Notes to the annual consolidated financial statements

1. Illustration of the Bank’s business operations and organization

The Banca del Sempione Group profile

Banca del Sempione, which was founded in 1960, provides its private and corporate clients with all the principal services typical of a universal bank, the main focus being on the provision of financial advice and asset administration services. The Bank promotes a SICAV founded and operating under the laws of Luxembourg (Base Investments SICAV, licensed to distribute products in Switzerland), a portion of whose capital funds it manages. The Group includes, in addition to Banca del Sempione and its Ticino-based branches, an affiliate located in the Bahamas, Banca del Sempione (Overseas) Ltd., a real estate company, Imocentro SA and two finance companies, Finrate SA, Lugano and BDS Corporate Services Limited, Nassau. Since 2005, our Group has held 91% of the share capital in an asset-management company named Accademia SGR SpA, specializing in the promotion and management of Italian-law real estate investment funds. Beginning 2006, the Bank sold the minority participation in BankNord Ge.Pa.Fi. SIM SPA, a stockbroking and investment management company bought in 2001.

As at 31 December 2006, the Group had 109 employees on its books, equating to 108.5 full-time positions (previous year: 103 employees, equating respectively to 102.5 positions).

Lending operations

In accordance with the Group’s strategy of focusing business development in the asset management area, the lending policy has been kept very tight; new loans are issued only if backed by guarantees, while interbank dealing is limited to the placement of short-term cash deposits.

Customer loans backed by guarantees shown in the financial statements account for 95% of the total.

Brokerage and investment service operations

In this business area, the main operations are asset management, securities and derivatives trading, and fiduciary deposit services. The Group offers asset management services organized by a committee responsible for defining investment policy, while the offices in Lugano and Nassau are responsible for implementing the investment policy decisions on client accounts. The Group’s customer advisory service is managed by a staff of specialists working in all the Bank’s branches.

Trading operations

The Group normally trades in securities, currencies, and derivative instruments on behalf of its clients. The results from trading operations are for the most part generated by currency trading. The volume of transactions for the Bank’s own account is limited.

Risk management

The Group has a set of regulations defining risk management in all areas of operation. Clear and conservative limits have been defined for each type of risk. The Risk Management unit is endowed with the necessary independence and professionalism. Its operating responsibility is to identify and measure risks as well as to ensure that the Group’s policies are implemented and limits respected: controls take place at regular intervals with the aid of the appropriate surveillance tools. Market valuations are updated on a daily basis.

Counterparty (credit) risks are minimized through a rigorous selection of financial counterparties and by systematic demands on customers for real guarantees and margin coverage. Lombard loans, accounting for the bulk of the portfolio, are issued on the basis of collateral values conservatively calculated and constantly monitored. The mortgage portfolio mainly refers to residences occupied by the owners themselves. The average mortgage amount issued is CHF 352’000 (previous year: CHF 345’000). The collateral value of commercial properties, incoming-producing buildings and private houses of high standing is determined with the help of external appraisers.

Interest rate risk management with respect to the balance sheet structure is managed by the Group’s ALM committee. Other market risks, mainly on currency and securities positions, are contained by virtue of very strict limits imposed by the operating units. The positions are monitored daily.

Operating risks are limited through a series of internal regulations and provisions. Control operations are an integral part of daily operations. Internal audits constantly monitor the adequacy of the procedures. The compliance service ensures that regulations and diligence requirements affecting the Group’s various areas of operations are respected.

Outsourcing

Banca del Sempione has appointed an external company to carry out the necessary maintenance work on programs belonging to the IT platform BOSS. A detailed services contract formally regulates the terms of this service. All personnel connected with the service company are subject to bank secrecy obligations. However, the services are not subject to the provision of circular FBC 99/2.

