Annual Report 2014 Semper Constantia Privatbank by Halle34 OG

ANNUAL REPORT 2014

b i ll ion i n as s et s

m il l ion p r o f i t on or d in ar y ac t iv it ies

It wa s a g ood year .

SEMPER CONSTANTIA

Ta b l e o f c o n t e n t s

ANNUAL REPORT 2014

T a b le o f contents

Edi t o ri a l 0 4

I N TROD U C T I O N O w n e rs a n d E xecut i ve Bo a rd m e m be rs 0 8 I nt e rvi e w 1 2 St ra t e gy 1 8 K e y f i g ure s a t a gl a nce 2 0

O U R AREAS O F B U S I N ESS A s se t a l l o c a t i o n a n d vo l um e de ve l o pm e nt i n 2 0 1 4 2 4 Wh i t e l a be l f unds 2 8 Rea l e st a t e 3 2 Tre a su ry, ca pi t a l m a rke t s a nd c o rp o ra t e se rvi ce s 3 6

A PART F RO M T H E N U M B ERS C o rp o ra t e go ve rna nce 4 0 E mpl o ye e s 4 2 S u st a i na bi l i t y 4 4

M A N AGE M E N T RE P ORT Ge n e ra l f ra m e w o rk c ondi t i o ns a nd re vi e w o f 2 0 1 4 4 8 B u si n e ss p e rf o rm a nce re po rt 4 9 N o n - f i n a n c i a l p e rf o rm a nce i ndi ca t o rs 5 2 Re s e a rc h a nd de ve l o pm e nt 5 2 R i sk re po rt i ng 5 3 Re g u l at o ry o ut l o o k 5 4 Outlook on 2015 54

C O N SO L I DATED F I N A N C I A L STATE M E N TS C o n so l i d a te d ba l a nce she e t 5 8 C o n so l i d a t e d i nco m e st a t e m e nt 6 0 C o n s o l i d a t e d st a t e m e nt o f cha nge s i n e qui t y 6 2 C o n so l i d a t e d ca sh f l o w st a t e m e nt 6 4 No t e s 6 6 C h a n g e s i n no n- curre nt a sse t s 8 2 A u d i t o â&#x20AC;&#x2122;s re po rt 8 4 Re p o rt o f t h e Supe rvi so ry Bo a rd 8 8 Im pri nt 9 2

SEMPER CONSTANTIA

Ent r e p r en eu r shi p a s t h e gu i di n g v a l u e f o r o u r bu s i n e s s .

Erhard F. Grossnigg Chairman

E d itorial

Dear Ladies and Gentlemen,

In 2013, the Supervisory Board appointed Dietmar Baumgartner and Peter Reisenhofer to the Executive Board, and, over the past two years, they have consolidated our company, once again keeping its place as one of Austria’s leading private banks. Semper Constantia’s employees have supported this process with a great deal of dedication and commitment, and today can justifiably be proud of an excellent performance in a truly challenging environment. We have had significant success achieving our aim of providing clients with the very best advisory and service quality.

A challenging 2014 has confirmed our chosen path. We have achieved significant growth in spite of low interest rates, increasingly excessive regulation, fierce competition and highly political markets. Within only two years, our managed assets registered a growth rate of more than 25 percent. Today, Semper Constantia manages assets of more than ten billion euros on behalf of its clients. During the past year, we also achieved a growth of over 40 percent in assets that we advised on and managed. The result from ordinary activities (POA) was more than ten million euros. There is no mysterious secret to the success of the past few years, but a very simple formula: consistency, hard work and passion for what we do.

In 2015, we will continue our course of expansion, including the selection of three experienced bankers to augment our Executive Board. I am delighted that we have succeeded in appointing Bernhard Ramsauer, Ulrich Kallausch and Harald Friedrich, all of whom are high-profile bank managers, to form the management team of our bank together with Dietmar Baumgartner. This will dynamically expand our business further with highnet-worth private clients and foundations, thereby diversifying our business model even more. Our business relations with institutional clients as well as our exceptional expertise in investment fund services will definitely remain a core activity for our bank. Additionally, Peter Reisenhofer is taking over the management of our securities investment firm.

We have also consistently worked on achieving transparency and independence during the past year. Our customers are kept involved in the investment process and thus gain insight into why and how we invest the money entrusted to us. We have dedicated a significant amount of time to develop a very structured investment process based on a house view formed from six basic principles. Being a bank by entrepreneurs for entrepreneurs, we have concurrently focused on the central value of independence, as this is what sophisticated clients truly want and seek. We are not committed to any large investment or commercial bank, nor do we need to sell their products therefore our clients receive customised solutions tailored to their financial needs. This provides us with the freedom to choose products from a global market that best meet the customer’s individual requirements as well as the high standards of our house view.

Our clients deserve the utmost thanks. They have trusted us and remained loyal. We will continue to dedicate ourselves to their interests with all our strength, commitment and, of course, a sense of responsibility. Erhard F. Grossnigg

We cultivate our knowledge in niche markets where Semper Constantia traditionally has great expertise and is consistently among the best in the world. Consequently, we continue to offer mutual funds such as SemperReal Estate or SemperBond Special.

SEMPER CONSTANTIA

INTROD UCTION 1 ANNUAL REPORT 2014

INTRODUCTION

1.1 OWNERS AND EXECUTIVE BOARD MEMBERS

1.2 Interview Dietmar Baumgartner, member of the Executive Board of Semper Constantia Privatbank on the success of fiscal year 2014, employees as entrepreneurs and service as the hard currency in private banking.

1.3 STRATEGY: INDEPENDENT ADVICE AND SERVICE 1.4 KEY FIGURES AT A GLANCE

SEMPER CONSTANTIA : INTRODUCTION

O wn er s an d E xe c u t i v e B o a rd m e mbe r s o f Semp e r Co n st a n t i a P ri v a t ba n k AG 1 .1 ANNUAL REPORT 2014

O w ners an d e x ecuti v e b oar d mem b ers 1.1

OWNERS OF SEMPER CONSTANTIA PRIVATBANK AG

Hans Peter Haselsteiner The native Tyrolean holds a 70% majority stake in Semper Constantia. The industrial tycoon and driving force behind STRABAG AG, as well as many other companies, holds shares in the company via the Haselsteiner Family Private Foundation. He is a guarantor for a stable ownership structure.

Erhard F. Grossnigg The entrepreneur with Upper Austrian roots holds a 10% investment in Semper Constantia. In his function as Chairman of the Supervisory Board, the enterprising finance expert who has rehabilitated more than 100 companies has been actively supporting the Executive Board with his many years of expertise.

R o ma n Rau ch The Vorarlberg native is one of Austriaâ&#x20AC;&#x2122;s prime-family entrepreneurs and also holds a 10% investment in Semper Constantia. The entrepreneur came to prominence through the development of a fruit juice business empire together with his brother Franz. As a well-respected businessman, his input forms the third pillar of the bankâ&#x20AC;&#x2122;s entrepreneurial ownership structure.

SEMPER CONSTANTIA : INTRODUCTION

Dietmar Baumgartner Executive Board Member This member of the Executive Board is responsible for the Semper Constantia market divisions. He was born in Vienna and, after completing his studies in economics, spent nearly ten years in Australia. In addition to other senior positions, he also served as General Manager of Private Banking for the Commonwealth Bank, the largest Australian bank. He returned to Austria in 2013 to strategically realign Semper Constantia, leading the bank onto a solid growth path.

O w ners an d e x ecuti v e b oar d mem b ers 1.1

Pete r Rei s e n h of e r Executive Board Member Since 2013, Mr. Reisenhofer has served on the Semper Constantia Executive Board where he is responsible for back-office activities. He previously worked in key management positions with various other private banks and financial institutions. As a trained lawyer, he is the driving force behind the continuous optimisation of processes that ensure Semper Constantia remains at the top of the financial industry.

SEMPER CONSTANTIA : INTRODUCTION

Inter view 1 .2 ANNUAL REPORT 2014

Dietmar Baumgartner, member of the Executive Board of Semper Constantia Privatbank on the success of fiscal year 2014, employees as entrepreneurs and ser vice as the hard currency in private banking.

I nter v ie w 1.2

Dietmar Baumgartner Executive Board Member

SEMPER CONSTANTIA : INTRODUCTION

“For us, entrepreneurial activity is not just lip service.”

The bank has also undergone a massive restructuring in recent years. How has your staff adjusted to these changes?

Low interest rates, volatile markets and a global growth that remained far below expectations – in total, 2014 framework conditions were very difficult. How did your bank perform in this environment?

Change is almost always a source of unrest in a company. However, we were able to translate this unrest into positive energy. Subsequently, our employees are prouder than ever before to work for Semper Constantia. The growing demand for our services will also be reflected in further employee investment during the coming year.

We are very satisfied with our performance. We surpassed the magical ten-billion mark in assets under management. Within just two years, we recorded a growth of more than 25 per cent. The profit from ordinary activities (POA) also exceeded ten million euros, and that happened in a very difficult market environment. However, what particularly pleases me is that we have gained an increasing share of the additionally acquired volumes in the areas of managed and advisory assets. Semper Constantia has reinforced its position as an advisory partner for our clients – here we have increased our income by nearly 45 per cent over the previous year.

How do you anchor the entrepreneurial approach in your staff? The central idea of this process is a fair partnership. Not only do we consider our clients partners, but our employees as well. We plan to offer a partner model to the men and women who work for us, which will allow them to participate in the bank’s success. A sustainable increase in the bank’s intrinsic value will be essential to this process. Teamwork, a sense of responsibility, commitment and client orientation will play a central role. Only in this way can you transform employees into entrepreneurs. The success of this strategy is also evidenced by the fact that many of our employees have remained loyal to the bank even during the difficult years. In today’s marketplace, this generates a high level of continuity and quality.

What is the driving force behind Semper Constantia’s success? The foundation is formed by our ownership structure: Hans Peter Haselsteiner and Erhard Grossnigg, both of whom stand for successful entrepreneurship in Austria. At the same time, they are the guarantee for our bank’s long-term direction, flexibility and entrepreneurial approach. They have a clear vision for Semper Constantia and, on this basis, the Executive Board and managers must demonstrate every day that they also realise this vision in the interests of the owners. At our bank, entrepreneurial thinking and acting is not just lip service, but reality.

I nter v ie w 1.2

Entrepreneurship is often equated with freedom. What freedoms can you draw on as an entrepreneurs’ bank?

And how do your clients see this new approach?

A central aspect is that we don’t have a large asset management department or an investment bank, which would only see us as a distribution channel to market their own products, looking over our shoulder. We can choose from the entire range of products on the market and select the ones that fit best with the bank’s house view.

Although product focus was stronger in the past, Semper Constantia has always maintained its core values. A similar analogy would be a rough diamond that only reveals its true splendour after the cut. We have worked a lot on these finishing touches in recent years and the extensive potential of Semper Constantia is now apparent.

Does this mean you do not plan to expand your fund range in the future?

Has this also been reflected in the number of clients?

We will continue to manage funds in areas that reflect our core expertise. One example is SemperReal Estate which, with regard to performance and risk, is one of the best open real estate funds in the German-speaking countries. SemperBond Special is also one of the top performers in the emerging bond fund segment. We have a select choice of products that are above-average in our opinion, and that is where we will concentrate our efforts. If a product does not create any added value for our clients, we eliminate it from what we offer.

The number of clients is not an adequate benchmark for a private bank like Semper Constantia. Our products and services are directed, above all, to people with substantial resources. For example, entrepreneurs with foundations are among our most important clients. What really counts for us is the volume of assets under management and custody, and this volume has grown to over ten billion euros during the past year. Our clients want maximum service, fast decisions without red tape and, of course, the preservation of their assets.

What is meant by the “house view”?

In times like these, is capital preservation the most difficult task?

In conventional business relationships, a client entrusts his or her money to a bank and the bank selects the appropriate products according to the client’s risk profile. We have reversed this process completely. The basis for everything we do is a detailed understanding of our clients’ needs. We have honed our house view in order to, in the long term, best meet the manifold market challenges in a consistent, prudent and, if necessary, resolute manner. At Semper Constantia this investment philosophy is our top priority, with a focus on the preservation of wealth in crises playing a pivotal role. Based on this philosophy, we have defined investment principles and clear investment strategies for the individual asset classes. The products we use to implement this strategy only come into play at the very end of the process. In other words, we are strategy and not product-driven.

The environment was difficult in 2014 but, at the same time, offered numerous opportunities that we were able to manage very successfully. It is crucial that the weightings in the asset classes are made based on a sound assessment of the medium to long-term risks and opportunities. Short-term “market timing” does not work in our opinion, and, in addition, would lead to high transaction costs.

SEMPER CONSTANTIA : INTRODUCTION

What developments do you expect in 2015?

But isn’t the question how to identify medium to long-term risks and opportunities on the markets?

I believe there is considerable potential in Europe over the medium-term. Companies in Europe are well positioned. These European companies have margins that are below the long-term average, and we expect this situation will be moving upward again towards the average. Political crises have slowed any improvement up to now, but we are seeing a number of positive signals.

We have developed our own system for this purpose which provides a recommendation for the proportion of risky investments in the portfolio. Based on indicators such as the labour market development, economic growth, interest rate curves and many other parameters, we evaluate the market movements and then increase or decrease cyclical investments. The top priority with these considerations is minimising losses, which is why we don’t try to squeeze out the last bit of yield through a “bull run”. Figuratively speaking, we’re not interested in picking up pennies off the tracks when the train is fast approaching.

Alexis Tsipras, the new Greek prime minister, has been responsible for growing anxiety throughout Europe. Is this really justified in your opinion? His populist appearances initially provided grounds for uncertainty, but the demands that included a haircut and other measures are no longer on the table. Naturally we must wait to see how the situation will develop, but that hasn’t dampened our optimism for Europe. Interest rates will remain very low for an extended period. Low energy prices and the weaker euro will drive growth in Europe during 2015. However, it would be important for politics to initiate the right steps.

