Annual Report 2015 - Meinl Bank AG · ANNUAL REPORT 2015 | MEINL BANK ... Deputy Chairman Alexander Johannes Braam Member Dr.h.c. Robert Kofler M.B.A. Member MMag. Peter ... and electrical

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MEINL BANK | ANNUAL REPORT 2015

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ANNUAL REPORT 2015 | MEINL BANK

SUPERVISORY BOARD

Lic.oec. HSG Julius Meinl

Chairman

Thomas Nilsson

Deputy Chairman

Alexander Johannes Braam

Member

Dr.h.c. Robert Kofler M.B.A.

Member

MMag. Peter Weinzierl

Member

(from 15 December 2015)

MANAGEMENT BOARD

Stephen Coleman

Member of the Board

(from 25 October 2015)

Samira Softic

Member of the Board

(from 11 December 2015)

MMag. Peter Weinzierl

Member of the Board

(until 10 December 2015)

Günter Weiß

Member of the Board

(until 25 October 2015)

EXECUTIVE BODIES OF THE COMPANY

Meinl Bank Group: Key Figures of the Financial Year 2015

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2015 2014 Changes in EUR m in EUR m in EUR m

Balance sheet total 412 672 –260

Loans and advances to credit institutions

and central banks 116 238 –122

Loans and advances to customers 125 169 –44

Amounts owed to credit institutions 30 43 –13

Amounts owed to customers 301 518 –217

Supplementary capital 7 7 0

Subscribed capital 9 9 0

Eligible capital according to part 2 of

Regulation (EU) 575/2013 37 46 –9

Consolidated results of

ordinary business activities –13 1 –14

Consolidated loss for the year –9 –2 –7

Consolidated net loss –22 –13 –9

Figures:

Own funds requirements according to Art. 92 (1)

lit c of Regulation (EU) No. 575/2013

Total capital ratio 12.08 % 11.84 %


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Executive Bodies of the Company 3

Key Figures of the Financial Year 2015 4

Management Report 7

Corporate Banking 9

Asset Management 13

Analysis of the Business Results and

Performance Indicators 20

Group Risk Report 22

Meinl Bank AG 34

Consolidated Balance Sheet

as of 31 December 2015 38

Development of Equity

of the Meinl Bank Group 40

Consolidated Statement

of Changes in Fixed Assets 42

Consolidated Profit and Loss Statement

for the Financial Year 2015 44

Consolidated Cash Flow Statement 45

Meinl Bank’s Participations, an Overview 46

Notes (Consolidated Financial Statements) 2015 47

Balance Sheet as of 31 December 2015 60

Development of Equity of Meinl Bank AG 62

Statement of Changes in Fixed Assets 64

Profit and Loss Statement


Notes (Individual Financial Statements) 2015 67

Report by the Supervisory Board 79

Head Office and

Selected Company of Meinl Bank Group 80

TABLE OF CONTENTS

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Man

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Corporate Banking 9

Asset Management 13

Analysis of the Business Results

and Performance Indicators 20

Group Risk Report 22

MANAGEMENT REPORT


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Cor

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Corporate Banking 10

Treasury, Monetary and Securities Trading 11

East Advisors Vermögensverwaltung GmbH 11

Participations 11

CORPORATE BANKING


A s in previous years, in a still challenging market environment, despite the still existing discussions

in connection with the so-called “MEL dispute” related to the actions fi led against Meinl due

to the MEL shares and in addition to the elaborate burden and/or diffi culties thrown up by the

supervisory bodies, Meinl Bank AG was able to assert itself in this environment in 2015, too.

Thanks to its strengthened team, Corporate Banking offers medium-sized to large companies

a large variety of services based on detailed know-how, in particular in the fi elds of energy, metal

and electrical industries or supply. This includes, in particular, loans in a wide range of variations,

project fi nancing, liquidity management as well as exchange rate transactions.

Ultimately, however, a major factor for success is the question to what extent it will be possible to meet the

requirements and expectations of corporate customers. Therefore, Corporate Banking seeks to achieve

a reconciliation of interests with the companies to ensure durable business relationships as well as

appropriate earnings for both parties.

In the fi nancial year 2015, the economic activity in the euro area has worsened considerably. The

sustained diffi cult environment at the stock exchanges and, in particular, the diffi culties in the raw material

markets have left their mark on the earnings side of Corporate Banking. The assessment of the banking

sector is negative. To date, it has not been possible to break this trend, not even by the ECB relaxing

its monetary policy as well as the further reduction of the interest rate on deposits towards the negative.

The contractual loopholes in the interest clauses, parts of which had been a result of this process, were

absorbed by way of agreements, in which Meinl Bank has at least secured the margin as a minimum

return for itself.

These challenges had mainly been met by a comprehensive cost reduction strategy as well as a refi nement

in the risk management activities. Strong infl uences also emanated from the stricter regulatory rules and

regulations regarding equity. In 2015, Meinl Bank purchased software for application in a credit rating for

risk measurement purposes.

Following a phase of strongly inward-looking activities, as well as a credit portfolio adjustment, the now

again greater concentration on the market represents a markedly positive development in corporate

customer business.

GENERAL DEVELOPMENT

CORPORATE BANKING

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Proprietary trading in securities has strongly increased in the past years. Despite close limit

structures – the Bank solely accepts small items in its books and only for a short period of time

– the team was able to gain respectable income. The focus in this context is more on fi xed

income and less liquid and tight-market securities. Due to the infl ows into the asset management, customer

trading in securities, too, regained importance for the Bank; however, overall, the volumes are still

relatively low. Trading in foreign currencies is limited to the mere peak settlement of customer payments

and does not have any special separate meaning to the Bank.

Meinl Bank has continued to expand the services in the business involving the foundation and

management of companies for its customers via its subsidiary, East Advisors Vermögens-

verwaltung GmbH. East Advisors’ range of offers includes in this connection advice

for structuring and establishing the companies and subsequently the assumption of the complete

administrative agendas for such companies in Austria. Furthermore, East Advisors’ scope of services also

includes assistance in structuring and establishing companies in other jurisdictions; via cooperations, East

Advisors offers nearly the same extent of support for its international customers with the foundation and

subsequent management as it does to its Austrian customers. The option to include such non-banking

services in the product portfolio is of major value, particularly for long-term customer retention.

Meinl Bank’s participation portfolio continued to be considerably reduced in 2015. This

corresponds to the general banking trend, which is also reinforced by the current regulations

efforts, to dispose of activities not required for operations as far as possible. Meinl Bank

already started this development in 2008 in order to be able to take the respective market

opportunities through an organised sale of such participations. The essential disposals in the 2015 fi nancial

year affected the participations in the company Julius Meinl Finance N.V., which liquidated, as well as the

sale of Ragusa Beteiligungs Ges.m.b.H. The few remaining non-fi nancial participations included in the

statement of changes in fi xed assets are not scheduled to be held long-term either; however, the market

conditions have not appeared opportune for this purpose so far. The purchase offer available as of the

end of 2014 for the participations in East Advisors Vermögensverwaltungs Ges.m.b.H. was not accepted;

nevertheless, East Advisors Vermögensverwaltungs Ges.m.b.H. sold its material assets, which fi nally brings

about the same intended effects on the balance sheet.

EAST ADVISORS VERMÖGENSVERWALTUNG GMBH

PARTICIPATIONS

TREASURY, MONETARY AND SECURITIES TRADING

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Asset Management & Private Banking 14

Institutional Banking 17

Julius Meinl Investment GmbH 18

Meinl Success Finanz AG 19

ASSET MANAGEMENT

2015 was a turbulent year for the international fi nancial markets. The global economic growth is still

weak. The oil price dropped due to the decreasing demand and the increasing production from more than

60 US dollars per barrel at the mid-year mark to just over 30 US dollars to the end of the year and was

thus below the level of 2008/09. The leading industrialised countries are facing an infl ation that is too

low: even without taking into account the lower energy prices, the consumer price increases are below the

objectives set by the mandates of the major national banks. As a counter-measure, the European Central

Bank announced in the fi rst quarter of 2015 that it will purchase government bonds for a total amount of

EUR 1.5 trillion – similar to so-called “Quantitative Easing” programmes of other central banks. Within

the framework of a project known as “Bazooka”, government bonds valued at EUR 60 billion have been

acquired on a monthly basis since March. The effects on consumer prices failed to materialise for the time

being, but they had been clearly noticeable in the medium term in the fi nancial markets. The return on

ten-year German government bonds, for example, amounted to approx. 0.50% in January and then fell

steadily down to 0.07% in April, as a result of which there had been a massive increase in the returns up

to approx. 0.98% following the start-up of the ECB measures after all. To the end of the year, the return

amounted to just over 0.60%. Similarly, massive movements occurred at the beginning of the year in the

currency market, for example with respect to the euro / US dollar pair. The year started with a value of

just over 1.20 and almost evolved to almost parity until March, to fi nally conclude at just over 1.08 at the

end of the year. Similar volatility dominated in the stock markets, which was driven by concerns about

growth and a possible sudden downturn of the Chinese national economy (so-called “hard landing”).

While the market participants had still been predominantly optimistic in the fi rst half of the year – the

“Shanghai Shenzhen CSI 300” main index increased by more than 50% from January to June –, this was

followed by a sudden and massive correction in the second half of the year with a decrease by more than

40%. Many international stock indices followed a similar pattern, although not on such a scale, with the

largest declines to be recorded in the month of August. The Austrian stock market was not able to evade

this development and decreased by more than 20% in the meantime; nevertheless, the ATX was able to

rise by approx. 13% during the course of the year.

In the fi eld of Private Banking, the core products of Meinl Bank are the funds of the in-house

capital investment company Julius Meinl Investment GmbH and the newly adapted asset manage-

ment strategies, the so-called “Meinl Elite Accounts”, each of which comprises four strategies in

the two major currencies, euro and US dollar. The most risk-averse customers have the “Moderate”

strategy at their disposal where investments are solely made in cash and/or money market products and

predominantly in short-term bonds with the best credit rating. In this context, a low volatility and the

preservation of capital are paramount. The “Income”, “Balanced” and “Capital Growth” strategies are

characterised by an increasing participation in the international stock markets.

All strategies have the following contemporary principles in common: high transparency, a low cost

burden, high liquidity and an open architecture are provided in asset management. But, what do these

ASSET MANAGEMENT – MARKET REPORT

PRIVATE BANKING / WEALTH MANAGEMENT

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catchwords mean in concrete terms for the customers of Meinl Bank? A large part of the asset

management strategies makes use of passive index funds (so-called “Exchange Traded Funds”, ETF).

Within the framework of these funds, the customers can determine at any time, with relatively small

cost and effort, what securities will be held in the fund at what weighting. The customer does thus not

purchase a “black box”, but can easily understand the instruments in which the investment is made.

Another advantage of the use of ETFs are the consistently small charges which, in comparison to funds

managed actively, are charged on the part of the fund companies. If, nevertheless, any investments are

made in actively managed funds, investments are made in the more cost-effective institutional tranches,

where possible, which are not available, for the most part, to private investors with lower investment

volumes outside an asset management business. The term “high liquidity” means that most investments

are made in such ETFs and funds that can be traded daily. An open architecture means to select the best

funds and ETFs of all fund companies for the customers in the “Meinl Elite Accounts” and to not confi ne

in advance to one or a limited set of provider(s). As a result of the investment universe being enlarged

in this manner, the customers can benefi t from signifi cant advantages. The attractive fee structure of the

Meinl Elite Accounts likewise speaks for itself, just as the low investment volume of EUR 100,000 required

in this context. As a result, private customers, too, benefi t from an asset management which is usually only

reserved to large institutional customers and professional investors. The customers seem to be convinced

of the additional value of asset management: all those customers, who had previously been investing in an

asset management of Meinl Bank, have switched to the newly created Meinl Elite Accounts and can thus

continue to benefi t from the best services and a global orientation with a high degree of diversifi cation

in the shares, bonds and real estate classes of investment, as well as in alternative investments, including,

but not limited to, commodities or currencies. It is exactly in this diffi cult market environment, which is

infl uenced by the policies of the central banks more strongly than ever before, that our customers are

seeking for a competent partner. With the Meinl Elite Accounts, Meinl Bank offers contemporary asset

management for its customers that does not need to be shrunk away from any comparison with other

institutions. The increases justify the expectation that Meinl Bank is on the right track with this

realignment.

Meinl Bank has always played a strong role in the implementation of individual solutions in the fi elds

of funds management, asset management, bond and stock trading and real estate. The investment

universe is extended continuously, e.g. by the extension of the bond trade in emerging countries. Overall,

the service level for the customers could be improved several times in trading: the customers’ trading

expenses were reduced, the execution speeds were increased, the execution quality was improved and the

range of tradable products was extended.

Other very innovative products that are part of our investment range since 2013 are offered via

Prague Prime Homes Management. The offers address all of the Bank’s customer groups. The possibilities

include direct real estate investments in the form of an owner community model, which has been

offered to qualifi ed investors since 2013. In this context, Prague Prime Homes Management identifi es and

analyses the properties, manages the acquisition, carries out the development management for the

properties to be refurbished and controls, where required, the subsequent sale of the apartments and/or

the entire properties to fi nal purchasers.

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Our customers have the option of equity investment jointly with other investors, up to the management

of whole projects either with exit after refurbishment or as “Develop to Hold” project, where income is

generated after the refurbishment in the form of rental income. For some of the projects, we also offer

an investment in the form of bonds issued by the respective project company as an alternative to the

equity participation. In each of these variations, Meinl Bank performs the placement and marketing to

its customers.

Since 2013, Prague Prime Homes has been initiating projects with a total investment volume of

approximately EUR 150 million. For one part of these projects, renovation has already been completed,

and the selling of the apartments is currently at an advanced stage. The completion of these projects is

scheduled to take place in the months to come. Further new projects undergo the evaluation stage, and

Meinl Bank intends to continue to use the potential offered by the Prague market and to offer new real

estate products for existing and new customers. For 2016, it is intended to also extend such activities to

other markets and to offer similar products for projects in other large European cities, including Vien-

na. Subsequently, further geographies may then likewise be added; the further steps will mainly be in

accordance with the interest of the Meinl Bank customers. Moreover, the Bank is currently analysing the

earnings opportunities for “income-producing” residential properties in various regions throughout

Europe with the objective of further expanding its offer in the fi eld of real estate.

With the further development of Prague Prime Homes, Meinl Bank consistently pursues its goal to

offer solutions and products to its customers that they cannot receive from competitors in the same form.

Such innovative products, combined with customer-oriented, friendly and competent employees, result

in a competitive advance for Meinl Bank that explains the strong increase of customers in Meinl Bank’s

primary target group – wealthy private customers and selected institutional investors from Europe in the

broader sense.

In 2015, the supplementary capital bond that had no longer been included in the eligible equity capital

due to its remaining term was redeemed, and a 1995-2025 bond with warrants having a nominal value

of EUR 7.27 million 6% supplementary capital was repaid and, at the same time, a 2015-2025 bond with

warrants having a nominal value of EUR 10.0 million 4% supplementary capital was issued. From this

bond, a nominal value of EUR 7.27 million was placed.

MARKET OVERVIEW AND POSITIONING

INSTITUTIONAL BANKING

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In the fi eld of institutional asset management, Meinl Bank offers innovative solutions to its customers

as well. There were further major cash infl ows, for example in the Meinl ATX fund. This is an index

fund, which was set up in cooperation with Julius Meinl Investment Ges.m.b.H. Here, a share index

is replicated, i.e. similar to an Exchange Traded Fund (ETF); investments are made in shares in the same

weighting as in the index to be replicated. The customer benefi ts from direct investment and (nearly)

100% exposure in shares, i.e. no swap-based solutions are applied and no securities lending is made.

Particularly for institutional customers, Meinl Bank offers bespoke services, e.g. the hedging of a block

of shares via derivatives. The massive regulatory reforms had a strong effect on the use of complex

investment instruments and changed the perspectives in the fi nancial markets. These new regulations

already had a strong effect mainly on the institutional investors. The requirements with regard to capital

adequacy and liquidity aspects increased enormously. These regulations and the effects of crises are

strongly politicised and are drawing the investors’ attention.

Institutional Asset Management generally faces special challenges due to the low-interest environment.

Taking higher statistical risks is the only way to achieve a higher target yield: either by increasing the

equity share or by the selective addition of higher-interest bonds from the periphery or the sub-investment

grade area.

In the United States, the Federal Reserve Bank implemented the fi rst interest increase since 2008

in December 2015. While the initial assumptions related to further rapid increases in 2016 due to

the improved economic development, most recently there had been a continuously growing num-

ber of critical voices against any willingness to faster interest rate increases. The estimates made by the

analysts regarding the base rate towards the end of 2016 assume a range between 0.5% and 2%, with

the median currently amounting to 1.25%. At a fi rst glance, the data on the employment situation in

the United States for 2015 looks good: on average, 228,000 jobs had been created each month, and the

rate of unemployment dropped to 4.9%, which is the lowest level since November 2007. By comparison,

however, the GDP growth was very moderate. This means that productivity had a very poor rate of

growth, which, in turn, results in the wage growth being restricted, increasing unit labour costs and

lower profi t margins on the part of the companies. In the long term, these effects are signalling restrained

economic growth, which will not boost the stock market particularly well.

In the market, there are rising expectations that the European Central Bank will take additional

major support measures in March to stimulate the low number of credits granted and the weak

economic growth. The speculations move in the direction of a further reduction of the interest

rate on deposits of currently minus 0.30% or an expansion of the bond purchase programme,

which was extended only in December 2015 until at least March 2017.

From a fundamental perspective, there is only a small number of factors in the commodities markets

which could bring about sustainably increasing prices in the medium term. China, the largest consumer

of many commodities in the past few years, is currently in the process of increasingly concentrating on

the expansion of the services sector to the detriment of the industrial sector. There is an excess supply of

crude oil, and industrial metals are less demanded due to lower production volumes. Gold and silver might

be of interest for diversifi cation purposes; nevertheless, the main argument always mentioned in favour

of the purchase of precious metals is a hedge against a high-infl ation scenario which, however, is hardly

likely to be realised in the medium term.

The expired fi nancial year was characterised by persistently high volatility in the markets and an

increasing macroeconomic uncertainty.

In Europe, the ECB responded to the low infl ation and the weak economic growth in the euro area by

extending the ongoing Quantitative Easing programme until March 2017. Apart from that, the discount

rate was lowered to –0.3% during the course of the year. The weak price development was due to a

considerable decrease in the price of oil, mainly in the second half of the year. In December, the price for

one barrel of the Brent fell to USD 28 in the meantime and thus to the lowest level since 2003.

In the USA, the zero interest rate phase offi cially came to an end with the fi rst interest rate increase for

almost ten years. While economists and central bank representatives expect further interest rate increa-

ses this year, the interest rate level should remain low in a historical comparison. Although the macro-

economic situation is positive, reporting a growth of 1.8% and an employment rate of 5.0% in its latest

fi gures, which meets the customary defi nition of full employment, the strong dollar and the low oil price

put pressure on prices. This is expected to delay further interest rate increases in 2016.

