ANNUAL REPORT

Year

2015
DUKASCOPY BANK SA

02 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONTENTS
INTRODUCING DUKASCOPY GROUP

04

MESSAGE FROM THE BOARD
OF DIRECTORS

06

MESSAGE FROM THE CEO

07

REVIEW OF OPERATIONS & KEY FIGURES

08

ORGANISATION OF THE BANK09

FINANCIAL STATEMENTS AND PROPOSEDAPPROPRIATION OF RETAINED EARNINGS10REPORT OF THE AUDITOR ON
THE STATUTORY FINANCIAL STATEMENTS

38

CAPITAL ADEQUACY
AND LIQUIDITY SITUATION

40

CONSOLIDATED FINANCIAL STATEMENTS

42

REPORT OF THE AUDITOR ON THE
CONSOLIDATED FINANCIAL STATEMENTS

70

CONSOLIDATED CAPITAL ADEQUACY
AND LIQUIDITY SITUATION

72

ADDRESSES - CONTACTS74

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 03

INTRODUCINGDUKASCOPY
GROUP
04 | DUKASCOPY BANK SA ANNUAL REPORT 2015

INTRODUCING DUKASCOPY GROUP

Dukascopy’s history started in 1998 as a project ofMore recently, Dukascopy Group added inno-

physicists headed by Dr. Andrey Duka in Geneva,

vative payment solutions via smartphones and e-

aiming at serving the financial community with inno-

wallets to its range of services.

vative solutions based on novel mathematical andeconophysical techniques.

The Group development strategy includes international expansion through physical presence in key

The founders’ vision materialised in an international

markets so as to be always closer to our growing

financial and media group headed by an innovativeinternational clientele. Our ambition is also to conti-

online Swiss bank and securities dealer “Dukascopy

nuously offer new financial instruments and inno-

Bank”, counting 164.8 employees (in full time equivalentvative services based on our in-house developed

as at 31.12.2015). The Group counts 298.4 employees oftechnology.

which 266.9 employees for the consolidated companies (in full time equivalent as at 31.12.2015). It offers

In Switzerland, Dukascopy Bank is a FinTech

multiproduct online and mobile trading platforms asprecursor. It advocates the adaptation of Swisswell as online banking services to individual and insti-

regulation to new technologies and new ways oftutional clients located worldwide. The media arm of

doing financial business. As an example, it sup-Dukascopy Group is “Dukascopy TV”, a Swiss financial

ported the authorisation of fully online client on-

online television regulated by OFCOM.

boarding procedures by FINMA, an importantmilestone for the Swiss online financial industry.

The Group is also active in social media through“Dukascopy Community”. This online community counts
over 120’000 members freely accessing financial infor-

Dukascopy brand is known internationally ashigh tech and reliable online services.

mation, sharing trading strategies, exchanging views
via secure chat and video facilities“Dukascopy Connect”
and “Telefision Interactive Rooms” and entertaining
themselves e.g. by participating to Dukascopy contests.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 05

MESSAGE FROMTHE BOARD OF DIRECTORS
2015 was a year rich in challenging and unpredictable
events impacting the banking industry: divergences inmonetary and fiscal policies, continued tightening of
regulatory requirements, uncertainty about economic
growth in China and globally, decline in oil prices, lower
market liquidity, negative interest rates and above all, theunpredicted decision of the Swiss National Bank to discontinue the minimum exchange rate of 1,20 CHF per EUR.
At Dukascopy, we will remember 2015 as a year ofaccomplishments and success: we realized one of ourstrategic objective with the opening of Dukascopy inJapan, a market with a high development potential, we
sustained our innovation capacity, the development of
our technologies and we were able to realise our record
profit to date to further consolidate our capital position inorder to ensure the development of innovation and ourcapacity to capture opportunities for growth in an international environment.

06 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Since many years, sudden economic and geopolitical issues are creating an uncertain operating
environment for banks. The emergence of disruptive
players and business models in the industry is now
forcing financial institutions to rethink the way they
deliver their services. Regulators will also have torapidly adapt the existing framework to safeguard
Switzerland’s competitiveness. As a highly innovative
and technological bank, Dukascopy benefits fromyears of experience and from its cost competitive andflexible operating model to ensure it delivers
advanced solutions and add value for its clients in thiscontinuously changing environment.
In 2016, we will keep on with our vision and strategy to deliver excellence and quality to our clientswith enhanced solutions, increased internationalpresence and ongoing dynamism.
The Board of Directors

MESSAGE
FROM THE co-CEOs
Dukascopy Group gathers thefruits of its work

Certainly, the year 2015 will be remembered forthe extraordinary market event which occurred on
15 January 2015 when the Swiss National Bank
abandoned its four years long EURCHF peg. The

2015 has been the best year in Dukascopy history.

sudden 20% shift in the EUR rate against main currencies has challenged risk management assump-

Favourable market conditions combined with

tions of brokers. In certain cases, resulting damages

continuous efforts to satisfy clients and to control

were tremendous. Dukascopy Group is proud ofcosts have been fruitful. Our excellent results com-having rightfully anticipated and managed this risk.

fort us in the rightness of our strategy. No dividend
will be distributed. The net profits 2015 and the

Looking forward, in the current context of weak

newly created “Reserves for general banking risks”

global economy and difficult structural reforms, mar-will build up the capital base of our Group, its resi-

kets should remain under strong influence of statelience towards possible negative events and sup-interventions/monetary policies, with stimulating

port our international expansion plans.

effects on market volatility and trading volumes.

2015 also has been an important milestone for

In our Group, 2016 should at least see the addi-

our media arm, Dukascopy TV. During this year,

tion of new licensed brokerage companies and thethe Federal Office of Communication (OFCOM) has

launch of CFDs on single stocks.

registered Dukascopy TV as a Swiss online TV channel. Active since 2008, Dukascopy TV reaches maturity. We will continue to invest in Dukascopy TV withWe thank all our employees, clients and business
partners for their trust and contribution.

a focus on quality rather than quantity. We strive formeeting the interest of our growing audience.

Veronika and Andrey Duka
co-Chief Executive Officers

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 07

REVIEW OF OPERATIONSIn 2015, the net inflow of margin deposits has

Dukascopy Bank

been very strong. However, this left the total of

Stimulated by high market volatility, trading vo-

margin deposits almost unchanged (+1% compa-

lume has reached records in 2015 with a monthly

red to 2014) due to the drop of the EUR/CHF rate

average of CHF 55 billion. Conditions were also(-10% over 2015 which concerns 31% of clients

favourable to operating income which touched an

deposits) and to client trading losses.

unprecedented level at CHF 35 million. In comparison to 2014, the increase is impressive: +29%.
However, 2014 had been extraordinary due to weakvolatility. But even compared to a more ordinary

Dukascopy Grouplevel of annual income (CHF 30 million), 2015 would
have appeared 17% higher.

In 2015, Dukascopy Europe remained profitable
for the third consecutive year.

