ANNUAL REPORT 2006

LA COMPAGNIE FINANCIÈRE EDMOND DE ROTHSCHILD BANQUE 47, Rue du Faubourg Saint-Honoré - 75401 Paris Cedex 08, France Telephone: 33 (0) 1.40.17.25.25 Telefax: 33 (0) 1.40.17.24.02 Telex: Lacof 280 585 - Swift: COFIFRPP Website: www.lcf-rothschild.fr A French corporation with Executive and Supervisory Boards and capital stock of 82,739,820 euros The French presidential election candidates are unanimously in favour of the environment; the European Commission has taken a very firm stance on greenhouse gas emissions; the American President, who has close ties to the Texas oil lobby, has taken a spectacular change in direction. These are just some of the symptoms that illustrate a major phenomenon: green is very much in fashion.

The Rothschild family and the LCF Rothschild Group have always been in the avant-garde. Even before it was fashionable, we took an interest in saving the planet – by supporting the International Polar Foundation – and in “green” communication, as the eco-friendly “Formula Ones” of the high seas, the Gitana, are an integral part of the image of the LCF Rothschild Group. Lionel Lemonchois’ talent, the skills of the Gitana Team and rather favourable winds brought us victory on the Route du Rhum: we therefore feel we have the right to say that ecology should be consumed in moderation, and with relevance.

For half a century, the excesses of the “greens” in the four corners of the globe, speaking out of context and laboring under misapprehensions, have not served the cause of the environment. Opposition to nuclear power, for instance, which remains the only massive response to dramatic climatic change. And, again, since the “Rome Club”, recommending more or less zero growth. Is it really necessary to outlaw growth in the emerging world, under the pretext that our own oasis of opulence has already wrought havoc with the climate? 2•3

MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD of La Compagnie Financière Edmond de Rothschild Banque to the Annual General Meeting of Stockholders

I would like to make a few quiet remarks before the There is only one adequate means of reconciling the noise of “eco-mania” drowns out the voice of reason. fight against poverty with the protection of the en- First of all, if the governments of the major countries vironment, and that is technological innovation. have evaded the subject up till now, despite the alarm Claude Allègre, the former French Socialist Minister, signals that have been coming from the scientific expresses this perfectly: “Long live ecology as an community for a long time, this is because there is no engine for growth! Down with the ecology of simple answer. No corrective process will have an decline!”. Scientific progress is the only means imagin- effect on the climate in less than decades. Any brutal able to meet this immense challenge. Indeed, to seize regulatory measures would be seriously destructive upon the subject would be the least our developed for business activity and would therefore generate countries could do, since they bear such a large share of poverty. And if there is one area where globalization the responsibility for the current deterioration, since is a necessity, it is in the conservation of the planet: they have the requisite technological advance, and climatic protectionism is not possible, nor is virtue in since they would find it a major source of economic isolation. What is required is long-term, coordinated development, which would compensate for the action on a planetary scale, based on in-depth analysis. delocalization of their traditional activities.

World leaders are now forced to deal with the ecolo- If the industrialized countries do not take this fortress gical threat because public opinion is concerned, and by storm, their pawn will quickly be checked by the this is fortunate. Is this due to the spate of tsunamis emerging powers. Because they are much more aware (which are totally unrelated to the weather) and tor- of the ecological threat their double-digit growth nadoes (which are symptoms of unbalance)? Or to poses than we are wont to believe. Because they have the influence of the film by Al Gore, former Vice- demonstrated that they can control their demography, President of Bill Clinton, who did not sign the Kyoto they will confirm that the environment is a major protocol any more than his successor did? Is it the cause. They have made their statement: why are we new awareness of the scarcity of fossil fuels (oil and waiting to innovate? gas) in the face of accelerating global economic devel- opment? In any case, world opinion is changing quickly and profoundly. The governments of Western democracies, having abandoned their “parental” responsibilities, will not be able to with- stand the ecological uprising of their offspring. Baron Benjamin de Rothschild

4•5

CONTENTS

Message from the Chairman CONSOLIDATED FINANCIAL STATEMENTS of the Executive Board 7 AND NOTES Management 10 Consolidated balance sheet and off-balance sheet items 44 Highlights 11 Consolidated income statement 45 Notes to the consolidated financial Observations of the Supervisory Board 12 statements 46 Review of operations Report of the Executive Board 13 PARENT COMPANY FINANCIAL Consolidated companies 24 STATEMENTS AND NOTES Management report 26 Parent company balance sheet and off-balance sheet items 58 Investments in subsidiaries and affiliates 34 Parent company income statement 59 Notes to the parent company financial REPORTS OF THE STATUTORY statements 60 AUDITORS Parent company five-year summary 71 Report on the consolidated financial statements 36 General report on the parent company DIRECTORY financial statements 37 Banks and companies in the Special report on regulated agreements 38 La Compagnie Financière Edmond de Rothschild Banque Group 72 Other LCF Rothschild Group Resolutions 42 banks and companies 74 At a time when investors’ aversion to risk seems to be weakening, multiple threats are weighing on our immediate future.

I am not referring to the alarming danger to world peace constituted by the paralysis of the United States, bogged down in Iraq, faced with major attempts at destabilization such as that of the Iranian government. When there is only one policeman left in the world capable of maintaining order, and he is crippled, times are grave. Nor will I mention the situation here in France, weakened by severely deterio- rated competitiveness, with public and social security finances in deficit on the eve of the baby-boomers’ retirement, a society whose various components are all destabilized: and with France at risk of being left behind, national opinion is under the spell of the populist siren song. Nor shall I mention the new wave of anti-liberalism and its trail of nationalizations in Russia, Venezuela and elsewhere, other symptoms of a rise in irrationalism against the logic of global- ization. Let us forget these major national and inter- national risk factors for a moment, since our financial markets, like the French people, have decided to forget them.

The fact remains that the world economy and global finance are hurtling at great speed into completely unfamiliar terrain, where the landmarks of the past are of no relevance for making forecasts. Totally unprecedented, the lightning emergence of over a third of the world’s population into the modern eco- nomy; the flood of capital generated by the world’s 6•7

MESSAGE FROM THE CHAIRMAN OF THE EXECUTIVE BOARD of La Compagnie Financière Edmond de Rothschild Banque to the Annual General Meeting of Stockholders

major financiers and the American trade deficit, to when imports of cheap textiles and electronics have avert global depression and deflation; the level of allowed us to preserve the purchasing power of our indebtedness of countries, States and American house- middle classes, burdened by excessive taxes and social holds (not only unprecedented but less and less offset charges? And when the explosion in global energy by healthy balance sheets, for companies are once demand is turning its nuclear talent into a major more acquiring a taste for credit); the game of “who competitive advantage, and making it a potential blinks first” that is preventing a collapse in the US major source of export revenue? dollar, as Asian and OPEC States hold more than two trillion dollars; the contained rise in prices and interest Moreover, speaking of France, how can we explain rates at historic lows, despite global growth of 5%, the contrast between the languishing sickness of with energy and commodity prices soaring. In a our national territory and the formidable success of word, the current phenomenon of globalization is our large corporations, hailed by the hit-parade of the totally unprecedented. CAC 40, if we forget the benefits of globalization? For two thirds of the business of our national cham- We can understand nothing about economics and pions is generated outside France, half of their share- finance, plan nothing, govern nothing, company, holders are foreign, and the very low cost of their bank or nation, if we fail to place globalization at the borrowing would be unthinkable without the shield heart of our considerations. Shouldn’t the United of a strong euro. States trade deficit be seen in a different light when we know it can be largely explained by American The globalized economy, on an inexorable upward companies sub-contracting to China? Should we be climb for several decades, is accumulating a series of surprised that strong global growth is continuing contradictions and imbalances that it must learn to beyond the usual cycles when an intercontinental sys- manage using new reference points. Contrary to the tem of communicating pipes has developed? Should pseudo-ruptures of the past, globalization is truly we fear inflation, at the peak of the cycle, when the metamorphosing our economic, financial and stock global workforce has suddenly doubled? Should we market models. The future of the markets is never be wary of a property crisis when long-term rates easy to predict. But in a global context that has no remain as moderate as price levels? Is it reasonable to historical precedent, the near future is particularly incriminate the euro and Jean-Claude Trichet’s sev- unpredictable. The outlook for the global economy erity when our German neighbour is registering the remains very bright in the medium and long term, largest trade surplus in the world, even ahead of and any investor who has time on his side should China, by virtue of its excellent global trading links? invest exclusively in equities. In the short term, how- Should France continue to be irritated by globalization, ever, it seems to me that our forecasts are extremely precarious. Such is the price of the lack of precedents - Ensuring our top executives have an interest in to be paid by the experts, who necessarily draw on their entity's capital is a key factor in providing the lessons of History. incentive and loyalty to retain our best people. Not exclusively for reasons of remuneration, but also for In the meantime, Spring 2007 marks the anniversary the sense of belonging, in an environment where the of four years’ growth in the global economy and the best talents are highly sought after. Our shareholder equity markets. The stock markets have more than has strongly supported this partnership model, which doubled since the trough of Spring 2003, but the rise certainly has a cost, but which has turned out to be in share prices has merely reflected the rising profits infinitely fructuous. It is, in fact, this sort of coopera- of vigorously healthy companies. And so price ear- tion, without the hindrance of a legal formula, which nings ratios remain at the low level of the severe stock has transformed the bank on the Faubourg Saint- market crisis of the beginning of the millennium. Honoré. All this model was missing was the essential, the major historic subsidiary: EdRAM. Now this has In these circumstances, the business activities and been remedied. profits of our Company, and in fact the LCF Rothschild Group as a whole, have far surpassed pre- - In 2006, our Company continued to create sophis- vious records. All our Paris entities enjoyed vigorous ticated, innovative products. In no particular order growth. The growth rate of assets under management I can cite Chinagora, a fund investing in Chinese exceeded 20%, the annual average of the last decade. domestic equity markets (Shanghai and Shenzhen), The consolidated results of Paris have almost doubled. unique in its kind in France; ERES, a fund advised by In this very favourable environment, our Company the Parisian holding company CFSH, mirroring, for must prepare for future growth. In order to maintain a small number of institutions and private investors, our annual growth rate of 20%, we have endeavoured the financial performances of our shareholder’s pro- to fortify the four pillars of the model which has prietary trading account; EdRRES, a real estate fund ensured our success up till now. focusing on the countries of Eastern Europe, run by our Israeli teams who are experts in this region; RFS - This remarkable growth is generated by LCF Active Strategies, a multi-strategy hedge fund under Rothschild Group’s specialization in asset manage- the umbrella of our subsidiary for structured product ment and its solid position in such a strongly growing management; Saint-Honoré Oblig Opportunités, an market. Our Paris Company has gradually personali- opportunistic fund which has attained assets of one zed the business lines, dedicating them to subsidiaries billion euros, etc. (or virtual subsidiaries, such as private asset manage- ment) which are very close to their specific markets But, above all, to avoid resting on our laurels after the and run by strong, responsible management teams. successful business development of the past few years, Multi-management products, structured products, we have set up a Secretariat for Innovation. This private equity and corporate advisory services have lightweight structure is in charge of collecting and become important activities. The fixed-income busi- approving innovative ideas, and encouraging their ness has been separated out. Since it began, it has implementation when they involve more than one been successfully developed by EdRAM, our flagship entity or require a considerable investment effort. business long reputed for its performances in equity management. Managers of fixed-income products - Last but not least, under the mentoring of our performed superbly in 2006, and will now have the family-based share ownership, we have reinforced advantage of natural, productive complicity with the brand management, recognizing that our brand is know-how of our structured product teams. both the surname of the family and the powerful brand name of our business. For, in the end, in the 8•9

unanimous and consistent opinion of our teams, this name remains the Group’s principal asset and prime source of growth.

More than likely, the majestic upward sweep of world growth and the rise in the major stock markets will experience a slow down, or even a period of turbulence. However, our Company emerged strengthened from the stock market crisis at the beginning of the century. As our business lines are highly cyclical, we have tirelessly prepared to make the lean periods to come, depending on the years, less lean or more prosperous.

Michel Cicurel March 2007 MANAGEMENT of La Compagnie Financière Edmond de Rothschild Banque

SUPERVISORY BOARD EXECUTIVE BOARD

Chairman Chairman Baron Benjamin de Rothschild Michel Cicurel

Deputy Chairman General Manager Victor Sasson Guy Grymberg

Members Deputy General Manager John Alexander Samuel Pinto Claude Janssen René de La Serre Patrice Dordet Claude Messulam Henri-Paul Rousseau Jean Laurent-Bellue Daniel Trèves

Non-voting members Jean Dumoulin AUDITORS Ervin Rosenberg Statutory Auditors Cabinet Didier Kling & Associés PricewaterhouseCoopers Audit

Alternate Auditors Marie-Paule Degeilh Yves Nicolas 10•11

HIGHLIGHTS in thousands of euros

CONSOLIDATED HIGHLIGHTS

Balance sheet 2006 2005 Total assets 2,880,881 2,619,021 Stockholders’ equity * 241,548 217,654 Customer loans 218,177 184,188 Customer deposits 1,175,547 968,441 Income statement Net banking income ** 373,797 291,516 Gross operating income ** 104,450 68,769 Net income for the year 78,799 41,171 Net income attributable to equity holders of the parent 73,061 36,577 Average number of employees 1,073 988

PARENT COMPANY HIGHLIGHTS

Balance sheet 2006 2005 Total assets 2,681,843 2,493,039 Stockholders' equity * 215,551 206,122 Customer loans 397,124 340,144 Customer deposits 1,187,656 979,597 Income statement Net banking income ** 173,295 128,255 Gross operating income ** 50,889 29,843 Net income for the year 52,951 33,029 Average number of employees 396 367

* Before allocation of net income ** Total net banking income and gross operating income for all business segments; these figures are analyzed in the management report on the operations of the Group and the Company. Observations of the Supervisory Board on the report of the Executive Board and on the financial statements for the year ended December 31, 2006

To the Stockholders,

In accordance with French law, the Executive Board of the Company has submitted to us within the pres- cribed time limit, for our examination and review, the financial statements for the year 2006 together with its report which will be presented to you at the Annual General Meeting.

We have examined the report and have no observa- tions to make or any information to add concerning the management of the Company or the financial statements for the year 2006. The financial state- ments are a confirmation of the information which has been provided to us during the year.

We recommend that you approve these financial sta- tements at the Annual General Meeting.

The Supervisory Board. 12•13

REVIEW OF OPERATIONS REPORT OF THE EXECUTIVE BOARD

All activities of La Compagnie Financière Edmond concentration on equity instruments in 2006. de Rothschild Banque registered significant growth These achievements and the quality of service gene- in 2006. Positions in asset management were streng- rated a 22% increase in assets under management thened, with total assets under management increa- in 2006. sing by almost 22% to ? 26 billion. La Compagnie Financière Edmond de Rothschild Banque consoli- Once again, the positioning of the Private Banking dated its position as a global asset manager, active in division, at the intersection between various areas all asset types, equity and bond management, multi- of expertise, demonstrated its relevance in offering management, structured management, hedge funds customers – high-wealth individuals and company and private equity. managers – analysis, tailored solutions and general management of their assets. The concern to supply Since 1998, despite the fall in equity prices in the early a comprehensive response to the specific issues 2000s, assets under management have risen by an faced by family business owners, and the choice and average of 20% per year. Thanks to the diversity and performances of “open-architecture” management, quality of management products offered, the net level were the main vectors for growth in 2006. Ranked of new inflows reached ? 2.6 billion, after an average leading French private bank by AM Group’s “Private level of ? 2.5 billion for 2004 and 2005. Banking Strategy Survey 2006”, the Private Banking division is recognized by all professionals in the sector. Owing to a number of commercial successes and well-maintained performances, results for all entities The increase in assets under management was continued to rise in 2006. La Compagnie Financière accompanied by expansion for staff teams, with Edmond de Rothschild Banque’s consolidated net additional members recruited for the asset enginee- income thus reached ? 73.1 million – including a net ring department, and the formation of new manage- gain of ? 13.8 million on sales of securities – compa- ment teams. red to ? 36.6 million for 2005, a 99.7% year-on-year increase. The brokerage company Assurances Saint-Honoré Patrimoine, which manages life insurance invest- PRIVATE BANKING AND ENGINEERING ment products, also had a remarkable year in 2006, registering significant growth in new inflows. This is In an occasionally uneven but generally bullish an indication of the high demand for “tailor-made” market environment, the Bank’s private asset mana- contracts, and their central role in balancing custo- gement business saw particularly strong growth mers’ assets. and satisfactory performances due to clear-sighted The dedicated services for medium-sized family busi- tured, “Emerging Rendement”, a fund in the nesses provided by Edmond de Rothschild “Rendement” range specializing in emerging mar- Entreprises Patrimoniales, the advisory services kets, and “Saint-Honoré Allocation Court Terme”. In subsidiary formed with Edmond de Rothschild parallel to these developments, EdRAM reinforced its Corporate Finance (mergers and acquisitions), management teams: four new fund managers have confirmed their promising start with further growth. joined the company.

The offices of the Private Banking division in In the existing range, “Tricolore Rendement” once Bordeaux, Lyon and Marseille were pivotal to all again achieved significant commercial success: assets these developments, either directly or through under management had reached ? 3.5 billion by the various intermediaries, principally independent asset end of the year, making it the second-largest French management advisors who are well aware of the equities fund on the French market. “Saint-Honoré efficiency of a coordinated approach shared with the Oblig Opportunités” also attracted high inflows: Bank in handling the most complex issues raised by launched in late 2005, it crossed the ? 1 billion customers. A new office is to be opened in Nantes threshold in early 2007. during the first half-year of 2007. The positive market response to these funds and the INSTITUTIONAL CUSTOMERS AND DISTRIBUTION continuing rise of discretionary management in 2006, positioned EdRAM as a reference in institutio- Assets under management by Edmond de Rothschild nal management. Dedicated funds represented close Asset Management (EdRAM) continued to rise in to 30% of assets under management. 2006 and reached ? 15.62 billion. The level of assets invested in equity instruments and products increa- Finally, as of January 1, 2007, the bond and credit sed by 17.9% to ? 9.48 billion (61% of total assets derivative management teams were transferred to under management). EdRAM took fourth place among RFS Gestion, a practical reflection of the ambition to this year’s ten best specialist management companies develop a new range of products in 2007 at the cross- in terms of market share (source: Europerformance). roads between fixed-income and structured products.

EdRAM continued to pursue its product innovation LONG-ONLY AND ALTERNATIVE strategy in 2006, focusing particular attention on the MULTI-MANAGEMENT Asian and European equities ranges. La Compagnie Financière Edmond de Rothschild Banque obtained In a little over four years of existence, Edmond de QFII (Qualified Foreign Institutional Investor) status Rothschild Multi Management has become France’s from the Chinese authorities, with a quota of $ 100 number four multi-management company (source: million, enabling EdRAM to launch a new “ARIA” Europerformance – 2006 ranking of multi-manage- classed mutual fund named “Saint-Honoré ment specialists). Assets under management increa- Chinagora”, the only French fund authorized to sed by almost 50%, reaching ? 3.1 billion by the end invest in domestic Chinese equities. The Group's of the year. Chinese equity funds, also including “Saint-Honoré Chine”, now account for over ? 300 million of assets The pace of new inflows was sustained, particularly under management. for alternative investments, rising more than 63% from ? 1.06 billion in 2005 to over ? 1.7 billion in Several other new products were launched: “Saint- 2006. This progression concerns both open investment Honoré Europe Synergie”, which invests in securities funds and dedicated products, with a significant of European companies likely to be the target of increase in discretionary management for institutional takeover bids, and companies that are being restruc- customers. 14•15

Performances by both long-only and alternative product to its AMF authorization to manage structured pro- ranges were impressive in 2006. All alternative funds ducts including complex derivatives, received appro- were ranked in the top deciles or quartiles of French val in April 2006 for its plans in respect of “ARIA and international categories, with performance levels EL” classed funds. This enabled RFS Gestion to well above the 2006 average for alternative funds of complete its range of investment solutions with the funds (estimated at 5.94% by Seeds Finance). Over launch of a hedge fund, “RFS Active Strategies”. This three years, 75% of funds in the two ranges were fund has attracted ? 100 million from leading insti- ranked in the top quartile for their category. tutional investors, alongside the LCF Rothschild Group. “RFS Active Strategies” is managed by a The most commercially successful funds were dedicated team of five professionals. “Saint-Honoré Multigest Rendement” (? 584 million of assets under management), “Multi Alternatif From January 2007, the Group’s bond and credit Explorer” (? 426 million), “Multi Alternatif Equilibre” derivative management teams were combined with (? 302 million) and “Multi Alternatif Select” the teams handling structured and quantitative (? 285 million). management techniques at RFS Gestion. The aim of this strategic step is to unite complementary skills 2006 also saw the launch of new investment pro- with a view to developing new ranges of hybrid pro- ducts: a new fund of hedge funds (“Multi Alternatif ducts that meet institutional investors’ growing Alpha”) was launched in Luxembourg in March, in demand for this type of investment solution. partnership with Banque Privée Edmond de Rothschild Geneva. In December EdRMM added to PRIVATE EQUITY its range of alternative products by launching the “ARIA 3” classed mutual fund “Multi Alternatif As a complement to management of listed financial Equity” (dedicated long/short Europe). instruments, the private equity business (providing venture capital for unlisted companies) is one of La These performances, and the launch policy for new Compagnie Financière Edmond de Rothschild funds, explain the company’s significant growth: ope- Banque’s strategic development areas, with assets rating income doubled for the third consecutive year. under management in excess of ? 800 million (not including assets managed by Edmond de Rothschild Set up in May 2002, EdRMM had 30 employees at Investment Services in Israel). December 31, 2006. Private equity funds continued to pursue their invest- STRUCTURED MANAGEMENT AND ment strategies over the year. The business is exerci- ALTERNATIVE MANAGEMENT sed through a central holding company, Edmond de Rothschild Private Equity Partners, and the following During 2006 Edmond de Rothschild Financial three specialist subsidiaries: Services, the structured product specialist for the Group, continued its innovation strategy while Edmond de Rothschild Investment Partners consolidating assets under management at ? 2.7 bil- (EdRIP) is dedicated to minority investments in lion after the very high rise of 2005. Most assets are unlisted European companies. It manages assets tota- invested in indexed EMTN and “cushion” funds ling over ? 500 million in three sectors: venture capi- marketed to institutional customers and through tal, life sciences and innovation funds. external distributors. With the venture capital fund “Winch Capital” laun- RFS Gestion, the management subsidiary of ched at the end of 2005 (? 170 million), the venture Edmond de Rothschild Financial Services, in addition capital management team undertook ten operations in 2006 for a total value of ? 60 million. Two with- At Edmond de Rothschild Investment Services drawals of previous investments were successfully (EdRIS), the LCF Rothschild Group's Israeli subsi- completed. In the life sciences, the dedicated team diary, assets under management increased by 57% in invests in private European companies involved in 2006 to over ? 1.4 billion. The asset management development of therapy products and medical and business was expanded with both institutional and molecular diagnosis technologies, primarily through private customers. EdRIS also took the opportunity the ? 80 million venture capital fund “Bio Discovery of recent reforms, imposing use of the “open-archi- II”. Four new investments were undertaken in 2006, tecture” model, to develop its distribution partner- as well as one IPO: this concerned OMS, successfully ships with Israeli banks. floated on Euronext Brussels in June. EdRIP also manages ? 150 million in innovation funds, finan- Two new private equity funds were launched during cing companies whose innovation is recognized by the year, including “Edmond de Rothschild Real the French innovation agency ANVAR. Estate Sicar” (EdRRES), a Luxembourg fund specia- lizing in Eastern European real estate. At December In 2006, three new staff members joined the com- 31, 2006, this fund had attracted ? 174 million of pany, and a collaboration agreement was signed with assets from a broad international base of institutional a venture partner in the field of life sciences. and private customers. This figure is expected to reach ? 200 million by March 31, 2007. Edmond de Rothschild Capital Partners (EdRCP) focuses on majority investments for leveraged buy- The significant increase in assets under management out operations in medium-sized companies with high in 2006 was accompanied by reinforcement of the growth potential. Since 2004 this subsidiary has teams, including recruitment of five people dedicated managed the ? 210 million “Edmond de Rothschild to management of this new fund. LBO Fund”, which undertook one new investment operation in 2006 together with reinvestments in In Italy, Edmond de Rothschild S.G.R. SpA, an existing lines for a total of ? 28 million, and was investment company specializing in portfolio mana- 56% subscribed by the end of the year. gement for third parties, provides services to locally based high-wealth individual customers. Edmond de Rothschild Private Equity Select LLP is based in London and manages the LBO fund of Edmond de Rothschild Asset Management funds “European Buy-out Opportunities I, LP” (EdRAM), through Edmond de Rothschild S.I.M. (EBOP), launched in 2004 and invested in national SpA, pursued the international commercial develop- and regional mid-market funds in Europe. EBOP ment of its collective investment vehicles, particularly was nearly fully committed by the end of 2006. The with institutional Italian customers. In all other team is currently marketing a new fund with equiva- countries (including Germany, Switzerland, lent investment criteria. Luxembourg, Portugal, Spain and Canada), the rise in terms of absolute value was moderate: there was a WORLDWIDE PRIVATE ASSET AND MUTUAL general shift away from money market funds to FUND ASSET MANAGEMENT higher-return equity and convertible bond funds. Also in 2006, EdRAM began registration of its La Compagnie Financière Edmond de Rothschild French range in foreign countries. This will continue Banque pursued its international development stra- in 2007 and should generate additional momentum tegy in 2006, with a significant rise in assets managed for international development. by Edmond de Rothschild Investment Services in Israel, and successful application for QFII status in The Italian branch office of Edmond de Rothschild China. Financial Services continued to roll out and expand 16•17

