no dilutive impact. Net income for the calculation of basic earnings and diluted earnings per share corresponds to Group net income, adjusted for undated super-subordinated notes issued by La Compagnie Financière Edmond de Rothschild Banque.


NOTE 3 – ANALYSIS OF BALANCE SHEET ITEMS

3.1. CASH, DUE FROM CENTRAL BANKS AND POSTAL ACCOUNTS


Cash 1,003 1,161

Central banks 394,952 634,136

Postal accounts 10 11

Subtotal 395,965 635,308

Related receivables - -

Total 395,965 635,308

3.2. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS


Treasury notes and similar securities - -

Bonds and other fixed-income securities - -

Equities and other variable-income securities 28 28

Subtotal 28 28

Trading securities and related receivables - -

Subtotal 28 28

Interest rate instruments – futures 7,661 10,465

Interest rate instruments – options - -

Foreign exchange instruments – futures 56 -

Foreign exchange instruments – options - -

Equity and index-linked instruments – futures 19,135 24,626

Equity and index-linked instruments – options - -

Related receivables on trading derivatives 10,872 14,624

Subtotal 37,724 49,715

Subtotal - trading securities 37,752 49,743

Fair value of amounts due from credit institutions 161,254 208,700

Fair value of transactions with clients - -

Subtotal 161,254 208,700

Fair value of loans and related receivables 29 31

Subtotal - loans and receivables measured at fair value through profit and loss under the fair value option

161,283 208,731

Fair value of treasury notes and similar securities 13,019 13,511

Fair value of bonds and other fixed-income securities 36,024 72,146

Subtotal 49,043 85,657

Fair value of debt securities and related receivables 2,410 2,674

Subtotal - fixed income securities measured at fair value through profit and loss under the fair value option

51,453 88,331

Fair value of equities and other variable-income securities - -

Subtotal - -

Fair value of equities and other variable - income securities and related receivables - -

Subtotal - variable income securities measured at fair value through profit and loss under the fair value option

- -

Subtotal - financial assets measured at fair value through profit and loss under the fair value option 212,736 297,062

Total financial assets at fair value through profit and loss 250,488 346,805

The total notional amount of trading derivatives was €8.838 million at 31 December 2013, compared with €12.559 million at 31 December 2012.

The notional value of derivatives indicates only the volume of business by the Group on the financial instruments markets, without reflecting the market risks related to these instruments.

3.3. AVAILABLE-FOR-SALE ASSETS


Treasury notes and similar securities 75,573 78,522

Quoted 75,573 78,522

Unquoted - -


including Impairment - -

Bonds and other fixed-income securities 150,220 138

Quoted - -

Unquoted 150,161 138

Related receivables 59 -


Equities and other variable-income securities 165,175 211,644

Quoted 267 262

Unquoted 164,908 211,382


including Impairment (30,649) (9,736)

Long-term equity securities 86,195 87,120

Quoted 14,666 9,106

Unquoted 71,529 78,014


including Impairment (5,410) (2,158)

Other available-for-sale financial assets - -

Quoted - -

Unquoted - -



Total available-for-sale financial assets 477,163 377,424

Including securities lent - -

A multi-criteria intrinsic value analysis led the Group to recognise an additional temporary impairment charge of €0.7 million in other-than-temporary-impairments (OTTI) on the Paris-Orléans investment. Further, the investment lines of the sponsoring portfolio depreciated overall by €22.6 million mainly on the EdR LBO Funds managed by EdRCP (down €21.5 million). Treasury notes and similar securities includes the new positions in euro-zone government bonds purchased by Financière Boréale, which are covered by a fair value hedge on the interest rate risk.

3.4. DUE FROM CREDIT INSTITUTIONS


Due from credit institutions

– Demand deposits 306,790 98,511

– Time deposits - 318,838

Subtotal 306,790 417,349

Related receivables - 5

Total gross value 306,790 417,354

Impairment - -

Total net value 306,790 417,354


3.5. TRANSACTIONS WITH CLIENTS


Overdrafts 338,226 207,918

Other loans and financing - -

– Loans 134,628 86,085

– Securities received under resale agreements (1) -

– Trade notes - -

Subtotal 472,853 294,003

Doubtful loans 3,023 3,101

Impairment of doubtful loans (2,807) (2,884)

Total net value 473,069 294,220

Including related receivables 659 1,533

Fair value of transactions with clients 473,519 294,797

3.6. FINANCIAL ASSETS HELD TO MATURITY


Treasury notes and similar securities - -

Quoted - -

Unquoted - -


Bonds and other fixed-income securities - -

Quoted - -

Unquoted - -


Impairment - -

Total financial assets held to maturity - -

Fair value of financial assets held to maturity - -

3.7. ACCRUAL ACCOUNTS – OTHER ASSETS AND LIABILITIES

31.12.2013 31.12.2012

In thousands of euros Assets Liabilities Assets Liabilities

Items under collection 89 - 507 -

Guarantee deposits paid (*) 44,424 - 60,890 -

Deferred charges 7,936 - 7,255 -

Accrued income 47,578 - 61,439 -

Deferred income - 2,659 - 1,315

Accrued expenses - 107,347 - 80,000

Other miscellaneous assets and liabilities (**) 44,711 130,005 49,321 136,970

Total 144,738 240,011 179,412 218,285 (*) with €14.680 thousand relating to collateral at 31 December 2013 against €32.318 thousand

at 31 December 2012 deposits paid. (**) with €24.325 thousand relating to collateral at 31 December 2013 against €7,750 thousand

at 31 December 2012, other liabilities.

3.8. INVESTMENTS IN ASSOCIATES


Banque de Gestion Edmond de Rothschild Monaco 20,277 18,905

Edmond de Rothschild Limited 6,584 6,586

Zhonghai Fund Management Co. Ltd. 28,425 28,314

Omega Financial Solutions 348 379

Investments in associates 55,634 54,184

MAJ date manuelle MAJ date manuelle

Total assets at Net banking income/2012 revenue

2012 Net profit attributable to equity holders of the parent

In thousands of euros 31.12.2013

Banque de Gestion Edmond de Rothschild Monaco

1,144,077 36,734 2,751

Edmond de Rothschild Limited 90,813 26,483 (55)

Zhonghai Fund Management Co. Ltd. 65,829 27,985 172

Omega Financial Solutions 2,274 1,435 (31)

Total 2,837

The impairment test performed on Zhonghai Fund Management Co. Ltd did not reveal the need to impair it above €4 million, as ascertained on 31 December 2012. For this test, the major parameters sensitive to assumptions are the perpetuity growth rate and the cost of capital. A change in the growth rate of +/-1% would have an impact of +6/-5% of the recoverable amount. A change in the cost of capital of +/-1% would have an impact of -8/+10% of the recoverable amount.

3.9. TANGIBLE ASSETS

In thousands of euros 31.12.2012 Acquisitions/

Provisions made

Disposals/ Releases to

income

Other Changes

31.12.2013

Gross value

Land and buildings 44,231 2,050 - 346 46,627

Hardware 19,361 2,937 (99) 6 22,205 Fixtures and fittings and other fixed assets 42,932 897 (228) 4 43,605

Tangible assets in progress 4 - - - 4

Total 106,528 5,884 (327) 356 112,441

Depreciation - Impairment

Buildings (20,367) (183) - (4) (20,554)

Hardware (18,148) (1,451) 104 (7) (19,502) Fixtures and fittings and other fixed assets (31,512) (2,518) 231 (2) (33,801)

Total (70,027) (4,152) 335 (13) (73,857)

Net book value 36,501 1,732 8 343 38,584


3.10. INTANGIBLE ASSETS

In thousands of euros

31.12.2012

Acquisitions /

Provisions made

Disposals / Releases to

income

Other Changes 31.12.2013

Gross value

Contract portfolio and other contractual rights 12,320 - - - 12,320

Other intangible assets 75,432 10,449 - 10,785 96,666

Intangible assets in progress 6,048 4,718 (3) (10,763) -

Total 93,800 15,167 (3) 22 108,986

Depreciation - Impairment

Intangible assets (70,124) (9,437) - (1) (79,562)

Total (70,124) (9,437) - (1) (79,562)

Net book value 23,676 5,730 (3) 21 29,424

Contract portfolios were assessed individually for impairment and found not to be impaired.

3.11. GOODWILL


Gross value at the beginning of the period 77,482 71,710

Acquisitions and other increases 794 5,725

Sales and other decreases - -

Translation adjustment 225 47

Gross value at the end of the period 78,501 77,482

Impairment - -

Impairment loss (794) -

Impairment at the end of the period - -

Net value at the end of the period 77,707 77,482

Given the change in governance of Edmond de Rothschild Capital Partners, since November 2013 the Group has owned all the capital of its subsidiary. At this time, the Bank acquired 100% of the shares of the companies Eminvest and Valse Invest recognising goodwill of €0.8 million, wholly amortised. The goodwill underwent an individual impairment test. This test is performed at the same time every year or when signs of impairment occur. Valuations used are sensitive, beyond the net income of the structures concerned, to multiples of assets under management (based on observable transactions in the private banking and asset management markets over the preceding 15 months) and multiples of net income of a sample of listed private banks and asset managers.

3.12. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS


Interest rate instruments – futures 8,911 12,530

Interest rate instruments – options - -

Foreign exchange instruments – futures - 360

Foreign exchange instruments – options - -

Equity and index-linked instruments – futures 22,566 41,104

Equity and index-linked instruments – options - -

Subtotal 31,477 53,994

Related payables on trading derivatives 2,593 2,719

Subtotal - trading securities 34,070 56,713

Due to credit institutions 103,560 4,951

Transactions with clients 2,013 14,955

Subtotal 105,573 19,906

Related payables 4 42

Subtotal - loans and payables measured at fair value through profit and loss under the fair value option

105,577 19,948

Negotiable debt instruments 176,583 272,664

Bonds 195 192

Other borrowings represented by securities - -

Subtotal 176,778 272,856

Related payables 1,560 21

Subtotal - borrowings represented by securities measured at fair value through profit and loss

178,338 272,877

Subtotal - financial liabilities measured at fair value through profit and loss under the fair value option 283,915 292,825

Total financial liabilities at fair value through profit and loss 317,985 349,538

31.12.2013

In thousands of euros Fair value Amount repayable at maturity

Difference between fair value and amount

repayable at maturity

Financial liabilities measured at a fair value through profit and loss under the fair value option

283,915 288,731 4,816

31.12.2012

In thousands of euros Fair value Amount repayable at maturity

Difference between fair value and amount

repayable at maturity Financial liabilities measured at a fair value through profit and loss under the fair value option

292,825 295,855 3,030

3.13. HEDGING DERIVATIVES

31.12.2013 31.12.2012


Negative market value

Positive market value

Negative market value

Positive market value

Hedging of non-derivative financial instruments

7,612 - 10,465 -

– Foreign exchange derivatives - - - -

– Interest rate derivatives 7,612 - 10,465 -

Cash flow hedges of non-derivative financial instruments

- - - -

– Foreign exchange derivatives - - - -

– Interest rate derivatives - - - -

Derivatives used for hedging 7,612 - 10,465 -


3.14. DUE TO CREDIT INSTITUTIONS


Due to credit institutions

– Demand deposits 33,956 12,493

– Time deposits - 250,000

Subtotal 33,956 262,493

Related payables - 2,262

Total due to credit institutions 33,956 264,755

In February 2012, the Bank participated in the LTRO (Long Term Refinancing Operation), borrowing €250 million from the ECB for three years. After the analysis and decision of the ALM committee, it was decided to repay this loan in full, from the first early repayment windows offered by the ECB which effectively took place on 6 March 2013.


31.12.2013 31.12.2012


Demand deposits

Time deposits Total Demand

deposits Time

deposits Total

Special savings accounts

– Special savings accounts

- 43,814 43,814 19 38,504 38,523

– Related payables - - - - - -

Subtotal - 43,814 43,814 19 38,504 38,523

Other deposits - - - - - -

– Demand deposits 1,078,382 - 1,078,382 925,024 - 925,024

– Time deposits - 52,501 52,501 - 84,635 84,635

– Securities delivered under repurchase agreements

39,999 56,233 96,232 91,000 66,611 157,611

– Other miscellaneous payables

1,400 - 1,400 15 - 15

– Related payables 56 172 228 4 529 533

Subtotal 1,119,837 108,906 1,228,743 1,016,043 151,775 1,167,818

Total 1,119,837 152,720 1,272,557 1,016,062 190,279 1,206,341

Fair value of transactions with clients - - 1,280,367 - - 1,217,847

3.16. PROVISIONS


Provisions for restructuring

Provisions for legal and tax

risks

Provisions for post employment benefit

commitments

Provisions for loan and guarantee commitments

Provisions for loss on contracts

Other provisions Total book value

At 31.12.2012 9,057 2,500 5,498 - - 21,055 38,110

Increase in provisions 332 130 634 - - 19,331 20,427

Provisions used (8,050) - - - - (11,499) (19,549) Unused provisions reversed to profit and loss (689) - (63) - - (2,673) (3,425)

Other movements - - (272) - - (16) (288)

At 31.12.2013 650 2,630 5,797 - - 26,198 35,275

— An allowance of €2.5 million was recognised during fiscal 2012 for legal and tax risks. Indeed, tax audits were performed in two of the Bank's subsidiaries. An addition of €0.1 million was made in 2013.

— Other provisions mainly include provisions for employee long-term loyalty programmes and provisions for litigation with third parties. (See note 6.1.C. Deferred remuneration) and a provision relating to private equity business allocated in 2013.

— The merger of the asset management organisations led the Group to record, in 2012, a provision of €9.1 million for the impacts of the job protection plan. On 31 December, the residual provision amounted to €0.65 million.

— Cash flows related to the additional supplementary pension plan are detailed in Note 6.1.A

— Concerning the Madoff criminal case, the Group has no proprietary position in the Madoff investment funds.

In addition, in its third-party management and/or custodianship activities, the Group considers that the risk of litigation to which it might be exposed is insignificant. In effect, examination of the investment process implemented by both the management company, EdRIM Gestion, and the Private Banking division showed that the former had satisfactorily implemented internal due diligence procedures governing the selection of underlying funds and that the management decisions taken by the latter were generally consistent with the authorisation granted to the Bank, both in the eligibility of the instruments purchased and the limits on investment. For the record, regarding these activities, the total exposure to Madoff funds was €42.9 million..

3.17. EQUITY INSTRUMENTS: UNDATED SUPER-SUBORDINATED NOTES

In June 2007 the Bank undertook a €50 million undated super-subordinated note issue. Further to contracts with one of the bearers, a partial redemption offer on a nominal of €29 million was made by the Bank with a discount of 7.5%. After obtaining the authorisation of the ACP on 12 July 2013, the €29 million were redeemed, and then destroyed, in August 2013. In the event of liquidation of the issuer, holders of these notes will be paid only after other creditors but before holders of equity-type loans and equity-type securities. The undated super-subordinated notes carry financial covenants: — non-payment of interest in the event of insufficient capital related

to non-compliance with prudential capital adequacy ratios or a deterioration in the Bank’s financial position;

— reduction of accrued interest due and payable and then of the nominal value of the notes if the Bank has not taken action to remedy the capital situation within a determined period.

Given the discretionary nature of the decision on the payment of interest on the super-subordinated notes, which is related to the payment of dividends, these notes have been classified as equity instruments and related reserves.

The main financial characteristics of these notes are as follows:

Issue date

Optional early redemption date (call

option)

Rate until early redemption

Rate after early redemption

Interest step-up from the optional early redemption

date

June 2007

June 2017 then quaterly 6,36% (1) 3-month Euribor

+2.65% + 100 basis

points (1) Rate fixed by reference to the 10-year swap rate in euros at 4 June 2007: 4.71% + 1.65%.

3.18. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

At 31 December 2013

In thousands of euros Gross amounts

of financial assets

Amounts set off on

balance sheet

Net amounts stated on

balance sheet

Impact of netting

agreements and similar

accords

Financial instruments received as collateral

Net amounts

Financial assets at fair value through profit and loss

-Trading securities 53,828 (16,076) 37,752 - (24,325) 13,427

-Loans and receivables measured at fair value through profit and loss under the

161,283 - 161,283 - - 161,283

-Fixed income securities measured at fair value through profit and loss under the

51,453 - 51,453 - - 51,453

Loans and receivables due from credit institutions and clients 779,859 - 779,859 - (40,000) 739,859

-Of which repurchase transactions

40,000 - 40,000 - (40,000) -

Accruals and other assets 144,738 - 144,738 - - 144,738

-Of which security deposits granted

44,424 - 44,424 - - 44,424

Other assets not subject to set-off 1,089,403 - 1,089,403 - - 1,089,403

TOTAL ASSETS 2,280,564 (16,076) 2,264,488 - (64,325) 2,200,163

At 31 December 2013


Gross amounts of

financial liabilities

Amounts set off on

balance sheet

Net amounts stated on balance sheet

Impact of netting agreements and similar accords


Net amounts

Financial liabilities at fair value through profit and loss


-Borrowings at fair value through profit and loss under the fair value option

105,577 - 105,577 - - 105,577

-Borrowings represented by securities at fair value through profit and loss under the fair

178,338 - 178,338 - - 178,338

Due to credit institutions and clients 1,306,513 - 1,306,513 - - 1,306,513


96,232 - 96,232 - (96,232) -

Accruals and other liabilities 240,011 - 240,011 - - 240,011


24,801 - 24,801 - - 24,801

Other liabilities not subject to set-off

55,663 - 55,663 - - 55,663

TOTAL LIABILITIES 1,936,248 (16,076) 1,920,172 - (14,680) 1,905,492

At 31 December 2012

In thousands of euros Gross amounts

of financial assets

Amounts set off on

balance sheet


Impact of netting


accords


Net amounts

Financial assets at fair value through profit and loss


-Loans and receivables measured at fair value through profit and loss under the

208,731 - 208,731 - - 208,731

-Fixed income securities measured at fair value through profit and loss under the

88,331 - 88,331 - - 88,331

Loans and receivables due from credit institutions and clients 711,574 - 711,574 - (40,000) 671,574


358,838 - 358,838 - (358,838) -

Accruals and other assets 179,412 - 179,412 - - 179,412


60,890 - 60,890 - - 60,890

Other assets not subject to set-off 1,217,973 - 1,217,973 - - 1,217,973

TOTAL ASSETS 2,485,377 (29,613) 2,455,764 - (67,774) 2,387,990

At 31 December 2012


Gross amounts of

financial liabilities

Amounts set off on balance sheet


Impact of netting


accords


Net amounts



-Borrowings at fair value through profit and loss under the fair value option 105,577 - 105,577 - - 105,577

-Borrowings represented by securities at fair value through profit and loss under the fair value option

178,338 - 178,338 - - 178,338

Due to credit institutions and clients 1,306,513 - 1,306,513 - - 1,306,513

-Of which repurchase transactions 96,232 - 96,232 - (96,232) -

Accruals and other liabilities 240,011 - 240,011 - - 240,011

-Of which security deposits granted 24,801 - 24,801 - - 24,801

Other liabilities not subject to set-off 55,663 - 55,663 - - 55,663

TOTAL LIABILITIES 1,936,248 (16,076) 1,920,172 - (14,680) 1,905,492


NOTE 4 – ANALYSIS OF INCOME STATEMENT ITEMS

4.1. INTEREST AND SIMILAR REVENUES


On transactions with credit institutions 530 3,017

– Demand deposits and interbank loans 523 2,486

– Loan and guarantee commitments - -

– Securities under repurchase/resale agreements 7 531

On transactions with clients 6,640 5,998

– Demand deposits and loans 6,588 5,986


– Securities under repurchase/resale agreements 52 12

On financial instruments 30,379 31,945

– Financial assets held to maturity - -

– Available-for-sale financial assets 772 84

– Financial assets measured at fair value through profit and loss under the fairvalue option 3,070 3,965

– Interest income on derivatives 26,537 27,896

Total interest and similar revenues 37,549 40,960

4.2. INTEREST AND SIMILAR EXPENSES


On transactions with credit institutions (426) (2,648)

– Demand deposits and interbank loans (425) (2,648)


– Securities under repurchase/resale agreements (1) -

On transactions with clients (970) (3,901)

– Demand deposits and loans (916) (3,194)


– Securities under repurchase/resale agreements (54) (707)

On financial instruments (29,375) (31,247)

– Debt securities (11,853) 13,019

– Interest income on derivatives (17,522) (44,266)

Total interest and similar expenses (30,771) (37,796)

4.3. FEE INCOME AND EXPENSES

31.12.2013 31.12.2012

In thousands of euros Income Expenses Income Expenses

Cash and interbank transactions - (24) - (94)

Transactions with clients 332 - 316 -

Securities transactions - - - -

Foreign exchange transactions 15 - 14 -

Off balance sheet transactions - - - -

– Securities commitments 119 - 119 -

– Commitments on forward financial instruments

5,613 (3,408) 3,769 (1,995)

Financial services 392,359 (82,673) 386,802 (86,413)

Releases from allowances (provisions) - - 251 -

Total fees 398,438 (86,105) 391,271 (88,502)

4.4. NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS

31.12.2013 31.12.2012

In thousands of euros Trading portfolio

Portfolio measured at

fair value under the fair value option

Trading portfolio

Portfolio measured at

fair value under the fair value option

Net gains or losses on financial assets at fair value through profit and loss

- 2,076 - 3,565

Net gains or losses on financial liabilities at fair value through profit and loss

- (13,516) - (65,503)

Net gains or losses on derivatives 14,082 - 64,206 -

Net gains or losses on foreign exchange transactions 9,707 - 9,141 -

Total net gains or losses on financial instruments at fair value through profit and loss

23,789 (11,440) 73,347 (61,938)

4.5. NET GAINS OR LOSSES ON AVAILABLE-FOR-SALE FINANCIAL ASSETS

Net gains or losses on available-for-sale financial assets include net gains and losses on non-derivative financial assets classified neither as loans and receivables nor as investments to be held to maturity.


Net gains or losses on available-for-sale bonds and other fixed-income securities - -

Net gains or losses on available-for-sale long-term investments 9,270 5,670

Lasting impairment of long-term investments (3,253) -

Net gains or losses on available-for-sale other variable-income securities 3,542 2,082

Lasting impairment of variable-income securities (18,044) (2,031)

Total net gains or losses on available-for-sale financial assets (8,485) 5,721

Interest income on available-for-sale fixed-income securities is included in “Interest margin” (notes 4.1 and 4.2) and any impairment loss caused by issuer insolvency is included in “Cost of risk” (note 4.8).

4.6. OTHER REVENUES AND EXPENSES


Expenses transferred to other companies 1,394 2,009

Miscellaneous revenues 2,393 3,290

Miscellaneous 3,603 3,896

Other revenues 7,390 9,195

Revenues transferred to other companies (7,011) (6,634)

Miscellaneous (8,730) (2,719)

Other expenses (15,741) (9,353)


4.7. GENERAL OPERATING EXPENSES


Wages and salaries (113,670) (103,672)

Pension expenses (8,996) (9,397)

Social security costs (40,883) (29,228)

Voluntary employee profit-sharing (259) (151)

Employee profit-sharing (3,872) (3,731)

Payroll taxes (11,198) (11,804)

Allocations to provisions for personnel expenses (11,792) (11,386)

Reversals of provisions for personnel expenses 22,464 28,830

Subtotal - Personnel expenses (168,206) (140,539)

Taxes other than on income (6,280) (6,965)

Rental expenses (21,523) (20,766)

Cost of external services (70,196) (78,437)

Travel expenses (2,466) (3,161)

Miscellaneous operating expenses - (145)

Allocations to provisions for administrative expenses - -

Reversals of provisions for administrative expenses 26 -

Subtotal - Administrative expenses (100,439) (109,474)

Total general operating expenses (268,645) (250,013)

4.8. COST OF RISK


Allocations to provisions for credit risk (98) (244)

Net losses on receivables written off (8) (716)

Reversals of provisions for credit risk 77 107

Reversals of other provisions - -

Amounts recovered on receivables formerly written off 105 16

Total cost of risk 76 (837)

4.9. NET GAINS OR LOSSES ON OTHER ASSETS


Losses on sales of intangible and tangible assets (1) (468)

Gains on sales of intangible and tangible assets - 6

Gain (loss) on disposals of investments in consolidated companies 481 -

Total net gains or losses on other assets 480 (462)

4.10. INCOME TAX EXPENSE AND EFFECTIVE TAX RATE

This entry includes extraordinary income from withholding tax of €4.9 million.