How did you invest in 2014 based on your strategy? We focused on stocks, and that was the correct approach. Overall, there was a significant increase in prices, and we used the stronger corrections during the second half-year to raise the share quota by a further 10 per cent. That allowed us to generate substantial returns for our investors in this segment. In contrast, the bond market was more difficult in 2014. Here we adjusted the strategy several times during the course of the year. While fixed-interest bonds appeared too risky at the beginning of the year, this picture changed during the following months. Regional crises, combined with a decline in raw material prices, led to a substantial easing in inflationary pressure, as well as fixed-interest bonds improving significantly, especially towards the end of 2014. Our asset managers anticipated this development during the first half of the year and increased the bond weighting by roughly 40 per cent – subsequently a very good decision.

Is the US market already overheated? Overheated is not really the right term, but the opportunities in this market are no longer as great as in the past years. Consequently, we plan a slight reduction in our US commitment.

I nter v ie w 1.2

Will there be any changes on the Executive Board of Semper Constantia in 2015?

The Austrian capital market is, unfortunately, weakening. Why is it still lagging behind the European trend?

The bank is continuing its expansionary course and has added additional expertise to its board by appointing three highly experienced bankers. Since April 2nd this year, Bernhard Ramsauer, as Chief Executive Officer, and Ulrich Kallausch, as Chief Operating and Chief Risk Officer, form the executive team together with me in the role of deputy CEO, Market Management Board and Chief Financial Officer. On June 1st, Harald Friedrich is also going to be appointed to the board and assume client responsibility with me.

Austria has the advantage – and at the same time the disadvantage – of serving as the bridgehead to Eastern Europe. The Russia and Ukraine crisis has left deep marks and there are currently no signs of a sustainable improvement of the situation. Only a recovery in the CEE countries would also lead to a substantial improvement on the Austrian capital market. A wealth tax is being discussed again in Austria. Aren’t you concerned that many of your wealthy clients could withdraw their investments?

Can we expect a change in strategy?

That is a very real danger. Especially wealthy entrepreneurs from the western regions of Austria could easily transfer their money to Switzerland. This type of asset transfer is completely legal based on the tax treaty with Switzerland and Liechtenstein. However, we do not expect a mass exodus of funds from Austria.

No. Our fundamental orientation remains the same; we will only be expanding our private banking activities by adding additional expertise.

Is Austria the right place to operate a private bank?

After having reached our ambitious targets for 2014, of course we are planning the next big step for 2015. Further growth of the total assets under management and administration is a clear goal in this case. Also, to further increase the satisfaction of our clients is a focus for this year. We are investing a significant amount in our IT systems and support services. Our vision is to provide our clients with the best advisory and service quality in Austria.

I can imagine you plan to follow the good year in 2014 by raising your standards. What goals have you set for the business in 2015?

I see far fewer problems for a bank than for an industrial company. We act on the international markets from our location in Vienna. At the same time, Austria is a rich country and we serve a predominantly domestic clientele. As a private bank with a strong focus on quality advising, we are currently seeing a significant increase in the demand for our services. The low interest rates currently make it really difficult to preserve value. One must turn to riskier investments, and that requires qualified advising – which is exactly what we offer.

SEMPER CONSTANTIA : INTRODUCTION

S t r a t e gy: i n d e p e n de n t a dv i s i n g and ser vice 1.3 ANNUAL REPORT 2014

strateg y 1.3

LEADING ADVISORY AND SERVICE QUALITY

Semper Constantia is distinguished by independent advising, individual and solution-oriented services, staff continuity and outstanding expertise in asset management.

Entrepreneurial freedom makes Semper Constantia the leading Austrian private bank with the best advisory and service quality. In 2014, the bank broke the magical ten-billion-euro mark for total assets.

T H E I N DE PE N DE N T B A N K F OR E N TRE PRE N EU RS BY E N TRE PRE N EU RS

I N D I V I D UA L A N D SO LU T I O N - OR I E N TED SERV I C ES

Entrepreneurs as owners and comprehensive services for our entrepreneurial clients (equities, liabilities, treasury)

Speed through a single point of contact, flat structures and service mentality Innovative solution expertise

Independent investment committee – 80% third-party product ratio

Direct access to management and portfolio managers

Co-invest with owners in a diversified portfolio High degree of automation and supportive reporting, also for tax optimisation, with internally developed software tools – TIPAS and TAMBAS

Complementary services for complete asset structuring, reporting and management

Flexibility in reporting through LeanMIS

S U STA I N A B I L I TY I N ADV I S I N G A N D STA F F

E X PERT I SE I N ASSET M A N AGE M E N T A N D N I C H E PROD U C TS

A strategic advising approach based on values and personal goals

Award-winning risk-adjusted asset management with a focus on wealth preservation

Team structure ensures continuity in advising

A leader in niche funds: - SemperReal Estate - SemperProperty Global/Europe - SemperBond Special - SemperShare Core Europe (sustainability, Value Group)

Long-term association of senior employees also ensures continuity Partner model: 50% of employee appraisals based on sustainable conduct

SEMPER CONSTANTIA : INTRODUCTION

K ey f i gu re s at a gl a n c e 1.4 ANNUAL REPORT 2014

K e y f igures at a glance 1.4

Data as at 31 December 2014

2014 Assets under management and administration

in EUR billion

Gross new acquisition volume

in EUR billion

Growth in asset management volume

in %

Equity pursuant to Part 2

in EUR million

10. 7 1. 5

2013

9. 0 1. 1

23.1 20.2 68. 2

67. 8

of Regulation (EU) No. 575/2013 Balance sheet total

in EUR million

662.1

594.8

Profit on ordinary activities (POA)

in EUR million

10. 0

3. 4

Operating profit on ordinary activities

in EUR million

10. 0

8. 8

Capital ratio

in %

17.3

20.6

Return on equity (RoE)

in %

14.6

12.0

Cost-to-income ratio (CIR)

in %

66.8

86.4

Liquidity

in %

168.9

125

Ă¸ FTE

111

119

Employees

SEMPER CONSTANTIA

OUR AREAS OF BUSINESS 2 ANNUAL REPORT 2014

OUR AREAS OF BUSINESS

2.1 ASSET ALLOCATION AND VOLUME DEVELOPMENT IN 2014 Semper Constantia relies on a conservative and very structured investment policy.

2.2 WHITE LABEL FUNDS Semper Constantia has over 30 years of experience in managing funds. The services regarding funds are continuously expanded.

2.3 REAL ESTATE Compared internationally, the bank has leading expertise in real estate.

2.4 TREASURY, CAPITAL MARKETS AND CORPORATE SERVICES Semper Constantia employs experienced staff and top-quality services in this area.

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

A sse t a l l oca t i o n a n d v o l u me d e v e l op m e n t i n 2 01 4 2 .1 ANNUAL REPORT 2014

The volume of the securities mandates under discretionary management rose by 18% in the past year.

A sset allocation an d v olume d e v elopment in 2 0 1 4 2.1

The volume of the securities mandates under discretionary management by Semper Constantia rose from EUR 756 million to EUR 891 million in 2014. This represents an increase of 18 per cent. Slightly over half of this volume is attributable to asset allocation mandates, where management involves all facets of Semper Constantia’s house view. In this segment, growth was particularly pleasing during the past year.

Semper Constantia’s asset management varied the stock component in its mixed portfolios only slightly from the 60 per cent average for equity investments in 2014. In view of the relatively steady increase in the euro-based global stock index, this proved to be the correct strategy. Nevertheless, the significant rise in volatility was used to raise the share quota by 10 per cent during the second halfyear and thereby quickly realise a significant profit. Nearly half of the European shares were covered by call options, which helped to substantially reduce the portfolio fluctuations caused by the sharp corrections in this submarket.

Philosophy Semper Constantia’s investment approach is based on a macroeconomic fundamental analysis, which is supplemented by quantitative risk management. After all qualitative and quantitative factors are taken into account, wealth preservation is the most important objective for all investment decisions. If financial securities or entire markets fundamentally disengage from fair value, immediate actions are taken to protect assets and/or to utilise opportunities. Special circumstances may also involve significant variances from the benchmark weighting.

The bond strategy was adjusted several times during 2014. Fixed-interest bonds appeared to be a higher risk at the beginning of the year because of the low yield level and sound growth outlook. Consequently, the bank’s focus turned to a low bond weighting with a correspondingly low interest rate risk. Growth expectations were not met during the course of the year, in no small part due to the escalation of regional crises (Argentina, Russia/ Ukraine etc.). In combination with the sharp drop in commodity prices, this led to a considerable easing in inflationary pressure and a significant recovery for fixed-interest bonds, above all towards the end of 2014. Asset management reacted during the first half-year with a substantial increase in the portfolio’s interest rate risk and raised the bond weighting by 40 per cent as the indications of bold expansive steps by the European Central Bank (quantitative easing) became increasingly more apparent.

Based on this philosophy, Semper Constantia has developed six investment principles that define its actions in relation to specific investment decisions.

Alternative investments represented a very attractive cash substitute throughout the entire year. With an additional yield of approximately 2 per cent over cash, alternative investments met expectations. The weighting of these alternative investments was only reduced towards year-end. In view of the declining inflationary expectations, traditional bonds appeared to be more attractive.

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

The six investment principles:

1 Disciplined investment decisions Every investment is the result of our disciplined decision process, which minimises the influence of human behavioural patterns.

2 Value preser vation The preservation of wealth has top priority in every investment decision.

3 The weighting of asset classes determines the yield Asset allocation is the determining factor for investment results.

4 Active management with a long-term perspective A longer-term perspective forms the basis for the identification of investment trends separate from short-term market fluctuations.

5 Reduction in volatility through diversification and risk management Diversification, i.e. the spreading of assets across various asset classes, combined with active risk management, substantially reduces the risk of major losses.

6 Quality investments pay off in the longer term

We categorically exclude investments whose apparent intrinsic value does not satisfy the Semper Constantia experts, even if these investments seem to promise high returns.

A sset allocation an d v olume d e v elopment in 2 0 1 4 2.1

One solution is the SemperOwners Portfolio. This balanced mixed fund is designed to systematically increase the creation of wealth through the dynamic weighting of individual asset classes. In order to meet this goal, our experts pursue a longterm investment strategy which represents the quintessence of Semper Constantia’s house view for a balanced portfolio.

The house view Basically speaking, the house view – which is guided by our investment philosophy and its six investment principles – summarises the investment expertise of the Semper Constantia Group in a clearly formulated policy on the optimal investment strategy. This is the basis used by the bank to manage clients’ funds in accordance with their individual investment goals. The Semper Constantia house view is regularly communicated in a newsletter and provides a transparent explanation of the motives for specific recommendations that are reflected in managed client portfolios.

Clients can invest jointly with Austria’s top entrepreneurs, starting with a minimum investment of EUR 100,000. The owners and management of Semper Constantia have invested their private assets in this fund. For the first time, investors can receive the benefits of the same specially designed format that is otherwise only available to a select circle of Austria’s most prestigious entrepreneurs.

SemperOwners Portfolio – the essence of our investment expertise The Semper Constantia house view has been palpable in a mutual fund since December 2014. The SemperOwners Portfolio represents the essence of the bank’s investment expertise. This exclusive investment solution was launched to meet the needs of wealthy private clients. Analogous to the owners of Semper Constantia Privatbank, successful entrepreneurs Hans Peter Haselsteiner and Erhard F. Grossnigg, the clients of Semper Constantia are faced with the challenge of successfully investing their private assets in difficult times such as those which have been experienced recently. High sovereign debt and very modest economic growth in many industrialised countries, together with geopolitical crises, have led to massive interventions by major central banks. The resulting low-interest environment makes it significantly more difficult to maintain real value. Investors are regularly confronted with a volatile stock market as a result of similar geopolitical crises and subsequent central bank intervention.

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

W h i t e la be l f u n ds 2.2

ANNUAL REPORT 2014

Semper Constantia Invest currently manages 190 funds with a volume of approximately EURÂ 5.2 billion.

White la b el f un d s 2.2

Semper Constantia Invest GmbH, a wholly owned subsidiary of Semper Constantia Privatbank, has been active in the fund business for close to 30 years and currently manages 190 funds with a total volume of approximately EUR 5.2 billion. As a proven solution for extensive assets, Semper Constantia Invest works to establish funds that are managed in-house or externally. The high level of innovation makes our company one of the most important Austrian providers in this field. Over 50 Austrian and international asset managers now use Semper Constantia Invest as the management company for an extensive number of funds.

Current risk factors such as the European sovereign debt crisis, the flagging European economy and the Russia-Ukraine conflict make funds a good investment choice. Whether mutual, large-scale investor or special funds, these customisable and flexible portfolios offer broad diversification and therefore high-risk reduction. Funds also create access to markets and asset classes that are too difficult or costly for individual investors to enter. Investors in these portfolios also benefit from the funds’ high liquidity and simplified accounting procedures. Investment funds moreover offer numerous tax advantages for private investors because capital gains and losses of the individual assets are offset and can be carried forward. In terms of security, investment funds also offer many advantages: from a legal point of view, they represent special assets as defined in the Austrian Investment Fund Act (InvFG) and thereby provide shareholders with the greatest possible protection.

The custodial services offered by Semper Constantia are provided by its subsidiary, Semper Constantia Invest, as well as by other investment companies (Semper Constantia Immo Invest GmbH, Security KAG). Synergy effects create a powerful total package with competitive conditions.