distribution of its products, particularly to insurance for business managers approached directly by the companies. team and existing customers of La Compagnie Financière's Group. The company has become an La Compagnie Financière Edmond de Rothschild important link in the Bank’s chain of services for Banque's representative office in Shanghai was ope- family business owners. ned in 2005 to promote the Bank’s subsidiaries in China, and develop contacts with the principal local 2006 was thus a particularly encouraging year, with banking and asset management entities. Thanks to 50% growth in revenues, and net income tripled the work done, the Bank launched its first gold- from 2005. indexed structured product, marketed to institutional and private customers in China, in partnership with La Compagnie Financière Edmond de Rothschild a Chinese banking network. Banque’s positioning thus became more soundly established. It is one of the very few private banking With its QFII status conferred in 2006, the Bank is establishments on the French market to remain on one of only 52 international financial institutions a human scale that allows the personal touch, with authorized to invest in the domestic Chinese market a strongly-rooted tradition of investment banking (A shares). based on a professional, independent approach, par- ticularly as it has no financing or investing services CORPORATE ADVISORY SERVICES to sell.

Following the reorganization of corporate advisory PERSONAL AND CORPORATE INSURANCE services initiated in 2004, the teams at Edmond de Rothschild Corporate Finance consolidated deve- Once again, and for the last time, Assurances & lopment of business in 2006. Their involvement in Conseils Saint-Honoré (ACSH) was fully consoli- certain major stock market operations reinforced La dated in the Bank’s Group business and results. Compagnie Financière Edmond de Rothschild ACSH designs and manages tailored insurance Banque’s position in the advisory sector. solutions for businesses and individuals, with parti- cular emphasis on welfare and provident funds, The success of this reorganization was facilitated by including healthcare expenses, pensions, and pro- an active policy to acquire new skills, both sector-spe- perty and casualty insurance. Consolidated reve- cific and operational: the average fee revenues per pri- nues grew by 10% in 2006, in line with the strate- vate banker rose by more than 34% over the year. gic plan: major contributors to this performance Strengthened international capacities led to a signifi- were the commercial success of expatriate insurance cant increase in the number of cross-border transac- services through Mobility Saint-Honoré, and the tions: three quarters of fees invoiced in 2006, against active individual life insurance business at the dedi- more than half in 2005, were generated by transac- cated subsidiary Assurances Saint-Honoré tions involving at least one international component. Patrimoine * (ASHP). The efficiency of the partnership network set up by Edmond de Rothschild Corporate Finance in Europe In view of the significant development of Mobility and the US was thus comprehensively demonstrated Saint-Honoré, an office was opened in Dubai in in 2006. September, and in June the company acquired Norfolk International, located in Calgary (Alberta): this will Meanwhile, Edmond de Rothschild Entreprises enable ACSH to provide round-the-clock monitoring Patrimoniales, a subsidiary* dedicated to the speci- services for its customers throughout the year. fic needs of medium-sized family businesses, reinfor- ced its teams and enlarged its advisory capacity both After several years of support for the development of

* joint ventures with the Bank’s Private Banking division. insurance brokerage business, the shareholders of The Bank’s IT division provided general and logistic Assurances & Conseils Saint-Honoré and Siaci began support for Assurances & Conseils Saint-Honoré in discussions in 2006 over proposals to combine the several projects, including reorganization of the wel- two companies into a new group. fare and health system for France and the ACSH net- work, and replacement of IT equipment. These discussions led to the signature of an agree- ment on February 12, 2007 (subject to the custo- Process optimization was also a priority, particularly mary administrative approvals) for creation of for the Private Asset Management business: an unu- France’s 5th largest insurance broker. The new bro- sual system was set up to aid documentation for the kerage group’s capital is evenly distributed between Asset Engineering activity. An Intranet portal was managers, the Luxembourg investment fund Eres also launched for life insurance: this provides an and the two entities’ historical shareholders: Europe’s interface between the Private Asset Management number one broker and one of the world’s top five division and ASHP for almost real-time information brokers Jardine Lloyd Thomson (JLT); Paris sharing. Finally, a new management tool was selec- Orléans, a listed equity investment company ted for managers, to achieve further improvements controlled by Barons David and Eric de Rothschild; in the security, transparency and quality of the cus- and Compagnie Financière Saint-Honoré (CFSH), tomer reporting system, and compliance with the the holding company headed by Baron Benjamin de future MiFID (the Markets in Financial Instruments Rothschild and controlling shareholder of La Directive) regulations. Compagnie Financière Edmond de Rothschild Banque. The Ourasi project, designed to accelerate in-house order transmission, was reinforced prior to optimiza- INVESTING IN LOGISTICS tion of order trading, which will be addressed in 2007. AND HUMAN RESOURCES In 2006, the Group finalized preparations for imple- Noting the very positive customer response to the mentation of IFRS, which are applicable from new financial products that are regularly introdu- January 1, 2007, and evaluation of the transition to ced, the Group has decided to further reinforce its these new accounting standards. Preparatory work capacity for designing new investment solutions. for the Basel II project was continued, and the finan- This ambition found practical expression in the cial impacts, particularly regarding operational risks, creation of an “Innovation Secrétariat”, whose main were measured. mission is to harness the creative energies within our establishment. The management control information system was also consolidated during 2006. Investments in IT solutions continued in 2006. Among several cross-functional projects, the new, The Bank’s group, including ACSH, employed a total remote IT room to provide a permanent back-up as of 1,144 persons at December 31, 2006 (compared to part of the Business Continuity Plan initiated in 1,022 in 2005), including 705 belonging to the ban- 2004 came into operation in 2006. All IT applica- king group in and outside France (631 in 2005). tions were reviewed to ensure compliance with IFRS, which have been applied since January 2007. The INVESTMENTS IN SUBSIDIARIES AND AFFILIATES websites of the Bank and its subsidiaries were totally redesigned, in close collaboration with the In June, La Compagnie Financière Edmond de Communication division; the new versions with Rothschild Banque sold all of its holding in Rothschild improved ergonomics will go on line during the first & Cie Banque. More than half of the transaction value semester of 2007. was settled in Paris Orléans shares. 18•19

During the same month, the Bank also acquired a CFSH took advantage of its management perfor- 25% investment in the corporate finance advisor mance to design and launch “Edmond de Rothschild Opticroissance, based in the Lyon area. Europportunities SCA SICAR” (ERES), a private equity fund intended to offer a limited number of In July, the Bank purchased shares in Edmond de partners an opportunistic non-benchmarked invest- Rothschild Financial Services, bringing its invest- ment policy, in parallel to CFSH’s standard policy. ment to 91.64%. Investments by CFSH on its own behalf continued In December, the Bank sold shares in Banque de to generate high-level gains. The cash generated Gestion Edmond de Rothschild Monaco, and its invest- enabled the company to reinforce its portfolio by ment now stands at 45.63% compared to 46% in 2005. adding new investments, both in listed and unlisted instruments. It also subscribed the entire capital of the subsidiary EdR Real Estate Management at the time of its for- 2006 EARNINGS mation. Parent Company net income for the year ended Finally, the Bank continued to assist customers in the December 31, 2006 was ? 52,951,266.49. divestment of shares in the film company Sofica Sofinergie 5. After this operation, its investment was Including unappropriated retained earnings and after 1.87%. appropriation to the legal reserve, income available for distribution is ? 57,154,739.72. STOCKHOLDERS It is recommended that dividends totaling The Compagnie Financière Saint-Honoré ? 52,953,484.80 be paid to stockholders, represent- (CFSH) group registered significant growth in net ing a dividend of ? 9.60 per share. income in 2006. In a favourable economic and stock market environment, 2006 was a good year Gross dividends per share for the three previous years for value creation. were: - 2003 (8.70 euros) The Group’s development strategy is strongly - 2004 (4.05 euros) backed by the Rothschild family, who owns 100% - 2005 (6.10 euros) of Compagnie Financière Saint-Honoré. Over the past year, the Group’s holding company sup- OUTLOOK FOR 2007 ported development by continuing its policy of participating in the launch of products managed The Group will continue its growth policy in 2007, by the Bank. For example, CFSH subscribed to focusing on its expertise in asset management, redu- the capital of “RFS Active Strategies”, a hedge cing earnings sensitivity to stock market fluctuations fund launched by RFS Gestion, and the “Saint- (primarily through development of the private equity Honoré Chinagora” fund marketed by Edmond and corporate advisory businesses), and reinforcing de Rothschild Asset Management. CFSH also international activities with particular emphasis on advised and assisted the Israeli subsidiary EdRIS Italy and China. in connection with the launch of its private equity fund “Edmond de Rothschild Real Estate It should benefit from favourable market trends with Sicar”, which will be invested in residential real the rising demand for services by small business cus- estate development operations in Eastern tomers and development of an “open architecture”. Europe. SUPERVISORY BOARD AND EXECUTIVE BOARD Mr. Victor Sasson

It is proposed that the Annual General Meeting of • Chairman of the Supervisory Board, Société Stockholders should renew the appointments of Française des Hôtels de Montagne (S.F.H.M.) Supervisory Board members Messrs Claude Janssen • Deputy Chairman of the Supervisory Board, and Henri-Paul Rousseau which are reaching the end Compagnie Financière Saint-Honoré of their term. • Director: La Compagnie Générale Immobilière de France A list of all members of the Supervisory Board and (Cogifrance), La Compagnie Fermière Benjamin et Executive Board of La Compagnie Financière Edmond de Rothschild S.A., La Compagnie Vinicole Edmond de Rothschild Banque, together with the Baron Edmond de Rothschild S.A., Holding positions held by each of them in other companies, is Benjamin et Edmond de Rothschild, Pregny S.A. shown below. (Switzerland) • Permanent representative of corporate director La Supervisory Board Compagnie Financière Edmond de Rothschild Banque to the Board of Société Immobilière Baron Benjamin de Rothschild d'Economie Mixte de la Ville de Paris (S.I.E.M.P.) • Manager, SNC Cogifrance et Compagnie Gestion • Chairman: • Member of the Board and Treasurer: La Fondation La Compagnie Financière Holding Benjamin et Ophtalmologique de Rothschild (F.O.R.), Institut de Edmond de Rothschild Genève S.A. (Switzerland), Biologie Physico-Chimique - Fondation Edmond de Holding Benjamin et Edmond de Rothschild, Pregny Rothschild S.A. (Switzerland), Banque Privée Edmond de Rothschild S.A. (Switzerland), Banca Privata Edmond Mr. John Alexander de Rothschild Lugano S.A. (Switzerland), Banque Privée Edmond de Rothschild Europe (Luxembourg), • Member of the Supervisory Board, Compagnie La Compagnie Benjamin de Rothschild S.A. Financière Saint-Honoré (Switzerland), Arbinter-Omnivalor S.A. (Switzerland), • Director: The Caesarea Edmond Benjamin de Rothschild Edmond de Rothschild Limited (United Kingdom), Development Corporation Ltd. (Israel) LCF Edmond de Rothschild Securities Limited • Deputy Chairman, Société Française des Hôtels de (United Kingdom), LCF Edmond de Rothschild Montagne (S.F.H.M.) Asset Management Limited (United Kingdom), LCF • Chairman of the Supervisory Board: Edmond de Rothschild Fund Management Limited Compagnie Financière Saint-Honoré, Assurances & (United Kingdom), The Bristol Port Company Conseils Saint-Honoré (Trustees) Limited (United Kingdom), First • Director: Corporate Shipping Limited (United Kingdom), Banque de Gestion Edmond de Rothschild Monaco Thatchcastle Limited (United Kingdom), CA Sperati (Monaco), La Compagnie Fermière Benjamin et (The Special Agency) Plc (United Kingdom), CPRE Edmond de Rothschild S.A., La Compagnie Vinicole Oxfordshire Buildings Preservation Trust Limited Baron Edmond de Rothschild S.A., Edmond de (United Kingdom), Sterling Insurance Group Rothschild Limited (United Kingdom), Isrop Limited (United Kingdom), La Compagnie Participations S.A. (Luxembourg), Rothschild Financière Holding Benjamin et Edmond de Continuation Holdings A.G. (Switzerland), Rothschild S.A. (Switzerland), Banque Privée Cogifrance (Paris), Content Participations S.A. (Paris) Edmond de Rothschild S.A. (Switzerland), Banque • Member of the Supervisory Board, Domaines Privée Edmond de Rothschild Europe Barons de Rothschild (Lafite) (Luxembourg), Fedex Corporation S.A. (Republic of

Panama), LCF Edmond de Rothschild (C.I.) Europe (Luxembourg), Isrop Participations S.A. Limited, LCF Edmond de Rothschild Holdings (C.I) (Luxembourg), Banque de Gestion Edmond de Limited, Edmond de Rothschild International Funds Rothschild Monaco (Monaco), Banque Privée Ltd. (Bermuda) Edmond de Rothschild Ltd (Bahamas), Edmond de Rothschild Limited (United Kingdom), Edmond de Mr. Claude Janssen Rothschild International Funds Ltd (E.D.R.I.F.)

• Honorary Chairman of the Board of Directors and Mr. Henri-Paul Rousseau Chairman of the International Board, INSEAD • Chairman, Institut Européen du Développement • Chairman of the Board and Managing Director, Durable (I.E.D.D.) Caisse de dépôt et placement du Québec • Director: • Chairman and director, CDP Capital Inc. (a subsi- Cie Lebon, Russell Reynolds Associates (USA), diary of Caisse de dépôt et placement du Québec) Union Centrale des Arts Décoratifs, Association pour • Director and member of the Executive Board, le Rayonnement de l’Opéra National de Paris Fondation de l’Institut de Cardiologie de Montréal (A.R.O.P.), Permal Asset Management (USA) (Quebec)

Mr. René de La Serre Mr. Daniel Trèves

• Director: • General Manager, La Compagnie Benjamin de P.P.R., Sanofi-Aventis S.A., Nord-Est S.A. Rothschild S.A. (Switzerland) • Member of the Supervisory Board: • Director: Compagnie Financière Saint-Honoré, Euronext N.V. Banque Privée Edmond de Rothschild S.A. (Netherlands), Schneider Electric S.A. (Switzerland), Banque Privée Edmond de Rothschild • Director, Harwanne Compagnie de Participations Europe (Luxembourg), La Compagnie Financière Industrielles et Financières S.A. (Switzerland) Holding Benjamin et Edmond de Rothschild • Non-voting member of the Board, Fimalac S.A. (Switzerland), Isrop Participations S.A. (Luxembourg), LCF Prifund Conseil (Luxembourg), Treasury Mr. Claude Messulam Investments (C.I.) Limited, Associated Investors Inc. (British Virgin Islands), Fondation pour le • General Manager, Banque Privée Edmond de Développement de l’Instruction et de l’Education Rothschild S.A. (Switzerland) Physique pour la Jeunesse Française de Genève • Director : (Switzerland) Compagnie Financière Saint-Honoré, La Compagnie Financière Holding Benjamin et Edmond de Rothschild Genève S.A. (Switzerland), Holding Benjamin et Edmond de Rothschild, Pregny S.A. (Switzerland), La Compagnie Benjamin de Rothschild S.A. (Switzerland), Arbinter-Omnivalor S.A. (Switzerland), LCF Edmond de Rothschild Gestion S.A. (Switzerland), Administration & Gestion S.A. (Switzerland), LCF Communication S.A. (Switzerland), Banca Privata Edmond de Rothschild Lugano S.A. (Switzerland), Rothschild Bank A.G. (Switzerland), Rothschild Holding A.G. (Switzerland), Banque Privée Edmond de Rothschild Executive Board Montagne (S.F.H.M.), Société de Participation Aérienne Elysair Mr. Michel Cicurel • Director: Edmond de Rothschild Corporate Finance, ERS, • Chairman of the Executive Board, Compagnie Financière Eurafrique, Groupement Immobilière et Financière Saint-Honoré Financière (G.I.F.), Sogefic, Banque de Gestion • Chairman of the Supervisory Board, Edmond de Edmond de Rothschild Monaco (Monaco), Banque Rothschild Multi Management Privée Edmond de Rothschild Europe (Luxembourg), • Chairman of the Board of Directors: Edmond de Rothschild Investment Services (Israel), Edmond de Rothschild S.G.R. SpA, Edmond de Edmond de Rothschild S.G.R. SpA (Italy), Edmond Rothschild S.I.M. Spa, ERS, de Rothschild S.I.M. SpA (Italy) • Member of the Supervisory Board: • Permanent representative of corporate director La Edmond de Rothschild Private Equity Partners Compagnie Financière Edmond de Rothschild Banque (SAS), Publicis to the Boards of: • Director: Financière Boréale, G.I.E. Saint-Honoré, Marais Banque Privée Edmond de Rothschild (Switzerland), Participations Edmond de Rothschild Limited (United Kingdom), La Compagnie Financière Holding Benjamin et Edmond Mr. Samuel Pinto de Rothschild (Switzerland), La Compagnie Benjamin de Rothschild S.A. (Switzerland), Bouygues Telecom, • Member of the Executive Board and General Rexecode, Société Générale, Cdb Web Tech (Italy) Manager, Compagnie Financière Saint-Honoré • Non-voting member of the Board, Paris Orléans • Chairman and Member of the Supervisory Board, • Permanent representative of corporate director La Edmond de Rothschild Asset Management Compagnie Financière Edmond de Rothschild • Member of the Supervisory Board, Edmond de Banque to the Boards of: Rothschild Multi Management, Edmond de Rothschild Assurances & Conseils Saint-Honoré, Edmond de Financial Services, Société de Participation Aérienne Rothschild Corporate Finance, Edmond de Rothschild Elysair Asset Management, Edmond de Rothschild Financial • Director, Edmond de Rothschild S.G.R. SpA Services, Equity Vision (Italy), • Permanent representative of corporate director • Permanent representative of corporate director Compagnie Financière Saint-Honoré to the Board of Compagnie Financière Saint-Honoré to the Board of Cogifrance Equity Vision • Member of the Board of General Partners, • Permanent representative of corporate director La Rothschild & Cie Banque Compagnie Financière Edmond de Rothschild Banque to the Board of Edmond de Rothschild Fund Mr. Guy Grymberg (Luxembourg investment fund)

• Chairman of the Supervisory Board, Edmond de Mr. Patrice Dordet Rothschild Financial Services • Deputy Chairman of the Supervisory Board, • Director, ERS Assurances & Conseils Saint-Honoré • Member of the Supervisory Board: • Member of the Supervisory Board: Edmond de Rothschild Asset Management, Edmond Compagnie Financière Saint-Honoré, Edmond de de Rothschild Multi Management, Edmond de Rothschild Asset Management, Edmond de Rothschild Rothschild Entreprises Patrimoniales Multi Management, Edmond de Rothschild Private • Deputy Chairman, Assurances Saint-Honoré Equity Partners, Société Française des Hôtels de Patrimoine 22•23

Mr. Jean Laurent-Bellue

• Chairman and General Manager, Edmond de Rothschild Corporate Finance • Member of the Supervisory Board, Edmond de Rothschild Entreprises Patrimoniales • Director: Afipa S.A. (Switzerland), Harwanne Compagnie de Participations Industrielles et Financières S.A. (Switzerland), Nord-Est S.A. • Member of the Supervisory Board, KPMG S.A., KPMG Associés • Chairman of the Board of Directors, LCFR UK PEP Ltd (United Kingdom) • Chairman of the Supervisory Board, Edmond de Rothschild Private Equity Select LLP (United Kingdom) CONSOLIDATED COMPANIES La Compagnie Financière Edmond de Rothschild Banque at December 31, 2006

Banks and investment Holding company Management companies companies

91.64% 99.96% 99.99% Edmond de Rothschild Edmond de Rothschild Financière Boréale Financial Services Asset Management 45.63% 80.15% Banque de Gestion Edmond de Rothschild Edmond de Rothschild Monaco Multi Management 20.00% 91.64%

Edmond de Rothschild Limited RFS Gestion

99.99% 99.99% Edmond de Rothschild Edmond de Rothschild S.I.M. SpA Private Equity Partners 71.29% Edmond de Rothschild Investment Partners 60.00% Edmond de Rothschild Capital Partners 99.99%

UK Private Equity Partners Ltd

75.00% Edmond de Rothschild Private Equity Select LLP 100.00% Edmond de Rothschild S.G.R. SpA 100.00%

EdR Real Estate Management

% held by the Group Fully consolidated Accounted for by the equity method Foreign companies 24•25

Advisory services Insurance companies Other

99.99% 98.89% 99.24% Edmond de Rothschild Edmond de Rothschild ERS Corporate Finance Courtage Services 99.99% 92.27% 99.24% Edmond de Rothschild Assurances & Conseils Le Cercle Edmond de Rothschild Entreprises Patrimoniales Saint-Honoré 99.99% 92.22% 18.33%

EDREP Transactions Assurances Saint-Honoré Omega Financial Solutions

67.00% 92.24% Edmond de Rothschild Mobility Saint-Honoré Investment Services Limited 25.00% 92.22%

Opticroissance Continental Média Assurance

92.22% Assurances Saint-Honoré Patrimoine 92.25%

Ingénierie Monétique et Bancaire

92.26%

Mobility Saint-Honoré Canada

92.26%

Norfolk Mobility Benefits Inc.