2. Accounting principles and valuation criteria

General principles

The accounting principles and valuation criteria adopted are in compliance with the provisions of the Code of Obligations, Swiss banking law, and the rulings issued by the Federal Banking Commission. The consolidated financial statements have been drawn up in accordance with Swiss law governing the preparation of bank accounting statements. They present a true and fair view of the Group’s capital structure, financial standing, and operating performance. All transactions are shown in the financial statements according to the transaction date entry principle.

Scope and method of consolidation

Those companies in which the Bank owns more than 50% of capital and shares with voting rights are fully consolidated. In accordance with the fully consolidated method, debits and credits, as well as revenues and expenses generated by transactions between consolidated companies, are netted. Consolidations of capital takes place according to the “acquisition method” prevalent in English speaking countries: according to this method, book value is offset against net equity existing at the time of formation or acquisition.

Any equity investments held by 20%-50% are recognised in the consolidated financial statements according to the equity method.

The non-consolidated equity investments are shown in the balance sheet at acquisition cost less any amortization, which may be necessary.

The list of significant participations, as well as the change in the scope of consolidation, are shown on note 3.3.

Conversion of foreign currencies

Foreign currency transactions are booked at the exchange rates of the transaction date. Profits and losses generated by the winding up of these transactions or by the conversion of foreign-currency denominated assets and liabilities at exchange rates prevailing as at the end of the financial year are booked to the income statement. The assets and liabilities of the consolidated companies are converted at the year-end exchange rate, whereas revenues and expenses are converted at the average exchange rate. The resulting differences are directly allocated to the Bankequity.

The following table sets out the exchange rates against the major foreign currencies applied for translation purposes:

Main valuation principles

Assets, liabilities, and off-balance sheet entries shown under the same item are always subject to an individual valuations.

2006 2005

Year End Average Year End Average USD 1.2196 1.2541 1.3182 1.2457 EUR 1.6068 1.5744 1.5542 1.5480 GBP 2.3979 2.2665 YEN 1.0265 1.1194

Cash and cash equivalents, money market securities lending, loans to banks, liability reserves

These items are shown in the financial statements on the basis of their nominal value or acquisition value, less write-downs to individual items for credit risk. The discount on money market securities is divided into installments.

Loans (accounts receivable from customers and mortgage lending) Loans are generally booked at nominal value. Non-performing loans - defined as loans for which the debtor is considered unlikely to meet its commitments based on an examination of solvency criteria - are valued on a case-by-case basis. Presumed risks of loss are covered by individual prudent write-downs. Any commitments deriving from off-balance sheet transactions are duly considered in this valuation. A loan is considered non-performing when interest and repayment expired by more than 90 days at the latest. In this case, interest not received is directly attributed to write-downs; an entry to revenues is made only when the interest is effectively received. The amount of the write-down corresponds to the difference between the book value of the loan and the amount the Bank believes it can collect as a function of counterparty risk and net revenues obtainable from the implementation of any guarantees. Non-performing loans are recognised in the balance sheet net of corresponding write-downs. A lump-sum adjustment may be applied to loans that, while not substandard, present a potential risk of loss, and to the portion of the portfolio consisting of numerous small loans. This adjustment is determined by applying a calculation method that is systematic and constant over time (20% of the nominal value of risked loans and 5% for the minor loans). Changes in the amount of the write-down, both case-by-case and lump-sum, as well as collections of loans previously amortised are entered under the income statement item “value adjustments, provisions, and losses”. Reserves released because they are no longer necessary are either allocated to form new provisions or booked to the income statement under the item “extraordinary gains”.

Trading securities and precious metals

Trading securities and precious metals are shown at the market price on the closing date of the financial statements and the results generated are shown in the income statement. If no reliable market price is available, the lesser value principle is applied.