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

Risk management

As a specialist for services related to the management of investment funds, our core businesses also include administration, risk management and reporting:

This is one of the most essential elements of successful fund design. In addition to ongoing fund and risk control (tracking errors, Sharpe ratio, etc.) together with a compliance officer, our bank has implemented the control of funds as an independent body, one that is responsible for the monitoring of investment guidelines and limits, in accordance with the Austrian Investment Fund Act and other regulations (Austrian Insurance Supervision Act, Austrian Pension Fund Act). The respective mandates are subject to regular reviews. All legal and investor-related guidelines are stored electronically in our settlement system, wherever possible, and any violations can be identified immediately. Controlling is largely system-supported and as standard practice takes place at all levels, e.g. starting with the master fund through the various segment funds down to the individual securities level. Further examples of these guidelines are pre-trade limit verification before fund recording and the preparation of risk reports.

Administration of investment funds These activities are performed by an expert team and include compliance with all regulatory requirements, including publications, reporting and the settlement of distributions. Fund authorisations in other countries are also part of the services offered. The basis for this business segment is a highly efficient, fully integrated bank settlement system for investment funds and a well-established and experienced settlement team. Fully integrated means that all steps are based on a system developed by our bank – including recognition, net asset value calculations, capital gains tax calculations as well as the preparation of activity reports, sales prospectuses and fund terms. This system includes all essential features required by a portfolio manager to deliver optimal client advice. This extensive range of services is complemented with qualitative activities, e.g. the control of fund managers, support in the selection of managers or advising on the design of funds.

White la b el f un d s 2.2

Our partners value the expertise and flexibility of the specialists at Semper Constantia Invest in the implementation of new white label funds, ongoing advising and substantial know-how, particularly in tax and accountancy issues. The company operates with a compact, specialised and fastreacting international support team that has provided top-level assistance for numerous clients over many years.

Reporting These documents give our clients an immediate overview and have a particularly high priority in our work. Our reports are prepared with sophisticated software in a standardised system. Semper Constantia Invest has focused on meeting special client wishes for decades and, in this way, can offer specifically designed solutions, including customised factsheets and monthly reports for individual clients. The online reporting tool developed by CPB Software AG (TIPAS) completes our total package of reporting tools. This classic Internet portal for professional portfolio information has been utilised and highly appreciated by our partners for many years. A wide variety of presentation options – for example a portfolio overview with key indicators and descriptive charts, historical portfolio structure, list of individual securities, foreign currency, country and industry analyses or performance calculations with benchmark and index comparisons – are only some of the advantages offered by TIPAS. These are indispensable tools for professional portfolio management. Semper Constantia Invest also attaches particular importance to providing consolidated reports that cover all involved depository banks and comprehensive fund calculations for our partners, in particular foundation board members, family offices and independent asset consultants. This provides a valid basis for meeting their responsibilities for the preservation of wealth.

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

Real e s t a t e 2 .3 ANNUAL REPORT 2014

The bank offers both direct investments in real estate as well as indirect solutions through funds.

R eal estate 2.3

Other acquisitions included a specialist shopping centre at a well-established location in Upper Austria, two properties near an emerging recreation and leisure region in Styria close to the well-known Red Bull Ring racetrack as well as a specialist retailer in Shopping City Süd, Austria’s largest shopping center. The volume of these acquisitions ranged from EUR 3 million to EUR 20 million per property.

Semper Constantia Privatbank has a history of over 25 years in real estate investments. This is one of the most attractive asset classes because of its high-income stability, particularly in economically challenging times. The bank offers both direct investments in real estate as well as indirect participation through funds. Semper Constantia Privatbank is one of the most renowned specialists on the Austrian market.

The performance of SemperReal Estate was based almost entirely on lease and rental income, and not on changes in valuation. Since the start of this fund more than ten years ago, an investor could have realised an annual return of 4.96 per cent. Based on this constant outstanding performance, SemperReal Estate was ranked first at the Alternative Investment Awards for the periods three years, five years and ten years.

SemperReal Estate The SemperReal Estate open-ended real estate fund continued its growth path in 2014. The recently re-confirmed FERI rating of “A”, “very good”, respectively, as well as excellent performance for more than ten years, form the basis for this success.

Meanwhile, clients’ funds totalling EUR 275 million have been invested in SemperReal Estate. These funds are invested in 35 properties in Austria and Germany with a total volume of more than EUR 282 million. The portfolio was further diversified by the acquisitions of 2014. The letting rate exceeds 97 per cent, and the current rental yield continues to be approximately 7 per cent. This creates a solid foundation for a successful year in 2015.

A high influx of funds during the past year – EUR 100 million – has already been fully invested in real estate. The real estate allocation equals over 100 per cent of the fund volume, which has a positive effect on the fund’s current performance. In accordance with the fund strategy, high-quality commercial properties in Austria and Germany were purchased also during the past year. These acquisitions include a logistics property near Stuttgart, an attractive office building with high occupancy in Essen, two sites with approved construction rights (so-called “Superädifikate”) in Linz and Villach, as well as two specialist retailers with long-term leases.

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

Special real estate funds

Investment apartments

Semper Constantia Privatbank also offers specially designed solutions for open-ended real estate funds. Here the acquisition, administration, facility management, cash management and consolidated reporting are provided from a single hand agent in accordance with the client’s instructions. The launch of the first special real estate funds with a focus on sustainability is planned for the first half of 2015.

The purchase of an apartment for rental purposes is a very sustainable financial investment. A condominium secured by land registry is acquired, and the investor benefits from monthly, indexed rental income. Optimal rentals are ensured by a focus on attractive residential locations, space concepts that meet the tenants’ needs and high-quality, modern equipment. Semper Constantia Privatbank offers all the services required by investors from a single agent: planning, construction supervision, preparation of the financing concept, legal and tax planning, rental, management and maintenance. There is no organisational effort required of the investor. Legal and tax options also create a financial incentive for investment apartments and round out the Semper Constantia Privatbank offering. Semper Constantia realised projects in the Vienna districts of Döbling (19th district) and Liesing (23rd district) during the past fiscal year. In addition, two attractive investment properties have already been secured for 2015: a high-quality property with 20 units is currently under construction at a charming micro-location in the 16th district of Vienna and over 40 compact, high-quality apartments are under construction at a quiet location in the 17th district not far from the Vienna General Hospital.

R eal estate 2.3

SEMPER CONSTANTIA : OUR AREAS OF BUSINES S

Tr e asu r y, ca pi t a l ma r ke t s a n d cor p or a t e s e r v i c e s 2 .4 ANNUAL REPORT 2014

Risks can be consciously managed with the proper application of financial instruments.

T reasur y, C apital M arkets un d C orporate S er v ices 2.4

Our treasury experts take the time to identify the best possible product for and with each client and then to arrange the transaction at the best possible price. The products used for these purposes range from common plain-vanilla instruments like spot and forward transactions to option strategies. On the subject of interest rates, our clients can choose from an established market offering that includes interest rate swaps and interest rate options. Similar to advising and trading in securities, the bank’s activities in the area of treasury products are also characterised by high flexibility, direct decision paths and innovative actions. The addition of corporate treasury sales services in 2014 rounded out our expertise and made an important contribution to the requirement of comprehensive advising for our clients – the volume of business generated in this area emphasises our high client approval. This service is supplemented by a daily report prepared directly by our traders: the Morning News, a concise and perceptive summary of the day’s most important macroeconomic events is viewed as an important source of information far beyond our active circle of clients.

In our working relationships with clients, functioning as the processing bank for orders is one of the pillars of this professional cooperation. Semper Constantia’s responsibilities as a custodial bank and the related execution of orders are undertaken by a team of experts with long-standing professional experience that guarantees the best possible access to the capital markets. These services range from the direct execution of client orders to brokerage – a service that gives our consultation-intensive clients the best possible and most direct access to market information. The increasingly strong volatility of interest rate and currency markets have created numerous and somewhat unpredictable risks for companies and investors. Semper Constantia meets the resulting client needs for professional risk management support with services offered by the corporate treasury department. In order to live up to our claim of high quality professional client consulting, these activities are also the responsibility for a team of experts who provide the best possible advice on, and implementation of investments in treasury instruments. Their services range from traditional interest rate and foreign exchange management to the use of derivatives to optimise risks. The use of suitable tools and means helps to improve financial return, reduce financing costs or increase investment income, by neutralising or consciously managing risks.

SEMPER CONSTANTIA

APART FRO M THE NUMB ERS 3 ANNUAL REPORT 2014

A PA R T F R O M T H E N U M B E R S

3.1 CORPORATE GOVERNANCE The bank is committed to value-oriented and transparent corporate governance.

3.2 EMPLOYEES – A BANK’S GREATEST ASSET Outstandingly qualified, highly motivated and performance-oriented employees are the foundation of the company’s success.

3.3 SUSTAINABILITY – SEMPER CONSTANTIA STANDS FOR EDUCATION AND STRONGLY SUPPORTS EMERGENCY RELIEF Semper Constantia takes its responsibility towards society seriously and is involved in a wide variety of social projects.

S E M P E R C O N S TA N T I A : A PA R T F R O M T H E N U M B E R S

Cor p or a t e go v e r n a n c e 3 .1 A nnual report 2014

Governance principles such as the separation of powers, transparency and reducing conflicts of interest are governed by clear guidelines.

corporate go v ernance 3.1

The trustworthy, transparent and efficient cooperation between the various corporate bodies, the protection of shareholders’ interests, continuous compliance with supervisory regulations as well as open and transparent communications are key guidelines for Semper Constantia Privatbank in the implementation of modern corporate governance.

Semper Constantia Privatbank has also issued clear guidelines to regulate compliance with governance principles that include the separation of responsibilities, transparency and the reduction of conflicts of interest, as well as ensuring the qualifications of members of the bank’s executive bodies and support of their motivation towards value-oriented actions.

Semper Constantia’s goal is to sustainably increase in the bank’s value while fully meeting all its responsibilities. The bank is committed to value-oriented and transparent management in the sense of corporate governance principles.

The bank is committed to implementing an internal control system in accordance with the relevant legal provisions. Semper Constantia’s control system includes all process-related monitoring measures which are integrated in organisational and technical processes in various ways. Included are the respective organisational guidelines for the entire operating management, defined control mechanisms and the monitoring responsibilities of the direct process supervisors. The internal control system is organised and implemented by management to meet the bank’s exact requirements. With the support of risk management, the functionality and effectiveness of this system is regularly evaluated and adjusted.

From the perspective of good corporate management, Semper Constantia’s corporate governance policy covers four areas: 1. Definition of the bank’s overriding objective, which provides management with a guiding principle to master conflicts of interest 2. Structures, processes and people to support the attainment of this objective 3. Regular evaluation of management activities and the continuous improvement of management procedures 4. Proactive corporate communications through the implementation of transparent decision processes in order to gain and strengthen the trust and support of the bank’s relevant reference groups

S E M P E R C O N S TA N T I A : A PA R T F R O M T H E N U M B E R S

Employees â&#x20AC;&#x201C; a b an kâ&#x20AC;&#x2122;s gre a t e s t a s s e t 3.2 ANNUAL REPORT 2014

The cornerstones of our corporate culture are teamwork, motivation, responsibility and client orientation.

E mplo y ees 3.2

In order to incorporate new employees quickly and successfully, an integration guideline has been developed which also includes a mentoring programme for certain areas. This programme is designed to facilitate the integration, promotion and support for promising new talents by experienced staff members.

In a market environment that is continuously confronted with new challenges, outstandingly qualified, highly motivated and achievementoriented employees are the foundation for our continued corporate success. At Semper Constantia Privatbank, we bear responsibility towards our employees – and for this reason, create a working environment that strengthens the aspirations of our employees and encourages responsible actions. During the past year, activities in this area have focused on strongly anchoring our corporate culture, education and training as well as the continued development of our code of conduct.

Vocational education and training Our employees’ high calibre of professional qualifications is a further essential concern of our private bank’s corporate culture. This high level can only be maintained through effective measures to ensure continuous vocational education and training. Therefore, we launched a number of initiatives in this area in 2014. Of special note is the establishment of mandatory participation in training programmes such as the Certified Financial Planner.

Corporate culture The cornerstones of our corporate culture are teamwork, a willingness to perform at the highest level, a sense of responsibility and, in particular, client orientation. These core values are manifested in the daily actions of our employees. Goals are defined and achieved together – every person is an important part of the team and is prepared to go the important “extra mile”. Willingness to perform at the highest level is demonstrated by a proactive approach and entrepreneurial actions. Our employees take responsibility for their actions and are continuously striving to further their professional and personal development.

Internal and external training courses were also offered last year on the subjects of current issues, such as legal regulations and frameworks. Numerous renowned experts were engaged for lectures as part of information events. Congruent behavioural goals

Semper Constantia places special value on the behaviour of our employees and applies a consistent measurement benchmark throughout the bank. The core elements of our behavioural goals, which reflect the cornerstones of our corporate culture, are teamwork, a willingness to perform at the highest level, a sense of responsibility as well as client orientation. Within our organisation, a responsible performance and management culture has been created through these performance criteria. The great importance Semper Constantia attaches to the conduct of our employees is manifested in our remuneration policy. The achievement of the behavioural objectives constitutes 50 per cent of the variable remuneration of Semper Constantia’s employees.

Our experience and expertise allow our employees to identify and understand the needs of our clients. We place high value on mutual trust and concentrate on developing and maintaining sustainable, long-term relations with our clients, which is also the core objective of client services. An employee survey brought important insights and allowed us to identify opportunities for optimisation in certain areas of our corporate culture. We place high value on the satisfaction and longterm retention of our employees and have therefore implemented measures to enhance job satisfaction. Several improvements were developed by a separate working group, which has also actualised their step-by-step implementation. Our company has a strong focus on communication and information, vocational education and training as well as the regular expression of recognition and appreciation by management. 43

S E M P E R C O N S TA N T I A : A PA R T F R O M T H E N U M B E R S

S u st a i n a bi l i t y â&#x20AC;&#x201C; S em p er Co n s t a n t i a s t a n ds f or edu ca t i on a n d s t ro n gl y s u ppo rt s em e r g e n c y re l i e f 3 .3 ANNUAL REPORT 2014

As a private bank, we take our educational mandate towards employees, clients and society seriously.