92.24%

MSH Limited Supported by significant rises in the financial and stock exchange markets and a favourable economic environment, La Compagnie Financière Edmond de Rothschild Banque Group's net income reached a record level of ? 73.1 million in 2006, compared with ? 36.6 million in 2005 (+99.7%). This result includes a net capital gain of ? 13.8 million; the “operating” net income thus amounted to ? 59.3 million, 62% higher than in 2005.

Net banking income increased by 28.2% to ? 373.8 million.

Asset management operations – the Group's core business – again registered a sustained level of activity, largely thanks to higher net inflows (? 2.6 billion in 2006) from private customers (+16.3%) and into collective investment vehicles, particularly Edmond de Rothschild Multi Management (+39.4%). Bolstered by market performances, total assets under management by the Group increased by ? 4.6 billion to ? 26 billion at the end of December 2006 (+21.6%).

Revenues from asset management again rose sharply, by 30.4%, mainly as a result of the increase in recur- ring financial fees from assets under management (+29.8%) and brokerage fees (+38.4%).

The corporate advisory services business continued to expand, and fees billed by the Group in 2006 increased by 27%. 26•27

MANAGEMENT REPORT La Compagnie Financière Edmond de Rothschild Banque

In the field of capital market activities, revenues from CONSOLIDATED BALANCE SHEET foreign exchange operations increased by 35.9%, mainly due to the increase in the volume of transac- Total assets at December 31, 2006 amounted to tions. ? 2.88 billion, an increase of 10% from ? 2.62 billion at the end of 2005. This was essentially due to the General operating expenses and depreciation and increase in the level of demand deposits from the amortization increased by 20.9% overall in 2006, to Group's mutual funds. ? 269.3 million. Much of this increase is attributable to expansion in the Group’s business in 2006, and the A condensed balance sheet is presented below (in consolidation of its financial performances. The prin- thousands of euros): cipal rises in expenses concerned variable remunerations, investment in logistics resources (particularly real Dec. 31, 2006 Dec. 31, 2005 estate), marketing and selling expenses, and variable Assets expenses related to administration of securities. Cash and interbank transactions 1,451,030 1,203,357 In these circumstances, gross operating income rose Loans and other financing to customers 218,177 184,188 to ? 104.5 million in 2006, an increase of 51.9% Other financial accounts 335,401 316,295 ? from 68.8 million in 2005. Fixed assets and securities 876,273 915,181 Total 2,880,881 2,619,021 Including a gross ? 15 million capital gain and after income tax of ? 32.8 million, net income for 2006 totaled ? 73.1 million, compared with ? 36.6 million Liabilities and stockholders' equity in 2005, or an increase of 99.7%. Cash and interbank transactions 1,630,287 1,552,523 Customer deposits 521,753 494,138 Other financial accounts 408,494 313,535 Stockholders' equity * 247,286 222,248 Net income for the year 73,061 36,577 Total 2,880,881 2,619,021

* Including minority interests. In assets, cash and interbank transactions accoun- The analysis of resources is as follows: ted for 50.4% of total assets at December 31, 2006, compared to 45.9% in 2005. This rise reflects the Dec. 31, 2006 Dec. 31, 2005 higher level of demand deposits with other financial Borrowings 61.3% 54.6 % institutions. The figures indicate the importance of • Demand 53.6% 41.5 % interbank operations for the Group, and particularly • Time 7.7% 13.1 % the parent company, which had a highly liquid Negotiable debt instruments 38.7% 45.4 % balance sheet. The distribution of loans to banks was Total 100% 100 % again based on strict selection of counterparties and the development of collateralized repo transactions. Customer deposits, including negotiable debt ins- truments, totaled ? 521.8 million at December 31, Loans and other financing to customers rose to 2006, an increase of 5.6% over the previous year. ? 218.2 million at December 31, 2006, from Interest-bearing deposits decreased by 9.1% in 2006, ? 184.2 million at December 31, 2005 and only to ? 321.7 million, but demand deposits rose by accounted for 7.6% of total consolidated assets. The 51.3%. majority of loans were granted to individual custo- mers against securities as part of private asset mana- Stockholders' equity was as follows (in thousands of gement activities. euros): (1) Dec. 31, 2006 (1) Dec. 31, 2005 Other financial accounts increased by 6% in 2006 to ? 335.4 million. Capital stock 82,740 81,461 Additional paid-in capital 96,363 89,170 Fixed assets and securities decreased in 2006 Retained earnings and (? 876.3 million at December 31, 2006, compared minority interests 68,181 51,617 with ? 915.2 million at December 31, 2005), Total 247,284 222,248 although different items experienced contrasting (1) Before appropriation of net income for the year. trends. The portfolio of long-term investment securi- ties – relating to both the Group’s cash transactions The increase in stockholders' equity in 2006 prima- and bond investments made as part of the asset and rily resulted from the issue of new shares upon the liability management – decreased by ? 132.5 million exercise of subscription stock options by employees. while intangible assets and goodwill increased by ? 31.4 million overall. Stockholders' equity accounted for 8.6% of total liabilities and stockholders' equity at December 31, In liabilities, cash and interbank transactions, 2006, compared with 8.5% at December 31, 2005. including negotiable debt instruments sold to banks and other financial institutions, increased by 5% and After deducting minority interests, net income for 2006 accounted for 56.6% of total liabilities at December was ? 73.1 million, compared with ? 36.6 million 31, 2006. This change essentially resulted from the in 2005, an increase of 99.7% over the previous year. increase in demand transactions with the Group's mutual funds. 28•29

CONSOLIDATED INCOME STATEMENT NET BANKING INCOME

Presented below is a condensed income statement Net banking income increased by 28.2% to showing total net banking income and gross operating ? 373.8 million in 2006. income of the Group's business segments, derived from the published consolidated income statement, In a favourable business and market environment, together with the Group's share in net income (in revenues from the Group’s asset management activities thousands of euros): continued to show significant growth. Net revenues amounted to ? 260.1 million, a rise of 30.4% in 2006 2005 2006, after a 38.5% increase in 2005. Asset management 260,116 199,462 The private asset management and collective invest- Interest earning operations 8,768 5,913 ment businesses had another year of highly sustained Capital market operations 14,317 10,962 activity levels in 2006 thanks to increased net inflows Corporate advisory services 12,091 9,521 (? 2.6 billion), both with private customers Insurance brokerage fees 69,805 60,138 (+16.3%) and in collective investment vehicles inclu- Securities portfolio and other 8,700 5,520 ding multi-management, which registered a particu- Net banking income * 373,797 * 291,516 larly high increase (+40%) in net inflows. Overall, the Group’s assets under management grew by General operating expenses (260,525) (214,596) • Personnel expenses (157,574) (131,166) 21.6%, with the additional benefit of rises in the • Other (102,951) (83,430) financial markets. Depreciation and amortization (8,822) (8,151) Thanks to higher inflows, market performances and Gross operating income * 104,450 * 68,769 a larger portion of equity and diversified collective Net change in allowances for investment vehicles, gross fund management fees ear- possible losses on loans (99) 2,939 ned by the Bank’s subsidiaries continued their signi- Net change in allowances for risks (9,959) (1,296) ficant rises (+36.2% in 2006). Net exceptional gain on securities transactions 18,970 649 Including insurance brokerage fees, total recurring Exceptional loss (2,101) (2,396) fees based on assets managed accounted for 74% of Employee profit-sharing and incentives (5,314) (4,276) consolidated net banking income. Income tax (32,788) (22,622) Share in net results of companies Due to the high inflows into investment funds, front- accounted for by the equity method 4,892 2,416 end fees also rose once more in 2006 (+16.3%). Goodwill amortization 748 (3,012) Good performances on the financial markets in 2006 Minority interests (5,738) (4,594) also contributed to the significant growth in stock mar- Net income 73,061 36,577 ket trading fees (+38.4% compared to 18.3% in 2005). * For a reconciliation with published net banking income and gross operating income, see the appendix below. Income from structured interest rate and equity pro- ducts, including the share of minority interests in Edmond de Rothschild Financial Services and its asset management firm, rose by 5.6%. This category of assets continued to expand in 2006, but the results generated by operations on the secondary market were considerably lower than in 2005. Interest earning operations (deposits and credits), GENERAL EXPENSES, DEPRECIATION now mostly related to assets managed for private AND AMORTIZATION customers, accounted for only 2.3% of consolidated net banking income. General operating expenses increased by 21.4% overall, to ? 260.5 million. This increase was due Revenues from capital market operations carried principally to development of the Group’s business out by La Compagnie Financière Edmond de in 2006, and reinforcement of its financial perfor- Rothschild Banque, mainly focusing on brokerage, mances. particularly for customers, increased substantially in 2006 (+30.6%) and totaled 3.8% of consolidated Personnel expenses increased by 20.1% in 2006, as banking income. Most of this increase concerned a result of the Group’s larger staff numbers (+11.9% foreign exchange activities (+35.9%), largely due to between December 31, 2005 and December 31, the rising volume of foreign exchange transactions. 2006), particularly concerning the various asset management activities and internal control and com- The results from euro treasury and trading opera- pliance. However, a substantial portion is attributable tions, meanwhile, remained practically stable. to an increase in variable remunerations based on business segments' financial performances and In a favourable economic environment, corporate Group net income, and the loyalty bonuses paid to advisory services activities developed further. certain employees.

Fees billed by the Group for these services, particu- Other administrative expenses increased by 23.4% larly by the subsidiary Edmond de Rothschild in 2006. This was mainly due to the increase in logis- Corporate Finance, rose by 27% in 2006. tical resources (mainly real estate) necessitated by the Group's expansion, as well as the rise in marketing Insurance brokerage fees billed by Assurances & and advertising expenses – particularly on the pro- Conseils Saint-Honoré group increased by 16.1% in motion of the Group's asset management activities – 2006 to ? 69.8 million. This increase is mainly attri- and higher selling expenses and variable expenses butable to individual life insurance, which generated related to securities administration resulting from the net revenues 41% higher than in 2005, but also to higher business levels of 2006. the international welfare health sector (+29%, inclu- ding the acquisition of the Canadian company Depreciation and amortization increased by 8.2% Norfolk) and business in France (+11%). Corporate in 2006 to ? 8.8 million. property and casualty insurance, in contrast, saw a slight fall-off in activity. After deducting general expenses, depreciation and amortization, gross operating income amounted to The rise in portfolio and other income over 2005 ? 104.5 million in 2006, compared with ? 68.8 million (+? 3.2 million) primarily resulted from higher in 2005, an increase of 51.9%. earnings from the Group’s available cash. 30•31

NON-OPERATING ITEMS After deducting the share attributable to minority interests of ? 5.7 million (? 4.6 million in 2005), The net change in allowances for possible loan net income for 2006 totaled ? 73.1 million, compared losses, which remained at a low level (-? 0.1 million with ? 36.6 million in 2005, an increase of 99.7%. in 2006), does not call for any particular comment.

The net change in allowances for risks was a net provision of ? 10 million, essentially resulting from new provisions for disputes with third parties (? 8.8 million).

The considerable ? 18.3 million rise in the net exceptional gain on securities transactions for 2006 related mostly to the gain generated by disposal of an equity investment from the Bank’s portfolio (? 15 million).

A net exceptional loss of ? 2.1 million was recorded in 2006, practically identical to 2005. This figure includes exceptional revenues and expenses relating to operations of the previous year.

Employee profit-sharing and incentives totaled ? 5.3 million in 2006, compared with ? 4.3 million in 2005.

Income tax arising partly from the tax consolidation of the parent company and certain subsidiaries amounted to a net charge of ? 32.8 million in 2006 compared with ? 22.6 million in 2005.

The share in net results of companies accounted for by the equity method more than doubled to a net profit of ? 4.9 million in 2006. This item included the contributions by Edmond de Rothschild Limited and Banque de Gestion Edmond de Rothschild Monaco which increased considerably in 2006.

The net gain shown under goodwill amortization for 2006 (? 0.7 million) results from completion of the allocation of goodwill generated on the parent company’s acquisition of an additional 41.75% in the capital of Assurances & Conseils Saint-Honoré. Identification of intangible assets previously included caused an equivalent reduction in goodwill and elimination of the corresponding amortization previously recognized. RESULTS OF CAPITAL MARKET OPERATIONS CAPITAL STOCK AND TREASURY SHARES

Alongside the establishment of a Capital Markets At December 31, 2006, the Company's capital stock Division for cash and portfolio management for third amounted to ? 82,739,820 and was held as follows: parties, capital market operations recorded a third consecutive year of strong increases in transaction Number of shares % volumes in 2006. The profitability of treasury opera- Compagnie Financière Saint-Honoré 4,403,767 79.84 tions thus continued to improve, and risks were again Caisse de dépôt et placement du Québec 577,063 10.46 well contained. La Compagnie Financière Edmond de Rothschild Banque 159,440 2.89 Foreign exchange and currency deposit operations for customers and other banks generated net income of Group employees 306,111 5.55 ? 12.9 million in 2006, a sharp increase (+? 3.4 million) Other minority stockholders 69,607 1.26 over 2005. This reflects the high volume rise in Total 5,515,988 100.00 interbank business and corporate services (+25%), together with the fact that from March 2006, most The par value of each share is ? 15. settlement and delivery circuits were secure thanks to the CLS system. There were no changes in treasury shares held by La Compagnie Financière Edmond de Rothschild Results from the euro treasury business – cash mana- Banque during 2006: gement for the Group's entities and other banks – were stable. The Bank continued its policy of highly Number Unit price Amount selective investments for cash surpluses. of shares (¤) (thousands of ¤) A visible indication of the Group's firm control of Position at December 31, 2005 159,440 80.053 12,764 financial risks was the maximum daily trading loss Position at December 31, 2006 159,440 80.053 12,764 recorded in 2006. It stood at ? 0.054 million, far below the overall authorized risk limit of ? 2.3 million for the period, which itself represents only 1% of the Bank's consolidated equity.

The Capital Markets Division’s main objective for 2007 is to reorganize the trading activity as work is begun on implementation of MiFID (the Markets in Financial Instruments Directive). 32•33

APPENDIX

The table below shows a reconciliation of net ban- king income and gross operating income, as shown in the published consolidated income statement, with total net banking income and gross operating income from the Group's business segments (in thousands of euros):

2006 2005 Net banking income (published) 381,412 Net banking income (published) 292,281 Restatements: Restatements: - Net gain on securities transactions (1,828) - Net loss on securities transactions 116 - Net gain in connection with employee stock purchase options (638) - Net loss incurred in connection with employee stock purchase options 399 - Net increase in provisions 648 - Net increase in provisions 2,361 - Reclassification of banking expenses (4,714) - Reclassification of banking expenses (2,778) - Prior year gains (1,118) - Prior year losses 316 - Other 35 - Other (1,179) Total net banking income from business segments 373,797 Total net banking income from business segments 291,516

2006 2005 Gross operating income (published) 100,805 Gross operating income (published) 57,840 Restatements: Restatements: - Net gain on securities transactions (1,828) - Net loss on securities transactions 116 - Net loss incurred in connection with employee stock purchase options 847 - Net loss incurred in connection with employee stock purchase options 350 - Employee profit-sharing and incentives 5,216 - Employee profit-sharing and incentives 4,261 - Net increase in provisions 1,979 - Net increase in provisions 4,292 - Prior year gains (3,514) - Prior year losses 555 - Other 945 - Other 1,355 Total gross operating income from business segments 104,450 Total gross operating income from business segments 68,769 INVESTMENTS IN SUBSIDIARIES AND AFFILIATES at December 31, 2006 (in euros)

Companies or groups of companies Capital Other Percentage Book value of Outstanding Guarantees Net sales or Net income Dividends stock held stockholders' of capital shares held loans and given by revenues (loss) received by equity held Gross Net advances the Bank for last for last the Bank made by fiscal year fiscal year the Bank

I – DETAILS OF INVESTMENTS (with net book value exceeding 1% of La Compagnie Financière Edmond de Rothschild Banque's capital stock) A - Subsidiaries (at least 50% held) Financière Boréale 1,739,944 38,183 99.96% 2,099,619 2,099,619 164,751,801 - 8,885,180 6,793 - Edmond de Rothschild Asset Management 9,180,000 * 7,546,872 99.99% 9,267,743 9,267,743 - 135,184 173,786,753 28,080,506 23,865,114 Edmond de Rothschild Financial Services 6,000,000 * 1,341,774 91.64% 24,826,571 24,826,571 - - 28,190,816 5,250,432 6,499,985 ERS 6,000,000 (2,710,988) 99.24% 5,954,220 3,864,289 - - 850,334 602,234 - Edmond de Rothschild Multi Management 1,766,770 * 2,098,046 78.05% 1,795,963 1,795,963 - - 43,205,812 12,255,591 6,650,150 Edmond de Rothschild S.G.R. SpA 5,000,000 (5,055,000) 100.00% 5,000,000 5,000,000 5,086,783 272,000 2,166,000 (1,397,217) - Edmond de Rothschild Private Equity Partners 2,700,000 (374,326) 99.99% 2,699,990 2,699,990 1,631,363 - - 3,565,773 2,969,989 Assurances & Conseils Saint-Honoré 7,390,250 5,007,179 92.27% 45,922,293 45,922,293 - 118,351 - 744,222 - B - Affiliates (10 to 50% held) Banque de Gestion Edmond de Rothschild Monaco 12,000,000 14,938,932 45.63% 5,218,330 5,218,330 9,315,000 - 54,750,771 5,501,890 552,032 Edmond de Rothschild Limited ** 1,000,000 ** 23,861,456 20.00% 2,163,678 2,163,678 - - ** 29,992,484 ** 7,425,826 885,348

II – INFORMATION ON OTHER SUBSIDIARIES AND AFFILIATES A – Subsidiaries not included in (I.A.) above - - - 2,933,104 2,896,352 511,075 - - - 151,458 B – Affiliates not included in (I.B.) above French companies (together) - - - 12,909,567 12,600,625 135,166 248,492 - - 1,770,715 Foreign companies (together) - - - 159,837 159,837 - - - - 502,485

* Excluding interim dividends paid in 2006. ** In pounds sterling. 34•35

Book value of Outstanding Guarantees Net sales or Net income Dividends shares held loans and given by revenues (loss) received by Gross Net advances the Bank for last for last the Bank made by fiscal year fiscal year the Bank

2,099,619 2,099,619 164,751,801 - 8,885,180 6,793 - 9,267,743 9,267,743 - 135,184 173,786,753 28,080,506 23,865,114 24,826,571 24,826,571 - - 28,190,816 5,250,432 6,499,985 5,954,220 3,864,289 - - 850,334 602,234 - 1,795,963 1,795,963 - - 43,205,812 12,255,591 6,650,150 5,000,000 5,000,000 5,086,783 272,000 2,166,000 (1,397,217) - 2,699,990 2,699,990 1,631,363 - - 3,565,773 2,969,989 45,922,293 45,922,293 - 118,351 - 744,222 -

5,218,330 5,218,330 9,315,000 - 54,750,771 5,501,890 552,032 2,163,678 2,163,678 - - ** 29,992,484 ** 7,425,826 885,348

2,933,104 2,896,352 511,075 - - - 151,458

12,909,567 12,600,625 135,166 248,492 - - 1,770,715 159,837 159,837 - - - - 502,485 REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

(Translated from the original in French)

Ladies and Gentlemen,

In compliance with the assignment entrusted to us at the Annual General Meeting of Stockholders, we have audited the consolidated financial statements of La Compagnie Financière Edmond de Rothschild Banque for the year ended December 31, 2006, a copy of which is attached hereto.

The consolidated financial statements have been prepared under the responsibility of the Executive Board. Our assignment is to give an opinion on these financial statements on the basis of our audit.

1 – Opinion on the consolidated financial statements

We conducted our audit in accordance with French professional standards; those standards require that we apply procedures to obtain reasonable assurance that the consolidated financial state- ments are free of any material misstatement. An audit consists in examining, on a test basis, evidence supporting the information contained in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made in the preparation of the financial statements, as well as assessing their overall presentation. We believe that our auditing procedures give a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly the financial position of La Compagnie Financière Edmond de Rothschild Banque and its consolidated subsidiaries, their assets and liabilities and the result of their operations at December 31, 2006 and for the year then ended, in accordance with accounting principles generally accepted in France.