Following a rapid increase of the share prices, concerns regarding the sustainability of the high growth

rates in China resulted in a sharp correction in the second half of the year. The growth forecast for the

fi ve years to come still amounts to 6.5% p.a.; in the fourth quarter, however, one of the main global drivers

for growth had already been recording a signifi cant decrease of its foreign trade volume.

JULIUS MEINL INVESTMENT GMBH

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MEINL SUCCESS FINANZ AG

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During the fi rst half of the year, the stock markets had been experiencing a high-altitude fl ight, and in

many markets, including Germany and the United States, new record highs were achieved. During the

course of the year, however, it had not been possible to maintain these fi gures, which is why most of the

stock markets completed the past year with only small exchange-rate gains. The returns on government

bonds fl uctuated at a low level.

Due to redemptions, a decrease of the fund assets from EUR 303 million to EUR 263 million had to be

recorded. The company currently manages 20 funds open to the general public.

Meinl Success Finanz AG was founded in 2002 as a wholly owned subsidiary of Meinl Bank

AG, with the purpose of building up the private banking business. In 2015, the company

employed an average of four employees who had been responsible for the care of external

distribution partners, the provision of information for customers and for ensuring the continuity of the

business operations. The company cooperates with some 40 licensed contract partners within Austria and

in Germany as well as with a securities intermediary bound by contract.

In addition to the agency and advisory services of the company, the customers of Meinl Success Finance

AG can also make use of the fund range of Julius Meinl Investment GmbH for investment purposes.

Moreover, the portfolio also offers more than 100 funds of international companies and unit-linked life

assurance products.

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Meinl Bank AG’s result from ordinary business activities amounted to EUR –14.2 million

in the fi nancial year and decreased by EUR 15.3 million compared to the previous year.

The Consolidated Financial Statements of 2015 disclosed a result from ordinary business

activities of EUR –13.5 million. As of 31 December 2015, Meinl Bank AG reports an equity excess of

EUR 9.4 million.

The following fi gures as fi nancial performance indicators represent a fi nancial and income analysis of the

development of Meinl Bank AG and the Meinl Bank Group in the fi nancial years 2015 and 2014:

ANALYSIS OF THE BUSINESS RESULTS AND PERFORMANCE INDICATORS

Meinl Bank AG 2015 2014

Cash fl ow fi gures: EUR ‘000 EUR ‘000 Cash fl ow from operating activities –132,203.3 –114,682.6Cash fl ow from investing activities –17,936.1 –829.9Cash fl ow from fi nancing activities –7,860.0 9,000.0 Managed customer assets: EUR m EUR m 1,099 1,439 Credit volume: EUR EUR Loans and advances to customers 125,089,122.66 163,347,649.44Loans and advances to credit institutions 74,874,753.70 157,736,493.78Guarantees and assets pledged as collateral assets 7,804,275.75 11,330,324.11Balances with Austrian central banks 41,718,696.70 79,913,257.44 249,486,848.81 412,327,724.77

Productivity: a) EUR EUROperating income 29,379,590.29 39,719,730.91Average staff levels 92 77 319,343.37 515,840.66or b)Loss for the year + taxes –11,553,609.09 –2,126,016.98 –125,582.71 –27,610.61Interest spread:Net interest income 4,361,126.26 5,062,472.23Average balance sheet total 540,434,230.62 597,710,304.99 0.81 0.85Commission spread: Service results (Commission income – commission expenditure) 6,490,433.92 16,627,119.67Average balance sheet total 540,434,230.62 597,710,304.99 1.20 2.78Gross income spread: Net interest income + service result 10,851,557.18 21,689,591.90Average balance sheet total 540,434,230.62 597,710,304.99 2.01 3.63Effi ciency 2 (Cost-Income Ratio in the wider sense): General administration costs 30,885,330.96 28,685,258.44Operating income 29,379,590.29 39,719,730.91 105.13 72.22Equity capital profi tability: Loss for the year –9,162,253.37 0.00Average equity capital 31,676,477.07 31,757,603.75 –28.92 0.00Valuation spread: Valuation result credit business 6,057,457.69 1,217,309.67Average balance sheet total 540,434,230.62 597,710,304.99 1.12 0.20Failure ratio: Valuation result credit business 6,057,457.69 1,217,309.67Loans and advances to customers 125,089,122.66 163,347,649.44 4.84 0.75

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Non-Financial Key Performance Indicators

During the fi nancial year under review, Meinl Bank AG employed 104 employees on average (87 in the

previous year). Qualifi ed and motivated employees are a success factor of Meinl Bank AG. Individual

career and life plans are taken into consideration in the training plans. A great deal of value is placed

on the training and education of our employees so that we are able to provide our customers with high

quality advice.

Research and Development

No activities were carried out in terms of research and development.

Meinl Bank – Group 2015 2014

Credit volume: EUR EUR Loans and advances to customers 125,089,236.71 169,353,364.09Loans and advances to credit institutions 74,874,890.44 157,779,750.98Guarantees and assets pledged as collateral assets 7,804,275.75 11,330,324.11Balances with Austrian central banks 41,508,898.76 79,913,257.44 249,277,301.66 418,376,696.62

Productivity:a) Operating income 31,354,331.69 40,173,526.65Average staff levels 104 87 301,483.96 461,764.67or b) Loss for the year + taxes –10,842,810.67 –3,909,590.56 –104,257.79 –44,937.82Interest spread: Net interest income 4,379,915.11 5,423,913.45Average balance sheet total 542,444,056.06 597,101,060.99 0.81 0.91Commission spread: Service results(Commission income – commission expenditure) 7,775,610.56 17,512,793.49Average balance sheet total 542,444,056.06 597,101,060.99 1.43 2.93Gross income spread: Net interest income + service result 12,155,525.67 22,936,706.94Average balance sheet total 542,444,056.06 597,101,060.99 2.24 3.84Effi ciency 2 (Cost-Income Ratio in the wider sense): General administration costs 31,840,311.25 29,561,654.83Operating income 31,354,331.69 40,173,526.65 –101.55 73.58Equity capital profi tability:Loss for the year –8,851,939.63 –1,865,165.89 Average equity capital 33,983,177.75 34,662,583.30 –26.05 –5.38Valuation spread: Valuation result credit business 6,057,457.69 1,248,130.67Average balance sheet total 542,444,056.06 597,101,060.99 1.12 0.21 Failure ratio: Valuation result credit business 6,057,457.69 1,248,130.67Loans and advances to customers 125,089,236.71 169,353,364.09 4.84 0.74

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Organisation

Meinl Bank AG, in accordance with the type, scope and complexity of the banking transactions it

performs, established corresponding accounting and control procedures to record, assess, control and

monitor the risks pertaining to its business and operations (overall bank risk management). The primary

task of this overall bank risk management is to constantly ensure the Bank’s risk-bearing capacity and

a regular and standardised management and control of the risks pertaining to the business and operations

of the Bank.

Functions that assume risks are separated from the functions monitoring the risks up to and including the

Management level, to ensure a clear separation of responsibilities and to avoid any confl icts of interest.

The head of the back offi ce division holds the central responsibility for the risk management.

In addition, Meinl Bank has established a Risk Controlling division. Its core tasks include the recording,

assessment, control and monitoring of the risks pertaining to the business and operations of the Bank

and the reporting of these topics to the Risk Monitoring Committee and to the executive bodies of

Meinl Bank AG. The Bank’s risks are quantifi ed and compared with available risk coverage assets in the

context of the regular analysis of the risk-bearing capacity. Tasks of Risk Controlling are to monitor the

Bank’s risk-bearing capacity, the compliance with the implemented risk limits and the adherence to the

internal risk management principles. The responsibility for risk reporting includes the regular and event-

related reporting about risks. In addition, a Risk Controller ensures that the internal risk management

documentation is constantly kept up-to-date.

Meinl Bank has established a Risk Monitoring Committee (RMC), which is responsible for a centralised

monitoring and control of the risks applying to the entire Bank. Regular participants of this Committee

are the entire Management Board and the Risk Controller, but also the heads of all essential risk-bearing

business units and the Internal Audit Department. Core tasks of the RMC are:

• the permanent determination of the risk profi le and the ongoing monitoring of the risk-bearing

capacity of the Bank as a whole;

• the assessment of whether the Bank has an adequate equity base in relation to the risk appetite

established and the performance and monitoring of the risk capital allocation;

• an assessment of the bank-specifi c stress tests;

• the ongoing development and monitoring of strategic control and hedging measures to comply with

the required equity base;

• decisions on the handling of essential risk positions;

• the determination and update of the limit system applying to the Bank as a whole; and

• the permanent further development of the Risk Management Systems.

GROUP RISK REPORT

– 23 –


In addition, Meinl Bank has established a Credit Committee for credit risk management that consists of

at least two Board members and the head of the Debt Capital Markets Financing division. All material

fi nancing projects, including their documentation, must be submitted to this Committee in order to decide

on an award in a risk-adequate manner by taking into account the total portfolio.

Risk Profi le

Meinl Bank’s overall bank risk strategy aims at avoiding risks and provisions for risks. In the course of a

regular adaptation of the risk profi le, the essential risk categories are identifi ed at least on a quarterly basis

and the degree of exposure to such risks is analysed and documented by RMC. As of 31 December 2015,

Meinl Bank has identifi ed the following risk categories as material risks to the Bank and the exposure to

such risks in relation to the other risk categories is as follows:

Meinl Bank’s market risk exposure is considered to be relatively low in relation to the other risk catego-

ries. No Market Making activities took place in the year 2015. The Bank does, in general, not plan any

trading for speculative purposes, i.e. to make use of short-term market fl uctuations. The currency risk is

minimised by currency-congruent investments to avoid any strategic positions in open foreign exchange

positions.

Meinl Bank’s exposure to credit risks is currently assessed to be relatively high. Credit risks arise mainly in

connection with the loans and advances to corporates within Austria and abroad. There are investments

in the amount of EUR 33.9 million in countries with non-investment grade rating (countries: Ukraine,

Russia and Serbia); most of these investments are hedged. The concentrations of securities for collateral

fi nancings constitute further credit risks. The Bank counteracts these risks by regularly monitoring the

degree by which collaterals are covered, by a standardised reporting system and by subsequently reques-

ting additional collaterals, if such are required. The credit default risk arising from interbank business,

which is still considered as being relatively high, is another infl uential factor for Meinl Bank’s credit

risk assessment. The Bank counteracts this risk by selecting its counterparties/issuers according to their

credit rating and by timely monitoring the credit-spread development of these counterparties. The Bank

generally avoids accepting long-term commitments with a term of more than 5 years. Credit risks may

also arise from guarantees and assumptions of obligations to perform. The strong decrease of the nostro

portfolio led to the reduction of the issuer default risk. With trust fi nancing, there is no counterparty

default risk due to the existing cash collateralisation; a potential legal risk arising from the transactions is

considered low by the Bank.

– 24 –


The operational risk exposure is currently assessed to be relatively high on account of the legal risks

associated with pending lawsuits and court decisions. This classifi cation results from the current legal

risk, which was taken care of by creating suffi cient provisions. In addition, these risks are counteracted by

ongoing multi-bank risk self-assessments, measures such as adequate processes documented in writing in

form of manuals and offi cial instructions, a risk-oriented and regular involvement of the Internal Audit

Department and the work of highly qualifi ed employees. An improved internal control system (ICS) had

been implemented.

The Bank considers its current business risk exposure as relatively high. This assessment results from the

currently strong fl uctuations in the business volume, as market news have a direct positive or negative

effect on Meinl Bank’s business and earnings situation. Also, Meinl Bank’s current and future strong

dependence on the commission-related business contributes highly to that risk classifi cation. The

generation of net interest income plays an inferior role at Meinl Bank. Meinl Bank’s general commercial

activity on the market in its capacity as Market Maker and in the fi eld of Sales Trading has been

reduced signifi cantly. In order to counteract the business risk, the Bank pushes a further diversifi cation and

re-orientation of its business activities. The opening up of new products and markets is fi rmly embedded

in Meinl Bank’s business strategy and contributes essentially to the growth of its business. However, the

Management is aware of the risks arising therefrom and counteracts them, inter alia, with a risk-oriented

and standardised product launch process. The reputation risk must be considered as being relatively high

on account of reports in the media. However, lasting and transparent media relations of the past years

have already led to improvements in this regard.

The holding risk can be assessed as being medium as the risk positions of the participations were taken

account of in Meinl Bank’s consolidated risk presentation and measurement on the level of the entire

Bank (“Look Through”). In 2015, the number of participations was considerably reduced. Risks arising

from the remaining essential holdings are controlled, in addition, by a standardised regular reporting to

the Management Board and the RMC.

The balance sheet structural risk (interest change risk) exposure can be assessed as being relatively low.

Any excesses arising from the ongoing business are constantly measured and controlled on the basis of the

minimum requirements as pronounced by the supervisory authority.

The liquidity risk exposure is still considered to be low as is refl ected in the results of the stress tests

performed. A substantial liquidity risk could arise from investor lawsuits and tax risks, if the risks are

incurred to a higher extent than currently estimated by the Bank.

– 25 –


Risk Governance

Meinl Bank has an internal control system that is adapted to its business activity and ensures a transparent

decision-making process and a clear distribution of tasks and assignment of competencies. It includes

consistently implemented control mechanisms in form of a separation of functions and the 4-eyes

principle.

The essential elements of the control system are documented in writing in form of process descriptions,

guidelines and offi cial instructions and are accessible to the competent employees in the versions as

amended from time to time. A project to improve the documentation of the processes and internal

controls is currently being elaborated. Its implementation has been scheduled by September 2016. The

Risk Management Manual should be particularly emphasised here as it covers all essential risk-relevant

subjects such as e.g. the overall bank risk control and risk management per individual risk category in one

comprehensive document. A new credit risk manual was likewise brought into force.

The entire Management Board is regularly involved in the determination of the risk strategy, the

establishment of the risk profi le, the decision-making process regarding essential risk positions and in the

risk control process. The Supervisory Board is informed about the results of the overall bank risk control

on a regular basis.

Analysis of the Risk-Bearing Capacity

One of Meinl Bank’s core instruments for monitoring and controlling the overall bank risk is the analysis

of the risk-bearing capacity, which is performed on a monthly basis. It ensures that the overall bank

risk potential is covered by available risk coverage assets at all times in each of the scenarios performed.

The overall bank risk potential is determined by quantifying and aggregating all identifi ed individual

risks where this is based on two different scenarios: in the going concern scenario, the risk potential will

be identifi ed by assuming that the Bank’s operating activities are continued and by assuming that the

regulatory requirements regarding a minimum amount of equity will be fulfi lled constantly. In the

liquidation scenario, it is assumed that the Bank is no longer able to comply with the regulatory

requirements as to minimum equity. In the liquidation scenario, the risk potential values are calculated

by taking into account the liquidation risk. Additional risk buffers are added to the already increased risk

potential values in the assumed case of liquidation, to ensure a conservative approach and the protection of

creditors.

The Bank regularly determines and identifi es risk coverage assets available for covering risks in parallel

to determining its overall bank risk potential. These funds are allocated to different risk coverage assets

depending on their availability and their publicity effectiveness. The risk coverage assets are then assigned

to the scenarios depending on the hedging purpose. For that purpose, the going concern scenario general-

ly only offers easily usable coverage assets with low publicity effectiveness for disposal. In the liquidation

scenario, however, use is made of the entire inventory of existing risk coverage assets.

– 26 –


In the current fi nancial year and towards the end of the fi nancial year 2015, the aggregate bank risk

potential under the going concern scenario was not completely covered by the available risk coverage

assets, which is due to a conservative approach and the determination of the risk coverage assets

according to the standard approach. The Bank’s Management Board will try to reduce the risk potential,

for example by selling the participation in SOGEAP.

Risk Capital Allocation

The RMC determines risk capital limits at least once per year on the basis of the risk categories identifi ed

as being material and based on the essential business areas to further limit the risks of the Bank’s business

and operation.

Such risk capital allocation is based on the risk coverage assets that are overall allocable pursuant to the

risk appetite and that are reduced by a risk buffer providing for other risks. The available risk capital

is distributed to the essential risk categories and business areas, where such distribution is oriented on

the existing business, the risk potential values of the essential risk categories known from experience and

by taking account of the business and risk strategy of Meinl Bank.

RMC is responsible for monitoring the compliance with the defi ned limits in capital allocation and for

deriving control measures, if required.

Limit System and Reporting

Meinl Bank has implemented a three-step Limit System relating to the entire bank to ensure an effective

containment of its risks:

• Regulatory limits for concentration risk containment are defi ned on the level of the group of

connected customers.

• Following the risk strategy, Meinl Bank defi nes specifi c limits for the fi nancing business, the securities

business, for open currency positions and for the balance sheet structural risks on the level of the

entire bank.

• In addition, Meinl Bank has clear competence rules, depending on business volume and the

counterparty, which range from the relevant person in charge to the Supervisory Board.

The individual specialist departments and the Risk Controlling division are responsible for the ongoing

monitoring and revision of the limit utilisation.

The bank-specifi c standardised reporting system consists of regular and event-related reports and

provides, at any time, an overview of the risk situation and the risk position of the Bank as a whole.

– 27 –


Stress Tests Related to the Overall Bank

In order to enable a quantifi cation and analysis of the effects of crisis scenarios that are not or not

suffi ciently taken into account in the context of the “normal” risk measurement methods (in particular

the risk-bearing capacity), Meinl Bank performs stress tests on a regular basis. As part of such tests, an

increase of the overall bank risk potential is simulated by assuming certain management-defi ned extreme

events (so-called stress events) and values for risk fi gures and positions in the profi t and loss statement

are quantifi ed. The results of the stress tests are used to derive control measures to avoid or reduce the

occurrence of stress events and to defi ne “emergency measures” for those stress events, which potentially

endanger the continued existence of the Bank.

Meinl Bank fulfi ls its disclosure obligations on its website (www.meinlbank.com).

Duties and Duties Procedures

In the 2014 fi nancial year, the Meinl Bank Group was subjected to an external audit according to Section

147 BAO [Federal Fiscal Code] with regard to all relevant types of duties. The company audit reports

and the corresponding certifi cates for the years 2003 to 2009 are now available at Meinl Bank and/or for

the group members.

Depending on the appreciation and the outcome of the further appeal proceedings, the matters in dispute

could lead to substantial retrospective tax payments to be made by Meinl Bank. Due to the complexity of

the matters on hand, the foreign element and the existing legal uncertainties, the estimate of the outcome

of the further proceedings is affected by high uncertainties. Depending on the assessment of the occur-

rence probabilities for the outcomes of the proceedings regarding the individual matters, the maximum

tax amount to be paid retroactively may be over EUR 125.2 million (in consideration of interest receivable

and balances from value added taxes for the company audit period). The Bank’s Management Board

uses analyses of the tax representative in support of its assessment of the tax risks. Due to the assessments

of the commissioned tax consultants, there are comprehensible arguments that generally allow the

establishment of accounting provisions below the maximum amount stated. Based on new information

and facts, the amount of the accounting provisions is regularly reviewed, also with regard to the reporting

date 31 December 2014.