S ustaina b ilit y 3.3

Education is the basis for success. Therefore, Semper Constantia Privatbank has dedicated itself to this matter with increased initiatives in this area both inside and outside the bank. International standards show that there is still a substantial need for education on financial issues in Austria. As a private bank, we are equally aware of our educational responsibility towards our employees and our clients. The Semper Constantia team takes part in additional training programmes such as CFP and CFA on a regular basis in order to remain concurrent on the latest developments. We organise numerous internal and external information events to provide our clients and other interested parties with information on various financial issues. Competent advising discussions, where we meet our clients as equals, are the optimal approach to understanding and implementing their investment goals.

This Austrian organisation is a member of the international non-profit educational initiative “Teach For All”. Its goal is to improve the opportunities for children who come from challenging backgrounds. Studies regularly confirm that one-fourth of school-leavers in Austria cannot properly grasp meaning from reading. In order to give these children a better chance for a high-quality education, top graduates from various fields of study commit to teaching in secondary schools for two years. The results achieved in these classes by highly motivated, young volunteer teachers are excellent according to the Austrian Ministry of Education. Semper Constantia sponsored one of the fellows for the “Teach for Austria” project in 2014 and plans to expand this commitment over the coming years.

“Teach For Austria” – high potential individuals who want to improve the world

Semper Constantia – aid programme for Serbia The employees of Semper Constantia also work to make a difference in society. Fast assistance is often required in the wake of natural and environmental disasters. In May 2014, the worst flooding in 50 years caused widespread damage across large areas in the Balkans. Thousands of people lost their homes and livelihoods in only a few days. Semper Constantia employees quickly organised a private fundraising campaign and collected over EUR 18,000 in a couple of days. This money was used to buy 15,000 litres of water, 2 tonnes of flour, 800 kg of laundry detergent, 600 litres of cooking oil as well as 34,000 nappies plus mattresses along with blankets and pillows. The 25 tonnes of goods were personally transported to Serbia in lorries, with three of the bank’s employees volunteering as drivers. The goods were taken directly to the crisis region, where they were immediately transferred to the Serbian Red Cross.

A good education is necessary to create a fertile ground for a highly developed society but, unfortunately, not everyone has access to quality education – not even in Austria. Acting from conviction, Semper Constantia has been supporting social and charitable initiatives in educational areas since the last year. One example is the “Teach For Austria” initiative.

SEMPER CONSTANTIA

MANAGE M ENT RE P ORT on the consolidated financial statements as at 31 December 2014

4 ANNUAL REPORT 2014

MANAGEMENT REPORT

4.1 GENERAL FRAMEWORK AND REVIEW OF 2014

4.2 BUSINESS PERFORMANCE REPORT 4.3 NON-FINANCIAL PERFORMANCE INDICATORS

4.4 RESEARCH AND DEVELOPMENT

4.5 RISK REPORTING

4.6 REGULATORY OUTLOOK

4.7 OUTLOOK ON 2015

SEMPER CONSTANTIA : MANAGEMENT REPORT

4 .1 G E N E R A L F R A M E WO R K A N D

The prospects of an end to the favourable US dollar liquidity, together with fears of an ominous military dispute with Russia increased market volatility during the fourth quarter of 2014, to a level last seen in 2012 before Mario Draghi heralded a turnaround in the European sovereign debt crisis.

R E V I E W O F 2 014

Developments in 2014 were influenced by disappointed hopes of acceleration in the global economy. The moderate global growth of roughly 3 per cent is explained primarily by the regional crises involving, for example, Argentina, Ukraine and Russia, as well as the resulting consumer hesitancy and investment restraint in countries only indirectly affected by these events. After weather-related difficulties at the beginning of the year, the USA subsequently took on the role of global growth engine. At the same time, the economies in Eastern Europe and the eurozone were subdued by the Russia conflict. The emerging markets were affected by an economic slowdown, while the momentum in the Japanese and Chinese economies was also discouraging in 2014.

In the previously described global low-inflation environment, bonds classified by many as finished at the beginning of the year made a brilliant comeback. Ten-year German bonds recorded a performance of over 10 per cent, and bonds issued by the euro-peripheral countries were far above this level. The low inflation rates pressured the ECB to adopt an expansive monetary policy that triggered a further drop of 50 per cent in the yield mark-up for ten-year Spanish bonds versus their German counterparts. In the end, the European sovereign debt crisis eased further during 2014. Even the year-end worries over politically unstable Greece could not reverse this trend.

Against this backdrop, wages and prices were not noticeably pressured by these developments. Commodity prices fell throughout 2014, with the most spectacular drop recorded by crude oil prices. This led to growing fears of deflation in the eurozone and to expansionary steps by the ECB that included a gradual increase of EUR 1,000 billion in the balance sheet total among others through bond purchases. The Bank of Japan also substantially expanded its securities purchase programme during the past year. The reason: the increase in the value added tax had become a burden for the economy. In contrast, the US Federal Reserve (FED) ended its bond purchase programme (quantitative easing 3). This growing divergence between the monetary policies of the major central banks during the year led to strong fluctuations on the currency markets. The FED’s increasingly restrictive monetary policy triggered an increase in the value of the US dollar, not only versus the euro and yen, during 2014 which had a significant influence on the global financial markets.

Global stocks recorded very good performance during the past year from the European point of view. However, this favourable evaluation was not based on price developments, but on foreign exchange gains that resulted from the weaker euro. The widely diversified global stock index MSCI-World All Countries recorded a plus of only 4.8 per cent in local currency, but an impressive euro-based gain of 19.4 per cent. In line with economic developments, the US stock market (S&P 500 Index) was particularly convincing with +13.7 per cent (+29.6 per cent in euro). Results from the eurozone were rather mixed with an increase of 4.92 per cent (EURO STOXX 50).

MANAGEMENT REPORT 4

The bank was also able to optimally represent its clients’ interests during phases of extreme market turbulence and high volatility, such as in the fourth quarter of 2014, through its strong market connections and high execution quality of client orders. In this way, the bank’s outstanding service quality significantly contributed to reaching the ambitious growth targets. Overall, this led to a substantial increase in asset volume for the segment “funds under management and advice” during the past year. Semper Constantia moved decisively closer to its strategic goal of becoming the bank with the pre-eminent advising quality on the market. The income generated by this business sector rose by nearly 45 per cent year-on-year in 2014.

4 . 2 Business per f ormance report

Despite the many adverse factors in the capital markets, SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT (hereinafter referred to as Semper Constantia or the bank) generated a gross new acquisition volume of approximately EUR 1.5 billion in 2014. This represents a year-on-year increase of 37 per cent and results that substantially exceeded the very lofty targets set for the year. The basis for the bank’s continuing success is its ownership structure. Semper Constantia sees itself as an entrepreneurs’ bank and, consequently, enjoys the freedom to quickly react to market developments. Building on a long-term orientation, flexibility and entrepreneurial conduct, Semper Constantia places the interests of its clients at the focal point of activities. During the past year, this was reflected in a focus on the traditional private banking businesses of asset management, white label funds and custodial bank services as well as, with regard to Semper Constantia, the real estate business. These segments represent the bank’s core epertise. The risk in these areas is also calculable and underscores the course for the bank’s sustainable development. The success of this strategy is also demonstrated by the bank’s financial indicators and by the substantial growth in the gross new acquisition volume.

In the area of investment apartments, two properties in Vienna were offered during 2014: one on Rathstrasse in the 19th district and another on Josef-Kutscha-Gasse in the 23rd district. This secure form of investment was met with substantial interest by existing and new clients, and most of the apartments were sold more than one year before completion. The bank’s real estate expertise also led to extremely positive development for the SemperReal Estate open-ended fund, which recorded sound financial inflows. The full investment of this new capital in profitable and stable commercial properties in Austria and Germany, combined with an occupancy rate of 97 per cent in these properties, generated stable income. In addition, the course was implemented for new special real estate fund projects that will provide major investors with even more individual solutions for real estate investments starting in 2015.

In the area of asset management, as part of the segment “funds under management and advice”, the bank has successfully established a position through its customised solutions. The key starting point for these activities is the Semper Constantia house view. An individual house view is formed for every important market development and an appropriate strategy is subsequently formulated. Only in the final step are the best products select-ed for the implementation of the strategy. In 2014, Semper Constantia succeeded in generating additional value for its clients in phases of lower volatility, often seen during the summer months, with sophisticated trading strategies and the utilisation of market opportunities.

The custodial bank and white label fund business, a further core industry for Semper Constantia, also recorded a strong upward trend in 2014. The gross volume in this segment rose by 29 per cent year-on-year. Once again, this confirms the trust clients have in the bank’s expertise and the strength of its system in this area as well as a superior focus on flexibility and service mentality. Another positive factor was that withdrawals in 2014 were only small and in line with normal market fluctuation, a development that also demonstrates clients’ satisfaction with Semper Constantia’s settlement expertise.

SEMPER CONSTANTIA : MANAGEMENT REPORT

The uncertainty on the financial markets led to an increase in client deposits (2014: EUR 546.0 million versus 2013: EUR 494.3 million) and investment fund inflows to a new high in 2014 – despite the extremely low level of interest rates. The growth in deposits supported a year-on-year increase of 11 per cent in the balance sheet total. Liquidity also remained at a very high level. Together with all other Austrian financial institutions, Semper Constantia is also confronted with negative interest on its deposits with the Austrian National Bank. The conservative business strategy chosen by Semper Constantia suggests the creation of a balance between risk and yield opportunities at the present and in the future. The high liquidity balances made it possible for the bank to substantially exceed the required liquidity coverage ratio (LCR) by the balance sheet date. At the same time, this situation will also result in a further decline in net interest income over the medium-term unless countermeasures are implemented.

Semper Constantia recorded an increase of EUR 6.6 million in profit on ordinary activities from EUR 3.4 million in the previous year to EUR 10.0 million in 2014. This strong development was the result of steady growth in the bank’s core businesses, which also led to a clear increase in fee and commission income. Commission income rose by 19 per cent over the previous year. The higher cash inflows in the internally managed SemperReal Estate mutual fund and the net fund changes in the third party managed funds of Semper Constantia Invest GmbH led to an increase in dividends over the previous year. These positive factors more than offset the lower net interest income, which has declined steadily in recent years. Another positive aspect was that Semper Constantia was not required to record any exceptionally high provisions for legal and litigation costs in 2014. Operating profit therefore more than doubled compared with the previous year. The provisions for legal claims were reviewed on the basis of current information and adjusted accordingly. The legal risks for Semper Constantia arising from a bond issued by the predecessor bank (Constantia Privatbank) and a promissory note also issued by the predecessor bank, whose debtor is Aviso Zeta AG, 1100 Vienna, cannot be entirely excluded. The bank has obtained two legal opinions which, as indicated in the previous year, do not consider the recognition of these provisions to be necessary.

MANAGEMENT REPORT 4

The following table shows the change in the major balance sheet positions compared with the previous year: Changes in major balance sheet positions during 2014 in EUR million:

IN EUR MILLION

2014

2013

CHANGE AbSOLUTE

CHANGE RELATIvE (%)

Balance sheet total as at 31/12/2014

662.1

594.8

67.3

11.4

Cash, balances with central banks

150.2

72.5

77.7

107.3

97.6

147.1

-49.5

-33.6

Loans and advances to clients

130.0

134.6

-4.6

-3.4

Debt, debt securities and other fixed-interest securities

242.0

202.1

39.9

19.8

Deposits by clients

546.0

494.3

51.7

10.5

73.2

68.0

5.2

7.7

Loans and advances to financial institutions

Equity, incl. participation capital

The new equity rules have also led to a decline in the common equity tier 1 capital ratio from 20.6 per cent to 15.7 per cent, but there is still a clear buffer above the legally required level of 4.5 per cent. The capital ratio equalled 17.3 per cent and is also considerably higher than the legal minimum of 8 per cent.

In addition to challenging markets, the credit sector was influenced by the implementation of the Basel-III supervisory regulations in 2014. New standards were set for Europe which include stricter requirements for the definition of equity, increased equity requirements, liquidity supervision, corporate governance and penalties. These measures are designed to prevent a recurrence of the events of 2007 and 2008.

SEMPER CONSTANTIA : MANAGEMENT REPORT

Semper Constantia is on the right course, a course that is also confirmed by the results of the first major client satisfaction survey. More than 70 per cent of the surveyed clients were, in total, very satisfied with the bank’s services. Particularly high ratings were received by the client advisers for the high quality of their services.

4 . 3 N on - f inancial per f ormance in d icators

In addition to the significant improvement in its financial indicators, the bank also enjoyed a number of qualitative successes during the past year. The positive development of our business has also resulted in high motivation and excellent team spirit throughout the entire bank. “Our employees are proud to work at Semper Constantia!”

In 2014 Semper Constantia held numerous events on a wide range of topics for its clients. Current and potential clients were invited to social gatherings as well as information events. The response was overwhelming, and the number of participants at every event exceeded all expectations. One example is our Advent party, where our in-house function rooms were filled to the limit. The SemperOwners Portfolio (fund start: beginning of December 2014) was introduced at this event as a new mutual fund that is “funded” by the bank’s owners. It gives Semper Constantia’s private clients the opportunity to invest in a fund that meets the high expectations and demands of the renowned Austrian industrialists who own Semper Constantia.

The team structure introduced in the private and institutional banking business in 2013 was able to develop more fully during 2014. The organisational focus on different client segments concentrated the know-how of employees in smaller teams, which were then strengthened by the hiring of additional experienced staff members. This allowed for an even more effective approach to dealing with the different client needs in the respective segments. These qualitative improvements in service played an important role in the acquisition of new clients. In particular, the many tenders won by the bank underscore the high quality of the restructured asset management and client service functions. The bank not only sharpened its focus on the different client segments, but also improved the geographical focus of its market activities. Institutional banking further expanded its market presence, primarily in Germany, with events and more frequent contacts with traditional institutional clients, while private banking successfully concentrated on stronger market penetration in Austria and Western Europe.