2 – Basis of opinion

In accordance with the provisions of article L. 823-9 of the French Commercial Code requiring the auditors to explain the basis of their opinion, we inform you that: - As part of its operations, your Group holds positions in securities and financial instruments. The accounting principles and valuation 36•37

REPORTS OF THE STATUTORY AUDITORS

methods used in connection with these positions are described GENERAL REPORT ON THE PARENT COMPANY under items “Securities”, “Valuation of and income from securities” FINANCIAL STATEMENTS and “Revenues and expenses on futures, swaps and options” of note 2.1 to the consolidated financial statements. As part of our appreciation (Translated from the original in French) of the accounting policies used by the Group, we assessed their Ladies and Gentlemen, appropriateness, and examined their application and the relevance of information disclosed in the notes to the financial statements. In compliance with the assignment entrusted to us at the Annual We also carried out the verifications we considered necessary to General Meeting of Stockholders, we report below for the year ascertain that the valuation of these positions was satisfactory. ended December 31, 2006, on: - The Group establishes allowances for the costs of litigation and - our audit of the parent company financial statements of La disputes (note 3.12) based on its best estimate of the risks incurred. Compagnie Financière Edmond de Rothschild Banque, a copy of Within the framework of our audit, we have examined the informa- which is attached hereto, tion available on the basis of which these estimates were prepared. - the basis for our opinion, and - the specific verifications and other matters required by law. Our assessment of these estimates revealed no elements to suggest that the methods used for determining these accounting estimates The parent company financial statements have been prepared under and the resulting valuations are other than reasonable. the responsibility of the Executive Board. Our assignment is to give an opinion on these financial statements on the basis of our audit. These appreciations are to be considered in the framework of our audit of the consolidated financial statements taken as a whole, 1 – Opinion on the parent company financial statements and thus contributed to the opinion on the consolidated financial statements expressed in the first part of this report. We conducted our audit in accordance with French professional 3 – Specific verifications standards; those standards require that we apply procedures to obtain reasonable assurance that the parent company financial statements are free of any material misstatement. An audit consists We have also verified in accordance with French professional stan- in examining, on a test basis, evidence supporting the information dards the information given in the Group's management report. contained in the financial statements. An audit also includes assessing We have no comments to make as to their fair presentation and the the accounting principles used and significant estimates made in conformity of such information with the consolidated financial the preparation of the financial statements, as well as assessing statements. their overall presentation. We believe that our auditing procedures give a reasonable basis for our opinion. Neuilly-sur-Seine and Paris, March 30, 2007 In our opinion, the parent company financial statements present The Statutory Auditors fairly the financial position of La Compagnie Financière Edmond de Rothschild Banque and its assets and liabilities and the result of PricewaterhouseCoopers Cabinet Didier Kling its operations at December 31, 2006 and for the year then ended in Audit & Associés accordance with accounting principles generally accepted in France. Jacques Lévi Didier Kling 2 – Basis of opinion

In accordance with the provisions of article L. 823-9 of the French Commercial Code requiring the auditors to explain the basis of SPECIAL REPORT ON REGULATED AGREEMENTS their opinion, we inform you that: - As part of its operations, your Company holds positions in securities (Translated from the original in French) and financial instruments. The accounting principles and valuation methods used in connection with these positions are described under Ladies and Gentlemen, items “Securities”, “Valuation of and income from securities” and “Revenues and expenses on futures, swaps and options” of note 1.2 to In our capacity as Statutory Auditors of your Company, we report the parent company financial statements. As part of our appreciation below on regulated agreements. of the accounting policies used by the Company, we assessed their I - Agreements authorized during the year appropriateness, and examined their application and the relevance of information disclosed in the notes to the financial statements. We In accordance with article L. 225-88 of the French Commercial also carried out the verifications we considered necessary to ascertain Code, we have been informed of the agreements that were approved that the valuation of these positions was satisfactory. in advance by the Supervisory Board. - As indicated in note 1.2 to the parent company financial state- ments, allowances are made when the current value of investments Our responsibility does not include identifying any undisclosed in subsidiaries and affiliates is lower than their acquisition cost. agreements. We are required to report to stockholders, based on Insofar as was necessary, we verified during our audit that current the information provided, about the main terms and conditions of values and the assumptions that underlie them do not cast doubt agreements that have been disclosed to us, without commenting on the amounts included in assets in your Company’s balance sheet. on their relevance or substance. Under the provisions of article - Your Company establishes allowances for the costs of litigation R.225-58 of the Commercial Code, it is the responsibility of and disputes (note 2.16) based on its best estimate of the risks stockholders to determine whether the agreements are appropriate incurred. Within the framework of our audit, we have examined and should be approved. the information available on the basis of which these estimates were prepared. We conducted our review in accordance with the standards of our profession applicable in France. Those standards require that we Our assessment of these estimates revealed no elements to suggest carry out the necessary procedures to verify the consistency of the that the methods used for determining these accounting estimates information disclosed to us with the source documents. and the resulting valuations are other than reasonable. 1 - Agreement with SNC Cogifrance Surène concerning the These appreciations are to be considered in the framework of our change of commercial premises into residential property audit of the parent company financial statements taken as a whole, and thus contributed to the opinion on the parent company finan- Type and purpose: cial statements expressed in the first part of this report. Following the authorization granted on March 30, 2006 by the 3 – Specific verifications and information Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque entered into an agreement with its subsidiary We have also carried out the specific verifications required by law, SNC Cogifrance Surène. Under the terms of this agreement, SNC in accordance with French professional standards. Cogifrance Surène has undertaken to change the commercial prem- ises it owns into residential property, in return for an indemnity of ? 2 We have no comments to make regarding the fairness and 1,830 /m from La Compagnie Financière Edmond de Rothschild conformity with the parent company financial statements of the Banque, to enable La Compagnie Financière Edmond de Rothschild information given in the report of the Executive Board and the Banque to obtain a dispensation allowing it to allocate some of its documents addressed to the stockholders relating to the financial own residential property for use as commercial premises. position and the parent company financial statements. Terms: The management report contains no information regarding the No payment was made in application of this agreement in 2006. salaries and benefits paid to members of the management bodies, or the commitments made in their favour when they take up, leave Members of the Supervisory Board and Executive Board concerned: or change their function or subsequently. Messrs Benjamin de Rothschild, Victor Sasson and Compagnie Financière Saint-Honoré, and Mr. Michel Cicurel in his capacity Neuilly-sur-Seine and Paris, March 30, 2007 as this company's permanent representative (these persons are also directors of Cogifrance, corporate manager of SNC Cogifrance The Statutory Auditors Surène).

PricewaterhouseCoopers Cabinet Didier Kling Audit & Associés Jacques Lévi Didier Kling 38•39

2 - Sale of limited partnership shares to Rothschild II - Agreements signed in previous years Continuation Holding AG (RCH) In application of French Commercial Code regulations, we were Type and purpose: advised of the following agreements approved in previous years Following the authorization granted on June 27, 2006 by the which continued to be effective during 2006. Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque entered into an agreement for the sale to 1 - Operating subsidy granted to Le Cercle Edmond de Rothschild Continuation Holding AG of the total investment held Rothschild by La Compagnie Financière Edmond de Rothschild Banque in the capital of Rothschild et Cie Banque. Type and purpose: Following the authorization granted by the Supervisory Board on Terms: December 15, 2005, La Compagnie Financière Edmond de The amount paid in application of this agreement in 2006 was Rothschild Banque signed an agreement on December 15, 2005 ? 18,959,951. with Le Cercle Edmond de Rothschild, granting that company an operating subsidy amounting to ? 15,000. This subsidy is intended Member of the Supervisory Board concerned: to enable the subsidiary to restore its stockholders' equity and pay Mr. Benjamin de Rothschild (also a director of Rothschild its operating charges. Continuation Holding AG). Terms: 3 - Tax consolidation agreement with Edmond de Rothschild This ? 15,000 subsidy was paid in 2006. It will be repaid to La Entreprises Patrimoniales Compagnie Financière Edmond de Rothschild Banque if, and only if, the subsidiary has generated positive net results. Type and purpose: Following the authorization granted on December 12, 2006 by the Supervisory Board, La Compagnie Financière Edmond de 2 - Operating subsidy granted to Edmond de Rothschild Rothschild Banque entered into a tax consolidation agreement with Courtage Services its subsidiary Edmond de Rothschild Entreprises Patrimoniales, with effect as from January 1, 2006. This agreement formally Type and purpose: defines the way La Compagnie Financière Edmond de Rothschild Following the authorization granted by the Supervisory Board on Banque and this subsidiary divide the income tax charge and the tax December 15, 2005, La Compagnie Financière Edmond de savings arising from the tax consolidation amongst themselves. Rothschild Banque signed an agreement on December 15, 2005 with Edmond de Rothschild Courtage Services, granting that Terms: company an operating subsidy amounting to ? 70,000. This sub- No tax was payable by Edmond de Rothschild Entreprises sidy is intended to enable the subsidiary to restore its stockholders' Patrimoniales for 2006. equity and pay its operating charges.

Members of the Executive Board concerned: Terms: Messrs Jean Laurent-Bellue and Patrice Dordet (members of the This ? 70,000 subsidy was paid in 2006. It will be repaid to La Supervisory Board of Edmond de Rothschild Entreprises Compagnie Financière Edmond de Rothschild Banque if, and Patrimoniales). only if, the subsidiary has generated positive net results.

4 - Tax consolidation agreement with Edmond de Rothschild 3 - Tax consolidation agreements with Financière Boréale, EDREP Transactions SH Aurore, Edmond de Rothschild Asset Management, ERS, Le Cercle Edmond de Rothschild, Edmond de Rothschild Type and purpose: Courtage Services and Edmond de Rothschild Corporate Finance Following the authorization granted on December 12, 2006 by the Supervisory Board, La Compagnie Financière Edmond de Type and purpose: Rothschild Banque entered into a tax consolidation agreement Following the authorizations granted on March 25, 2003 and with its subsidiary Edmond de Rothschild EDREP Transactions, December 15, 2005 by the Supervisory Board, La Compagnie with effect as from January 1, 2007. This agreement formally Financière Edmond de Rothschild Banque entered into tax conso- defines the way La Compagnie Financière Edmond de Rothschild lidation agreements with its subsidiaries Financière Boréale, SH Banque and this subsidiary divide the income tax charge and the Aurore, Edmond de Rothschild Asset Management, ERS, Le tax savings arising from the tax consolidation amongst themselves. Cercle Edmond de Rothschild, Edmond de Rothschild Courtage Services and Edmond de Rothschild Corporate Finance. These Terms: agreements formally define the way La Compagnie Financière This agreement had no effect in 2006. Edmond de Rothschild Banque and the abovementioned subsidia- EDREP Transactions is wholly-owned by Edmond de Rothschild ries divide the income tax charge and the tax savings arising from Entreprises Patrimoniales, in which La Compagnie Financière the tax consolidation amongst themselves. Edmond de Rothschild Banque holds more than 5% of the capital. Terms: for business generated. Total commissions received by La The table below shows, for each subsidiary, the amount of tax Compagnie Financière Edmond de Rothschild Banque under this payable for 2006: agreement in 2006 amounted to ? 722,736 net of taxes.

6 - Assistance to and management of Compagnie Financière Subsidiaries Date of Board Date of the Amount of tax Saint-Honoré authorization agreement (in ¤) Financière Boréale March 25, 2003 September 15, 2003 16,250 Type and purpose: SH Aurore March 25, 2003 June 18, 2003 - Under an agreement signed with Compagnie Financière Saint- Edmond de Rothschild Honoré, La Compagnie Financière Edmond de Rothschild Asset Management March 25, 2003 June 23, 2003 15,973,497 Banque carries out the administrative and financial management ERS March 25, 2003 July 25, 2003 2,000 of Compagnie Financière Saint-Honoré. Le Cercle Edmond de Rothschild March 25, 2003 July 25, 2003 - Edmond de Rothschild Terms: Courtage Services March 25, 2003 July 25, 2003 2,502 La Compagnie Financière Edmond de Rothschild Banque invoices Edmond de Rothschild the services rendered to Compagnie Financière Saint-Honoré on Corporate Finance December 15, 2005 December 20, 2005 16,250 the basis of a list of actual costs incurred in the management of its subsidiary during the year. For 2006, the corresponding amount recorded in La Compagnie Financière Edmond de Rothschild 4 - Agency agreement with Edmond de Rothschild Asset Banque's accounts was ? 1,937,500 net of taxes. Management 7 - Commercial agreement with Edmond de Rothschild Type and purpose: Financial Services Following the authorization granted on December 12, 2002 by the Supervisory Board, La Compagnie Financière Edmond de Type and purpose: Rothschild Banque entered into an agency agreement with Following the authorization granted on December 12, 2000 by the Edmond de Rothschild Asset Management on December 16, 2002. Supervisory Board, La Compagnie Financière Edmond de Rothschild Banque entered into a commercial agreement with Terms: Edmond de Rothschild Financial Services, defining the conditions In the course of the Group's relations with external partners who of the services rendered by Edmond de Rothschild Financial market the funds managed by Edmond de Rothschild Asset Services. This agreement took effect as of December 1, 2000. Management, La Compagnie Financière Edmond de Rothschild Three amendments were made to this agreement, on December Banque mandates the same subsidiary to pay these partners the 14, 2001, June 27, 2003 and March 22, 2005. A fourth amend- amount due by the Bank under the relevant partnership agreements. ment was signed on June 27, 2006. La Compagnie Financière Edmond de Rothschild Banque then set- tles the amount concerned by payment in arrears to Edmond de Terms: Rothschild Asset Management, upon presentation of quarterly or Payments by La Compagnie Financière Edmond de Rothschild annual invoices. The remuneration paid by La Compagnie Financière Banque to its subsidiary for services rendered take the form of a Edmond de Rothschild Banque to its subsidiary in application of this placement and negotiation fee, and a consulting fee. In 2006, La ? agreement amounted to 2,825,973 net of taxes for 2006. Compagnie Financière Edmond de Rothschild Banque paid its subsidiary ? 14,326,478 net of taxes, including placement fees of 5 - Commercial agreement with Assurances Saint-Honoré ? 12,682,979, consulting fees of ? 1,599,228 for new customers Patrimoine and consulting fees of ? 44,270 for existing customers.

Type and purpose: 8 - Index swap agreement with Edmond de Rothschild Following the authorization granted by the Supervisory Board on Financial Services December 14, 1999, La Compagnie Financière Edmond de Rothschild Banque signed a commercial agreement on January 11, Type and purpose: 2000 with Assurances Saint-Honoré, with retroactive effect as Following the authorization granted on December 12, 2000 by the from December 31, 1999. In 2005, Assurances Saint-Honoré Supervisory Board, La Compagnie Financière Edmond de contributed part of its assets in the form of one of its business acti- Rothschild Banque entered into an index swap agreement with vities to Assurances Saint-Honoré Patrimoine. Consequently, this Edmond de Rothschild Financial Services, the purpose of the company took over Assurances Saint-Honoré's rights and obliga- transaction being to protect the Bank against any market fluctu- tions under this agreement. ations on structured products issued, taking into account direct and indirect costs related to these instruments. This agreement was Terms: amended on March 22, 2005. Assurances Saint-Honoré Patrimoine passes on commissions to La Compagnie Financière Edmond de Rothschild Banque in return 40•41

Terms: The gain or loss on the swap is calculated at the end of each month, and, in 2006, La Compagnie Financière Rothschild Banque recorded expenses and revenues respectively amounting to ? 1,286,953 and ? 1,207,338 net of taxes for 2006.

9 - Operating subsidy granted to ERS

Type and purpose: Following the authorization granted by the Supervisory Board on December 12, 2000, La Compagnie Financière Edmond de Rothschild Banque signed an agreement on January 23, 2001 with ERS granting that company an operating subsidy. Before 2006, La Compagnie Financière Edmond de Rothschild Banque had paid ERS ? 14,400,000 out of a total authorized amount of ? 14,900,000.

Terms: No further subsidy was paid in 2006.

Neuilly-sur-Seine and Paris, March 30, 2007

The Statutory Auditors

PricewaterhouseCoopers Cabinet Didier Kling Audit & Associés Jacques Lévi Didier Kling FIRST RESOLUTION

The general meeting, having reviewed the report of the Executive Board, the observations of the Supervisory Board and the general report of the Statutory Auditors on the 2006 parent company financial statements, approves the parent company balance sheet and income statement, together with the operations reported therein.

SECOND RESOLUTION

The general meeting, having reviewed the report of the Executive Board, the observations of the Supervisory Board and the report of the Statutory Auditors on the 2006 consolidated financial state- ments, approves the consolidated balance sheet and income statement, together with the operations reported therein.

THIRD RESOLUTION

The general meeting, having reviewed the special report of the Statutory Auditors, approves the agree- ments described in this report. 42•43

RESOLUTIONS

FOURTH RESOLUTION FIFTH RESOLUTION

The general meeting takes note that income available The general meeting re-elects Mr. Claude Janssen as for distribution comprises (in euros): member of the Supervisory Board for a three-year term expiring at the close of the general meeting to Net income for 2006 52,951,266.49 be called to approve the financial statements for the Unappropriated retained earnings of the previous year 4,331,309.23 year 2009.

Appropriation to the legal reserve (127,836.00) SIXTH RESOLUTION Net income available for distribution 57,154,739.72 The general meeting re-elects Mr. Henri-Paul The general meeting resolves to appropriate net Rousseau as member of the Supervisory Board for a income available for distribution, as follows: three-year term expiring at the close of the general meeting to be called to approve the financial state- Payment of a dividend of ¤ 9.60 per share, or total dividends of 52,953,484.80 ments for the year 2009. leaving net income to be carried forward of 4,201,254.92 SEVENTH RESOLUTION

Dividends per share for the three previous years were The general meeting re-elects Mr. Jean Dumoulin as as follows: non-voting member of the Supervisory Board for a Û 6.10 for 2005, Û 4.05 for 2004 and Û 5.80 for 2003. three-year term expiring at the close of the general meeting to be called to approve the financial state- The dividend for 2006 will be payable from June 1, 2007. ments for the year 2009.

Dividends on treasury stock held by La Compagnie EIGHTH RESOLUTION Financière Edmond de Rothschild Banque will be transferred to retained earnings. The general meeting sets the total annual amount of attendance fees to be paid to members of the Supervisory Board at Û 500,000 for the year 2006 and subsequent years. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

CONSOLIDATED BALANCE SHEET AND OFF-BALANCE SHEET ITEMS (in thousands of euros)

Assets December 31, December 31, 2006 2005 Interbank transactions and similar 1,601,420 1,315,205 Transactions with customers 218,177 184,188 Bonds, shares and other debt and equity securities 542,794 659,846 Investments in non-consolidated subsidiaries and affiliates and other long-term investments 35,876 26,080 Fixed assets 116,604 66,421 Goodwill 31,709 50,890 Accruals and other assets 334,301 316,391 Total assets 2,880,881 2,619,021

Liabilities and stockholders' equity December 31, December 31, 2006 2005 Interbank transactions and similar 103,600 83,358 Transactions with customers 1,175,547 968,441 Borrowings represented by securities 872,893 994,862 Accruals and other liabilities 372,071 299,727 Negative goodwill 25 86 Allowances 36,423 13,808 Minority interests 10,786 6,086 Stockholders' equity (excluding fund for general banking risks) 309,536 252,653 • Capital stock 82,740 81,461 • Additional paid-in capital 96,363 89,170 • Retained earnings and other reserves 57,372 45,445 • Net income for the year 73,061 36,577 Total liabilities and stockholders' equity 2,880,881 2,619,021

Commitments and contingencies December 31, December 31, 2006 2005 Commitments given Loan commitments 58,481 56,037 Guarantee commitments 743,100 597,437 Commitments received Guarantee commitments 62,787 72,202 Security commitments 10,000 - 44•45

CONSOLIDATED INCOME STATEMENT (in thousands of euros)

2006 2005 Interest and similar revenues 154,158 179,390 Interest and similar expenses (129,782) (161,391) Dividend income 2,875 1,449 Fee income 407,133 316,225 Fee expenses (87,389) (69,876) Gains on trading securities 11,609 9,698 Gains on short-term investment securities and similar 8,997 9,053 Other banking revenues 17,026 15,028 Other banking expenses (3,215) (7,295) Net banking income 381,412 292,281 General operating expenses (271,516) (226,039) Depreciation, amortization and write-downs (9,091) (8,402) Gross operating income 100,805 57,840 Cost of risk (337) 5,452 Operating income 100,468 63,292 Share in net income of subsidiaries and affiliates accounted for by the equity method 4,805 2,557 Gains on long-lived assets 14,851 971 Income before tax 120,124 66,820 Non-operating loss (6,650) - Income tax (35,423) (22,628) Goodwill amortization 748 (3,021) Minority interests (5,738) (4,594) Net income for the year 73,061 36,577 Net earnings per share – Basic (in euros) 13.45 7.00 Net earnings per share – Diluted (in euros) 13.40 6.85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS at December 31, 2006

The consolidated financial statements of La Compagnie Financière • EDREP Transactions and EdR Real Estate Management, formed in Edmond de Rothschild Banque are prepared in accordance with regula- 2006 and respectively 99.99% and 100.00% held are fully consolidated. tion n° 99-07 of the French Accounting Regulation Committee (Comité • Opticroissance and Omega Financial Solutions respectively 25.00% and de la Réglementation Comptable – CRC). 20.00% held are accounted for by the equity method. They are presented in accordance with CRC regulation n° 2000-04 as amended by CRC regulation n° 2005-05. 1.3. Consolidation principles

NOTE 1 – ACCOUNTING POLICIES - CONSOLIDATION • Year-end

1.1. Consolidation methods The consolidated financial statements are prepared on the basis of the individual financial statements of each Group company at December 31, The consolidated financial statements include the financial statements of 2006, in accordance with the specific relevant regulations for credit insti- La Compagnie Financière Edmond de Rothschild Banque and of all tutions and in accordance with the French general accounting chart for significant subsidiaries in which it has a controlling interest. other companies.

• Fully consolidated companies • Elimination of intercompany transactions

Financial companies controlled by La Compagnie Financière Edmond de All payables, receivables, commitments, revenues and expenses resulting Rothschild Banque are fully consolidated. Full consolidation entails from transactions between fully consolidated companies are eliminated, taking up the financial statements of these companies item by item, eli- as are intercompany profits and losses on sales of assets. minating intercompany transactions and reflecting the minority interests Dividends received from consolidated companies are eliminated from in the result for the year and in equity. consolidated income.

• Companies accounted for by the equity method • Goodwill

In accordance with French accounting regulations, companies over which Goodwill arises when a stockholding is acquired. It is shown as an asset La Compagnie Financière Edmond de Rothschild Banque exercises signi- or in equity, depending on whether it is positive or negative. ficant influence are accounted for by the equity method. When an asset, it is amortized to income over twenty years. There is no Non-financial companies which are not material or which are not inten- offsetting with negative goodwill. ded to be held for the long term are accounted for at cost. Under the equity method, La Compagnie Financière Edmond de • Deferred taxes Rothschild Banque's equity in net assets and results is substituted in the consolidated financial statements for the cost of securities and dividends Deferred taxes, which arise from timing differences between income for received. reporting and tax purposes, are calculated to take into account adjust- ments made in the consolidation. 1.2. Changes concerning consolidated companies

The consolidated financial statements at December 31, 2006 included the following changes concerning consolidated companies: • Norfolk Mobility Benefits Inc., 92.26%-held, and MSH Limited, 92.24%-held, are fully consolidated, 46•47