On 25 June 2014 (with supplement dated 3 July 2014), Meinl Bank concluded a written agreement for

the assumption of tax risks (“obligation to perform”) with a company in the infl uence of the ultimate

owners of the Bank up to the amount of EUR 38.0 million. According to this agreement, the company

assumes the subsequent payment of taxes of Meinl Bank regarding the years 2003 to 2009 included by the

external audit by crediting value added tax credits for the years in question if a claim is asserted. The

intrinsic value of this obligation to perform for tax risks is essentially justifi ed with the company’s asset

situation.

– 28 –


Furthermore, on 4 July 2016, Meinl Bank concluded a written agreement, which is similar in large parts,

for the assumption of tax risks (“obligation to perform”) up to the amount of EUR 15.0 million with

another company in the infl uence of the ultimate owners of the Bank. An oral promise was already

made in the 2015 fi nancial year in this regard. In addition, Meinl Bank has a loan owed to this company

in the amount of EUR 4.6 million with a term until 31 December 2015 and also holds a profi t-sharing

right of this company in the amount of EUR 2.9 million. By way of a purchase agreement concluded on

15 October 2015, this company acquired all shareholdings in a Group company at a purchase price in the

amount of EUR 13.8 million. The intrinsic value of these investments of the Bank vis-à-vis the company

and of the obligation to perform, thus in total EUR 35.4 million (within the Bank Group: a total of EUR

36.1 million) is established by the company’s asset situation and the realisation of assets by a subsidiary in

this company in the near future, as well as with a business valuation of said company. This constitutes an

uncertainty in the preparation of the fi nancial statements. According to these agreements, the companies

assume subsequent tax payments to be made by Meinl Bank concerning the years 2003 to 2009 included

by the external audit – by crediting value added tax credits for the years in question, if a claim is asserted.

Therefore, jointly with the above obligation to perform, provisions in the amount of EUR 53.0 million

are secured.

Tax provisions in the total amount of EUR 2.5 are established in the Bank’s annual fi nancial statement

at hand for the years in question. They concern provisions that are faced by advance corporation tax

payments for the years in question that have been previously paid and are capitalised as tax offi ce

receivables. Meinl Bank has not allocated any provisions for potential additional tax risks due to the

obligations to perform and based on its own evaluation and the evaluation of the tax representative. It

was agreed with the tax authority that the collection of the subsequent tax payment will be suspended

according to Section 212a BAO due to the provision of collateral until a decision is made by the high

courts.

Investor Lawsuits

For several years, the Meinl Bank Group has been facing a large number of lawsuits, mainly from

former investors of Meinl European Land Limited. For the risks resulting from these investor

lawsuits, the Group established provisions for impending losses in the amount of EUR 18.5 million

as at 31 December 2015 for an amount in dispute of EUR 91.5 million. The calculation of the

amount of the provision ratio is generally based on an estimate given by the lawyers representing

the Bank in the proceedings as to the chances of success and is verifi ed and substantiated by means

of a back testing model taking into account the course of the proceedings so far. The provision is

the best possible estimate due to the non-foreseeable course of the proceedings and is subject to

uncertainties due to the complexity of the matters and a foreseeable longer duration of the proceedings.

– 29 –


As of 31 December 2015, in addition to provisions made for civil actions already brought,

potential claims of approx. 5,000 investors that joined the criminal investigations as private

parties and have previously waived the assertion of their alleged claims in civil proceedings had

likewise been taken into account. That part of the private parties who had already fi led an

additional lawsuit before the civil court has already been taken into account in the past annual fi nancial

statements in the provisions described above on the basis of historically determined loss ratios.

Their joining as private parties may lead to the interruption of the limitation period under certain

circumstances, which would otherwise already have accrued in all these cases. The underlying estimate made

by the Bank and by the Bank’s legal representatives with regard to the likelihood for the private parties to

prevail in the proceedings has not changed signifi cantly when compared to past annual fi nancial

statements.

In the fi rst place, the consideration of the private parties is based on refl ections on the overall settle-

ment of the pending MEL proceedings within the framework of the agreement concluded with the

Dutch foundation Stichting Atrium Claim and without acknowledging any strict legal obligation.

Via the Stichting, all investors having taken legal steps in the form of a lawsuit or as a joining as

private parties are given the opportunity to receive a compensation amount, the amount of which

depends on specifi c parameters. The solution via the Stichting has become possible as a result of

Atrium, the succession company of Meinl European Land Limited, assuming half of the costs and

compensation payments. The total amount of those private parties who did not fi le any lawsuit is

estimated at approx. EUR 230.0 million. Until 30 April 2016, approx. 1,300 private parties of the

ones referred to above bindingly accepted the judicial settlement with the joining of private parties

amounting to a total of approx. EUR 50.0 million. To this end, compensation payments in the amount

of EUR 7.6 million were determined. The settlements reached in this context were used to calculate

a loss ratio, which was then applied to the total amount of the joining of private parties. This results in

a risk provision for private parties in the amount of EUR 11.0 million. The settlements reached via the

Stichting were included into the Bank’s back testing model in order to determine the provision ratios.

Going Concern

If one of the above risks occurs at an amount that substantially exceeds the formed provisions and/or the

assumed obligations to perform by third parties, a shortfall of the capital adequacy requirements and/or

the over-indebtedness of Meinl Bank may occur.

Based on the previous course of proceedings with investor lawsuits and the joining of private parties as

well as an assessment by the legal representative on the one hand and on the evaluation of the tax risks

by the tax adviser on the other hand, the Bank’s Management Board assumes that the risks will occur to

a lower extent.

– 30 –


With regard to the concentration risks, the Management Board’s evaluation regarding the satisfi ability of

the exposures is based on its regular assessment of the counterparties’ credit rating; such counterparties

being all part of the ultimate owners of the Bank. This also includes the assessment of the intrinsic value

of the underlying net assets as well as its timely convertibility into cash.

In its budgetary planning for the 2016 fi nancial year, the Management Board expects positive results of

ordinary business activities in the amount of EUR 6.3 million. The budget planned in detail is mainly

based on the assumption that it will be possible to considerably increase the commission income,

while the non-personnel expenses will be signifi cantly reduced by savings in the fi eld of marketing and

consultancy services, and the formation of provisions for loans and risks to investors is now expected to

become necessary only to a minor extent.

On the basis of its assessment of these potential risks to continued existence, as well as the positive

projected results for the following fi nancial year, the Management Board of the Bank assumes going

concern.

– 31 –


In summer 2015, Eric Breiteneder, a Vienna lawyer representing investors, initiated collective

proceedings for MEL investors against Atrium in the Netherlands. The basic idea behind this was that

the Netherlands offer the possibility to receive a court decision which will be binding for all investors

concerned under certain circumstances.

In January 2016, within the framework of these proceedings, a general settlement was reached between

a Dutch foundation of investors and Atrium which was also joined by Meinl Bank. The investor foundation

offers the MEL investors an opportunity for a settlement of between 1.5% and 70% of the pecuniary loss

from a MEL investment, with the amount of the percentage rate depending, in the fi rst place, from the time

of purchase and from the amount of the investment. A prerequisite for joining the settlement via the inves-

tor foundation is that the respective investor has fi led either a civil lawsuit or an application for joining as

a private party in the course of the ongoing criminal investigation proceedings before 20 June 2014. Once

a settlement is reached, any potential claims of the investor will be deemed to have been fi nally settled,

and the application for joining as a private party has to be withdrawn.

The costs of the settlements are covered by the provisions of Meinl Bank.

On 11 March 2016, an invitation dated 10 March 2016 of the Austrian Financial Market Authority to

submit comments on the matter in accordance with Sections 37 et seqq. and 45 Austrian General Admi-

nistrative Procedures Act [Allgemeines Verwaltungsverfahrensgesetz, AVG] – violation of Section 28a(2) lit. 2

Austrian Banking Act [Bankwesengesetz, BWG] (personal reliability of a member of the supervisory board)

– was served to the Management Board members of Meinl Bank AG.

The Bank concluded an agreement for the assumption of tax risks (“obligation to perform”) up to the

amount of EUR 15.0 million with an Austrian company in the infl uence of the ultimate owners of the

Bank. The obligation to perform was promised to the Bank orally and with legally binding effect in the

2015 fi nancial year.

In addition, Meinl Bank has a loan owed to this company in the amount of EUR 4.6 million with a

term until 31 December 2015 and receivables from a purchase of shareholdings of EUR 1.2 million.

Furthermore, the Bank holds a profi t-sharing right from capital investment of this company with a book

value of EUR 2.9 million.

The shareholdings in SO.GE.A.P. Societa per la Gestione dell’Aeroporto (SOGEAP) were sold in April

2016 at a book value of EUR 7.8 million.

EVENTS OF SPECIAL SIGNIFICANCE THAT OCCURRED AFTER THE END OF THE BUSINESS YEAR

The years since the fi nancial crisis in 2008 have brought considerable changes in the regulatory

environment, the successful management of which means a major challenge for a small bank.

Since 2014, Meinl Bank has been increasing its personnel resources required in this context

in order to meet these new requirements in all areas, despite the distractions caused by the ongoing

proceedings. This is also connected with a catch-up process, which should essentially be completed in the

course of the year 2016.

The exit of Great Britain from the European Union should not have any effects on the Bank.

There are better chances for 2016 than for the previous years to ultimately fi nd a global solution for

inherited burdens relating to the MEL dispute both on the civil law and also on the criminal law side.

Furthermore, the changes in the Management Board should likewise result in the dispute with the

Austrian Financial Market Authority being largely settled. Subsequently, the Bank can focus again on

operational agendas and use committed resources for the defence of offi cial encroachments for better

(in the sense of more income-generating) purposes. However, it must be assumed that the initiatives

introduced in 2016 will not be fi nally completed before the 4th quarter of the year 2016 either.

An adjustment of non-core activities is currently ongoing, which will also enable a better focus on a

more precisely defi ned business model. Important aspects here are an increase of the number of persons

working in the Asset Management Team in Vienna, where its focus on the CIS countries was further

increased with a clear geographic allocation of the markets to individual account managers, but also a

strengthening of the Corporate Finance team. In addition, an Austrian Desk department was established

within the Asset Management.

After the successful introduction of investment products of Prague Prime Homes in the years 2013

and 2014, the extension of this product range to other European cities is planned. In a fi rst stage, the

expansion will focus on Warsaw and Vienna. In further stages, cities such as Budapest and Bratislava

seem interesting, on the one hand, but also London, on the other hand. The further development of the

product offer is mainly controlled on the demand side by Asset Management customers according to

certain geographies.

Meinl Bank is convinced that in view of the products already launched and those still in the pipeline,

customers will recognise that the Bank has regained the competence that has always been attributed to

it. Its targeted staff policy and in-depth training ensure that the quality of its personnel is on a level that

guarantees that even high-end customers in the private customer segment are given exactly the offers they

are looking for most in the current market situation and in view of the insecurity on the capital markets:

– 32 –


FORECAST DEVELOPMENT IN 2016

highly professional, objective and still individual advice and an investment concept tailored specifi cally

to the investment strategy and risk profi le of each individual customer. The noticeable increase in the

number of new customers acquired in the previous years is intended to be continued. In addition to the

direct banking business, Meinl Bank also offers its customers increasingly so-called “family offi ce” services

to provide customers with the comprehensive support they may nowadays expect from a quality private

bank.

Meinl Bank’s Corporate Finance fi eld continues to focus on the Eastern European region and Latin

America. Stable existing customer relations are continued and topped by new customers mainly in the

fi eld of Asset Management who, in addition to support in the management of their assets, also need

support in transactions belonging to their operating business. The employees’ long years of experience

in the core markets and their network of contacts still constitute the essential competitive edge of Meinl

Bank. An increase of the staff numbers should give Meinl Bank the potential to further push the M&A

consultancy business besides the traditional structuring business.

Vienna, 8 July 2016

The Management Board

Stephen Coleman Samira Softic

Member of the Board Member of the Board

– 33 –


– 34 –


MEINL BANK AG

Management Board

Stephen Coleman (from 25 October 2015)

Member of the Board

Samira Softic (from 11 December 2015)

Member of the Board

MMag. Peter Weinzierl (until 10 December 2015)

Member of the Board

Günter Weiß (until 25 October 2015)

Member of the Board

Directors

Stephen Coleman (until 25 October 2015)

Investment Banking

Dr. Klaus Requat

Investment Banking

Authorised Proxies

Thomas Gross

Back Office

Mag. Matvei Hutman

Private Banking

Erwin List

Treasury, Currency Trading

Karl Prüger

Corporate Banking

Samira Softic (until 11 December 2015)

Bank Organisation

Günter Weiß (from 17 November 2015)

Accounting

General Agents

Klara E. Kalmar

Human Resources

Martina Kitzinger

Settlement

Thomas Milunovic

Corporate Banking

Astrid Mahoric

Corporate Banking

Richard Schmid

Accounting

– 35 –


MEINL BANK AG

Julius Meinl Investment GmbH, Vienna

Dr. Wolf Dietrich Kaltenegger

Managing Director

Arno Mittermann

Managing Director

Meinl Success Finanz AG, Vienna

Josef Weichselbraun

Management Board

Mag. Reinhard Puntigam

Management Board


– 36 –

Soko

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015

Consolidated Balance Sheet

as of 31 December 2015 38

Development of Equity

of the Meinl Bank Group 40

Consolidated Statement of

Changes in Fixed Assets 42

Consolidated Profi t and Loss Statement


Consolidated Cash Flow Statement 45

Meinl Bank’s Participations, an Overview 46

Notes (Consolidated Financial Statements) 2015 47

CONSOLIDATED FINANCIAL STATEMENTS 2015


– 37 –

Consolidated Balance Sheet as of 31 December 2015

– 38 –

12/31/2015 12/31/2014Assets No.* EUR EUR EUR ‘000

1. Cash and balances with central banks 1 a) Cash 210,501.10 1,072 b) Balances with central banks 41,508,898.76 79,913 41,719,399.86 80,958

2. Debt instruments of public issuers 2 4,120,649.20 28,960

3. Loans and advances to credit institutions 3 a) Repayable on demand 74,874,890.44 107,537 b) Other loans and advances 0.00 50,243 74,874,890.44 157,780

4. Loans and advances to customers 4 125,089,236.71 169,420

5. Debt securities including fi xed income securities 5 a) of other borrowers 3,139,912.50 5,523

6. Shares and other variable yield securities 6 63,379,697.46 122,188

7. Investments 7 a) In affiliated companies 1,797,596.66 3,932 b) In other companies 3,971.62 4 1,801,568.28 3,936

8. Shares in affiliated companies 7 12,759,503.82 17,553

9. Intangible fi xed assets 0.35 0

10. Tangible fixed assets 8 857,073.81 1,015

11. Other assets 9 84,099,359.21 84,374

12. Accruals and deferred items 575,658.84 498 Balance Sheet total 19 412,416,950.08 672,031

1. Foreign assets 149,096,098.31 223,691

* Item number in the notes


Consolidated Balance Sheet as of 31 December 2015

– 39 –

12/31/2015 12/31/2014Liabilities No.* EUR EUR EUR in EUR ‘000

1. Liabilities to credit institutions 10 a) Repayable on demand 30,369,436.11 42,994 b) With agreed maturity dates or periods of notice 0.00 0 30,369,436.11 42,994

2. Liabilities to customers 11 a) Savings deposits aa) Repayable on demand 950,614.25 910 bb) With agreed maturity dates or period of notice 24,825,691.33 25,776,305.58 23,849 b) Other liabilities aa) Repayable on demand 273,536,683.82 490,847 bb) With agreed maturity dates or period of notice 1,259,198.06 274,795,881.88 2,583 300,572,187.46 518,1893. Other liabilities 12 7,636,415.27 14,3604. Provisions 12 a) Provisions for severance payments 827,808.90 1,191 b) Provisions for taxes 2,503,615.44 17,573 c) Other provisions 33,532,757.04 24,337 36,864,181.38 43,101

4. A Fund for general banking risks 14 5,736,212.15 5,7365. Supplementary capital according to Part 2 Title I Chapter 4 of Regulation (EU) No. 575/2013 15 7,267,521.93 15,1276. Subscribed capital 16 9,000,000.00 9,0007. Capital reserves 17 a) Appropriated 6,431,154.76 6,431 b) Unappropriated 17,084,852.79 17,085 23,516,007.55 23,5168. Retained earnings a) Statutory reserves 453,042.44 453 b) Other reserves 688,863.10 689 1,141,905.54 1,1429. Liability reserves according to Section 57 (5) BWG 18 12,219,971.95 12,22010. Negative differences arising from capital consolidation 144,229.69 14411. Adjustment item for currency differences resulting from consolidation 0.00 012. Net profi t/net loss for the year a) Loss carried forward (13,499,179.32) (11,634 ) b) Consolidated loss for the year (8,551,939.63) (1,865 ) (22,051,118.95) (13,499 )

Balance Sheet total 19 412,416,950.08 672,031

1. Contingent liabilities 20 13,408,626.72 18,019 thereof: a) Liabilities arising from guarantees and assets pledged as collateral assets 7,804,275.75 11,3302. Credit risks 3,761,867.68 1,0553. Liabilities from trustee operations 20 118,201,529.91 290,3794. Eligible capital according to Part 2 of Regulation (EU) No. 575/2013 13 36,974,729.51 45,526 thereof: supplementary capital according to Part 2 Title 1 Chapter 4 of Regulation (EU) No. 575/2013 EUR 7,267,521.93 (previous year: KEUR 7,267) 5. Own funds requirements according to Article 92 of Regulation (EU) No. 575/2013 13 306,111,089.31 384,640 Thereof own funds requirements according to Art. 92 (1a) of Regulation (EU) 575/2013 Core tier 1 ratio = 9.70% (previous year: 9.58%) Thereof own funds requirements according to Art 92 (1b) of Regulation (EU) 575/2013 Core tier 1 ratio = 9.70% (previous year: 9.58%) Thereof own funds requirements according to Art 92 (1c) of Regulation (EU) 575/2013 Total capital ratio = 12.08% (previous year: 11.46%)6. Foreign liabilities 244,283,257.26 358,524



Development of Equity of the Meinl Bank Group

– 40 –


Balance as of 1/1/2014 9,000,000.00 14,516,007.55 1,141,905.54 5,736,212.15 12,219,971.95 144,229.69 –58,294.41 –11,634,013.43 31,066,019.04

Consolidated profit –1,865,165.89 –1,865,165.89

Difference arising from capital consolidation 0.00

Change in currency differences –58,294.41 –58,294.41

Change in capital reserves 9,000,000.00 9,000,000.00

Balance as of 12/31/2014 = 1/1/2015 9,000,000.00 23,516,007.55 1,141,905.54 5,736,212.15 12,219,971.95 144,229.69 0.00 –13,499,179.32 38,259,147.56


Balance as of 12/31/2015 9,000,000.00 23,516,007.55 1,141,905.54 5,736,212.15 12,219,971.95 144,229.69 0.00 –22,051,118.95 29,707,207.93

Subscribed Capital Retained capital reserves earningsin EUR

– 41 –


Balance as of 1/1/2014 9,000,000.00 14,516,007.55 1,141,905.54 5,736,212.15 12,219,971.95 144,229.69 –58,294.41 –11,634,013.43 31,066,019.04


Difference arising from capital consolidation 0.00

Change in currency differences –58,294.41 –58,294.41


Balance as of 12/31/2014 = 1/1/2015 9,000,000.00 23,516,007.55 1,141,905.54 5,736,212.15 12,219,971.95 144,229.69 0.00 –13,499,179.32 38,259,147.56


Balance as of 12/31/2015 9,000,000.00 23,516,007.55 1,141,905.54 5,736,212.15 12,219,971.95 144,229.69 0.00 –22,051,118.95 29,707,207.93

Negative difference Adjustment Fund fo arising from item for general Liability capital currency Net profit bank risks reserves consolidation differences for the year Equity capital

Consolidated Statement of Changes in Fixed Assets according to Section 226 (1) UGB

– 42 –


Treasury bills and similar securities 498,390.82 0.00 498,390.82 187,606.00 200,445.25 485,551.57 6,506.40 479,045.17 493,939.37 4,602.00

Shares and other variable income securities 14,072,409.70 0.00 14,072,409.70 0.00 10,125,809.13 3,946,600.57 283,000.00 3,663,600.57 14,009,697.88 283,000.00

Participations in affiliated companies*) 24,151,178.04 0.00 24,151,178.04 0.00 323,961.00 23,827,217.04 11,067,713.22 12,759,503.82 17,552,924.89 4,495,000.00

Investments in other participations 3,971.62 0.00 3,971.62 0.00 0.00 3,971.62 0.00 3,971.62 3,971.62 0.00

Intangible fixed assets 365,040.07 0.00 365,040.07 0.00 0.00 365,040.07 365,039.72 0.35 0.35 0.00

Tangible fixed assets 7,298,193.25 0.00 7,298,193.25 171,142.89 104,563.75 7,364,772.39 6,507,698.58 857,073.81 1,014,794.64 318,030.88

TOTAL 46,389,183.50 0.00 46,389,183.50 358,748.89 10,754,779.13 35,993,153.13 18,229,957.92 17,763,195.34 33,075,328.75 5,100,632.88

*) For information on the value of shares in associated companies, please refer to item 7 in the Notes.