In line with the claim to be the private bank with the best advising and service in Austria, Semper Constantia will also implement numerous personnel and technical measures to further improve the quality of services in 2015.

4 . 4 R esearch an d d e v elopment

Semper Constantia conducts no research and development activities.

The 2014 quality campaign made it possible to reach and also substantially exceed ambitious acquisition goals. It is particularly pleasing that clients are placing their trust in Semper Constantia, not only for the traditionally strong custodial activities (depository management and white label funds), but increasingly for the management of their assets as well.

MANAGEMENT REPORT 4

Semper Constantia executes foreign exchange transactions primarily as closed transactions for clients, and the related foreign exchange risks are therefore limited. Interest rate risk is strictly limited by the use of the same interest rate indicators for financial assets and liabilities and by the establishment of tight limits. The main volume of business is tied to the three-month Euribor. Interest rate risks are managed by the Asset/Liability Committee (ALCO), which defines measures to limit market risk and sets the criteria for asset-liability management on behalf of the Executive Board.

4 . 5 R isk reporting

Semper Constantia Privatbank provides traditional banking services for private and institutional clients. Through its conservative approach, the bank aims to meet all regulatory requirements for the identification and management of risks and for the maintenance of appropriate liquidity and equity. Semper Constantia Privatbank is focused on the minimisation of financial risks. The CET1 ratio, as defined by regulatory requirements, equalled 15.7 per cent as at 31 December 2014 and thus significantly exceeded the legal minimum of 4.5 per cent.

Deposits by clients and funds amounted to EUR 546.0 million as at 31 December 2014. These funds are invested primarily with the Austrian National Bank and also in liquid government securities and securities of other top-quality issuers. Deposits with the Austrian National Bank amounted to EUR 150.2 million as at 31 December 2014, and the unencumbered receivables from issuers of tenderable securities totalled EUR 101.2 million.

The most important primary financial tools and means used by Semper Constantia are debt issued by public authorities, loans and advances to financial institutions and clients, deposits by financial institutions and clients, debt, shares, investment certificates and participation capital.

Short-term liquidity is managed on a daily basis by the treasury department of Semper Constantia. In order to measure and manage medium-term and structural liquidity risk, a daily liquidity analysis is prepared on the basis of complete balance sheet data. Risk controllers also prepare a weekly report for the Executive Board.

Semper Constantia’s activities are focused on asset management, and lending is therefore a supplementary function. Loans are generally supported by collateral in the form of securities held by clients in their custodial accounts and/or by real estate. This collateral substantially limits the risk of loss on receivables. In interbank trading, the bank works with counterparties that have a sound credit rating. In calculating credit risk, Semper Constantia uses the standard approach defined in Article 111 et seq. of the Capital Requirements Regulation (CRR).

Operational risk is limited by clear guidelines, instructions, procedural measures and insurance. A key element for the management of operational risk is the internal control system. Risk self-assessments are carried out on a regular basis to facilitate the identification of risks. Other instruments used by Semper Constantia for operational risk management include active damage and complaint management as well as response management. Operational risk is calculated according to the basis indicator approach defined by Article 315 et seq. of the Capital Requirements Regulation (CRR).

Derivative financial instruments are used solely for hedging purposes. The off-balance sheet transactions reported in the notes do not represent a market risk for Semper Constantia as they consist almost entirely of client positions. Currency risks are limited to a manageable scope by the definition of focal points for securities investments. The preferred instruments are Euro Government Bonds issued by selected member countries of the European Union, the United States of America and corporations with sound credit ratings.

SEMPER CONSTANTIA : MANAGEMENT REPORT

In this context, we have defined three general objectives. 1) The comprehensive and rapid implementation of all requirements and, if reasonable, the implementation of measures that exceed the scope of regulatory requirements. 2) The generation of the greatest possible benefits for our clients during this implementation through a further improvement in quality, and 3) the maintenance of a stable focus on our business in the midst of all these challenges.

The investments in other companies held by Semper Constantia are designed primarily to support bank operations. Included here are the investments in Semper Constantia Invest GmbH, Semper Constantia Immo Invest GmbH, Semper Constantia Asset Management GmbH, LeanMIS GmbH, Cantiga Holding GmbH & Co KG and The Value Group GmbH. At Semper Constantia there is a clear separation between the market departments and risk management. The bank’s risk strategy is adjusted to conform with the corporate strategy at least once each year.

Our efforts in meeting these objectives were very successful during the past year, and we are convinced that we will be able to guarantee this same high implementation strength for our clients and house over the coming years. Not only are we very flexible, but also substantially larger than the critical financial mass required for the correct fulfilment of these requirements.

Risk at the overall bank level is managed on the basis of a going-concern scenario. In addition, a liquidation scenario and stress tests are prepared and implemented to develop the required limits and management measures. The business model incorporates measurement methods that reflect the proportionality principle and substantially exceed the scope of legal calculations for equity. The results of the risk capacity analysis are evaluated at the regular roundtable meetings of the bank’s risk managers and presented to the Supervisory Board of Semper Constantia as part of the quarterly risk reporting.

As a leading private bank, we naturally give top priority to the absolute precise calculation and payment of taxes, including a comprehensive reporting to our clients. This subject area is rounded out by an extensive project to analyse and improve the bank’s internal control system, which will help set a course for the future.

4 . 6 R egulator y outlook 4 .7 O utlook on 2 015

The year 2014 was influenced by the implementation and refinement of extensive regulatory and taxation requirements, a trend that will continue – and most likely intensify – during the coming years. Numerous acronyms such as UCITS, FATCA, EMIR, AIFMG, CRR, CRD and many more represent the substantial efforts that will have to be made by European banks, not only in the legal sector but also by, in particular, IT, data warehousing, core bank systems and business intelligence. In addition, the legal environment is gaining an increasing influence over the strategic focus of banks.

The bank’s portfolio management is expecting moderate growth in the global economy during 2015. In combination with the expansive monetary policies of the ECB and the Bank of Japan, the focus will be on cyclical asset classes. Investments in stocks are a particular favourite at the present time. The effects of the massive drop in the oil price are seen by the bank’s portfolio managers as generally positive, in contrast to the latest market reactions. This opinion is based on the resulting substantial improvement in the purchasing power of consumers. At the same time, major oil exporters from the emerging markets, for example Russia and Venezuela, are faced with growing crises.

MANAGEMENT REPORT 4

In addition, the ECB activities will provide support for corporate bond prices. The influential US bond market is not expected to create any headwinds for Eurobonds because an increase in key interest rates by the US Federal Reserve appears extremely unlikely before mid-year. In view of the strong US economy, a moderate increase in US bond yields can be expected during 2015. The outlook for bond yields in 2015 can be classified as moderate, with the exception of temporary opportunities in the eurozone.

These geopolitical factors, together with the gradually more restrictive monetary policy of the US Federal Reserve, will lead to provisional corrections on the financial markets. The development of stocks differed substantially by region during the past year: the US market recorded positive performance of roughly 14 per cent in local currency, but the leading Austrian Traded Index (ATX) index declined by the same amount. As we are still forecasting moderate growth for the global economy in 2015, regional factors should remain the dominant performance drivers, thus leading to widely varying results in the individual markets. The bank’s analyses indicate that stocks will still receive a fair valuation on a global basis, which also makes them one of the most attractive asset classes for the new financial year. Their valuation is already high in specific regions, and an increase in volatility can be expected in 2015. Semper Constantia’s asset management tends to favour European stocks in the new financial year. Low energy prices and the weaker euro give Europe an additional boost. The influence of geopolitical factors will increase in the “old world” during 2015, but the potential for profit growth is the highest in this region.

The raw material markets have been characterised by a series of losses across all segments in recent years. The erosion of the crude oil price in recent months has been particularly spectacular. Many raw materials are currently trading near, or even under, their production cost. Against this backdrop, the bank’s analysts are projecting the stabilisation of raw material prices during the first half of 2015 and slow recovery during the second half of the year. Semper Constantia is going to address these macroeconomic challenges and work to expand further in its core businesses, whereby the focus will be placed on organic growth. Three new members, who will enrich the house with their private banking expertise, are also to be added to the Executive Board in 2015.

Bonds appear less attractive at first glance based on the absolute yield levels. However, the low-interest environment in the eurozone has led the European Central Bank (ECB) to accelerate its bond purchases. The bank’s portfolio management expects an increase in these activities, which will allow Eurobonds to remain attractive – especially in the first quarter of 2015 – despite the lower yields. The European peripheral countries are expected to benefit most from the ECB purchases.

Vienna, 9 March 2015 The Executive Board

Dietmar Baumgartner

Peter Reisenhofer

SEMPER CONSTANTIA

CONSOLIDATED F INANCIAL STATE M ENTS 5 ANNUAL REPORT 2014

CONSOLIDATED FINANCIAL STATEMENTS

5.1 CONSOLIDATED BALANCE SHEET 5.2 CONSOLIDATED INCOME STATEMENT 5.3 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 5.4 CONSOLIDATED CASH FLOW STATEMENT 5.5 NOTES 5.6 Changes in non-current assets 5.7 AUDITOR’S REPORT 5.8 REPORT BY THE SUPERVISORY BOARd

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

Consolidated balance sheet as at 31 december 2014 ASSETS

EUR

1. Cash, balances with central banks

31/12/2014 EUR

150,839,790.63

31/12/2013 kEUR

72,999

2. Debt issued by public authorities, which is accepted by the central bank for refinancing: debt issued by public authorities and similar securities

68,641,883.33

56,641 68,641,883.33

56,641

3. Loans and advances to financial institutions a) Payable on demand

69,007,594.83

b) Other loans and advances

28,588,615.96

4. Loans and advances to clients 5. Debt and other fixed-interest securities from other issuers

88,636 58,420 97,596,210.79

147,056

129,960,813.32

134,600

173,362,421.80

6. Shares and other non-fixed interest securities 7. Investments in other companies 8. Shares in subsidiaries 9. Intangible assets 10. Property, plant and equipment 11. Other assets 12. Prepaid expenses and deferred charges Total profit 1. Foreign assets 2. Special assets in managed investment funds

145,426 173,362,421.80

145,426

26,766,934.75

26,910

231,622.56

240

0.00

354,527.38

214

1,234,983.13

1,344

12,787,495.30

9,173

322,615.57

158

662,099,298.56

594,761

301,683,097.09

239,474

5,485,172,862.77

4,387

CONSOLIdATEd bALANCE SHEET 5.1

LIAbILITIES ANd EQUITy

EUR

31/12/2014 EUR

31/12/2013 kEUR

1. Deposits by financial institutions a) Payable on demand

16,205,097.67

b) With agreed term or cancellation period

10,157

0.00

0 16,205,097.67

10,157

2. Deposits by clients a) Other liabilities Thereof: aa) Payable on demand

520,805,569.03

bb) With agreed term or cancellation period

452,438

25,239,224.88

3. Other liabilities 4. Deferred income

41,855 546,044,793.91

494,293

19,552,883.03

14,793

182,749.24

255

5. Provisions a) Provisions for severance compensation b) Provisions for pensions c) Tax provisions d) Other

441,517.00

1,324

0.00

97,965.51

6,376,250.24

6. Participation capital 7. Subscribed capital

5,958 6,915,732.75

7,282

30,000,000.00

30,000

5,000,000.00

5,000

8. Share premium a) Unappropriated

24,794,315.52

24,716 24,794,315.52

24,716

9. Other reserves a) Statutory reserves

500,000.00

b) Miscellaneous reserves

500

5,039,855.20

10. Liability reserve i.a.w. Section 57 (5) of the Austrian Banking Act 11. Non-controlling interests 12. Total profit Total profit 1. Contingent liabilities, thereof: liabilities arising from sureties and guarantees from the provision of collateral

5,040 5,539,855.20

5,540

3,205,527.94

2,709

3,000.00

4,655,343.30

662,099,298.56

594,761

2,741,002.67

2,883

2,741,002.67

2. Credit risks

2,883

129,453.04

3. Liabilities arising from fiduciary transactions 4. Qualifying capital i.a.w. Part 2 of Regulation (EU) No. 575/2013 thereof: supplementary capital i.a.w. Part 2 Title I Chapter 4 of Regulation (EU) No. 575/2013

4,284,189.92

1,650

68,185,171.28

67,754

6,000,000.00

5. Required capital i.a.w. Section 22 (1) of the Austrian Banking Act, thereof:

200

31,599,048.30

26,328

Required capital i.a.w. Art. 92 (1) letter a of Regulation (EU) No. 575/2013

15.74%

required capital i.a.w. Art. 92 (1) letter b of Regulation (EU) No. 575/2013

15.74%

required capital i.a.w. Art. 92 (1) letter c of Regulation (EU) No. 575/2013

17.26%

6. Foreign liabilities

47,987,227.32

78,162

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

Consolidated income statement for the financial year from 1 January 2014 to 31 December 2014

EUR

1. Interest and similar income thereof:

2014 EUR

2013 kEUR

8,249,269.77

10,366

(3,873,919.31)

(5,551)

4,375,350.46

4,815

from fixed-interest securities: EUR 4,823,004.91 2. Interest and similar expenses I.