• Translation of foreign currency financial statements The Group defines restructured loans as loans to counterparties under- going financial difficulties such that the lender is obliged to adjust the ini- The financial statements of foreign companies are translated into euros as tial terms (duration, rate, etc) to enable the counterparty to honour its follows: payment obligations. - balance sheet items (other than stockholders' equity): at official year-end Restructured loans do not therefore include: rates as published by the Bank of France; - loans with terms that have been renegotiated for commercial reasons - items making up stockholders' equity: at historical rates of exchange; with counterparties that have no solvency problems, - income statement items: at average exchange rates for the year. - loans whose theoretical repayment schedule is altered through applica- Translation differences arising from currency fluctuations are included in tion of an option or clause contained in the initial contract (e.g. for tem- consolidated stockholders' equity. porary suspension and deferral of due dates). • Doubtful loans: balance sheet receivables and signed commitments NOTE 2 - OTHER ACCOUNTING POLICIES AND VALUATION METHODS concerning a counterparty are identified as doubtful outstandings in the information system as soon as they bear a clear risk of non-payment. 2.1. Accounting principles and valuation methods A clear risk of non-payment is considered to exist when it becomes pro- bable that a Group entity will not recover all or some of the amounts due • Transactions in foreign currencies under the initial contractual terms of a commitment entered into by a customer, notwithstanding any guarantees or security provided. Transactions in foreign currencies are translated into euros using the offi- The loans or other items concerned are identified either by inclusion in cial rates of exchange as published by the Bank of France at the year-end. specially-created accounts or by means of a tag in the information system. Investments in subsidiaries and affiliates denominated in foreign curren- The Group classifies loans and commitments with a clear risk of non-pay- cies but financed in euros are recorded in the balance sheet at the euro ment as doubtful in each of the following cases: equivalent of their historical cost in foreign currency, using exchange rates - when at least one payment is overdue for three months or more (six prevailing at the date of acquisition. The resulting translation gains or los- months for home purchase loans and real estate leases; nine months for ses are not included in income. loans to local public authorities, depending on the specific characteristics of the loans in question). The only exception to this rule is when specific • Loans and other financing to customers circumstances indicate that non-payment is due to causes unrelated to the debtor's financial position. The Group applies CRC regulation n° 2002-03 of December 12, 2002 as - when the characteristics of a counterparty's position in connection with amended by CRC regulation n° 2005-03 of November 3, 2005 and a loan or commitment are such that, independently of any failure to meet recommendation n° 2002-04 issued by the French National Accounting payment dates, it can be concluded that a clear risk of non-payment Committee (Conseil National de la Comptabilité – CNC) on March 28, exists. This is the case, for instance, when the lender is aware that its 2002 relating to the accounting treatment of credit risks by enterprises counterparty's financial position is poor and there is a resulting risk of regulated by the French Banking and Financial Regulation Committee. non-recovery (for example, when the counterparty is subject to early war- Consequently, more detailed information is provided on counterparty ning procedures under French law). risks and new categories of loans have been created in the financial state- - when there are litigation proceedings between the lender and its custo- ments as follows: mer, for example over indebtedness procedures, judicial administration, • Performing loans: loans and other financing to customers are shown in receivership, court-ordered liquidation, personal bankruptcy, property the balance sheet at nominal value. liquidation, or any summons before an international court. • Overdue loans: payments which are three months or less overdue (six There are two categories of doubtful loans – compromised doubtful months or less in the case of real estate loans) are maintained in perfor- loans and uncompromised doubtful loans: ming loans. Beyond these periods of time, the entire loan is classified as - uncompromised doubtful loans are doubtful loans which do not fulfill doubtful. the criteria for classification as compromised doubtful loans, • Restructured loans: loans restructured as a result of the customer's - compromised doubtful loans are loans to a counterparty whose solvency financial position are re-entered in performing loans if restructured under is such that, after a reasonable period of classification in doubtful loans, market conditions prevailing at the time. Loans restructured under non- no improvement and return to the performing loans category is foreseea- market conditions are included in a specific subcategory of performing ble. Classification under compromised doubtful loans takes place when loans until their final due date. Any principal amount or interest waived, the accelerated payment clause comes into play, or in the case of a lease, whether due or accrued, is charged to income at the time of the restruc- upon cancellation of the lease. Loans of an unlimited term become turing. If, in view of market rates prevailing at the time a loan is restruc- repayable when relations are terminated with the counterparty as notified tured when these are less favourable than the initial terms of the loan, or under the procedures defined in the contract. Any loan included in in view of the initial loan rate otherwise, the restructuring gives rise to a doubtful loans will be automatically classified as a compromised doubtful future interest loss, the discounted variance is recorded as a write-down of loan after one year in the uncompromised doubtful loans category. the loan and included in the cost of risk, and subsequently taken to inte- Any loan returned to the performing loans category is immediately down- rest income over the remaining life of the loan. If the customer does not graded if the borrower fails to make payments as and when due. pay on due dates after the restructured loan has been returned to perfor- Interest ceases to be accrued once the loan is transferred to compromised ming loans, the restructured loan is immediately downgraded. doubtful loans. Disputed loans are loans whose nature or amount only are being contes- • Fixed assets ted, not the solvency of the counterparty. These loans are included in uncompromised doubtful loans. Intangible assets relate primarily to purchased goodwill and market sha- Allowances for clear risk of non-payment: a specific allowance for write- res. Software is amortized over one to three years. down is set up by a charge against income when the probability that all Depreciation of office furniture and equipment, computer hardware, fix- or part of a loan will not be repaid becomes clear. Allowances are deduc- tures, fittings and vehicles is determined using the following rates: ted from amounts outstanding in the financial statements. - straight line method: 10 to 25%, or In accordance with the application date provisions of CRC regulation - reducing balance method: 37.5% or 40% (or, respectively 62.5% or n° 2002-03 as amended concerning the accounting treatment of credit 60% in the case of assets acquired between February 1, 1996 and January risks by enterprises regulated by the French Banking and Financial 31, 1997). Regulation Committee, the Group applies the discounted future cash The building owned by La Compagnie Financière Edmond de Rothschild flow method described in article 13 of this regulation for measurement of Banque is being depreciated over twenty-five years. the write-down. As part of the convergence of French accounting principles towards inter- national financial reporting standards (IFRS), CRC regulation n° 2004-06 • Securities of November 23, 2004, applicable from January 1, 2005 eliminated the possibility of recognizing deferred charges in assets for subsequent amor- The securities portfolio includes principally the following securities issued tization. in France and abroad: Deferred charges must now be recognized: - equity and debt securities; - in assets, if they qualify for definition and recognition as assets or are - French Treasury notes; attributable to the initial cost of the assets, - other negotiable debt instruments; - in expenses in all other cases. - interbank market securities. The Group applies CRC regulation n° 2002-10 of December 12, 2002 Securities are classified according to the purpose for which they were relating to depreciation, amortization and write-down of assets, as amen- acquired and, in accordance with regulation n° 90-01 of the CRBF and ded by CRC regulations n° 2003-07 of December 12, 2003 and CRC CRC regulation n° 2002-03 relating to the determination of credit risks regulation n° 2004-06 of November 23, 2004 on the definition, valuation and the setting up of allowances for possible losses on fixed-income secu- and recognition of assets. rities, the Group recognizes four different categories of securities: trading Tangible assets are recognized at cost (purchase price plus direct ancillary securities, short-term investment securities, long-term investment securi- expenses). ties, and investments in subsidiaries and affiliates. Software is recorded in intangible assets under development until put into use. Trading securities are purchased for resale within a period of not more Tangible and intangible assets qualifying for depreciation or amortization than six months. are depreciated and amortized over their period of use by the company Short-term investment securities are acquired with the intent to hold concerned. them for at least six months, in principle for subsequent resale. Long-term investment securities are intended to be held for the long • Interest and fee income and expenses term, and the interest rate risk is covered either by specific operations or by the borrowings used to finance them. Interest and discounting fees are recorded in the income statement on an The premium or discount representing the difference between cost and accrual basis. redemption value is amortized over the remaining life of the securities. In general, fees are also recorded on an accrual basis. Investments in subsidiaries and affiliates are purchased with the intention of being held for the long term. This category includes all holdings of 5% • Valuation of and income from securities or more. Holdings of less than 5% are also included if the Bank is repre- sented on the Board of Directors or other management bodies, or if there Securities held at year-end are valued as follows: also exists an indirect investment via other Group companies. - Trading securities are valued at market price at year-end. The resulting Securities are shown under the following balance sheet headings: net unrealized gain or loss is included in the income statement. - interbank transactions and similar; - Short-term investment securities are carried at the lower of acquisition - bonds, shares and other debt and equity securities; cost and stock market value (average market price for December); or, in - investments in non-consolidated subsidiaries and affiliates and other the case of unlisted securities, their estimated realizable value. No credit long-term investments. is taken for unrealized gains, but unrealized losses are provided for. The Group has decided not to apply in advance the provisions of CRC - No allowance is made for unrealized losses on long-term investment regulation n° 2005-01 relating to the recognition of securities transac- securities for which the interest rate risk is hedged, when market value tions. falls below book value. No credit is taken for unrealized gains. - Investments in non-consolidated subsidiaries and affiliates are valued at their current value to La Compagnie Financière Edmond de Rothschild Banque. Listed investments are valued using several criteria, including market price. Unrealized gains are not accounted for. An allowance is made in the case of unrealized losses. 48•49

• Revenues and expenses on futures, swaps and options • Commitments for long-service awards

The accounting principles adopted are those defined by the regulations of In accordance with recommendation n° 2003-R.01 of April 1, 2003 the French Banking and Financial Regulation Committee, the instruc- issued by the French National Accounting Committee and CRC regula- tions of the French Banking Commission and the opinions of the French tion n° 2000-06 relating to liabilities, an allowance was set up at year-end National Accounting Council. These principles are based on the type of to cover probable payments to certain current employees (payments made transaction, its purpose and the market on which it is made: at the time of the award of long-service medals). This allowance totaled - Interest rate swaps ? 1,061,000 at December 31, 2006. Revenues and expenses from instruments which are used as a hedge and assigned from the beginning to cover an identifiable item are recognized • Other retirement commitments in the income statement on a symmetrical basis with the revenues and expenses from the hedged item. No provision is made for termination benefits to be paid to retiring - Interest rate futures (notional, Euribor, etc.) employees, except for the following subsidiaries: Edmond de Rothschild Gains and losses resulting from the hedging of transactions on underlying Corporate Finance and Edmond de Rothschild Financial Services. These capital markets are amortized over the remaining maturity of the transac- costs are charged to income when paid. tions hedged. While a contract is still outstanding, one of two accounting methods is • Employee profit-sharing applied: . transactions on organized or similar markets: the gains or losses resulting from Amounts to be paid under the French profit-sharing system are provided valuation of the contract at market are taken into the income statement; for on the basis of an agreement signed within the economic unit formed . private contracts: only unrealized losses are accounted for. by La Compagnie Financière Edmond de Rothschild Banque. - Future rate agreements (FRAs) Income and expenses from FRAs used for hedging are taken to income on • Tax consolidation a symmetrical basis with the revenues and expenses from the hedged ins- trument. In the case of trading transactions, gains and losses are recorded La Compagnie Financière Edmond de Rothschild Banque and certain of in the income statement when the operation is settled. its subsidiaries have opted to form a tax consolidation group. In 2006, the - Options (foreign exchange, interest rate, index and share options) tax consolidation group includes the parent company and eight of its sub- Premiums are recorded in a suspense account when the contract is initiated. sidiaries. The parent company and the subsidiaries have agreed that the When the contract is settled, in the case of hedging transactions, they are advantage or disadvantage arising from the tax consolidation (difference taken to income in the same manner as the results of the transaction being between the consolidated tax charge and the total of the tax charges of the covered; in the case of trading transactions, they are taken to income. companies calculated independently) is taken into account immediately Outstanding trading contracts are valued at market at the balance sheet date. in the parent company's income statement. Any unrealized gain or loss on contracts on organized markets is taken into the income statement. Provisions are set up for unrealized losses on • Deferred taxation private contracts. Deferred taxation arising on timing differences between accounting and • Pension commitments taxable income is accounted for in the income statement and in the balance sheet. In the balance sheet, deferred taxes are included in The French banking industry's own pension system was changed by an Accruals. Deferred taxes are determined using the liability method. Under agreement signed on September 13, 1993 by the French Banking this method, deferred taxes are adjusted when tax rates are changed and Association (AFB). All French banks joined the nation-wide unfunded the ensuing difference is taken to income. Deferred taxes were also adjus- multiemployer plans Agirc and Arrco. ted to include the special contribution based on corporate profits intro- The former pension plan of which La Compagnie Financière Edmond de duced by the law of December 29, 1999 on the financing of the French Rothschild Banque is a member, Caisse de Retraite de la Profession Social Security system. Bancaire (CRPB), continues to exist and to assume various commitments Deferred taxes are recorded only in respect of tax actually saved thanks to set out by the agreement, primarily from its own funds and, where neces- timing differences. sary, through employer contributions payable each year at an average rate which, for the first ten years of application of the 1993 agreement could 2.2. Other accounting matters not exceed 4% of total wages and salaries. La Compagnie Financière Edmond de Rothschild Banque after estima- Discounts and premiums on short-term investment securities are not ting its commitments arising from the change set up an allowance to included in the income statement, although this is permitted by regula- cover these commitments. The initial allowance resulting from the change tion n° 90-01 of the CRBF. Discounts and premiums on long-term to the new system was made by transfer from retained earnings. investment securities are included in the determination of net income Subsequent adjustments to the allowance are charged or credited to using an actuarial method. income. NOTE 3 - ANALYSIS OF BALANCE SHEET ITEMS Long-term investments with a book value of ? 35,871,000 matured in 2006. Total treasury shares held at December 31, 2006 amounted to ? ? 3.1. Interbank transactions and similar (in thousands of euros) 13,556,000 including 792,000 held by Edmond de Rothschild Multi Management (2005: ? 749,000) and ? 12,764,000 held by La Dec. 31, 2006 Dec. 31, 2005 Compagnie Financière Edmond de Rothschild Banque. There were no changes in treasury shares held by La Compagnie Cash, due from banks and postal accounts 15,034 9,813 Financière Edmond de Rothschild Banque during 2006. Treasury notes and similar securities 146,326 108,042 Unrealized gains on shares and equity securities held as short-term invest- Due from banks ? ? • Demand deposits 470,525 272,972 ments were 9.37 million at December 31, 2006 compared with 7.24 • Time deposits 956,986 918,158 million at December 31, 2005. Sub-total 1,588,871 1,308,985 Included in short-term investment securities are units and shares in Related receivables 12,549 6,220 mutual funds as follows (in thousands of euros): Total 1,601,420 1,315,205 Dec. 31, 2006 Dec. 31, 2005 Allowances - - French Foreign Total French Foreign Total Net 1,601,420 1,315,205 funds funds funds funds Funds which reinvest all their income 123,872 3,008 126,880 94,107 1,000 95,107 3.2. Transactions with customers (in thousands of euros) Other funds 2,331 - 2,331 3,649 - 3,649 Total 126,203 3,008 129,211 97,756 1,000 98,756 Dec. 31, 2006 Dec. 31, 2005 Other loans and financing 3.4. Investments in non-consolidated subsidiaries and • Loans 45,567 52,108 affiliates and other long-term investments Sub-total 45,567 52,108 (in thousands of euros) Overdrafts * 171,831 130,131 Total 217,398 182,239 Dec. 31, 2006 Dec. 31, 2005 Doubtful loans ** 4,756 6,137 Gross Allowances Net Gross Allowances Net Allowances (3,977) (4,188) Banks * 133 - 133 4,100 - 4,100 Net *** 218,177 184,188 Other financial companies ** 21,817 - 21,817 18,450 - 18,450

* No customer loans classified as doubtful loans at December 31, 2005 were re-entered in perfor- Other companies *** 14,351 (425) 13,926 3,782 (252) 3,530 ming loans during 2006. Total 36,301 (425) 35,876 26,332 (252) 26,080 ** At December 31, 2006, compromised doubtful loans amounted to ? 4,247,000 and were pro- vided for to the extent of ? 3,702,000, resulting in a net total of ? 545,000. * Including in 2005 ? 3,967,000 relating to the Group's investment in Rothschild et Compagnie *** Including accrued interest and other related receivables totaling ? 2,089,000 in 2006 and Banque; this investment was sold during the first half of 2006. ? 1,215,000 in 2005. ** Including ? 8,737,000 relating to the Group's investment in Edmond de Rothschild Limited (2005: ? 7,250,000) and ? 13,066,000 relating to Banque de Gestion Edmond de Rothschild 3.3. Bonds, shares and other debt and equity securities Monaco (2005: ? 11,186,000) (companies accounted for by the equity method). *** Including ? 141,000 relating to the investment in Sofinergie 5 (2005: ? 1,401,000) ; (in thousands of euros) ? 844,000 relating to Sofinergie 4, identical to 2005; and ? 10,689,000 relating to an investment in Paris Orléans. Dec. 31, 2006 Dec. 31, 2005 Debt Equity Total Debt Equity Total 3.5. Intangible assets (in thousands of euros) Trading 1,196 28 1,224 - 28 28 Short-term investment 18,215 137,521 155,736 31,815 109,146 140,961 At Jan. 1, Additions/ Disposals/ Other At Dec. 31, 2006 Provisions Releases changes 2006 Long-term investment 369,722 - 369,722 502,220 - 502,220 made to income Treasury shares - 13,556 13,556 - 13,513 13,513 Gross value Sub-total 389,133 151,105 540,238 534,035 122,687 656,722 Purchased goodwill and market shares Related receivables 4,369 - 4,369 3,974 - 3,974 (including leasehold right) * 25,904 51,082 - (210) 76,776 Total 393,502 151,105 544,607 538,009 122,687 660,696 Other intangible assets 33,677 1,790 (235) 396 35,628 Allowances - (1,813) (1,813) - (850) (850) Intangible assets under development 811 1,640 (105) (1,190) 1,156 Net 393,502 149,292 542,794 538,009 121,837 659,846 Total 60,392 54,512 (340) (1,004) 113,560 Amortization and write-downs No Trading securities were reclassified as Short-term investment securities Other intangible assets (28,443) (3,330) 115 615 (31,043) during 2006. Total (28,443) (3,330) 115 615 (31,043) Included under Short-term investment securities are ? 2.13 million of Net book value 31,949 51,182 (225) (389) 82,517 undated subordinated notes issued by Financière Eurafrique. * An intangible asset of ? 72.6 million resulting from the final valuation of assets and liabilities At December 31, 2006, the net book value of listed securities and unlis- related to the Assurances & Conseils Saint-Honoré subgroup is considered as market shares, with ted securities was ? 243.64 million and ? 299.15 million respectively. application of impairment tests in the event there is evidence of a loss in value, in accordance with The difference between the net book value of long-term investment secu- the CNC Emergency Committee’s opinion 2006-E of December 6, 2006. rities and their redemption value is ? 124,220,000. 50•51

3.6. Tangible assets (in thousands of euros) 3.9. Interbank transactions and similar (in thousands of euros)

At Jan. 1, Additions/ Disposals/ Other At Dec. 31, Dec. 31, 2006 Dec. 31, 2005 2006 Provisions Releases changes 2006 Due to banks made to income • Demand deposits 75,126 61,104 Gross value • Time deposits and borrowings 28,474 22,254 Land 11,434 - - - 11,434 Total 103,600 83,358 Buildings 20,431 - - - 20,431 Computer equipment 12,684 1,962 (63) 73 14,656 3.10. Transactions with customers (in thousands of euros) Fixtures and fittings and other tangible assets 28,603 2,364 (1,567) 763 30,163 Tangible assets in progress 269 1,612 - (914) 967 Dec. 31, 2006 Dec. 31, 2005 Total 73,421 5,938 (1,630) (78) 77,651 Demand Time Total Demand Time Total Depreciation and write-downs Special savings accounts Buildings (14,289) (844) - - (15,133) • Special savings accounts 552 27,282 27,834 499 26,023 26,522 Computer equipment (8,402) (2,343) 69 26 (10,650) • Accrued interest and related payables 14 - 14 15-15 Fixtures and fittings and other tangible assets (16,258) (2,574) 1,035 16 (17,781) Sub-total 566 27,282 27,848 514 26,023 26,537 Total (38,949) (5,761) 1,104 42 (43,564) Other deposits Net book value 34,472 177 (526) (36) 34,087 • Demand deposits 321,875 - 321,875 183,590 - 183,590 • Time deposits - 77,763 77,763 - 62,569 62,569 3.7. Goodwill (in thousands of euros) • Securities delivered under repurchase agreements 648,116 97,270 745,386 514,207 180,586 694,793 • Other 1,452 - 1,452 163 199 362 Positive goodwill Negative goodwill • Accrued interest and Gross value at beginning of year 54,830 199 related payables 548 675 1,223 115 475 590 Accumulated amortization (3,940) (113) Sub-total 971,991 175,708 1,147,699 698,075 243,829 941,904 Net value at beginning of year 50,890 86 Total 972,557 202,990 1,175,547 698,589 269,852 968,441 Increase during the year * (20,203) (173) Provision for amortization 1,022 112 3.11. Borrowings represented by securities Net goodwill at end of year 31,709 25 (in thousands of euros)

* At December 31, 2006, the Group had the final valuation figures for identifiable assets and lia- bilities related to the Assurances & Conseils Saint-Honoré subgroup, which it took over in 2005. Dec. 31, 2006 Dec. 31, 2005 This value reflects the existence of non-amortizable intangible assets previously included in good- Non-negotiable certificates of deposit 156 156 will. At the year-end, these non-amortizable intangible assets were recorded in the consolidated Interbank market securities and negotiable balance sheet at fair value at the date of the takeover. The revaluation difference resulted in a ? 46,807,000 reduction in the previously recorded consolidated goodwill. debt instruments 736.489 816.454 In compliance with section 221 of CRC regulation 99-07, the revaluation difference on non- Bond borrowings 32.537 38.990 amortisable intangible assets compared to the share of equity previously consolidated under the Sub-total 769.182 855.600 equity method was recorded directly in consolidated reserves. Accrued interest and related payables 103.711 139.262 3.8. Accruals - Other assets and other liabilities Total 872.893 994.862 (in thousands of euros) 3.12. Allowances (in thousands of euros) Dec. 31, 2006 Dec. 31, 2005 Assets Liabilities Assets Liabilities At Jan. 1, Provisions Allowances Releases Other At Dec. 31, Option premiums 11,403 11,043 2,446 2,446 2006 made used to income 2006 Deferred taxes 6,077 4,979 4,575 6,497 Allowances for commitments Items under collection 14,011 - 2,460 - Allowances for pension commitments 542 100 - 248 - 394 Guarantee deposits paid 2,457 - 2,702 - Allowances for long-service medals 923 160 22 - - 1,061 Deferred charges 15,579 - 35,700 - Allowances for possible losses Income to be received 167,118 - 172,555 - on treasury shares 1,455 1,486 - - - 2,941 Deferred income - 22,429 - 24,081 Other allowances for commitments 3,969 15,438 680 2,640 - 16,087 Charges payable - 149,180 - 114,413 Sub-total 6,889 17,184 702 2,888 - 20,483 Other assets and other liabilities 117,656 184,440 95,953 152,290 Allowances for risks Total 334,301 372,071 316,391 299,727 Allowances for litigation costs 5,821 9,781 488 621 - 14,493 Allowances for possible losses on short-term investment securities 225 1,213 395 831 - 212 Other allowances for risks 873 372 - 10 - 1,235 Sub-total 6,919 11,366 883 1,462 - 15,940 Total 13,808 28,550 1,585 4,350 - 36,423 An additional complementary pension plan was set up in December NOTE 4 - ANALYSIS OF INCOME STATEMENT ITEMS 2004. It applies to a category of senior employees for whom the existing basic and complementary pension plans provide a significantly lower rate 4.1. Interest and similar revenues (in thousands of euros) of income replacement than for other categories of personnel. This plan is a defined-benefit plan expressed in terms of the overall final 2006 2005 pension (limited in time) or in terms of the top-up pension it provides in On transactions with banks 112,767 129,161 addition to the basic pensions. In 2006, there was a change to this plan, concerning the base salary used to On transactions with customers 8,155 5,629 calculate the maximum level of benefits under the plan; the actuarial present On bonds and other debt securities 23,067 19,770 value of the liability, calculated at the rate of 4.25% at December 31, Other interest and similar revenues 10,169 24,830 2005 thus declined from Û 21,596,000 to Û 15,829,000 at December 31, Total 154,158 179,390 2006 using a rate of 4.50%. Under the preferential method the Group has opted not to apply, an 4.2. Interest and similar expenses (in thousands of euros) allowance of Û 12,616,000 would have been established at December 31, 2006 (compared to Û 12,825,000 in 2005). The plan assets are valued at 2006 2005 Û 3,116,000 at December 31, 2006 and the net residual past service cost On transactions with banks 73,362 42,163 Û is 97,000. On transactions with customers 24,732 17,744 Allowances do not include any amounts for termination benefits to be On bonds and other debt securities 23,371 89,627 ? paid to retiring employees ( 2,348,000 in 2006). Other interest and similar expenses 8,317 11,857 The allowances for pension commitments were reduced in 2006 based on Total 129,782 161,391 information received from the Caisse de Retraite de la Profession Bancaire (CRPB) concerning commitments at December 31, 2006. Treasury shares were awarded to employees free of charge. An allowance 4.3. Dividend income for possible losses on these shares is recognized for the period concerned by the allocation of such shares. This item includes mostly dividends received from non-consolidated sub- sidiaries and affiliates. 3.13. Changes in stockholders’ equity and minority interests (in thousands of euros) 4.4. Fee income and expenses (in thousands of euros)