Balance as of Currency Balance as of Balance as of Accumulated Book value Book value Depreciations 12/31/2014 difference 1/1/2015 Additions Disposals 12/31/2015 depreciation 12/31/2015 12/31/2014 2015Acquisition cost (in EUR)

– 43 –


Treasury bills and similar securities 498,390.82 0.00 498,390.82 187,606.00 200,445.25 485,551.57 6,506.40 479,045.17 493,939.37 4,602.00

Shares and other variable income securities 14,072,409.70 0.00 14,072,409.70 0.00 10,125,809.13 3,946,600.57 283,000.00 3,663,600.57 14,009,697.88 283,000.00

Participations in affiliated companies*) 24,151,178.04 0.00 24,151,178.04 0.00 323,961.00 23,827,217.04 11,067,713.22 12,759,503.82 17,552,924.89 4,495,000.00

Investments in other participations 3,971.62 0.00 3,971.62 0.00 0.00 3,971.62 0.00 3,971.62 3,971.62 0.00

Intangible fixed assets 365,040.07 0.00 365,040.07 0.00 0.00 365,040.07 365,039.72 0.35 0.35 0.00

Tangible fixed assets 7,298,193.25 0.00 7,298,193.25 171,142.89 104,563.75 7,364,772.39 6,507,698.58 857,073.81 1,014,794.64 318,030.88

TOTAL 46,389,183.50 0.00 46,389,183.50 358,748.89 10,754,779.13 35,993,153.13 18,229,957.92 17,763,195.34 33,075,328.75 5,100,632.88

*) For information on the value of shares in associated companies, please refer to item 7 in the Notes.

Balance as of Currency Balance as of Balance as of Accumulated Book value Book value Depreciations 12/31/2014 difference 1/1/2015 Additions Disposals 12/31/2015 depreciation 12/31/2015 12/31/2014 2015

– 44 –


Consolidated Profi t and Loss Statement for the Financial Year 2015

2015 2014EUR EUR EUR ‘000

1. Interest and similar income 5,529,340.11 6,604 thereof: from fixed income securities EUR 931,132.33 (previous year: KEUR 405) 2. Interest and similar expenses (1,149,425.00 ) (1,180 ) I. Net interest income 4,379,915.11 5,424 3. Income from securities and investments a) Income from shares, other equity rights and other variable income securities 82,110.75 34 b) Income from investments in affiliated companies 11,323,069.73 11,994 11,405,180.48 12,029 4. Commissions received 12,219,100.00 19,931 5. Commissions paid (4,443,489.44 ) (2,418 ) 6. Income from financial transactions 7,663,826.20 3,982 7. Other operating income 129,799.34 1,227 II. Operating income 21 31,354,331.69 40,174 8. General administration costs a) Staff costs thereof: aa) Wages and salaries (8,411,083.20 ) (8,839 ) bb) Expenses for statutory social contributions and compulsory contributions related to wages and salaries (1,853,354.11 ) (1,627 ) cc) Other social benefits (31,458.30 ) (13 ) dd) Expenses for severance payments and contributions to company employee retirement funds (400,786.81 ) (154 ) (10,696,682.42 ) (10,633 ) b) Other administration costs (material expenses) (21,143,628.83 ) (18,929 ) 9. Write-downs on assets included in items 8 and 9 318,030.88 (330 ) 10. Other operational costs 0.00 0 III. Operating expenses 21 (32,158,342.13 ) (29,892 ) IV. Operating result 22 (804,010.44 ) 10,282 11. Expenses from valuation of loans and advances 23 (7,164,589.49 ) (1,301 ) 12. Income from dissolution of write-downs on loans and advances 23 697,209.59 1,545 13. Write-downs from investments 23 (7,585,364.77 ) (9,711 ) 14. Income from write-downs from shares in affiliated companies 23 1,359,581.96 1,055 15. Costs from investments in associated companies 23 0.00 (532 ) V. Loss on ordinary activities 24 (13,497,173.15 ) 1,338 16. Extraordinary income 25 15,000,000.00 0 17. Extraordinary expenses 26 (12,345,637.52 ) (3,554 ) 18. Extraordinary results 2,654,362.48 (3,554 ) 19. Taxes on income 27 2,297,069.43 2,045 20. Other taxes not to be reported under item 19 (6,198.39 ) (1 ) 21. Interest expense for supplementary capital 28 0.00 (1,693 ) VI. Loss for the year = Group loss for the year 29 (8,551,939.63 ) (1,865 ) 22. Loss carried forward (13,499,179.32 ) (11,634 ) VII. Consolidated net loss (22,051,118.95 ) (13,499 )


No.*

Consolidated Cash Flow Statement

– 45 –


2015 2014EUR ‘000 EUR ‘000 EUR ‘000 EUR ‘000

Net cash flow from operating activities –124,576.5 –117,638.6Net cash flow from investing activities 10,265.9 2,032.2Net cash flow form financing activities –7,860.0 9,000.0 Payments affecting change of cash and cash equivalents –122,170.6 –106,606.4

Net change in cash funds:As at the beginning of the financial year 238,764.9 345,313.0–/+ changes in cash funds (see above) –122,170.6 –106,606.4–/+ Exchange rate difference from capital consolidation 0.0 58.3As at the end of the financial year 116,594.3 238,764.9

Net cash flow from operating activitiesResults of ordinary business activities –13,503.4 1,336.8Reconciliation to net cash flow fromordinary business activities+/– Loss/profit from the disposal of net assets in the investment sector –96.4 0.0+/– Depreciation/appreciation of assets in the investment sector 7,903.4 5,969.8+/– Results from investments in associated companies –626.3 –3,216.1+/– Other non-cash items Provisions for severance payments –363.5 63.4+/– Changes in assets Loans and advances to credit institutions 0.0 0.0 Securities and shares 75,470.3 –129,060.2 Other receivables and accruals 45,633.2 121,103.5 –77,930.7 –206,990.9 Increase of provisions except for income taxes –688.2 –7,655.8+/– Change in liabilities Trade accounts payable –217,616.8 108,052.0 Payables to credit institutions –12,624.7 –12,329.7 Other liabilities –6,723.9 –236,965.4 3,638.1 99,360.4Net cash flow from ordinary business activities –123,236.3 –111,132.4Net cash flow from extraordinary items –2,461.5 –3,553.7Interest expense for supplementary capital 0.0 –1,693.7–/+ Payments/credits for income taxes 1,121.3 1,258.8Net cash flow from ordinary business activities –124,576.5 –117,638.6

Net cash flow from investing activities was calculated as follows: Cash receipts from sales of assets (without financial assets) 0.0 0.0+ Cash receipts from sales of financial assets 10,624.7 13,901.9– Cash paid for asset additions –171.1 –255.1– Cash paid for financial asset additions –187.6 –11,614.6 Net cash flow from investing activities 10,265.9 2,032.2

Net cash flow from financing activities includes: Payments of equity capital 0.0 9,000.0– Payouts from the serving of equity capital –7,860.0 0.0+/– Foreign exchange difference capital consolidation 0.0 58.3Net cash flow from financing activities –7,860.0 9,058.3

Name and registered office of Investment Investment Equity Annual result Reporting date the company C*) direct|indirect in percent in EUR in EUR 2015

– 46 –

Meinl Bank’s Participations, an Overview

Fully Consolidated

Julius Meinl Investment GmbH, Vienna f FS x 100.00 3,469,097.53 424,914.73 12/31Meinl Success Finanz AG, Vienna f FS x 100.00 1,496,454.13 557,546.95 12/31JMVL Vermögens- u. Finanzierungs- Beratung GmbH, Vienna f FS x 100.00 40,601.65 –6,884.99 11/30Meinl Capital Advisors AG, Vienna f FS x 100.00 1,234,145.33 421,722.62 12/31

Valued “At Equity”

Coffee Finance A.V.V., Oranjestad e T x 100.00 –162,944.00 –17,957.00 12/31 Fifth Avenue Investments A.V.V., Oranjestad e EB x 100.00 –840,137.00 –2,262.00 12/31Park Avenue Investments A.V.V., Oranjestad e EB x 100.00 372,006.00 –443.00 12/31East Advisors Vermögens- verwaltung GmbH, Vienna e RE x 99.98 916,553.74 545,287.22 12/31BASL Holding GmbH, Vienna e O x 100.00 6,278,285.57 7,636,609.07 12/31Fides Anlagen- und Maschinen- Vermietung GmbH, Vienna e O x 50.00 1,331,105.27 6,682.49 12/31

Not consolidated

SO.GE.AP. Aeroporto di Parma, Societa per la Gestione SPA, Parma O x 51.93 15,829,724.00 –3,597,010.00 12/31Prime Site Immobilien AG, Vienna O x 89.90 201,488.79 –29,812.28 12/31Hohenlohe Windpark 1 GmbH, Wolfschlugen O x 100.00 – –Mentor Energy Holding AG, Zurich O x 100.00 – –MMF Beteiligungs GmbH, Vienna O x 100.00 – –Central European Property Management Ltd., St. Helier RE x 100.00 – –

C*) Consolidation method in the consolidated financial statement: “f ” = Full consolidation “e” = Valuation “at equity”EB = Equity Banking, FS = Financial Services, RE = Real Estate, T = Trade, O = Other


The Consolidated Financial Statements of the Meinl Bank Group for the year ended on 31 December 2015 have been prepared pursuant to the provisions of the Austrian Business Code, as far as applicable to credit institutions, and the provisions of the Austrian Banking Act (BWG), and, where relevant, Regulation (EU) No. 575/2013 (Capital Requirements Regulation, “CRR”).

The Consolidated Financial Statements are in compliance with the generally accepted principles of proper accounting and therefore provide a true image of the net assets, fi nancial position and results of operations of the company.

When preparing the Financial Statements, Meinl Bank is faced with considerable uncertainties in connection with essential risks, particularly the risk arising from investor lawsuits, the tax risk arising from the external tax audit for the years 2003 to 2009 and the concentration risks.

The Bank has formed provisions in the amount of EUR 18.4 million for existing investor lawsuits with a value in dispute of EUR 91.5 million. For risks arising from the joining of private parties that could lead to potential compensation, there is a provision in the amount of EUR 11.1 million. Moreover, a global provision in the amount of EUR 1.0 million is in place for costs of litigation.

The tax risk arising from the external audit of the years 2003 to 2009 may result in a scenario disadvantageous for the Bank with up to EUR 125.2 million. Risks up to the amount of EUR 53.0 million were outsourced to third parties with obligations to perform. The Bank has not formed any substantial provisions for any further risks.

Meinl Bank is exposed to concentration risks in connection with companies in the infl uence of the ultimate owners of the Bank. They result, on the one hand, from an obligation to perform in the amount of up to EUR 38.0 million of a company and, on the other hand, from investments in another company with a total exposure of up to EUR 36.1 million.

If one of the above risks occurs at an amount that substantially exceeds the formed provisions and/or the assumed obligations to perform by third parties, the over-indebtedness and/or illiquidity of Meinl Bank may occur.

Based on the previous course of proceedings with investor lawsuits and an assessment by the legal representative on the one hand and on the evaluation of the tax risks by the tax adviser on the other hand, the Bank’s Management Board assumes that the risks will occur to a lower extent.

With regard to the concentration risks, the Management Board’s evaluation is based on its regular assessment of the counterparties’ credit rating; such counterparties being entirely part of the ultimate owners of the Bank. This also includes the assessment of the intrinsic value of the underlying net assets as well as its timely convertibility into cash.

In its budgetary planning for Meinl Bank for the 2016 fi nancial year, the Management Board of Meinl Bank expects positive results of ordinary business activities in the amount of EUR 6.3 million. The budget planned in detail is mainly based on the assumption that it will be possible to considerably increase the commission income, while the non-personnel expenses will be signifi cantly reduced by savings in the fi eld of marketing and consultancy services, and the formation of provisions for loans and risks to investors is now expected to become necessary only to a minor extent.

On the basis of its assessment of these potential risks to continued existence, as well as the positive projected results for 2016, the Management Board of the Bank assumes going concern.

CONSOLIDATION PRINCIPLES

Consolidation itself was made pursuant to the consolidation provisions set out in the Austrian Business Code (UGB) and the Austrian Banking Act (BWG) on the basis of annual fi nancial statements and fi nancial statements of sub-groups that were valued uniformly across the entire Group.The group of consolidated companies in accordance with Section 59 BWG includes one controlled domestic credit institution and three controlled domestic fi nancial institutions. The balance sheet date of one of the domestic fi nancial institutions is 30 November 2015. However, the difference of the balance sheet items at the end of the year and at the balance sheet date of this company is insignifi cant. All other participations that are of signifi cant importance for providing a true image of the net assets, fi nancial position and results of operations and in which Meinl Bank holds a material controlling interest are taken into account using the equity-method evaluation. Subsidiaries that are no fi nancial institutions were not included in the Consolidated Financial Statements. Non-consolidated participations and shares in non-consolidated affi liated companies were valued at cost of acquisition, unless a write-down was necessary as the impairment is expected to be permanent.

Notes (Consolidated Financial Statements) 2015

– 47 –


– 48 –

Initial consolidation was made as of 1 January 1995 and/or at the respective time of acquisition.

Capital consolidation and the consolidation “at equity” were made according to the book value method.

The reconciling items on the liabilities side resulting from full consolidation in the amount of EUR 0.144 million were disclosed under equity as separate liability-side differences from capital consolidation. A difference of EUR 0.0 million was found in capital consolidation and disclosed under equity as separate reconciling item from currency translation.

Important year-end exchange rates 2015 20141 CHF 1.0835 1.20241 USD 1.0887 1.2141

With regard to debt consolidation, mutual receivables and liabilities have been offset between the consolidated companies.Within the framework of the costs and income consolidation, the income and costs between the companies have been netted with the corresponding counter-items. There was no need to eliminate interim profi ts.

ACCOUNTING AND VALUATION METHODSForeign currency assets and liabilities were valued at the ECB’s reference rate prevailing as of 31 December 2015. Amounts held in foreign currencies were converted at the current bid price applicable as at 31 December 2015.Tangible assets are valued at acquisition cost minus the scheduled straight-line depreciations. The depreciation rates are 2.5% and 10% p.a. for the immovable assets and 10% to 33% p.a. for the movable assets. The full annual depreciation is calculated regarding the additions in the fi rst half of the fi nancial year, and half the annual depreciation is calculated regarding the additions in the second half of the year. Low-value assets (individual acquisition price of up to KEUR 0.4) are fully depreciated in the year of addition.Loans and advances to credit institutions and customers are recognised at their nominal value. Provisions for specifi c doubtful debts were formed for identifi able default risks of borrowers. For receivables in risk countries (Ukraine, Russia and Serbia), corresponding collaterals (real estate, coverage by deposits) are obtained. With not completely value-adjusted loans, full recoverability is assumed due to the borrower’s results of operations or fi nancial position or due to the created collaterals.The securities held as fi xed assets were valued according to the moderate lower of cost or market principle. The assess-ment of the derivatives held as hedging instrument is made by applying the AFRAC Comment Letter “The business accounting of derivatives and hedging instruments”, according to which assessment units are formed with the hedged underlying transactions and no provisions for contingent losses are formed for negative market values as long as no loss is imminent overall.Securities held as current assets were valued according to the strict lower of cost or market principle and/or at market prices.The valuation option set out in Section 56 (5) BWG was used for measuring fi xed-rate bonds. The Bank keeps a securities trading book containing securities and other fi nancial instruments in the amount of EUR 4.0 million (previous year: EUR 6.8 million).Participations and shares in affi liated companies are generally valued under the going concern premise at acquisition cost; if permanent decreases in value have presumably occurred, depreciations are made. To the extent that any selling prices had already been fi xed during the balance sheet performance period, they were used for the valuation taking into account the historical cost principle.Banking liabilities are valued at their repayment amount in consideration of the principle of prudence.The provisions were created in the amount probably required for repayment. They take into account all identifi able risks and liabilities the amount of which are not yet established.For provisions for litigation risks, a back testing was carried out on the basis of historical data; in doing so, it was distinguished between own brokerage and third-party bank cases. The comparative fi nancial statements via the Stichting foundation were included into the Bank’s back testing model in order to determine the provision ratios.The provisions for severance payments were calculated according to the actuarial principles. They were determined on the basis of the expert opinion KFS/RL 2 of the Austrian Chamber of Public Accountants and Tax Advisers by using an interest rate of 2% (previous year: 2%) and a higher pension age in accordance with the Pension Reform 2003 and/or the Pension Harmonisation of 2004.Trust assets for which the trustor holds a right of separation in case of insolvency were not recorded in the balance sheet according to Section 48 BWG, but disclosed in sub-item 3. Interest income and expenses do not include interest from trust assets and liabilities.