Consolidated net income 24,541 30,348

Income tax 10,449 23,033

Income before tax 34,990 53,381

Provisions and expenses not deductible for tax purposes 6,645 8,141

Dividends received from affiliated companies and related restatements 556 519

Share in net income of associates (2,837) 1,806

Untaxed consolidation restatements 3,657 209

Non-taxable miscellaneous income and other deductions (9,751) (5,042)

Items taxed at reduced rates 15,334 2,383

Pre-tax income taxable at standard tax rate 48,594 61,397

Tax rate - -

Theoretical tax expense at standard rate 18,466 22,164

Pre-tax income taxable at reduced rate - (2,383)

Tax rate 0.00% 0.00%

Theoretical tax expense at reduced rate - -

Pre-tax income taxable at reduced rate (15,334) -

Tax rate 17.10% 16.25%

Theoretical tax expense at reduced rate (2,622) -

Theoretical income tax expense 15,844 22,164

Unrecognised tax losses arising in the year 3,914 (2,054)

Unrecognised tax losses used (1,484) (2,054)

Allocations to/reversals of provisions set up for tax purposes 130 2,500

Tax credits (1,420) (106)

Tax differential on earnings of foreign entities (1,749) (2,885)

Save or load generated by the tax consolidation - (2)

Tax assessment and tax income on previous years (4,019) 1,119

Miscellaneous (767) (523)

Income tax calculated 10,449 23,033

– Including current tax charge 5,905 30,353

– Including deferred tax charge 4,414 (7,320)

– Including allocations to/reversals of provisions set up for tax purposes 130 -

Income before tax 34,990 53,381

Income tax 10,449 23,033

Average effective tax rate 29.86% 43.15%

Standard tax rate in France (including the 5% contribution) 38.00% 36.10%

Impact of permanent differences (1.88)% 3.81%

Impact of reduced-rate taxation 9.16% 1.61%

Tax differential on earnings of foreign entities (5.00)% (5.40)%

Impact of losses for the year and utilisation of tax losses brought forward 6.94% 1.44%

Impact of other items (17.36)% 5.59%

Average effective tax rate 29.86% 43.15%


NOTE 5 – NOTE ON COMMITMENTS


Commitments given

Loan commitments

To credit institutions - -

To clients 123,059 139,788

Guarantee commitments

To credit institutions - -

To clients 192,249 256,736

Commitments received - -

Loan commitments

From credit institutions 13,163 12,174

From clients - -

Guarantee commitments

From credit institutions 20,312 20,312

From clients - -

The beneficiaries of free share allocation plans and stock option plans introduced by Edmond de Rothschild S.A. (EdR S.A.) or other Group companies have concluded liquidity contracts with the issuing entities. Under the terms of these contracts, the issuing companies undertake to purchase and the beneficiaries to sell the shares issued or allocated under these plans, subject to certain conditions. These contracts are discussed in greater detail in Note 6.2. Since December 2005, it has been agreed between EdR S.A. and the Bank that EdR S.A. would systematically be substituted for the Bank in the performance of these contracts, and EdR S.A. reserves the right to use a third-party substitute. The contract between La Compagnie Financière Edmond de Rothschild Banque and EdR S.A. also covers the other commitments to buy out minority shareholders’ interests outstanding within the Group.

The following table lists the number of shares by issuer that are subject to a liquidity provision on matured plans:

Issuer Number of shares

La Compagnie Financière Edmond de Rothschild Banque 122,764

Edmond de Rothschild Asset Management 68,267

NOTE 6 – EMPLOYEE BENEFITS AND SHARE-BASED PAYMENTS

6.1. EMPLOYEE BENEFITS UNDER “IAS 19”

In accordance with IFRS 1, since 1 January 2006 the Group has measured and recognised employee benefits under the rules set out in IAS 19. In its first application of IFRS, the Group opted to apply the exception contained in IFRS 1, allowing all cumulative actuarial gains and losses still outstanding at 1 January 2006 to be recognised directly in equity at that date.

6.1.A. PENSION COSTS – DEFINED BENEFIT PLANS

An additional supplementary pension plan set up in December 2004 was closed on 31 December 2012, although its provisions were maintained for beneficiaries born before 31 December 1953. It applies to a category of senior management for whom the existing basic and complementary pension plans provide a significantly lower rate of income replacement than for other categories of personnel. This plan is a defined-benefit plan expressed in terms of the overall final pension (limited in time), or in terms of the top-up pension it provides in addition to the basic pensions. Payment of benefits is conditional on the employee remaining in the Company until retirement. The plan provides for annuity purchases upon retirement to settle the obligation to the beneficiary. The beneficiaries of this additional supplementary pension plan are senior management, members of the General Management Committee, and senior executives defined in the 35-hour working week agreement as executives not covered by the normal classification. The basis for determining the reference remuneration and calculating the additional pension is the gross annual salary plus bonuses received, before any applicable tax or social charges withheld at source. The guaranteed additional pension is 10% of the reference remuneration between four and eight times the annual limit defined by French social security legislation at the date of settlement of the pension, plus 20% of the portion of the reference remuneration between eight and 22 times that limit.

This supplementary pension is payable in addition to the mandatory basic and additional pensions. Gains and losses resulting from its first application are treated in accordance with the rules for changes of accounting method.


The Group has therefore allocated the impact of this change of method, net of deferred taxes, to equity at the date of its first application (€8.381 million). This impact results from the recognition of previously unrecognised post-employment benefits, for a pre-tax amount of €12.825 million. Benefit commitments have been discounted at the rate of 4.25%. The value of the commitments at 31 December 2013 has been determined by qualified actuaries, applying the following assumptions: — update rate: 3% depending on the term of the plan (3.5 years); — inflation rate: 2% depending on the term of the plan (2.7 years); — expected return on plan assets: 3%; — expected salary increase rate, net of inflation: 2%

The discount rate was chosen on the basis of the average yields observed on bonds maturing in 10 years or more, issued by euro zone companies with AA ratings. The benchmark is the iBoxx € Corporates index. This rate is the same as the one used for the last evaluation, i.e. 3%.

Taxes and contributions on annuities: Article 113 of French Law No. 2003-775 of 21 August 2003 on pension reform alters the terms of liability to Social Security taxes, the general social contribution and the tax to repay social-security debt, of employers’ contributions to funding pension benefits. In exchange for the exemption from social security charges, a tax payable exclusively by the company was established. The 2010 Social Security Financing Act doubled the tax levied on annuities exceeding one-third of the annual Social Security ceiling, raising it from 8% to 16% The 2011 Social Security Financing Act subsequently modified the basis for applying this tax. The allowance was eliminated and the 16% tax thus applied from the first euro of the annuity, for all annuities paid after 1 January 2001. The Group had previously opted for the tax on annuities, but at the end of 2011 it chose to change options as allowed by the 2011 Social Security Financing Act for defined-benefit plans consistent with L. 137-11. It is now taxed at 12% based on all contributions paid into the fund. In addition to the foregoing tax, an additional 30% contribution to be paid by employers from the first euro was established on annuities exceeding eight times the annual ceiling and paid from 1 January 2010. These impacts were measured in 2009.

As at 31 December 2013, the amount of commitments came to €23.488 million euros before tax, the fair value of the assets was €23.504 million, i.e. an amount paid in advance of €0.016 million euros.

• Financial assets representing commitments(for the additional supplementary pension)

Portfolio structure 31.12.2013 31.12.2012

Equities 28.14% 27.54%

Bonds 61.09% 61.25%

Real estate 6.11% 5.73%

Money market and Other 4.66% 5.48%

Actual return on plan assets 3.00% 3.00%

• Main actuarial assumptions (additional supplementary pension)defined (for the additional supplementary pension)


Present value of the commitment 23,488 22,646

- Value of plan assets (23,504) (23,279)

Financial position of plan (16) (633)

- Unrecognised past service cost - 299

Provision (16) (334)

6.1.B. TERMINATION BENEFITS FOR RETIRING EMPLOYEES

Termination benefits for retiring employees are a post-employment benefit and are part of the defined-benefit plan category. Entitlements to termination benefits for retiring employees in Group companies are defined by the following collective agreements: — the French national collective agreement for banks (No. 1361)

for all companies; — the French national collective agreement for insurance and/or

reinsurance brokerage firms (No. 3110) for Assurance Saint-Honoré Patrimoine.

The following remuneration basis is used to calculate the benefit payable to retiring employees: — for the national collective agreement for banks, 1/13th of the

average remuneration the beneficiary received or would have received over the past 12 months, excluding any standard or exceptional bonus and any variable component of pay;

— for the national collective agreement for insurance brokerages, 1/12th of the remuneration the beneficiary received or would have received over the past 12 months,


excluding any bonuses and additional payment for overtime, travel or secondment;— for the national collective agreement for insurance brokerages,

1/12th of the remuneration the beneficiary received or would have received over the past 12 months.

This indemnity cannot be lower than the retirement indemnity defined by French employment law. This plan is not funded by an insurance contract. The actuarial method used to value the commitment is the projected unit credit method. Actuarial gains and losses on the plan for termination benefits for retiring employees are recorded in equity. The Group has opted to apply the amendment to IAS 19 allowing actuarial gains and losses related to experience adjustments and/or changes in assumptions to be recognised in equity (the “SoRIE” method). The discount rate chosen is based on the rates on long-term corporate bonds at the time of measurement (rate on iBoxx Euro Corporate AA 10-year+). The rate as of 31 December 2013 was 3%, versus 4.75% at 31 December 2011 and is the same as the one used for the last evaluation, i.e. 3%.

The gross value of commitments came to €5.673 million at 31 December 2012 and €5.600 million at 31 December 2013. The cost of services in 2013 is €548,000, the discount expense is €167,000, actual benefits paid come to €409,000 and the actuarial gain recorded for 2013 is €198,000.

• Main actuarial assumptions (additional supplementarypension) post-employment benefits, defined-benefit plan(additional supplementary pension and terminationbenefits for retiring employees)

Breakdown of the expense recognised 31.12.2013 31.12.2012


Current period service cost (386) (469)

Interest cost (816) (1,305)

Expected return on plan assets 663 720

Actuarial gains and losses - -

Amortisation of past service cost - 46

Amortisation of actuarial gains and losses - -

Effect of any plan curtailments or settlements (158) 8,278

Effect of overfunding - -

Net expense recognised (697) 7,270

• Main actuarial assumptions (additional supplementarypension) defined-plan

Main actuarial assumptions (termination benefits for retirging employees) 31.12.2013 31.12.2012

Discount rate 3.00% 3.00%

Expected long-term inflation 2.00% 2.00%

Salary increase

-Clerical workers 3% 3%

-Executives and Senior Management 3.50% 3.50%

-Senior executives 4% 4%

Rate of employer's social security charges and taxes 61.90% 59.30%

Mortality rates INSEE 2009-2011 INSEE 2008-2010

0 0

Main actuarial assumptions (additional supplementary pension) 31.12.2013 31.12.2012

Discount rate 3.00% 3.00%

Expected return on plan assets 3.00% 3.00%

Expected return on reimbursement rights 2% 2%

Salary increase rates, net of inflation 2% 2%

Average remaining working life of employees 3.5 years 13.9 years

Mortality rates TGHF05 TGHF05

• Analysis of sensitivity of post-employment benefitcommitments to changes in the main actuarialassumptions

Impact of the change (additional supplementary pension) 31.12.2013

Change of ( 0.50%) in the discount rate: 2.50% (3.00% - 0.50%)

– Impact on present value of commitments at 31 December 2012 0.25%

Impact on net total expense in 2012 (14.27)%

Change of +0.50% in the discount rate: 3.50% (3.00% + 0.50%) 0.00%

– Impact on present value of commitments at 31 December 2012 (0.21)%

– Impact on net total expense in 2012 14.23%


Changes in provision (in thousands of euros) 31.12.2013 31.12.2012

Provision/asset at the beginning of the period 5,338 15,663

– Expense recognised in profit and loss 1,106 (6,553)

– Employer’s contribution to plan assets - -

– Benefits directly paid by the employer (unfunded) (409) (6,318)

– Changes in consolidation scope (acquisitions and disposals) - -

– Actuarial gains or losses 28 2,636

– Other movements (479) (90)

Provision/asset at the end of the period 5,584 5,338



Recognition of commitments


Change in the value of commitments

Present value of the commitment at the beginning of the period 28,318 32,497

– Past service cost 796 1,187

– Discount expense 815 1,305

– Employee contributions - -

– Actuarial gains or losses 420 3,591

– Benefits paid by the employer and/or the fund (1,239) (2,001)

– Plan liquidation or reduction (22) 50

– Amendment to plan - (8,311)


– Other movements - -

Total present value of the commitment at the end of the period (A) 29,088 28,318

Change in plan assets and reimbursement rights - -

Fair value of plan assets at the beginning of the period 23,279 17,287

– Return on plan assets 663 720

– Actuarial gains or losses 392 955

– Employer contributions - 5,000

– Employee contributions - -

– Plan liquidation or reduction - -

– Amendment to plan - -


– Other changes (translation adjustment) - -

– Benefits paid by the fund (830) (683)

Fair value of plan assets at the end of the period (B) 23,504 23,279

Funding status

Financial position (A) – (B) 5,584 5,039

– Unrecognised actuarial gains or losses - -

– Unrecognised past service cost - 299

– Adjustment due to limit on plan assets - -

Provision/asset 5,584 5,338

6.1.C. DEFERRED COMPENSATION

The Bank ended the previous scheme for deferred compensation paid in cash, which resulted in a reversal of a provision of €24.960 million, excluding the effect of discounting.

The Group formalised its remuneration policy in application of, firstly, the French Ministerial Decree of 3 November 2009 relating to the remuneration of employees whose professional activities may affect the risk exposure of credit institutions and, secondly, the professional standards of the French Banking Federation (FBF) issued on 5 November 2009. This remuneration policy was approved by the Supervisory Board of the Bank on 23 March 2010 after the favourable opinion of the Remuneration Committee. It was adapted to the new provisions of the Decree of 13 December 2010. The Group applies the aforementioned professional standards, taking into account individual employee performances, competition in its markets, long-term objectives and the interests of shareholders.

The regulatory environment The Decree of 3 November 2009 and the professional standards of the French Banking Federation have required financial institutions to regulate variable remuneration payment practices for financial market professionals and senior managers, to guarantee a level of shareholders' equity that would not expose them to risk. The Decree of 13 December 2010 extends the standards of the FBF issued on 5 November 2009 reserved for senior managers and financial market professionals (defined as employees whose performance and remuneration are linked to market instruments), to “risk taker” employees, as well as to all employees within an equivalent remuneration bracket and whose professional activities are likely to have an impact on the firm’s risk profile. It also resumed the payment criteria of the variable remuneration of the employees concerned, as determined by the FBF. In addition, the AFG, AFIC and ASPIM issued common provisions on the remuneration policies of management companies on 23 November 2010.

Governance and formalisation of existing practices Pursuant to the aforementioned texts, an annual report on the variable remuneration of the employees concerned is to be sent to the Prudential Supervisory Authority. The process for determining remuneration packages each year must be examined by the Bank's Remuneration Committee.


The Bank’s system

1 --- ‘‘Risk-taker’’ employees The employees concerned are: — those dealing in transactions on any financial markets involving

financial instruments or contracts. This, in the Group, means market operators and traders,

— members of the management bodies, — and those engaged in internal control and risk control functions.

Activities concerned — the corporate Risk Management Department and the Bank’s

internal and risk control functions, — the Capital Markets Department: market operators and traders, — the Group as a whole: members of the management bodies.

The calculation of allocations for the variable remuneration of “risk-taker” employees complies with the following guidelines:

Overall The total bonus allocation for each entity and department of the Bank is proposed by the Human Resources department and the Finance department, after consultation with the corporate Risk Management and the Compliance and Control department, which determines an adjustment factor for the allocation based on the results of each entity and the Group. 50% of the total allocation for bonuses to “risk-taker” employees must be paid in deferred form in cash.

Individually Bonuses paid to “risk-taker” employees must be deferred on a straight-line basis over a minimum of three years when they reach a certain level of base salary. Each year, the bonus threshold beyond which payment is made on a deferred basis is set by the Executive Board on recommendation by the Human Resources department, after consultation with the Compliance and Control department.

Bonuses paid in 2013 for the 2012 financial year will be in cash, deferred and paid in one-third instalments when the amount exceeds 100% of the annual base salary. The share of the bonus to be deferred will be from 40% to 60%, depending on salary level. Exceptions may be made if there is a risk of losing key personnel.

2 --- Managers, sales staff of asset management companies As members of the AFG, AFIC and ASPIM, the companies concerned are Edmond de Rothschild Asset Management, Edmond de Rothschild Investment Partners and Edmond de Rothschild Capital Partners (Decree of 23 November 2010). The calculation of allocations for the variable remuneration of the managers and sales staff of asset management companies complies with the following guidelines: Analysis of proposed allocations for individuals and identification, where appropriate, of special situations by the Human Resources department, the Compliance and Control department and the corporate Risk Management department. A list of employees concerned is updated annually.

The special bonus will vary according to: — The employee’s performance (according to defined individual

quantitative targets); — An additional criterion is applied to measure the performance of

the following positions: . managers: measuring the multi-year performance of managed products; . salespeople: the ability to forge a lasting relationship of trust with clients.

— The results of the entity (department of the Bank or subsidiary) and of the Group;

— The satisfaction of quantitative and qualitative behavioural objectives, in terms of risk control and internal control.

— The performance bonus for asset managers, as it may increase the Company’s risk exposure, will be subject to the following rules;

— When the level of this bonus substantially exceeds the employee's base salary, a portion of it will be paid on a deferred basis;

— The deferred cash bonus will be paid over three years. Exceptions may be made if there is a risk of losing key personnel.


6.2. SHARE-BASED BENEFIT PLANS GOVERNED BY “IFRS 2”

6.2.A. DESCRIPTION OF SHARE PURCHASE OPTION AND FREE SHARE ALLOCATION PLANS

Year 2008 2009 2009 2010 2010 2010 2010

Free share Subscription Subscription Purchase Purchase Purchase Purchase

Plan type allocations option option option option option option

18 25 26 28 28 Bis 28 Ter 30

Date of Executive Board autorisation 01/10/08 01/07/09 01/07/09 01/07/10 01/07/10 01/07/10 01/07/10

Allocation date 01/10/08 01/07/09 01/07/09 01/07/10 01/07/10 01/07/10 01/07/10

Immediate allocation

Unavailability period 55 months 4 years 4 years 4 years 5 years 6 years 4 years

Definite shares allocation date 01/05/13 01/07/13 01/07/13 01/07/14 01/07/15 01/07/16 01/07/14

Length of lock-in period

Options expiry date 30/09/2013 30/09/2013 30/09/2013 30/09/2014 30/09/2015 30/09/2016 30/09/2014

Terms and procedures for payment EDRAM LCFEDRB LCFEDRB LCFEDRB LCFEDRB LCFEDRB EDRAM

Stock Stock Stock Stock Stock Stock Stock

Beneficiaries EDRAM LCFEDRB LCFEDRB LCFEDRB LCFEDRB LCFEDRB EDRAM

Employees Employees Employees Employees Employees Employees Employees

Number of options granted (1) 49,905 7,500 20,000 19,580 19,580 19,592 863

Exercise price (or share price on the date of grant) 124.24 149.71 149.71 117.00 117.00 117.00 115.80

Performance conditions No No No No No No No

Conditions in the event of leaving the Group:

- Resignation Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited

- Dismissal Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited

- Retirement Maintained Maintained Maintained Forfeited Forfeited Forfeited Forfeited

- Death Maintained Maintained Maintained Maintained Maintained Maintained Maintained

Number of options taken up, of free options definitely allocated in 2013 14,490 7,500 20,000

Cancelled ab initio 15,295 5,642 5,642 5,643

Cancelled and replaced 20,120

Number of options or existing free options on 31/12/2012 14,490 7,500 20,000 16,913 16,913 16,926 863

Number of options or existing free options on 31/12/2013 13,938 13,938 13,949 863

Fair value as % of grant price 30.38% 42.82% 24.07% 25.99% 27.41% 24.07%

(1) At the allocation date


2010 2010 2010 2010 2010 2010 2010 2010 2011

Purchase Purchase Purchase Purchase Purchase Subscription Subscription Subscription Free share

option option option option option option option option allocations

30 Bis 30 Ter 32 32 Bis 32 Ter 33 33 Bis 33 Ter 35

01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/11

01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/10 01/07/11

5 years 6 years 4 years 5 years 6 years 4 years 5 years 6 years 2 years

01/07/15 01/07/16 01/07/14 01/07/15 01/07/16 01/07/14 01/07/15 01/07/16 01/07/13

2 years

30/09/15 30/09/16 30/09/14 30/09/15 30/09/16 30/09/14 30/09/15 30/09/16

EDRAM EDRAM EDRAM EDRAM EDRAM EDRAM EDRAM EDRAM LCFEDRB

Stock Stock Stock Stock Stock Stock Stock Stock Stock

EDRAM EDRAM EDRAM EDRAM EDRAM EDRAM EDRAM EDRAM LCFEDRB

Employees Employees Employees Employees Employees Employees Employees Employees Employees

863 864 20,375 20,375 20,405 9,733 9,733 9,729 18,327

115.80 115.80 146.00 146.00 146.00 146.00 146.00 146.00 141.00

No No No No No No No No No

Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited



Maintained Maintained Maintained Maintained Maintained Maintained Maintained Maintained Maintained

14,528

5,905 5,905 5,916 6,761 6,761 6,761 3,799

863 864 15,780 15,780 15,803 4,456 4,456 4,451 14,528

863 864 14,470 14,470 14,489 2,972 2,972 2,968

25.99% 27.41% 24.07% 25.99% 27.41% 24.07% 25.99% 27.41% 91.83%


Year 2011 2011 2011 2011 2011 2011 2011

Free share Purchase Purchase Purchase Free share Subscription Subscription

Plan type allocations option option option allocations option option

35 36 36 Bis 36 Ter 37 38 39

Date of Executive

Board autorisation 01/07/11 01/07/11 01/07/11 01/07/11 01/07/11 30/11/10 30/11/10

Allocation date 01/07/11 01/07/11 01/07/11 01/07/11 01/07/11 30/11/10 30/11/10

Immediate allocation OUI

Unavailability period 2 years 4 years 5 years 6 years 2 years 1 years 4 years

Definite shares allocation date 01/07/13 01/07/15 01/07/16 01/07/17 01/07/13 30/11/13 30/06/14

Length of lock-in

period 2 years 2 years

Options expiry date 30/09/2015 30/09/2016 30/09/2017

Terms and procedures

for payment LCFEDRB EDRAM EDRAM EDRAM EDRAM EDRIS EDRIS

Stock Stock Stock Stock Stock Stock Stock

Beneficiaries EDCF EDRAM EDRAM EDRAM EDRAM EDRIS EDRIS

Employees Employees Employees Employees Employees Employees Employees

Number of options

granted (1) 709 1,527 1,527 1,526 33,540 53,602 12,685

Exercise price (or share price on the date of grant)

141.00 158.20 158.20 158.20 158.20 352.82 352.82

Performance

conditions No No No No No No No

Conditions in the

event of leaving the

Group:

- Resignation Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited

- Dismissal Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited

- Retirement Forfeited Forfeited Forfeited Forfeited Forfeited Maintained Maintained

- Death Maintained Maintained Maintained Maintained Maintained Maintained Maintained Number of options taken up, of free options definitely allocated in 2013

709 22,735

Cancelled ab initio 737 737 736 10,805 53,602 12,685

Cancelled and

replaced Number of options or existing free options on 31/12/2012

709 790 790 790 24,315 53,602 12,685

Number of options or existing free options on 31/12/2013

790 790 790

Fair value as % of

grant price 91.83% 19.45% 20.92% 22.00% 88.28% 28.75% 23.09%

(1) At the allocation date


2011 2011 2011 2011 2011 2012 2012 2012

Subscription Subscription Subscription Subscription Subscription Free share Free share Free share

option option option option option allocations allocations allocations

39 bis 39 ter 40 40 bis 40 ter 41 41 bis 42

30/11/10 30/11/10 30/11/10 30/11/10 30/11/10 01/07/12 01/07/12 01/07/12

30/11/10 30/11/10 30/11/10 30/11/10 30/11/10 01/07/12 01/07/12 01/07/12

5 years 6 years 4 years 5 years 6 years 2 years 2 years 2 years

30/06/15 30/06/16 30/06/14 30/06/15 30/06/16 01/07/14 01/07/14 01/07/14

EDRIS EDRIS EDRIS EDRIS EDRIS LCFEDRB LCFEDRB EDRAM

Stock Stock Stock Stock Stock Stock Stock Stock

EDRIS EDRIS EDRIS EDRIS EDRIS LCFEDRB LCFEDRB EDRAM

Employees Employees Employees Employees Employees Employees Employees Employees

12,685 12,686 3,037 3,037 3,038 8,181 3,242 24,085 422,531

352.82 352.82 352.82 352.82 352.82 128.00 128.00 136.200

No No No No No No No No

Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited

Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited Forfeited

Maintained Maintained Maintained Maintained Maintained Forfeited Forfeited Forfeited

Maintained Maintained Maintained Maintained Maintained Maintained Maintained Maintained

79,962

12,685 12,686 3,037 3,037 3,038 4,977 2,770 195,562

20,120

12,685 12,686 3,037 3,037 3,038 3,204 3,242 23,100 328,296

3,204 3,242 21,315 126,887

23.90% 24.30% 23.09% 23.90% 24.30% 91.23% 91.23% 87.06%

Black & Scholes Black & Scholes Black & Scholes Black & Scholes Black & Scholes


6.2.B. EXPENSE RECOGNISED IN PROFIT AND LOSS

The expense mentioned here relates to share purchase option plans, share subscription option plans and free share allocation plans awarded since 7 November 2002 and for which rights have not yet vested at the date of transition to IFRS (1 January 2006). All these plans are fully settled in shares of the parent company or subsidiaries.