Thanks to the cost containment measures implemented in 2014, operating expenses remained

Dukascopy Japan has joined the Group in

stable: -1% below 2014. The combination of higher

August 2015 while its commercial activities wereincome and lower expenses nicely improved thestopped, meaning when it had operating expenses

cost/income ratio at 73% compared to 95% in 2014

but no income. The consolidated net profit 2015 ofand resulted in an unprecedented net profit of CHF

the Group is CHF 0.6 million below Dukascopy

3.4 million. CHF 2.8 million have been put aside asBank’s net profit due to the initial losses of Dukas-“Reserves for general banking risks” for a rainy day.

copy Japan. Dukascopy Japan has restarted ope-

Without this extraordinary item, the net profit 2015

rations in October 2015 and is expected to break-would have reached about CHF 5.5 million.

even by 2017.

Key Figures of Dukascopy Bank

Total operating income
Total operating expenses
Net profit
Cost / income ratio
Total assets
Total client deposits
Shareholders’ equity
Regulatory capital

08 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Year 2015(in CHF million
or in %)

Year 2014(in CHF million
or in %)

Year 2013(in CHF million
or in %)

35.0
25.6
3.4
73.3%
184.1
144.5
32.8
34.9

27.1
25.9
1.0
95.4%
177.8
143.3
29.4
29.4

30.1
24.5
2.1
81.5%
151.5
117.6
28.4
28.4

ORGANISATION OF THE BANKBoard of Directors

Executive Committee

ChairmanBogdan Prensilevich

Chairman
Dr. Andrey Duka,
co-Chief Executive Officer & Chief Technology officer

Vice-Chairman
Pierre J-M. Bongard

Veronika Duka,
co-Chief Executive Officer & Chief Administrative Officer

Members
Gérard de Cerjat
Frank Guemara
Pierre-Alain Guillaume

Members
Laurent Bellières, Chief Financial & Chief Risk Officer
Dmitrijs Kukels, Chief Brokerage Officer

Internal Auditor

External Auditor

PKF Certifica SA

KPMG SADUKASCOPY BANK SA ANNUAL REPORT 2015 | 09

FINANCIAL
STATEMENTS
and proposed appropriation of retained earnings

10 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

BALANCE SHEET
as at 31 December 2015

ASSETS
Liquid assets
Amounts due from banks
Amounts due from customers
Positive replacement values of derivative financial instruments
Financial investments
Accrued income and prepaid expenses
Participations
Tangible fixed assets
Other assets
TOTAL ASSETS

31.12.2015
CHF
37 818 353
97 342 305
821 764645 264
40 052 872
3 118 388
3 371 169917 185563
184 087 863

31.12.2014
CHF
95 024 810
47 206 276
75 747
1 356 813
28 934 315
1 646 457
2 094 582
1 444 379
2 687
177 786 066

LIABILITIESAmounts due to banks
Amounts due in respect of customer deposits
Negative replacement values of derivative financial instruments
Accrued expenses and deferred income
Other liabilities
Provisions
Reserves for general banking risks
Bank's capital
Statutory retained earnings reserve
Profit carried forward
Profit of the year
TOTAL LIABILITIESCHF
39 377 263
105 129 317
579 348
2 300 088
769 359
300 000
2 800 000
22 000 000
383 000
7 059 873
3 389 615
184 087 863

CHF
40 002 092
103 268 514
638 584
1 908 112
2 300 097
225 793–
22 000 000
332 000
6 104 408
1 006 466
177 786 066

31.12.2015
CHF

31.12.2014
CHF

116 992
878 000

125 381822 000

OFF–BALANCE SHEET
as at 31 December 2015

Off–balance sheet commitments
Contingent liabilities
Irrevocable commitments

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 11

STATEMENT OF INCOME
for the year ended 31 December

Result from interest operations
Interest and discount income
Interest and dividend income from financial investments
Interest expense
Gross result from interest operations
Change in value ajustments from default risks and losses
from interest result operations
Subtotal net from interest operations

31.12.2015
CHF

31.12.2014
CHF(30 289)
1 047 607
(969 942)
47 37618 560665 116(633 777)
49 889–47 376–49 889589 003(256 111)
332 892

551 761(220 388)
331 373

Result from trading activities

34 579 549

26 768 709

Operating expenses
Personnel expenses
General and administrative expenses
Subtotal operating expenses(12 220 454)
(13 395 215)
(25 615 669)

(13 830 772)
(12 058 193)
(25 888 965)

Value adjustment on participations and depreciation andamortisation of tangible fixed assets and intangible assets
Change to provisions and other value adjustments, and losses
Operating result(888 759)(900 494)
7 554 895

(945 373)(247 651)
67 992Extraordinary income
Change in reserves for general banking risks
Taxes
Profit of the year

1 675
(2 800 000)
(1 366 955)
3 389 615

1 537 459–
(598 985)
1 006 466

Result from commission business and services
Commission income from other services
Commission expense
Subtotal result from commission business and services

12 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

THE BOARD OF DIRECTORS PROPOSES THE FOLLOWINGAPPROPRIATION OF AVAILABLE EARNINGS:

Profit of the year
Profit carried forward
Amount at the disposal of the Shareholders' general meeting

2015
CHF
3 389 615
7 059 873
10 449 488

Proposed utilisation
Contribution to the statutory retained earnings reserve
To be carried forward
Total

170 000
10 279 488
10 449 488

PRESENTATION OF THE STATEMENT OF CHANGES IN EQUITY
as at 31 December 2015

Bank'scapital
CHF

Equity at start of current year
22 000 000
Allocation of previous year result−– Allocation to Retained earnings
reserve−– Allocation to Voluntary retained
earnings reserves and profit−
carried forward
Other allocations to (transfer
from) the reserves for general−banking risks
Profit (result of the year)−
Equity at end of current year
22 000 000

Statutoryretainedearnings
reserve
CHF

Reserves Voluntary retainedfor general earnings reservesbankingand profit carried
risks*
forward
CHF
CHF

Result of
the year
CHF

Total
CHF

1 006 466 29 442 874–

332 000–––

6 104 408–

51 000––(51 000)–––

955 466(955 466)––

2 800 000––

2 800 000–
383 000–
2 800 000–
7 059 874

3 389 615 3 389 615
3 389 615 35 632 489*Only the portion of Reserves for general banking risks which remains of the deduction of deferred tax can be counted as regulatory capital.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 13