Financial investments

Fixed-income securities are valued according to the accrual method since the intention is to hold them to maturity. Any transaction premiums and discounts at the time of the acquisition of the fixed-income securities are therefore shown in the income statement on an accrual basis according to time-to-maturity. The result realized on a sale or early repayment is spread over the residual duration of the transaction determined on the basis of the original maturity date. Any depreciation in value caused by a deterioration in the issuer’s solvency is shown under the item “other ordinary expenses”. In a similar way, any later write-backs to the previous value are booked to the item “other ordinary revenues”. Participations and precious metals are shown at the lesser of acquisition cost and market value. Real assetsreceived in guarantee of loans issued and those received from auctions are shown among financial investments if the intention is to sell them off; they are shown at the lesser of acquisition cost and liquidation value. Physical assets in precious metals intended for conversion into cash are valued according to the lesser value principle, while those used to cover commitments in the metals account are valued according to market prices.

Non-consolidated participations

Any minority stakes held by 20%-50% are shown in the financial statements according to the equity method. The companies in which the Bank holds an equity investment of less than 20% of the voting shares or whose sizes and operations do not have a significant impact on the Group, are shown in the financial statements at acquisition price less depreciation and amortization as appropriate.

Fixed assets

Assets used for more than one reporting period and which are higher than the minimum activation limit are shown in the balance sheet at acquisition cost less depreciation and amortization. Depreciation and amortization are applied according to the straight-line method and are estimated on the basis of the presumed usefullife of the assets according to conservative criteria. Every year the bank examines the consistency of the criteria adopted and, if necessary, deducts supplementary depreciation and amortization. Ordinary and supplementary depreciation and amortization are booked under the income statement item “depreciation and amortization of fixed assets.” The presumed useful life expected for the different categories of assets is set out below:

Real estate, including land Up to 67 years Other fixed assets Up to 10 years Information technology and other equipment Up to 5 years

Any gains realized on sales are shown under the item “extraordinary gains” and any losses under the item “extraordinary losses”.

Intangible Assets

Goodwill If an equity investment is acquired at a price higher than the net value of the assets taken over, the difference is recognised as goodwill. Amortisation, calculated in accordance with the useful life of the asset (usually 5 years), is recognised in the income statement. At the end of each period, the real value of goodwill is in any case subject to an impairment test. If it proves to be overvalued, supplemental amortisation is recognised.

Other Intangible Assets Purchases of software and other intangible assets are carried in the balance sheet only if their useful life is multi-year. Intangible assets developed in-house are not recognised on the balance sheet. The measurement is based on purchase cost, less the necessary amortisation estimated on the basis of the useful life of the asset, up to a maximum of five years. The present value is revised each year. If the impairment test results in a change in useful life or a decrease in value, supplemental amortisation is recognised.

Employee pension funds

All employees at the Swiss parent company are members of two legally autonomous pension funds. Premiums paid by the employer are recognised as staff expenses. Foreign employees do not have any type of professional pension since it is not required by local laws.

Taxes

Current taxes are determined in accordance with legal provisions in force. They are booked in the income statement of the period in which taxable earnings are generated. Tax provisions set aside at year-end are booked under the liability item “accrued liabilities and deferred income”. The tax effect of the time difference between the tax amount and the financial statement value of the assets and contingent liabilities is booked as deferredtaxes on the liability side of the balance sheet under the item “value adjustments and provisions”. Deferred taxes are calculated separately for each accounting period and for each tax entity based on tax rates in effect at the time the annual financial statements are drawn up. Deferred tax credits on time differences or on losses carried forward are booked under the asset item “pre-paid expenses and accrued interest” only if it is likely that they will be realized as a result of the future generation of sufficient taxable earnings. Deferred tax credits and liabilities are offset only to the extent that they are attributable to the same tax collection agency and only if this offsetting is permitted by law.

Contingent liabilities

These off-balance sheet transactions are booked at nominal value. Value adjustments and provisions are made for all recognizable risks on a case-by-case basis as at the financial statement ending-date according to the conservative principle.