At Jan.1, Capital Appropriation Other At Dec. 31, 2006 2005 2006 increase of net income changes 2006 Income Expenses Income Expenses Stockholders' equity Cash and interbank transactions - 149 - 115 • Capital stock 81,461 1,279 - - 82,740 Transactions with customers 21 - 35 - • Additional paid-in capital 89,170 7,193 - - 96,363 • Retained earnings 45,445 - 4,504 7,423 57,372 Securities transactions - 501 - 244 • 2005 net income 36,577 - (36,577) - - Foreign exchange transactions 11 - 10 - Sub-total 252,653 8,472 (32,073) 7,423 236,475 Commitments and contingencies 2006 net income - - - - 73,061 • Commitments on financial futures 120 84 22 15 Total 252,653 8,472 (32,073) 7,423 309,536 Financial services 405,775 86,470 316,611 68,167 Minority interests Release from (increase in) provisions 1,206 185 (453) 1,335 • Retained earnings 1,492 - (388) 3,944 5,048 Total 407,133 87,389 316,225 69,876 • 2005 net income 4,594 - (4,594) - - • 2006 net income - - - - 5,738 4.5. Gains and losses on trading securities Total 6,086 - (4,982) 3,944 10,786 (in thousands of euros)

2006 2005 Gains Losses Net Gains Losses Net Trading securities 435 - 435 327 1 326 Foreign exchange transactions 67,437 56,608 10,829 42,072 32,811 9,261 Transactions in financial futures 412 67 345 1,607 1,496 111 Total 68,284 56,675 11,609 44,006 34,308 9,698 52•53

4.6. Gains and losses on short-term investment and similar 4.10. Cost of risk (in thousands of euros) securities (in thousands of euros) 2006 2005 2006 2005 Provisions for possible losses on loans (762) (359) Gains Losses Net Gains Losses Net Net losses on receivables written off - (296) Gains or losses on sale 10,542 595 9,947 10,006 7,943 2,063 Releases from allowances for possible losses Releases from allowances on loans no longer required 94 63 (provisions) for write-downs 49 1,012 (963) 4,829 41 4,788 Releases from allowances - 6,043 Releases from allowances 1,226 1,213 13 2,683 481 2,202 Amounts recovered on receivables written off 331 1 Total 11,817 2,820 8,997 17,518 8,465 9,053 Total (337) 5,452

4.7. Other banking revenues (in thousands of euros) 4.11. Non-operating loss (in thousands of euros)

2006 2005 An exceptional loss of ? 6,650,000 was recognized in 2006 correspon- Expenses transferred to other companies 8,622 6,160 ding to a provision related to a litigation in process. Miscellaneous revenues 5,344 3,366 Other 3,060 5,502 4.12. Income tax (in thousands of euros) Total 17,026 15,028 2006 2005 4.8. Other banking expenses (in thousands of euros) Net income for the year before minority interests 78,799 41,171 Income tax charge 35,423 22,628 Income before tax 114,222 63,799 2006 2005 Provisions and expenses not deductible for tax purposes 1,886 5,745 Revenues transferred to other companies 981 411 Share in results of a joint venture (GIE) - 390 Other 2,234 6,884 Dividends received from affiliated companies 278 (827) Total 3,215 7,295 Share in results of companies accounted for by the equity method (4,787) (2,557) 4.9. General operating expenses (in thousands of euros) Miscellaneous non-taxable revenues (5,610) (405) Items taxed at reduced rates (15,024) (2,118) 2006 2005 Pre-tax result taxable at standard rate 90,965 64,027 Employee compensation 93,487 85,571 Standard rate 34.43% 34.93% Pension costs 9,765 7,856 Pre-tax result taxable at reduced rate 15,024 2,118 Social security and similar costs 30,276 31,592 Reduced rate 8.26% 15.23% Employee incentives 1,296 1,361 Theoretical tax charge 32,561 22,687 Employee profit-sharing 4,595 3,204 Tax losses not recognized arising in the year 1,586 721 Payroll taxes 8,490 6,454 Use of tax losses not recognized in the previous year (1,092) (800) Provisions for personnel expenses 15,884 3,442 Increase in (release from) allowances set up Releases from allowances for personnel expenses (1,522) (740) for tax purposes 1,932 (36) Sub-total - Personnel expenses 162,271 138,740 Other 436 56 Taxes other than on income 10,301 8,654 Income tax charge 35,423 22,628 Rental expenses 12,204 10,959 • Current 36,515 21,982 Cost of external services 84,351 66,578 • Deferred (3,024) 682 • Increase in (release from) allowances set up Traveling expenses 1,584 1,207 for tax purposes 1,932 (36) Miscellaneous operating expenses 199 237 Provisions for administrative expenses 2,344 1,552 Releases from allowances for administrative expenses (1,738) (1,888) Sub-total - Administrative expenses 109,245 87,299 Total 271,516 226,039 NOTE 5 - ADDITIONAL INFORMATION ON COMMITMENTS 5.2. Fair value of financial instruments (in thousands of euros) AND CONTINGENCIES The fair value of financial instruments is calculated daily by reference to market value as part of the measurement of counterparty risks. 5.1. Transactions in financial instruments (in thousands of euros) Positive fair value Negative fair value 2006 2005 2006 2005 Transactions in interest rate futures are concluded for hedging purposes. Organized and similar markets Foreign exchange options may be entered into as part of the management Futures of a specialized portfolio, or are matched. • Currency swaps 7,369 15,463 (7,535) (16,127) Commitments relating to financial instruments are as follows (nominal Private contracts value of contracts, in thousands of euros): Futures • Interest rate swaps 76,918 86,344 (32,465) (32,779) At December 31, 2006 Hedging Trading Total Options Purchases Sales Purchases Sales Purchases Sales • Indices 11,358 2,454 (11,198) (2,454) Organized and similar markets Futures • Currency swaps 1,707,593 1,785,228 - - 1,707,593 1,785,228 Total 1,707,593 1,785,228 - - 1,707,593 1,785,228 Private contracts Futures • Interest rate swaps 1,292,872 706,463 - - 1,292,872 706,463 Options • Other contracts 55,193 59,952 - - 55,193 59,952 Total 1,348,065 766,415 - - 1,348,065 766,415

At December 31, 2005 Hedging Trading Total Purchases Sales Purchases Sales Purchases Sales Organized and similar markets Futures • Currency swaps 1,216,031 1,079,928 - - 1,216,031 1,079,928 Total 1,216,031 1,079,928 - - 1,216,031 1,079,928 Private contracts Futures • Interest rate swaps 1,279,749 807,154 - - 1,279,749 807,154 Options • Other contracts 8,737 8,737 - - 8,737 8,737 Total 1,288,486 815,891 - - 1,288,486 815,891

The residual values of the above commitments are analyzed as follows (in thousands of euros):

At December 31, 2006 Less than one year 1 to 5 years More than 5 years Purchases Sales Purchases Sales Purchases Sales Organized or similar markets 1,686,501 1,785,228 15,034 - 6,058 - Private contracts 442,402 645,133 517,574 58,979 388,089 62,303

At December 31, 2005 Less than one year 1 to 5 years More than 5 years Purchases Sales Purchases Sales Purchases Sales Organized or similar markets 1,195,261 1,075,984 14,029 3,944 6,741 - Private contracts 442,346 708,153 567,757 107,738 278,383 - 54•55

NOTE 6 - ADDITIONAL INFORMATION ON COUNTERPARTY RISKS NOTE 7 - ADDITIONAL INFORMATION ON BANKING ACTIVITIES ON DERIVATIVES 7.1. Analysis of net banking income by business segment 6.1. Types of risk and method of calculation (in thousands of euros)

Credit risk equivalents on derivatives and the effect of netting agreements The table below shows a reconciliation between net banking income as are estimated in accordance with the principles established by regulations shown in the published statement of income and total net banking n° 91-05 and 95-02 of the French Banking and Financial Regulation income from the Group's business segments: Committee, and by instruction n° 96-06 of the French Banking Commission. 2006 2005 The positive replacement value of credit risk equivalents represents the Net banking income 381,412 292,281 fair market value of the contracts before taking account of netting agree- Net loss (gain) on securities transactions (1,828) 116 ments and guarantees received. Net loss (gain) incurred in connection with The gross add-on is based on the notional amount of the contracts mul- employee stock purchase options (638) 399 tiplied by a weighting factor. The net add-on is calculated using the for- Increase in provisions 648 2,361 mula prescribed by instruction n° 96-06, as follows: Reclassification of banking expenses (4,714) (2,778) net add-on = 0.4 x gross add-on + 0.6 x NGR x gross add-on, Prior year losses (gains) (1,118) 316 where NGR represents the ratio between net replacement cost and gross Other 35 (1,179) replacement cost, for all transactions entered into under legally valid net- Total net banking income from business segments 373,797 291,516 ting agreements. Asset management 260,116 199,462 Weighting factors used for each type of counterparty (20% for banks and Interest earning operations 8,768 5,913 50% for customers) are consistent with those prescribed by regulation Capital market operations 14,317 10,962 n° 91-05. Corporate advisory services 12,091 9,521 6.2. Analysis of weighted credit risk equivalents by type of Insurance brokerage 69,805 60,138 counterparty (in thousands of euros) Securities portfolio and other 8,700 5,520

Gross weighted risk Net weighted risk In a favourable business and market environment, revenues from the 2006 2005 2006 2005 Group’s asset management activities continued to show significant ? Banks 32,084 32,528 17,197 11,868 growth. Net revenues amounted to 260.1 million, a rise of 30.4% in Customers 22,862 20,352 22,639 18,855 2006, after a 38.5% increase in 2005. The private asset management and collective investment businesses had another year of highly sustained activity levels in 2006 thanks to increa- 6.3. Effect of netting on total weighted credit risk equiva- sed net inflows (? 2.6 billion), both with private customers (+16.3%) and lents by type of counterparty (in thousands of euros) in collective investment vehicles including multi-management, which registered a particularly high increase (+40%) in net inflows. Overall, the Effect of netting Effect of collateralization Group’s assets under management grew by 21.6%, with the additional 2006 2005 2006 2005 benefit of rises on the financial markets. Banks 7,781 8,098 7,106 12,562 Thanks to higher inflows, market performances and a larger portion of Customers 223 1,497 - - equity and diversified collective investment vehicles, gross fund manage- ment fees earned by the Bank’s subsidiaries continued their significant rises (+36.2% in 2006). Including insurance brokerage fees, total recurring fees based on assets managed accounted for 74% of consolidated net banking income. Due to the high inflows into investment funds, front-end fees also rose once more in 2006 (+16.3%). Good financial market performances in 2006 also contributed to the significant growth in stock market trading fees (+38.4% compared to 18.3% in 2005). Income from structured interest rate and equity products, including the share of minority interests in Edmond de Rothschild Financial Services and its asset management firm, rose by 5.6%. This category of assets continued to expand in 2006, but the results generated by operations on the secondary market were considerably lower than in 2005. Interest earning operations (deposits and credits), now mostly related to assets managed for private customers, accounted for only 2.3% of conso- lidated net banking income.

Revenues from capital market operations carried out by La Compagnie NOTE 8 - CONSOLIDATED COMPANIES Financière Edmond de Rothschild Banque, mainly focusing on broke- rage, particularly for customers, increased substantially in 2006 (+30.6%) Effective interest % Control % and totaled 3.8% of consolidated banking income. at December 31, at December 31, Most of this increase concerned foreign exchange activities (+35.9%), lar- 2006 2005 2006 2005 gely due to the rising volume of foreign exchange transactions. Fully consolidated companies The results from euro treasury and trading operations, meanwhile, remai- Holding company ned practically stable. • Financière Boréale ** 99.96 99.96 99.96 99.96 In a favourable economic environment, corporate advisory services acti- Investment companies vities developed further. • Edmond de Rothschild Financial Services 91.64 76.20 91.64 76.20 Fees billed by the Group for these services, particularly by the subsidiary • Edmond de Rothschild S.I.M. SpA * 99.99 99.99 100.00 100.00 Edmond de Rothschild Corporate Finance, rose by 27% in 2006. Management companies • Edmond de Rothschild Asset Management ** 99.99 99.99 99.99 99.99 Insurance brokerage fees billed by Assurances & Conseils Saint-Honoré • RFS Gestion 91.64 76.20 99.99 99.99 ? group increased by 16.1% in 2006 to 69.8 million. This increase is • Edmond de Rothschild Multi Management 80.15 80.83 80.15 80.83 mainly attributable to individual life insurance, which generated net reve- • Edmond de Rothschild S.G.R. SpA * 100.00 99.70 100.00 99.70 nues 41% higher than in 2005, but also to the international welfare • Edmond de Rothschild Private Equity Partners 99.99 99.99 99.99 99.99 health sector (+29%, including the acquisition of the Canadian company • Edmond de Rothschild Investment Partners 71.29 74.77 71.29 74.78 Norfolk) and business in France (+11%). Property and casualty insu- • Edmond de Rothschild Capital Partners 60.00 60.00 60.00 60.00 • EdR Real Estate Management * 100.00 - 100.00 - rance, in contrast, saw a slight fall-off in activity. • UK Private Equity Partners Ltd * 99.99 99.99 100.00 100.00 The rise in portfolio and other income over 2005 (+? 3.2 million) pri- • Edmond de Rothschild Private Equity Select LLP * 75.00 75.00 75.00 75.00 marily resulted from higher earnings from the Group’s available cash. Advisory companies • Edmond de Rothschild Corporate Finance ** 99.99 99.99 99.99 99.99 7.2. Determination of business segment contributions • Edmond de Rothschild Entreprises Patrimoniales ** 99.99 99.99 100.00 100.00 • EDREP Transactions 99.99 - 100.00 - Contributions to net banking income are determined as follows: • Edmond de Rothschild Investment Services Limited * 67.00 67.00 67.00 67.00 - Asset management: net fee income earned on asset management activities; Insurance companies - Commercial banking: net interest margin earned on loans and deposits • Edmond de Rothschild Courtage Services ** 98.89 98.89 100.00 100.00 • Assurances & Conseils Saint-Honoré 92.27 92.23 92.27 92.23 to and from customers, taking account in particular of internal refinan- • Assurances Saint-Honoré 92.22 92.18 99.94 99.91 cing contracts existing between commercial banking departments and • Mobility Saint-Honoré 92.24 92.10 99.99 99.88 euro treasury departments; • Mobility Saint-Honoré Canada * 92.26 92.16 100.00 100.00 - Income from euro and foreign currency operations includes the income • MSH Limited * 92.24 - 100.00 - or loss on refinancing operations (at money market rates or at the rates of • Norfolk Mobility Benefits Inc. * 92.26 - 100.00 - • Continental Média Assurance 92.22 92.18 100.00 100.00 internal contracts) with other interbank activities within the Group. • Assurances Saint-Honoré Patrimoine 92.22 92.18 100.00 100.00 • Ingénierie Monétique et Bancaire 92.25 92.15 100.00 100.00 Other • Le Cercle Edmond de Rothschild ** 99.24 99.24 100.00 100.00 • ERS ** 99.24 99.24 99.24 99.24 Companies accounted for by the equity method Bank • Banque de Gestion Edmond de Rothschild Monaco 45.63 46.00 45.63 46.00 Investment company • Edmond de Rothschild Limited * 20.00 20.00 20.00 20.00 Advisory company • Opticroissance 25.00 - 25.00 - Other • Omega Financial Solutions 18.33 - 20.00 -

* Foreign company. ** Included in the tax consolidation group in 2006. 56•57

NOTE 9 - EMPLOYEES

2006 2005 Average number of employees in French companies 964 930 • Specialized staff 357 371 • Executives and senior management 607 559 Average number of employees in foreign companies 109 58 Total number of employees 1.073 988

NOTE 10 - OTHER INFORMATION

The financial statements of La Compagnie Financière Edmond de Rothschild Banque are included in the consolidated financial statements of Compagnie Financière Saint-Honoré using the full consolidation method. PARENT COMPANY FINANCIAL STATEMENTS AND NOTES

PARENT COMPANY BALANCE SHEET AND OFF-BALANCE SHEET ITEMS (in thousands of euros)

Assets December 31, 2006 December 31, 2005 Cash, due from banks and postal accounts 15,032 9,810 Due from banks 1,416,621 1,194,955 Transactions with customers 397,124 340,144 Bonds and other debt securities 376,001 504,527 Shares and other equity securities 20,429 20,071 Investments in affiliates and other long-term investments 20,999 15,003 Investments in subsidiaries 97,516 82,146 Intangible assets 5,113 5,018 Premises and equipment 28,574 29,176 Treasury shares 12,764 12,764 Other assets 56,759 34,006 Accruals 234,911 245,419 Total assets 2,681,843 2,493,039

Liabilities and stockholders' equity December 31, 2006 December 31, 2005 Due to banks 88,361 68,097 Transactions with customers 1,187,656 979,597 Borrowings represented by securities 884,107 1,010,379 Other liabilities 112,373 86,363 Accruals 106,569 93,301 Allowances 34,275 16,151 Stockholders' equity (excluding fund for general banking risks) 268,502 239,151 • Capital stock 82,740 81,461 • Additional paid-in capital 96,363 89,170 • Appropriated retained earnings 32,117 32,096 • Unappropriated retained earnings 4,331 3,395 • Net income for the year 52,951 33,029 Total liabilities and stockholders' equity 2,681,843 2,493,039

Commitments and contingencies December 31, 2006 December 31, 2005 Commitments given Loan commitments 59,495 56,046 Guarantee commitments 743,372 597,710 Commitments received Guarantee commitments 62,787 72,202 Security commitments 10,000 - 58•59

PARENT COMPANY INCOME STATEMENT (in thousands of euros)

2006 2005 Interest and similar revenues 158,308 184,157 Interest and similar expenses (133,931) (170,656) Dividend income 44,882 31,922 Fee income 81,099 61,087 Fee expenses (22,686) (15,497) Gains on trading securities 11,267 9,466 Gains on short-term investment securities and similar 1,263 415 Other banking revenues 41,395 32,172 Other banking expenses (4,992) (6,721) Net banking income 176,605 126,345 General operating expenses (123,249) (97,921) Depreciation, amortization and write-downs (5,951) (5,430) Gross operating income 47,405 22,994 Cost of risk 213 5,401 Operating income 47,618 28,395 Gains on long-lived assets 15,810 2,460 Income before tax 63,428 30,855 Non-operating loss (6,633) (3) Income tax (3,844) 2,177 Net income for the year 52,951 33,029 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS at December 31, 2006

NOTE 1 – ACCOUNTING POLICIES • Restructured loans: loans restructured as a result of the customer's financial position are re-entered in performing loans if restructured under 1.1. General market conditions prevailing at the time. Loans restructured under non- market conditions are included in a specific subcategory of performing The parent company financial statements of La Compagnie Financière loans until their final due date. Any principal amount or interest waived, Edmond de Rothschild Banque are prepared in accordance with regula- whether due or accrued, is charged to income at the time of the restruc- tion n° 99-04 of the French Accounting Regulation Committee (Comité turing. If, in view of market rates prevailing at the time a loan is restruc- de la Réglementation Comptable – CRC) tured when these are less favourable than the initial terms of the loan, or They are presented in accordance with CRC regulation n° 2000-03 as in view of the initial loan rate otherwise, the restructuring gives rise to a amended by CRC regulation n° 2005-04. future interest loss, the discounted variance is recorded as a write-down of the loan and included in the cost of risk, and subsequently taken to inte- 1.2. Accounting principles and valuation methods rest income over the remaining life of the loan. If the customer does not pay on due dates after the restructured loan has been returned to perfor- • Transactions in foreign currencies ming loans, the restructured loan is immediately downgraded. La Compagnie Financière Edmond de Rothschild Banque defines Transactions in foreign currencies are translated into euros using the offi- restructured loans as loans to counterparties undergoing financial difficul- cial rates of exchange as published by the Bank of France at the year-end. ties such that the lender is obliged to adjust the initial terms (duration, Investments in subsidiaries and affiliates denominated in foreign curren- rate, etc) to enable the counterparty to honour its payment obligations. cies but financed in euros are recorded in the balance sheet at the euro Restructured loans do not therefore include: equivalent of their historical cost in foreign currency, using exchange rates - loans with terms that have been renegotiated for commercial reasons prevailing at the date of acquisition. The resulting translation gains or los- with counterparties that have no solvency problems, ses are not included in income. - loans whose theoretical repayment schedule is altered through applica- tion of an option or clause contained in the initial contract (e.g. for tem- • Loans and other financing to customers porary suspension and deferral of due dates). • Doubtful loans: balance sheet receivables and signed commitments La Compagnie Financière Edmond de Rothschild Banque applies CRC concerning a counterparty are identified as doubtful outstandings in the regulation n° 2002-03 of December 12, 2002 as amended by CRC regulation information system as soon as they bear a clear risk of non-payment. n° 2005-03 of November 3, 2005 and recommendation n° 2002-04 issued A clear risk of non-payment is considered to exist when it becomes pro- by the French National Accounting Committee (Conseil National de la bable that the Bank will not recover all or some of the amounts due under Comptabilité – CNC) on March 28, 2002 relating to the accounting treat- the initial contractual terms of a commitment entered into by a customer, ment of credit risks by enterprises regulated by the French Banking and notwithstanding any guarantees or security provided. Financial Regulation Committee. Consequently, more detailed informa- The loans or other items concerned are identified either by inclusion in tion is provided on counterparty risks and new categories of loans have specially-created accounts or by means of a tag in the information system. been created in the financial statements as follows: La Compagnie Financière Edmond de Rothschild Banque classifies loans • Performing loans: loans and other financing to customers are shown in and commitments with a clear risk of non-payment as doubtful in each the balance sheet at nominal value. of the following cases: • Overdue loans: payments which are three months or less overdue (six - when at least one payment is overdue for three months or more (six months or less in the case of real estate loans) are maintained in perfor- months for home purchase loans and real estate leases; nine months for ming loans. Beyond these periods of time, all loans and other financing loans to local public authorities, depending on the specific characteristics granted to the customer concerned are classified as doubtful. of the loans in question). The only exception to this rule is when specific circumstances indicate that non-payment is due to causes unrelated to the debtor's financial position. 60•61