In thousands of euros 2012 2011

Net expense from share purchase option plans 277 (1,101)

Net expense from share subscription option plans (194) (837)

Net expense from free share allocation plans (4,336) (10,070)

Total expense recognised in profit and loss (4,253) (12,008)

6.2.C. STOCK OPTION PLAN STATISTICS

Plan statistics Number of options 2008 plans

Number of options 2009 plans




Total

Options outstanding at 31 December 2011 18,515 31,001 296,756 148,564 - 494,836

– Awarded in 2012 - - - - 44,620 44,620

– Cancelled in 2012 (4,025) (3,501) (36,271) (14,984) (5,962) (64,743)

– Cancelled and replaced in 2012 - - - - - -

– Exercised in 2012 - - (146,417) - - (146,417)

– Expired in 2012 - - - - - -

Options outstanding at 31 December 2012 14,490 27,500 114,068 133,580 38,658 328,296

Weighted average residual contractual term: 15.61 months. Weighted average fair value at award date: €50.06. Weighted average share price at exercise date: €122.80.

• Main assumptions used for valuationof plans

Main assumptions 31.12.2012 31.12.2011

Average residual term of plan (months) 52 53

Risk-free interest rate 2.19% 2.20%

Rate of forfeiture of rights 16.04% 15.55%

Estimated dividend rate 5.75% 6.04%

Volatility at award date 35.15% 34.00%

6.2.D. VALUE ATTRIBUTED TO FREE SHARES AND OPTIONS AWARDED

In compliance with IFRS 2, free shares and options awarded are measured at their fair value on their award date, with no subsequent adjustment. Only assumptions concerning the population of beneficiaries (forfeiture of rights) may be revised during the vesting period, leading to readjustment of the expense.

If one plan is replaced by another, the Group recognises the marginal effects of increases in the total fair value or of any other change favourable to the member of staff.

• Free sharesThe Group amortises the award price of free shares over the vesting period on a straight-line basis, based on the current share price at the award date, discounted at a rate equal to the average dividend rate observed over the past three years.

• Stock-optionsThe Group uses the Black & Scholes model to value options (European call options), with the following parameters: — strike: stock option exercise price; — benchmark price: current share price; — volatility: based on a representative sample; — market interest rate for the period under consideration; — dividend rate: average over three years, capped at the interest

rate adopted; — period: period between the award date of the stock option and

the earliest possible exercise date.


NOTE 7 – ADDITIONAL INFORMATION

7.1. CONSOLIDATED COMPANIES

Percentage held Percentage controlled

31.12.2013 31.12.2012 31.12.2013 31.12.2012

Fully consolidated companies

Holding companies

• Financière Boréale ** 100.00 100.00 100.00 100.00

• Edmond de Rothshild Real Estate Management Cie SàRL * 62.73 62.73 62.73 62.73

• CFSH Luxembourg * 100.00 100.00 100.00 100.00

• CFSH Secondary Opportunities SàRL * 98.00 98.00 98.00 98.00

• Edmond de Rothschild Europportunities RCI II SàRL * 99.49 99.38 99.49 99.38

• ERES RCI SàRL * 99.35 99.35 99.35 99.35

• Câblinvest SàRL * 99.90 99.90 100.00 100.00

• Câblinvest II SàRL * 99.90 99.90 100.00 100.00

- -

- -

Investment companies

• Edmond de Rothschild Asia Securities Limited * 100.00 100.00 100.00 100.00

Management companies

• Edmond de Rothschild Asset Management ** 98.13 98.29 98.13 98.29

• Edmond de Rothschild S.G.R. SpA * 75.00 75.00 75.00 75.00

• Edmond de Rothschild Private Equity Partners ** 100.00 100.00 100.00 100.00

• Edmond de Rothschild Europportunities Management SàRL 100.00 100.00 100.00 100.00

• Edmond de Rothschild Europportunities Management II SàRL 68.68 60.00 68.68 60.00

• Edmond de Rothschild Investment Partners 60.00 60.00 60.00 60.00

• Edmond de Rothschild Capital Partners 100.00 60.00 100.00 60.00

• EdR Real Estate (Eastern Europe) Management SàRL * 100.00 100.00 100.00 100.00

• LCFR UK PEP Limited * 100.00 100.00 100.00 100.00

• Edmond de Rothschild Asset Management Hong Kong Limited * 98.13 98.29 100.00 100.00

• Edmond de Rothschild Asset Management Chile S.A.* 98.13 98.29 100.00 100.00

• Edmond de Rothschild Private Equity China Management SàRL * 100.00 60.00 100.00 60.00

Advisory companies

• Edmond de Rothschild Corporate Finance ** - 100.00 - 100.00

• Edmond de Rothschild Entreprises Patrimoniales ** 100.00 100.00 100.00 100.00

• EDREP Transactions ** 100.00 100.00 100.00 100.00

• Edmond de Rothschild Investment Services Ltd * 100.00 100.00 100.00 100.00

• Edmond de Rothschild Asia Private Investors Limited * 60.00 99.67 100.00 99.67

• Edmond de Rothschild Asia Limited * 100.00 100.00 100.00 100.00

• Edmond de Rothschild China Limited * 60.00 99.67 100.00 100.00

Insurance companues

• Assurances Saint-Honoré Patrimoine 90.00 90.00 90.00 90.00

Other

• ERS ** - 100.00 - 100.00

• Edmond de Rothschild Boulevard Buildings Ltd * 100.00 100.00 100.00 100.00

• Groupement Immobilière Financière 100.00 100.00 100.00 100.00

• Edmond de Rothschild Investors Assistance 100.00 100.00 100.00 100.00

Associates

Bank

• Banque de Gestion Edmond de Rothschild Monaco 42.77 42.77 42.77 42.77

Investment company

• Edmond de Rothschild Limited * 20.00 20.00 20.00 20.00

Mangement company

• Zhonghai Fund Management Co. Ltd * 25.00 25.00 25.00 25.00

Other

• Omega Financial Solutions 19.63 19.66 20.00 20.00

* Foreign company ** Company included in the tax group in 2013. (1) These companies were merged with Group entities. (2) Change of company name in april 2013 at the time of the merger with Edmond de Rothschild Corporate Finance (ex : Edmond de Rothschild Entreprises Patrimoniales). (3) Change of company name in 2013 (ex : Edmond de Rothschild Investment Services Ltd). (4) Change in company name in 2013 (ex : Edmond de Rothschild Limited).


7.2. AVERAGE NUMBER OF EMPLOYEES

31.12.2013 31.12.2012

French companies 769 849

– Specialised staff 152 175

– Executives and Senior Management 617 674

Foreign companies 141 155

Total 910 1,004

Pursuant to the provisions of the French Commercial Code, the Group publishes a breakdown by categories of its average workforce during the period. The number of workers employed part-time or for less than the full year is taken into account in proportion to the average time worked as compared to the full-time hours laid down by agreement or statute.

7.3. EVENTS AFTER THE BALANCE SHEET DATE

No significant event has occurred since 31 December 2013. The consolidated annual financial statements contained in this document were finalised by the Executive Board on 12 March 2014 and will be presented for approval at the Annual General Meeting of 23 May 2014.

7.4. DISCLOSURES CONCERNING CAPITAL

Pursuant to French Banking and Financial Regulation Committee regulation No. 2000-03, the capital adequacy ratio is assessed at the level of Edmond de Rothschild S.A., which meets capital adequacy requirements. The capital of La Compagnie Financière Edmond de Rothschild Banque at 31 December 2013 is €83,075,820, consisting of 5,538,388 shares with par value of €15 each.

7.5. AUDITORS’ FEES

Auditors’ fees shown in the income statement for the 2013 financial year:


Statutory Auditors’ fees, fees for certification and audit of the separate and consolidated financial statements 864 980

Fees concerning other checks and investigations directly related to the Statutory Auditors’ work 249 246

Other services provided by the networks to fully consolidated subsidiaries - 64

Total 1,113 1,290

NOTE 8 – OPERATING SEGMENTS

The Group’s operations are organised around two strategic lines of business, Asset Management and Private Banking, as well as a third line, Other Activities and Proprietary Trading.

Private Banking covers a range of services including: — portfolio and private asset management, asset engineering and

family office services; — corporate advisory services for family-owned businesses.

Asset Management covers the following four types of management: — equities, diversified, and convertible bond management; — funds of funds, traditional and funds of hedge funds; — fixed income and credit management as well as structured,

quantitative and hedge fund management; — the management of private equity funds..

Other Activities and Proprietary Trading includes: — in Other Activities, corporate advisory services provided by the

dedicated subsidiary Edmond de Rothschild Corporate Finance in mergers and acquisitions, business valuations and financial engineering, and the Capital Markets department for its own activities;

— in Proprietary Trading, management of the Group’s assets (particularly its securities portfolio), the Bank’s corporate finance department for all its business lines, expenses related to this division’s specific activities and its role in steering the Group, and income and expenses not directly attributable to the other divisions.

• Methodologies

Each division’s financial statements have been established with the aim of: — determining the results of each division as if they were

independent entities; — providing a fair view of their results and profitability over the

period.


The principal conventions used in establishing these financial statements are the following: — each division’s net banking income corresponds to the revenues

generated by its business, net of fees passed on to business agents;

— each division’s management expenses comprise its direct costs, its share of expenses related to the logistical and operational support provided by the Bank, and a share of the Group’s overheads;

— allocation of provisions between the divisions reflects the risk borne inherent to its business. Provisions that cannot be allocated to a division are included in Proprietary Trading.

A detailed analysis of the earnings of each of these business divisions is given in the table below, showing their contribution to Group profitability

Private Banking Asset Management Other Activities and Proprietary Trading Group

In thousands of euros 2013 2012 2013 2012 2013 2012 2013 2012

Net banking income 89,597 85,737 219,643 219,027 5,384 19,726 314,624 324,490

Operating expenses (86,843) (83,073) (157,278) (174,000) (38,112) (19,375) (282,233) (276,448)

Personnel expenses (52,334) (50,357) (81,409) (90,953) (34,463) (16,324) (168,206) (157,634)

– direct (40,625) (38,371) (64,035) (71,873) (31,137) (14,243) (135,797) (124,487)

– indirect (11,709) (11,986) (17,374) (19,080) (3,326) (2,081) (32,409) (33,147)

Other operating expenses (29,296) (28,016) (69,656) (73,359) (1,487) (1,033) (100,439) (102,408)

Depreciation, amortisation and impairment

(5,213) (4,700) (6,213) (9,688) (2,162) (2,018) (13,588) (16,406)

Gross operating income 2,754 2,664 62,365 45,027 (32,728) 351 32,391 48,042

Cost of risk 165 118 - (688) (89) (267) 76 (837)

Operating income 2,919 2,782 62,365 44,339 (32,817) 84 32,467 47,205

Share in net income of associates 2,751 2,289 86 (69) - - 2,837 2,220

Net gains or losses on other assets - - - - 480 (463) 480 (463)

Changes in the value of goodwill - - - - (794) - (794) -

Income (loss) before tax 5,670 5,071 62,451 44,270 (33,131) (379) 34,990 48,962

Income tax (781) (829) (21,103) (13,889) 11,435 (4,693) (10,449) (19,411)

Net income 4,889 4,242 41,348 30,381 (21,696) (5,072) 24,541 29,551


NOTE 9 – TRANSACTIONS WITH RELATED PARTIES

La Compagnie Financière Edmond de Rothschild Banque is a subsidiary of Edmond de Rothschild S.A. (EdR S.A.), itself a subsidiary of Edmond de Rothschild Holding S.A. (EdRH), the ultimate shareholder being Baron Benjamin de Rothschild.

All transactions took place in the ordinary course of business and on terms comparable to the terms of transactions with similar parties or, where relevant, with other employees. The parties related to La Compagnie Financière Edmond de Rothschild Banque Group are the companies included in La Compagnie Financière Edmond de Rothschild Banque, and all EdRH Group companies. In application of IAS 24, directors (members of the Supervisory Board) and managers (members of the Executive Board) of La Compagnie Financière Edmond de Rothschild Banque, their spouses and dependent children are also considered related parties.

TRANSACTIONS WITH RELATED COMPANIES

Note 7.1 lists all companies included in the La Compagnie Financière Edmond de Rothschild Banque consolidation. Since transactions and year-end outstanding balances with fully consolidated Group companies are totally eliminated in consolidation, the table below only shows data for intercompany transactions with entities subject to significant Group influence, and consolidated by the equity method.

• Transactions with associates

Note 3.8 lists all companies accounted for by the equity method (associates).


Financial assets at fair value through profit and loss - -

Loans and receivables due from credit institutions - -

Accruals and other assets 29 1

Assets 29 1

Due to credit institutions 1,774 340

Accruals and other liabilities 501 421

Liabilities 2,275 761

+ Interest and similar revenues - -

- Interest and similar expenses - -

+ Fee income - -

- Fee income (expense) (1,619) (1,440)

Net banking income (1,619) (1,440)

• Transactions with the parent company

Relations between La Compagnie Financière Edmond de Rothschild Banque and its principal shareholder Edmond de Rothschild S.A. (EdR S.A.) cover three areas: — business: EDR SA has in the past played a role in the Group’s

business development, in particular providing seed money for the Group’s investment funds. At the request of La Compagnie Financière Edmond de Rothschild Banque, it could continue this role in the future, but on a smaller scale ;

— control: EdR S.A. holds 86.91% of the Bank’s capital ; — a service provision relationship under a management and

assistance agreement: under an agreement dated 7 October 1997 and amended on 30 December 1999, La Compagnie Financière Edmond de Rothschild Banque provides EdR S.A. with general assistance and management services including (i) management of its securities portfolio in accordance with the policies and instructions issued from time to time by EdR S.A.’s management; (ii) submission of reports and analyses to EdR S.A.’s Executive Board and Supervisory Board regarding proposed investments; and (iii) all everyday management operations of an administrative, legal, tax and financial nature.

In particular, La Compagnie Financière Edmond de Rothschild Banque provides EdR S.A. with the staff necessary to execute these services. This agreement is renewable automatically from year to year, but may be terminated by either party subject to notice by 30 June of each year. More generally, La Compagnie Financière Edmond de Rothschild Banque invoices all the services provided to EdR S.A. during the year (for the amount determined at the end of EdR S.A.’s accounting year).


Loans and receivables due from credit institutions - -

Accruals and other assets 431 2,243

Assets 431 2,243


Due to clients 74,045 76,964

Accruals and other liabilities - 544

Liabilities 74,045 77,508


+ Interest and similar revenues - 115

- Interest and similar expenses - (21)

+ Fee income 15 15

- Fee income (expense) - (545)

+ Other revenues 360 1,902

- Other expenses - -

Net banking income 375 1,466

- General operating expenses - (11)

Gross operating income 375 1,455


• Transactions with other related parties

These are transactions with EdRH and its subsidiaries, and with EdR S.A.’s subsidiaries.


Financial assets at fair value through profit and loss - -

Loans and receivables due from credit institutions 15,562 10,375

Loans and receivables due from clients - -

Accruals and other assets 4,295 10,108

Assets 19,857 20,483


Financial liabilities at fair value through profit and loss 100,771 7,584

Due to credit institutions 136 8,083

Due to clients 1,973 4,933

Accruals and other liabilities 2,492 1,049

Provisions 1,413 1,362

Liabilities 106,785 23,011


+ Interest and similar revenues 51 76

- Interest and similar expenses (71) (74)

+ Fee income 2,275 8,133

- Fee income (expense) (4,494) (4,045)

+ Other revenues 320 240

- Other expenses (162) (143)

Net banking income (2,081) 4,187

- General operating expenses (3,292) (2,070)

Gross operating income (5,373) 2,117

TRANSACTIONS WITH RELATED NATURAL PERSONS


Loans and overdrafts 19,454 19,338

Assets 19,454 19,338



Net banking income 371 256

Gross operating income 371 256

MANAGEMENT REMUNERATION

Remuneration paid to members of the management bodies is determined under methods proposed by the Remuneration Committee and adopted by the Supervisory Board. Remuneration comprises a basic portion and a variable portion. The variable part of the remuneration is determined in relation to the consolidated net result. The variable remuneration is paid in the following financial year, in cash and/or in company shares.

The remuneration paid to members of the Executive Board is partly borne by Group entities whose business benefits the most directly from their work.

• Benefits in kind

Benefits in kind mainly take the form of company cars. Each member of the Executive Board has a company car.

• Post-employment benefits

Post-employment benefits principally comprise termination benefits for retiring employees and the Bank’s supplementary pension plan.

Termination benefits for retiring employees Under their employment contracts, members of the Executive Board receive the termination benefits applicable to the Bank’s employees. Depending on the circumstances, the standard rules or special rules under the Bank’s collective agreement apply.

Pension plans Additional supplementary pension plans are managed externally by AXA. The brokerage firm in charge is Eparinter, which is managed and advised by SIACI Saint-Honoré.

Health and welfare coverage Members of the Executive Board benefit from the health and welfare coverage available to all Group employees (death, invalidity and health benefits). They are also covered by the Work Accident death and invalidity insurance plan applicable to all employees.

• Remuneration and benefits paid to members of themanagement bodies


Remuneration paid (*) 3,112 4,455

Short-term benefits - -

Post-employment benefits 465 355

Other long-term benefits - -

Share-based payments (**) 280 582

Total 3,857 5,392

(*) Including employer’s social security charges.

(**) Recognised in profit and loss in application of IFRS 2.

Number of options 2013 2012

Share purchase options - -

Share subscription options - -

Free shares - -

Total - -


NOTE 10 – RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

PART 1 GENERAL RISK MANAGEMENT ¨POLICY

SECTION 1 – INTERNAL CONTROL

To meet the requirements of its regulators, the Bank has set up an internal control system that enables it to manage risk on a consolidated basis.

The components of this system are designed to provide the corporate governance bodies and the audit committee with an informative overview of the risks so that they can be managed appropriately.

The experience gained in this process by the internal control teams, and the strong involvement of corporate governance bodies, now enables a consolidated view of risk, for the Bank itself, and for its clients.

The internal control system is organised on three levels: — First level: in addition to the operational staff and line managers, a

network of controllers and compliance officers within the departments and operating subsidiaries constitutes the first level of internal control;

— Second level: the Compliance and Control Department oversees the proper implementation of internal control measures at the first level, and the Central Risk department ensures the consolidated monitoring of the financial risks of the Bank’s activities;

— Third level: The Inspector General exercises a third level of monitoring of all of the Group’s structures. During targeted or company-wide assignments it reports on the quality of internal control systems, and the rationalisation and safety of the processes. The maturity of the risk management system and the checks implemented by the second-level control entities give the Inspector General a reliable foundation on which to base its investigations, which it reports on directly to the Audit Committee.

SECTION 2 – DESCRIPTION OF SECOND-LEVEL ENTITIES

Compliance and Control department and the Central Risk department are second-level control entities that each work very closely with the first-level compliance officers of their respective business lines to set

targets, continuously improve methods and tools and coordinate control activities.

More specifically: — The Compliance and Control department is tasked with

implementing continuous monitoring mechanisms and monitoring operational risk.

A) In continuous monitoring, at the second level of the control system, it oversees the implementation of first-level controls by the operational departments and provides assistance to the business lines. This entails informing and training employees to provide them with adequate knowledge of the regulations and the internal procedures governing their activities. It also ensures compliance with the ethics policies applicable to employees and in the context of the fight against money laundering and the financing of terrorism.

B) In respect of operational risk, it maps the entities’ operational risk, consolidates incidents and plans the actions needed to improve the operational chain.

— The Central Risk department, an essential link in the second-level internal control system, consists of two units: a Financial Control team to monitor counterparty, liquidity and market risk, and a Third-Party Risk Management team to monitor the risks associated with third-party investment by the Bank’s asset managers and its management subsidiaries.

In addition to its own role in monitoring financial risk, the Central Risk department is also responsible for leading the Group’s risk management organisation, including the set-up of cross-functional committees that review the overall risks inherent to the Bank’s activities. The Compliance and Control department ensures the operational compliance of this Risk Management organisation.