Net interest income

3. Income from securities and investments in other companies a) Income from shares, other participation rights and non-fixed interest securities b) Income from investments in other companies thereof: accounted for as associated companies: EUR 8,991.45 c) Income from shares in subsidiaries

830,553.66

8,991.45

0.00

4. Fee and commission income 5. Fee and commission expenses 6. Income / expenses from financial transactions 7. Other operating income II. Operating income

839,545.11

65,751,006.46

55,872

(44,116,897.99)

(37,689)

2,741,277.10

3,441

1,385,409.33

1,106

30,975,690.47

27,611

8. General administrative expenses a) Personnel expenses thereof: aa) Salaries

(8,915,262.02)

(8,191)

bb) Expenses for legally required social security and payroll-related duties and mandatory contributions

(2,012,924.35)

(2,004)

(99,718.19)

(88)

dd) Expenses for pensions and similar support payments

(129,969.72)

(111)

ee) Expenses for severance compensation and contributions to employee severance compensation funds

(148,442.36)

(320)

cc) Other employee-related expenses

b) Other administrative expenses (miscellaneous)

(10,930,677.22)

9. Valuation adjustments to assets recorded under items 9 and 10 10. Other operating expenses III. Operating expenses

(12,861) (22,236,993.86)

(23,575)

(473,455.09)

(515)

(324.56)

(59)

(22,710,773.51)

(24,149)

CONSOLIdATEd INCOME STATEMENT 5.2

2014 EUR

2013 kEUR

8,264,916.96

3,462

(2,355,625.29)

(4,517)

12. Income from the reversal of valuation adjustments to receivables and income arising from transactions with securities recorded under other current assets

2,482,759.86

3,975

13. Valuation adjustments to securities that are accounted for as financial assets

(400,517.16)

(9)

14. Income from valuation adjustments to securities that are accounted for as financial assets

2,025,653.06

485

v. Profit on ordinary activities

10,017,187.43

3,396

15. Income taxes

(2,607,426.41)

(887)

(20,889.27)

(11)

7,388,871.75

2.498

EUR

Iv. Operating profit 11. Valuation adjustments to receivables and expenses arising from transactions with securities recorded under other current assets

16. Non-income based taxes vI. Net profit for the year 17. Changes in reserves a) Addition to liability reserve i.a.w. Section 57 (5) of the Austrian Banking Act b) Release of other reserves

18. Distribution on participation capital vII. Net profit for the year (after changes to reserves) 19. Non-controlling interests 20. Profit / loss carried forward vIII. Total profit for the year

(496,357.69)

(417)

0.00

199 (496,357.69)

(218)

(2,250,000.00)

(2,250)

4,642,514.06

0.00

12,829.24

(17)

4,655,343.30

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

Consolidated statement of changes in equity for the year ended 31 December 2014

IN EUR

PARTICIPATION CAPITAL

SUbSCRIbEd CAPITAL

SHARE PREMIUM

31 december 2013

30,000,000.00

5,000,000.00

24,716,059.52

Profit carried forward

0.00

Distribution Semper Constantia Privatbank

0.00

Net profit for the year

0.00

Addition to other reserves

0.00

Release of other reserves

0.00

Addition to share premium

0.00

78,256.00

Addition to liability reserve

0.00

Distribution on participation capital

0.00

30,000,000.00

5,000,000.00

24,794,315.52

31 december 2014

CONSOLIdATEd STATEMENT Of CHANGES IN EQUITy 5.3

OTHER RESERvES

LIAbILITy RESERvE

NON-CONTROLLING INTERESTS

PROfIT CARRIEd fORwARd

NET PROfIT fOR THE fINANCIAL yEAR

TOTAL

5,539,855.20

2,709,170.25

3,000.00

(16,500.29)

29,329.52

67,980,914.20

0.00

29,329.52

(29,329.52)

0.00

7,388,871.75

0.00

78,256.00

0.00

496,357.69

0.00

(496,357.69)

0.00

(2,250,000.00)

5,539,855.20

3,205,527.94

3,000.00

12,829.24

4,642,514.06

73,198,041.96

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

Consolidated cash flow statement for the financial year from 1 January to 31 December 2014

IN kEUR

Net profit for the year Depreciation, amortisation and write-ups Proceeds from the sale of non-current assets Other non-cash income and expenses

2014

2013

CHANGE

7,389

2,498

4,891

788

1,397

(610)

(1,953)

(173)

(1780)

(9)

(18)

Change in long-term provisions

(882)

142

(1,024)

Gross cash ﬂow

5,332

3,846

1,486

Increase/decrease in: Loans and advances to financial institutions

49,460

(14,005)

63,465

Loans and advances to clients

4,639

4,549

Securities (current)

7,592

52,694

(45,103)

(3,780)

13,863

(17,643)

Other assets/prepaid expenses and deferred charges Tax provisions Other provisions Deposits by financial institutions Deposits by clients Other liabilities / deferred income Net cash flow from operating activities (OCf) Payments made for investments in financial assets Payments made for investments in other non-current assets Proceeds from the sale of financial assets Proceeds from the sale of other non-current assets Net cash flow from investing activities (ICf) Distribution on participation capital Cash inflows from shareholder contributions

(220)

318

418

1,535

(1,116)

6,048

(33,745)

39,793

51,752

33,011

18,741

4,688

(4,073)

8,761

126,246

57,454

68,792

(129,216)

(118,592)

(10,625)

(504)

(191)

(314)

83,486

29,445

54,041

(23)

(46,233)

(89,313)

43,080

(2,250)

263

(185)

Increase from L sieben merger

(29)

Distribution Semper

(4,000)

4,000

Net cash ﬂow from financing activities (fCf)

(2,172)

(5,958)

3,786

Change in cash and cash equivalents

77,841

(37,817)

(115,658)

Cash on hand, deposits with national bank 01/01/2014

72,999

110,816

(37,817)

Cash on hand, deposits with national bank 31/12/2014

150,840

72,999

77,841

(37,817)

(115,658)

Change

CONSOLIDATED CASH FLOW STATEMENT 5.4

SEMPER CONSTANTIA : CONSOLIDATED FINANCIAL STATEMENTS

N ot es t o t he c o n s o l i da t e d f i n a n ci a l s t a t e me n t s as at 31 December 2014

5 .5 ANNUAL REPORT 2014

N otes to the C onsoli d ate d Financial S tatements 5.5

SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT, Vienna, holds a direct stake of 94.9 per cent in Semper Constantia Immo Invest GmbH as well as an indirect investment of 5.05 per cent through its subsidiary Cantiga Holding GmbH & Co KG. This represents a combined holding of 99.95 per cent.

I . G E N E R A L I N F O R M AT I O N

These consolidated financial statements were prepared in accordance with generally accepted accounting principles and in keeping with the general objective of presenting a true and fair picture of the asset, financial and earnings position of the company.

Subsidiaries – securities firms The accounting and valuation methods comply with the accounting principles defined by the Austrian Commercial Code and the supplementary provisions of the Austrian Banking Act as well as EU Regulation No. 575/2013 (Capital Requirements Regulation – CRR).

Semper Constantia Asset Management GmbH, Vienna

Subsidiaries – other companies

In preparing the notes, the schedule of maturities for loans and advances to and deposits by financial institutions and clients was based on a remaining term of three months or more. Therefore, the figures on this schedule differ from the items reported as payable on demand on the balance sheet.

Cantiga Holding GmbH & Co KG (financial holding company), Vienna

LeanMIS GmbH, Vienna

25.03%

The subsidiaries Semper Constantia Invest, Semper Constantia Immo Invest, Semper Constantia Asset Management GmbH and Cantiga Holding GmbH & Co KG are included in the financial statements through full consolidation. The investment in LeanMIS GmbH is accounted for as an associated company by applying the equity method.

Based on settlement agreements concluded by SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT with Semper Constantia Invest GmbH and another partnership limited by shares, all receivables and liabilities held by these two partnerships are netted out by fund.

SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT, Semper Constantia Invest GmbH, Semper Constantia Immo Invest GmbH and Semper Constantia Asset Management have formed a corporate group for tax purposes pursuant to Section 9 (1) of the Austrian Corporate Tax Act (KStG). A notification was filed with the tax authorities to indicate the founding of an integrated company for VAT purposes, which includes SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT, the two investment corporations and the securities firm.

I I . C O N S O L I DAT I O N R A N G E

Subsidiaries – financial institutions

Semper Constantia Immo Invest GmbH, Vienna

Limited partnership holding

Investments in other companies

SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT, Vienna, has maintained a trading book since the start of its operating activities on 5 December 2009.

Semper Constantia Invest GmbH, Vienna

100.00%

99.95%

SEMPER CONSTANTIA : CONSOLIDATED FINANCIAL STATEMENTS

Transaction costs, such as brokerage or arrangement fees, are not capitalised as the amounts are immaterial and allocation may be complex.

I I I . C O N S O L I DAT I O N P R I N C I P L E S A N D METHODS

The consolidation is based on the book value method defined in Section 254 (1) clause 1 of the Austrian Commercial Code. In accordance with Section 254 (1) clause 2 of the Austrian Commercial Code, any remaining consolidation differences are offset against reserves.

Securities are classified as held for trading, other current assets or investments (non-current assets). Classification under non-current assets reflects the intention to hold these securities over the long-term (remaining term more than one year), i.e. there is no intention to sell the securities prematurely. Some of them serve as collateral reserves. The Executive Board or the Asset/Liability Committee (ALCO) is responsible for deciding whether securities meet the criteria for classification as non-current.

As part of the consolidation process, receivables were offset against the corresponding liabilities. All intra-group income and expenses were eliminated during the consolidation. There were no interim profits during the reporting year, and the elimination of such items was therefore unnecessary.

Securities that are held for resale or with the intention to utilise existing or expected differences between the purchase and sale price or price fluctuations over the short-term are recorded in a securities trading book pursuant to Art. 4 (1) No. 86 of the Capital Requirements Regulation (CRR) and are valued on a mark-to-market basis.

The principles that form the basis for the consolidation are applied analogously to accounting procedures under the equity method.

I V. AC C O U N T I N G A N D VA L UAT I O N

Securities recorded under other current assets are held primarily for the investment and management of liquid funds.

METHODS

1. Foreign currency assets

Debt instruments issued by public authorities as well as bonds and other fixed interest securities are recorded under non-current assets in cases where they represent a strategic long-term position (intention to hold and remaining term of more than one year) based on a previous or recent resolution, respectively, of the Executive Board. Non-current securities are designated as such on the books.

The euro value of foreign currency assets is determined according to the corresponding average exchange rates on the balance sheet date. 2. Securities holdings Securities held as fixed assets are valued according to the diluted lower of cost or market principle. In accordance with Section 56 (2) and (3) of the Austrian Banking Act (BWG), premiums and discounts are distributed proportionately as income or expense over the remaining term of the respective item.

3. Loans and advances to financial institutions and clients Loans and advances to financial institutions and clients are carried at nominal value or the lower fair value.

In accordance with an expert opinion issued by the Austrian Chamber of Chartered Accountants (KWT) on financial reporting (KFS RL 16), the recognition or collection of deemed distribution income from accumulating investment funds is accounted for by increasing the balance sheet approach of the respective fund shares. The redemption price (imputed value) of these shares on the balance sheet date represents the upper limit for the carrying amount in these cases. 68

N otes to the C onsoli d ate d Financial S tatements 5.5

The major share of the previous severance compensation obligations was transferred to an employee benefit fund at the end of the 2014 financial year.

4. Investments in other companies and shares in subsidiaries Investments in other companies are carried at acquisition cost or the lower fair value, respectively, unless the equity method is used. Shares in subsidiaries are valued by applying the equity method.

7. Participation capital In accordance with and consideration of the provisions of EU Regulation No. 575/2013 (Capital Requirements Regulation – CRR), a restatement of participation capital was completed with regard to adjusted prior-year values. Additional information is provided in the section on “equity and equityrelated liabilities” in the notes to the consolidated balance sheet.

5. Intangible assets, land and buildings as well as property, plant and equipment Intangible assets consist solely of EDP software and are amortised on a straight-line basis, which equals a five-year period for the depreciation calculation of standard products. Buildings, operating and office equipment are carried at acquisition cost less ordinary straight-line depreciation. In accordance with tax regulations, annual depreciation is recorded in full for additions made during the first six months; one-half this amount is recorded for additions made during the second six months of the year.

8. Other provisions

Low-value assets are written off completely in the year of acquisition and simultaneously treated as disposals.

9. Other assets and miscellaneous liabilities

Other provisions include employee-related obligations (performance bonuses, vacations, additional hours worked as well as overtime) and also reflect other uncertain obligations and recognisable risks.

Liabilities are stated at their nominal value or the higher repayment amount.

The depreciable or useful life is based on the asset category: buildings are depreciated over fifty years, adaptations or installations in buildings owned by third parties over ten years, office furnishings over ten years and technical office equipment and EDP hardware over five years.

10. Derivative financial transactions Derivative financial transactions (futures, swaps, options) are classified as hedging instruments in accordance with their intended purpose. As pending transactions, they are generally not shown on the balance sheet. Option premiums that were paid or received are reported under other assets or other liabilities, respectively. Option premiums are recognised as liabilities up to the exercise date. Unless these written options have a higher value than at the balance sheet date, the difference is included under other provisions.

6. Provisions for severance compensation The provision for severance compensation is calculated in accordance with financial principles and the Austrian entry-age normal method (“Teilwertverfahren”) based on a discount rate of 2 per cent per year (2013: 2 per cent per year). In accordance with transitional provisions defined by the Austrian Corporate Employee and Self-Employed Pension Act (BMSVG), the retirement age was adjusted in 2004 to 65 for men and, in some cases, also for women.