Commissions received are taken also for transactions with longer terms in full to profi t or loss of the period in which they are received if such commissions are not mainly of an interest nature and if they are not repayable even in case of early cancellation of the respective transaction. In other cases, commission income from longer-term transactions is allocated on an accrual basis.

NOTES ON THE CONSOLIDATED BALANCE SHEETAND THE CONSOLIDATED PROFIT AND LOSS STATEMENT

The content of the Consolidated Balance Sheet and the Consolidated Profi t and Loss Statement is largely determined by the data in the individual fi nancial statements of Meinl Bank AG.

1. Cash and Balances with Central BanksCash and balances with central banks are reported at EUR 41.7 million and therefore are EUR 39.2 million below the value for the previous year. The provisions regarding liquidity and maintenance of the minimum reserves have always been complied with.

2. Debt Instruments of Public IssuersCompared to the previous year’s value, debt instruments of public issuers decreased by EUR 24.9 million from EUR 29.0 million to EUR 4.1 million. The difference between lower costs of acquisition and the market values is EUR 0.6 million. In the year 2016, debt instruments of public issuers will fall due in the amount of EUR 0.3 million.

3. Loans and Advances to Credit InstitutionsOf the appropriated loans and advances to banks, EUR 0.0 million (previous year: EUR 49.4 million) have residual terms of up to 3 months and EUR 0.0 million (previous year: EUR 0.8 million) of more than 3 months to 1 year and EUR 0.0 million of more than 1 year (previous year: EUR 0.0 million).

4. Loans and Advances to CustomersLoans and advances to customers in the amount of EUR 125.0 million (previous year: EUR 169.4 million) decreased by EUR 44.4 million compared to the previous year. This includes loans and advances to two members of the Management Board in the total amount of EUR 2.9 million with an average interest rate of 1.5% p.a. and loans to four members of the Supervisory Board in the total amount of EUR 4.6 million with an average interest rate of 1.85% p.a. EUR 4.8 million of these loans and advances were paid back. Of the appropriated loans and advances to customers, EUR 15.2 million (previous year: EUR 12.9 million) have residual terms of up to 3 months, EUR 66.9 million (previous year: EUR 119.4 million) of more than 3 months to 1 year, EUR 32.0 million (previous year: EUR 25.7 million) of more than 1 year to 5 years, and EUR 9.2 million (previous year: EUR 4.8 million) of more than 5 years.

5. Debt Securities and other Fixed Income SecuritiesDebt securities and other fi xed income securities issued by others decreased from EUR 5.3 million in the previous year to EUR 3.1 million by the end of 2015. With regard to the securities of the current assets, the difference between the lower acquisition cost and the higher market value is EUR 0.0 million. In 2016, debt securities of EUR 0.0 million become due; EUR 0.0 million of the debt securities are unlisted.

6. Shares and other Variable Yield SecuritiesOf the reported amount of EUR 63.4 million, EUR 3.6 million (previous year: EUR 14.0 million) are allocated to the fi xed assets, EUR 62.4 million (previous year: EUR 110.9 million) are unlisted. A “right of profi t participation” in Julius Meinl AG in the amount of EUR 2.9 million is included in this item. This participating right corresponds to participation in the company to the amount of 10.98%. With regard to the securities in the current assets, the difference between the lower book value and the higher market value is EUR 0.0 million (previous year: EUR 0.0 million). The difference according to Section 56 (5) BWG is EUR 0.0 million (previous year: EUR 0.0 million).

7. Shares in Affi liated Companies / Participations in Associated or Other CompaniesShares in affi liated companies valued at amortised cost are presented in the Statement of Changes in Fixed Assets.Information on affi liated companies according to Section 64 (1) lit. 10 BWG and information on associated companies according to Section 238 lit. 2 UGB is given separately on page 46. None of these companies are listed on a stock exchange. Equity and the annual result of participations of insignifi cant importance are not disclosed according to Section 241 (2) UGB.

– 49 –


The value of the shares in associated companies developed as follows (values in KEUR):

Balance as of 31/12/2014 3,932Currency difference 0Share of the result 6,827Distributions 6,200Disposal 2,761Balance as of 31/12/2015 1,798

The item Participations in associated companies discloses exclusively the companies valued at equity. Any non-consolidated affi liated companies are disclosed under the item Shares in affi liated companies.

8. Tangible Fixed AssetsThe basic value of developed plots amounts to EUR 0.04 million.The tangible fi xed assets decreased compared to the previous year by EUR 0.1 million to EUR 0.9 million.

9. Other AssetsThis item includes, inter alia, interest not yet billed of EUR 2.5 million (previous year: EUR 3.9 million), dividend claims of EUR 9.2 million (previous year: EUR 8.7 million), claims from insurance benefi ts of EUR 8.0 million (previous year: EUR 8.0 million), accounts receivable due from the tax authority from input taxes of the years 2004 and 2015 totalling EUR 19.8 million (previous year: EUR 17.9 million), a credit balance on the account held with the tax authority of EUR 35.0 million (previous year: EUR 35.1 million) and other clearing items. It is disclosed at EUR 84.1 million and is thus by EUR 0.3 million lower than in the year before and they have a remaining term of less than 1 year. Essential income that only becomes cash effective after the reporting date includes interest not yet billed of EUR 2.5 million and claims from insurance benefi ts of EUR 8.0 million.

Claims from insurance benefi ts relate entirely to claims to insurance companies on the basis of D&O insurance for representation costs that have already arisen. The claim and intrinsic value of these accounts receivable of Meinl Bank from the insurance companies is based on an evaluation of the legal representation of 23 May 2016. The claims relate to the years 2013 to 2015.

10. Liabilities to Credit InstitutionsThe deposits from credit institutions amount to EUR 30.4 million (previous year: EUR 43.0 million). Of the appropriated deposits, EUR 0.0 million (previous year: EUR 0.0 million) have a residual term of up to 3 months, EUR 0.0 million (previous year: EUR 0.0 million) of more than 3 months to 1 year and EUR 0.0 million of more than 1 year (previous year: EUR 0.0 million).

11. Liabilities to CustomersCustomer deposits of the Meinl Bank Group are reported at EUR 300.6 million (previous year: EUR 518.2 million). Of the appropriated customer deposits, EUR 1.3 million (previous year: EUR 1.8 million) have a residual term of up to 3 months, EUR 0.1 million (previous year: EUR 0.9 million) of more than 3 months to 1 year, EUR 24.7 million (previous year: EUR 23.7 million) of more than 1 year to 5 years, and EUR 0.0 million (previous year: EUR 0.0 million) of more than 5 years.

12. Other Liabilities/ProvisionsOther liabilities decreased by EUR 6.7 million to EUR 7.6 million and have a residual term of less than 1 year. Essential expenses that only become cash-effective after the closure are interest not yet paid of EUR 1.3 million and consultation fees of EUR 2.7 million.Provisions declined from EUR 43.1 million by EUR 6.2 million to EUR 36.9 million. Other provisions disclose provisions for personnel in the amount of EUR 0.9 million (previous year: EUR 1.3 million).

The Meinl Bank Group formed provisions for anticipated losses in the amount of EUR 30.8 million (previousyear: EUR 21.0 million) for risks arising from investor lawsuits as at 31 December 2015. The amount of the provisioning ratio for investor lawsuits is generally calculated on the basis of a back testing model taking into account the course of the proceedings so far. As part of this model, the Bank carried out an internal loss analysisof lawsuits that were ended by out-of-court settlement or and/or with a favourable or unfavourable court ruling and adjusted the provisioning ratios accordingly. The settlements of the Stichting were also included in the loss ratio. In doing so, we distinguish two groups of claimants when determining the provisioning ratios, for which separate loss ratios were developed: claimants who were direct customers of the Bank originally and complaining customers who carried out their investments via third-party banks. As a basis for the formation of provisions, Meinl Bank uses the theoretical loss, i.e. the difference between the historical purchase price of the customer and the value of the shares at the time of sale by the customer and/or the redemption by Meinl Bank.

– 50 –


– 51 –


Far East Far East Meinl Bank Meinl Bank Group Group Group Groupin EUR ‘000 2015 2014 2015 2014 Subscribed capital 2,400 2,400 9,000 9,000Capital reserves 17,490 17,490 23,516 23,516Retained earnings 0 0 1,142 1,142Fund for general bank risk 0 0 5,736 5,736Liability reserves 0 0 12,220 12,220Profi t/loss carried forward –1,360 737 –13,499 –11,634Negative differences arising from capital consolidation 19,205 19,205 144 144Adjustment item for currency differences resulting from consolidation 1,289 1,289 0 0 39,024 41,114 38,259 40,124Deductions: Intangible fi xed assets and fi nancial investments 0 0 0 0Loss for the year –9,960 –2,097 –8,552 –1,865Core capital (tier I capital) 29,064 39,017 29,707 38,259 Supplementary capital 7,267 7,267 7,267 7,267Additional equity capital (tier II capital) 7,267 7,267 7,267 7,267Total own funds 36,331 46,284 36,974 45,526 Capital requirements 299,211 385,629 306,111 384,640Required own funds 23,937 30,850 24,489 30,771Surplus cover 12,394 15,434 12,485 14,755 The total return on capital is –26.0%.

As of 31 December 2015, in addition to provisions made for civil actions already brought, potential claims of approx. 5,000 investors that joined the criminal investigations as private parties and have previously waived the assertion of their alleged claims in civil proceedings had likewise been taken into account. That part of the private parties who had already fi led an additional lawsuit before the civil court have already been taken into account in the past annual fi nancial statements in the provisions described above on the basis of historically determined loss ratios.

In the fi rst place, the consideration of the private parties is based on refl ections on the overall settlement of the pending MEL proceedings within the framework of the agreement concluded with the Dutch foundation Stichting Atrium Claim and without acknowledging any strict legal obligation. Via the Stichting, all investors having taken legal steps in the form of a lawsuit or as a joining as private parties are given the opportunity to receive a compensation amount, the amount of which depends on specifi c parameters. The solution via the Stichting has become possible as a result of Atrium, the succession company of Meinl European Land Limited, assuming half of the costs and compensation payments. The total amount of those private parties who did not fi le any lawsuit is estimated at approx. EUR 230.0 million. Until 30 April 2016, approx. 1,300 private parties of the ones referred to above bindingly accepted the judicial settlement with the joining of private parties amounting to a total of approx. EUR 50.0 million. To this end, compensation payments in the amount of EUR 7.6 million were determined. The settlements reached in this context were used to calculate a loss ratio, which was then applied to the total amount of the joining of private parties. This results in a risk provision for private parties in the amount of EUR 11.0 million.A provision in the form of a lump sum amount of EUR 1.0 million was formed for future litigation costs.

The provision is the best possible estimate due to the non-foreseeable course of the proceedings and is subject to uncertain-ties due to the complexity of the matters and a foreseeable longer duration of the proceedings.

13. EquityThe consolidated equity according to Part 2 of Regulation (EU) No. 575/2013 totalled approx. EUR 37.0 million.The following table shows the composition of the equity of the Meinl Bank Group and of Finanzholding B.V. Belegging-Maatschappij “Far East” B.V., Velp, The Netherlands according to Part 2 of Regulation (EU) No. 575/2013:

14. Fund for General Banking RisksThis item remains unchanged in the reporting year at EUR 5.7 million.

15. Supplementary CapitalThe supplementary capital decreased from EUR 15.1 million to EUR 7.3 million. In the year under review, the supple-mentary capital was re-issued. It is a bond with a term until 2025 and bears interest at 4%. Affi liated companies hold EUR 0.0 million (previous year: EUR 0.0 million). The expense for this supplementary capital amounted to EUR 0.0 million in the reporting year (previous year: EUR 1.7 million). During the year under review, two bonds were repaid.

16. Subscribed CapitalThe subscribed capital totals EUR 9.0 million and comprises 12,000 no-par-value shares.

17. Capital Reserves / Retained EarningsThe capital reserves, structured into appropriated and unappropriated reserves, are recognised at EUR 23.5 million (previous year: EUR 23.5 million).The retained earnings are recognised at EUR 9.7 million (previous year: EUR 9.7 million) and are divided into the statutory reserve at EUR 0.5 million and other reserves in the amount of EUR 9.2 million.

18. Liability Reserve according to Section 57 (5) BWGThe liability reserve was calculated according to Section 57 (5) BWG and is recognised at EUR 12.2 million unchanged to the previous year.

19. Balance Sheet TotalThe consolidated balance sheet total of EUR 412.4 million (previous year: EUR 672.0 million) is EUR 2.0 million above the comparable value of the individual fi nancial statements of Meinl Bank AG. This increase of the balance sheet volume derives from a balance sheet total for the consolidated subsidiaries of EUR 15.8 million minus EUR 13.8 million of internal group balances.

20. Additional InformationThe Consolidated Financial Statements disclose foreign currency assets in the amount of EUR 135.3 million (previous year: EUR 287.2 million) and foreign currency liabilities in the amount of EUR 130.5 million (previous year: EUR 278.5 million). As of the balance sheet date, commodity futures in the amount of EUR 19.8 million (previous year: EUR 23.1 million) have not yet been transacted. The positive market value of these futures amounts to EUR 2.6 million as at 31 December 2015 (previous year: EUR 0.6 million).

The Bank’s risk management aims at mitigating signifi cant risks arising from the business. It obtains information on the Bank’s risk situation on a regular, timely and comprehensive basis and, if it identifi es unbearable risks, takes the measures required to mitigate or eliminate them. The Bank is currently not exposed to any signifi cant price change, default, liquidity and cash fl ows risks. We only use forward exchange transactions occasionally in the fi eld of the foreign exchange risk in order to hedge and actively control the risk.

Contingent liabilities in the fi eld of guarantees declined by EUR 4.6 million from EUR 18.0 million to EUR 13.4 million. This includes contingent liabilities connected with the profi t share for the supplementary capital in the amount of EUR 5.6 million and fi nancial guarantees in the amount of EUR 7.8 million. Credit risks amount to EUR 3.7 million (previous year: EUR 1.1 million). Liabilities arising from trust transactions declined to EUR 118.2 million (previous year: EUR 290.4 million).

21. Operating Income/Operating ExpensesOperating income of EUR 31.4 million (previous year: EUR 40.2 million) is EUR 2.0 million higher than reported in the individual fi nancial statements. Operating expenses are EUR 1.0 million higher in the Consolidated Financial Statements than in the individual fi nancial statements and amounted to EUR 32.1 million. The item Expenses for severance payments comprises severance payments of EUR 0.3 million and EUR 0.1 million contributions to employee pension funds. Costs of materials include consulting expenses in the amount of EUR 10.8 million (previous year: EUR 9.6 million) as well as rental and leasing expenses in the amount of EUR 1.1 million (previous year: EUR 1.1 million). These expenses will amount to EUR 1.0 million in the next year and to EUR 4.9 million over the next 5 years (previous year: EUR 5.1 million).

Expenditures relating to the auditor for the fi nancial year and included in the operating expenses cover the following:

in EUR 12/31/2015 12/31/2014Expenditures for the auditing of individual and consolidated fi nancial statements 956,892 692,816 Tax counselling 85,785 Audit-related services 296,725 90,108

– 52 –


Separation of the income of the Meinl Bank Group from a geographic perspective according to Section 64 (1) lit. 9 BWG:

22. Operating ResultAt EUR -0.8 million (previous year: EUR 10.3 million), our operating results were EUR 1.0 million above the results of Meinl Bank AG.

23. Valuation Result The valuation result amounts to EUR 12.7 million (previous year: EUR -8.9 million). It includes value allowances on accounts receivable in the amount of EUR -7.2 million (previous year: EUR -1.3 million), income from the reversal of value allowances on accounts receivable in the amount of EUR 0.7 million (previous year: EUR 1.5 million), value allowances on participations in the amount of EUR -7.6 million (previous year: EUR -9.7 million), expenses from associated companies in the amount of EUR 0.0 million (previous year: EUR -0.5 million) as well as income from the disposal of participations and price gains from securities held as current assets in the amount of EUR 1.4 million (previous year: EUR 1.1 million).

24. Results from Ordinary Business ActivitiesThe results form ordinary business activities of EUR -13.5 million (previous year: EUR 1.3 million) were EUR 0.7 million below the results of Meinl Bank AG.

25. Extraordinary IncomeThis item is recognised at EUR 15.0 million (previous year: EUR 0.0 million) and relates to the reversal of tax provisions in connection with the obligation to perform of a company in the infl uence of the ultimate owners of the Bank.

26. Extraordinary ExpensesThis item is recognised at EUR -12.3 million. It includes allocations of funds for litigation risks and costs in the amount of EUR 12.3 million.

27. Taxes on IncomeMeinl Bank AG is the parent company of a group and tax-sharing agreement. The income of EUR 2.4 million results from the tax compensation to be paid by the members of the group. The Group uses the exemption clause of Section 241 (3) UGB for that purpose. The Meinl Bank Group was subjected to an external audit according to Section 147 BAO with regard to all relevant types of charges in the 2014 fi nancial year. For the years 2003 to 2009, the external audit report and corresponding certifi cates are now available at Meinl Bank and/or for the group members.

Depending on the appreciation and the outcome of the further appeal proceedings, the matters in dispute could lead to substantial retrospective tax payments to be made by Meinl Bank. Due to the complexity of the matters on hand, the foreign element and the existing legal uncertainties, the estimate of the outcome of the further proceedings is affected by high uncertainties. Depending on the assessment of the occurrence probabilities for the outcomes of the proceedings regarding the individual matters, the maximum tax amount to be paid retroactively may be over EUR 125.2 million (in considera-tion of interest receivable and balances from value added taxes for the company audit period). The Bank’s Management Board uses analyses of the tax representative in support of its assessment of the tax risks. Due to the assessments of the commissioned tax consultants, there are comprehensible arguments that generally allow the establishment of accountingprovisions below the maximum amount stated. Based on new information and facts, the amount of the accounting provisions is regularly reviewed, also with regard to the reporting date 31 December 2015.