SECTION 3 – INTERNAL CONTROL CONSOLIDATION AT EdR GROUP LEVEL

2012 was marked by the accelerated harmonisation of the audit and risk management system between the French and Swiss entities of the Edmond de Rothschild Group. This resulted in standardised methods for assessing and calculating risk enabling risk management to be consolidated at the level of the Swiss holding company. The consolidated risk management system that the Edmond de Rothschild Group is working to put in place will involve stepped-up communications between the teams and the adoption of continuously improved feedback mechanisms


PART 2 COUNTERPARTY CREDIT RISK MANAGEMENT

Counterparty credit risk is the risk of loss caused by the inability of a client or counterparty to honour its financial obligations. This risk includes the settlement risk during the period running from the point after which the payment or delivery order for a financial instrument sold cannot be unilaterally cancelled by the Bank, up to the final reception of the financial asset purchased or the corresponding cash.

SECTION 1 – RISK-GENERATING ACTIVITIES

Counterparty credit risks affecting the Group originate in: 1. transactions with Private Banking clients and funds managed bythe Group’s asset management companies, particularly in connection with the following operations: — loans or commitments to Private Banking clients; — overdrafts on current accounts for private clients; — occasional overdrafts in funds managed by the Group’s asset

management companies that are transferred to the Bank (such overdrafts result from the time elapsing between purchases and sales of securities);

— capital guarantees given to some funds, particularly “cushion funds” (the “cushion” is the maximum acceptable loss corresponding to the difference at any time between the present value of the fund’s guarantee commitments and its net asset value). The management model for UCITS benefiting from the capital guarantee by the Bank provides assurance that the net asset value will remain equal to or higher than the guaranteed capital, so that the Bank’s guarantee will not be called. However, in the event of certain operational risks materialising (such as errors in the application of the management model or the unavailability of the management team), the net asset value could be lower than the guaranteed capital and in such a case the Bank’s guarantee would be executed.

— foreign exchange transactions concluded with certain in-house funds to hedge the exchange rate risk resulting from positions in foreign currencies.

2. over-the-counter transactions entered into as part of proprietarytrading activities, principally with banks or large companies withsatisfactory credit ratings.

SECTION 2 – AUTHORISATION, MONITORING AND ASSESSMENT PROCEDURES

AUTORISATION PROCEDURES Credit risks are generally accepted on condition that the expected return provides satisfactory coverage of the risk of loss in the event of default by the client or counterparty. While guarantees are generally sought, this is never a substitute for ex ante analysis of the risks. The applicable rules and methods are different for transactions with clients and capital market trading operations.

• Loans and signed commitments grantedto Private Banking clients

In most cases, financing for clients (loans or signed commitments) is overseen by the Commitments Committee, which meets weekly and is chaired by the Chief Executive Officer or another member of the Bank’s Executive Board. Before any such arrangement is entered into, the Commitments and risk exposure department examines the application by the client advisor concerned (or a Group management company when the beneficiary is a managed fund). This department issues a detailed written opinion on the quality of the proposed risk, and sends the entire file to the Commitments Committee for final decision, which is evidenced by a formal approval document signed by the Committee’s Chairman. In addition, loans and commitments may be granted through delegation of authority to the Executive Officer of the Private Banking division, and through sub-delegations of authority in favour of certain staff members in the division. These delegations and sub-delegations of authority are subject to strictly defined limits, and are governed by an ad hoc internal procedure. The Commitments Committee is always informed of loans and commitments granted in execution of delegations and sub-delegations of authority, and such loans and commitments are reported in the minutes of each Committee meeting.

Over-the-counter transactions Bank counterparties are examined every six months by a specific committee known as the Banks Committee, chaired by the Bank’s Chief Executive Officer and consisting of the Head of the Capital Markets department, the Head of the Commitments department and the Head of Financial Control. In view of the sudden decline in the financial standing of a number of bank counterparties, in 2008 Financial Control intensified the day-to-day monitoring arrangements by collecting and analysing the information yielded by the credit default swap (CDS) spreads.


This monitoring report has been extended to cover some 30 corporate signatures and to sovereign issuers. To supplement this mechanism and comply with CRBF regulation No. 097-02 of 21 February 1997, in 2011 the Central Risk department implemented its own method for assessing credit risk that relies on scoring by internal experts, in addition to the use of external ratings. This internal model can thus measure the borrower’s creditworthiness by means of financial analysis and scoring techniques. Commercial counterparties (primarily large public sector companies) also require formal approval from the same committee, and are reviewed every six months. This type of risk mainly concerns money market and guaranteed funds for which the Bank has the right to examine the issuer risk associated with the fund. Individual risk limits for all capital market counterparties (bank and commercial) are set by the aforementioned Banks Committee and assure in advance that these comply with the risk appetite of the EdR Holding SA Group. The authorisations granted are then submitted for approval by the Bank's Supervisory Board. These individual limits are, where appropriate, supplemented by so-called “group” limits which govern exposures to any group of third parties deemed to be a single beneficiary within the meaning of Article 3 of Regulation No. 93-05 on monitoring large exposures. Investment limits are assigned based on an internal rating established by the Risk Management department and on analysis of the creditworthiness of individual counterparties.

Two types of limits are defined: — limits on amounts: the maximum amount of the risk (both on and

off balance sheet) that the Bank is willing to accept for a counterparty (or group of related counterparties); and

— time limits: this determines the maximum term of transactions. The term is correlated with, among other things, the credit rating of the counterparty or issuer.

Any deterioration in the quality of a counterparty deemed to be material triggers the immediate review of the authorisations granted to the entity during the weekly Commitments Committee meeting.

RISK MONITORING AND ASSESSMENT PROCESS

• Loans and signed commitments grantedto Private Banking clients

Monitoring compliance with limits Client advisors are responsible for the daily monitoring of accounts in an overdraft position, or in a debit position in excess of the authorised overdraft. To carry out this monitoring, every morning they receive a statement of limits exceeded.

The Commitments and risk exposure department also carries out a weekly examination of the statements of limits exceeded, including a materiality threshold, for all accounts in the Bank’s books. When such situations have not been corrected after a certain time, the department sends a memo to the client advisor (with a copy to his superior) so that appropriate measures can be defined and applied. When the Commitments and risk exposure department considers it necessary, a memo is sent to inform the Commitments Committee of such a situation. Finally, the Commitments and risk exposure department prepares a quarterly summary table of “error status” accounts and sends it to the managers of the commercial groups in the Private Banking division, and the members of the Bank’s Executive Board.

Monitoring guarantees Financing granted by the Bank is usually covered by guarantees, primarily in the form of pledged securities accounts or assigned life insurance policies. The Commitments and Risk Exposure department regularly reviews the value of such guarantees for the purpose of ensuring that this value is maintained relative to the amount of financing granted. A quarterly memorandum is sent to the Private Banking division and the General Management to report on irregularities. However, when warranted, the Commitments and Risk Exposure department can also send a memorandum to the Commitments Committee prior to the end of the quarter to bring such irregularities to its attention and begin taking action.

Processing doubtful loans Doubtful loans and commitments are transferred to the Legal department for monitoring. These items are reviewed quarterly by the Doubtful Loans Committee, which is chaired by the Bank’s Chief Executive Officer and consists of the General Secretary, the Head of the Legal department, the Chief Financial Officer of the Private Banking division, the Head of Accounting and the Bank’s general auditor. This committee also examines all litigation that may involve the Group.

• Over-the-counter transactions

Management of the credit risks associated with market transactions is primarily based on strict selection of authorised counterparties. It also uses risk reduction and elimination techniques selected by the Group with its primary counterparties: establishment of framework agreements and collateral agreements, and use of the Continuous Link Settlement (CLS) system. This credit risk management also incorporates daily monitoring of compliance with risk limits and market counterparty monitoring.


Framework agreements and collateral agreements To reduce the counterparty risk of off-balance-sheet transactions, framework agreements have been established in every case for several years. At 31 December 2013, 63.3% of gross off-balance-sheet risks were covered by such agreements for our market counterparties. 68.5% of risks not covered by a framework agreement at that date concerned transactions with Group entities, and the others mainly relate to currency futures or options transactions with commercial entities.

The Bank has also entered into collateral agreements with 71 of its principal counterparties (corresponding to 55 groups), 43 of which were active at 31 December 2010. The characteristics of these agreements are entered in the OSACAS database. The Structured Products Back Office is responsible for monitoring and administrative processing of loan collateral. As of the date of this document, the collateral accepted by the Bank consists exclusively of cash. The KTP tool performs a daily calculation of a theoretical margin call for each active counterparty. All this information is then cascaded into the DSI Collateral tool for assignment of a first provisional status. Notice to pay is sent to the counterparty when the status relates to a receivable margin call. Once payment is made, the collateral received is interfaced with the Fermat counterparty risk management tool. In the event of disagreement with the counterparty, no flow is exchanged, and the status is updated to “abandon”. An incident report listing all “abandoned” margin calls is sent to Financial Control. All framework or collateral agreements are examined before they are signed by a legal advisor with specialist knowledge in trading transactions, and the amounts of allowances are approved by the Central Risk department.

Use of the CLS system for foreign exchange transactions Since March 2006, the Bank has belonged to the CLS system, which eliminates the settlement risk usually associated with over-the- counter foreign exchange transactions. The settlement/delivery risk on foreign currency transactions has been considerably reduced; at 31 December 2013, 73% of spot and forward foreign currency transactions with external counterparties went through the CLS system.

Monitoring of risk limit compliance Exposure is reassessed daily based on marked-to-market plus an add-on intended to cover the risk of potential deterioration in the remaining period up to the maturity of each contract. The add-on depends on the nature and term of the contract. Tracking is fully automated on a new software platform, and it satisfies the most stringent market requirements (GEM, Fermat, on stream since June 2008).

Desk managers are informed daily of the level of loans outstanding. Each operator is responsible for strict compliance with the risk limits assigned to his profit centre. Each operator is responsible for strict compliance with the risk limits assigned to his profit centre, and must inform his superiors immediately if this limit is exceeded. The Financial Control team reviews counterparty credit limit compliance daily for all the Group’s capital market trading activities. The Bank's Executive Board is alerted if this limit is exceeded. Once a month the Risk Committee also reviews risk exposure, limits exceeded and the methods for resolving the situation. The Risk Committee also monitors establishment of framework and collateral agreements.

Monitoring counterparties The Central Risk department oversees commitments and continuously monitors market counterparties in order to identify risks of default ahead of time. The Financial Control team submits a report to the Commitments Committee on counterparties affected by significant events such as a change of ownership, internal downgrading or reported losses. The total limits on bank counterparties are systematically reviewed twice a year, taking into consideration financial data, macroeconomic data and agency ratings. Credit risks with financial institutions and sovereign entities are only contracted vis-à-vis counterparties whose creditworthiness is considered beyond reproach. A warning system on CDS spreads was established in early September 2008, for which data are provided by CMA Datavision, an independent company based in London and New York. Spreads are measured on the basis of a model combining relevant market quotations for CDS collected from reliable contributors, ratings and other sectoral data. The monitoring system has been supplemented with analysis of one-year and five-year CDS spreads, enabling the difficulties of certain counterparties to be anticipated. CDS spreads are used in analysing the internal ratings of market counterparties according to a proprietary methodology defined and validated in 2011.


SECTION 3 – EXPOSURE TO COUNTERPARTY CREDIT RISKS

• The Group’s commitments to clients

The Group's clients include the Private Banking Clients, the Edmond de Rothschild S.A. Group (excluding Bank and its subsidiaries) and the UCITS managed by the Group. Commitments to clients are shown in the tables below.

• Changes in the Group’s commitments to clients

In million of euros 31.12.2013 31.12.2012

Loans and other financing (balance sheet) 473 294

Guarantees 192 257

Unused credit facilities 95 104

Total 761 655

Group commitments to clients rose as a combined consequence of higher amounts for private clients and investment fund overdrafts at the end of the year. Guarantees granted to investment funds were down sharply.

• Quality of commitments to clients

Distribution of commitments Client financing is distributed across a fairly broad base. Most loans on the balance sheet are for less than €5 million. About 30 clients only (“related beneficiaries”) have loans outstanding of over €3 million. Off balance sheet, three clients account for €45 million in outstandings, or a little over half the amount of guarantees to private clients. It should be noted that La Compagnie Financière Edmond de Rothschild Banque no longer has any significant trading transactions in process. Only a few currency futures were completed in the 2013. Lastly, no loans to private clients were declared high risk in 2013.

Portion of loans (to private clients) in excess of the authorised limit Authorised limits are exceeded only in a minority of cases. This situation generally concerns less than 5% of loans and other financing and is always resolved rapidly.

Portion of loans to private clients covered by a pledged financial instrument account or assigned life insurance policy

About 90% of loans and financing to private clients are guaranteed by a pledged securities account, an assigned life insurance policy or a bank guarantee (usually the Group). The securities portfolios concerned by the pledges are diversified and invested in listed securities, and mostly managed under contract.

Portion of doubtful loans and financing to Private Banking clients and related provisions


Doubtful loans and other financing to private banking clients 3,023 3,093

- Including amount covered by provisions 2,807 2,876

Net total 216 216

Percentage of client loans and other financing 0.05% 0.07%

Once a loan is identified as doubtful, the Bank assesses the counterparty’s solvency and the risks of non-recovery, and decides whether and in what amount an impairment loss should be recognised.

• Impaired and unimpaired loans and otherfinancing with over-due payments and guaranteesreceived for these loans

The tables below show the net book value of unimpaired loans with overdue payments (presented by period overdue), impaired doubtful loans and guarantees received to cover these assets. The amount declared as associated guarantee received is the value of the guarantee, which cannot exceed the value of the asset it covers.


In thousands of euros Payments overdue by Doubtful loans Total loans and commitments

Associated guarantees

received 31 December 2013 ≤ 90 days > 90 days > 180 days

> 1 year

(impaired assets and commitments

covered by provisions)

≤ 180 days ≤ 1 year

Financial assets at market value through profit and loss (excl. variable-income securities) - - - - - - -

Available-for-sale financial assets (excl. variable-income securities) - - - - - - -

Loans and receivables due from credit institutions - - - - - - -

Loans and receivables due from clients - - - - 216 216 216

Total doubtful loans with overdue payments, net of impairment - - - - 216 216 216

Loan commitments given - - - - - - -

Financial guarantee commitments given - - - - - - -

Total doubtful off balance sheet commitments, net of provisions - - - - - - -

Total - - - - 216 216 216

In thousands of euros Payments overdue by Doubtful loans Total loans and commitments

Associated guarantees received 31 December 2012 ≤ 90 days

> 90 days > 180 days > 1 year

(impaired assets and commitments

covered by provisions)

≤ 180 days ≤ 1 year

Financial assets at market value through profit and loss (excl. variable-income securities) - - - - - - -

Available-for-sale financial assets (excl. variable-income securities) - - - - - - -

Loans and receivables due from credit institutions - - - - - - -

Loans and receivables due from clients - - - - 216 216 216

Total doubtful loans with overdue payments, net of impairment - - - - 216 216 216

Loan commitments given - - - - - - -

Financial guarantee commitments given - - - - - - -

Total doubtful off balance sheet commitments, net of provisions - - - - - - -

Total - - - - 216 216 216

• Exposure to credit risk

The table opposite shows the exposure of all the Group’s financial assets to credit risk. This exposure corresponds to the book value of the financial assets reported in the balance sheet net of any impairment, before the effect of unrecorded netting and collateral agreements. This exposure does not include the effect of framework netting agreements operative at 31 December 2013 and collateral agreements on financial futures traded over the counter. Calculated on the basis of the netting allowed under capital adequacy rules, this effect at 31 December 2013 would reduce the Group’s exposure to credit risk by €19.3 million.


Maximum exposure to credit risk

Financial assets at market value through profit and loss (excl. Variableincome securities) 250,460 346,777

Hedging derivatives - -

Available-for-sale financial assets (excl. variable-income securities) 225,793 78,660

Due from credit institutions 306,790 417,354

Transactions with clients 473,069 294,220

Financial assets held to maturity - -

Exposure of commitments in the balance sheet, net of impairment 1,256,112 1,137,011

Loan commitments given 123,059 139,788

Financial guarantee commitments given 192,249 256,736

Provisions for signed commitments - -

Exposure of off balance sheet commitments, net of impairment 315,308 396,524

Total net exposure 1,571,420 1,533,535


• Distribution of financial instruments by nature of market price or valuation model used

The breakdown of financial instruments by nature of market price or valuation model is reported in the table below for each category of instrument defined above.

31.12.2013 31.12.2012

In thousands of euros Market price Model using observable parameters

Model using non-observable parameters

TOTAL Market price Model using observable parameters

Model using non-observable parameters

TOTAL

Financial instruments held for trading at market value through profit and loss

28 37,724 - 37,752 28 49,715 - 49,743

Financial instruments measured at market value through profit and loss under the fair value option

51,453 161,283 - 212,736 88,331 208,731 - 297,062

Financial assets and liabilities at fair value through profit and loss 51,481 199,007 0 250,488 88,359 258,446 0 346,805

Financial instruments held for trading at market value through profit and loss - 34,070 - 34,070 360 56,353 - 56,713

Financial instruments measured at market value through profit and loss under the fair value option

- 105,127 178,788 283,915 - 19,499 273,326 292,825


- 139,197 178,788 317,985 360 75,852 273,326 349,538

• Exposure to counterparty credit risks on capital marketoperations

In addition to the risks deriving from proprietary trading activities, the exposure to credit risk shown below includes the issuer risk affecting guaranteed investment funds (when the Bank is the guarantor) and money-market funds in order to reflect the Bank’s overall exposure. At 31 December 2013, 21.7% of credit risks on capital market transactions concerned bank counterparties with external ratings of AA or better. Compared to 31 December 2012, the proportion is roughly stable. It should also be noted that all of our exposures are to

counterparties whose risks are considered of good or even excellent quality (external rating higher than A).

Distribution of gross commitments by bank counterparty rating At 31 December 2013, gross banking commitments (including off balance sheet commitments) were slightly higher but remained controlled (€677.4 million at 31 December 2012, compared to €627.4 million at 31 December 2012):

Gross risk equivalent

In million of euros 31.12.2013 31.12.2012 31.12.2011

Rating by grade Amount % Amount % Amount %

AAA - 0.0% 1.3 0.2% 0.6 0.2%

AA 147.0 21.7% 134.7 21.5% 61.6 14.9%

A 530.4 78.3% 491.1 78.3% 350.7 84.9%

BBB - 0.0% - 0.0% - 0.0%

<BBB - 0.0% - 0.0% - 0.0%

Unrated 0.0 0.0% 0.3 0.0% - 0.0%

Methodology: External ratings presented on the Standard & Poor’s model, commitments measured at replacement value, excluding the effect of netting and collateral agreements.

The breakdown by rating of commitments on bank counterparties shows the excellent quality of the portfolio, which is focused almost exclusively on investment-grade counterparties.

Breakdown of gross commitments by bank counterparty rating

The table below shows the breakdown by level of credit quality of the gross outstandings relating to the portfolio of loans and commitments on sovereign counterparties. This exposure reduced due to a policy of greater selectivity of counterparties and represented €681.1 million as of 31 December 2013 compared to €939.6 million as of 31 December 2012:


Gross risk equivalent

In million of euros 31.12.2013 31.12.2012 31.12.2011

Rating by grade Amount % Amount % Amount %

AAA 66.5 9.8% 69.3 7.4% 1,311.0 99.9%

AA 614.6 90.2% 870.3 92.6% 1.6 0.1%

A - 0.0% - 0.0% 49.7 5.0%

BBB - 0.0% - 0.0% - 0.0%

<BBB - 0.0% - 0.0% 9.2 0.9%

Unrated - 0.0% - 0.0% - 0.0%

Methodology: External ratings presented on the Standard & Poor’s model, commitments measured at replacement value (Marked to Market + Add-On), excluding the effect of netting and collateral agreements.

Thus, virtually all of our sovereign exposures, exclusively comprised of debt issued or guaranteed by euro zone governments, relates to counterparties whose risk is considered to be of good or excellent quality. At 31 December 2013, the Bank held no public debt of peripheral euro-zone countries (Spain, Greece, Ireland, Portugal, or Italy).

PART 3

MARKET RISK MANAGEMENT

Market risks are risks of losses due to unfavourable developments in price (primarily due to interest rate, exchange rate, share price or commodity price fluctuations), except price movements resulting from deterioration of an issuer’s financial position.

SECTION 1 – RISK-GENERATING ACTIVITIES

The Group's market risks result from: — proprietary trading activities carried out by the Bank’s Capital

Markets department, mainly the “euro and currency treasury” desk and the “foreign exchange” desk; and

— ownership of EMTN or structured funds, either under the seed money policy or for market making. In this case, the Bank’s subsidiary Financière Boréale is the counterparty in sales from clients that take place before the product’s contractual maturity.

This exposure to the secondary market is intended to be unwound as soon as it reaches a sufficient price target. Risks taken by the Capital Markets department are therefore not generated by speculative transactions, but mainly result from short-term cash investments and client intermediation transactions.

The structured products activities do not, for their part, generate significant market risks. The derivatives used to index performance (chiefly swaps) are generally matched with instruments with identical features contracted with the fund, or a commitment to pay interest expected by the client having purchased the EMTN. Hedging gains or losses may occur during the launch of “formula” funds but these are exceptional and are unlikely to persist. Loans and other financing commitments to clients do not generally lead to any exposure to market risks (interest rate or exchange rate risks) since an internal transfer or transaction system transfers the risk to the trading room under the supervision of the Capital Markets department.

In other words, all market risks, whether initially entailed in transactions with clients or arising from proprietary trading, are centrally managed by the Bank’s trading room, or in the specific case of market making for structured products, by the financial engineering team of the Central Risk department having worked within EdRIM Solutions until 1 December 2012. The EDRIM Solutions risk control system was also incorporated within the Bank, and is based on its usual control mechanism.


SECTION 2 – MONITORING AND ASSESSMENT METHODS

• Market risk approval principles

Authorised limits for maximum exposure to the various market risks are set by the Executive Board and submitted to the Supervisory Board for approval. These limits are expressed in four ways: — absolute value of assets held: this is the maximum acceptable

level in a given currency of the net position in that currency for foreign exchange transactions;

— sensitivity: sensitivity is defined as the value of the potential loss resulting from a specific variation in a given risk factor (e.g. interest rate or exchange rate);

— stop-loss: the amount of cumulative losses over a given period (calculated in days, months or years) that must not be exceeded unless the position is immediately settled. Stop loss limits are also set by the treasury and foreign exchange desks;

— maximum potential loss: the estimated loss over a one-year horizon resulting from the holding of structured products. This limit is defined on the basis of an unfavourable price development scenario, taking into consideration the protection generally associated with this category of financial assets.

• Monitoring compliance with market risk limits

Traders in the Capital Markets department and the financial engineering team of the Central Risk department must at all times comply with all market risk limits. In addition, the Bank’s Financial Control team (which is part of the corporate Risk Management department and is strictly independent of the front office) verifies compliance with market risk limits for all activities carried out by the Capital Markets department, on the basis of daily reporting. For structuring, compliance with market risk limits is monitored on a weekly basis. In the specific case of over-the-counter transactions with a client, the Financial Control team verifies that there is perfect matching (type and direction of options, nature of the underlying instrument, exercise price, maturity) with a market counterparty (option contracts are systematically back to back, i.e. each option transaction with a client is always immediately reversed with the market by entering into a matching opposite transaction with a market counterparty). It should be noted, however, that no options transactions were carried out in 2013.

SECTION 3 – EXPOSURE TO MARKET RISKS

The table below reports details of the exposure of the capital market trading activities to exchange rate, interest rate and equity risks during the last two years.