- when the characteristics of a counterparty's position in connection with Securities are classified according to the purpose for which they were a loan or commitment are such that, independently of any failure to meet acquired and, in accordance with regulation n° 90-01 of the CRBF and payment dates, it can be concluded that a clear risk of non-payment CRC regulation n° 2002-03 relating to the determination of credit risks exists. This is the case, for instance, when the Bank is aware that its coun- and the setting up of allowances for possible losses on fixed-income secu- terparty's financial position is poor and there is a resulting risk of non- rities, the Bank recognizes four different categories of securities: trading recovery (for example, when the counterparty is subject to early warning securities, short-term investment securities, long-term investment securi- procedures under French law). ties, and investments in subsidiaries and affiliates. - when there are litigation proceedings between the Bank and its custo- Trading securities are purchased for resale within a period of not more mer, for example over indebtedness procedures, judicial administration, than six months. receivership, court-ordered liquidation, personal bankruptcy, property Short-term investment securities are acquired with the intent to hold liquidation, or any summons before an international court. them for at least six months, in principle for subsequent resale. There are two categories of doubtful loans – compromised doubtful Long-term investment securities are intended to be held for the long loans and uncompromised doubtful loans: term, and the interest rate risk is covered either by specific operations or - Uncompromised doubtful loans are doubtful loans which do not fulfill by the borrowings used to finance them. the criteria for classification as compromised doubtful loans, The premium or discount representing the difference between cost and - Compromised doubtful loans are loans to a counterparty whose sol- redemption value is amortized over the remaining life of the securities. vency is such that, after a reasonable period of classification in doubtful Investments in subsidiaries and affiliates are purchased with the intention loans, no return to the performing loans category is foreseeable. of being held for the long term. This category includes all holdings of 5% Classification under compromised doubtful loans takes place when the or more. Holdings of less than 5% are also included if the Bank is repre- accelerated payment clause comes into play, or in the case of a lease, upon sented on the Board of Directors or other management bodies, or if there cancellation of the lease. also exists an indirect investment via other Group companies. - Loans of an unlimited term become repayable when relations are termi- Securities are shown under the following balance sheet headings: nated with the counterparty as notified under the procedures defined in - Treasury notes and similar securities; the contract. Any loan included in doubtful loans will be automatically - bonds and other debt securities; classified as a compromised doubtful loan after one year in the uncom- - shares and other equity securities; promised doubtful loans category. - investments in affiliates and other long-term investments Any loan returned to the performing loans category is immediately down- - investments in subsidiaries; graded to the category of compromised doubtful loan if the customer fails - treasury shares. to make payments as and when due. La Compagnie Financière Edmond de Rothschild Banque has decided Interest ceases to be accrued once the loan is transferred to compromised not to apply in advance the provisions of CRC regulation n° 2005-01 doubtful loans. relating to the recognition of securities transactions. Disputed loans are loans whose nature or amount only are being contes- ted, not the solvency of the counterparty. These loans are included in • Fixed assets uncompromised doubtful loans. Allowances for clear risk of non-payment: a specific allowance for write- Intangible assets relate primarily to purchased software which is amorti- down is set up by a charge against income when the probability that all zed over one to three years. or part of a loan will not be repaid becomes clear. Allowances are deduc- Depreciation of office furniture and equipment, computer hardware, fix- ted from amounts outstanding in the financial statements. tures, fittings and vehicles is determined using the following rates: In accordance with the application date provisions of CRC regulation - straight line method: 10 to 25%, or n° 2002-03 as amended concerning the accounting treatment of credit - reducing balance method: 37.5% or 40% (or, respectively 62.5% or risks by enterprises regulated by the French Banking and Financial 60% in the case of assets acquired between February 1, 1996 and January Regulation Committee, La Compagnie Financière Edmond de Rothschild 31, 1997). Banque applies the discounted future cash flow method described in The building owned by La Compagnie Financière Edmond de Rothschild article 13 of this regulation for measurement of the write-down. Banque is being depreciated over twenty-five years. As part of the convergence of French accounting principles towards inter- • Securities national financial reporting standards (IFRS), CRC regulation n° 2004-06 of November 23, 2004, applicable from January 1, 2005 eliminated the The securities portfolio includes principally the following securities issued possibility of recognizing deferred charges in assets for subsequent amor- in France and abroad: tization. - equity and debt securities; Deferred charges must now be recognized: - French Treasury notes; - in assets, if they qualify for definition and recognition as assets or are - other negotiable debt instruments; attributable to the initial cost of the assets, - interbank market securities. - in expenses in all other cases. La Compagnie Financière Edmond de Rothschild Banque applies CRC regulation n° 2002-10 of December 12, 2002 as amended by CRC regu- lation n° 2003-07 of December 12, 2003 relating to depreciation, amorti- zation and write-down of assets, and regulation n° 2004-06 of November 23, 2004 on the definition, valuation and recognition of assets. Tangible assets are recognized at cost (purchase price plus direct ancillary - Options (foreign exchange, interest rate, index and share options) expenses). Premiums are recorded in a suspense account when the contract is initiated. Intangible assets are mainly comprised of software which is recorded in When the contract is settled, in the case of hedging transactions, they are intangible assets under development until put into use. taken to income in the same manner as the results of the transaction being Tangible and intangible assets qualifying for depreciation or amortization covered; in the case of trading transactions, they are taken to income. are depreciated and amortized over their period of use by the company Outstanding trading contracts are valued at market at the balance sheet date. concerned. Any unrealized gain or loss on contracts on organized markets is taken into the income statement. Provisions are set up for unrealized losses on • Interest and fee income and expenses private contracts.

Interest and discounting fees are recorded in the income statement on an • Pension commitments accrual basis. In general, fees are also recorded on an accrual basis. The French banking industry's own pension system was changed by an agreement signed on September 13, 1993 by the French Banking • Valuation of and income from securities Association (AFB). All French banks joined the nation-wide unfunded multiemployer plans Agirc and Arrco. Securities held at year-end are valued as follows: The former pension plan of which the Bank is a member, Caisse de - Trading securities are valued at market price at year-end. The resulting Retraite de la Profession Bancaire (CRPB), continues to exist and to net unrealized gain or loss is included in the income statement. assume various commitments set out by the agreement, primarily from its - Short-term investment securities are carried at the lower of acquisition own funds and, where necessary, through employer contributions payable cost and stock market value (average market price for December); or, in each year at an average rate which, for the first ten years of application of the case of unlisted securities, their estimated realizable value. No credit the 1993 agreement could not exceed 4% of total wages and salaries. is taken for unrealized gains, but unrealized losses are provided for. La Compagnie Financière Edmond de Rothschild Banque after estima- - No allowance for write-down is made for unrealized losses on long-term ting its commitments arising from the change set up an allowance to investment securities for which the interest rate risk is hedged, when mar- cover these commitments. ket value falls below book value. No credit is taken for unrealized gains. The initial allowance resulting from the change to the new system was - Investments in subsidiaries and affiliates are valued at their current value made by transfer from retained earnings. Subsequent adjustments to the to La Compagnie Financière Edmond de Rothschild Banque. Listed allowance are charged or credited to income. investments are valued using several criteria, including market price. Unrealized gains are not accounted for. An allowance for write-down is • Commitments for long-service awards made in the case of unrealized losses. In accordance with recommendation n° 2003-R.01 of April 1, 2003 • Revenues and expenses on futures, swaps and options issued by the French National Accounting Committee and CRC regula- tion n° 2000-06 relating to liabilities, an allowance was set up at year-end The accounting principles adopted are those defined by the regulations of to cover probable payments to certain current employees (payments made the French Banking and Financial Regulation Committee, the instruc- at the time of the award of long-service medals). This allowance totaled tions of the French Banking Commission and the opinions of the French ? 712,000 at December 31, 2006. National Accounting Council. These principles are based on the type of transaction, its purpose and the market on which it is made: • Other retirement commitments - Interest rate swaps Revenues and expenses from instruments which are used as a hedge and No provision is made for termination benefits to be paid to retiring assigned from the beginning to cover an identifiable item are recognized employees. These costs are charged to income when paid. in the income statement on a symmetrical basis with the revenues and expenses from the hedged item. • Income tax - Interest rate futures (notional, Euribor, etc.) Gains and losses resulting from the hedging of transactions on underlying Income tax is determined taking account of the tax consolidation group capital markets are amortized over the remaining maturity of the transac- formed by La Compagnie Financière Edmond de Rothschild Banque and tions hedged. certain of its subsidiaries. While a contract is still outstanding, one of two accounting methods is applied: Under the agreements signed between the parent company and the sub- . transactions on organized or similar markets: the gains or losses resulting sidiaries in this connection, the parent company records the full impact from valuation of the contract at market are taken into the income statement; of the tax consolidation in its income statement. The tax group includes . private contracts: only unrealized losses are accounted for. eight subsidiaries in 2006. - Future rate agreements (FRAs) Income and expenses from FRAs used for hedging are taken to income on • Employee profit-sharing a symmetrical basis with the revenues and expenses from the hedged ins- trument. In the case of trading transactions, gains and losses are recorded Amounts to be paid under the French profit-sharing system are provided in the income statement when the operation is settled. for on the basis of an agreement signed within the economic unit formed by La Compagnie Financière Edmond de Rothschild Banque. 62•63

1.3. Other accounting matters NOTE 2 - ANALYSIS OF BALANCE SHEET ITEMS

Discounts and premiums on short-term investment securities are not 2.1. Due from banks (in thousands of euros) included in the income statement, although this is permitted by regula- tion n° 90-01 of the CRBF. Dec. 31, 2006 Dec. 31, 2005 Discounts and premiums on long-term investment securities are included Demand Time Total Demand Time Total in the determination of net income using an actuarial method. Overdrafts 101,928 - 101,928 72,673 - 72,673 Loans 349,541 288,903 638,444 202,043 303,157 505,200 Participating loans - 16 16 - 613 613 Securities received under resale agreements - 668,064 668,064 - 614,208 614,208 Sub-total 451,469 956,983 1,408,452 274,716 917,978 1,192,694 Related receivables 277 7,892 8,169 51 2,210 2,261 Total 451,746 964,875 1,416,621 274,767 920,188 1,194,955

2.2. Transactions with customers (in thousands of euros)

Dec. 31, 2006 Dec. 31, 2005 Other loans and financing • Loans 47,456 56,335 • Items not charged to specific accounts 5 3 • Securities received under resale agreements 94,122 88,825 Sub-total 141,583 145,163 Overdrafts (1) 254,762 193,032 Total 396,345 338,195 Doubtful receivables (2) 4,756 6,137 Allowances (2) (3,977) (4,188) Total (3) 397,124 340,144

(1) No customer loans classified as doubtful loans at December 31, 2005 were re-entered in perfor- ming loans during 2006. (2) At December 31, 2006, compromised doubtful loans amounted to Û 4,247,000 and were pro- vided for to the extent of Û 3,702,000, resulting in a net total of Û 545,000. (3) Including accrued interest and other related receivables totaling Û 3,113,000 in 2006 and Û 1,707,000 in 2005. Amounts eligible for refinancing with the ECB totaled Û 265,000 at December 31, 2006, unchan- ged from December 31, 2005.

2.3. Bonds and other debt securities (in thousands of euros)

Dec. 31, 2006 Dec. 31, 2005 Trading 1,196 - Short-term investment 2,593 2,583 Long-term investment 367,824 497,982 Sub-total 371,613 500,565 Related payables 4,388 3,962 Total 376,001 504,527

No securities changed category during 2006. At December 31, 2006, the total net book value of listed securities and unlisted securities was Û 123.93 million and Û 252.07 million respectively. Included under Short-term investments are Û 2.13 million of undated subordinated notes issued by Financière Eurafrique. Long-term investments with a book value of Û 33,807,000 matured in 2006. The difference between the net book value of long-term investment secu- rities and their redemption value is Û 124,220. Unrealized losses on long-term investments totaled Û 154,870 at December 31, 2006. 2.4. Shares and other equity securities (in thousands of euros) List of subsidiaries: - Edmond de Rothschild Asset Management Dec. 31, 2006 Dec. 31, 2005 - Financière Boréale Trading Short-term Total Trading Short-term Total - Edmond de Rothschild Corporate Finance investment investment - Edmond de Rothschild Financial Services Securities held 28 22,209 22,237 28 20,886 20,914 - ERS Allowances - (1,808) (1,808) - (843) (843) - Edmond de Rothschild S.G.R. SpA Total 28 20,401 20,429 28 20,043 20,071 - Edmond de Rothschild S.I.M. SpA Unrealized capital gains (1) - 6,128 6,128 - 4,272 4,272 - Edmond de Rothschild Multi Management - Edmond de Rothschild Private Equity Partners (1) Difference between cost and market value. - Edmond de Rothschild Investment Partners - Edmond de Rothschild Investment Services Limited No securities changed category during 2006. - Assurances & Conseils Saint-Honoré At December 31, 2006, the total net book value of listed and unlisted - Edmond de Rothschild Entreprises Patrimoniales securities was Û 6.70 million and Û 13.73 million respectively. - EdR Real Estate Management Included in short-term investment securities are units and shares in mutual funds as follows (in thousands of euros): 2.7. Intangible assets (in thousands of euros)

Dec. 31, 2006 Dec. 31, 2005 At Jan. 1, Additions/ Disposals/ Other At Dec. 31, French Foreign Total French Foreign Total 2006 Provisions Releases changes 2006 funds funds funds funds made to income Funds which reinvest all their income 12,698 1,198 13,896 9,494 1,000 10,494 Gross value Other funds 2-22-2Purchased goodwill Total 12,700 1,198 13,898 9,496 1,000 10,496 (including leasehold right) 1,861 - - - 1,861 Other intangible assets 22,284 507 - 1,190 23,981 Intangible assets under development 634 1,270 - (1,211) 693 2.5. Investments in affiliates and other long-term investments (in thousands of euros) Total 24,779 1,777 - (21) 26,535 Amortization and write-downs Dec. 31, 2006 Dec. 31, 2005 Other intangible assets (19,761) (1,665) - 4 (21,422) Gross Allowances Net Gross Allowances Net Total (19,761) (1,665) - 4 (21,422) Investments Net book value 5,018 112 - (17) 5,113 • in banks 7,735 - 7,735 11,696 - 11,696 • in other companies 13,812 (346) 13,466 3,648 (173) 3,475 2.8. Tangible assets (in thousands of euros) Sub-total 21,547 (346) 21,201 15,344 (173) 15,171 Translation adjustment (202) - (202) (168) - (168) At Jan. 1, Additions/ Disposals/ Other At Dec. 31, Total 21,345 (346) 20,999 15,176 (173) 15,003 2006 Provisions Releases changes 2006 made to income At December 31, 2006, the total net book value of listed and unlisted Gross value securities was Û 10.72 million and Û 10.28 million respectively. Land 11,434 - - - 11,434 Major investments in subsidiaries and affiliates are listed on pages 34 and Buildings 20,431 - - - 20,431 35. Computer equipment 10,469 1,304 (47) 92 11,818 Fixtures and fittings and other 2.6. Investments in subsidiaries (in thousands of euros) tangible assets 19,991 839 (269) 821 21,382 Tangible assets in progress 269 1,612 - (913) 968 Dec. 31, 2006 Dec. 31, 2005 Total 62,594 3,755 (316) - 66,033 Gross Allowances Net Gross Allowances Net Depreciation and write-downs Financial and non-financial Buildings (14,288) (845) - - (15,133) companies 99,592 (2,090) 97,502 84,829 (2,691) 82,138 Computer equipment (6,819) (1,896) 60 - (8,655) Translation adjustment 14 - 14 8 - 8 Fixtures and fittings and other Total 99,606 (2,090) 97,516 84,837 (2,691) 82,146 tangible assets (12,311) (1,545) 189 (4) (13,671) Total (33,418) (4,286) 249 (4) (37,459) The total net book value of the above investments is made up of unlisted Net book value 29,176 (531) (67) (4) 28,574 securities. 64•65

2.9. Treasury shares 2.13. Due to banks (in thousands of euros)

La Compagnie Financière Edmond de Rothschild Banque has acquired Dec. 31, 2006 Dec. 31, 2005 its own shares in the amount of Û 12.76 million, classified as a short-term Demand Time Total Demand Time Total investment. Deposits 55,760 - 55,760 24,085 - 24,085 These shares are for present and future attributions to certain employees Borrowings 3,724 28,016 31,740 21,513 22,095 43,608 free of charge. Sub-total 59,484 28,016 87,500 45,598 22,095 67,693 There were no changes in treasury shares during 2006. Related payables 512 349 861 300 104 404 Total 59,996 28,365 88,361 45,898 22,199 68,097 Number of shares Unit price Amount (thousands of euros) Position at December 31, 2006 159,440 80.053 12,764 2.14. Transactions with customers (in thousands of euros)

2.10. Other assets and other liabilities (in thousands of euros) Dec. 31, 2006 Dec. 31, 2005 Demand Time Total Demand Time Total Special savings accounts Dec. 31, 2006 Dec. 31, 2005 • Special savings accounts 552 27,282 27,834 499 26,023 26,522 Assets Liabilities Assets Liabilities • Accrued interest and related Option premiums 11,403 11,043 2,446 2,446 payables 14 - 14 16 - 16 Other 45,356 (1) 101,330 31,560 (1) 83,917 Sub-total 566 27,282 27,848 515 26,023 26,538 Total 56,759 112,373 34,006 86,363 Other deposits • Demand deposits 329,797 - 329,797 189,728 - 189,728 (1) Liabilities for Edmond de Rothschild Financial Services securities borrowed and sold to • Time deposits - 81,936 81,936 - 65,983 65,983 employees as part of an employee share ownership plan were cancelled in 2006. • Securities delivered under repurchase agreements 648,116 97,270 745,386 515,777 180,586 696,363 2.11. Accruals (in thousands of euros) • Other 1,452 - 1,452 191 199 390 • Accrued interest and related Dec. 31, 2006 Dec. 31, 2005 payables 554 683 1,237 120 475 595 Assets Liabilities Assets Liabilities Sub-total 979,919 179,889 1,159,808 705,816 247,243 953,059 Items under collection 14,012 - 2,460 - Total 980,485 207,171 1,187,656 706,331 273,266 979,597 Deferred charges 36,076 - 34,523 - Income to be received 178,554 - 199,607 - 2.15. Borrowings represented by securities Deferred income - 21,523 - 22,910 (in thousands of euros) Charges payable - 77,966 - 56,391 Other 6,269 7,080 8,829 14,000 Dec. 31, 2006 Dec. 31, 2005 Total 234,911 106,569 245,419 93,301 Non-negotiable certificates of deposit 156 156 Interbank market securities and negotiable instruments 747,689 831,954 2.12. Long-term investments (in thousands of euros) Bond borrowings 32,537 38,990 Sub-total 780,382 871,100 Accrued interest and related payables 103,725 139,279 At Jan. 1, Acquisitions/ Divestments/ Other At Dec. 31, 2006 Provisions Releases changes 2006 Total 884,107 1,010,379 made to income Gross book value 2.16. Allowances (in thousands of euros) Bonds and other debt securities 497,982 1,092,503 (1,222,661) - 367,824 Investments in affiliates and At Jan. 1, Provisions Allowances Releases Other At Dec. 31, other long-term investments 15,176 11,637 (5,468) - 21,345 2006 made used to income 2006 Investments in subsidiaries 84,837 14,980 (211) - 99,606 Allowances for commitments Total 597,995 1,119,120 (1,228,340) - 488,775 Allowances for pension commitments 219 - - (219) - - Allowances Allowances for long-service medals 650 84 (22) - - 712 Investments in affiliates and Allowances for possible losses on other long-term investments (173) (184) 11 - (346) treasury shares 910 1,272 - - - 2,182 Investments in subsidiaries (2,691) - 601 - (2,090) Other allowances for commitments 9,441 9,741 (180) (147) 39 18,894 Total (2,864) (184) 612 - (2,436) Sub-total 11,220 11,097 (202) (366) 39 21,788 Net book value Allowances for risks Bonds and other debt securities 497,982 1,092,503 (1,222,661) - 367,824 Allowances for litigation costs 3,809 7,706 (201) (21) 412 11,705 Investments in affiliates and Other allowances for risks 1,122 111 - - (451) 782 other long-term investments 15,003 11,453 (5,457) - 20,999 Sub-total 4,931 7,817 (201) (21) (39) 12,487 Investments in subsidiaries 82,146 14,980 390 - 97,516 Total 16,151 18,914 (403) (387) - 34,275 Total 595,131 1,118,936 (1,227,728) - 486,339 An additional complementary pension plan was set up in December At December 31, 2006, the Company's capital stock amounted to 2004. It applies to a category of senior employees for whom the existing Û 82,739,820.00, divided into 5,515,988 shares of Û 15 par value each, basic and complementary pension plans provide a significantly lower rate and was held as follows: of income replacement than for other categories of personnel. This plan is a defined-benefit plan expressed in terms of the overall final Number of shares % held pension (limited in time) or in terms of the top-up pension it provides in Compagnie Financière Saint-Honoré 4,403,767 79.84% addition to the basic pensions. Caisse de dépôt et placement du Québec 577,063 10.46% In 2006, there was a change to this plan, concerning the base salary used to La Compagnie Financière Edmond de Rothschild Banque 159,440 2.89% calculate the maximum level of benefits under the plan; the actuarial present Group employees 306,111 5.55% value of the liability, calculated at the rate of 4.25% at December 31, Other minority stockholders 69,607 1.26% Û Û 2005 thus declined from 21,596,000 to 15,829,000 at December 31, Total 5,515,988 100.00% 2006 using a rate of 4.50%. Under the preferential method the Bank has opted not to apply, an allo- wance of Û 12,616,000 would have been established at December 31, Net income available for distribution comprises (in euros): 2006 (compared to Û 12,825,000 in 2005). The plan assets are valued at Û 3,116,000 at December 31, 2006 and the net residual past service cost Net income for 2006 52,951,266 is Û 97,000. Unappropriated retained earnings at the end of the year 4,331,310 Allowances do not include any amounts for termination benefits to be paid Appropriation to the legal reserve (127,836) to retiring employees (Û 1,691,000 in 2006 against Û 1,618,000 in 2005). Net income available for distribution 57,154,740 Treasury shares were awarded to employees free of charge. An allowance for possible losses on these shares is recognized for the period concerned Net income available for distribution is appropriated as follows (in euros): by the allocation of such shares. Allowances for banking risks amounted to Û 4,770,000 at December 31, Payment of a dividend of ¤ 9.60 per share *, or total dividends of 52,953,485 2006 (Û 4,518,000 at December 31, 2005). Leaving net income to be carried forward of 4,201,255

2.17. Appropriated retained earnings (in thousands of euros) * On shares carrying full dividend rights.

Dec. 31, 2006 Dec. 31, 2005 2.19. Transactions with subsidiaries (in thousands of euros) Legal reserve 8,147 8,126 Regulated reserves 152 152 Dec. 31, 2006 Dec. 31, 2005 Other reserves 23,818 23,818 Assets Total 32,117 32,096 Transactions with customers 172,996 150,008 Liabilities 2.18. Changes in stockholders' equity (in thousands of euros) Transactions with customers 13,055 10,690 Borrowings represented by securities 5,408 12,013 Capital Additional Appropriated Unappro- Net Total stock paid in retained priated income 2.20. Analysis of certain assets and liabilities according capital earnings retained to remaining term to maturity at December 31, 2006 earnings (in thousands of euros) Stockholders' equity at January 1, 2006 81,461 89,170 32,096 3,395 33,029 239,151 Less than 3 months 1 to More than Total Capital increase 1,279 7,193 - - - 8,472 3 months to 1 year 5 years 5 years Net income for the year Assets before appropriation - - - - 52,951 52,951 Due from banks 1,206,022 209,054 1,545 - 1,416,621 Dividends - - 21 936 (33,029) (32,072) Transactions with customers 293,335 15,600 31,245 56,944 397,124 Other movements ------Bonds and other debt securities 136,703 187,328 30,400 21,570 376,001 Stockholders' equity at December 31, 2006 82,740 96,363 32,117 4,331 52,951 268,502 Total 1,636,060 411,982 63,190 78,514 2,189,746 Liabilities Due to banks 86,546 16 - 1,799 88,361 Transactions with customers 1,074,261 12,791 40,326 60,278 1,187,656 Borrowings represented by securities 198,123 117,736 313,274 254,974 884,107 • Non-negotiable certificates of deposit 160 - - - 160 • Interbank market securities and negotiable debt instruments 197,963 117,736 313,274 214,484 843,457 • Bond borrowings - - - 40,490 40,490 Total 1,358,930 130,543 353,600 317,051 2,160,124 66•67