– 53 –


in EUR Austria N.A.* Total1. Interest and similar income 5,529,340.11 0.00 5,529,340.11 thereof: from fi xed income securities 931,132.33 0.00 931,132.333. Income from securities and investments 11,407,897.48 –2,717.00 11,405,180.484. Commissions received 12,219,100.00 0.00 12,219,100.006. Income/expenses from fi nancial transactions 7,663,826.20 0.00 7,663,826.207. Other operating income 129,799.34 0.00 129,799.34

II.Operating income 36,949,963.13 –2,717.00 36,947,246.13(without interest and commission expenses)

*N.A. = Netherlands Antilles

On 25 June 2014 (with supplement from 3 July 2014), Meinl Bank concluded a written agreement for the assumption of tax risks (“obligation to perform”) with a company in the infl uence of the ultimate owners of the Bank up to the amount of EUR 38.0 million. According to this agreement, the company assumes the subsequent payment of taxes of Meinl Bank regarding the years 2003 to 2009 included by the external audit by crediting value added tax credits for the years in question if a claim is asserted. The intrinsic value of this obligation to perform regarding tax risks is essentially justifi ed by the Bank’s Management Board with the company’s asset situation. Should the obligations to perform be utilised, Meinl Bank AG will issue an equity boost, which will be repaid from potential future net profi ts for a year.

Furthermore, on 4 July 2016, Meinl Bank concluded a written agreement, which is similar in large parts, for the assumption of tax risks (“obligation to perform”) up to the amount of EUR 15.0 million with another company in the infl uence of the ultimate owners of the Bank. An oral promise was already made in the 2015 fi nancial year in this regard. In addition, Meinl Bank has a loan owed to this company in the amount of EUR 4.6 million with a term until 31 December 2015 and also holds a profi t-sharing right of this company in the amount of EUR 2.9 million. By way of a purchase agreement concluded on 15 October 2015, this company acquired all shareholdings in a Group company at a purchase price in the amount of EUR 13.8 million. The intrinsic value of these investments of the Bank vis-à-vis the company and of the obligation to perform, (thus in total EUR 36.1 million) is established by the company’s asset situation and the realisation of assets by a subsidiary in this company in the near future, as well as with a business valuation of said company. This constitutes an uncertainty in the preparation of the fi nancial statements. According to this agreement, the companies assume subsequent tax payments to be made by Meinl Bank concerning the years 2003 to 2009 included by the external audit, if a claim is asserted – therefore, provisions in the amount of EUR 53.0 million are secured.

Tax provisions in the total amount of EUR 2.5 million are formed in the Bank’s annual fi nancial statements at hand for the years in question. Due to the availability of the obligations to perform and on the basis of its own assessment and the assess-ment of the tax representative, Meinl Bank has not formed any provisions for potentially exceeding tax risks. It was agreed with the tax authority that the collection of the subsequent tax payment will be suspended according to Section 212a BAO due to the provision of collateral in the amount of EUR 25.0 million until a decision is made by the high courts.

No deferred taxes were calculated as such are of an insignifi cant amount.

28. Interest Expense for Supplementary CapitalThe interest expense for supplementary capital is identical with the individual fi nancial statements and amounts to EUR 0.0 million (previous year: EUR 1.7 million).

29. Loss for the Year = Group Loss for the YearThe loss of the year of the Meinl Bank Group of EUR –8.6 million (previous year: EUR –1.8 million) was EUR 0.5 million below the result of the individual fi nancial statements.

– 54 –


– 55 –


OTHER INFORMATION

Staff in Austria and abroadAs at 31 December 2015, the Bank employed 105 employees in its affi liated companies both in Austria and abroad. The strong international presence of our Bank places a high level of requirements on a forward-looking qualitative staff policy.

At this juncture, too, we would like to thank our staff for their willingness to dedicate their knowledge and their experience to the service of our Bank. We are certain that our Bank’s very impressive series of successes will continue in the future.

Executive Bodies of the Company

Supervisory Board: Lic.oec. HSG Julius Meinl, Chairman Thomas Nilsson, Deputy Chairman Alexander Johannes Braam, Member Dr.h.c. Robert Kofl er M.B.A., Member MMag. Peter Weinzierl, Member (from 15 December 2015)

Management Board: Stephen Coleman, Member of the Board (from 25 October 2015) Samira Softic, Member of the Board (from 11 December 2015) Günter Weiß, Member of the Board (until 25 October 2015) MMag. Peter Weinzierl, Member of the Board (until 10 December 2015)

The safeguard clause set out in Section 241 (4) UGB is used with regard to the compensation for the Management Board in the expired fi nancial year. In the fi nancial year 2015, the Supervisory Board received compensation in the amount of EUR 0.2 million (previous year: EUR 0.2 million). A consulting contract was concluded with the Chairman of the Supervisory Board. A lump sum of EUR 1.0 million is charged for rendering the agreed consulting services. A second consulting contract was concluded with another member of the Supervisory Board which entered into force on 1 January 2016. Remuneration is paid depending on the time spent on the basis of an agreed daily rate covering any costs incurred in this context.

Vienna, 8 July 2016


Stephen Coleman Samira Softic Member of the Board Member of the Board

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated fi nancial statements of

MEINL BANK Aktiengesellschaft,Vienna,

comprising the Consolidated Balance Sheet as of 31 December 2015, the Consolidated Profi t and Loss Statement, the Consolidated Statement of Cash Flows and the Consolidated Statement of Changes in Equity for the fi nancial year then ended as well as the Consolidated Notes.

Responsibility of the Legal Representatives for the Consolidated Financial Statements

The Company’s legal representatives are responsible for the preparation and proper overall presentation of the present consolidated fi nancial statements so that they provide a true and fair presentation of the Group’s net assets, fi nancial position and results of operations in accordance with the corporate and banking provisions to be applied in Austria and the additional requirements of Sections 245a UGB [Austrian Business Code] as well as 59a BWG and for the internal controls deemed necessary by the legal representatives to enable the preparation of consolidated fi nancial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conductedour audit in accordance with the Austrian Standards on Proper Auditing. These standards require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the valuations and other disclosures in the consolidated fi nancial statements. The audit procedures selected depend on the auditor’s dutiful judgement, including the assessment of the risks of material misstatements of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control systems relevant to the Group’s preparation and fair presentation of the consolidated fi nancial statements and the Group’s net assets, fi nancial position and results of operations in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the legal representatives, as well as evaluating the overall presentation of the consolidated fi nancial statements.

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

Opinion

Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated fi nancial statements comply with legal requirements and give a true and fair view of the Group’s net assets and fi nancial position as at 31 December 2015 and of its results of operations and cash fl ows for the fi nancial year then ended in accordance with the Austrian Generally Accepted Accounting Principles.

Without qualifying our opinion, we draw your attention to the Management Board’s explanations in the Notes (chapter 12) and in the management report for the Group (chapter “Investor Lawsuits”) concerning the estimation of litigation risk especially in connection with Atrium European Real Estate (former Meinl European Land). Provisions in the amount of EUR 30.5 million were accounted for risks arising from investor lawsuits and the joining of private parties. The estimation of this amount is highly dependent on assumptions in respect of course of legal proceedings. These assumptions indicate a material uncertainty with regard to the preparation of fi nancial statements.

Without qualifying our opinion, we further draw your attention to the Management Board’s explanations in the Notes to the consolidated fi nancial statements (chapter 27) and in the management report for the Group (chapter “Duties and Duties Procedures”) concerning the estimations of the tax risk in connection with an ongoing tax audit for the years 2003 to 2009. According to two agreements the Bank concluded with companies in the infl uence of the ultimate owners of the Bank, they cover tax payments up to the amount of EUR 38.0 million and/or EUR 15.0 million and thus altogether EUR 53.0 million.Therefore, no provisions were accounted in the annual fi nancial statements for tax risks covered by these obligations to perform. The estimation of tax risk is highly dependent on assumptions in respect of the course of the other legal proceedings as well as collectability of funds out of the obligations to perform. These assumptions indicate a material uncertainty with regard to the preparation of fi nancial statements.

– 56 –


Auditor’s Report

– 57 –


Without qualifying our opinion, we further draw your attention to the Management Board’s explanations in the Notes to the consolidated fi nancial statements (chapter 27) and in the management report for the Group (chapter “Duties and Duties Procedures”) concerning the estimations of the intrinsic value of direct and indirect risk positions with a company in the sphere of infl uence of the Bank’s ultimate owners and liabilities issued by it in the total amount of EUR 36.1 million. The assessment of the intrinsic value is essentially dependent on the expected performance of the sale of rights by a subsidiary of this company as well as on the achievement of fi nancial objects in this subsidiary. The occurrence of these assumptions constitutes an essential insecurity in the preparation of the fi nancial statements.

Without qualifying our opinion, we further draw your attention to the Management Board’s explanations in the Notes to the consolidated fi nancial statements (prior to the accounting and valuation methods) as well as in the Management Report for the Group concerning the going concern assumption.

Report on the Management Report for the Group

Pursuant to statutory provisions, the Management Report for the Group is to be audited as to whether it is consistent with the consolidated fi nancial statements and as to whether the other disclosures are not misleading with respect to the company’sposition. The auditor’s report also has to contain a statement as to whether the management report for the Group is consistent with the consolidated fi nancial statements.

In our opinion, the Management Report for the Group is consistent with the consolidated fi nancial statements.

Vienna, 8 July 2016

Grant Thornton Unitreu GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Mag. Eginhard Karl Mag. Christian Pajer Auditor Auditor

KPMG Austria GmbHWirtschaftsprüfungs- und Steuerberatungsgesellschaft

Mag. Bernhard MechtlerAuditor

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

– 58 –



Balance Sheet as of 31 December 2015 60

Development of Equity of Meinl Bank AG 62

Statement of Changes in Fixed Assets 64

Profi t and Loss Statement for 2015 66

Notes (Individual Financial Statements) 2015 67

FINANCIAL STATEMENTS FOR 2015

– 59 –

Fin

anci

al S

tate

men

ts f

or 2

015

Balance Sheet as of 31 December 2015

– 60 –

12/31/2015 12/31/2014Assets No.* EUR EUR EUR ‘000

1. Cash and balances with central banks 1 a) Cash 209,797.94 1,071 b) Balances with central banks 41,508,898.76 79,913 41,718,696.70 80,984

2. Debt instruments of public issuers 2 1,038,289.50 26,847

3. Loans and advances to credit institutions 3 a) Repayable on demand 74,874,753.70 107,494 b) Other loans and advances 0.00 50,243 74,874,753.70 157,735

4. Loans and advances to customers 4 125,089,122.66 163,348

5. Debt securities including fi xed income securities a) issued by other borrowers 5 3,139,912.50 5,323

6. Shares and other variable yield securities 6 63,330,010.26 122,139

7. Investments 7 21,739.83 22 thereof: in credit institutions EUR 0.00 (previous year: KEUR 2,397)

8. Shares in affi liated companies 8 17,606,533.36 33,321 thereof: in credit institutions EUR 2,500,000.00 (previous year: EUR 2,500,000.00)

9. Intangible fi xed assets 9 0.07 0

10. Tangible fi xed assets 10 855,891.74 1,003

11. Other assets 11 82,160,869.08 81,858

12. Accruals and deferred items 571,305.24 493 Balance Sheet total 12 410,407,124.64 673,074

1. Foreign assets 23 149,096,098.31 232,471



Balance Sheet as of 31 December 2015

– 61 –

12/31/2015 12/31/2014Liabilities No.* EUR EUR EUR EUR ‘000

1. Liabilities to credit institutions 13 a) Repayable on demand 30,369,436.11 b) With agreed maturity dates or periods of notice 0.00 30,369,436.11 42,9942. Liabilities to customers 14 a) Savings deposits thereof: aa) Repayable on demand 950,614.25 bb) With agreed maturity dates or period of notice 24,825,691.33 25,776,305.58 24,759 b) Other liabilities thereof: aa) Repayable on demand 277,161,389.05 bb) With agreed maturity dates or period of notice 1,259,198.06 278,420,587.11 500,140 304,196,892.69 524,8993. Other liabilities 15 5,578,552.71 11,6854. Provisions 16 a) Provisions for severance payments 719,357.90 1,072 b) Provisions for taxation 2,472,851.16 17,473 c) Other provisions 32,707,161.76 23,567 35,899,370.82 42,1114.A Fund for general banking risks 17 5,736,212.15 5,7365. Supplementary capital 18 7,267,521.93 15,1276. Subscribed capital 19 9,000,000.00 9,0007. Capital reserves 20 a) Appropriated 6,431,154.76 6,431 b) Unappropriated 17,084,852.79 17,085 23,516,007.55 23,5168. Retained earnings 20 a) Statutory reserves 453,042.44 453 b) Other reserves 9,227,201.36 9,227 9,680,243.80 9,6809. Liability reserves according to Section 57 (5) BWG 21 12,219,971.95 12,22010. Loss/profi t for the year a) Loss carried forward (23,894,831.70) (23,895 ) b) Loss for the year (9,162,253.37) 0 (33,057,085.07) (23,895 )

Balance Sheet total 410,407,124.64 673,074

1. Contingent liabilities 22 13,408,626.72 18,019 thereof: Liabilities arising from guarantees and assets pledged as collateral assets 7,804,275.75 11,3302. Credit risks 22 3,761,867.68 1,0553. Liabilities from trustee operations 118,201,529.91 290,3794. Eligible capital according to Part 2 of Regulation (EU) No. 575/2013 24 34,362,872.24 43,525 thereof: supplementary capital according to Part 2 Title 1 Chapter 4 of Regulation (EU) No. 575/2013 EUR 7,267,521.93 (previous year: KEUR 7,267) 5. Own funds requirements according to Art. 92 of Regulation (EU) No. 575/2013 thereof: own funds requirements according to Art. 92 (1) lit a of Regulation (EU) 575/2013 296,251,065.07 377,672 core tier I capital ratio = 9.15% (previous year: 9.6%) thereof: own funds requirements according to Art. 92 (1) lit b of Regulation (EU) 575/2013 core tier I capital ratio = 9.15% (previous year: 9.6%) thereof: own funds requirements according to Art. 92 (1) lit c of Regulation (EU) 575/2013 Total capital ratio = 11.60% (previous year: 11.52%)6. Foreign liabilities 23 242,537,456.17 357,622



Development of Equity of Meinl Bank AG

– 62 –


Balance as of 1/1/2014 9,000,000.00 14,516,007.55 9,680,243.80 5,736,212.15 12,219,971.95 –23,894,831.70 27,257,603.75


Balance as of 12/31/2014 = 1/1/2015 9,000,000.00 23,516,007.55 9,680,243.80 5,736,212.15 12,219,971.95 –23,894,831.70 36,257,603.75

Result –9,162,253.37 –9,162,253.37

Balance as of 12/31/2015 9,000,000.00 23,516,007.55 9,680,243.80 5,736,212.15 12,219,971.95 –33,057,085.07 27,095,350.38

Subscribed Capital Retained capital reserves earningsin EUR

– 63 –


Balance as of 1/1/2014 9,000,000.00 14,516,007.55 9,680,243.80 5,736,212.15 12,219,971.95 –23,894,831.70 27,257,603.75


Balance as of 12/31/2014 = 1/1/2015 9,000,000.00 23,516,007.55 9,680,243.80 5,736,212.15 12,219,971.95 –23,894,831.70 36,257,603.75

Result –9,162,253.37 –9,162,253.37

Balance as of 12/31/2015 9,000,000.00 23,516,007.55 9,680,243.80 5,736,212.15 12,219,971.95 –33,057,085.07 27,095,350.38

Fund for general Liability Net profit/loss Equity banking risks reserves for the year capital

Statement of Changes in Fixed Assets according to Section 226 (1) UGB

– 64 –


Shares and other variable income securities 14,022,722.50 0.00 10,125,809.13 3,896,913.37 283,000.00 3,613,913.37 13,960,010.68 283,000.00

Investments 21,739.83 0.00 0.00 21,739.83 0.00 21,739.83 21,739.83 0.00

Shares in affiliated companies 55,662,984.93 0.00 8,069,363.66 47,593,621.27 29,987,087.91 17,606,533.36 33,321,308.34 7,670,951.25

Intangible fixed assets 44,606.59 0.00 0.00 44,606.59 44,606.52 0.07 0.07 0.00

Fixtures. furniture and office equipment 6,515,868.40 170,840.79 59,784.03 6,626,925.16 5,897,707.15 729,218.01 872,558.50 312,620.79

Buildings 356,199.85 0.00 0.00 356,199.85 269,174.97 87,024.88 90,371.97 3,347.09

Land 82,815.03 0.00 0.00 82,815.03 43,166.19 39,648.84 39,648.84 0.00

Subtotal tangible fixed assets 6,954,883.28 170,840.79 59,784.03 7,065,940.04 6,210,048.31 855,891.73 1,002,579.31 315,967.88

TOTAL 76,706,937.13 170,840.79 18,254,956.82 58,622,821.10 36,524,742.74 22,098,078.36 48,305,638.23 8,269,919.13

Balance as at Balance as at Accumulated Book value Book value Depreciations 1/1/2015 Additions Disposals 12/31/2015 depreciations 12/31/2015 12/31/2014 2015 Acquisition cost (in EUR)

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Shares and other variable income securities 14,022,722.50 0.00 10,125,809.13 3,896,913.37 283,000.00 3,613,913.37 13,960,010.68 283,000.00

Investments 21,739.83 0.00 0.00 21,739.83 0.00 21,739.83 21,739.83 0.00

Shares in affiliated companies 55,662,984.93 0.00 8,069,363.66 47,593,621.27 29,987,087.91 17,606,533.36 33,321,308.34 7,670,951.25

Intangible fixed assets 44,606.59 0.00 0.00 44,606.59 44,606.52 0.07 0.07 0.00

Fixtures. furniture and office equipment 6,515,868.40 170,840.79 59,784.03 6,626,925.16 5,897,707.15 729,218.01 872,558.50 312,620.79

Buildings 356,199.85 0.00 0.00 356,199.85 269,174.97 87,024.88 90,371.97 3,347.09

Land 82,815.03 0.00 0.00 82,815.03 43,166.19 39,648.84 39,648.84 0.00

Subtotal tangible fixed assets 6,954,883.28 170,840.79 59,784.03 7,065,940.04 6,210,048.31 855,891.73 1,002,579.31 315,967.88

TOTAL 76,706,937.13 170,840.79 18,254,956.82 58,622,821.10 36,524,742.74 22,098,078.36 48,305,638.23 8,269,919.13

Balance as at Balance as at Accumulated Book value Book value Depreciations 1/1/2015 Additions Disposals 12/31/2015 depreciations 12/31/2015 12/31/2014 2015

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Profi t and Loss Statement for the Financial Year 2015

2015 2014EUR EUR EUR ‘000

1. Interest and similar income thereof: 5,516,906.30 6,275 from fixed income securities: EUR 886,728.72 (previous year: KEUR 405) 2. Interest and similar expenses (1,155,783.04 ) (1,213 ) I. Net interest income 26 4,361,123.26 5,062 3. Income from securities and investments a) Income from shares, other equity rights and other variable income securities 82,089.15 b) Income from investments 11,095,000.00 11,177,089.15 13,260 4. Commissions received 9,589,218.88 17,845 5. Commissions paid (3,098,784.96 ) (1,218 ) 6. Income from financial transactions 7,253,471.69 3,650 7. Other operating income 97,472.27 1,120 II. Operating income 27 29,379,590.29 39,719 8. General administration costs a) Staff costs thereof: aa) Wages and salaries (7,880,155.16 ) (8,096 ) bb) Expenses for statutory social contributions and compulsory contributions related to wages and salaries (1,722,385.03 ) (1,455 ) cc) Other social benefits (29,763.30 ) (12 ) dd) Expenses for severance payments and contributions to company employee retirement funds (407,804.36 ) (230 ) (10,040,107.85 ) (9,794 ) b) Other administration costs (material expenses) (20,845,223.11 ) (18,574 ) 9. Write-downs on assets in items 8 and 9 (315,967.88 ) (317 ) III. Operating expenses 28 (31,201,298.84 ) (28,684 ) IV. Operating results 29 (1,821,708.55 ) 11,035 10. Expenses from valuation of loans and advances 30 (7,167,306.49 ) (1,270 ) 11. Income from dissolution of write-downs on loans and advances 30 697,209.59 1,545 12. Write-downs from investments and shares in affiliated companies 30 (7,953,951.25 ) (9,679 ) 13. Income from write-downs from shares in affiliated companies 30 2,037,785.13 1,491 V. Results from ordinary business activities 31 (14,207,971.57 ) 3,122 14. Extraordinary income 32 15,000,000.00 0 15. Extraordinary expenses 33 (12,345,637.52 ) (3,554 ) 16. Extraordinary results 2,654,362.18 (3,554 ) 17. Taxes on income 34 2,397,554.11 2,127 18. Other taxes not reported under item 17 (6,198.39 ) (1 ) 19. Interest expense for the supplementary capital 18 0.00 (1,694 ) VI. Loss for the year = Net loss for the year 35 (9,162,253.37 ) 0 20. Loss carried forward (23,894,831.70 ) (23,895 ) VII. Net loss 36 (33,057,085.07 ) (23,895 )


No.*

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The Financial Statements as at 31 December 2015 have been prepared pursuant to the provisions of the Austrian Business Code, as far as applicable to credit institutions, as well as the provisions of the Austrian Banking Act, and, where relevant, Regulation (EU) No. 575/2013 (Capital Requirements Regulation, “CRR”).The Financial Statements are in compliance with the generally accepted principles of proper accounting and therefore provide a true image of the net assets, fi nancial position and results of operations of the company.

