CONSOLIDATED ANNUAL REPORT 2020 BANQUE HAVILLAND S.A. Banque Havilland (the “Bank”) was established by an entrepreneurial British family with a successful track record across many different business sectors. The Bank was founded in 2009 in Luxembourg where it has its head office. The Bank has been built on strong financial foundations following prudent principles. Private ownership provides the Bank and its client stability and consistency allowing it to take a long- term approach to the management of client wealth and generational client relationships. We enable our clients and their family’s wealth to safely thrive, helping them to fulfil their goals and realise their ambitions for themselves and for the next generations. Since inception, the Bank has grown from its original business in Luxembourg, both organically and through acquisitions (hereafter the “Group”). The Group now also encompasses London as a branch of Luxembourg; Monaco, Switzerland (with its branch in Zurich) and Liechtenstein as subsidiaries; and Dubai as a representative office. LIST OF CONTENTS DNA & Values 5 Group Governance 7 - 8 Consolidated Management Report 9 - 14 Audit Report 15 - 20 Consolidated balance sheet 22 - 23 Consolidated off balance sheet 24 Consolidated profit and loss account 25 - 26 Notes to the consolidated accounts 28 - 61 BH CONSOLIDATED ANNUAL REPORT 2020 4 BH CONSOLIDATED ANNUAL REPORT 2020 5 DNA & VALUES Our values underpin the guiding Our values are the DNA of our principles for what matters most to us organisation and support our in our interaction with our customers, sustainability vision. our staff and our stakeholders. EMPOWERMENT FAIRNESS We give employees autonomy to We strive to be fair in flexand adapt to client needs within everything we do. a framework of clear and results- oriented decision-making and reporting processes, always respecting regulatory requirements. INTEGRITY DILIGENCE We act with integrity in everything we We strive reliably to deliver on our do, this is the key to being trusted by our responsibilities and commitments to clients and counterparties. clients and partners. We aim to exceed expectations. BH CONSOLIDATED ANNUAL REPORT 2020 5 BH CONSOLIDATED ANNUAL REPORT 2020 6 BH CONSOLIDATED ANNUAL REPORT 2020 7 GOVERNANCE GROUP BOARD OF DIRECTORS Our Monaco, Switzerland, and Liechtenstein entities are supervised by a local Board of Directors, comprising at The Group Board of Directors has overall least one Independent Director, and at responsibility for the Bank and its UK least one Group Authorised Manager. branch. It defines, monitors and carries GROUP AUTHORISED responsibility for the establishment of MANAGEMENT a solid central administration and the internal governance framework. The Group Authorised Management is responsible for the efficient day-to-day As part of its role, the Group Board management and the sound and prudent of Directors is responsible for setting operations of the Bank and its Branch. and overseeing the business and risk strategy including risk appetite and risk This management is carried out in management framework. accordance with the strategies and guiding principles set out and approved The Group Board of Directors is assisted by the Board of Directors, within the by four specialised committees: the Group applicable regulation. Strategy Committee, the Group Risk & Compliance Committee, the Group Audit GROUP AUTHORISED Committee and the Group Nomination & MANAGEMENT Remuneration Committee. Group Chief Lars Rejding COMPOSITION Executive Officer Deputy Chief Juho Hiltunen Executive Officer Frédéric Genet Chairman1 Organisation, IT, Artyom Grigoryan Finance & Operations Fernand Grulms Independent Director Financial market Harley Rowland activities Bernard Herman Independent Director2 Gil Huart Chief Risk Officer Virginie Lagrange Independent Director The Group Board of Directors and the Antony Turner Independent Director Group Authorised Management also Venetia Lean Director exercises an oversight on the subsidiaries of the Bank (Monaco, Switzerland, Harley Rowland Executive Director and Liechtenstein), to ensure that their Central Administration, Internal governance, and Risk Management systems are adequate. 