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

1. Name, legal status and domicile of the bankDukascopy Bank SA (hereinafter the "Bank") is a limited company under Swiss law, authorized and regulated by FINMA as abank and a securities dealer, which renders online brokerage and online banking services from its head office in Geneva(Switzerland). The Bank has an agency in Zürich and representative offices in Riga, Kiev, Moscow, Hong Kong and Kuala Lumpur.
2. Accounting and valuation principles
2.1. General principles
The financial statements are established in accordance with the Swiss Code of Obligations, the Act on Banks and Saving
institutions, its related Ordinance and the FINMA circular 15/1. The financial statements are prepared in accordance with thereliable assessment principle as defined by the FINMA circular 15/1 and are allowed to include silent reserves. In the notes,
certain figures are rounded for publication but the calculations are based on the non-rounded figures, thus small rounding
differences can arise.
General valuation principles
The financial statements are prepared on the assumption of an ongoing concern. The accounting is therefore based ongoing-concern values.
Items are entered in the balance sheet as liabilities if they have arisen due to past events, if a cash outflow is probable and theirvalue can be reliably estimated. If a reliable estimate is not possible, then it is a contingent liability, which is commented on in
the notes. The disclosed balance sheet items are valued individually.
In principle, neither assets and liabilities nor expenses and income are offset. Accounts receivable and account payable areoffset in the following cases:• deduction of value adjustments from the corresponding asset item;• offsetting of positive and negative replacement values of derivative financial instruments with the same counterparty,
if there are recognized and legally enforceable netting agreements in place.
2.2. Changes to accounting principles and valuation method
There was no such change in 2015.
However, it must be noted that the new FINMA circular 15/1 guiding the establishment of the financial statements, applicablefor the first time to the financial statements established as at 31.12.2015, have introduced new disclosure requirements andvarious changes to the balance sheet, statement of income and notes. For instance, the Bank had to offset value adjustments
and corresponding asset items while such items were previously published on a gross basis. Comparative figures 2014 havebeen adapted according to the changes introduced by the FINMA circular 15/1, without any impact on the shareholders’capital and net profit. As permitted by the FINMA circular 15/1, no comparative figures are published in relation with items
which are published for the first time.
Financial instrumentsa. Liquid assets
Liquid assets are recognized at their nominal value.
b. Amounts due from banks and amounts due from customers
They are recognized at their nominal value less any necessary value adjustments. Amounts due in respect of precious metal
account deposits are valued at fair value.
14 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

The Bank is not active in credit activities. However, loans and advances on salaries may be granted to employees of the Bankand amounts receivable from clients may appear in the normal course of the Bank’s core activities.
Doubtful receivables, i.e. obligations entered with clients for which the debtor is unlikely to meet its future obligations, arevalued individually and depreciated by means of individual value adjustments. Impaired receivables and any collateralobtained are valued at their liquidation value, and any adjustments in value are made in light of the debtors' credit-worthiness. If the repayment of a loan depends exclusively on the proceeds of the collateral, a value adjustment is made for theentire unsecured portion of the receivable.
If a receivable is classed as entirely or partially irrecoverable or a receivable is waived, the receivable is derecognised bybooking it against the corresponding value adjustment.
If recovered amounts from receivables written off in earlier periods cannot be used immediately for other value adjustmentsof the same type, they are recognized in “Change in value adjustments for default risk and losses from interest operations” inthe statement of income.
c. Amounts due to banks and amounts due in respect of customer deposits
These items are recognized at their nominal value. Amounts due in respect of previous metal account deposits are valued atfair value.
d. Positive and negative replacement values of derivative financial instruments
Trading operations comprise execution of client orders and transactions of the Bank for its own account including hedging
transactions.
The Trading assets and liabilities relating to trading operations of the Bank are exclusively recognized in the off-balance sheet
due to the nature of such transactions (spot forex, spot precious metals and derivatives). Spot trading transactions executedby the Bank are accounted for according to the value date principle. This implies that between the trade date and the value
date, spot transactions are disclosed as derivatives instruments. Explanations below concerning derivative financial
instruments traded by the Bank also apply to such spot trading operations.
Trading assets and liabilities are valued and recognized at fair value. Fair value is the price based on a price-efficient and liquidmarket or the price calculated using a valuation model.
The price gain or loss resulting from the valuation is recorded via the item “Result from trading operations”.
Derivative financial instruments are used for trading and for hedging purposes.
Trading purposes
The valuation of derivative financial instruments for trading purposes is done according to the fair value and the positive or
negative replacement value is recorded in the corresponding item. The fair value is based on market prices.
The realized result from trading operations and the unrealized result from valuations relating to trading operations arerecorded via the item “Result from trading operations”.
Hedging purposes
The Bank also uses derivative financial instruments as part of its assets and liabilities management (ALM) to hedge against
market risks. Hedging operations are valued and disclosed as trading operations. Derivatives are used for economic hedging
purpose and the Bank does not apply hedge accounting.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 15

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Use of swaps
The Bank uses currency swaps to rollover spot foreign exchange and precious metals transactions to the next spot settlement
date until positions are closed.
Netting
The Bank offsets positive and negative replacement values with the same counterparty within the terms of the recognized
and legally enforceable netting agreements.
e. Financial investments
Financial investments only count Swiss and US government bonds acquired with the intention to hold them until maturity.
The valuation is based on the acquisition cost principle with the agio/disagio (premium/discount) accrued/deferred over the
residual term to maturity (accrual method).
If held-to-maturity financial investments are sold or reimbursed early, the realised gains and losses, which correspond to theinterest component, are accrued/deferred over the residual term to maturity of the transaction via the item “Other assets” or“Other liabilities”.
Value adjustments for default risk are recorded immediately under “Changes in value adjustments for default risk and losses
from interest operations”.
Participations
Participations owned by the Bank include equity securities of companies that are held for long-term purposes, irrespective ofany voting rights. They are valued at historical costs minus any value adjustments due to business reasons.
Each participation is tested for impairment as of the balance sheet date. This test is based on indicators reflecting a possible
impairment of individual assets. If any such indictors exist, the recoverable amount is calculated. The recoverable amount iscalculated for each individual asset. The recoverable amount is the higher amount of the net selling price and the value in use.
An asset is impaired if its carrying amount exceeds its recoverable amount. If the asset is impaired, the book value is reduced
to match the recoverable amount and the impairment is charged via the item “Value adjustments on participations andamortization of tangible fixed assets and intangible assets”.
Realized gains from the sale of participations are recorded via the item “Extraordinary income” and realized losses arerecorded via the item “Extraordinary expenses”.
Tangible fixed assets
Investments in tangible fixed assets are capitalized as an asset if they exceed the minimal value for recognition of CHF 1’000.
Tangible fixed assets are recognized at acquisition cost minus the scheduled accumulated amortization over the estimatedoperating life.
Tangible fixed assets are amortised at a consistent rate over an estimated operating life via the item “Value adjustments onparticipations and amortization of tangible fixed assets and intangible assets”. The estimated operating lives of the different
categories of tangible fixed assets and the amortization methods are as follows:- Fixtures and fittings
4 years, on a straight-line basis- Furniture
4 years, on a straight-line basis- IT hardware
3 years, on a degressive* basis- Vehicles
5 years, on a degressive* basis- Software
5 years, on a degressive* basis
16 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Acquisition cost of tangible fixed assets acquired during the year are depreciated at the same rate on a prorata basis.
Objects used by the Bank as the lessee as part of a finance lease are recorded via the item “Tangible fixed assets” at cash
purchase value. The leasing liabilities are disclosed, depending on the counterparty, in the items “Liabilities with banks” or“Other liabilities”.
In case an indication arise that the value of a tangible fixed assets is impaired, an additional amortization is recorded in theitem “Value adjustments on participations and amortization of tangible fixed assets and intangible assets”.
The recoverable amount is the higher amount of the net selling price and the value in use. An asset is impaired if its carrying
amount exceeds its recoverable amount. If the asset is impaired, the book value is reduced to match the recoverable amountand the impairment is charged via the item “Value adjustments on participations and amortization of tangible fixed assets
and intangible assets”.
If the impairment test shows that the operating life of an intangible asset has changed, the residual carrying amount should
be depreciated systematically over the newly estimated useful life.
Realized gains from the sale of tangible fixed assets are recorded via the item “Extraordinary income” and realized losses arerecorded via the item “Extraordinary expenses”.
Provisions
The Bank records provisions based on its assessment of the risks of loss and probable liabilities, based on past events, ofwhich the amount and due date are uncertain but assessable. Legal and factual obligations are valued regularly. If an outflow
of resources is likely and can be reliably estimated, a corresponding provision is created.
Existing provisions are reassessed at each balance sheet date. Based on this reassessment, the provisions are increased, left
unchanged or released. Currently, provisions exclusively relate to legal risks. The variation of provisions is recorded in thestatement of income via “Changes in provisions and other value adjustments and losses”.
Provisions are released via the statement of income if they are no longer needed on business grounds and cannot be used forother similar purposes except if the Bank decides to maintain them as silent reserves.
Reserves for general banking risks
Reserves for general banking risks are prudently created reserves to hedge against the risks in the course of business of theBank. The creation and release of Reserves for general banking risks are recognized via the item “Changes in reserves forgeneral banking risks” in the statement of income. The Reserves for general banking risks are subject to tax when they exceed
certain criteria.
Taxes
Current taxes are recurring, usually annual, taxes on profits, capital and total income (Geneva professional tax). Transactionrelated taxes are not included in current taxes.
Liabilities from current tax are disclosed via the item “Accrued liabilities and deferred income”.
Expense due to current tax is disclosed in the statement of income via the item “Taxes”.
Off-balance sheet transactions
Off-balance sheet disclosures are at nominal value. Provisions are created in the liabilities in the balance sheet for foreseeable
risks.

