2017 Annual Report and CSR Report

Union Asset Management Holding AG 2017 annual report Group management report 2017 annual report and CSR report 1 Union Asset Management Holding AG 2017 annual report Contents Foreword 5 Consolidated financial statements (IFRS) of Union Asset Management 48 Holding AG for the financial year from 1 January to 31 December 2017 Report of the Supervisory Board 6 Consolidated income statement 48 Statement of comprehensive income 48 Group management report of Union Asset Management Holding AG 10 for the financial year from 1 January to 31 December 2017 Consolidated statement of financial position 49 A Basic information on the group 11 Statement of changes in equity 50 B Economic report 14 Statement of cash flows 51 General economic and industry conditions 14 Notes to the consolidated financial statements 53 Specific business performance 18 Business environment 24 Basis of preparation 53 Research and development 27 [1] Principles of group accounting 53 Dependent company report 30 [2] Accounting policies 53 Position of the company 31 [3] Consolidated group 57 [4] Principles of consolidation 57 C Events after the reporting date 40 [5] Estimates 58 [6] Financial instruments 58 D Corporate governance declaration 40 [7] Fair value measurement of financial instruments 59 [8] Currency translation 60 E Forecast, report on risks and opportunities 41 [9] Cash reserve 60 [10] Receivables 60 Report on opportunities 41 [11] Allowances for losses on loans and receivables 60 Report on risks 41 [12] Investment securities 60 Forecast 45 [13] Shares in companies accounted for using the equity method 60 [14] Property, plant and equipment 60 F Non-financial statement 46 [15] Intangible assets 61 [16] Assets and liabilities held for sale 61 [17] Liabilities 61 [18] Asset and liability derivatives 61 [19] Provisions for employee benefits 62 [20] Other provisions 63 2 Union Asset Management Holding AG 2017 annual report [21] Revenue 63 [51] Income tax liabilities 81 [22] Income taxes 63 [52] Other liabilities 82 [23] Contingent liabilities 64 [53] Equity 82 [24] Leases 64 Financial instruments disclosures 84 Consolidated income statement disclosures 65 [54] Categories of financial instruments 84 [25] Net interest income 65 [55] Items of income, expense, gains and losses 84 [26] Allowances for losses on loans and receivables 65 [56] Fair values 85 [27] Net fee and commission income 65 [57] Fair value hierarchy 86 [28] Net income from investment securities 66 [58] Contractual maturity analysis 89 [29] Other net remeasurement income on financial instruments 66 [59] Assets past due 91 [30] Net income from companies accounted for using the equity method 67 [60] Foreign currency volumes 91 [31] Administrative expenses 67 [32] Other operating result 67 Other disclosures 93 [33] Income taxes 68 [61] Equity management 93 [62] Disclosure of interests in other entities 93 Statement of comprehensive income disclosures 69 [63] List of shareholdings 104 [34] Amounts reclassified to profit or loss 69 [64] Contingent liabilities 106 [35] Income taxes relating to components of other comprehensive income 69 [65] Other commitments 106 [66] Operating lease disclosures 106 Consolidated statement of financial position disclosures 70 [67] Financial guarantees 107 [36] Cash reserve 70 [68] Number of employees 107 [37] Loans and advances to banks 70 [69] Auditor fees 108 [38] Loans and advances to customers 70 [70] Events after the end of the reporting period 108 [39] Asset derivatives 70 [71] Related party disclosures 108 [40] Investment securities 70 [72] Board of Managing Directors of Union Asset Management Holding AG 111 [41] Shares in companies accounted for using the equity method 72 [73] Supervisory Board of Union Asset Management Holding AG 112 [42] Property, plant and equipment 73 [74] Supervisory mandates held by members of the Board of 112 [43] Intangible assets 74 Managing Directors and employees [44] Income tax assets 75 [75] Miscellaneous other disclosures 113 [45] Other assets 76 [46] Assets held for sale 76 Independent auditor’s report 114 [47] Liabilities to banks 76 [48] Liabilities to customers 76 Shareholders and executive bodies of Union Asset Management Holding AG 117 [49] Liability derivatives 76 [50] Provisions 77 Glossary 119 3 Union Asset Management Holding AG 2017 annual report 2017 corporate social responsibility report 121 Sustainability in the Union Investment Group 122 About this report 125 Management approaches – GRI standards 103-1 + 103-2 + 103-3 128 Union Investment sustainability programme 133 Union Investment real-estate portfolio 138 GRI content Index 163 Imprint 179 4 Union Asset Management Holding AG 2017 annual report Foreword Foreword Dear readers In addition, we are seeing increasing interest from our institu- and shareholders, tional