Limits set at 1 January Year-end Average Minimum Maximum

In thousands of euros 2013 2013 2012 2013 2012 2013 2012 2013 2012

Exchange rate risk * 480 27 68 85 105 20 29 193 367

Interest rate risk ** 1,150 255 480 324 343 143 52 535 843

Equity risk *** 2,250 106 88 93 185 47 45 165 307

* sensitivity of operational foreign exchange positions to an 8% change in exchange rates, excluding correlations. ** sensitivity of short-term positions to a uniform, parallel 1% change in interest rates, excluding correlations. *** potential maximum loss on Financière Boréale’s portfolio of structured products plus residual hedging gains or losses on financial arrangements.

The Group considers that its overall exposure to market risks is very moderate, in compliance with the risk management policy defined and implemented. Most transactions are carried out on behalf of clients and immediately fully hedged with a market counterparty.


PART 4

LIQUIDITY AND FINANCING MANAGEMENT

The liquidity risk is the risk that the Group will be unable to honour its commitments upon maturity or to settle a position due to the market situation. The risk of being unable to honour commitments may result from both transformation of maturities (i.e. borrowing short term to lend long term) and the inability to contract new borrowings at an acceptable price, whether under normal market conditions or due to factors specific to the Group.

SECTION 1 – LIQUIDITY

Liquidity, i.e. the immediate availability of investments or the possibility of rapid resale for a reasonable cost, for example in response to withdrawals or unexpected early redemption requests, is one of the basic principles of the Bank’s cash and asset and liability management policy. The Bank is aware that its prudent, not to say conservative, approach reduces the opportunities of optimising returns in situations where a longer maturity would generate additional margins.

This policy is primarily managed by central coordination of decisions regarding investments: — at the level of the Capital Markets department for cash

management; — at the level of the Finance department, following an Executive

Board decision, for securities portfolios.

Refinancing of the client loan portfolio is also centrally coordinated by the trading room through the use of internal contracts.

The Asset and Liability Management Committee, which includes a seat for the Risk Management department, carries out three to four checks per year to ensure compliance with this policy. Since the emergence in September 2007 of the interbank liquidity crisis, the Financial Control team has also issued daily reports on operational liquidity. In addition, Financial Control has developed a liquidity stress scenario, updated in March 2012, for monthly testing of the balance sheet’s ability to withstand a shock leading, among other things, to the withdrawal of most client resources.

The stress-testing results are positive since in all circumstances the Bank retains a liquidity credit balance. The Group is therefore not considered to be dependent on the market to meet its commitments. In September 2009, the methodology for measuring liquidity risk was modified to more closely reflect: — the impact of the external environment (deterioration of the stock

markets, sharp appreciation of the US dollar against the euro) on the valuation of derivative products and, hence, on the volume of collateral payments; and

— the consequence of massive redemptions on the amount of overdrafts allowed to mutual funds, thereby impacting available cash.

Here again, the results confirmed the strong resilience of the balance sheet. There are several indicators of investment liquidity: — the volume of free-cash investments including overnight deposits

and short-term securities was generally above €700 million in 2013. It came to €819 million at 31 December 2013, a slight decrease year-on-year;

— fixed-term cash investments, in the form of term loans and negotiable debt securities, are governed by strict principles: counterparties must be top-quality counterparties selected under strict criteria by the Commitments Committee, and the investment period must be short. These investments were valued at €191 million on 31 December 2013, relatively unchanged from the last year;

— client loans and other financing in the form of multi-instalment loans amounted to €139 million at 31 December 2013. The weighted average maturity of this amount was approximately 7 months at 31 December 2013;

— the short-term securities portfolio (excluding investments in associates) is also subject to limits in terms of amount and purpose. At 31 December 2013, it totalled €96.8 million of variable-income securities (other than money market funds used in the subsidiaries’ cash management), essentially in the form of units of in-house funds acquired under the seed money policy. Since March 2010, the securities portfolio is governed by a system of limits aiming to encourage sufficient diversification and favour the holding of liquid assets. The status of these securities (sell or hold) is regularly examined by the Asset and Liability Management Committee, which approves securities for holding in the portfolio only in order to support development of the product or product range. In October 2012, this mechanism was supplemented by portfolio risk monitoring using a VaR method with a 95% confidence interval. An additional mechanism for supervising the securities portfolios has been defined at the Edmond de Rothschild Group.


The resulting liquidity ratio (as defined by French bank regulations) was very conservative at 232% at 31 December 2013, compared with 315% at 31 December 2012.

• Exposure to liquidity risk relating to funds

Liquidity indicators on sensitive funds are monitored daily by the first-level Risk Management team, and monthly by first-level risk committees in the subsidiaries, assisted by the Third Party Risk manager in the Risk Management department. Items consolidated at all subsidiaries are reported monthly to the Financial Risk Committee.

In 2013, no funds had to temporarily suspend redemptions to meet demand. No gates were used on funds of hedge funds.

SECTION 2 - LIMITATION OF TRANSFORMATION OF MATURITIES

Continuing its prudent approach, the Bank has decided to maintain a structural “reverse” transformation position in which long maturities (mainly long–term capital, redeemable subordinated notes and EMTNs associated with issuance of structured products) provide generous coverage of short-term investments. The following tables present the balance sheet by contractual maturities:

At 31 December 2013

In thousands of euros From 1 to 3 months From 3 months to 1 year From 1 to 5 years More than 5 years Indeterminate TOTAL

Cash, due from central banks and postal accounts 395,965 - - - - 395,965

Financial assets at fair value through profit and loss 169,183 30,270 48,666 2,341 28 250,488

Hedging derivatives - - - - - -

Available-for-sale financial assets 119,185 150,076 58,635 149,267 - 477,163

Due from credit institutions 306,790 - - - - 306,790

Loans and receivables due from clients 403,492 37,210 31,920 231 216 473,069

Revaluation difference on portfolios with interest rate hedging - - - - - -

Financial assets held to maturity - - - - - -

Financial assets by maturity 1,394,615 217,556 139,221 151,839 244 1,903,475

Central banks and postal accounts - - - - - -

Financial liabilities at fair value through profit and loss 121,685 36,065 156,049 4,186 - 317,985

Hedging derivatives - - - 7,612 - 7,612

Due to credit institutions 33,956 - - - - 33,956

Due to clients 1,194,559 21,566 53,164 - 3,268 1,272,557

Borrowings represented by securities - - - - - -

Subordinated debt - - - - - -


Financial liabilities by maturity 1,350,200 57,631 209,213 11,798 3,268 1,632,110


At 31 December 2012

In thousands of euros From 1 to 3 months From 3 months to 1 year From 1 to 5 years More than 5 years Indeterminate TOTAL

Cash, due from central banks and postal accounts 635,308 - - - - 635,308

Financial assets at fair value through profit and loss 208,135 79,712 51,681 7,277 - 346,805

Hedging derivatives - - - - - -

Available-for-sale financial assets 161,496 - 162,596 53,332 - 377,424

Due from credit institutions 430,436 (13,082) - - - 417,354

Loans and receivables due from clients 233,605 48,396 11,779 440 - 294,220


Financial assets held to maturity - - - - - -

Financial assets by maturity 1,668,980 115,026 226,056 61,049 - 2,071,111

Central banks and postal accounts - - - - - -

nancial liabilities at fair value through profit and loss 37,166 96,722 197,605 18,045 - 349,538

Hedging derivatives - - - 10,465 - 10,465

Due to credit institutions 12,627 2,128 250,000 - - 264,755

Due to clients 1,101,703 38,828 54,803 11,007 - 1,206,341

Borrowings represented by securities - - - - - -

Subordinated debt - - - - - -


Financial liabilities by maturity 1,151,496 137,678 502,408 39,517 - 1,831,099

Assessment and operational monitoring of transformation is carried out monthly based on liquidity gaps determined from the parent company’s balance sheet. This is an appropriate basis because the Bank houses the Central Refinancing Unit for its subsidiaries, whose activities use little liquidity. The management of structural liquidity risk is governed by two limits, periodically reviewed by the ALM Committee. The table below shows details of liquidity gaps at 31 December 2013.

Period 1 month

3 months

6 months

1 year

2 years

3 years

4 years

5 years

In million of euros 347 366 395 441 346 182 114 77

Despite a conservative financial management policy, the Bank cannot rule out the possibility of significant early redemption requests from its clients. A highly adverse scenario has therefore been developed, and it reported monthly to the Risk Committee and the Asset and Liability Management Committee. Examination of this scenario indicates that the Bank could easily meet its obligations in the event of the strong constraint assumptions, i.e.: — immediately repay all demand and time deposits maturing in under

one year; — repay half of long-term resources from the retail business; — honour its commitments following the depletion of demand

resources (assuming one-third reduction in demand deposits).

In the event of a severe liquidity crisis affecting the Bank, an emergency funding programme has been developed. It provides three funding options to counter a liquidity shortage: — use of credit lines available from correspondent banks; — mobilisation of eligible assets with the ECB; — disposal of liquid assets not eligible with the ECB. The emergency plan also provides for the implementation of

dedicated and reactive governance adapted to the level of emergency.

SECTION 3 - DIVERSIFICATION OF FUNDING SOURCES

Given the Bank’s core businesses, finances received from interbank sources and clients do not result from an active policy of seeking resources to finance investments, but instead reflect its asset management activity (Private Banking deposits, issuance of structured products, security lending with funds) and promotion of the Bank as a counterparty on the money market. Similarly, the issuance of undated super-subordinated notes in 2007 was part of the Bank’s equity reinforcement strategy and was not undertaken to extend the maturity of resources.


The Bank nonetheless devotes careful attention to diversification of its funding sources, which is one of the foundations of its liquidity risk management policy. The table below provides an indication of the diversity of its funding sources at 31 December 2013:

Banks Private clients* Other Total

In million of euros Amount Number Amount Number Amount Number Amount Number

Cash borrowings 50.3 2 0.8 3 NA - 51.1 5

Time deposits NA NA NA NA NA NA 52.3 NA

Certificates of deposit NA - 16.8 13 4.7 1 21.5 14

Structured EMTNs 32.2 12 88.6 212 35.3 15 156.1 229

(*)For structured product issues, the Private Clients column includes data relating to the Private Banking division’s clients. However, it is difficult to estimate accurately the number of investors who have subscribed to these products via other distribution channels.

PART 5 MANAGEMENT OF OVERALL INTEREST RATE RISK

SECTION 1 - DEFINITION AND ORIGIN OF OVERALL INTEREST RATE RISK

The overall interest rate risk is the risk of loss on all fixed-rate assets, liabilities and off balance sheet commitments (except bonds and other fixed-income securities in the trading portfolio that fall in the category of market risks), in the event of a parallel uniform shift in yield curves. The sensitivity as calculated by the Bank is defined as the change in net present value of residual fixed-rate positions in the event of a parallel uniform shift in yield curves. This sensitivity and changes in sensitivity are calculated using dedicated software (RiskConfidence developed by Moody's Analytics), based on a 1% to 2% change in interest rates.

SECTION 2 - EXPOSURE TO OVERALL INTEREST RATE RISK

The overall interest rate risk to which the Group is exposed is consistently low. Client loans and other financings are mainly linked to variable rate indexes (principally EONIA) and refinanced internally (with the trading room) on a similar basis. The Group manages its exposure to overall interest rate risk in the context of a sensitivity limit reflecting the net present value of the loss incurred in the event of a uniform adverse change of 200 basis points in the various yield curves.

The table below shows the level of the overall fixed-interest gap by future period from 31 December 2012, assuming contractual termination of existing assets and liabilities and no new lending:

Period1

month 3

months 6

months 1

year 2

years 3

years 4

years 5

years

In million of euros 198.1 161.8 122.8 (18.4) (20.2) (20.2) 0.7 -

Brackets indicate that there is a surplus of fixed-rate sources, and therefore balance sheet sensitivity to a fall in interest rates.

The medium-term impasse results solely from the non-hedging of the undated super-subordinated notes issued in June 2007 for €21 million. As a result, sensitivity to an even variation of 100 basis points of the interest rate curve is limited to €0.9 million as of 31 December 2013. A stress scenario (2%) is also produced every month, which shows the low convexity of the balance sheet (sensitivity at 2% is equal to 1.9 times sensitivity at 1% as of 31 December 2013).

PART 6 MANAGEMENT OF THE OVERALL EXCHANGE RATE RISK

The overall exchange rate risk of the investment portfolio relates to the Bank's investments in foreign currencies. It essentially results from purchases of mutual fund units denominated in foreign currencies undertaken in connection with the seed money policy. The amounts concerned are generally low, as shown in the following table at 31 December 2013:

Currency Total (thousands of euros)

ARS 1,532.0

ILS 2,034.6

CHF 25.8

When the amounts are significant, the Bank may have to protect investments against exchange rate risk by borrowing the currency for an equivalent value. The investments reported above were financed from the outset by currency purchases. The exchange rate risk on the new Israeli shekel (ILS) position is low, because fund assets are denominated in other currencies, mainly euros (zero risk) and US dollars, and are subsequently converted into ILS for calculation of the net asset value.



Investments in subsidiaries and affiliates At 31 December 2013 (in euros)

Companies or groups of companies Capital Other shareholders'

equity Percentage of capital

held

I - DETAILS OF INVESTMENTS (with net book value exceeding 1% of La Compagnie Financière Edmond de Rothschild Banque's capital stock)

A - Subsidiaries (at least 50 % held)

Financière Boréale 1,739,944 (298,808) 100.00%

Edmond de Rothschild Asset Management 10,990,299 44,902,714 98.29%

Edmond de Rothschild Corporate Finance 660,000 2,471,201 100.00%

ERS 2,000,000 (71,895) 100.00%

Edmond de Rothschild S.G.R. SpA 5,000,000 1,373,959 75.00%

Edmond de Rothschild Private Equity Partners 2,700,000 927,587 100.00%

Assurances Saint-Honoré Patrimoine 7,034,410 * 2,636,515 90.00%

Edmond de Rothschild Entreprises Patrimoniales 50,000 1,110,638 100.00%

Edmond de Rothschild Asia Limited 1,300,000 4,261,501 100.00%

Edmond de Rothschild Investment Services Ltd **** 81,000 **** 1,070,000 100.00%

CFSH Luxembourg 12,000,000 41,745,267 100.00%

B - Affiliates (10 to 50 % held)

Banque de Gestion Edmond de Rothschild Monaco 12,000,000 30,650,728 42.77%

Edmond de Rothschild Limited ** 1,000,000 **/**** 26,735,000 20.00%

Zhonghai Fund Management Co., Ltd. *** 146,666,700 *** 275,135,808 25.00%

Edmond de Rothschild Private Equity China Investment S.C.A. 13,069,000 1,075,117 22.63%

EDRRIT Limited **/**** 278,000 **/**** 8,000 10.00%

II - INFORMATION ON OTHER SUBSIDIARIES AND AFFILIATES

A - Subsidiaries not included in Section I above - - -

B - Affiliates not included in Section I above -

French companies (together) - - -

Foreign (together) - - -

* Excluding interim dividends paid in 2013.** In pounds sterling. *** In renminbi. **** Rounded to the nearest thousand.


Book value of shares held Oustanding loans

and advances made by the Bank

Guarantees provided by the

Bank

Net sales or revenues for the last fiscal year

Net income (loss) for the last fiscal

year

Dividends received by the

Bank Gross Net

2,100,550 2,100,550 79,487,934 - 3,405,692 36,074 -

57,125,942 57,125,942 - 83,948 256,381,502 10,625,979 9,887,807

1,874,063 1,874,063 - - 3,335,375 (3,981,113) -

1,999,932 1,999,932 - - 966,859 (199,761) -

3,750,000 3,750,000 8,607,168 - 7,558,117 (1,107,051) -

2,700,014 2,700,014 3,287,544 - - 3,017,861 -

24,300,004 24,300,004 - - 22,357,499 6,309,224 6,014,422

6,215,949 6,215,949 - 57,900 2,873,594 (450,797) -

1,300,000 1,300,000 2,500,000 - 20,113 (2,267,086) -

31,813,119 31,813,119 6,146,451 - **** 17,755,000 **** 5,131,000 -

66,840,000 66,840,000 - - 76,493 9,972,051 -

4,895,687 4,895,687 - - 39.446.229 5 351 277 1,379,354

2,163,678 2,163,678 - - **/**** 16,073,000 **/**** 1,090,000 512,623

31,517,330 28,313,330 - - *** 183,288,385 *** 26,146,320 -

2,959,500 2,959,500 - - - 2 305 445 7,526

3,094,016 3,094,016 - - **/**** 11,000 **/**** 4,000 -

-

622,134 363,907 17,448,732 - - - 60,010

10,967,486 9,382,145 - - - - 211,211

176,221 176,221 - - - - 51,865


Consolidated companies

La Compagnie Financière Edmond de Rothschild Banque at 31 December 2013

Fully integrated

Affiliated

Foreign companies

% Group holding

* Asset Management approved companies

Bank and Investment Companies Asset Management Companies

Edmond de Rothschild Asset Management (*)

Edmond de Rothschild Asset Management Hong Kong Limited (*)

Edmond de Rothschild Asset Management Chile S.A.

Edmond de Rothschild Private Equity Partners

Edmond de Rothschild Investment Partners (*)

Edmond de Rothschild Capital Partners (*)

Edmond de Rothschild Private Equity China Management Sarl

Edmond de Rothschild S.G.R. SpA (*)

EdR Real Estate (Eastern Europe) Management Sarl

LCFR UK PEP Limited

Zhonghai Fund Management Co. Limited (*)

98,13%

98,13%

98,13%

Edmond de Rothschild Europportunities Management II Sarl

Edmond de RothschildEuropportunities Management Sarl

100,00%

68,68%

60,00%

100,00%

100,00%

100,00%

75,00%

100,00%

25,00%

Banque de Gestion Edmond de Rothschild Monaco

Edmond de Rothschild (UK) Ltd

Edmond de Rothschild Asia Securities Limited

100,00%

20,00%

42,77%

Holding Companies

Financière Boréale

EdR Real Estate(Eastern Europe) CIE Sarl

CFSH Luxembourg Sarl100,00%

62,73%

100,00%

CFSH SecondaryOpportunities SA

Edmond de Rothschild Europportunities RCI II SARL

99,49%

98,00%

ERES RCI Sarl99,35%

CâbIinvest Sarl

CâbIinvest II Sarl99,90%

99,90%

100,00%

Eminvest

Valse Invest

100,00%

100,00%


Advisory Companies Other

Groupement Immobilière Financière

19,63%

100,00%

Edmond de RothschildInvestors Assistance

EdREP Transactions

Insurance Companies

Assurances Saint-HonoréPatrimoine

90,00%

100,00%

100,00%

Edmond de Rothschild(Israël) Ltd

Edmond de Rothschild Asia Limited

Edmond de Rothschild China Limited

60,00%

100,00%

100,00%

Edmond de Rothschild Asia Private Investors Limited

60,00%

100,00%

100,00%

Omega Financial Solutions

Edmond de RothschildCorporate Finance

Edmond de Rothschild Boulevard Buildings Limited


Parent company financial statements and notes PARENT COMPANY BALANCE SHEET AND OFF BALANCE SHEET ITEMS In thousands of euros

Assets 31.12.2013 31.12.2012

Cash, due from central banks and postal accounts 395,962 635,306

Treasury notes and similar securities 2.1 - -

Due from credit institutions 2.2 416,964 578,821

Transactions with clients 2.3 599,176 411,565

Bonds and other fixed-income securities 2.4 190,099 76,277

Equities and other variable-income securities 2.5 81,117 97,502

Investments in affiliates and other long-term investments 2.6 51,504 50,985

Investments in subsidiaries 2.7 218,309 200,383

Intangible assets 2.8 21,842 17,419

Tangible assets 2.9 22,447 22,465

Treasury shares 2.10 - -

Other assets 2.11 120,946 100,771

Settlement accounts 2.12 80,930 162,061

Total assets 2,199,296 2,353,555

Liabilities 31.12.2013 31.12.2012

Due to credit institutions 2.14 139,584 265,213

Transactions with clients 2.15 1,352,491 1,242,255

Borrowings represented by securities 2.16 181,885 292,412

Other liabilities 2.11 78,264 113,080

Settlement accounts 2.12 132,397 132,606

Provisions 2.17 22,621 18,078

Subordinated debt 2.18 21,732 51,719

Shareholders’ equity (excluding fund for general banking risks) 2.20 270,322 238,192

· Capital stock 83,076 83,076 · Additional paid-in capital 98,244 98,244 · Reserves 2.19 32,278 32,278 · Retained earnings (+/-) 24,594 9,765 · Net income for the year (+/-) 32,130 14,829 Total liabilities 2,199,296 2,353,555

Commitments and contingencies 31.12.2013 31.12.2012

Commitments given



Security commitments - 34,522

Commitments received


Security commitments - 860


PARENT COMPANY INCOME STATEMENT In thousands of euros

2013 2012

+ Interest and similar revenues 3.1 45,850 54,455

- Interest and similar expenses 3.2 (36,882) (53,467)

+ Revenues from variable-income securities 3.3 74,231 21,004

+ Fee income 3.4 122,209 119,562

- Fee expenses 3.4 (17,404) (19,783)

+/- Net income from the trading portfolio 3.5 9,285 9,831

+/- Net income from short-term investment securities and related instruments 3.6 (25,668) 332

+ Other income from banking activities 3.7 47,009 48,736

- Other banking expenses 3.8 (46,481) (41,100)


- General operating expenses 3.9 (149,690) (121,212)

- Depreciation, amortisation and impairment of tangible and intangible assets (9,235) (8,275)


+/- Cost of risk 3.10 163 118

Operating income 13,387 10,201

+/- Net income from fixed assets 3.11 1,962 1,970

Income (loss) before tax 15,349 12,171

+/- Extraordinary income or loss 3.12 (255) 84

- Corporate income tax 3.13 17,036 2,574

Net income 32,130 14,829


Note to the parent company financial statements NOTE 1 --- ACCOUNTING PRINCIPLES

1.1. GENERAL

The parent company financial statements of La Compagnie Financière Edmond de Rothschild Banque are prepared in accordance with Regulation No. 99-04 of the French Accounting Regulation Committee (Comité de la Réglementation Comptable, CRC). They are presented in accordance with CRC Regulation No. 2000-03 as amended by CRC Regulation No. 2005-04.

1.2. ACCOUNTING PRINCIPLES AND VALUATION METHODS

• Translation of transactions in foreign currencies

Transactions in foreign currencies are translated into euros using the official exchange rates as published by the Banque de France at the year-end. Investments in subsidiaries and affiliates denominated in foreign currencies but financed in euros are recorded in the balance sheet at the euros equivalent of their historical cost in foreign currency, using exchange rates prevailing at the date of acquisition or subscription. The resulting translation gains or losses are not included in income.

• Loans and other financing to clients

La Compagnie Financière Edmond de Rothschild Banque applies CRC Regulation No. 2002-03 of 12 December 2002 as amended by CRC Regulation No. 2005-03 of 3 November 2005 and recommendation No. 2002-04 issued by the French National Accounting Committee on 28 March 2002 related to the accounting treatment of credit risks by enterprises regulated by the French Banking and Financial Regulation Committee. Consequently, more detailed information is provided on counterparty risks and new categories of loans have been created in the financial statements as follows:

— Performing loans: loans and other financing to clients are shown in the balance sheet at nominal value.

— Overdue loans: payments overdue by three months or less (six months or less in the case of real estate loans) continue to be reported as performing loans. Beyond these periods of time, loans – for all amounts extended to clients – are classified as doubtful.

— — Restructured loans: loans restructured as a result of the client’s financial position are re-entered in performing loans if restructured under market conditions prevailing at the time.

