2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

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Notes 35 Requirements of Swiss banking law The Julius Baer Group is subject to consolidated supervision by the Swiss Federal Banking Commission. The following differences exist between the International Financial Reporting Standards (IFRS), according to which the Group prepares its financial statements, and the accounting regulations for banks in accordance with Swiss law: According to Swiss accounting standards, realized gains and losses on financial assets that are valued in accordance with the accrual method and that are sold or repaid before final maturity are not recorded immediately but rather are accrued over the residual term of the transaction until the final maturity. In accordance with IFRS, such gains and losses are recorded immediately in the income statement. In addition, changes in the fair value of available-for-sale financial investments as well as in the fair value of cash flow hedges are directly set off against the shareholders’ equity. According to Swiss banking law, such value adjustments are not recognized. According to IFRS, nearly all income and expenses shall be attributed to ordinary business operations. In line with the Swiss accounting regulations applicable to banks, income and expenses are already classified as extraordinary if they do not relate to the period under review or to normal operations (compare to Note 4). Moreover, according to IFRS, deferred taxes must be calculated on additional gains from valuation adjustments. In accordance with IFRS, treasury shares are deducted from the equity capital in the balance sheet. Gains or losses resulting from the purchase/sale of treasury shares in the financial investments are not stated in the income statement but are directly set off against the equity capital. According to Swiss law, treasury shares not held for trading purposes are included in the position financial investments in the balance sheet and correspondingly separated into a reserve for treasury shares (stated on a gross basis). Gains or losses resulting from the purchase/sale of treasury shares are stated in the income statement. With the exception of the CHF 80.8 million of treasury shares deducted from the equity capital in the consolidated financial statements in accordance with IFRS, and the classification of extraordinary income and expenses of CHF 9.3 million as other ordinary income and expenses, these differences between the requirements of IFRS and Swiss banking law are not material for the consolidated financial statements. 136 JULIUS BAER GROUP
Report of the Group auditors to the Ordinary Shareholders' Meeting of Julius Baer Holding Ltd., Zurich As auditors of the Group, we have audited the consolidated financial statements (income statement, balance sheet, shareholders' equity, statement of cash flows and notes to the consolidated financial statements / pages 63 - 136) of Julius Baer Holding Ltd. for the year ended 31 December 2005. These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards and with the International Standards on Auditing, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers Ltd Albert Schönenberger Rolf Birrer Zurich, 15 February 2006 JULIUS BAER GROUP 137
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2005 Annual Report Julius Baer Hold
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Key figures 2004 2005 Change CHF m
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Annual Report 2005
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Foreword 4 Dear Shareholders and Cl
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Foreword 6 Annual financial results
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Foreword 8 The significant economie
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Foreword 10 2005 will go down in th
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anks, the decision has been made to
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this corresponds to CHF 2.59 per re
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2004 2005 Change Change CHF m CHF m
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Private Banking 20 Private Banking
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Asset Management 22 Asset Managemen
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Trading & Sales 24 Trading & Sales
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Corporate Center 26 Corporate Cente
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Corporate Center 28 Our model of su
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Corporate Governance
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1.2 Cross-shareholdings There are n
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2.3 Changes of capital The descript
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egistered shares not physically rep
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Corporate Governance tors of Julius
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3.3 Cross-involvement Since 2004, M
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The Chairman’s Committee receives
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Group Executive Board The Group Exe
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Group Managing Board of UBS AG, 199
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4.3 Other activities and functions
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Equity Bonus Plan 2004 2005 Number
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5.3 Compensation for former members
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5.7 Additional honorariums No addit
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7. Changes of control and defense m
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9. Information policy Julius Baer H
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Financial Report
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Consolidated income statement 2004
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31.12.2004 31.12.2005 Change Change
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Translation differences 2003 2004 2
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Consolidation policies and valuatio
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when the contractually stipulated p
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A hedge is regarded as highly effec
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Intangible assets Intangible assets
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In the case of defined benefit pens
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Under revised IAS 32, certain deriv
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Notes JULIUS BAER GROUP 81
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3. Credit risks Credit or counterpa
Page 89 and 90: Assets by countries/country groups
Page 91 and 92: 5. Liquidity and financing risks Th
Page 93 and 94: The liquidity position of Bank Juli
Page 95 and 96: Hedges The Group hedges a portion o
Page 97 and 98: 7. Reputational risks The Group’s
Page 99 and 100: 3 Results from trading operations N
Page 101 and 102: 7 Taxes Notes 2004 2005 Change Chan
Page 103 and 104: The depreciation and write-offs of
Page 105 and 106: Information on the consolidated bal
Page 107 and 108: 12 Financial investments 31.12.2004
Page 109 and 110: Notes 31.12.2004 31.12.2005 Change
Page 111 and 112: 18 Financial liabilities designated
Page 113 and 114: 20a Deferred tax assets Notes 31.12
Page 115 and 116: 23 Corporate capital Notes Register
Page 117 and 118: 25 Pension plans and other employee
Page 119 and 120: 26 Assets and liabilities by domest
Page 121 and 122: 27 Consolidated off-balance-sheet t
Page 123 and 124: 28 Derivative financial instruments
Page 125 and 126: 29 Financial instruments (continued
Page 127 and 128: 30 Risk-weighted assets (BIS) Notes
Page 129 and 130: Notes Head Office Currency Capital
Page 131 and 132: Notes Head Office Currency Capital
Page 133 and 134: Pro-forma information The following
Page 135 and 136: Movements in shares granted under v
Page 137 and 138: Notes 31.12.2004 31.12.2004 31.12.2
Page 139: Breakdown of assets under managemen
Page 143 and 144: Financial Report of Julius Baer Hol
Page 145 and 146: lion to CHF 28 million due to capit
Page 147 and 148: Balance sheet 31.12.2004 31.12.2005
Page 149 and 150: Proposal of the Board of Directors
Page 151 and 152: Report of the statutory auditors to
Page 153 and 154: Addresses and contacts
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2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

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