1 Until 26th of March 2021 2 Chairman since 26th of March 2021 BH CONSOLIDATED ANNUAL REPORT 2020 7 GROUP INTERNAL LOCAL MANAGEMENT CONTROL FUNCTIONS Each of the subsidiaries of the Group The Chief Risk Officer and the Chief is headed by a local Chief Executive Compliance Officer supervise the second Officer (Monaco, Switzerland, and line of defence of the Bank while the Liechtenstein). Chief Internal Auditor oversees the third They locally report to their Board line of defence. of Directors, and functionally to the Group CEO. In their capacity as Group Heads they also oversee, through functional As a general principle, the internal reporting lines, the Internal control control functions of each entity report functions in the subsidiaries. to the appropriate control functions at the Bank Head Office level, from both a They exercise their functions with hierarchical and functional perspective independence, authority and objectivity for our branch and from a functional and they have an independent reporting perspective for subsidiaries. line to the Board. BH CONSOLIDATED ANNUAL REPORT 2020 8 BH CONSOLIDATED ANNUAL REPORT 2020 9 CONSOLIDATED MANAGEMENT REPORT GENERAL BUSINESS EVOLUTION IN 2020 2020 was a historic year, overshadowed The Group continued to pursue its by the Coronavirus pandemic. commercial development activities through an enhanced network of The Group took extensive measures professional counterparties and to protect the safety and health of development of the business with employees and clients whilst ensuring existing clients. business continuity. Private Banking activity was The Group rapidly put in place a remote strengthened by appointing a new Head working environment for all staff. At the of Private Banking in Luxembourg in the height of the pandemic, around 90% of first quarter 2020. staff were working from home. In 2020, we enhanced our service Thanks to extensive protective offering through the development measures, the impact on the of a more comprehensive wealth organisation was very low and all management approach, an improved departments remained fully operational on-boarding process, and more digital and continued serving our clients tools at the disposal of our clients and in this exceptional environment. teams. We also started to host regular This demonstrates the efficiency highly successful webinars for our staff of the Group’s business continuity and clients. management and the digital capabilities The Group continuously enriches its of the Bank. Further, the Group remained digital capabilities to complement the well protected against the heightened value of human interaction allowing us cybersecurity risk during the pandemic. to offer our clients their preferred choice of service and to enhance the Group’s The Group continued to implement its service efficiency. strategy and the risk appetite framework confirming a repositioning towards core Our direct access client offering was markets and a reduction of its overall again busy due to the volatility in risk profile. markets, with further growth in demand from our clients seeking direct access The financial performance of the to our trading room. We also continued Group in 2020 reflects the strategic to support our clients with their plans direction the Group has taken, its through a credit offering tailored to reduced risk appetite and the evolution each region’s specific features including of financial markets. mortgages and Lombard loans. BH CONSOLIDATED ANNUAL REPORT 2020 9 Our Institutional Banking offering was Furthermore, governments themselves reinforced, leading to an expanded have commenced a huge fiscal push servicing of new funds for existing clients to offset the lockdown inactivity, and the development of new projects including even directly paying into materialising in 2021. consumers’ pockets. MARKETS Undoubtedly, many are financially worse off and face employment uncertainty in 2020 will be a year few would wish to the coming months, but it cannot be said relive, but for investors and market that this is universally true as there are participants it was something of a many whose net income has increased or rollercoaster as virtually all asset classes stayed the same due to lack of spending saw wild price swings and analysts were opportunities, reduced travel costs etc. forced to tear up previous assumptions. As such there is good reason to suspect there may be considerable sums of pent- Certain assets reached new peaks such up spending demand ready to explode as US ‘mega-tech’ stocks, Bitcoin and once restrictions are finally lifted. Gold while others such as Crude Oil fell to all-time lows with many sectors FINANCIALS still languishing as lockdown-induced economic paralysis continued. Amid the In 2020, Banque Havilland Luxembourg chaos, the instant recession, improbable incurred a loss of EUR1.1m while valuations and the reality of stretched Banque Havilland Suisse improved its global debt (now 365% of GDP), statutory net result by CHF 24.0m to a however, stands a theme that has been profit of CHF 18.0m. Banque Havilland the dominant feature of markets for Liechtenstein and Banque Havilland years – that of central bank stimulus and Monaco remained stable and positive, the mantra of ‘don’t fight the Fed’. respectively with a net result of CHF 1.5m and EUR 0.1m. Ultimately,