Loans restructured under non-market conditions are included in a specific subcategory of performing loans until their final due date. Any principal amount or interest waived, whether due or accrued, is charged to income at the time of the restructuring. If, in view of market rates prevailing at the time a loan is restructured when these are less favourable than the initial terms of the loan, or in view of the initial loan rate otherwise, the restructuring gives rise to a future interest loss, the discounted variance is recorded as an impairment of the loan and included in the cost of risk, and subsequently taken to interest income over the remaining life of the loan. If the client does not pay on due dates after the restructured loan has been returned to performing loans, the restructured loan is immediately downgraded.

La Compagnie Financière Edmond de Rothschild Banque defines restructured loans as loans to counterparties undergoing financial difficulties such that the lender is obliged to adjust the initial terms (duration, rate, etc.) to enable the counterparty to honour its payment obligations.

Restructured loans do not therefore include: . loans with terms that have been renegotiated for commercial

reasons with counterparties that have no solvency problems, . loans whose theoretical repayment schedule is altered through

application of an option or clause contained in the initial contract (e.g. for temporary suspension and deferral of due dates).


— Doubtful loans: balance sheet receivables and signed commitments concerning a counterparty are identified as doubtful outstandings in the accounting information system as soon as they bear a clear risk of non-payment.

A clear risk of non-payment is considered to exist when it becomes probable that the Bank will not recover all or some of the amounts due under the initial contractual terms of a commitment entered into by a client, notwithstanding any guarantees or security provided. The loans or other items concerned are identified either by inclusion in specially created accounts or by means of a tag in the information system. La Compagnie Financière Edmond de Rothschild Banque classifies loans and commitments with a clear risk of non-payment as doubtful in each of the following cases: . when at least one payment is overdue for three months or more

(six months for home purchase loans and real-estate leases; nine months for loans to local public authorities, depending on the specific characteristics of the loans in question). The only exception to this rule is when specific circumstances indicate that non-payment is due to causes unrelated to the debtor's financial position ;

. when the characteristics of a counterparty’s position in connection with a loan or commitment are such that, independently of any failure to meet payment dates, it can be concluded that a clear risk of non- payment exists. This is the case, for instance, when the Bank is aware that its counterparty’s financial position is poor and there is a resulting risk of non-recovery (for example, early warning procedures) ;

. if there is litigation between the company and its counterparty. where there are litigation proceedings between the Bank and its counterparty, for example, over indebtedness proceedings, judicial administration, receivership, court-ordered liquidation, personal bankruptcy, property liquidation and any summons before an international court.

There are two categories of doubtful loans: compromised doubtful loans and uncompromised doubtful loans:

. uncompromised doubtful loans are doubtful loans which do not fulfil the criteria for classification as compromised doubtful loans;

. compromised doubtful loans are loans to a counterparty whose solvency is such that, after a reasonable period of classification as doubtful loans, no return to the performing loans category is foreseeable ; Classification as compromised doubtful loans takes place when the accelerated payment clause comes into play or, in the case of a lease, upon cancellation of the lease ;

. Loans of an unlimited term become repayable when relations are terminated with the counterparty as notified under the procedures defined in the contract. Any loan included in doubtful loans will be automatically classified as a compromised doubtful loan after one year in the uncompromised doubtful loans category.

Any loan returned to the performing loans category is immediately downgraded to the category of compromised doubtful loan if the client fails to make payments as and when due. Interest ceases to be accrued once the loan is transferred to compromised doubtful loans. Disputed loans are loans whose nature or amount only is being contested, not the solvency of the counterparty. These loans are included in uncompromised doubtful loans.

Provisions for clear credit risk: a specific allowance for impairment is set up by a charge against income when the probability that all or part of a loan will not be repaid becomes clear. Allowances are deducted from amounts outstanding in the financial statements. These allowances are deducted from assets.

In accordance with the application date of CRC regulation No. 2002-03 as amended related to the accounting treatment of credit risk by enterprises regulated by the French Banking and Financial Regulation Committee, La Compagnie Financière Edmond de Rothschild Banque applies the discounted future cash flow method described in CRC article 13 of this regulation for measurement of the write-down.


• Securities portfolio

The securities portfolio mainly comprises the following securities issued in France and abroad: — equity and debt securities (fixed and variable income) ; — French treasury notes ; — other negotiable debt securities ; — interbank market securities.

Securities are classified according to the purpose for which they were acquired and, in accordance with CRBF Regulation No. 90-01 as amended by CRC Regulation No. 2005-01 related to securities transactions, Regulation No. 2008-07 of 3 April 2008 related to securities acquisition costs and Regulation No. 2008-17 of 10 December 2008 related to the transfer of securities other than 'trading securities’ or ‘short-term investment securities’, and to stock option plans and free share allocation plans for employees, and to CRC Regulation No. 2002-03 related to the determination of credit risks and the setting up of allowances for possible losses on fixed-income securities, the Bank recognises four different categories of securities: trading securities, investment securities and shareholdings and subsidiary stakes. . Trading securities are recorded at the date of acquisition for their

purchase price excluding costs, including accrued interest where applicable. Acquisition costs are recorded directly as expenses. Trading securities are purchased for resale within a period of not more than six months.

. Short-term investment securities are recorded at the date of acquisition for their purchase price. Acquisition costs are attached to the purchase price of short-term investment securities. These are acquired with the intention of being held for at least six months, in principle for subsequent resale.

Long-term investment securities are recorded at the date of acquisition for their purchase price. Acquisition costs are attached to the purchase price of long-term investment securities.

These are intended to be held for the long term, and are either subject to specific interest rate hedges or covered by dedicated financing resources. The premium or discount representing the difference between purchase price and redemption value is amortised over the remaining life of the securities. . Portfolio securities, other long-term securities, and investments in

non-consolidated subsidiaries and affiliates are recorded at the date of acquisition for their purchase price. These securities are purchased with the intention of being held for the long term. This category includes all holdings of 5% or more. Holdings of less than 5% are also included if the Bank is represented on the Board of Directors or other management bodies, or if another indirect investment is held via other Group companies.

Securities are shown under the following balance sheet headings: — treasury notes and similar securities, — bonds and other fixed-income securities, — equities and other variable-income securities, — affiliates and other long-term investments, — investments in subsidiaries, — treasury shares.

• Fixed assets

Intangible fixed assets relate primarily to purchased software that is amortised over one to three years. Depreciation of office furniture and equipment, computer hardware, fixtures and fittings, and vehicles is determined using the following rates: — straight-line method: 10 to 25%, or — reducing balance method: 37.5% and 40% (or, respectively,

62.5% and 60% for assets acquired between 1 February 1996 and 31 January 1997).

The building owned by La Compagnie Financière Edmond de Rothschild Banque is being depreciated over 25 years. As part of the convergence of French GAAP towards international financial reporting standards (IFRS), CRC Regulation No. 2004-06 of 23 November 2004, applicable from 1 January 2005, eliminated the possibility of recognising deferred charges in assets for subsequent amortisation. (International Financial Reporting Standards). Deferred charges must now be recognised: — in assets, if they qualify for definition and recognition as assets

or are attributable to the initial cost of assets ; — in expenses in all other cases. La Compagnie Financière Edmond de Rothschild Banque applies CRC Regulation No. 2002-10 of 12 December 2002 as amended by CRC Regulation No. 2003-07 of 12 December 2003 related to depreciation and amortisation of assets, and Regulation No. 2004-06 of 23 November 2004 on the definition, recognition and valuation of assets. Tangible assets are recognised at cost (purchase price plus direct ancillary expenses). Intangible fixed assets are mainly made up of software, which is recorded in intangible fixed assets in progress until put into use. These are recorded in intangible fixed assets in progress until put into use. Tangible and intangible fixed assets qualifying for depreciation or amortisation are depreciated and amortised over their period of use in the Company.


• Treasury shares

The Bank’s treasury shares are recognised as short-term investment securities. The Bank applies the new provisions in French National Accounting Council No. 2008-17 of 6 November 2008 related to the accounting treatment of stock option plans and free share allocation plans for employees. Implementation of the new rules has no impact on our accounts as the Bank was already applying these principles to the individual accounts. Allocations, reversals and charges related to the plans are now presented in personnel expenses. Treasury shares allotted to a plan are the subject of an allowance for commitments staggered over the allocation period and adjusted on the basis of the number of shares allocated to beneficiaries. Treasury shares not allotted to a plan may be depreciated if their net book value is greater than the current share price on the accounting date, as for other short-term investment securities.

• Interest and fee income and expenses

Interest and discounting fees are recorded in the income statement on an accrual basis. In general, fees are also recorded on an accrual basis.

• Valuation of securities

Securities held at year-end are valued as follows: — trading securities are valued at market price at year-end. The

resulting net unrealised gain or loss is included in the income statement;

— short-term investment securities are carried at the lower of acquisition cost and stock market value (market value at the end of-December) or, in the case of unlisted securities, at their estimated realisable value;

— no credit is taken for unrealised gains, but unrealised losses are provided for;

— no allowance for write down is made for unrealised losses on long- term investment securities for which the interest rate risk is hedged, when their market value falls below book value. No credit is taken for unrealised gains;

— investments in subsidiaries and affiliates are valued at their current value to La Compagnie Financière Edmond de Rothschild Banque. Quoted investments are valued using several criteria, including market price. Unrealised gains are not recognised, and a provision is established in the case of unrealised losses.

• Revenues and expenses on forward financial instruments,swaps and options

The accounting principles adopted are those defined by the regulations of the CRBF, the instructions of the French Banking Commission and the opinions of the French National Accounting Council. These principles are based on the type of transaction, its purpose, and the market on which it takes place: — Interest rate swaps; — Revenues and expenses from instruments used as a hedge and

assigned from the beginning to cover an identifiable item are recognised in the income statement on a symmetrical basis with the revenues and expenses from the hedged item;

— Interest rate futures (notional, Euribor, etc.). Gains and losses resulting from hedges of transactions on underlying capital markets are amortised over the remaining maturity of the transactions hedged. While a contract is still outstanding, one of two accounting methods is applied: — transactions on organised or similar markets: the gains or losses

resulting from valuation of the contract at market are taken to the income statement;

— over-the-counter: only unrealised losses are accounted for; — future rate agreements (FRAs). Income and expenses from FRAs used for hedging are taken to income on a symmetrical basis with the revenues and expenses from the hedged instrument. In the case of trading transactions, gains and losses are recorded in the income statement when the operation is settled. — options (foreign exchange, interest rate, index and equity

options). Premiums are recorded in a suspense account when the contract is initiated. When contracts are settled, in the case of hedging transactions, they are taken to income in the same manner as the results of the hedging transaction; In the case of trading transactions, they are taken to income. Outstanding trading contracts are valued at market value at the balance sheet date. Any unrealised gain or loss on contracts on organised markets is taken to the income statement. Provisions are recorded for unrealised losses on private contracts.


• Pension commitments

The French banking industry's own pension system was changed by an agreement signed on 13 September 1993 by the French Banking Association (AFB). All French banks have since joined the nationwide unfunded multi-employer plans Agirc and Arrco. The former pension plan of which the Bank is a member, Caisse de Retraite de la Profession Bancaire (CRPB), continues to exist and to assume various commitments set out by the agreement, primarily from its own funds and, where necessary, through employer contributions payable each year at an average rate that, for the first 10 years of application of the 1993 agreement, could not exceed 4% of total wages and salaries. No provision was established for the financial commitments associated with this pension plan, as the information available showed that the assets covering the commitments exceeded the value of the CRPB's commitment. The Bank does not apply the preferential method consisting of recording post-employment benefits concerned by defined-benefit plans, i.e. pension plans, complementary pensions, and retirement benefits plans.

• Commitments for long service awards

In accordance with Recommendation No. 2003-R.01 of 1 April 2003 issued by the French National Accounting Committee and CRC Regulation No. 2000-06 related to liabilities, a provision was made at year-end to cover probable payments to certain current employees (payments made at the time of the award of long-service medals). At 31 December 2013, this provision totalled € 1.127 million.

• Income tax

Corporation tax is determined taking account of the tax consolidation group formed by La Compagnie Financière Edmond de Rothschild Banque (parent) and certain of its subsidiaries. Under the agreements signed between the parent company and the subsidiaries in this connection, the parent company records the full impact of the tax consolidation in its income statement. The tax group includes in 2013, five subsidiaries.

• Mandatory employee profit-sharing

Amounts to be paid under the French profit-sharing system are provided for on the basis of an agreement signed within the economic unit formed by La Compagnie Financière Edmond de Rothschild Banque.

• Transactions with related parties

Under CRB Regulation 91-01 as amended, La Compagnie Financière Edmond de Rothschild Banque presents related-party transactions in Note 9 to the financial statements.


NOTE 2 --- ANALYSIS OF BALANCE SHEET ITEMS

2.1. TREASURY NOTES AND SIMILAR SECURITIES


Short-term investment - -

Subtotal - -

Depreciation - -

Net total - -

2.2. DUE FROM CREDIT INSTITUTIONS

31.12.2013 31.12.2012


Demand deposits

Time deposits

Total Demand deposits

Time deposits

Total

Overdrafts 221,961 - 221,961 59,973 - 59,973

Loans - 155,000 155,000 - 200,000 200,000

Securities received under resale agreements

40,000 - 40,000 - 318,837 318,837

Subtotal 261,961 155,000 416,961 59,973 518,837 578,810

Related receivables - 3 3 - 11 11

Total 261,961 155,003 416,964 59,973 518,848 578,821



Other loans and financing

. Loans 138,855 91,076

. Prêts subordonnés - -

. Securities received under resale agreements

56,237 66,617

Subtotal 195,092 157,693

Overdrafts 403,868 253,656


Doubtful loans(1) 3,023 3,090

Allowances(1) (2,807) (2,874)

Total (2) 599,176 411,565

(1) At 31 December 2013, compromised doubtful loans amounted to €3.023 million and were provisioned to the extent of €2.807 million, resulting in a net total of €216 thousand.

(2) Including accrued interest and other related receivables totalling €708,000 in 2013 and €1,574,000 in 2012.

No loans were eligible for refinancing with the Central Bank at 31 December 2013. No client loans classified as doubtful loans at 31 December 2012 were reclassified in performing loans during 2013.

2.4. BONDS AND OTHER FIXED-INCOME SECURITIES


Short-term investment 188,528 74,511

Long-term investment - -

Subtotal 188,528 74,511

Related receivables 1,571 1,766


Depreciation - -

Net total 190,099 76,277

No securities changed category during the 2013. The total net book value of unlisted securities was €190.10 million. Included under “Short-term investment securities” are €2.13 million of undated subordinated notes issued by Financière Eurafrique.

2.5. EQUITIES AND OTHER VARIABLE-INCOME SECURITIES

31.12.2013 31.12.2012


Tradi

ng

Short-term

investment Total Trading

Short-term

investment Total

Securities held 28 111,824 111,852 28 102,207 102,235

Depreciation - (30,735) (30,735) - (4,733) (4,733)

Net total 28 81,089 81,117 28 97,474 97,502

Unrealised capital gains(1) - 13,613 13,613 - 7,800 7,800

(1) Difference between cost and market value.

No securities changed category during the financial year. The total net book value of listed and unlisted securities was €8.338 million and €72.751 million, respectively.

Included in short-term investment securities are fund units and shares as follows:

31.12.2013 31.12.2012


France Outside France Total France Outside France Total

Capitalisation funds 50,553 30,487 81,040 71,711 25,711 97,422

Other capitalisation funds

- - - - - -

Total 50,553 30,487 81,040 71,711 25,711 97,422


2.6. INVESTMENTS IN AFFILIATES AND OTHER LONG-TERM INVESTMENTS

31.12.2013 31.12.2012

In thousands of euros Gross Impairment Net Gross Impairment Net

Shareholdings - Credit institutions

7,152 - 7,152 7,152 - 7,152

- Other companies

49,422 (5,532) 43,890 48,267 (4,789) 43,478

Subtotal 56,574 (5,532) 51,042 55,419 (4,789) 50,630

Translation differences 462 - 462 355 - 355

Total 57,036 (5,532) 51,504 55,774 (4,789) 50,985

The total net book value of listed and unlisted securities was €8.43 million and €43.07 million respectively. Major investments in subsidiaries and affiliates are listed in the table “Investments in subsidiaries”.

2.7. INVESTMENTS IN SUBSIDIARIES

31.12.2013 31.12.2012


Gross Impairment Net Gross Impairment Net

Financial and non-financial companies

218,550 (258) 218,292 200,626 (258) 200,368

Translation differences 17 - 17 15 - 15

Total 218,567 (258) 218,309 200,641 (258) 200,383

The total net book value of the above investments is made up of unlisted securities. List of subsidiaries: — Edmond de Rothschild Asset Management — Financière Boréale — Edmond de Rothschild Corporate Finance — Edmond de Rothschild S.G.R. SpA — Edmond de Rothschild Private Equity Partners — Edmond de Rothschild Investment Partners — Edmond de Rothschild Investment Services Ltd — Assurances Saint-Honoré Patrimoine — Edmond de Rothschild ASIA Limited — Edmond de Rothschild Boulevard Buildings Ltd — Edmond de Rothschild Real Estate (Eastern Europe) -CIE SàRL - A — Edmond de Rothschild Real Estate (Eastern Europe) - CIE SàRL - B — CFSH Luxembourg — Eminvest — Valse invest

2.8. INTANGIBLE ASSETS


At 1 January 2013

Acquisitions/ provisions

made

Disposals/ releases to

income

Other changes

At 31 Decembe

r 2013

Gross value

Goodwill (including leasehold right) 3,881 - - - 3,881

Other intangible assets 50,229 5,477 - 15,581 71,287

Intangible assets in progress 5,980 4,718 - (10,698) -

Total 60,090 10,195 - 4,883 75,168

Depreciation

Other intangible assets (42,671) (10,655) - - (53,326)

Total (42,671) (10,655) - - (53,326)

Net book value 17,419 (460) - 4,883 21,842

2.9. TANGIBLE ASSETS


At 1 January

2013

Acquisitions/ provisions made


income

Other changes

At 31 December

2013

Gross value

Land 11,434 - - - 11,434

Buildings 20,974 - - - 20,974

Computer hardware 18,135 2,890 - - 21,025

Fixtures and fittings and other fixed assets

35,203 572 - - 35,775

Tangible assets in progress - - - - -

Total 85,746 3,462 - - 89,208

Depreciation

Buildings (20,231) (183) - - (20,414)

Computer hardware (16,980) (1,394) - - (18,374)

Fixtures and fittings and other fixed assets (26,070) (1,903) - - (27,973)

Total (63,281) (3,480) - - (66,761)

Net book value 22,465 (18) - - 22,447

2.10. TREASURY SHARES, FREE SHARE ALLOCATION PLANS AND STOCK OPTION PLANS

The Bank no longer holds treasury shares. At 31 December 2013: — 15,237 free shares granted on 1 July 2011, which will become

fully vested on 1 July 2013, were the subject of additional allocations to allowances for commitments amounting to €61,710 as well as a reversal of allowances for commitments amounting to €1,943,950.


— 6,446 free shares granted on 1 July 2012, which will become fully vested on 1 July 2014, were the subject of additional allocations to allowances for commitments amounting to €150,120 as well as a reversal of allowances for commitments amounting to €15,940.

— 41,825 stock options granted on 1 July 2010 were the subject of additional allocations to allowances for commitments amounting to €16,620 as well as a reversal of allowances for commitments of €92,870.

Allowances for bonus shares, staggered over the allocation periods, correspond to the estimated purchase price (last known value: €124 per share) for 3,242 shares. Allowances for bonus shares that are not staggered correspond to the estimated purchase price (last known value: €124 per share) for 3,204 shares. Allowances for stock options, staggered over the allocation periods, correspond to the difference between the price set at the time of allocation (€117 per option) and the estimated purchase price (last-known value: €124).

There was no change in treasury shares during 2013:

Number of shares Unit price Total

(in thousands of euros)

Position at 31 December 2012 - - -

Position at 31 December 2013 - - -

including:

Treasury shares allotted - - -

2.11. OTHER ASSETS AND LIABILITIES

31.12.2013 31.12.2012

In thousands of euros Assets Liabilities Assets Liabilities

Option premiums - - - -

Margin calls 29,566 476 25,363 23,654

Guarantee deposits 14,680 24,325 32,318 27,773

Other 76,700 53,463 43,090 61,653

Total 120,946 78,264 100,771 113,080

2.12. ACCRUALS

31.12.2013 31.12.2012

In thousands of euros Actif Passif Actif Passif

Items under collection - - 507 -

Prepaid expenses 18,032 - 29,748 -

Income to be received 58,552 - 115,077 -

Deferred income - 12,862 - 22,216

Charges payable - 87,832 - 101,120

Other 4,346 31,703 16,729 9,270

Total 80,930 132,397 162,061 132,606

2.13. LONG-TERM INVESTMENTS


At 1 January

2012 Acquisitions/

provisions made


income Other

changes

At 31 December

2012

Gross value

Bonds and other fixed-income securities

- - - - -

Affiliates and other long-term investments

55,774 3,225 (1,950) (13) 57,036

Investments in subsidiaries 200,641 25,084 (5,158) (2,000) 218,567

Total 256,415 28,309 (7,108) (2,013) 275,603

Impairment


(4,789) (743) - - (5,532)

Investments in subsidiaries (258) - - - (258)

Total (5,047) (743) - - (5,790)

Net book value


- - - - -


50,985 2,482 (1,950) (13) 51,504

Investments in subsidiaries

200,383 25,084 (5,158) (2,000) 218,309

Total 251,368 27,566 (7,108) (2,013) 269,813


2.14. DUE TO CREDIT INSTITUTIONS

31.12.2013 31.12.2012

In thousands of euros Demand deposits

Time deposits


Time deposits

Total

Deposits 33,798 - 33,798 6,573 - 6,573

Borrowings - 105,782 105,782 5,927 250,450 256,377

Subtotal 33,798 105,782 139,580 12,500 250,450 262,950

Related payables - 4 4 135 2,128 2,263

Total 33,798 105,786 139,584 12,635 252,578 265,213


31.12.2013 31.12.2012

In thousands of euros Demand deposits

Time deposits


Time deposits

Total

Special savings accounts

. Special savings accounts

- 43,814 43,814 19 38,504 38,523

. Related payables - - - - - -

Subtotal - 43,814 43,814 19 38,504 38,523

Other liabilities

. Demand deposits 1,156,301 - 1,156,301 945,963 - 945,96

3

. Time deposits - 52,646 52,646 - 99,127 99,127

. Securities delivered under repurchase agreements

39,999 56,233 96,232 91,000 66,611 157,61

1

. Other miscellaneous payables

1,400 1,868 3,268 - 456 456

. Related payables 56 174 230 4 571 575

Subtotal 1,197,756 110,921 1,308,677 1,036,967 166,765 1,203,73

2

Total 1,197,756 154,735 1,352,491 1,036,986 205,269 1,242,255

2.16. BORROWINGS REPRESENTED BY SECURITIES


Interbank market securities and negotiable debt instruments 181,634 291,929

Bonds issued 190 190

Subtotal 181,824 292,119

Related payables 61 293

Total 181,885 292,412

2.17. PROVISIONS


At 1 January

2013

Increases in provisions

Allowances used

Releases to income

Other changes

At 31 December

2013 Provisions for charges Provisions for long-service medals 1,155 65 (93) - - 1,127

Provisions for possible losses on treasury shares (1)

2,758 228 (1,889) (163) - 934

Other provisions for litigation expense - - - - - -

Other provisions for charges (2) 7,574 - (7,546) - - 28

Subtotal 11,487 293 (9,528) (163) - 2,089 Provisions for risks Provisions for litigation (3)

5,228 16,598 (1,049) (1,658) - 19,119

Other provisions for risks 1,363 50 - - - 1,413

Subtotal 6,591 16,648 (1,049) (1,658) - 20,532 Total 18,078 16,941 (10,577) (1,821) - 22,621

(1) Treasury shares held for bonus share and stock option plans: - 15,237 free shares granted on 1 July 2011, which became fully vested on 1 July 2013, were the subject of additional allocations to allowances for commitments amounting to €61,710 as well as a reversal of allowances for commitments amounting to €1,943,950. - 6.446 free shares granted on 1 July 2012, which became fully vested on 1 July 2014, were the subject of additional allocations to allowances for commitments amounting to €150,120 as well as a reversal of allowances for commitments amounting to €15,940. - 41,825 stock options granted on 1 July 2010 were the subject of additional allocations to allowances for commitments amounting to €16,620 as well as a reversal of allowances for commitments of €92,870. Allowances for bonus shares, staggered over the allocation periods, correspond to the estimated purchase price (last known value: €124 per share) for 3,242 shares. Allowances for bonus shares that are not staggered correspond to the estimated purchase price (last known value: €124 per share) for 3,204 shares. Allowances for stock options, staggered over the allocation periods, correspond to the difference between the price set at the time of allocation (€117 per option) and the estimated purchase price (last-known value: €124).