* The amortization rate is applied to the accounting value at the beginning of the year.
DUKASCOPY BANK SA ANNUAL REPORT 2015 | 17

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Pension benefit obligations
The Bank’s employees based in Switzerland are insured for retirement, death or disablement through a defined contribution
pension scheme. The Bank bears the costs of the occupational benefit plan for employees and survivors as per the legal
requirements. The employer contribution arising from the pension scheme are included in “Personnel expenses” on an
accrual basis.
Employee benefit obligations mean all commitments resulting from the pension fund to which Bank’s employees are insured.
There is an economic benefit if the Bank has the ability to reduce its future employer's contributions. A contrario, there is aliability if, owing to a shortfall in the pension fund, the Bank wants or has to participate in the financing of the pension fund.
The Bank assesses whether there is an economic benefit or economic obligation arising from pension schemes as of thebalance sheet date. The assessment is based on the contracts and financial statements of the pension funds (establishedunder Swiss GAAP FER 26 in Switzerland).
The identified economic benefit (including the employer contribution reserves without a waiver of use) are recorded in“Other assets”. If an economic obligation is identified for an individual pension fund, it is recorded in “Provisions”. The
difference with the corresponding value of the prior period are recorded in the statement of income in “Personnel expenses”.
2.3. Recording of business transactions
All business transactions, except trading operations, concluded up to the balance sheet date are recorded as of their tradedate (trade date principle) and valued according to the above-mentioned principles. Any trading operations including spot
foreign exchange transactions, foreign exchange forwards, swaps or any other derivative financial instrument entered into
but not yet fulfilled are recorded in accordance with the settlement date accounting method. Between the trade date and thesettlement date, these transactions are disclosed at replacement value via the item “Positive replacement values ofderivatives financial instruments” or “Negative replacement value of derivative financial instruments”.
2.4. Treatment of foreign currencies
Transactions in foreign currencies are converted at the exchange rates of the transaction date. Assets and liabilities carried inforeign currencies are converted at the exchange rates of the balance sheet date. Resulting conversion gains and losses arerecorded via the item “Result from trading operations”.
At the balance sheet date, the main exchange rates used to convert assets and liabilities in foreign currencies were as
follows:

USD
EUR
GBP
CAD
JPY
AUD
NZD
NOK
SEK
SGD

18 | DUKASCOPY BANK SA ANNUAL REPORT 2015

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

2015
CHF
1.00230
1.08815
1.47700
0.724400.00834
0.730650.68455
0.11395
0.11846
0.702962014
CHF
0.99435
1.20295
1.548900.855400.008310.812150.775200.133390.127620.75027

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

3. Risk Management
As online bank mainly offering fully automated (Straight-Through-Processing) brokerage services via innovative in-housedeveloped IT solutions, Dukascopy Bank is mostly subject to operational, market and legal risks. Since the Bank is not active incredit activities and only executes client orders based on collateral (client margin deposits and bank guarantees), its credit risk
exposure is normally limited to possible default of institutional trading counterparties.
The identification, measurement, monitoring, management of risks and maintenance of the Bank’s stability, even in case of
extraordinary events such as the abandon of the EURCHF peg by the Swiss National Bank on 15 January 2015, is a priority for
the Bank’s shareholders. The key elements of risk management are the following:- a comprehensive risk policy and internal regulation defining among others the risk appetite and risk limits which
are commensurate with the Bank’s risk capacity;- the permanent monitoring of risk limits and compliance with regulatory capital, risk diversification and liquidity
requirements applicable to Swiss banks;- a risk control function in charge of monitoring the Bank’s risk profile and risk management capabilities;- proper segregation of duties;- wide application of the four-eyes principle and IT-based controls in business operations;- three lines of defense: risk management by business units, risk control and compliance functions and internal audit;- a comprehensive internal reporting on relevant risks.
The Board of Directors is the supreme organ of the risk management organization. It has established an analysis of the mainrisks the Bank is exposed to. Based on its risk analysis, the Board of Directors has adopted a General Risk Policy aiming atlimiting and managing the main risks affecting the Bank. The General Risk Policy defines the risk appetite, the main risk limits
and features of the risk measurement and risk management. The Board of Directors monitors compliance with the limits aswell as the implementation of the risk policy based on a comprehensive quarterly reporting on risks.
The executive management is responsible for the execution of the Board of Directors’ policies. It ensures a suitable risk
management organization is in place as well as the use of an adequate risk monitoring system. It monitors the use of limits
and ensure that an adequate internal reporting is in place. The risk control function and the compliance function are
independent of business operations. They monitor all risks as the second line of defense and establish most of the quarterly
reporting about risks to the executive management and Board of Directors.
Operational risks
Operational risks are defined as the risk of losses due to inadequacy or failure of internal procedures, people and systems or
due to external events. This definition includes risks related to client data confidentiality and legal risks, including fines bysupervisory authorities and settlements. As bank offering highly automated services accessible through the Internet,
Dukascopy Bank much relies on IT systems and Internet connections to operate. Automation brings high efficiency,
eliminates human errors but at the same time means dependency on the availability and integrity of IT systems and Internet
connections that the Bank protects through advanced security solutions and permanent monitoring of the system components.
The operational risks are measured but calculating the probability and extent of possible financial damages due to negative
events such as an error in client order execution or the breach of a regulation (compliance risk). The Bank has documented
operational risks and key controls aiming at mitigating such risks (e.g. four eyes principle, reconciliations, automated controls,internal regulation, etc.) in a systematic manner via an internal regulation which is approved annually by the Board of