Value adjustments and provisions

A single value adjustment and provision is made for all recognizable risks as at the financial statement endingdate according to the conservative principle. Provisions no longer necessary for operating purposes and which are not used to constitute new provisions of the same type are liquidated in favor of the income statement. Individual provisions and value adjustments are used to directly decrease the value of the asset in question. The tax provision includes only deferred taxes deriving from the difference between the financial statement criteria adopted for drawing up the annual consolidated accounts and the individual financial statements.

Derivative financial instruments

All derivative financial instruments are shown at market value since they are strictly for trading purposes. Positive and negative replacement values are booked under the balance sheet items “other assets” or “other liabilities” as appropriate. Market value is determined by market prices on an efficient and sufficiently liquid regulated stock exchange, by sell prices offered by a market-maker or by prices calculated with the aid of a pricing model. Offsetting in the balance sheet between positive and negative replacement values with the same counterparty is allowed only within the limits of legally valid offsetting agreements. The realized or unrealized results from transactions with derivative instruments are shown under the item “results from trading operations”.

Changes to the accounting, valuation, and presentation principles

The accounting and valuation principles applied to the annual report for the year-ending 31 December 2006 are the same as those applied in the previous year, except for the adoption of the new standard RPC 16. The application of this standard had no impact on the Group’s annual report.

3.1 Breakdown of collateral loans and off-balance sheet transactions

(Amount expressed in CHF 1’000)

Type of collateral Mortgage Other Without collateral collateral collateral Total

Loans

Due from customers 4’521 54’625 6’090 65’236 Mortgages 65’316 – Residential real estate 58’388 – Trade and industrial property 6’928

Total loans 69’837 54’625 6’090 130’552

Previous year 69’080 50’385 9’888 129’353

Off-balance sheet transactions

Contingent liabilities

8’570 352 8’922 Irrevocable commitments 1’196 1’196 Liabilities for calls on shares and other equities 60 60

Total off-balance sheet transactions 8’570 1’608 10’178

Previous year 12’173 390 12’563

(Amount expressed in CHF 1’000)

Estimated Specific Gross realisation Net provisioamount value amount ning

Non-performing loans Year under review 22’268 2’010 20’258 20’258

Previous year 25’457 4’691 20’766 20’680

3.2 Securities and precious metal trading portfolios, financial investments and participations

(Amount expressed in CHF 1’000)

Year under Previous review year

Securities and precious metal trading portfolios

Interest bearing securities Listed equities

303 1’135 59 331 Precious metals 221 106

Total securities and precious metal trading portfolios 583 1’572

(Amount expressed in CHF 1’000)

Book Market Value Value Year under Previous Year under Previous

review year review year

Financial investments

Interest bearing securities to keep until maturity 32’107 28’887 31’980 28’998 Listed equities 2’837 1’330 2’957 1’341 Real estate 1’962 1’562 1’962 1’562

Total financial investments 36’906 31’779 36’899 31’901

of which securities used in repurchase agreements, according to liquidity provisions 25’535 15’567

(Amount expressed in CHF 1’000)

Participations

Not listed

Total participations

Year under Previous review year

20 1’645 20 1’645

3.3 information on significant participations

Year under Previuos Name and address Business activities review year

Share capital Interest in % Interest in %

Fully consolidated companies

Banca del Sempione (Overseas) Ltd, Nassau Bank and Trust CHF 5’000’000 100 100 BDS Corporate Services Ltd, Nassau Financial USD 50’000 100 100 Imocentro SA, Lugano Real Estate CHF 700’000 100 100 Finrate SA, Lugano Financial CHF 200’000 100 100 Accademia SGR SpA, Milano Asset Management EUR 1’400’000 91 91

Company recognised under “participation”

BankNord Ge. Pa. Fi. SpA, Milano Asset Management 10

In 2006, BDS Corporate Services Ltd, Nassau, increased its share capital from USD 10,000 to USD 50,000 through the free issuance of 40’000 new shares with a par value of USD 1.