When preparing the Financial Statements, Meinl Bank is faced with considerable uncertainties in connection with essential risks, particularly the risk arising from investor lawsuits, the tax risk arising from the external tax audit for the years 2003 to 2009 and the concentration risks.

The Bank has formed provisions in the amount of EUR 18.4 million for existing investor lawsuits with a value in dispute of EUR 91.5 million. For risks arising from the joining of private parties that could lead to potential compensa-tion for damages, there is a provision in the amount of EUR 11.1 million. Moreover, a global provision in the amount of EUR 1.0 million is in place for costs of litigation.The tax risk arising from the external audit of the years 2003 to 2009 may result in a scenario disadvantageous for the Bank with up to EUR 125.2 million. Risks up to the amount of EUR 53.0 million were outsourced to third parties with assumptions of obligations. The Bank has not formed any substantial provisions for any further risks.Meinl Bank is exposed to concentration risks in connection with companies in the infl uence of the ultimate owners of the Bank. They result, on the one hand, from an obligation to perform in the amount of up to EUR 38.0 million of a company and, on the other hand, from investments in and/or liabilities/assumptions of obligations of another company with a total exposure of up to EUR 35.4 million.If one of the above risks occurs at an amount that substantially exceeds the formed provisions and/or the promised obligations to perform of third parties, the over-indebtedness and/or illiquidity of Meinl Bank may occur.Based on the previous course of proceedings with investor lawsuits as well as an assessment of the legal representative on the one hand and on the evaluation of the tax risks by the tax adviser on the other hand, the Bank’s Management Board assumes that the risks will occur to a lower extent.With regard to the concentration risks, the Management Board’s evaluation is based on its regular assessment of the counterparties’ credit rating; such counterparties being part of the ultimate owners of the Bank. This also includes the assessment of the intrinsic value of the underlying net assets as well as its timely convertibility into cash.

In its budgetary planning for the 2016 fi nancial year, the Management Board expects positive results of ordinary business activities in the amount of EUR 6.3 million. The budget planned in detail is mainly based on the assumptionthat it will be possible to considerably increase the commission income, while the non-personnel expenses will be signifi cantly reduced by savings in the fi eld of marketing and consultancy services, and the formation of provisions for loans and risks to investors is now expected to become necessary only to a minor extent.

On the basis of its assessment of these potential risks to continued existence and the positive budgetary planning for 2016, the Management Board of the Bank assumes going concern.

ACCOUNTING AND VALUATION METHODS

Foreign currency assets and liabilities were valued at the ECB’s reference rate prevailing as of 31 December 2015. Amounts held in foreign currencies were converted at the current bid price applicable as at 31 December 2015.

Tangible assets are valued at acquisition cost minus the scheduled straight-line depreciations. The depreciation rates are 2.5% and 10% p.a. for the immovable assets and 10% to 33% p.a. for the movable assets. The full annual depreciation is calculated regarding the additions in the fi rst half of the fi nancial year, and half the annual depreciation is calculated regarding the additions in the second half of the year. Low-value assets (individual acquisition price of up to KEUR 0.4) are fully depreciated in the year of addition.

Loans and advances to credit institutions and customers are recognised at their nominal value. Provisions for specifi c doubtful debts were formed for identifi able default risks of borrowers. For receivables in risk countries (Ukraine, Russia and Serbia), corresponding collaterals (real estate, coverage by deposits) are obtained. With not completely value-adjusted loans, full recoverability is assumed due to the borrower’s results of operations or fi nancial position or due to the created collaterals.

Notes (Individual Financial Statements) 2015

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The securities held as fi xed assets were valued according to the moderate lower of cost or market principle.The assessment of the derivatives held as hedging instrument is made by applying the AFRAC Comment Letter “The business accounting of derivatives and hedging instruments”, according to which assessment units are formed with the hedged base transactions and no provisions for contingent losses are formed for negative market values as long as no loss is imminent overall.Securities held as current assets were valued according to the strict lower of cost or market principle and/or at market prices.

The valuation option set out in Section 56 (5) BWG was used for measuring fi xed-rate bonds. The Bank keeps a securities trading book containing securities and other fi nancial instruments in the amount of EUR 4.0 million (previous year: EUR 6.8 million).

Participations and shares in affi liated companies are generally valued under the going concern premise at acquisition cost; if permanent decreases in value have presumably occurred, depreciations are made. To the extent that any selling prices had already been fi xed during the balance sheet performance period, they were used for the valuation taking into account the historical cost principle.

Banking liabilities are valued at their repayment amount in consideration of the principle of prudence.

The provisions were created in the amount probably required for repayment. They take into account all identifi able risks and liabilities the amount of which are not yet established.For provisions for litigation risks, a back testing was carried out on the basis of historical data; in doing so, it was distinguished between own brokerage and third-party bank cases. The comparative fi nancial statements via the Stichting foundation were included into the Bank’s back testing model in order to determine the provision ratios.The provisions for severance payments were calculated according to the actuarial principles. They were determined on the basis of the expert opinion KFS/RL 2 of the Austrian Chamber of Public Accountants and Tax Advisers by using an interest rate of 2% (previous year: 2%) and a higher pension age in accordance with the Pension Reform 2003 and/or the Pension Harmonisation of 2004.

Trust assets for which the trustor holds a right of separation in case of insolvency were not recorded in the balance sheet according to Section 48 BWG, but disclosed in sub-item 3. Interest income and expenses do not include interest from trust assets and liabilities.Commissions received are taken also for transactions with longer terms in full to profi t or loss of the period in which they are received if such commissions are not mainly of an interest nature and if they are not repayable even in case of early cancellation of the respective transaction. In other cases, commission income from longer-term transactions is allocated on an accrual basis.

NOTES ON THE BALANCE SHEET AND THE PROFIT AND LOSS STATEMENT

BALANCE SHEET

ASSETS

1. Cash and Balances with Central BanksCash and balances with central banks are reported at EUR 41.7 million and therefore are EUR 39.3 million below the value for the previous year.The provisions regarding liquidity and maintenance of the minimum reserves have always been complied with.

2. Debt Instruments of Public IssuersCompared to the previous year’s value, debt instruments of public issuers decreased by EUR 25.8 million to EUR 1.0 million. The difference between lower costs of acquisition and the market values is EUR 0.6 million (previous year: EUR 0.5 million). In the year 2016, debt instruments of public issuers will fall due in the amount of EUR 0.0 million.

3. Loans and Advances to Credit InstitutionsOur loans and advances to credit institutions declined in the 2015 fi nancial year by EUR 32.8 million to EUR 74.9 million and represent an adjustment of our cash positions to the current market situation. The receivables due from associated banks totalled EUR 0.0 million (previous year: EUR 0.0 million). Of the other receivables, EUR 0.0 million (previous year: EUR 49.4 million) had terms up to 3 months, EUR 0.0 million (previous year: EUR 0.8 million) had terms from 3 months to 1 year, and EUR 0.0 million (previous year: EUR 0.0 million) had terms of more than 1 year.

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4. Loans and Advances to CustomersOur loans and advances to customers decreased in the year under review by EUR 38.3 million to EUR 125.0 million. This includes loans and advances to two members of the Management Board in the total amount of EUR 2.9 million (previous year: EUR 2.5 million) with an average interest rate of 1.5% p.a. as well as loans and advances to four members of the Supervisory Board in the total amount of EUR 4.6 million (previous year: EUR 9.4 million) with an average interest rate of 1.85% p.a. EUR 4.8 million were paid back. The loans and advances to customers include EUR 12.1 million to affi liated companies (previous year: EUR 10.1 million). Of the appropriated loans and advances to customers, EUR 15.2 million (previous year: EUR 12.9 million) have residual terms of up to 3 months, EUR 66.9 million (previous year: EUR 119.3 million) of more than 3 months to 1 year, EUR 32.0 million (previous year: EUR 19.7 million) of more than 1 year to 5 years, and EUR 9.2 million (previous year: EUR 4.8 million) of more than 5 years.

5. Debt Securities including Fixed Income Securities Issued by Other BorrowersDebt securities including fi xed income securities issued by other borrowers decreased from EUR 5.3 million in the previous year to EUR 3.1 million as at the year’s end. Of this, EUR 0.0 million (previous year: EUR 0.0 million) were allocated to fi xed assets. EUR 0.0 million (previous year: EUR 0.0 million) were allocated to unlisted securities. The difference according to Section 56 (5) BWG is EUR 0.0 million (previous year: EUR 0.0 million). In the year 2016, debt securities in the amount of EUR 0.0 million fall due.

6. Shares and other Variable Yield SecuritiesShares and other variable income securities decreased by EUR 58.8 million to EUR 63.3 million. This included EUR 3.6 million (previous year: EUR 14.0 million) for tangible fi xed assets. A “right of profi t participation” in Julius Meinl AG in the amount of EUR 2.9 million is included in this item. This participating right corresponds to a participation in the company to the amount of 10.98%. This included EUR 62.3 million (previous year: EUR 110.9 million) for unlisted securities. The difference for securities licensed for stock exchange trade according to Section 56 (5) BWG is EUR 0.0 million (previous year: EUR 0.0 million).

7. InvestmentsFor the participations of subordinate importance, the equity capital and the overall results for the year were not indicated in accordance with Section 241 (2) UGB. Investments remained unchanged at EUR 0.02 million. The information about investment companies according to Section 238 lit. 2 UGB is represented separately as part of the consolidated fi nancial statements on page 46. None of the investments is listed on the stock market.

8. Shares in Affi liated CompaniesThe book value of the shares in affi liated companies declined by EUR 15.7 million to EUR 17.6 million.The information regarding the affi liated companies according to Section 64 (1) lit. 10 BWG is represented separately on page 46. None of them is listed on the stock market.

9. Intangible Fixed AssetsThis item is reported with the reminder value of EUR 0.07 (previous year: EUR 0.07).

10. Tangible Fixed AssetsThe value of developed plots amounts to EUR 0.04 million.Tangible fi xed assets decreased in the period under review by EUR 0.1 million to EUR 0.9 million.

11. Other AssetsInter alia, this item includes dividend entitlements of EUR 9.1 million (previous year: EUR 9.4 million), interest not yet applied of EUR 2.5 million (previous year: EUR 2.3 million), insurance claims of EUR 8.0 million (previous year: EUR 8.0 million), tax claims against tax authorities regarding prepaid taxes for the years 2004 to 2015 amounting to EUR 19.8 million (previous year: EUR 17.9 million), deposit on the account of the tax offi ce amounting to EUR 35.0 million (previous year: EUR 35.0 million) and other deferments. At EUR 82.2 million, this is EUR 16.1 million lower than in the previous year and has a residual term of less than one year. Essential income that only becomes cash effective after the end of the reporting date includes interest not yet billed of EUR 2.5 million, income from dividend entitlements of EUR 9.1 million and claims arising from insurance benefi ts of EUR 8.0 million.Claims arising from insurance benefi ts relate entirely to claims to insurance companies on the basis of D&O insurancefor representation costs already arisen. The claim and intrinsic value of these accounts receivable of Meinl Bank against the insurance companies is based on an evaluation of the legal representation dated 23 May 2016. The claims concern the years 2013 to 2015; safety discounts have been made.

12. Net TotalAs at the year’s end, the net total of Meinl Bank AG reached EUR 410.4 million and thus was EUR 262.7 million lower than the previous year’s value.

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LIABILITIES

13. Liabilities to Credit InstitutionsLiabilities to credit institutions that include the daily amounts as well as those with agreed terms or notice periods decreased in the reporting year from EUR 43.0 million by EUR 12.6 million to EUR 30.4 million. Amounts owed to affi liated credit institutions totalled EUR 0.0 million (previous year: EUR 3.3 million).Of the liabilities with agreed maturity dates or periods of notice, EUR 0.0 million (previous year: EUR 0.0 million) had terms up to 3 months, EUR 0.0 million (previous year: EUR 0.0 million) had terms of more than 3 months to 1 year, and EUR 0.0 million (previous year: EUR 0.0 million) had terms of more than 1 year.

14. Liabilities to CustomersLiabilities to customers totalled EUR 304.2 million (previous year: EUR 524.9 million). Savings deposits totalled EUR 25.8 million and thus were 4.0% above the balance at the end of the year 2014. This item includes EUR 19.5 million of liabilities to affi liated companies (previous year: EUR 9.6 million). Of the appropriated liabilities, EUR 1.3 million (previous year: EUR 1.8 million) had terms up to 3 months, EUR 0.06 million (previous year: EUR 0.9 million) had terms from 3 months to 1 year, EUR 24.7 million (previous year: EUR 23.7 million) had terms from 1 year to 5 years, and EUR 0.0 million (EUR 0.0 million) had terms of more than 5 years.

15. Other LiabilitiesThis item decreased by EUR 6.1 million to EUR 5.6 million. It includes, inter alia, interest of EUR 0.0 million (previous year: EUR 3.5 million) and unpaid invoices of EUR 4.5 million (previous year: EUR 4.2 million) and has a residual term of less than 1 year. Essential expenses that only become cash-effective after the closing are consulting expenses in the amount of EUR 2.8 million.

16. ProvisionsWith an amount of EUR 35.9 million, this item, which includes provisions for severance payments, taxes and miscellaneous, is EUR 6.2 million below the level in the respective period of the previous year. The other provisions include provisions for personnel amounting to EUR 0.7 million (previous year: EUR 1.2 million).

As at 31 December 2015, Meinl Bank formed provisions for anticipated losses in the amount of EUR 30.5 million (previous year: EUR 20.6 million) for risks arising from investor lawsuits and the joining of private parties. The calculation of the provision ratio for investor lawsuits is generally based on a back testing model taking into account the course of the proceedings so far. As part of this model, the Bank carried out an internal loss analysis of lawsuits that were ended by out-of-court settlement and/or with a favourable or unfavourable court ruling and adjusted the provisioning ratios accordingly. The settlements of the Stichting foundation were also included in the loss ratio. In doing so, we distinguish two groups of claimants when determining the provisioning ratios, for which separate loss ratios were developed: claimants who were direct customers of the Bank originally and complaining customers who carried out their investments via third-party banks. As a basis for the formation of provisions, Meinl Bank uses the theoretical loss, i.e. the difference between the historical purchase price of the customer and the value of the shares at the time of sale by the customer and/or the redemption by Meinl Bank.As of 31 December 2015, in addition to provisions made for civil actions already brought, potential claims of approx. 5,000 investors that joined the criminal investigations as private parties and have previously waived the assertion of their alleged claims in civil proceedings had likewise been taken into account. That part of the private parties who had already fi led an additional lawsuit before the civil court has already been taken into account in the past annual fi nancial statements in the provisions described above on the basis of historically determined loss ratios.In the fi rst place, the consideration of the private parties is based on refl ections on the overall settlement of the pending MEL proceedings within the framework of the agreement concluded with the Dutch foundation Stichting Atrium Claim and without acknowledging any strict legal obligation. Via the Stichting, all investors having taken legal steps in the form of a lawsuit or as a joining as private parties are given the opportunity to receive a compensation amount, the amount of which depends on specifi c parameters. The solution via the Stichting has become possible as a result of Atrium, the succession company of Meinl European Land Limited, assuming half of the costs and compensation payments. The total amount of those private parties who did not fi le any lawsuit is estimated at approx. EUR 230.0 million. Until 30 April 2016, approx. 1,300 private parties of the ones referred to above bindingly accepted the judicial settlement with the joining of private parties amounting to a total of approx. EUR 50.0 million. To this end, compensation payments in the amount of EUR 7.6 million were determined. The settlements reached in this context were used to calculate a loss ratio, which was then applied to the total amount of the joining of private parties. This results in a risk provision for private parties in the amount of EUR 11.0 million.A provision in the form of a lump sum amount of EUR 1.0 million was formed for future litigation costs. The provision is the best possible estimate due to the non-foreseeable course of the proceedings and is subject to uncertain-ties due to the complexity of the matters and a foreseeable longer duration of the proceedings.

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17. Fund for General Banking RisksThis item was not changed in the reporting year and remains at EUR 5.7 million.

18. Supplementary CapitalThe supplementary capital decreased from EUR 15.1 million to EUR 7.3 million. In the year under review, the supplementary capital was re-issued. It is a bond with a term until 2025 and bears interest at 4%. Affi liated companies hold EUR 0.0 million (previous year: EUR 0.0 million). The expense for this supplementary capital amounted to EUR 0.0 million in the reporting year (previous year: EUR 1.7 million). During the year under review, two bonds were repaid.