clients in sustainable investment solutions. Sustainability has now developed from a soft to a hard investment criterion in portfolio management, not least with regard to risk manage- When I look back at 2017, there are a few things that parti- ment. Due to the increased client interest, the volume of our cularly stick out in my memory: the strong, globally syn- sustainable solutions rose to more than EUR 33.5 billion as at chronised economic upturn on the one hand and alarming the end of 2017. This makes us the leading asset manager in geopolitical developments, few groundbreaking policies in this segment in Germany. Germany and Europe and the palpable unease of people in this country with regard to their prosperity on the other. What will happen now? Do the signs point to further growth? We believe they do! However, we have to take advantage of 2017 was not an easy a year. But it was a successful year for us! the opportunities that arise and set the course for the future Despite the difficult environment, we achieved very good results with all consistency. The challenges are not getting smaller. for ourselves and our investors. Compared to others, we made Cumbersome regulation, the volatility returning to capital better use of the momentum of low interest rates while investing markets and new sales channels will make our business more in the areas that will be most important to us in the future. complex and difficult. We are therefore able to live up to our aspiration of increasing It is important that we look ahead and prepare for future our investors’ assets and thus earning their trust. This is developments at an early stage. We have done our homework demonstrated, for example, by our dynamic new business. In here and are already ahead of the curve in many respects. total, we generated net sales of EUR 25.1 billion in 2017 – Looking forward, I remain confident in the high performance after 2015, the second-best sales result in the company’s history. of our approximately 3,000 employees. For I know that they too are ready for the future! At the same time, our assets under our management reached a new high of EUR 324 billion last year. This resulted in operating income of EUR 610 billion, the best in the company’s history. Happy reading! We therefore continue to grow constantly and above the average of our industry. We are particularly pleased with the momentum behind these numbers. It validates our approach of addressing, together with our partners in the Genossenschaftliche FinanzGruppe, the long-term benefit of a broad asset structure among our Hans Joachim Reinke retail clients and thus basing savings behaviour in general on Chief Executive Officer of a broader and more stable foundation. Union Asset Management Holding AG 5 Union Asset Management Holding AG 2017 annual report Report of the Supervisory Board Report of the Supervisory Board Supervisory Board and Executive Committee Privatfonds GmbH), Wolfgang Nett (Sales Director, Union Investment Privatfonds GmbH), Heike Orth (Group Leader, In the 2017 financial year, the Supervisory Board and its Admin Service, Institutional Clients, Union Investment Executive Committee monitored the management activities Institutional GmbH), Claudia Vives Carrasco (Real Estate of the Board of Managing Directors in accordance with the Manager, Union Investment Real Estate GmbH). The terms of applicable legal provisions and the Articles of Association office of all 15 Supervisory Board members run until the end and decided on items of business that required their consent. of the Annual General Meeting that formally approves their conduct for the fourth financial year after the beginning of the To carry out its responsibilities and in compliance with the term of office, i.e. until the Annual General Meeting in 2022. applicable legal provisions, the Supervisory Board formed an Executive Committee that operates, in particular, as a Human At its constituent meeting on 12 May 2017, the newly Resources Committee and Audit Committee and prepares assembled Supervisory Board again elected Mr Wolfgang the resolutions of the Supervisory Board. The Executive Kirsch as Chairman of the Supervisory Board and the Committee met three times in 2017. The Super visory Board Executive Committee. Mr Rainer Schaidnagel was elected was regularly reported to on its activities. Deputy Chairman of the Supervisory Board and the Executive Committee. The terms of office of the ten shareholder representatives and the five employee representatives on the Supervisory The Supervisory Board thanks Messrs Hermann Buerstedde, Board ended at the end of the Annual General Meeting on Lars Hille and Karl-Heinz Moll, who left the Supervisory Board 12 May 2017. On 12 May, the Annual General Meeting at the

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