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 19

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Directors and based on the FINMA circular 2008/21. The operational risk management framework also includes a BusinessContinuity Management documentation, which rules the maintenance or the resumption of business operations in case ofoccurrence of critical situations such as a natural disaster affecting the Bank. The effectiveness of the Business Continuity Management is tested annually.
The Bank establishes risk indicators, mainly based on operational incidents and losses which allow the risk control function toreport about operational risks in a systematic and objective way to the executive management and Board of Directors.
The management of operational risks is one of the priorities of the Bank since it has a direct effect on its stability andattractiveness as trusty service provider.
Market risks – trading operations
Due to the Bank’s specialization in forex trading, market risks are concentrated on currency risk. Market risks related to otherfinancial instruments offered by the Bank (precious metals, stocks, commodities, etc.) are minor in comparison to currency risks.
The management of market risks deriving from trading operations is a priority risk management activity and a cornerstone of
the Bank’s financial stability. In particular, the volatility on the forex market may trigger significant impact on the Bank’s
statement of income due to the Bank’s currency risk exposure via the item “Result from trading activities”. For various reasons
including for benefiting from bid and ask spreads, the Bank permanently keeps a certain portion of market exposure derivingfrom client orders execution.
The Bank applies prudent market risks limits and sophisticated monitoring of market risk exposure via automated hedging
logics and 24h human and automated surveillance.
The Bank automatically measures its market risk exposure on a permanent and real time basis. The IT system automatically
caps such market risk exposure under the limits decided by the executive management and the Board of Directors. Thoselimits have been set sufficiently carefully to ensure that Swiss banking capital adequacy requirements are complied with at all
time. If deemed necessary, the Bank’s advanced technology allows it to fully exclude exposure deriving from trading on all or
specific instruments, for instance in anticipation of exceptional market events such as the abandon of a currency peg by aCentral Bank.
Market risks – other currency risks
The Bank has a limit applicable to currency risk exposure deriving from currency discrepancies between assets and liabilities.
This limit is monitored on a daily basis by the Treasurer who maintains sufficient currency congruence between assets andliabilities through the assets and liabilities management (ALM).
Market risks – interest rate risks
The Bank is not active in credit or other interest generating activities. The Bank’s exposure to interest rate risks mostly derives
from government bonds it has bought and deposited with trading counterparties as trading collateral. Since the Bank
intends to hold those bonds until maturity, the identified interest rate risks should not materialize in losses. The Bank
calculates and reports about interest rate risks on a quarterly basis.
Credit risk
The Bank is not active in credit activities. However, in the frame of its core trading activities, a credit risk exists if clients are notable to honor payment obligations collected during their trading at the Bank (settlement of trading losses and payment offees). For that reason, the Bank only accepts to trade on a covered basis. The trading platforms automatically monitor thecredit risk relating to clients by way of margin call and margin cut functionalities which shall ensure that the Bank remains

20 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

covered by sufficient collateral at any time. In some circumstances, the margin call and margin cut functionalities of the Bank
may not suffice to fully prevent certain client accounts to become negative. In such cases, the Bank collects unsecured
receivables. Also, the Bank may grant short term unsecured loans and advances to Bank’s employees.
Counterparty risk in interbank business
The Bank deposits its liquidity and trades (mainly to hedge client transactions) with more than 20 different banks and otherinstitutional trading counterparties external to its ECN marketplace such as brokers and other marketplaces. Counterparty
and default risks relating to banks and other trading counterparties are mitigated by the fixation of exposure limits within thecompetences set by the Board of Directors. The respect of the risk limits is controlled on a daily basis and limits are adapted asoften as deemed necessary.
In principle, the Bank works only with first-class counterparties. Before entering into a business relationship with a counterparty in interbank business, the Bank performs an assessment of the counterparty risk and sets a risk exposure limit
accordingly. The limit depends significantly on the rating, if any, and on the capital adequacy of the counterparty which arereassessed on an annual basis or more frequently if deemed necessary. The Bank is attentive to financial news and public
information circulating about its counterparties. In case of negative information concerning the stability of a counterparty, its
creditworthiness is verified by the Bank. If deemed necessary, risk limits and credit risk exposures are adjusted or suppressedby the executive management and the risk control function. The Treasurer monitors compliance with the limits on a daily
basis.
Liquidity
Due to the nature of its business activities, the Bank has abundant liquidities and no long term monetary commitment. The
Bank is exclusively financed by its own capital, client deposits and therefore does not need to raise funds on the money
market. As a result, the liquidity risk of the Bank is low and requires limited monitoring. The liquidity risk management
strategy of the Bank and an emergency liquidity plan have been approved by the Board of Directors. They identify reserves ofliquidity, liquidity risk indicators and steps necessary to maintain sufficient liquidity, including in case of liquidity stresssituation. The Treasurer ensures that the limits are complied with. The liquidity situation and concentration risks are monitored by the risk control function and reported quarterly to the executive management and to the Board of Directors.
4. Methods used for identifying default risks and determining the need for value adjustments
4.1. Amounts due from customers
With regard to receivables covered by bank guarantees, the credit risk mostly relates to banks having issued such guarantees
and the default risk is determined as explained in section 4.2. below. If a bank guarantee issuer defaults, the receivablebecomes unsecured and default risks are assessed like for unsecured loans or advances to Bank’s employees.
The Bank considers that a risk of default exists on unsecured receivables if a payment of interests or a reimbursement ofprincipal is not honored in due date or if the debtor disputes such payment obligation or indicates that he/she will not beable to honor them. In such cases, the Bank enquires about the debtor’s intentions and financial situation and evaluates the
chances of recovering the receivable. A value adjustment is recorded for the portion of receivable whose recovery is
considered uncertain.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 21