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

v. N O T E S T O T H E C O N S O L I dAT E d b A L A N C E S H E E T

1. Schedule of maturities by remaining term

IN EUR

31/12/2014

31/12/2013

Loans and advances to financial institutions Up to 3 months

28,588,615.96

58,419,158.39

Over 3 months and up to 1 year

0.00

Over 1 year and up to 5 years

0.00

Over 5 years

0.00

28,588,651.96

58,419,158.39

Up to 3 months

8,932,160.29

12,547,737.63

Over 3 months and up to 1 year

9,856,968.68

18,715,369.59

Over 1 year and up to 5 years

25,877,156.17

21,186,607.50

Over 5 years

36,525,706.37

40,297,407.24

Total

81,191,991.51

92,747,121.96

Total Loans and advances to clients

deposits by financial institutions Up to 3 months

20,054,528.70

25,631,968.42

Over 3 months and up to 1 year

3,333,063.22

16,122,528.62

Over 1 year and up to 5 years

1,851,632.96

100,308.89

0.00

25,239,224.88

41,854,805.93

Over 5 years Total

The above table does not include claims and liabilities that are payable on demand. The item â&#x20AC;&#x153;debt and other fixed-interest securitiesâ&#x20AC;? includes loans and advances of EUR 15,002,200.00 that are due in 2015 (2013 due in 2014: EUR 26,500,000.00). 2. Securities The difference/premium between the acquisition costs and the repayment amount of non-current securities totalled EUR 4,180,129.37 as at 31 December 2014 (2013: EUR 2,705,682.92) after the deduction of a proportional share of write-downs. The difference/discount between the repayment amount and the acquisition cost for non-current securities totalled EUR 42,408.12 as at 31 December 2014 (2013: EUR 122,713.79) after the addition of a proportional share of write-ups.

NOTES TO THE CONSOLIdATEd fINANCIAL STATEMENTS 5.5

The classification of bonds and other fixed-interest securities, shares and other non-fixed interest securities, shares in subsidiaries and investments in other companies by category are admitted for trading on a stock exchange, listed or not listed as follows (the values shown below for fixed-interest securities do not include accrued interest):

IN EUR

Bonds and other fixed-interest securities (incl. proportional share of premium/discount) Shares and other non-fixed interest securities Total

AdMITTEd TO TRAdING

THEREOf QUOTEd

THEREOf NOT QUOTEd

167,870,867.39

0.00

2,141,138.99

0.00

170,012,006.38

0.00

Bonds and other fixed-interest securities as well as shares and other non-fixed interest securities, which are admitted to trading on a stock exchange, are classified as current or non-current as follows:

IN EUR

Bonds and other fixed-interest securities (incl. proportional share of premium/discount) Shares and other non-fixed interest securities Total

AdMITTEd TO TRAdING

THEREOf NON-CURRENT

THEREOf CURRENT (INCL. TRAdING PORTfOLIO)

167,870,867.39

150,258,359.36

17,612,508.03

2,141,138.99

0.00

2,141,138.99

170,012,006.38

150,258,359.36

19,753,647.02

The difference between acquisition costs and the higher market value of listed current securities at the balance sheet date totalled EUR 230,173.26 (2013: EUR 367,548.93). The item â&#x20AC;&#x153;shares and other non-fixed interest securitiesâ&#x20AC;? includes investment certificates that are not admitted to trading, with a carrying amount of EUR 24,157,897.06 as at 31 December 2014 (2013: EUR 26,746,302.72). The market value of non-current securities totalled EUR 203,276,643.89 as at 31 December 2014 (2013: EUR 154,009,419.25). The total carrying amount as on that date was EUR 200,691,801.88 (2013: EUR 153,276,346.84). Non-current securities include debt and other fixed-interest securities as well as debt issued by public authorities and investment certificates that are not admitted to trading on a stock exchange. The securities trading book had a total volume of EUR 49,699.58 at year-end (2013: EUR 90,298.47).

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

3. Related parties Loans and advances to clients during the reporting period do not include any credit claims from companies in which an investment is held (2013: EUR 28,356.92). The item “deposits by clients” includes EUR 22,169.85 (2012: EUR 36,155.00) in liabilities to companies in which an investment is held. 4. Non-current assets The schedule of changes in non-current assets is represented as an appendix to the notes. Obligations arising from the use of leased property, plant and equipment that is not shown on the balance sheet amount to EUR 56,726.50 for the next financial year (2013 for 2014: EUR 71,529.87) and to EUR 163,965.20 for the next five financial years (2013 for 2014-2018: EUR 216,214.61). Rental obligations total EUR 1,157,038.86 for the next financial year (2013 for 2014: EUR 1,093,980.00) and EUR 6,349,664.90 for the next five financial years (2013: 2014-2018: EUR 6,003,930.84). 5. Other assets Other assets comprise the following items:

IN EUR

2014

2013

Settlements with taxation authorities

5,096,596.75

1,847,209.97

Variation margins on futures and forward exchange contracts concluded for funds

4,289,085.19

3,866,902.63

Premium Spitalgasse 19A GmbH & Co KG

1,850,406.62

1,794,406.62

Miscellaneous

1,551,406.74

1,664,270.58

12,787,495.30

9,172,789.80

Total

With regard to the settlements with taxation authorities, additional information is provided under other liabilities in the section on VAT settlements. The limited partnership interest in Premium Spitalgasse 19A GmbH & Co KG is held on a temporary basis. 6. Equity and equity-related liabilities The bank’s share capital is divided into 5,000,000 no-par value shares, with each share representing an equal participation in the share capital. In addition, the equity-related instruments also include 30,000 equally ranked bearer participation certificates with a nominal value of EUR 1,000 each and a total nominal value of EUR 30,000,000. The terms defined in 2009 for the issuance of participation capital were amended in this regard as of 7 February 2010 in accordance with Section 23 (4) of the Austrian Banking Act (BWG). The registered global certificates are replaced by an amendable collective instrument in accordance with Section 24 of the Austrian Depository Act (DepG), Austrian Federal Gazette No. 424/1969. The subscription conditions were last amended on 18 November 2011.

NOTES TO THE CONSOLIdATEd fINANCIAL STATEMENTS 5.5

The dividend on the participation capital equalled 7.5 per cent per year (gross) based on the nominal amount for the fiscal year 2014 (2013: EUR 2,250,000.00). The participation certificates carry a claim to profit-related income from participation capital in accordance with Section 23 (4) of the Austrian Banking Act (BWG) without the obligation for the subsequent payment of dividends. A distribution is to be made on participation capital if and to what extent this capital is covered by net profit for the year after changes in reserves, contingent upon the approval of the distribution by the issuerâ&#x20AC;&#x2122;s annual general meeting. The current terms for the participation capital do not meet the requirements for positions and instruments of common equity tier 1 (CET1) as defined in Article 26 et seq. of the Capital Requirements Regulation (CRR) and additional tier 1 capital (AT1) as defined in Article 61 et seq. of the CRR. Consequently, the participation capital must be evaluated in accordance with the transition provisions stated in Article 484 CRR and in compliance with the ranges defined in Article 486 (5) of the CRR. These transition provisions provide for the continuous restriction of the classification of participation capital as tier 1 capital from the beginning of 2014 until the end of 2021 within a range of 80 per cent to 10 per cent. Accordingly, the participation capital in the financial year 2014 is therefore only qualified as eligible tier 1 capital at 80 per cent of the nominal amount of EUR 24,000,000.00. In accordance with Article 63 of the CRR, the remaining 20 per cent are to be allocated to the supplementary capital (T2) at an amount of EUR 6,000,000.00. The capital is composed of the following:

IN EUR

2014

2013

Subscribed capital

5,000,000.00

Participation capital

24,000,000.00

30,000,000.00

Unappropriated share premium

24,794,315.52

24,716,059.52

5,539,855.20

3,205,527.94

2,709,170.25

3,000.00

62,542,698.66

67,968,084.97

6,000,000.00

0.00

68,542,698.66

67,968,084.97

Positions of common equity (CET1)

Other reserves Liability reserve as per Section 57 (1) 5 Austrian Banking Act (BWG) Non-controlling interests

Supplementary capital (T2) Participation capital Total capital

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

The breakdown of the consolidation of own resources shows the following result:

IN EUR

2014

2013

1. Eligible consolidated own funds

68,185,171.28

67,753,630.59

2. Consolidated (minimum) equity requirement

31,599,048.30

26,328,162.52

3. Equity capital surplus

36,586,122.98

41,425,468.07

4. Shortfall in own funds

0.00

662,099,298.56

594,760,379.45

5. Consolidated balance sheet

Semper Constantia has its banking operations in Austria only. These operations are supplemented by subsidiaries at the same location. The following total return on assets is determined at the reporting date for the audited company:

IN EUR

Net profit after tax divided by balance sheet total Total return on capital

31/12/2014

31/12/2013

7,388,871.75

2,497,773.14

662,099,298.56

594,760,379.45

1.12%

0.42%

7. Other provisions and liabilities The item â&#x20AC;&#x153;other provisionsâ&#x20AC;? includes personnel-related provisions of EUR 1,899,873.30 (2013: EUR 1,309,260.64) and miscellaneous provisions of EUR 4,476,376.94 (2013: EUR 4,649,258.86). The components of other liabilities are as follows:

IN EUR

2014

2013

Variation margins on futures and forward exchange contracts concluded for funds

4,274,709.04

3,855,823.56

Commission liabilities

4,205,373.13

2,268,889.58

Distribution on participation capital

2,250,000.00

Other liabilities

8,822,800.86

6,417,953.56

19,552,883.03

14,792,666.70

Total

NOTES TO THE CONSOLIdATEd fINANCIAL STATEMENTS 5.5

Significant expenses that will not become due and payable until after the balance sheet date comprise, among others, the reported commission liabilities and the distribution on participation capital. The liabilities due and payable after the balance sheet date total EUR 6,457,932.83 (2013: EUR 4,674,172.95). Other liabilities include a credit of EUR 6,746,141.28 (2013: EUR 2,953,369.43) attributable to SemperReal Estate from ongoing value added tax settlements, which is also due after the balance sheet date. 8. Legal risks The legal risks for SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT associated with a bond as well as a promissory note loan issued by the predecessor bank (Constantia Privatbank), whose debtor is Aviso Zeta AG, 1100 Vienna, cannot be entirely excluded. The bank has obtained two legal opinions which, as already indicated in the previous year, do not consider the recognition of provisions to be necessary from the current perspective. In connection with possible risks associated with the issue of the Baumarkt Finance bond, the bank has created sufficient provisions to the best of its knowledge and belief. 9. Additional notes on balance sheet items The amounts deposited during the reporting year as collaterals for arrangement and settlement risks connected with liabilities to financial institutions consist of the following: securities with a market value totalling EUR 122,469,912.42 (2013: EUR 92,394,341.95) that are deposited with Oesterreichische Kontrollbank Aktiengesellschaft, Vienna, with Societe Generale Newedge UK Limited, London, with Euroclear Bank, Brussels, and with JP Morgan Securities PLC, London, as well as loans and advances to financial institutions with a carrying amount of EUR 63,165,665.48 (2013: EUR 48,666,598.54). In addition, central bank-eligible securities with a market value of EUR 59,631,410.00 were deposited with Oesterreichische Nationalbank, Vienna, at the reporting date 2014 (2013: EUR 97,770,679.00). To date, the bank has not made use of refinancing transactions corresponding thereto. Foreign currency assets totalled EUR 157,347,499.22 (2013: EUR 144,654,595.46), and foreign currency liabilities amounted to EUR 84,063,683.95 (2013: EUR 87,999,734.73). 10. Carrying amounts and fair values of financial instruments classified as financial assets

IN EUR

Carrying amount of debt issued by public authorities with a fair value of Carrying amount of debt and other fixed-interest securities with a fair value of Carrying amount of investment certificates with a fair value of

2014

2013

36,235,233.00

28,864,673.24

36,990,090.00

29,523,300.00

150,258,359.36

115,325,053.08

152,070,958.37

115,425,286.73

14,198,209.52

9,077,156.88

14,215,595.52

9,051,368.88

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

The bank recognised the following derivative financial instruments for its own account as at 31 December 2014: IN EUR

Put options Long-term written put options (Remaining terms up to 31/01/2018)

CARRyING AMOUNT

Liability

Provision

527,424.78

0.00

fAIR vALUE

500,826.33

The options are primarily stock options on IMMOFINANZ AG. These options are valued by applying the Blackâ&#x20AC;&#x201C;Scholes model, using a share market price of EUR 2.092 as at 31 December 2014, a risk-free interest rate for the remaining term as well as a volatility of 45.85 per cent. The asset (premium paid) is reported under other receivables, while the liability (premium received) is recorded under other liabilities. 11. below-the-line items At the balance sheet date, contingent liabilities from guarantees amounted to EUR 2,741,002.67 (2013: EUR 2,883,369.34), matched by contingent claims of the same amount (2013: EUR 2,883,369.34). Material credit risks arising from sold put options on assets amounted to EUR 129,453.04 (2013: EUR 200,420.01) at the balance sheet date. Among the liabilities arising from fiduciary transactions of EUR 4,284,189.92 (2013: EUR 1,650,355.36) are loans that are managed in trust. Eligible own funds in accordance with Part 2 of EU Regulation No. 575/2013 amount to EUR 68,185,171.28 (2013: EUR 67,753,630.59). 12. Supplementary information Special off-balance sheet financing transactions are comprised as follows:

IN EUR

2014

2013

Interest rate swaps

18,000,000.00

5,000,000.00

Interest rate futures

546,029,696.13

72,482,773.92

Interest rate options

0.00

288,003,634.08

290,324,045.39

212,476,993.53

3,517,338,454.63

2,225,628,793.35

Foreign exchange futures

42,838,025.80

25,148,133.19

Foreign exchange options

152,960,741.08

48,242,536.69

1,024,197,124.42

685,180,104.97

0.00

1,148,216.80

0.00

5,592,836,304.25

3,562,162,969.73

Purchase transactions over nominal value:

Foreign exchange and interest rate swaps Forward exchange contracts

Asset-based contracts Commodities futures (market transactions) Other futures, forward contracts Total

NOTES TO THE CONSOLIdATEd fINANCIAL STATEMENTS 5.5

IN EUR

2014

2013

Interest rate swaps

18,000,000.00

5,000,000.00

Interest rate futures

546,029,696.13

72,482,773.92

Sales transactions over nominal value:

Interest rate options

0.00

278,115,752.08

289,907,497.97

212,476,993.53

3,517,338,454.63

2,225,628,793.35

Foreign exchange futures

42,838,025.80

25,148,133.19

Foreign exchange options

152,960,741.08

48,242,536.69

Asset-based contracts

977,637,403.33

657,718,311.36

0.00

1,148,216.80

0.00

5,545,860,035.74

3,524,813,294.12

Foreign exchange and interest rate swaps Forward exchange contracts

Commodities futures (market transactions) Other futures, foward contracts Total

The differences between the purchase and sales contracts under the item â&#x20AC;&#x153;contracts involving net asset valuesâ&#x20AC;? resulted primarily from transactions with sold put options on assets in accordance with Section 1 letter k) Annex I of the CRR. These transactions mainly relate to closed positions that are settled for funds and other clients.

v I . N O T E S T O T H E C O N S O L I dAT E d I N C O M E S TAT E M E N T

1. Income 1.1. Commission income Commission income includes the following:

IN EUR

2014

2013

Income for administrative services

7,150,326.04

6,446,588.32

Income from securities transactions

8,111,616.19

8,020,869.74

45,486,128.23

37,433,403.27

5,002,936.00

3,971,349.61

65,751,006.46

55,872,210.94

Income from administrative fees and issue premiums Miscellaneous commission income Total

Income for administrative services comprises asset management fees, custody account charges and custodian bank fees provided for third parties. Income from administrative fees and issue premiums is primarily comprised of commission income recorded by Semper Constantia Invest GmbH, Semper Constantia Immo Invest GmbH and Semper Constantia Asset Management GmbH.