19. Subscribed CapitalThe subscribed capital totals EUR 9.0 million and comprises 12,000 no-par-value shares.

20. Capital Reserves/Retained EarningsThe capital reserves, divided into appropriated and unappropriated reserves, are reported at EUR 23.5 million (previous year: EUR 23.5 million).The retained earnings are reported at EUR 9.7 million (previous year: EUR 9.7 million) and are divided into statutory reserves of EUR 0.5 million and other reserves of EUR 9.2 million.

21. Liability Reserves according to Section 57 (5) BWGThe liability reserves have been calculated according to Section 57 (5) BWG and totalled EUR 12.2 million, the same as in the previous year.

22. Contingent Liabilities/Credit RisksContingent liabilities in the fi eld of guarantees declined by EUR 4.6 million from EUR 18.0 million to EUR 13.4 million. This includes contingent liabilities connected with the profi t share for the supplementary capital in the amount of EUR 5.6 million (previous year: EUR 6.7 million) and fi nancial guarantees of EUR 7.8 million (previous year: EUR 11.3 million).Credit risks increased by EUR 2.7 million to EUR 3.8 million (previous year: EUR 1.1 million). Liabilities arising from trust transactions declined to EUR 118.2 million (previous year: EUR 290.4 million).

23. Foreign Assets and LiabilitiesThe bank’s foreign assets as at the year’s end totalled EUR 149.1 million (previous year: EUR 231.5 million). This included EUR 12.2 million (previous year: EUR 22.3 million) for investments and shares in affi liated foreign companies.The foreign liabilities totalled EUR 242.5 million (previous year: EUR 357.6 million).

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24. Eligible CapitalEligible capital according to Part 2 of Regulation (EU) No. 575/2013 achieved approx. EUR 36.8 million. The following table shows the composition of own funds of Meinl Bank AG, of the Meinl Bank Group and of Finanzholding B.V. Belegging-Maatschappij “Far East” B.V., Velp, The Netherlands according to Part 2 of Regulation (EU) No. 575/2013:

25. Additional InformationThe Financial Statements disclose foreign currency assets in the amount of EUR 135.3 million (previous year: EUR 287.1 million) and foreign currency liabilities in the amount of EUR 130.5 million (previous year: EUR 278.7 million). As of the balance sheet date, there have not been any commodity futures not yet been transacted.

PROFIT AND LOSS STATEMENT

26. Net Interest Income Interest and similar income, including interest from fi xed income securities, minus interest and similar expenses, resulted in net interest income of EUR 4.4 million, which is EUR 0.7 million below the previous year’s value.

27. Operating IncomeThe total operating income of EUR 29.4 million was EUR 10.3 million below the results for the previous year. The decrease results mainly from the decrease of the income from investments by EUR 2.0 million and the increase of the income from fi nancial transactions by EUR 3.6 million as well as from the decrease of the commission income by EUR 8.2 million. It was decided not to split Meinl Bank AG’s income according to Section 64 (1) lit. 9 BWG as there was no signifi cant difference to other markets.

28. Operating ExpensesOperating expenses increased in the year under review by EUR 2.5 million to EUR 31.2 million. The staff costs increased by EUR 0.2 million to EUR 10.0 million. The material expenses rose by EUR 2.2 million to EUR 22.1 million. The material expenses include consulting expenses in the amount of EUR 10.6 million (previous year: EUR 9.4 million) as well as rental and leasing expenses in the amount of EUR 1.0 million (previous year: EUR 1.1 million). These expenses will be EUR 1.0 million (previous year: EUR 1.1 million) for the next year and EUR 4.9 million (previous year: EUR 4.9 million) for the next

Far East Meinl Bank Meinl Bank Meinl Bank Group Group AG AGin EUR ‘000 12/31/2015 12/31/2015 12/31/2015 12/31/2014Subscribed capital 2,400 9,000 9,000 9,000Capital reserves 17,490 23,516 23,516 23,516Retained earnings 0 1,142 9,680 9,680Fund for general bank risks 0 5,736 5,736 5,736Liability reserves 0 12,220 12,220 12,220Loss carried forward –1,360 –13,499 –23,894 –23,894Negative differences arising from capital consolidation 19,205 144 0 0Adjustment item for currency differences from consolidation 1,289 0 0 0 39,024 38,259 36,258 36,258Deductions:Intangible fi xed assets 0 0 0 0Loss for the year –9,960 –8,552 –9,162 0Core capital (tier I capital) 29,064 29,707 27,096 36,258Additional equity capital:Supplementary capital 7,267 7,267 7,267 7,267Additional equity capital (tier II capital) 7,267 7,267 7,267 7,267Total own funds 36,331 36,974 34,363 43,528Own funds requirement according to Art. 93 CRR 299,211 306,111 296,251 377,672Required own funds 23,937 24,489 23,700 30,214Surplus cover 12,394 12,485 10,563 13,311

The total return on capital is -28.92% (previous year: 0.0%).

– 73 –


5 years. In addition, this item includes expenses to KPMG Austria GmbH. Wirtschaftsprüfungs- und Steuerberatungsgesell-schaft, Vienna, and to Grant Thornton Unitreu GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna, in the amount of EUR 1.2 million (previous year: EUR 0.7 million). EUR 0.9 million (previous year: EUR 0.6 million) thereof are allocated to the audit of the Financial Statements.In the fi nancial year, an average of 92 (previous year: 77) salaried staff was employed. The item costs for settlements and con-tributions to company employee retirement funds include EUR 0.7 million (previous year: EUR 0.0 million) of severance payments (of which EUR 0.7 to executives), EUR 0.1 million (previous year: EUR 0.1 million dissolution) for allocation of severance payment provisions, and EUR 0.4 million (previous year: EUR 0.1 million) contributions to employee pension funds.

29. Operating ResultThe operating result deteriorated in the reporting period by EUR 12.9 million and amounts to EUR -1.8 million.

30. Valuation ResultThe valuation result amounts to EUR -12.4 million (previous year: EUR -7.9 million). It includes allocations to value allowances on accounts receivable in the amount of EUR -7.2 million (previous year: EUR -1.3 million), value allowances on investments in the amount of EUR -8.0 million (previous year: EUR -9.7 million) and income from dissolutions of securities and receivables in the amount of EUR 0.7 million (previous year: EUR 1.5 million) and income from disposal of investments in the amount of EUR 2.6 million (previous year: EUR 1.5 million).

31. Result of Ordinary Business ActivitiesThis item is reported at EUR -14.2 million and is thus EUR 17.18 million below the value for 2014.

32. Extraordinary IncomeThis item is reported at EUR 15.0 million (previous year: EUR 0.0 million) and relates to the release of tax provisions in connection with the obligation to perform of a company in the infl uence of the ultimate owners of the Bank.

33. Extraordinary ExpensesThe amount of extraordinary expenses was EUR 12.3 million and included allocations of funds for litigation risks and costs in the amount of EUR 12.3 million.

34. Taxes on Income Meinl Bank AG is group leader within the framework of a group and tax reconciliation agreement. Income totalling EUR 2.4 million can be attributed to the tax allocation to be paid by group members. The exemption clause according to Section 241 (3) UGB is applied in this regard.In the 2014 fi nancial year, the Meinl Bank Group was subjected to an external audit according to Section 147 BAO [Federal Fiscal Code] with regard to all relevant types of duties. The company audit reports and the corresponding certifi cates for the years 2003 to 2009 are now available at Meinl Bank and/or for the group members.

Depending on the appreciation and the outcome of the further appeal proceedings, the matters in dispute could lead to substantial retrospective tax payments to be made by Meinl Bank. Due to the complexity of the matters on hand, the foreign element and the existing legal uncertainties, the estimate of the outcome of the further proceedings is affected by high uncertainties. Depending on the assessment of the occurrence probabilities for the outcomes of the proceedings with the individual matters, the maximum tax amount to be paid retroactively can be over EUR 125.2 million (in consideration of interest receivable and balances from value added taxes for the company audit period). The Bank’s Management Board uses analyses of the tax representative in support of its assessment of the tax risks. Due to the assessments of the commissioned tax consultants, there are comprehensible arguments that generally allow the establishment of accounting provisions below the maximum amount stated. Based on new information and facts, the amount of the accounting provisions is regularly reviewed, also with regard to the reporting date 31 December 2015.

On 25 June 2014 (with supplement from 3 July 2014), Meinl Bank concluded a written agreement for the assumption of tax risks (“obligation to perform”) with a company in the infl uence of the ultimate owners of the Bank up to the amount of EUR 38.0 million. According to this agreement, the company assumes the subsequent payment of taxes of Meinl Bank regarding the years 2003 to 2009 included by the external audit by crediting tax credits for the years in question if a claim is asserted. The intrinsic value of this obligation to perform regarding tax risks is essentially justifi ed with the company’s asset situation. Should the obligations to perform be utilised, Meinl Bank AG will issue an equity boost, which will be repaid from potential future net profi ts for a year.

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Furthermore, on 4 July 2016, Meinl Bank concluded a written agreement, which is similar in large parts, for the assumption of tax risks (“obligation to perform”) up to the amount of EUR 15.0 million with another company in the infl uence of the ultimate owners of the Bank. An oral promise was already made in the 2015 fi nancial year in this regard. In addition, Meinl Bank has a loan owed to this company in the amount of EUR 4.6 million with a term until 31 December 2015 and also holds a profi t-sharing right of this company in the amount of EUR 2.9 million. By way of a purchase agreement concluded on 15 October 2015, this company acquired all shareholdings in a Group company at a purchase price in the amount of EUR 13.8 million. The intrinsic value of these investments of the Bank vis-à-vis the company and of the obligation to perform (thus in total EUR 35.4 million) is established by the company’s asset situation and the realisation of assets by a subsidiary in this company in the near future, as well as with a business valuation of said company. This constitutes an uncertainty in the preparation of the fi nancial statements. According to this agreement, these companies assume subsequent tax payments to be made by Meinl Bank concerning the years 2003 to 2009 included by the external audit, by crediting value added tax credits for the years in question, if a claim is asserted. Therefore, jointly with the above obligation to perform, provisions in the amount of EUR 53.0 million are secured.

Tax provisions in the total amount of EUR 2.5 million are formed in the Bank’s annual fi nancial statements at hand for the years in question. Due to the availability of the obligations to perform and on the basis of its own assessment and the assessment of the tax representative, Meinl Bank has not formed any provisions for potentially exceeding tax risks. It was agreed with the tax authority that the collection of the subsequent tax payment will be suspended according to Section 212a BAO due to the provision of collateral in the amount of EUR 25.0 million until a decision is made by the high courts.

No deferred taxes were calculated as such are of an insignifi cant amount.

35. Loss for the Year = Net Loss for the YearThe net loss for the year with EUR -9.2 million is by EUR 9.2 million lower than the result for the previous year.

36. Net LossConsidering the loss carried forward, the net loss is EUR -33.1 million (previous year: EUR -23.9 million).

The company is included in the Consolidated Financial Statement of B.V. Belegging - Maatschappij “Far East”, Velp, The Netherlands, which prepares the consolidated fi nancial statements for the largest group of companies. The Consolidated Financial Statements are available at the named parent company’s registered offi ce.

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OTHER INFORMATION

Executive Bodies of the Company

Supervisory Board: Lic.oec. HSG Julius Meinl, Chairman Thomas Nilsson, Deputy Chairman Alexander Johannes Braam, Member Dr.h.c. Robert Kofl er M.B.A., Member MMag. Peter Weinzierl, Member (from 15 December 2015)

Management Board: Stephen Coleman, Member of the Board (from 25 October 2015) Samira Softic, Member of the Board (from 11 December 2015) Günter Weiß, Member of the Board (until 25 October 2015) MMag. Peter Weinzierl, Member of the Board (until 10 December 2015)

The safeguard clause set out in Section 241 (4) UGB is used with regard to the compensation for the Management Board in the expired fi nancial year. In the fi nancial year 2015, the Supervisory Board received compensation in the amount of EUR 0.2 million (previous year: EUR 0.2 million). A consulting contract was concluded with the Chairman of the Supervisory Board. A lump sum of EUR 1.0 million is charged for rendering the agreed consulting services. A second consulting contract was concluded with another member of the Supervisory Board which entered into force on 1 January 2016. Remuneration is paid depending on the time spent on the basis of an agreed daily rate covering any costs incurred in this context.

Meinl Bank fulfi ls its disclosure obligations according to Part 8 of Regulation (EU) No. 575/2013 on its website (www.meinlbank.com).

Vienna, 8 July 2016


Stephen Coleman Samira Softic Member of the Board Member of the Board

– 76 –


Report on the Financial Statements

We have audited the accompanying annual fi nancial statement of

MEINL BANK Aktiengesellschaft,Vienna,

including the Balance Sheet as of 31 December 2015, the Profi t and Loss Statement for the year then ended as well as the Notes.

Responsibility of the Legal Representatives for the Annual Financial Statements

The Company’s legal representatives are responsible for the preparation and proper overall presentation of the present fi nancial statements in accordance with the corporate and banking provisions to be applied in Austria and for the internal controls deemed necessary by the legal representatives to enable the preparation of annual fi nancial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with the Austrian Standards on Proper Auditing. Those standards require that we apply the international auditing standards. According to these standards, we are obliged to comply with professional guidelines and to plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the valuations and other disclosures in the fi nancial statements. The audit procedures selected depend on the auditor’s dutiful judgement, including the assessment of the risks of material misstatements of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the company’s preparation and proper overall presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the legal representatives, as well as evaluating the overall presentation of the fi nancial statements.

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

Opinion

Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the fi nancial state-ments comply with legal requirements and give a true and fair view of the company’s net assets and fi nancial position as at 31 December 2015 and of its results of operations for the fi nancial year then ended in accordance with the Austrian Generally Accepted Accounting Principles.

Without qualifying our opinion, we draw your attention to the Management Board’s explanations in the Notes (chapter 16) and in the Management Report (chapter “Investor Lawsuits”) concerning the estimation of litigation risk especial-ly in connection with Atrium European Real Estate (former Meinl European Land). Provisions in the amount of EUR 30.5 million were formed for risks arising from investor lawsuits and the joining of private parties. The estimation of this amount is highly dependent on assumptions in respect of course of legal proceedings. These assumptions indicate a material uncertainty with regard to the preparation of fi nancial statements.

Without qualifying our opinion, we further draw your attention to the Management Board’s explanations in the Notes (chapter 34) and in the Management Report (chapter “Duties and Duties Procedures”) concerning the estimations of the tax risk in connection with an ongoing tax audit for the years 2003 to 2009. According to two agreements the Bank concluded with companies in the infl uence of the ultimate owners of the Bank, they cover tax payments up to the amount of EUR 38.0 million and/or EUR 15.0 million and thus altogether EUR 53.0 million. Therefore, no provisions were accounted in the annual fi nancial statements for tax risks covered by these obligations to perform. The estimation of tax risk is highly de-pendent on assumptions in respect of the course of the other legal proceedings as well as collectability of funds out of the obligations to perform. These assumptions indicate a material uncertainty with regard to the preparation of fi nancial statements.

Auditor’s Report

– 77 –


Without qualifying our opinion, we further draw your attention to the Management Board’s explanations in the Notes (chapter 34) and in the Management Report (chapter “Duties and Duties Procedures”) concerning the estimations of the intrinsic value of direct and indirect risk positions with a company in the sphere of infl uence of the ultimate owners of the Bank in the total amount of EUR 35.4 million. The assessment of the intrinsic value is essentially dependent on the expec-ted performance of the sale of rights by a subsidiary of this company as well as on the achievement of fi nancial objects in this subsidiary. The occurrence of these assumptions constitutes an essential insecurity in the preparation of the fi nancial statements.

Without qualifying our opinion, we further draw your attention to the Management Board’s explanations in the Notes (prior to the accounting and valuation methods) as well as in the Management Report concerning the going concern assumption.

Report on the Management Report

Pursuant to statutory provisions, the Management Report is to be audited as to whether it is consistent with the fi nancial statements and as to whether the other disclosures are not misleading with respect to the company’s position. The Auditor’s Report also has to contain a statement as to whether the Management Report is consistent with the fi nancial statements and as to whether the disclosures are correct in accordance with Section 243a Austrian Business Code (UGB).

In our opinion, the Management Report is consistent with the fi nancial statements. The disclosures in accordance with Section 243a UGB are correct.

Vienna, 8 July 2016

Grant Thornton Unitreu GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Mag. Eginhard Karl Mag. Christian Pajer Auditor Auditor

KPMG Austria GmbHWirtschaftsprüfungs- und Steuerberatungsgesellschaft

Mag. Bernhard MechtlerAuditor

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

– 78 –


– 79 –


The Supervisory Board performed the supervisory and control duties required of it by law and under the

Memorandum and Articles of Association during the 2015 fi nancial year. There was no need to set up an

Audit Committee for the 2015 fi nancial year according to Section 63a (4) BWG. The Management Board duly

reported to the Supervisory Board on important management issues, business in progress and the status of the

company. The Supervisory Board supervised the Management Board and verifi ed that the management of

the company as a whole and the conduct within the management complied with the management objectives

prescribed by law and the Memorandum and Articles of Association.

These fi nancial statements plus notes and management report and the consolidated fi nancial statements

and consolidated management report were audited by KPMG Austria AG Wirtschaftsprüfungs- und

Steuerberatungsgesellschaft, Vienna, and by Grant Thornton Unitreu GmbH, Wirtschaftsprüfungs- und

Steuerberatungsgesellschaft, Vienna. The fi nal results of the audit did not give rise to any objections and hence

the auditor issued an unqualifi ed audit certifi cate with four additional remarks. The management report is

consistent with the annual fi nancial statements.

The annual fi nancial statements plus management report and the consolidated fi nancial statements plus

consolidated management report were submitted to and verifi ed by the Supervisory Board.

The fi nal results of verifi cation of the annual fi nancial statements, the directors’ management report, the

consolidated fi nancial statements, the directors’ consolidated management report and the proposed

appropriation of profi ts by the Supervisory Board did not give rise to any objections and the Supervisory

Board therefore approved the annual fi nancial statements for the 2015 fi nancial year, taking due account of

the additional notes in the auditor’s audit certifi cate and the relevant points in the notes, and endorsed the

management report. The annual fi nancial statements have therefore been approved according to Section

96 (4) AktG [Companies Act].

The Supervisory Board

Lic.oec. HSG Julius Meinl

Chairman

Vienna, July 2016

Report by the Supervisory Board

Head Offi ce

Meinl Bank AG Phone +43 1 531 88 0

A-1010 Vienna, Bauernmarkt 2 Sort Code 19240

BIC MEIN AT WW

Internet www.meinlbank.com

E-mail [email protected]

Selected Company of the Meinl Bank Group

Julius Meinl Investment Ges.m.b.H. Phone +43 1 531 88 0

A-1010 Vienna, Kärntnerring 2 Fax +43 1 531 88 485

MEINL BANK – HEAD OFFICEAND SELECTED COMPANY OF THE MEINL BANK GROUP

– 80 –



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