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

4.2. Amounts due from banks
In principle, the Bank only takes credit risk exposure towards counterparties having sound creditworthiness. The Bank
considers that a counterparty is defaulting in case the latter refuses to honor a payment order in due time, or is declaredbankrupted or placed under special administration due to insolvency/going concern issues. In such cases, the counterparty’s
situation is evaluated by the Bank. A value adjustment is recorded on the portion of receivable whose recovery is considered
uncertain.
4.3. Process for determining value adjustments and provisions
Value adjustments and provisions are reassessed at each balance sheet date. Changes in value adjustments and provisions
are approved by the executive management unless they simply result from a use of provision in conformity with its purposeor the recovery of an impaired receivable.
5. Valuation of collateralCollateral provided by clients is normally made of cash deposited with Dukascopy Bank, in any currency accepted in depositby the Bank. Collateral also may comprise up to 80% of bank guarantees issued by Swiss or European banks having a Baa or
superior Long-Term senior debt Moody’s rating. With the joint approval of the risk control function and executive management, the Bank may accept bank guarantees derogating the above criteria. Bank guarantees must be denominated insame currency as the reference client account reference currency. Collateral is valued at nominal value of the cash or bankguarantees. The Bank applies no haircut to collateral and grants a leverage for the trading of certain instruments.
6. Business policy regarding the use of derivative financial instruments and hedge accounting
Trading of OTC financial instruments with clients, including trading of certain financial derivatives (CFD and binary options), is
the core business of the Bank. As per Swiss legislation, the main instrument offered by the Bank, namely leveraged margin
trading on currencies and precious metals without delivery, does not qualify as derivative financial instrument, while it isoften regarded as a CFD instrument in other jurisdictions. Therefore, depending on the qualification of leveraged margin
trading, the Bank may be seen as a pure provider of financial derivative instruments. The Bank does not trade credit
derivatives.
The Bank executes all trading operations in full STP (Straight-through-Processing) mode and always acts as principal in trades,
including on its ECN (Electronic Communication Network) trading environment.
The Bank also uses derivative financial instruments for risk management purposes, mainly to hedge against market risks(including currency risk) mostly deriving from clients trading operations. Hedging operations are executed by the Bank eitherwith external institutional counterparties or with clients. The Bank does not use hedge accounting.
7. Material events after the balance sheet dateNo material events occurred after the balance sheet date that could have a material impact on the financial position of the
Bank as of 31 December 2015.

22 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of collateral for loans/receivables and off-balance-sheet transactions, as well as impairedloans/receivables
Loans(before netting with value adjustments)
Amounts due from customers
Total at 31 December 2015
(before netting with value adjustments)
Total at 31 December 2014
(before netting with value adjustments)
Total at 31 December 2015
(after netting with value adjustments)
Total at 31 December 2014
(after netting with value adjustments)
Off-balance sheet commitments
Contingent liabilities*
Irrevocable commitments
Total at 31 December 2015
Total at 31 December 2014

Secured by
mortgages
CHF
–

Other
collateral
CHF
689 784

UnsecuredCHF
138 846

Total
CHF
828 630–

689 784

138 846828 630–

18 01771 35289 369–689 784

131 980

821 764–18 01757 73075 747––––

116 992–
116 992
125 381–878 000
878 000
822 000

116 992
878 000
994 992
947 381*Contingent liabilities are bank guarantees issued by the Bank on behalf of clients, fully secured by client cash deposits

Breakdown of impairedloans/receivables
Total at 31 December 2015
Total at 31 December 2014

Gross debt
amountCHF

Estimated liquidation
proceeds of collateral
CHF

Net debt
amount
CHF

Individual value
adjustments
CHF

6 866
30 304––6 866
30 3046 866
17 331DUKASCOPY BANK SA ANNUAL REPORT 2015 | 23

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of derivative financial instruments (assets and liabilities)
Trading instruments
Positive
Negative
replacement replacement
valuesvaluesCHF
CHF

OTC transactions

Currencies:– forward contracts*– swaps
Total currencies
Precious metals:– forward contracts*– swaps
Total precious metals
Indices:– CFD
Total indices
Others:– CFD
Total others
Total at 31 December 2015 before impact of netting contractsof which determinated of using valuation models
Total at 31 December 2014 before impact of netting contractsof which determinated of using valuation models
Total at 31 December 2015 after impact of netting contracts
Total at 31 December 2014 after impact of netting contracts

2 846 180
2 409 316
5 255 496

Contract
volumesCHF

2 746 884 1 258 459 862
2 361 121 1 645 041 590
5 108 005 2 903 501 452

17
75
92

55 32429 95985 28314 449 657
32 398 452
46 848 109

8 990
8 990

3 941
3 941

9 738 060
9 738 060

505
505
5 265 083–
2 621 084–
645 264
1 356 813

2 505 431
1 938
2 505 431
1 938
5 199 167 2 962 593 052––
1 902 854 1 960 157 264––
579 348638 584* Represent the spot trading transactions which are accounted for according to the value date principle.

Breakdown by counterparty
Positive replacement values after impact
of netting contacts
Total at 31 December 201524 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Centralclearing
housesBanks andsecurities
dealers

Otherscustomers–

538 417106 847

Total

645 264

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of financial investments

Debt securitiesof which bonds held to maturity
Total
including securities eligible for repo transactionsin accordance with liquidity regulations

Book value
2014
2015
CHF
CHF
40 052 872
28 934 315
40 052 872
28 934 315

Fair value
2015
2014
CHF
CHF
40 550 740 29 207 260
40 550 740 29 207 260

40 052 872

40 550 740

28 934 315

29 207 260

Breakdown of countreparties by Fitch rating
AAA to AADebt securities:
Book value of bonds
held to maturity

A+ to A-

BBB+ to BBB-

BB+ to B-

Lower than B-

Without rating

40 052 872

Presentations of participations
2014
Participations

Without listed value
Total participations

Cost
value
CHF

2 094 582
2 094 582

2015

Value
Disposals
Book value
Value
adjustment at end of year Additions Reimbursement adjustment
CHF
CHF
CHF
CHF
CHF

Book value
at end of year
CHF

–
–

3 371 171
3 371 171––

2 094 582 2 558 395
2 094 582 2 558 395(1 281 806)*(1 281 806)*This amount relates to the reduction and an reimbursement of Dukascopy Europe IBS AS's capital.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 25

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Disclosure of companies in which the bank holds a permanent direct or indirect significant participations
2015
Activity

Share capital
CHF

Head
officeSharecapital in %SWFX-Swiss FX Marketplace SA
Dukascopy Europe IBS AS
Dukascopy Community SA
Dukascopy Payments AS
Dukascopy Japan K.K.

dormant
brokeragesocial media
e-moneybrokerage

100 000
1 479 241
100 000
608 085
5 488 259

SWFX-Swiss FX Marketplace SA
Dukascopy Europe IBS AS
Dukascopy Community SA
Dukascopy Payments AS

dormant
brokeragesocial media
dormant

100 000
2 765 738
100 000
608 085

GenevaRiga
Geneva
Riga
Tokyo
2014
GenevaRiga
GenevaRiga

Participations

100%
100%
100%
100%
100%

Vote
in %
100%
100%
100%
100%
100%

Held
directly
100%
100%
100%
100%
100%

100%
100%
100%
100%

100%
100%
100%
100%

100%
100%
100%
100%

Dukascopy Japan K.K. was acquired in August 2015.