The Group sold its 10% stake in Banknord Ge. Pa. Fi. S.p.A. Milano in early 2006. The sale caused no change in the scope of consolidation because the equity investment was not previously included.

3.4 Fixed assets and participations

(Amount expressed in CHF 1’000)

Book Book Write-offs/ value value Historical Accumulated previous Write-offs/ Riclas- previous cost depreciation year Additions Disposals Depreciations sifications year

Non-consolidated Participations

Other participations 1’685 40 1’645 –1’625 20

Total non-consolidated participation 1’685 40 1’645 –1’625 20

Real estate

Bank buildings 49’039 13’452 35’587 103 –989 34’701 Others fixed assets 15’080 14’178 902 196 –222 876

Total real estate 64’119 27’630 36’489 299 –1’211 35’577

Intangible assests

Goodwill 583 583 –120 463 Other intangible assests 2’825 983 1’842 884 –959 1’767

Total intangible assests 3’408 983 2’425 884 –1’079 2’230

Fire insurance value of real estate Fire insurance value of other fixed assets 41’300 6’050

3.5 Other assets and other liabilities

(Amount expressed in CHF 1’000)

Year under review Previous year Other Other Other Other assets liabilities assets liabilities

Replacement value of derivative financial instruments related to contracts negotiated for own account 800 640 1’623 1’235 Indirect taxes 163 3’135 217 1’217 Settlement accounts 12 131 Other 943 512 1’398 797

Total 1’906 4’287 3’250 3’380

3.6 Assets pledged or ceded to secure own liabilities and assets subject to ownership reservation

(Amount expressed in CHF 1’000)

Year under Previous review year

Type of securities and purpose of the deposit

Financial investment reserved for REPO transactions with the SNB (unused) 4’959 4’971 Receivables from banks and financial investment to cover mandatory margins on derivative products (fully used). 7’481 7’407

Total 12’440 12’378

3.7 Liabilities to the pension fund of own staff

(Amount expressed in CHF 1’000)

Year under Previous review year Balances in sight and time accounts of the Group foundation 4’237 4’072

Banca del Sempione has twopension plans for its staff members in Switzerland. For the mandatory part, LPP, the Bank has opted for affiliation with the legally independent, Basel-based, Collective Pension Foundation. In addition, employees are affiliated with the Banca del Sempione Pension Fund, managing only the optional (supplemental) part of the professional pension plan. Both Funds reinsure risks with a life insurance company, fully for the mandatory part, and only for the risk of decease and disability for the supplemental part. The pension age is the same as that established by the AVS. In case of early retirement, the affiliate receives the capital accumulated at that time (supplemental part). At the end of the accounting period, as in the previous year, the Bank did not record any obligations with the two pension funds since all the risks are reinsured and there are no financial risks in the supplemental part. So the Bank receives neither a monetary advantage nor does it have coverage obligations. All the Bank’s financial obligations to the pensionFunds are fulfilled with the payment of the contributions. Neither of the two Funds contain reserve contributions from the employer. The Banca del Sempione Pension Fund’s last audited annual report (31 December 2005) showed a coverage rate of 137%. Foreign employees do not have any type of professional pension since it is not required by local laws.

3.8 Valuation adjustments and provision

(Amount expressed in CHF 1’000)

Provisions for current and deferred taxes

Recoveries, New doubtful allocation Reversal interest, charged credited Year Previous Specific exchange to income to income under year usage differences statement statement review

1’481 100 –16 1’565

Valuation adjustments and provisions reserve for loan losses (credit and country risks) 20’750 –1’067 141 514 20’338 Other provisions 12’876 –399 421 315 13’213

Subtotal 33’626 –1’466 562 829 33’551 Total valuation adjustments and provisions 35’107 –1’466 562 929 –16 35’116

less: valuation adjustments directly netted with assets –20’680 –20’258

Total valuation adjustments and provisions as per balance sheet 14’427 14’858 Reserves for general banking risks 12’820 400 13’220