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

1.2. Income / expenses from financial transactions Income from financial transactions can essentially be broken down into income generated by the bank’s own foreign exchange trading and income from foreign exchange transactions executed for its clients. 1.3. Other operating income Other operating income comprises the following items:

IN EUR

2014

2013

Income from expenses charged out

811,550.18

292,926.66

Income from the release of provisions

542,766.75

496,609.26

0.00

244,808.00

31,092.40

71,308.87

1,385,409.33

1,105,652.79

Income from the sale of real estate Miscellaneous Total

Income from expenses passed on involves project and consulting fees as well as shipping costs charged to third parties. 2. Expenses 2.1. Expenses for severance payments and payments to employee benefit funds The net expenses for severance payments and payments to employee benefit funds included under this item total EUR 46,137.91 (2013: EUR 214,566.03). 2.2. Taxes on income and earnings Taxes on income and earnings are related exclusively to results from ordinary activities. Deferred tax assets totalling EUR 52,211.00 were not recorded in 2014 (2013: EUR 121,064.00). The stand-alone method was used for allocation in connection with the group and tax settlement agreement. Regarding further information please refer to our notes on the “scope of consolidation”.

v I I . O T H E R I N f O R M AT I O N

1. Employees The Group had an average of 119 employees (only salaried employees) in 2014 (2013: 125).

NOTES TO THE CONSOLIdATEd fINANCIAL STATEMENTS 5.5

2. Auditing expenses The auditor’s fees amounted to EUR 238,927.57 in 2014 (2013: EUR 251,840.48) and are comprised as follows: IN EUR

Audit of the annual financial statements Tax advising Other consulting services Total

2014

2013

200,399.58

177,140.20

4,897.99

53,362.30

33,630.00

21,337.98

238,927.57

251,840.48

Of this total amount, EUR 126,255.98 (2013: EUR 123,500.04) were charged for the audit of the annual financial statements by BDO Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft as the auditor of the individual and consolidated financial statements of Semper Constantia Privatbank Aktiengesellschaft, Vienna. 3. Loans to members of the Supervisory board No loans were outstanding to members of the corporate bodies during the period under review. 4. Expenses for severance payments and pensions The following expenses were recognised for the Executive Board and executive employees during the reporting period: IN EUR

2014

2013

Expenses for severance compensation

17,886.29

80,878.12

Payments to employee benefit funds

56,630.22

37,701.58

Expenses for pension accounts

44,033.29

16,403.70

118,549.80

134,983.40

Total

5. Remuneration of the Executive and Supervisory boards The members of the Executive Board received remuneration totalling EUR 757,319.65 in the reporting year (2013: EUR 744,169.63). Expenses totalling EUR 63,000.00 were recognised in 2014 for the members of the Supervisory Board of SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT, Vienna (2013: EUR 50,000.00). The two investment fund companies recognised Supervisory Board remuneration of EUR 46,500.00 during the reporting year (2013: EUR 42,500.00). 6. Group parent company SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT is the group parent company as defined in Section 30 (5) of the Austrian Banking Act (BWG) and prepares the consolidated financial statements for the largest group of companies. Regarding further and more detailed disclosures, please refer to our comments provided under “General information”. 79

SEMPER CONSTANTIA : CONSOLIDATED FINANCIAL STATEMENTS

M e mbe rs o f the Super visory Board

A nnual report 2014

N otes to the C onsoli d ate d Financial S tatements 5.5

Execu tive Board

Supervisory Board Erhard F. Grossnigg Chairman

Dietmar Baumgartner Member

Peter PĂźspĂśk Vice-Chairman

Peter Reisenhofer Member

Roland Krempler Member

Martin Schiller Member (up to 30 June 2014)

Ron Schwarzbaum Member

Birgit Wagner Member (up to 30 June 2014); works council Patrick Draschtak Member (up to 30 June 2014); works council Aleksandar Lacarak Member (since 30 June 2014); works council Franz-Erwein Nostitz-Rieneck Member (since 30 June 2014); works council

Vienna, 9 March 2015 The Executive Board

Dietmar Baumgartner

Peter Reisenhofer

SEMPER CONSTANTIA : CONSOLIdATEd fINANCIAL STATEMENTS

Changes in non-current assets

IN EUR

ACQUISITION COST ON 01/01/2014

AddITIONS

dISPOSALS

TRANSfERS

29,330,980.00

69,214,100.00

61,771,730.00

0.00

116,279,850.96

54,993,632.36

21,115,550.00

0.00

9,190,430.88

5,008,305.64

0.00

240,313.28

8,991.46

17,682.18

0.00

26,443.28

8,991.46

17,682.18

0.00

a) in credit institutions

0.00

b) in other companies

0.00

Software

812,590.79

264,879.77

0.00

Goodwill

0.00

812,590.79

264,879.77

0.00

a) Land with buildings

0.00

b) Buildings

0.00

692,228.62

3,619.28

0.00

1,628,851.57

235,675.04

7,721.30

0.00

2,321,080.19

239,294.32

7,721.30

0.00

158,175,246.10

129,729,203.55

82,912,683.48

0.00

1. Debt issued by public authorities 2. Debt and other fixed-interest securities 3. Shares and other non-fixed interest securities Investment certificates 4. Investments in other companies thereof: associated companies 5. Shares in subsidiaries

thereof accounted for as associated companies

6. Intangible assets

7. Property, plant and equipment

c) Fixtures in third-party buildings d) Furniture, fixtures and office equipment (incl. low-value assets)

Total

CHANGES IN NON-CURRENT ASSETS 5.6

ACQUISITION COST ON 31/12/2014

ACCUMULATEd AMORT./dEPR. LESS wRITE-UPS

fOREIGN ExCHANGE vALUATION

CARRyING AMOUNT 31/12/2014

CARRyING AMOUNT 31/12/2013

ANNUAL AMORT./ dEPR. (wRITE-UPS)

36,773,350.00

538,117.01

0.00

36,235,232.99

28,864,673.24

819,877.17

150,157,933.32

1,074,587.94

(1,175,016.53)

150,258,361.91

115,325,053.08

782,047.00

14,198,736.52

527.00

0.00

14,198,209.52

9,114,997.88

(112,747.00)

231,622.56

0.00

231,622.56

240,313.28

0.00

17,752.56

0.00

17,752.56

26,443.28

0.00

1,077,470.56

722,943.18

0.00

354,527.38

214,454.38

124,806.77

0.00

1,077,470.56

722,943.18

0.00

354,527.38

214,454.38

124,806.77

0.00

695,847.90

176,543.90

0.00

519,304.00

585,286.00

69,601.28

1,856,805.31

1,141,126.18

0.00

715,679.13

759,051.13

279,047.04

2,552,653.21

1,317,670.08

0.00

1,234,983.13

1,344,337.13

348,648.32

204,991,766.17

3,653,845.21

(1,175,016.53)

202,512,937.49

155,103,828.99

1,962,632.26

SEMPER CONSTANTIA : CONSOLIDATED FINANCIAL STATEMENTS

A u d i t or s’ r e po rt f o r t h e conso l i d a t ed f i n a n c i a l s t a t e me n t s as at 31 December 2014

5 .7 ANNUAL REPORT 2014

Auditors’ Report for the consolidated financial statements 5.7

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Report on the Financial Statements We have audited the accompanying financial statements, including the accounting, of SEMPER CONSTANTIA PRIVATBANK AKTIENGESELLSCHAFT, Vienna, for the fiscal year from January 1, 2014 to December 31, 2014. These financial statements comprise the balance sheet as of December 31, 2014, the income statement for the fiscal year ended December 31, 2014, and the notes. Management’s Responsibility for the Financial Statements and for the Accounting System The Company’s management is responsible for the accounting and for the preparation and fair presentation of the financial statements in accordance with Austrian Generally Accepted Accounting Principles and other legal or regulatory requirements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; making accounting estimates that are reasonable in the circumstances.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

Auditor’s Responsibility and Description of Type and Scope of the Statutory Audit Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards on Auditing. Those standards require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

SEMPER CONSTANTIA : CONSOLIDATED FINANCIAL STATEMENTS

Opinion

Comments on the Management Report

Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the financial statements comply with legal requirements and give a true and fair view of the financial position of the Company as of December 31, 2014 and of its financial performance for the fiscal year from January 1, 2014 to December 31, 2014 in accordance with Austrian Generally Accepted Accounting Principles.

Pursuant to statutory provisions, the management report is to be audited as to whether it is consistent with the financial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as to whether the management report is consistent with the financial statements. In our opinion, the management report is consistent with the financial statements.

Vienna, on March 10, 2015 BDO Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft Josef Schima Certified public accountant Andreas Thürridl Certified public accountant

This report is a translation of the original report in German, which is solely valid. Publication of the financial statements together with our auditor‘s opinion may only be made if the financial statements and the management report are identical with the audited version attached to this report. Section 281 paragraph 2 UGB (Austrian Commercial Code) applies.

A u d itors â&#x20AC;&#x2122; R eport f or the consoli d ate d f inancial statements 5.7

SEMPER CONSTANTIA : CONSOLIDATED FINANCIAL STATEMENTS

Repo rt by the Super visory Board 5 .8 ANNUAL REPORT 2014

R eport b y the S uper v isor y Boar d 5.8

The members of the Supervisory Board in 2014 were Erhard F. Grossnigg (Chairman), Peter Püspök (Vice-Chairman), Roland Krempler, Ron Schwarzbaum, Birgit Wagner, Patrick Draschtak (up to 30 June 2014) as well as Aleksandar Lacarak and Franz Erwein Nostitz-Rieneck (as of 30 June 2014).

Dear Ladies and Gentlemen, The Supervisory Board maintained a continuous dialogue with the Executive Board during the reporting year and fulfilled the duties required by law, the articles of association and the rules of procedure. The Supervisory Board regularly monitored the management of the bank and provided the Executive Board with support on strategic issues.

The annual financial statements of Semper Constantia Privatbank Aktiengesellschaft as at 31 December 2014 and the management report, the consolidated financial statements as at 31 December 2014 and the group management report were audited by BDO Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna. The results of these audits provided no grounds for objections and the auditor consequently issued an unqualified opinion, confirming that the annual financial statements and the management report as well as the consolidated financial statements and the group management report meet legal requirements.

The Supervisory Board held five meetings during the reporting year at which the Executive Board provided extensive, current information on the development of business and the standing of the bank, including the risk position and risk management. All relevant transactions were discussed openly and in detail based on written and verbal reports by the Executive Board. The Supervisory Board was therefore able to carry out the duties required by law and the articles of association and also ensure compliance with all relevant regulations by the bank’s management. Recommendations made by the Supervisory Board were accepted by the Executive Board. Five resolutions were passed by the Supervisory Board in writing during the reporting year.

The Supervisory Board stated its agreement with the annual financial statements for 2014 as presented by the Executive Board, with the recommendation for the distribution of profit and with the related recommendation of the Audit Committee, and approved the annual financial statements as at 31 December 2014. Therefore, these annual financial statements are considered finalised in accordance with Section 96 (4) of the Austrian Stock Corporation Act.

The Executive Board submitted all transactions to the Supervisory Board that required the consent of this body; these transactions were subsequently approved. The Supervisory Board verified the correctness of the actions taken by the Executive Board.

In conclusion, the Supervisory Board would like to thank the Executive Board and the entire staff for their strong commitment and performance in 2014.

The Audit Committee of the Supervisory Board met twice during 2014. These meetings dealt, above all, with the preparation of a resolution on the annual financial statements and consolidated financial statements as well as a recommendation for the appointment of an auditor for the 2015 financial year. The responsible bank auditor was present at both meetings.

Vienna, March 2015 For the Supervisory Board

Martin Schiller resigned from the Executive Board as of 30 June 2014. The redistribution of responsibilities among the individual Executive Board members and the transfer of assignments continued throughout the past year.

Erhard F. Grossnigg Chairman of the Supervisory Board

SEMPER CONSTANTIA

N otes

SEMPER CONSTANTIA

Imprint Publisher: Semper Constantia Privatbank Aktiengesellschaft Concept & Design: Halle34 Og für zeitgenössische Kommunikation www.halle34.com Text: Stephan Scoppetta Chapter 4 www.chapter4.at Translations: Emma Vincent Photos: Michael Dürr www.michaelduerr.com

IT WAS A GOOD YEAR