Presentations of tangible fixed assets
2014

Softwares
Other tangible fixed assets
Total fixed assets

2015

Accumulated Book value
Book value
Cost value depreciation at end of year Additions Disposals Depreciation at end of year
CHF
CHF
CHF
CHF
CHF
CHF
CHF
–
(48 889)
79 4755 444
36 03022 746 535 (22 667 060)
(12 317)(839 870)
1 364 904
368 438
881 155
8 083 112
(6 718 208)
(888 759)
1 444 379
373 882 (12 317)
917 185
30 829 647 (29 385 268)

Leasing

Future leasing installments arising from operating leasesof which, may be terminated within one year

2016
CHF
1 598 324
140 746

2017
CHF
1 133 2282018
CHF
890 539

2020
CHF
745 336

2021
CHF
10 290

563
563

2014
CHF
2 687
2 687

486 648282 046665
769 359

2 033 676
266 421–2 300 097

2019
CHF
890 539

Breakdown of other assets and liabilities
Other assets
OthersTotal other assets
Other liabilities
Wire transfers
Indirect taxes to be paid
OthersTotal other liabilities
26 | DUKASCOPY BANK SA ANNUAL REPORT 2015

2015
CHF

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Assets pledged as collateral or assigned to guarantee own commitments, as well as assets under reservationof ownership
2015
2014
Book value of pledged
Book value of pledged
Effective
Effectiveassets and assets
assets and assets
assigned as collateral commitments assigned as collateral commitments
CHF
CHF
CHF
CHF
31 261 303
9 529 393
19 907 237
1 700 623
Swiss and US government bonds
Deposits made with banks
235 969
235 969
237 219237 219
to secure guarantees
31 497 272
9 765 362
20 144 456
1 937 842
Total

Indications relating to pension funds
A collective pension fund plan exists for the employees based in Switzerland (Caisse Inter-Entreprises-CIEPP).
This fund is a defined contributions scheme. There is no employer contribution reserve and there no identifiableeconomic benefit to be capitalised in the balance sheet (2014: nil). The overfunding in the pension fund is basedon its unaudited accounts as of 31 December 2015 (coverage ratio is 112%).
Based on the last audited financial statements of the Caisse Inter-Entreprises-CIEPP as at 31 December 2014,
the coverage ratio was 117.4% (31 December 2013: 112.6%).
The employees based in Russia Federation were affilated to a defined contributions scheme pension fund of theRussian state which has been cancelled in 2015. Since 2015, employees based in Russia are no longer insured by any
pension fund.
Pension expenses included in "Personnel expenses" at 31 December were as follows:
Pension expenses
Over/under- Economic interest
Change inContributionsof the Bankin personnel expenses
economic interest
paidfunding
versus prior year
in 2015
31.12.15
2014
2015
2014
2015
Pension plans
with overfunding

−

−

−

342 249342 249428 983

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 27

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentations of value adjustments and provisions, reserves for general banking risks and changes therein
during the current year
Use in
New
Balance at conformity with
Balance at
Recoveries, creations
designated31 December
Reclassifi- Currency past due charged Releases 31 December
purpose2014
2015
cations differences interest to income to income
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
Provisions for otherbusiness risks
Total provisions
Reserves for generalbanking risks
Value adjustments fordefault risks and country
risks – of which, value
adjustments for default
risks in respect of impairedloans/receivables

225 793(125 793)–––

200 000–

300 000

225 793(125 793)–––

200 000–

300 000

–

–

–

–

–

2 800 000–

2 800 000

17 331(12 650)

–

189

–

2 671

(675)

6 866

Provisions for other business risks include provisions for legal fees and litigations arising out of the normal conduct ofDukascopy Group's activities.
Provisions are valued according to the best estimate principle. Reserves for general banking risks have not been taxed.

Presentation of the Bank's capital
2015

Share capital
Registred sharesof which, paid up
Total Bank's capital

Total par value
CHF
22 000 000
22 000 000
22 000 000
22 000 000

Share capital
Registred sharesof which, paid up
Total Bank's capital

22 000 000
22 000 000
22 000 000
22 000 000

28 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Numberof shares
21 712 000
21 712 000
21 712 000
21 712 0002014
21 712 000
21 712 000
21 712 000
21 712 000

Capital eligible for dividend
CHF
22 000 000
22 000 000
22 000 000
22 000 000
22 000 000
22 000 000
22 000 000
22 000 000

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Disclosure of amounts due from/to related parties

Amountsdue from
CHF
Holders of qualified participation
Group companies
Linked companies
Transactions with members of governing bodies
Other related parties

2015
Amounts
due toCHF

20 4695 575 089

Amountsdue from
CHF

2014
Amounts
due toCHF

15 446

4 939 848

679

Dukascopy Bank SA engaged into transactions with related parties in the normal course of its business. Thesetransactions mainly include rent, marketing services and software development support. Besides, all subsidiaries of
the Bank hedge their trading operations with Dukascopy Bank.
Transactions with related parties are conducted at arm's length.

Disclosure of holders of significant participations

With voting rights
Dr. Andrey Duka
Veronika Duka

NominalCHF
10 890 000
10 890 000

With voting rights
Dr. Andrey Duka
Veronika Duka

10 890 000
10 890 000

2015% of equity
Number of shares
in %
CHF
49,5%
10 890 000
49,5%
10 890 000
2014

Capital eligible for dividend
CHF
10 890 000
10 890 000

49,5%
49,5%

10 890 000
10 890 000

10 746 000
10 746 000

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 29

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of the maturity structure of financial instruments
Due
No
Over
maturity 5 years
CHF
CHF

Total
CHF

–

–

–

37 818 353

–

–

–

97 342 305

–

–

–

821 764

–

–

–

–

645 264–

40 052 872––

40 052 872––

40 052 872––

176 680 558––

28 934 315––

172 597 961

–

–

–

–

–

–

39 377 263

–

–

–

–

–

–

105 129 317

579 348

–

–

–

–

–

–

579 348

at 31 December 2015

145 085 928

–

–

–

–

–

–

145 085 928

Total third-party liabilities at 31 December 2014

143 909 190

–

–

–

–

–

–

143 909 190

WithinCancellable Within Within 3 to
3 months 12 months 1 to 5 years
CHF
CHF
CHF
CHF

ASSETSAt sight
CHF

Liquid assets

37 818 353

–

–

–

Amounts due from banks

97 106 336

235 969––758 962

62 802––

financial instruments

645 264––

Financial investments

–

–

–

at 31 December 2015

136 328 915

298 771

Total current assets at 31 December 2014

143 383 847

279 799

Amounts due to banks

39 377 263

Amounts due in respect of customer deposits

105 129 317

Amounts due from customers
Positive replacement values of derivative

Total current assets

Third-party liabilities

Negative replacement values of derivative
financial instruments
Total third-party liabilities