NOTE 3 – ANALYSIS OF INCOME STATEMENT ITEMS 3.6. Gains and losses on short-term investment and similar securities (in thousands of euros) 3.1. Interest and similar revenues (in thousands of euros) 2006 2005 2006 2005 Gains Losses Net Gains Losses Net On transactions with banks 113,979 130,376 Losses on sale - 5 (5) - 7,718 (7,718) On transactions with customers 12,580 9,571 Gains on sale 2,232 - 2,232 1,083 - 1,083 On bonds and other debt securities 15,204 12,516 Releases from allowances (provisions) Other interest and similar revenues 16,545 31,694 for write-downs 48 1,012 (964) 4,825 41 4,784 Total 158,308 184,157 Releases from allowances - - - 2,269 - 2,269 Other - - - - 3 (3) Total 2,280 1,017 1,263 8,177 7,762 415 3.2. Interest and similar expenses (in thousands of euros)

2006 2005 3.7. Other banking revenues (in thousands of euros) On transactions with banks 74,570 48,276 On transactions with customers 24,878 17,896 2006 2005 On bonds and other debt securities 23,745 89,792 Expenses transferred to other companies 5,867 4,936 Other interest and similar expenses 10,738 14,692 Miscellaneous revenues 28,322 21,959 Total 133,931 170,656 Other 7,210 5,276 Releases from allowances (provisions) (4) 1 Total 41,395 32,172 3.3. Dividend income (in thousands of euros)

2006 2005 3.8. Other banking expenses (in thousands of euros) Shares and other equity securities 1,030 512 Investments in affiliates and other long-term investments 3,250 1,538 2006 2005 Investments in subsidiaries 40,602 29,872 Revenues transferred to other companies 4,441 3,641 Total 44,882 31,922 Other 969 2,148 Releases from allowances (provisions) (418) 932 Total 4,992 6,721 3.4. Fee income and expenses (in thousands of euros)

2006 2005 3.9. General operating expenses (in thousands of euros) Income Expenses Income Expenses Cash and interbank transactions - 107 - 102 2006 2005 Transactions with customers 23 - 37 - Employee compensation 38,740 37,390 Foreign exchange transactions 12 - 11 - Pension costs 5,947 5,126 Commitments and contingencies Social security and similar costs 12,164 13,076 • Commitments on financial futures 120 84 22 15 Employee incentives 1,070 1,070 Financial services 80,974 22,495 61,535 15,380 Employee profit-sharing 2,173 1,735 Provisions (30) - (518) - Payroll taxes 5,051 4,011 Total 81,099 22,686 61,087 15,497 Provisions for personnel expenses 10,136 1,049 Releases from allowances for personnel expenses (241) (668) 3.5. Gains and losses on trading securities Sub-total - Personnel expenses 75,040 62,789 (in thousands of euros) Taxes other than on income 3,200 1,788 Rental expenses 10,316 9,642 2006 2005 Cost of external services 34,276 23,292 Gains Losses Net Gains Losses Net Traveling expenses 463 394 Trading securities 423 - 423 327 - 327 Miscellaneous operating expenses 30 - Foreign exchange transactions 67.020 56.113 10.907 40.270 31.205 9.065 Provisions for administrative expenses 24 16 Transactions in financial futures 4 67 (63) 1.499 1.496 3 Releases from allowances for administrative expenses (100) - Releases from allowances - - - 71 - 71 Sub-total - Administrative expenses 48,209 35,132 Total 67.447 56.180 11.267 42.167 32.701 9.466 Total 123,249 97,921 3.10. Cost of risk (in thousands of euros) NOTE 4 – ADDITIONAL INFORMATION ON BANKING ACTIVITIES

2006 2005 4.1. Analysis of net banking income by business segments Provisions for possible losses on loans (239) (288) (in thousands of euros) Net losses on receivables written off - (507) Releases from allowances for possible losses The table below shows a reconciliation between net banking income as on loans no longer required 121 152 shown in the published statement of income and total net banking Releases from allowances - 6.043 income from the Bank's business segments: Amounts recovered on receivables written off 331 1 Total 213 5,401 2006 2005 Net banking income 176,605 126,345 Allowances for possible losses on loans used in 2006 totaled Û 407,000. Net (gain) loss on securities transactions (1,511) 299 Net loss incurred in connection with employee 3.11. Gains and losses on long-lived assets stock purchase options - 399 (in thousands of euros) Increase in (release from) provisions (22) 2,240 Reclassification of banking expenses (1,237) (1,143) 2006 2005 Other (540) 115 Gains on sales of tangible and intangible assets - 9 Total net banking income from business segments 173,295 128,255 Gains on sale of long-term investments 15,907 2,178 • Asset management 112,471 83,962 Losses on sales of tangible and intangible assets (78) (26) • Interest earning operations 9,079 6,359 • Capital market operations 14,317 10,962 Losses on sale of long-term investments (447) (594) • Securities portfolio and other 37,428 26,972 Amortization of long-term investments (184) - Releases from allowances for write-down In a favourable business and market environment, revenues from La of long-term investments 612 893 Compagnie Financière Edmond de Rothschild Banque Group’s asset Total 15,810 2,460 management activities continued to show significant growth. The private asset management and collective investment businesses had 3.12. Non-operating loss another year of highly sustained activity levels in 2006 thanks to increa- sed net inflows (Û 2.6 billion), both with private customers (+16.3%) and The net balance of non-operating items was a loss of Û 6,633,000 in in collective investment vehicles including multi-management, which 2006, including an exceptional loss of Û 6,650,000 corresponding to a registered a particularly high increase (+40%) in net inflows. Overall, the provision related to a dispute in process. Group’s assets under management grew by 21.6%, with the additional benefit of rises on the financial markets. 3.13. Income tax Thanks to higher inflows, market performances and a larger portion of equity and diversified collective investment vehicles, gross fund manage- Income tax arising from the tax consolidation and the resulting agreements ment fees earned by the Bank’s asset management subsidiaries continued signed between the Bank and its subsidiaries was a tax charge of Û 1,203,000 their significant rises (+36.2% in 2006). in 2006. In these circumstances, asset management revenues earned by the Bank Excluding deferred taxes, the income tax for La Compagnie Financière increased by 34% in 2006, primarily due to dividends received from its Edmond de Rothschild Banque if it had been taxed separately (rather collective investment management subsidiaries (+35.8% over 2005). than in a tax group) would have been Û 729,000. Due to the high inflows into investment funds, front-end fees also rose once more in 2006 (+16.5%). Good financial market performances in 2006 also contributed to the significant growth in stock market trading fees (+38.4% compared to 18.3% in 2005). Interest earning operations (deposits and credits), now mostly related to assets managed for private customers, increased by 42.8% in 2006 prima- rily as a result of rising money market rates. Revenues from capital market operations carried out by La Compagnie Financière Edmond de Rothschild Banque, mainly focusing on broke- rage, particularly for customers, increased substantially in 2006 (+30.6%). Most of this increase concerned foreign exchange activities (+35.9%), lar- gely due to the rising volume of foreign exchange transactions. The results from euro treasury and trading operations, meanwhile, remai- ned practically stable. The rise in portfolio and other income in 2006 (+¤ 38.8%) primarily resulted from the higher level of fees billed by the Bank for administrative services and above all, custody and placement services rendered to several subsidiaries. 68•69

NOTE 5 – ADDITIONAL INFORMATION ON COMMITMENTS The residual values of the above commitments are analyzed as follows (in AND CONTINGENCIES thousands of euros):

5.1. Transactions with subsidiaries (in thousands of euros) At December 31, 2006 Less than one year 1 to 5 years More than 5 years Purchases Sales Purchases Sales Purchases Sales 2006 2005 Organized and similar markets 1,705,120 1,785,228 15,034 - 6,058 - Commitments given Private contracts 611,039 692,358 363,936 105,980 373,090 114,403 Loan commitments 1,356 2,665 Guarantee commitments 526 656 At December 31, 2005 Less than one year 1 to 5 years More than 5 years Purchases Sales Purchases Sales Purchases Sales Organized and similar markets 1,195,261 1,075,984 14,029 3,944 6,741 - 5.2. Transactions in financial instruments (in thousands of euros) Private contracts 451,646 731,257 567,757 171,964 278,383 30,000

Transactions in interest rate futures are concluded for hedging purposes. The Bank's exposure to market risks on financial instruments is as follows Foreign exchange options may be entered into as part of the management (in thousands of euros): of a specialized portfolio, or are matched. Commitments relating to financial instruments are as follows (nominal Type of risks Type of transactions Assumptions Sensitivity value of contracts, in thousands of euros): 2006 2005 Interest rate risk Short-term positions 1% unfavourable in euros change in interest rates 147 406 At December 31, 2006 Hedging Trading Total Short-term positions 1% unfavourable Purchases Sales Purchases Sales Purchases Sales in foreign currencies change in interest rates 47 140 Organized or similar markets Foreign exchange risks Spot and forward foreign 8% unfavourable Futures exchange positions change in exchange rates 146 99 • Currency swaps 1,726,212 1,785,228 - - 1,726,212 1,785,228 Total 1,726,212 1,785,228 - - 1,726,212 1,785,228 5.3. Fair value of financial instruments (in thousands of euros) Private contracts Futures • Interest rate swaps (1) 1,292,872 852,789 - - 1,292,872 852,789 The fair value of financial instruments is calculated daily by reference to Sub-total 1,292,872 852,789 - - 1,292,872 852,789 market value as part of the measurement of counterparty risks. Options • Indices 55,193 59,952 - - 55,193 59,952 Positive value Negative value Sub-total 55,193 59,952 - - 55,193 59,952 2006 2005 2006 2005 Total 1,348,065 912,741 - - 1,348,065 912,741 Organized and similar markets Futures (1) Including Û 146,326,000 with subsidiaries. • Currency swaps 7,394 15,463 (7,539) (16,127) Private contracts At December 31, 2006 Hedging Trading Total Futures Purchases Sales Purchases Sales Purchases Sales • Interest rate swaps 86,595 97,211 (33,027) (33,576) Organized or similar markets Options Futures • Indices 11,358 2,454 (11,198) (2,454) • Currency swaps 1,216,031 1,079,928 - - 1,216,031 1,079,928 Total 1,216,031 1,079,928 - - 1,216,031 1,079,928 Private contracts Futures • Interest rate swaps (1) 1,289,049 924,484 - - 1,289,049 924,484 Sub-total 1,289,049 924,484 - - 1,289,049 924,484 Options • Indices 8,737 8,737 - - 8,737 8,737 Sub-total 8,737 8,737 - - 8,737 8,737 Total 1,297,786 933,221 - - 1,297,786 933,221

(1) Including Û 126,630,000 with subsidiaries. NOTE 6 - ADDITIONAL INFORMATION ON COUNTERPARTY RISKS NOTE 7 – AVERAGE NUMBER OF EMPLOYEES ON DERIVATIVES 2006 2005 6.1. Types of risk and method of calculation Specialized staff 124 122 Executives and senior management 209 189 Credit risk equivalents on derivatives and the effect of netting agreements Other 63 56 are estimated in accordance with the principles established by regulations Total 396 367 n° 91-05 and 95-02 of the French Banking and Financial Regulation Committee, and by instruction n° 96-06 of the French Banking NOTE 8 – OTHER INFORMATION Commission. The positive replacement value of credit risk equivalents represents the The financial statements of La Compagnie Financière Edmond de fair market value of the contracts before taking account of netting agree- Rothschild Banque are included in the consolidated financial statements ments and guarantees received. of Compagnie Financière Saint-Honoré using the full consolidation The gross add-on is based on the notional amount of the contracts mul- method. tiplied by a weighting factor. The net add-on is calculated using the for- mula prescribed by instruction n° 96-06, as follows: net add-on = 0.4 x gross add-on + 0.6 x NGR x gross add-on, where NGR represents the ratio between net replacement cost and gross replacement cost, for all transactions entered into under legally valid net- ting agreements. Weighting factors used for each type of counterparty (20% for banks and 50% for customers) are consistent with those prescribed by regulation n° 91-05.

6.2. Analysis of weighted credit risk equivalents by type of counterparty (in thousands of euros)

Gross weighted risks Net weighted risks 2006 2005 2006 2005 Banks 32,084 32,528 17,197 11,868 Customers 28,332 26,322 28,109 24,714

6.3. Effect of netting on total weighted credit risk equivalents by type of counterparty (in thousands of euros)

Effect of netting Effect of collateralization 2006 2005 2006 2005 Banks 7,781 8,098 7,106 12,562 Customers 223 1,608 - - 70•71

PARENT COMPANY FIVE-YEAR SUMMARY

2002 2003 2004 2005 2006 Financial position at December 31 Capital stock 68,648,940 68,648,940 78,396,390 81,461,460 82,739,820 Number of shares outstanding 4,576,596 4,576,596 5,226,426 5,430,764 5,515,988 Number of convertible bonds outstanding - - - - - Stockholders' equity (1)* 129,023,000 135,761,000 190,754,000 206,122,000 215,551,000 Long-term funds (1)* 129,023,000 135,761,000 217,974,000 245,112,000 248,088,000 Total assets * 3,027,971,000 2,353,358,000 2,641,825,000 2,493,039,000 2,681,843,000 Results of operations for the year Total revenues 288,696,856 411,586,143 203,535,337 279,857,444 268,870,440 Income before tax, depreciation, amortization and provisions 21,409,159 20,382,446 19,235,152 24,870,027 79,337,654 Income tax (7,257,387) (3,305,641) 404,652 (2,177,273) 1,267,379 Net income for the year 16,962,509 23,595,243 19,384,948 33,028,999 52,951,266 Total dividends 10,068,511 26,544,257 19,792,766 32,953,373 52,953,485 Earnings per share Income after tax but before depreciation, amortization and provisions 6.26 5.18 3.60 4.98 14.15 Net income for the year 3.71 5.16 3.71 6.08 9.60 Dividend 2.20 5.80 4.05 6.10 9.60 Personnel Number of employees 461 358 360 371 415 Total gross payroll 35,258,650 25,513,024 25,286,607 27,976,370 33,726,281 Social security contributions and employee benefits 17,479,448 12,513,713 13,342,208 18,202,179 18,111,059 Employee profit-sharing 454,948 916,958 1,319,105 1,735,443 2,172,796

(1) Excluding net income for the year. * Rounded up to the nearest thousand of euros. France

Head office Offices

La Compagnie Financière Bordeaux Edmond de Rothschild Hôtel de Saige Banque 23, Cours du Chapeau Rouge 47, Rue du Faubourg Saint-Honoré 33000 Bordeaux 75401 Paris Cedex 08 Telephone: 33 (0) 5 56 44 20 66 Telephone: 33 (0) 1 40 17 25 25 Fax: 33 (0) 5 56 51 66 03 Fax: 33 (0) 1 40 17 24 02 Website: www.lcf-rothschild.fr Lyon 55, Avenue Foch 69006 Lyon Telephone: 33 (0) 4 72 82 35 25 Fax: 33 (0) 4 78 93 59 56

Marseille 165, Avenue du Prado 13272 Marseille Cedex 08 Telephone: 33 (0) 4 91 29 90 80 Fax: 33 (0) 4 91 29 90 85

Nantes 10-12, Rue du Président Herriot 44000 Nantes Telephone: 33 (0) 2 53 59 10 00 Fax: 33 (0) 2 53 59 10 09

Representative Office

People's Republic of China Room 03 28F China Insurance Building 166 East Lujiazui Road Pudong New Area Shanghai 200120 Telephone: (86-21) 58 76 51 90 Fax: (86-21) 58 76 71 80 72•73

DIRECTORY Banks and companies in the La Compagnie Financière Edmond de Rothschild Banque Group

Subsidiaries and sub-subsidiaries Foreign subsidiaries, branches and sub-subsidiaries

Edmond de Rothschild Edmond de Rothschild Israel United Kingdom Asset Management Private Equity Partners 47, Rue du Faubourg Saint-Honoré 47, Rue du Faubourg Saint-Honoré Edmond de Rothschild Edmond de Rothschild 75401 Paris Cedex 08 75401 Paris Cedex 08 Investment Services Limited Private Equity Select LLP Telephone: 33 (0) 1 40 17 25 25 Telephone: 33 (0) 1 40 17 25 25 Alrov Tower Orion House Fax: 33 (0) 1 40 17 24 42 Fax: 33 (0) 1 40 17 23 91 46, Rothschild Boulevard 5 Upper St Martin’s Lane 66883 Tel Aviv London WC2H 9EA Edmond de Rothschild Edmond de Rothschild Telephone: (972-3) 566 33 23 Telephone: (44-20) 7845 59 93 Corporate Finance Capital Partners Fax: (972-3) 566 66 89 Fax: (44-20) 7557 59 93 47, Rue du Faubourg Saint-Honoré 47, Rue du Faubourg Saint-Honoré 75401 Paris Cedex 08 75401 Paris Cedex 08 Italy Telephone: 33 (0) 1 40 17 21 11 Telephone: 33 (0) 1 40 17 25 25 Fax: 33 (0) 1 40 17 25 01 Fax: 33 (0) 1 40 17 23 91 Edmond de Rothschild S.G.R. SpA Edmond de Rothschild Edmond de Rothschild Via Palestro 24 Entreprises Patrimoniales Investment Partners 20121 Milan 47, Rue du Faubourg Saint-Honoré 47, Rue du Faubourg Saint-Honoré Telephone: (39-02) 76 061 200 75401 Paris Cedex 08 75401 Paris Cedex 08 Fax: (39-02) 76 061 222 Telephone: 33 (0) 1 40 17 31 63 Telephone: 33 (0) 1 40 17 25 25 Fax: 33 (0) 1 40 17 23 93 Fax: 33 (0) 1 40 17 31 43 Edmond de Rothschild S.I.M. SpA Edmond de Rothschild Assurances & Conseils Via Palestro 24 Financial Services Saint-Honoré 20121 Milan 47, Rue du Faubourg Saint-Honoré 22, Avenue Matignon Telephone: (39-02) 76 061 403 75401 Paris Cedex 08 75408 Paris Fax: (39-02) 76 061 418 Telephone: 33 (0) 1 40 17 25 25 Telephone: 33 (0) 1 44 71 30 60 Fax: 33 (0) 1 40 17 23 67 Fax: 33 (0) 1 47 42 28 94 Edmond de Rothschild Financial Services Edmond de Rothschild Italian branch Multi Management Via Palestro 24 47, Rue du Faubourg Saint-Honoré 20121 Milan 75401 Paris Cedex 08 Telephone: (39-02) 76 061 200 Telephone: 33 (0) 1 40 17 25 25 Fax: (39-02) 76 061 222 Fax: 33 (0) 1 40 17 27 67 DIRECTORY Other LCF Group banks and companies

France Switzerland

Cogifrance Head office Branches Representative offices 47, Rue du Faubourg Saint-Honoré 75008 Paris Banque Privée Fribourg Argentina Telephone: 33 (0) 1 40 17 25 25 Edmond de Rothschild S.A. 11, Rue de Morat Torre Bouchard Fax: 33 (0) 1 40 17 24 02 18, Rue de Hesse 1700 Fribourg Bouchard 547, Piso 12 1204 Geneva Telephone: (41-26) 347 24 24 C1 106 BG Buenos Aires Telephone: (41-22) 818 91 11 Fax: (41-26) 347 24 20 Telephone: (54-11) 5032 1000 Fax: (41-22) 818 91 21 Fax: (54-11) 5032 1015 Lausanne 2, Avenue Agassiz China 1003 Lausanne Suite 1505 One Exchange Square Telephone: (41-21) 318 88 88 8 Connaught Place Fax: (41-21) 323 29 22 Central, Hong Kong Telephone: (852) 2869 1711 Fax: (852) 2877 2185

Uruguay Avenida Pedro Blanes Viale 6328 11500 Montevideo Telephone: (598-2) 600 79 99 Fax: (598-2) 600 09 52 74•75

Subsidiaries or affiliates in Other foreign subsidiaries Switzerland Bahamas Luxembourg Monaco Arbinter-Omnivalor S.A. 4, Cours de Rive Banque Privée Banque Privée Banque de Gestion 1204 Geneva Edmond de Rothschild Edmond de Rothschild Edmond de Rothschild Telephone: (41-22) 318 61 61 Limited Europe Monaco Fax: (41-22) 318 61 40 / 318 61 50 51 Frederick Street 20, Boulevard Emmanuel Servais Les Terrasses PO Box N-1136 2535 Luxembourg 2, avenue de Monte-Carlo Banca Privata Nassau Telephone: (352) 24 88 1 BP 317 Edmond de Rothschild Telephone: (1-242) 328 81 21 Fax: (352) 24 88 8596 MC 98006 Monaco Cedex Lugano S.A. Fax: (1-242) 328 81 15 Telephone: (377) 93 10 47 47 2, Via Ginevra - CP 5882 Branches of Banque Privée Fax: (377) 93 25 75 57 6901 Lugano Edmond de Rothschild Europe Telephone: (41-91) 913 45 00 Subsidiary of Banque de Gestion Fax: (41-91) 913 45 01 Belgium Edmond de Rothschild Monaco Avenue Louise 480 Bte 16A La Compagnie 1050 Brussels Edmond de Rothschild Benjamin de Rothschild S.A. Conseil et Courtage Telephone: (32) 02 645 25 25 20, Route de Pré-Bois d’Assurance Monaco Fax: (32) 02 645 25 20 Case Postale 490 Les Terrasses 1215 Geneva 2, avenue de Monte-Carlo Spain Telephone: (41-22) 319 75 00 98000 Monaco Fax: (41-22) 319 75 60 Telephone: (377) 97 98 28 00 Calle Orfila, 8 Bajo B Fax: (377) 97 98 28 01 Privaco Trust S.A. 28010 Madrid 11, Rue de Morat Telephone: (34) 91 319 90 22 United Kingdom 1700 Fribourg Fax: (34) 91 702 07 51 Telephone: (41-26) 321 58 58 Edmond de Rothschild Fax: (41-26) 322 74 73 Josep Bertrand, 11 Limited 08021 Barcelona Orion House Rouiller, Zurkinden & Cie Telephone: (34) 93 272 05 04 5 Upper St Martin’s Lane Finance S.A. Fax: (34) 93 215 06 97 London WC2H 9EA 11, Rue de Morat Telephone: (44-20) 7845 59 00 1700 Fribourg Portugal Fax: (44-20) 7845 59 01 Telephone: (41-26) 347 26 00 Fax: (41-26) 347 26 15 Rua D. Pedro V, 130 LCF Rothschild (C.I.) Limited 1250-095 Lisbon Hirzel Court - St Peter Port Telephone: (351) 21 351 46 60 GY1 2NH Guernsey Fax: (351) 21 351 46 88 Channel Islands UK Telephone: (44-1481) 716 336 R. Domingos Sequeira 105 Fax: (44-1481) 714 416 4050-232 Porto Telephone: (351) 22 833 1098 Taiwan Fax: (351) 22 831 5416 Priasia Limited (LCF Rothschild Group) Israel 46, Rothschild Boulevard Tortola, British Virgin Islands Representative office in Taiwan 66883 Tel Aviv Bank Tower Telephone: (972-3) 566 98 18 205 Tun Hwa North Road, Fax: (972-3) 566 98 21 Suite 406 Taipei/Taiwan 105 Slovakia Telephone: (886-2) 2545 05 05 Hlavné námestie 4 Fax: (886-2) 2545 14 07 811 01 Bratislava Telephone: (421) 2 5443 0940 Fax: (421) 2 5443 4095 Photos: D.R. Translation: J.H. Communication Printed in France by: Edips Imprimeurs