3.9 Capital Structure

(Amount expressed in CHF 1’000)

Year under review Previous year Total Dividend Total Dividend nominal Number bearing nominal Number right value of shares capital value of shares capital

Share capital 20’000 200’000 20’000 20’000 200’000 20’000

Total share capital issued and fully paid 20’000 200’000 20’000 20’000 200’000 20’000

Nominal Participation Nominal Participation CHF in % CHF in %

Major shareholders

Eburnea Holding SA, Sion (Donelli Group) 10’400 52.00 10’400 52.00 Molu Holding SA, Lugano (Gattei Group) 7’000 35.00 7’000 35.00 Golden Horn Finanz AG, Lugano (Filofibra Group) 2’350 11.75 2’350 11.75

There is neither conditional capital nor shareholders without right to vote.

3.10 Statement of changes in shareholders’equity

Shareholders’equity, at beginning of year under review

Share capital General legal reserve Minority interests in shareholders’equity Other reserves

(Amount expressed in CHF 1’000) 20’000 49’902 195 12’820 Retained earnings 5’431

Total shareholders’equity, at the beginning of year under review (before profit distribution) 88’348

– Dividend –2’500 + Allocation to the reserve for general banking risks 400 + Foreign currency transactions and consolidation differences 38 + Net income 8’029

Total shareholders’equity, at the end of year under review (before profit distribution) 94’315

Of which: Share capital 20’000 General legal reserve 52’915 Minority interests in shareholders’equity 151 Other reserves 13’220 Retained earnings 8’029

3.11 Maturity structure of current assets and borrowed funds

(Amount expressed in CHF 1’000)

Maturity

within redeemable within within 12 months after real estate at sight by notice 3 months 3–12 months – 5 years 5 years to be sold total

Current assets

Cash 8’945 8’945 Due from banks 28’968 112’603 2’073 143’644 Due from customers 47’296 9’569 7’776 595 65’236 Mortgages 24’490 10’522 18’788 11’516 65’316 Securities and precious metal trading portfolios 583 583 Financial investments 2’839 3’323 7’281 21’501 1’962 36’906

Total current assets 41’335 71’786 136’017 35’918 33’612 1’962 320’630

Previous year 38’597 65’205 147’835 70’415 18’294 1’519 1’562 343’427

Borrowed funds

Due to banks 11’250 11’250

Due to customers in saving and investment accounts 47’505 47’505 Due to customers, other 167’440 3’400 15’114 358 186’312

Total borrowed funds 178’690 50’905 15’114 358 245’067

Previous year 213’655 55’025 10’401 1’158 280’239

3.12 Related party transactions, loans to members of the Bank’s governing bodies

(Amount expressed in CHF 1’000)

Year under Previous review year

Due from related companies

4’787 5’137 Due to related companies 3’454 3’076 Loans and exposure to members of the bank’s governing bodies 3’949 3’945

Transactions with related parties

No significant transactions with affiliated entities were executed during the financial year. The conditions applied for banking services are generally equivalent to those applied to primary customers. Members of the Bank’s governing bodiesenjoy the same benefits made available to all employees.

3.13 Assets and liabilities by domestic and foreign origin

Year under review Previous year

(Amount expressed in CHF 1’000)

Domestic Foreign Domestic Foreign

Assets

Cash 8’943 2 16’765 2 Due from banks 39’327 104’317 37’456 126’500 Due from customers 19’044 46’192 26’103 36’478 Mortgages 65’316 66’772 Securities and precious metal trading portfolios 229 354 108 1’464 Financial investments 13’482 23’424 12’305 19’474 Non-consolidated participations 20 20 1’625 Fixed assets 35’447 130 36’445 44 Intangibile assets 1’586 644 1’769 656 Accrued income and prepaid expenses 1’935 366 1’561 235 Other assets 1’789 117 3’185 65