(2) Reversals of provisions for employee long-term loyalty programmes are the main components of “Other provisions for charges”. These reversals of available provisions are the result of changes in the long-term remuneration scheme.

(3) These are mainly intended to cover the costs of litigation with third parties and a provision for private equity business allocated in 2013. Reversals of provisions relate mainly to litigation costs.

An additional supplementary pension plan set up in December 2004 was closed on 31 December 2012, although its provisions were maintained for beneficiaries born before 31 December 1953. It applies to a category of senior employees for whom the existing basic and complementary pension plans provide a significantly lower rate of income replacement than for other categories of personnel. This plan is a defined-benefit plan expressed in terms of the overall final pension (limited in time) or in terms of the top-up pension it provides in addition to the basic pensions. The unfunded actuarial liability at the rate of3.00% at 31 December 2013 fell from €22.646 million to €23.488 million.


Taxes and contributions on annuities: Article 113 of French Law No. 2003-775 of 21 August 2003 on pension reform alters the terms of liability to Social Security taxes, the general social contribution and the levy to repay social-security debt, of employers’ contributions to funding pension benefits. In exchange for the exemption from social security charges, a tax payable exclusively by the company was established. The 2010 Social Security Financing Act doubled the tax levied on annuities exceeding one-third of the annual Social Security ceiling, raising it from 8% to 16% The 2011 Social Security Financing Act subsequently modified the basis for applying this tax. The allowance was eliminated and the 16% tax thus applied from the first euro of the annuity, for all annuities paid after 1 January 2001. The Group had previously opted for the tax on annuities, but at the end of 2011 it chose to change options as allowed by the 2011 Social Security Financing Act for defined-benefit plans consistent with L. 137-11. It is now taxed at 12% based on all contributions paid into the fund. In addition to the foregoing tax, an additional 30% contribution to be paid by employers from the first euro was established on annuities exceeding eight times the annual ceiling and paid from 1 January 2010. 2009 doubled this tax rate, raising it to 16% for all annuities paid from As measured by the preferential method (not applied by the Bank) no amount would have been provisioned in 2013 or 2012. Plan assets were valued at €23.504 million in 2013 and the net residual past service cost was zero at 31 december 2013. Provisions do not include any amounts for termination benefits to be paid to retiring employees (€3.997 million in 2013 against €3.937 million in 2012). Provisions for banking risks came to €3.496 million at 31 December 2013 (€3.911 million at 31 December 2012). Concerning the Madoff criminal case, the Group has no proprietary position in the Madoff investment funds. In addition, in its third-party management and/or custodianship activities, the Group considers that the risk of litigation to which it might be exposed is insignificant. In effect, examination of the investment process implemented by both the management company, EdRIM Gestion, and the Private Banking division showed that the former had satisfactorily implemented internal due diligence procedures governing the selection of underlying funds and that the management decisions taken by the latter were generally consistent with the term granted to the Bank, both in the eligibility of the instruments purchased and the limits on investment. For the record, regarding these activities, the total exposure to Madoff funds was €42.9 million.

2.18. SUBORDINATED DEBT


Undated subordinated notes (1) 21,000 50,000

Related payables 732 1,719

Total 21,732 51,719

(1) In June 2007, the Bank undertook a €50 million undated super-subordinated note issue. In the event of liquidation of the issuer, holders of these notes will be paid only after other creditors but before holders of equity-type loans and equity-type securities. Further to contracts with one of the bearers, a partial redemption offer on a nominal value of €29 million was made by the Bank with a discount of 7.5%. After obtaining the authorisation of the ACP on 12 July 2013, the €29 million were redeemed, and then destroyed, in august 2013. Capital gains of €1.4 million, after tax, were recorded on the bank's income statement.

The undated super-subordinated notes carry financial covenants: — Non-payment of interest in the event of insufficient capital related to non-compliance

with the prudential capital adequacy ratio or a deterioration in the Bank’s financial position ;

— reduction of accrued interest due and payable and then the nominal value of the notes if the Bank has not taken action to remedy the capital shortfall within a determined period.

The main financial characteristics of these notes are as follows:

Issue date

Optional early redemption date

(call option)

Rate until early

redemption

Rate after early redemption

Interest step-up from the optional early redemption

date

june 2007

June 2017 then quarterly 6,36 % (*) Euribor + 2,65 % + 100 basis points

(*) Rate fixed by reference to the 10-year swap rate in euros on 4 June 2007: 4.71% + 1.65%.

2.19. RESERVES


Legal reserve 8,308 8,308

Regulated reserves 152 152

Other reserves 23,818 23,818

Total 32,278 32,278


2.20. CHANGE IN SHAREHOLDERS’ EQUITY

In thousands of euros Capital

Additional paid-in capital

Reserves Carry

forward Results Total

Shareholders’ equity at 1 January 2012 83,076 98,244 32,278 9,765 14,829 238,192

Capital increase - - - - - -

Net income for the year (before appropriation)

- - - - 32,130 32,130

Dividends - - - 14,829 - 14,829

Other movements - - - - (14,829) (14,829)

Shareholders’ equity at 31 December 2012

83,076 98,244 32,278 24,594 32,130 270,322

At 31 December 2012, the Bank’s share capital was €83,075,820.00, divided into 5,538,388 shares each with a nominal value of €15, and was held as follows:

Number of shares % held

Edmond de Rothschild S.A. 4,813,272 86.91%

Caisse de Dépôt et Placement du Québec 577,063 10.42%

EdRRIT Limited 24,172 0.44%

Group employees 86,910 1.57%

Other minority shareholders 36,971 0.66%

Total 5,538,388 100.00%

Net income available for distribution comprises (in euros):

Net income for 2013 32,130,411.85

Balance carried forward at year-end 24,594,021.76

Appropriation to the legal reserve -

Net income available for distribution 56,724,433.61

Net income available for distribution is allocated as follows (in euros)(*) :

Payment of a dividend 2.91 euros per share or : 16,116,709.08

Cary forward 40,607,724.53

(*) Subject to approval by the Annual General Meeting of 23 May 2014.

2.21. TRANSACTIONS WITH SUBSIDIARIES


Assets

Transactions with clients (excluding related receivables) 99,937 117,478

Liabilities

Transactions with clients (excluding related receivables) 71,874 19,096

2.22. ANALYSIS OF CERTAIN ASSETS AND LIABILITIES BY REMAINING TERM TO MATURITY

< 3 months > 3 months > 1 year

> 5 years Total In thousands of euros < 1 year < 5 years

Assests

Due from credit institutions 411,963 5,001 - - 416,964

Transactions with clients 479,057 42,392 77,406 321 599,176


10,037 176,074 - 3,988 190,099

Total 901,057 223,467 77,406 4,309 1,206,239

Liabilities

Due to credit institutions 134,582 - 5,002 - 139,584

Transactions with clients 1,253,962 20,368 78,161 - 1,352,491

Borrowings represented by securities

29,790 31,643 90,082 30,370 181,885

Interbank market securities and negotiable debt instruments

29,595 31,643 90,082 30,370 181,690

Bonds 195 - - - 195

Total 1,418,334 52,011 173,245 30,370 1,673,960

NOTE 3 --- ANALYSIS OF INCOME STATEMENT ITEMS

3.1. INTEREST AND SIMILAR REVENUES


On transactions with credit institutions 32,291 40,466

On transactions with clients 7,135 6,949

On bonds and other fixed-income securities 722 731

Other interest and related income 5,702 6,309

Total 45,850 54,455

3.2. INTEREST AND SIMILAR EXPENSES


On transactions with credit institutions (5,801) (15,467)

On transactions with clients (962) (3,724)

On bonds and other fixed-income securities (26,824) (28,376)

Other interest and similar expenses (3,295) (5,900)

Total (36,882) (53,467)

3.3. REVENUES FROM VARIABLE-INCOME SECURITIES


Equities and other variable-income securities 1,974 2,878

Investments in affiliates and other long-term investments 2,604 2,224

Investments in subsidiaries 69,653 15,902

Total 74,231 21,004


3.4. FEE INCOME AND EXPENSES

2013 2012

In thousands of euros Income Expenses Income Expenses

Cash and interbank transactions - (16) - (46)

Transactions with clients 34 - 41 -

Securities transactions - (338) - (408)

Foreign exchange transactions

15 - 14 -

Off balance sheet transactions

. Securities transactions 119 - 119 -

. Transactions in forward financial instruments

5,612 (3,408) 3,769 (1,995)

Financial services 116,429 (13,642) 115,368 (17,334)

Releases from allowances (provisions)

- - 251 -

Total 122,209 (17,404) 119,562 (19,783)

3.5. GAINS AND LOSSES ON TRANSACTIONS IN TRADING SECURITIES

2013 2012

In thousands of euros Income Expenses Balance Income Expenses Balan

ce

Trading securities 265 (18) 247 9 (1) 8

Foreign exchange transactions 303,968 (294,918) 9,050 237,578 (227,719) 9,859

Commitments on forward financial instruments

- (12) (12) 1 (37) (36)

Releases from allowances (provisions) - - - - - -

Total 304,233 (294,948) 9,285 237,588 (227,757) 9,831

3.6. GAINS AND LOSSES ON TRANSACTIONS IN SHORT-TERM INVESTMENT SECURITIES AND SIMILAR

2013 2012

In thousands of euros Income Expenses Balance Income Expenses Balance

Losses on sale - (1) (1) - (3,704) (3,704)

Gains on sale 333 - 333 1,057 - 1,057

Allocations and releases linked to impairment 737 (26,737) (26,000) 4,595 (1,616) 2,979

Total 1,070 (26,738) (25,668) 5,652 (5,320) 332

3.7. OTHER BANKING REVENUES


Expenses transferred to other companies 18,633 17,659

Miscellaneous revenues 26,228 28,564

Other 1,746 2,513

Releases from allowances (provisions) 402 -

Total 47,009 48,736

3.8. OTHER BANKING EXPENSES


Revenues transferred to other companies (37,883) (39,887)

Other (723) (830)

Releases from allowances (provisions) (7,875) (383)

Total (46,481) (41,100)

3.9. GENERAL OPERATING EXPENSES


Employee compensation (61,221) (62,389)

Social security and similar costs (27,882) (23,043)

Voluntary employee profit-sharing (268) (223)



Provisions for personnel expenses (8,921) (4,253)

Releases from allowances for personnel expenses 11,903 40,732

Subtotal – personnel expenses (95,263) (59,328)

Taxes other than on income (2,482) (3,379)

Rental expenses (17,917) (17,046)

Cost of external services (32,462) (40,068)

Travel expenses (1,566) (1,391)

Miscellaneous charges from operations - -

Increase in provisions for administrative expenses - -

Decrease in provisions for administrative expenses - -

Subtotal – administrative expenses (54,427) (61,884)

Total (149,690) (121,212)

3.10. COST OF RISK


Provisions for possible losses on loans - -

Dotations aux provisions - -

Net losses on bad debts (8) (28)

Reversals of impairment on bad debts now performing 76 143

Releases from allowances - -

Recoveries on amortised loans 95 3

Total 163 118

3.11. GAINS AND LOSSES ON LONG-TERM ASSETS


Gains on sale of intangible and tangible assets - 1

Gains on sale of long-term investments 2,704 6,648

Losses on sale of intangible and tangible assets - -

Losses on sale of long-term investments - 110

Amortisation of long-term investments (742) (4,789)

Reversals of amortisation of long-term investments - -

Total 1,962 1,970


3.12. EXCEPTIONAL ITEMS

Exceptional items for 2013 came to -€255,000.

3.13. INCOME TAX

Corporation tax arising from tax consolidation and the resulting agreements signed between the Bank and its subsidiaries resulted in a tax credit of €12,141,000 million. Had it been taxed separately, La Compagnie Financière Edmond de Rothschild Banque, excluding deferred tax, would not have been subject to this tax because it shows a tax loss.

NOTE 4 --- ADDITIONAL INFORMATION ON BANKING ACTIVITIES

Analysis of the aggregates of net banking income

The analysis of net banking income by major business segment, which is extracted from the accounting presentation of the income statement, can be broadly summarised as follows:


- Asset management 64,655 68,498

- Interest-earning operations 5,108 3,985

- Trading transactions 11,037 13,183

- Corporate advisory services 329 200

- securities portfolio and other 91,020 53,704


At €172.2 million, the banking income for 2013 is up by 23.3% on 2012 (€139.6 million).

This €32.6 million increase is mainly explained by the the change in the item “revenue from the securities portfolio and other income" and, in particular, by the payment in 2013 of interim and additional dividends – distributed by the subsidiaries, particularly collective investment management subsidiaries. REvenur from the bank’s available cash also improved due to the early repayment of the LTRO loan and the partial redemption of the undated super subordinated note. Asset management fees were down 6% to €64.7 million as a result of the adverse impact on higher financial fees of the reduction in turnover fees and write-downs relating to private equity business. The entry fees received from subscription to UCITS units by clients were up by 16.4%. Trading transactions continued to be impacted by a historically low interest rate environment. As a result, this item was down €2.1 million in 2013, compared to 2012.

NOTE 5 --- ADDITIONAL INFORMATION ON COMMITMENTS AND CONTINGENCIES

5.1. TRANSACTIONS WITH SUBSIDIARIES


Commitments given

Loan commitments - 6,000

Guarantee commitments 84 142

5.2. LIQUIDITY COMMITMENTS

The beneficiaries of free share allocation plans and stock option plans introduced by Edmond de Rothschild S.A. or other Group companies have concluded liquidity contracts with the issuing entities. Under the terms of these contracts the issuing companies undertake to purchase and the beneficiaries to sell the shares issued or allocated under these plans, subject to certain conditions. Since December 2005, it has been agreed between Edmond de Rothschild S.A. and the Bank that Edmond de Rothschild S.A. will systematically be substituted for the Bank in execution of these contracts, and Edmond de Rothschild S.A. reserves the right to use a third-party substitute.

5.3. TRANSACTIONS IN FORWARD FINANCIAL INSTRUMENTS

Transactions in interest rate futures are concluded for micro-hedging purposes. Foreign exchange options may be entered into as part of the management of a specialised portfolio, or are matched. Commitments related to forward financial instruments are broken down as follows (nominal value of contracts):

Au 31 décembre 2013 Hedging Trading portfolio Total

In thousands of euros Purchases Sales Purchases Sales Purchases Sales

Organised or similar markets

Futures contracts

Currency swaps (1) 3,754,972 3,754,590 - - 3,754,972 3,754,59

0

Total 3,754,972 3,754,590 - - 3,754,972 3,754,590

Private contracts

Futures contracts

Interest rate and index swaps (1)

323,272 320,016 - - 323,272 320,016

Subtotal 323,272 320,016 - - 323,272 320,016

Contrats conditionnels

Interest rate and index swaps (1) - - - - - -

Subtotal

Total 323,272 320,016 - - 323,272 320,016 (1) Including €79.829 million with subsidiaries.


At 31 December 2012 Hedging Trading portfolio Total



Futures contracts

Currency swaps (1) 5,615,112 5,612,900 - - 5,615,112 5,612,900

Total 5,615,112 5,612,900 - - 5,615,112 5,612,900

Private contracts

Futures contracts

Interest rate and index swaps (1)

458,525 445,396 - - 458,525 445,396

Subtotal 458,525 445,396 - - 458,525 445,396

Contrats conditionnels Interest rate and index swaps (1) - - - - - -

Subtotal - - - - - -

Total 458,525 445,396 - - 458,525 445,396 (1) Including 79.829 million with subsidiaries

The residual values of the above commitments break down as follows:

At 31 December 2012 Less than 1 year 1 to 5 years More than 5 years


Organised or similar markets 5,607,487 5,605,279 7,625 7,621 - -

Private contracts 124,611 282,056 287,868 127,338 46,046 36,002

At 31 December 2011 Less than 1 year 1 to 5 years More than 5 years


Organised or similar markets 4,469,992 4,472,881 4,598 2,299 - -

Private contracts 180,961 408,654 322,977 83,543 105,686 105,616

The Bank's exposure to market risks related to transactions in financial instruments is summarised as follows (in thousands of euros):

Type of risk Type of transaction Assumption Sensitivity 2013 2012

Interest rate risk

Short-term positions in euros

1% unfavourable change in interest rates 120 101

Short-term positions in foreign currencies

1% unfavourable change in interest rates 135 378

Exchange rate risk

Spot and forward foreign exchange positions

8% unfavourable change in exchange rates

27 68

5.4. FAIR VALUE OF TRANSACTIONS IN FORWARD FINANCIAL INSTRUMENTS

The fair value of forward financial instruments is calculated daily by reference to their market value as part of the measurement of counterparty risk.

Positive value Negative value

In thousands of euros 2013 2012 2013 2012


Futures contracts

Currency swaps 13,910 33,142 (13,756) (66,483)

Private contracts

Futures contracts

Interest rate and index swaps

38,866 46,785 (31,967) (57,336)

NOTE 6 - ADDITIONAL INFORMATION ON COUNTERPARTY RISKS ON DERIVATIVES

6.1. TYPES OF RISK AND METHOD OF CALCULATION

Credit risk equivalents on derivatives and the effect of netting agreements are estimated in accordance with the principles established by Regulations Nos. 91-05 and 95-02 of the French Banking and Financial Regulation Committee, and Instruction No. 96- 06 of the French Banking Commission. The positive replacement value of credit risk equivalents represents the fair market value of the contracts before taking account of netting agreements and guarantees received.

The gross add-on is based on the notional amount of the contracts multiplied by a weighting factor. The net add-on is calculated using the formula prescribed by Instruction No. 96-06, as follows: net add-on = 0.4 x gross add-on + 0.6 x NGR x gross add-on, where NGR represents the ratio between net replacement cost and gross replacement cost, for all transactions entered into under legally valid netting agreements. Weighting factors used for each type of counterparty are consisted with those prescribed by Regulation No. 91-05: 20% for banks and 50% for clients.

6.2. ANALYSIS OF WEIGHTED CREDIT RISK EQUIVALENTS BY TYPE OF COUNTERPARTY

Gross weighted risks Net weighted risks


Banks 12,318 23,966 7 26

Trade receivables 16,079 32,743 15 25

6.3. EFFECT OF NETTING ON TOTAL WEIGHTED CREDIT RISK EQUIVALENTS BY TYPE OF COUNTERPARTY

Effect of netting Effect of collateralisation


Banks 5,145 15,318 1 4

Trade receivables 1,229 8,342 - -


NOTE 7 - AVERAGE HEADCOUNT

2013 2012

Specialised staff 133 132

Managerial staff 282 298

Unclassified 105 104

Total 520 534

Pursuant to the provisions of the French Commercial Code, the Group publishes a breakdown by category of its average workforce during the period. The number of workers employed part-time or for less than the full year is taken into account in proportion to the average time worked as compared to the full-time hours laid down by agreement or statute.

NOTE 8 – ADDITIONAL INFORMATION

8.1. The financial statements of La Compagnie Financière Edmond de Rothschild Banque are included in the consolidated financial statements of Edmond de Rothschild S.A. using the full consolidation method.

8.2. EVENTS AFTER THE BALANCE SHEET DATE

No significant event has occurred since 31 December 2013.

The annual financial statements contained herein were finalised by the Executive Board on 17 March 2014 and will be presented for approval at the Annual General Meeting held on 23 May 2014.

NOTE 9 --- TRANSACTIONS WITH RELATED PARTIES

9.1. TRANSACTIONS WITH RELATED NATURAL PERSONS


Loans and overdrafts 19,454 19,338

Assets 19,454 19,338


Time deposits 185 341

Liabilities 185 341



Net banking income 371 256

Gross operating income 371 256

9.2. TRANSACTIONS WITH RELATED COMPANIES

• Transactions related to the income statement


Name Relationship with the related party Income Expenses

- Income/expenses on transactions with credit institutions

EDRIM Solutions Subsidiary - -

- Financial services EDRIM Solutions Subsidiary - (2,014)

+ Gains/(losses) on sale of long-term investments EDRIM Solutions Subsidiary - -

• Transactions in forward financial instruments

In thousands of euros Amount

Total return index swap EDRIM Solutions Subsidiary -

• Transactions related to the income statement


Désignation Relation avec la partie liée

Income Expenses

- On transactions with credit institutions EDRIM Solutions Subsidiary 61 (1,227)

- Financial services EDRIM Solutions Subsidiary - (3,459)

+ Gains/(losses) on sale of long-term investments

EDRIM Solutions Subsidiary 432 -


Parent company five-year summary

2009 2010 2011 2012 2013

Financial position at year-end

Share capital 83,075,820 83,075,820 83,075,820 83,075,820 83,075,820

Number of shares issued 5,538,388 5,538,388 5,538,388 5,538,388 5,538,388

Number of convertible bonds - - - - -

Shareholders’ equity(1)* 231,400,000 222,188,000 222,285,000 223,363,000 238,192,000

Long-term funds(1)* 397,552,000 385,592,000 384,798,000 273,553,000 259,382,000

Total assets* 2,433,077,000 2,502,621,000 3,072,808,000 2,353,555,000 2,199,296,000

Results of operations for the year

Total revenues 274,235,882 367,715,542 529,828,773 432,127,711 514,210,977

Income before tax, depreciation,

amortisation and provisions

12,620,088 53,740,114 68,724,456 (14,041,382) 55,453,158

Income tax (11,849,663) (12,597,846) (8,383,767) (2,573,637) (17,035,895)

Net income for the year 8,185,309 41,584,922 43,194,923 14,828,872 32,130,412

Total dividends paid 17,722,842 41,870,213 42,479,436 - 16,116,709

Earnings per share

Income after tax but before depreciation,

amortisation and provisions

4.42 11.98 13.92 (2.07) 13.09

Net income for the year 1.48 7.51 7.80 2.68 5.80

Dividend** 3.20 7.56 7.67 - 2.91

Employees

Number of employees at year-end 507 508 511 528 526

Total gross payroll 45,893,169 44,527,599 48,308,305 58,501,446 47,937,302

Social security contributions and employee

benefits

20,929,124 24,953,014 26,307,066 23,042,591 27,882,464

Mandatory employee profit-sharing 1,787,587 2,495,166 2,524,140 2,218,312 2,088,549 (1) Excluding net income for the year * Rounded to the nearest thousand euros ** Subject to the decision of the Annual General Meeting held on 30 May 2013.