Total assets 187’118 175’546 202’489 186’543

Liabilities

Due to banks 4’540 6’710 3’760 12’681

Due to customers in saving and investment accounts 41’056 6’449 43’199 8’126 Due to customers, other 84’725 101’587 91’888 120’585 Accrued expenses and deferred income 3’644 493 2’279 359 Other liabilities 4’056 231 3’202 178 Valuation adjustments and provisions 14’858 14’427 Reserves for general banking risks 13’220 12’820 Share capital 20’000 20’000 Reserves and retained earnings 51’050 1’865 48’980 922 Minority interests in shareholders’equity 151 195 Net income 5’722 2’307 4’070 1’361 Of which minority interests –22 –22

Total liabilities and shareholders’equity 242’871 119’793 244’625 144’407

3.14 Assets by countries/country group

Year under review Previous year

(Amount expressed in CHF 1’000)

Amount CHF Percentage % Amount CHF Percentage %

Switzerland 187’118 52 202’489 52

Other OCSE countries 138’279 38 174’143 45 Other countries 37’267 10 12’400 3

Total assets with foreign countries 175’546 48 186’543 48 Total assets 362’664 100 389’032 100

3.15 Balance sheet by currencies

(Amount expressed in CHF 1’000)

Currency CHF USD EUR Altre Totale

Assets

Cash 6’176 66 2’693 10 8’945 Due from banks 42’105 23’651 68’994 8’894 143’644 Due from Customers 30’379 1’074 31’439 2’344 65’236 Mortgages 65’316 65’316 Securities and precious metal trading portfolios 12 71 279 221 583 Financial Investments 35’742 196 785 183 36’906 Non-consolidated participations 20 20 Fixed assets 35’465 112 35’577 Intangibile assets 2’227 3 2’230 Accrued income and prepaid expenses 1’123 374 794 10 2’301 Other assets 1’000 139 764 3 1’906

Total assets 219’565 25’571 105’863 11’665 362’664

Forward transactions and currency options 28’947 76’490 86’255 13’883 205’575

Total assets 248’512 102’061 192’118 25’548 568’239

Liabilities and shareholders’equity

Due to banks 1’985 2’841 5’806 618 11’250 Due to customers in saving and investment accounts 47’505 47’505 Due to customers, other 70’179 24’343 82’725 9’065 186’312 Accrued expenses and deferred income 3’999 43 95 4’137 Other liabilities 3’115 186 925 61 4’287 Valuation adjustments and provisions 1’941 12’917 14’858 Reserves for general banking risks 13’220 13’220 Share capital 20’000 20’000 Reserves and retained earnings 52’915 52’915 Minority interests in shareholders’equity 151 151 Net income 8’357 36 –364 8’029 Of which minority interests –22 –22

Total liabilities and shareholders’equity 223’216 27’449 102’255 9’744 362’664

Forward transactions and currency options 28’455 75’914 87’428 13’778 205’575

Total liabilities and shareholders’equity 251’671 103’363 189’683 23’522 568’239

Net positions per currency –3’159 –1’302 2’435 2’026 0

4.1 Contingent liabilities

(Amount expressed in CHF 1’000)

Year under Previous review year

Contingent liabilities

Guarantees and similar instruments issued 8’922 12’503

Total contingent liabilities 8’922 12’503

4.2 Outstanding derivative instruments

(Amount expressed in CHF 1’000)

Foreign exchange

Forward contracts Options (OTC)

Total year under review

Previous year

Positive Negative replacement replacement Contract value value volumes

692 500 190’465 108 140 15’110 800 640 205’575 1’623 1’235 288’820

4.3 Fiduciary transactions

(Amount expressed in CHF 1’000)

Year under Previous review year

Fiduciary transactions

Fiduciary deposits with third banks 417’258 365’388 Fiduciary loans and other fiduciary transactions 52’584 41’924

Total fiduciary transactions 469’842 407’312

4.4 Assets under control

(Amount expressed in CHF 1’000)

Year under Previous review year

Type of Assets under control

Assets in funds managed by the Group 219’076 238’088 Assets under management 516’405 433’946 Other Assets under control 1’954’896 1’867’447

Total Assets under control(including assets consolidated two times) 2’690’377 2’539’481

of which double counting 207’779 236’676 Net new money 73’032 15’172

Client assets under controlinclude all assets for which the Bank is not only limited to custody, receiving therefore commissions and/or fees in addition to custody fees and account maintenance charges.