Reports of the Statutory Financial year ended 31 December 2013 [CURRENT]

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS


In carrying out the mission entrusted to us by your Annual General Meeting, we hereby present our report for the year ended 31 December 2013, on : — Our audit of the consolidated financial statements of

La Compagnie Financière Edmond de Rothschild Banque, a copy of which is attached hereto;

— The basis for our opinion; and — Specific verification as required by law.

The consolidated financial statements have been approved by the Executive Board. Our role is to give an opinion on these financial statements on the basis of our audit.

I - OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS

We conducted our audit in accordance with French professional standards; these standards require that we apply procedures to obtain reasonable assurance that the consolidated financial statements are free of any material misstatement. An audit includes examination, on a test basis or other methods of selection, of evidence relevant to the amounts and disclosures in the consolidated financial statements. It also includes an assessment of the accounting principles applied, the significant estimates made and the overall presentation of the financial statements. We consider that the evidence we obtained is sufficient and appropriate on which to base our opinion.

In our opinion, the consolidated financial statements present a true and fair view of the financial position of La Compagnie Financière Edmond de Rothschild Banque and its consolidated subsidiaries, their assets and liabilities and the result of their operations at 31 December 2013 and for the year then ended, in accordance with IFRS as adopted by the European Union.

II - BASIS FOR OUR OPINION

It is in this context, in accordance with the provisions of Section L 823-9 of the French Commercial Code requiring the auditors to explain the basis of their opinion, that we bring the following items to your attention:

FINANCIAL ASSETS AVAILABLE FOR SALE

Your Group recognises impairments on available-for-sale assets when there is objective evidence of a lasting or significant decline in the value of these assets (Notes 2 and 3.3 related to “Available-for-sale financial assets”).

We have examined the control system used to identify signs of impairment, the valuation of the most significant positions and the estimates that have led, where applicable, to write-downs due to impairment.


GOODWILL IMPAIRMENT TESTS

Your Group has carried out impairment tests on goodwill and on your portfolio of contracts (Notes 1.6. "Measurement of goodwill", 3.10. "Intangible assets" and 3.11. "Goodwill"). We have examined the methods for performing these tests along with the documentation available, particularly reports by independent experts.

PROVISIONS FOR RISKS

As stated in Note 2 "Accounting policies, valuation methods and explanatory notes: Provisions" and 3.16. "Provisions", in the annex, your Group establishes provisions intended to cover the risks inherent to its activities.

We examined the procedures for the control and valuation of provisions to be booked as well as the risks linked to exposures, as described in Note 3.16. of the annex.

PENSIONS AND EMPLOYEE COMMITMENTS; SHARE-BASED PAYMENTS

Your Group establishes provisions to cover pension and employee commitments and share-based payments (Notes 2 “Accounting policies, valuation methods and explanatory notes: Employee benefits and share-based payments", 3.16. "Provisions", 5 “Notes on commitments” and 6 “Employee commitments and share-based payments” in the annex).

We have examined the method for valuing these commitments and the assumptions and parameters used, as well as available documentation, particularly external audit reports.

The assessments were made in the context of our audit of the consolidated financial statements taken as a whole and therefore contributed to the formation of our opinions expressed in the first part of this report.

III - SPECIFIC VERIFICATION

In accordance with professional standards applicable in France, we have also performed the specific statutory verification of information in the Group management report. We have no comments to make as to its fairness and consistency with the consolidated financial statements.

Neuilly-sur-Seine and Paris, 23 April 2014

The Statutory Auditors

PricewaterhouseCoopers Cabinet Didier Kling Audit & Associés Jacques Lévi Didier Kling Partner Partner


REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS


In carrying out the mission entrusted to us by your Annual General Meeting, we hereby present our report for the year ended 31 December 2013, on: — Our audit of the parent company financial statements of La

Compagnie Financière Edmond de Rothschild Banque, a copy of which is attached hereto;

— The basis for our opinion; and — Specific verifications and other matters as required by law.

The parent company financial statements were approved by the Executive Board. Our role is to give an opinion on these financial statements on the basis of our audit.

I - OPINION ON THE PARENT COMPANY FINANCIAL STATEMENTS

We conducted our audit in accordance with French professional standards; these standards require that we apply procedures to obtain reasonable assurance that the parent company financial statements are free of any material misstatement. An audit includes examination, on a test basis or other methods of selection, of evidence relevant to the amounts and disclosures in the parent company financial statements. It also includes an assessment of the accounting principles applied, the significant estimates made and the overall presentation of the financial statements. We consider that the evidence we obtained is sufficient and appropriate on which to base our opinion.

In our opinion, the parent company financial statements present a true and fair view of the financial position of La Compagnie Financière Edmond de Rothschild Banque and its assets and liabilities and the result of its operations at 31 December 2012 and for the year then ended in accordance with accounting principles generally accepted in France.

II - BASIS FOR OUR OPINION

It is in this context that, in accordance with the provisions of Section L 823-9 of the French Commercial Code requiring the auditors to explain the basis for their opinion, we bring the following items to your attention:

— As part of its operations, your Company holds positions in securities and financial instruments. The accounting principles and valuation methods used in connection with these positions are described in the sections "securities", "valuation of securities" and "revenues and expenses on futures, swaps and options" of Note 1.2 in the annex to the parent company financial statements. As part of our assessment of the accounting policies used by the Company, we examined their appropriateness, their application and the relevance of information disclosed in the notes to the financial statements.

— Note 1.2 in the annex to the financial statements indicates that participating interests and shares are measured by reference to their value in use. In our assessment of these estimates, we examined the items that led to the determination of the current value of the main positions in the portfolio.

— Your company makes provisions to deal with disputes and to cover free share plans (Note 2.17 in the annex). As part of our assessment, we reviewed the available evidence on which these estimates were based, the methodology for evaluating commitments under action plans, and the assumptions and parameters used.

The assessments were made in the context of our audit of the parent company financial statements taken as a whole and therefore contributed to the formation of our opinions expressed in the first part of this report.

III - SPECIFIC VERIFICATIONS AND INFORMATION

In accordance with professional standards applicable in France, we have also performed the specific verifications of information required by law. We have no comment to make on the fairness and consistency with the parent company financial statements of the information in the Executive Board's management report or in the documents sent to the shareholders on the financial position and the parent company financial statements.


In accordance with the law, we have verified that the various information on changes of ownership and control and the identity of shareholders have been disclosed to you in the Executive Board’s management report.

The management report contains no information regarding the salaries and benefits paid to members of the management bodies, or the commitments made in their favour when they take up, leave or change their function, or subsequently.





SPECIAL REPORT ON REGULATED AGREEMENTS AND COMMITMENTS

Ladies and Gentlemen, Shareholders,

In our capacity as Statutory Auditors of your company, we hereby present our report on regulated agreements and commitments.

It is our responsibility to inform you, on the basis of information provided to us, of the essential characteristics and terms of agreements and commitments about which we have been advised or that we have discovered during our audit, without commenting on their usefulness or merit or ascertaining the existence of other such agreements or commitments. It is your responsibility, in accordance with Section R. 225-58 of the French Commercial Code, to evaluate the benefits resulting from these agreements and commitments prior to their approval.

Moreover, it is also our responsibility, where applicable, to provide you with the information stipulated in Section R. 225-58 of the French Commercial Code relating to the performance, during the past year, of agreements and commitments already approved by the General Assembly.

We have carried out those procedures we considered necessary to comply with the professional guidelines issued by the French national auditing body (Compagnie Nationale des Commissaires aux Comptes) on this type of engagement. These tests and investigations consisted of verifying the consistency of the information given to us with the documents on which it is based.

AGREEMENTS AND COMMITMENTS SUBJECT TO SHAREHOLDER APPROVAL

Agreements and commitments approved during the past year

In accordance with Article L.225-88 of the French Commercial Code, we have been informed of the following agreements and commitments that were approved in advance by the Supervisory Board.

1. Contract with Financière Boréale covering the sale offinancial instruments

Nature and purpose Pursuant to the authorisation given on 19 March 2013 by the Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque entered into a contract with Financière Boréale covering the sale of financial instruments.

The objective of this agreement is to support the secondary residual market for structured products issued or marketed by the bank or its subsidiaries. Under the terms of this agreement, Financière Boréale undertakes: • To buy financial instruments covered by the contract, namely

bonds, negotiable debt instruments, EMTNs, BMTNs, shares orunits in funds managed by a Group company, subject to certainconditions being met.

• Within the framework of a unilateral promise of sale, to sell to LaCompagnie Financière Edmond de Rothschild Banque, or to any ofits nominees, the financial instruments purchased, where FinancièreBoréale shall not retain them beyond a period of 10 years.

Upon the sale of the securities, Financière Boréale shall receive remuneration by applying to the purchase price the overnight rate in the currency of the securities' nominal value.

Terms This agreement came into effect on 1 January 2013. During 2013, the purchase flow amounted to €7,722,404 with net expenses of €8,142.

Persons concerned The Board member of La Compagnie Financière Edmond de Rothschild Banque concerned is Marc Samuel, who is also Chairman of the Board of Financière Boréale.

La Compagnie Financière Edmond de Rothschild Banque holds over 5% of the capital of Financière Boréale and is a member of its Board of Directors.

AGREEMENTS AND COMMITMENTS ALREADY APPROVED BY THE SHAREHOLDERS

Agreements and commitments approved in prior years and which continued to be performed during the past year

Pursuant to Section R.225-57 of the French Commercial Code, we have been informed that the following agreements and commitments, already approved by the shareholders in prior years, continued to be performed during the past year.


1. Tax consolidation agreements with Financière Boréale, SHAurore, Edmond de Rothschild Asset Management, ERS,Edmond de Rothschild Corporate Finance, Edmond deRothschild Private Equity Partners, Edmond de RothschildEntreprises Patrimoniales and EDREP Transactions

Nature and purpose Pursuant to the authorisations given by the Supervisory Board on 25 March 2003, 15 December 2005, 10 November 2009 and 8 December 2011, La Compagnie Financière Edmond de Rothschild Banque entered into tax consolidation agreements with its subsidiaries Financière Boréale, SH Aurore, Edmond de Rothschild Asset Management, ERS, Edmond de Rothschild Corporate Finance, Edmond de Rothschild Private Equity Partners, Edmond de Rothschild Entreprises Patrimoniales and EdREP Transactions.

The agreement formally defines the manner in which La Compagnie Financière Edmond de Rothschild Banque and the aforementioned subsidiaries divide among themselves the income tax charge and the tax savings arising from the tax consolidation.

Terms The table below shows, for each subsidiary, the amount of tax payable for 2013:

In euros

Date of the

Supervisory Board

meeting

Date of

agreement

Amount

involved in

2012

Financière Boréale 25-Mar-03 15-Sep-03 -

SH Aurore 25-Mar-03 18-Jun-03 -

Edmond de Rothschild Asset

Management 25-Mar-03 23-Jun-03 12,198,686

ERS 25-Mar-03 25-Jul-03 -

Edmond de Rothschild

Corporate Finance 15-Dec-05 20-Dec-05 -

Edmond de Rothschild Private

Equity Partners 10-Nov-09 26-Nov-09 -

Edmond de Rothschild

Entreprises Patrimoniales 08-Dec-11 01-Jan-12 -

EDREP Transactions 08-Dec-11 01-Jan-12 -

Tax consolidation agreements with the following subsidiaries ceased during 2013: — For Edmond de Rothschild Corporate Finance due to its

absorption by Edmond de Rothschild Entreprises Patrimoniales (now named Edmond de Rothschild Corporate Finance) dated 30 April 2013;

— For S.A Aurore, due to the universal transfer of its assets to La Compagnie Financière Edmond de Rothschild Banque dated 26 July 2013;

— For ERS, due to the universal transfer of its assets to La Compagnie Financière Edmond de Rothschild Banque dated 6 August 2013.

2. Agency agreement with Edmond de Rothschild AssetManagement

Nature and purpose Following the authorisation given on 12 December 2002 by the Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque entered into an agency agreement with Edmond de Rothschild Asset Management on 16 December 2002. An amendment to this agreement was signed on 30 July 2007.

Terms In the course of the Group’s relations with external partners that market the funds managed by Edmond de Rothschild Asset Management and other related companies, La Compagnie Financière Edmond de Rothschild Banque tasks Edmond de Rothschild Asset Management with paying those partners the amount owed by the Bank under the relevant partnership agreements. La Compagnie Financière Edmond de Rothschild Banque then settles the amount concerned by payment in arrears to Edmond de Rothschild Asset Management, upon presentation of quarterly or annual invoices. The remuneration paid by La Compagnie Financière Edmond de Rothschild Banque to its subsidiary under this agreement amounted to €660,216 net of tax for 2013.


3. Commercial agreement with Assurances Saint-HonoréPatrimoine

Nature and purpose Pursuant to the authorisation given on 14 December 1999 by the Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque signed a commercial memorandum of understanding on 11 January 2000 with Assurances Saint-Honoré, with retroactive effect as from 31 December 1999. In 2005, Assurances Saint-Honoré contributed part of its assets in the form of one of its business activities to Assurances Saint-Honoré Patrimoine. The latter company took over Assurances Saint-Honoré’s rights and obligations under the aforementioned commercial memorandum of understanding.

Terms Assurances Saint-Honoré Patrimoine passes on commissions to La Compagnie Financière Edmond de Rothschild Banque in return for business generated by that company. Total commissions received by La Compagnie Financière Edmond de Rothschild Banque under this agreement in 2013 amounted to €654,545 net of tax.

4. Support services and management of Edmond deRothschild S.A.

Nature and purpose Pursuant to the authorisations given by the Supervisory Board on 7 October 1997 and 23 September 1999, La Compagnie Financière Edmond de Rothschild Banque signed an agreement with Edmond de Rothschild S.A. to handle the latter’s administrative and financial management.

Terms La Compagnie Financière Edmond de Rothschild Banque invoices the services rendered to Edmond de Rothschild S.A. on the basis of a schedule of the costs it incurs in managing its subsidiary during the year. For 2013, the income from this agreement recorded by La Compagnie Financière Edmond de Rothschild Banque was €360,400 net of tax.

5. Operating subsidy to ERS

Nature and purpose Pursuant to the authorisation given on 12 December 2000 by the Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque signed an operating subsidy agreement on 23 January 2001 with ERS.

Terms ERS will repay La Compagnie Financière Edmond de Rothschild Banque all or part of the subsidy only after approval by the General Secretary of the Prudential Supervisory Authority (Autorité de Contrôle Prudentiel) if, and only if, both of the following cumulative conditions would be met after each potential repayment: — ERS generates a net profit; — ERS continues to meet the ratio.

In 2013, this agreement became void due to the debt being extinguished following the merger of assets under the universal transfer operation of the assets of ERS to La Compagnie Financière Edmond de Rothschild Banque.

6. Transfer to Edmond de Rothschild Asset Management of theparticipating interest in Edmond de Rothschild MultiManagement

Nature and purpose Pursuant to the authorisation given by the Supervisory Board on 26 May 2009, on 27 May 2009 La Compagnie Financière Edmond de Rothschild Banque transferred to Edmond de Rothschild Financial Services (now "EDRIM Solutions") all of the securities it owned in Edmond de Rothschild Multi Management ("EDRMM"), namely 169,709 shares.


Terms This transfer was made against the payment of a price determined as follows:

— Payment of an initial upfront instalment of €12,588,953 was determined on the basis of EDRMM’s net assets at 31 December 2008.

— Earn-out payments in 2010, 2011, 2012 and 2013 equal to the amount received by EDRIM Solutions under a profit-sharing agreement reached between EDRMM (absorbed by EDRIM Solutions) and RFS IM (now "EDRIM Gestion"). This earn-out payment is paid no later than January 31st of each year, with the proviso that it is subject to market fluctuations.

In 2013, no earn-out payments were recognised in income in the accounts of La Compagnie Financière Edmond de Rothschild Banque.

7. Shareholder's loan agreement with Financière Boréale

Nature and purpose Pursuant to the authorisation given on 27 September 2011 by the Supervisory Board, on 17 November 2011 La Compagnie Financière Edmond de Rothschild Banque granted a shareholder's loan to Financière Boréale, followed by a debt forgiveness agreement for the full amount, including a return-to-profitability clause.

Terms Return to profitability will be discussed five years after the 2011 balance sheet date, or 31 December 2016, and therefore had no impact in 2013.





REPORT FROM THE COMPANY'S SUPERVISORY BOARD CHAIRMAN

Ladies and Gentlemen, Shareholders,

In our role as Statutory Auditor of La Compagnie Financière Edmond de Rothschild Banque and pursuant to the provisions of Article L. 225 235 of the French Commercial Code, we hereby present to you our report on the report issued by the Chairman of your company in accordance with the provisions of Article L. 225 68 of the French Commercial Code for the financial year ended 31 December 2013.

It is the Chairman's duty to issue and submit to the Supervisory Board for approval a report on internal control and risk management procedures implemented within the company and also to provide other information as required under Article L. 225 68 of the French Commercial Code, notably relating to the company's governance procedures.

It is our role:

• To provide you with our observations regarding the informationcontained in the Chairman's report, relating to the internal controland risk management procedures covering the preparation andprocessing of accounting and financial information; and

• To certify that the report contains the other information requiredunder Article L. 225 68 of the French Commercial Code, it beingspecified that it is not our responsibility to verify the truthfulness ofthe said information.

We have carried out our work in accordance with professional standards applicable in France.

INFORMATION RELATING TO INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES REGARDING THE PREPARATION AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION

Professional standards require that due diligence is carried out in order to assess the truthfulness of information relating to internal control and risk management procedures and to the preparation and processing of accounting and financial information contained in the Chairman's report.

Such diligence notably consists of: • Obtaining an understanding of the internal control and risk

management procedures relating to the preparation and processingof accounting and financial information which forms the basis of theinformation presented in the Chairman's report and existingdocumentation;

• Obtaining an understanding of the work carried out in order toenable the said information and existing documentation to beprepared;

• Establishing whether any major deficiencies in the internal controland risk management procedures relating to the preparation andprocessing of accounting and financial information which we mayhave uncovered during the course of our assignment are properlydisclosed in the Chairman's report.

On the basis of our work, we have no comments to make regarding the information relating to the company's internal control and risk management procedures related to the preparation and processing of accounting and financial information contained in the report of the Chairman of the Supervisory Board, as drawn up in accordance with the provisions of Article L. 225 68 of the French Commercial Code.

OTHER INFORMATION

We certify that the report by the Chairman of the Supervisory Board contains the other information as required under Article L. 225 68 of the French Commercial Code.





REPORT ON THE CAPITAL INCREASE WITH REMOVAL OF THE PRE-EMPTIVE SUBSCRIPTION RIGHTS WITH DELEGATION OF AUTHORITY TO THE BOARD


In our capacity as Statutory Auditors of your company and in performance of the assignment provided for under Articles L. 225-135 et seq. of the French Commercial Code, we hereby present to you our report on the proposed capital increase via the issue of ordinary shares with the removal of the pre-emptive subscription rights of a maximum of 1% of the share capital, an operation which you have been requested to approve.

This capital increase is submitted for your approval pursuant to the provisions of Articles L. 225-129-6 of the French Commercial Code and L. 3332-18 et seq. of the French Labour Code.

On the basis of its report, your Board proposes that you delegate to it for a period of 2 months the power to set out the conditions for this operation and to withdraw your pre-emptive subscription rights to the ordinary shares to be issued.

It is the Board's responsibility to issue a report in accordance with Articles R. 225-113 and R. 225-114 of the French Commercial Code. It is our responsibility to issue our opinion as to the truthfulness of the data drawn from the accounts regarding the removal of the pre-emptive subscription rights and certain other information regarding the issue provided in this report.

We have carried out those procedures we considered necessary to comply with the professional guidelines issued by the French national auditing body (Compagnie Nationale des Commissaires aux Comptes) on this type of engagement. These procedures consisted of verifying the contents of the Board's report relating to the operation and the method used to determine the issue price of the shares.

Subject to a future review of the conditions of the proposed capital increase, we have no particular comment to make regarding the method for determining the issue price of the ordinary shares to be issued as given in the Board's report.

As the conditions for the capital increase are yet to be finalised, we are unable to express an opinion on this matter or, consequently, on the proposal put to you to remove the pre-emptive subscription right.

In accordance with Article R. 225-116 of the French Commercial Code, we will issue an additional report once your Board has made use of the aforementioned delegation of authority.*





Resolutions

RESOLUTION ONE

The General Meeting, having reviewed the report of the Executive Board, the observations of the Supervisory Board and the report of the Auditors on the annual financial statements, approves the balance sheet and income statement for the financial year ended 31 December 2013, together with the transactions recorded in these statements or summarised in these reports.

RESOLUTION TWO

The General Meeting, having reviewed the report of the Executive Board, the observations of the Supervisory Board and the report of the Auditors on the consolidated financial statements, approves the consolidated balance sheet and income statement for the financial year ended 31 December 2013, together with the transactions recorded in these statements or summarised in these reports.

RESOLUTION THREE

The General Meeting, having referred to the special report of the Auditors, approves the agreements referred to in that report.

RESOLUTION FOUR

The General Meeting takes note that the profit available for distribution comprises (in euros):

Profit for 2013 32,130,411.85

Retained earnings 24,594,021.76

Appropriation to the legal reserve -

Profits available for distribution 56,724,433.61

The General Meeting resolves to allocate profit available for distribution as follows: Distribution of a dividend of €2.91 per share, making total dividends of 16,116,709.08

Leaving retained earnings of 40,607,724.53

Dividends per share paid from the previous three years' income were as follows:

2012 2011 2010

Dividend per share - 7.67 7.56

Amount eligible for relief under Article 158-3-2 of the French General Tax Code

- 40% 40%

The dividend for 2013 shall be paid as from 2 June 2014.

RESOLUTION FIVE

The General Meeting reappoints Mr. Benjamin de Rothschild as Retained earnings brought forward from the previous year member of the Supervisory Board for a three-year term expiring at the close of the Annual General Meeting to be called to approve the Appropriation to the legal reserve financial statements for 2016.

RESOLUTION SIX

The General Meeting reappoints Mrs. Ariane de Rothschild as member of the Supervisory Board for a three-year term expiring at the close of the Annual General Meeting to be called to approve the financial statements for 2016.

RESOLUTION SEVEN

The General Meeting reappoints Mr. René Barbier de La Serre as member of the Supervisory Board for a three-year term expiring at the close of the Annual General Meeting to be called to approve the financial statements for 2016.

EIGHTH RESOLUTION

The General Meeting reappoints Mr. Christian Varin as member of the Supervisory Board for a three-year term expiring at the close of the Annual General Meeting to be called to approve the financial statements for 2016.

NINTH RESOLUTION

The General Meeting re-elects Mr Louis-Roch Burgard as member of the Supervisory Board for a three-year term expiring at the close of the Annual General Meeting called to approve the financial statements for 2016.

TENTH RESOLUTION

The General Meeting, having been read the report from the Board and consulted in accordance with Article L. 511-73 of the French Monetary and Financial Code, approves the overall package of remuneration of all types amounting to €12,087,236 paid during the financial year 2013 to persons covered by Article L. 511-71 of the French Monetary and Financial Code.

ELEVENTH RESOLUTION

The General Meeting, having been read the report from the Board, hereby decides that the variable element of total remuneration of persons covered by Article L. 511-71 of the French Monetary and Financial Code may represent a maximum of twice the amount of the fixed remuneration.