Net fund inflow includes all incoming and outgoing transfers in cash and securities occurring during the year, in accordance with the valuation on the transfer date and excluding interest, fees and commissions.

5.1 Result from trading operations

(Amount expressed in CHF 1’000) Foreign exchange and banknotes Precious metals Securities

Total result from trading operations

Year under Previous review year

2’476 2’698 40 38 40 45

2’556 2’781

5.2 Personnel expenses

(Amount expressed in CHF 1’000) Bank staff

Year under Previous review year

615 581 Salaries and wages 10’929 10’646 AVS, AI, IPG and other contributions required by law 1’066 1’044 Pension foundation contributions 1’296 1’266 Other personnel expenses 490 392

Total personnel expenses 14’396 13’929

5.3 Other operating expenses

(Amount expressed in CHF 1’000)

Year under Previous review year

Premises expenses 1’131 950 Information technology, machinery, fixtures and fittings, vehicles and other equipment 1’393 1’268 Other operating expenses 3’363 3’249

Total operating expenses 5’887 5’467

5.4 Extraordinary income and costs

Extraordinary income were generated by the capital gain on the sale of the participation in Banknord Ge. Pa. Fi. SpA Milano. Extraordinary costs relates to the increase of the reserve for general banking risk.

5.5 Revaluation of fixed assets to a level exceeding acquisition value (art. 665 and 665a CO)

No company included within the scope of consolidation has carried out revaluations.

5.6 Revenues and expenses from ordinary banking operations broken down according to the domicile of operations (Switzerland or abroad)

Year under rewiew Previous year

(importi in CHF 1’000)

Switzerland Abroad Switzerland Abroad

Result from interest activities

Interest and discount income 6’602 869 5’357 519 Interest and dividend income on trading portfolios 12 28 Interest and dividend income on financial investments 496 22 496 24 Interest expense –733 –508 –685 –368

Net interest income (subtotal) 6’377 383 5’196 175

Result from commission and service fee activities

Commission income on lending activities 132 16 139 19 Commission income on securities and investment activities 18’069 3’261 16’033 2’428 Commission income on other services 2’176 368 2’241 164 Commission expenses –1’861 –122 –1’344 –48

Result from commission and service fee activities (subtotal) 18’516 3’523 17’069 2’563

Result from trading operations 2’392 164 2’661 120

Other ordinary results

Results from the sale of financial investments 1 –17 211 –18 Income from non-consolidated participations 2 10 Real estate income 745 640 Other ordinary income 86 4 Other ordinary expenses –1

Other ordinary results (subtotal) 834 –17 864 –18

Total income 28’119 4’053 25’790 2’840

Operating expenses

Personnel expenses –13’836 –560 –13’528 –401 Other operating expenses –4’985 –902 –4’665 –802

Total operating expenses (subtotal) –18’821 –1’462 –18’193 –1’203

Gross Profit 9’298 2’591 7’597 1’637

5.7 Taxes

(Amount expressed in CHF 1’000) New provisions for deferred taxes Release of provisions for deferred taxes Taxes on current income

Total taxes

Year under Previous review year

100 –16 –63 1’898 1’598

1’982 1’535

Reference Points.

The world is constantly on the move. Borders, cultures, and relations change. New unheard of risks and opportunities emerge. Banca del Sempione is ready to take up and evaluate these changes in the exclusive interest of its clients.