30 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of assets and liabilities by domestic and foreign origin in accordance with the domicile principle
ASSETSin CHF ('000)
Liquid assets
Amounts due from banks
Amounts due from customers
Positive replacement valuesof derivative financial instruments
Financial investments
Accrued income and prepaid expenses
Participations
Tangible fixed assets
Other assets
Total assets
LIABILITIESAmounts due to banks
Amounts due in respect of customer
deposits
Negative replacement valuesof derivative financial instruments
Accrued expenses and deferred income
Other liabilities
Provisions
Reserves for general banking risks
Bank's capital
Statutory retained earnings reserve
Profit carried forward
Profit of the year
Total liabilities

2015

2014

Domestic
8 385
76 322722

Foreign
29 43321 020100

Total
37 81897 342822

Domestic
80 80615 51821

Foreign
14 21931 68855

Total
95 02547 2067655
28 008
1 330
200
587
1
115 610590
645
12 04540 053
1 789
3 119
3 171
3 371
330
917
–
1
68 478 184 088

576
28 934
1 128
200
843
3
128 029

781
–
518
1 895
601
–
49 7571 357
28 934
1 646
2 095
1 444
3
177 786

12 70026 67739 37716 80623 19640 0027 676

97 453105 1298 246

95 023103 269

271
2 037
769
300
2 800
22 000
383
7 060
3 390
59 386

308
263
1
–
–
–

579
2 300
770
300
2 800
22 000
383
–
7 060
–
3 390
124 702 184 088

107
1 844
2 300
226
–
22 000
332
6 104
1 006
58 971

532
64
–
–
–
–
–
–
–
118 815

639
1 908
2 300
226
–
22 000
332
6 104
1 006
177 786

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 31

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of total assets by country / group of countries
2015
ASSETSSwitzerland
Europe excluding Switzerland
USA and Canada
Others
Total

Absolute
CHF ('000)
115 61052 44912 382
3 647
184 088

2014
Share
%
62,8
28,5
6,7
2,0
100,0

Absolute
CHF ('000)
128 02940 0049 431
322
177 786

Share
%
72,0
22,5
5,3
0,2
100,0

Breakdown of total assets by credit rating of country groups (risk domicile view)
2015
SERV Rating
1
2
3
4
5
6
7
without rating
Total

Absolute
CHF ('000)
65 578
69
714
100
1 578
75
249
115
68 478

Share
%
95,8
0,1
1,0
0,1
2,3
0,1
0,4
0,2
100,0

The Bank does not use an internal rating system for country risk management. SERV is rating issued by OECD.

32 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of assets and liabilities broken by most significant currencies of the bank
ASSETS
EUR
CHF
USD
in CHF ('000)
8 385
29 433–Liquid assets
7 600
14 58759 434
Amounts due from banks
35
38
707
Amounts due from customers
Positive replacement values
645––
of derivative financial instruments
28 008–12 045
Financial investments
1 273
421
1 259
Accrued income and prepaid expenses
3 371
–
–
Participations
917––
Tangible fixed assets
1––
Other assets
50
235
44
479
73 445
Total assets
Claims arising from spot exchange
and swap transactions
77 224 701 491 1 332 595
Total at 31 December 2015
127 459 745 970 1 406 040
LIABILITIESAmounts due to banks
1 613
14 50418 439Amounts due in respect of customer
deposits
7 096
30 45159 748
Negative replacement valuesof derivative financial instruments
579––
Accrued expenses and deferred income
1 458
567
225
Other liabilities
617
23
123
Provisions
300––
Reserves for general banking risks
2 800
–
–
Bank's capital
22 000––Statutory retained earnings reserve
383––
Profit carried forward
7 060
–
–
Profit of the year
3 390
–
–
Total liabilities
47 296 45 545
78 535
Delivery obligations arising from spot
exchange and swap transactions
78 959 682 874 1 342 857
Total at 31 December 2015
126 255 728 419 1 421 392
Net position by currency
1 204 17 551 (15 352)

GBP

JPY

Others

Total

–
8 672
–

–
1 718
–

–
5 331
42

37 81897 342
822

–
–
62
–
–
–
8 734

–
–
–
–
–
–
1 718

–
–
104
–
–
–
5 477

645
40 053
3 119
3 371
917
1
184 088

333 670 194 530 323 083 2 962 593
342 404 196 248 328 560 3 146 681
3 136

974

711

39 377

4 055

173

3 606

105 129

–
7
–
–
–
–
–
–
–
7 198

–
–
–
–
–
–
–
–
–
1 147

–
43
7
–
–
–
–
–
–
4 367

579
2 300
770
300
2 800
22 000
383
7 060
3 390
184 088349 539 186 072 322 292 2 962 593
356 737 187 219 326 659 3 146 681
–
1 901
9 029
(14 333)

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 33

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of contingent liabilities and contingent assets
2015
CHF
116 992
116 992

Contingent liabilities
Other contingent liabilities
Total contingent liabilities

2015
CHF

Contingent assets
Other contingent assets
Total contingent assets––

Breakdown of the result from trading activities
Trading income
Leveraged margin trading
Binary options
Total

34 | DUKASCOPY BANK SA ANNUAL REPORT 2015

2015
CHF
33 992 878
586 671
34 579 549

2014
CHF
26 625 770
142 939
26 768 709

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown by underlying risk
2015
CHF
1 279 443
28 977 662
4 322 444
34 579 549

Result from trading activities from:
Equity securities
Foreign currency
Commodities / precious metals
Total

In 2015 the Bank paid negative interests in the amount of CHF 45 873 in relation with bank deposits in EUR and CHF.

Breakdown of personnel expenses
Personnel expenses
Salariesof which, expenses relating to share-based compensation
and alternative forms of variable compensation
Benefits
Other personnel expenses
Total personnel expenses

2015
CHF
10 084 353

2014
CHF
11 159 225−
2 016 200
119 901
12 220 454−
2 563 549
107 998
13 830 772

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 35

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of general and administrative expenses
General and administrative expenses
Premises
IT related expenses
Legal and consulting
Post, telecommunications and data
Expenses for vehicles
Office supply
Audit feesof which for financial and regulatory auditsof which for other services
Marketing and communication
Travels
OthersTotal general and administrative expenses

2015
CHF
2 158 874
1 975 007
1 289 324
579 343
45 108
199 952
264 106
264 106−
5 724 561
848 872
310 068
13 395 215

2014
CHF
2 182 586
1 937 772
1 218 429
733 784
52 820242 308
248 400
248 400−
4 148 532
984 733
308 829
12 058 193

2015
CHF
675
1 000
–
–
–
–
1 675

2014
CHF
4 637
–
461 000
370 000
692 850
8 972
1 537 459

Explainations regarding extraordinary income and expenses
Extraordinary income
Release of provision on doubtful debtors
Disposal of fully depreciated fixed assets
Release of other provisions*
Release of provision for litigations
Reversal of accrued liabilities recorded in previous years
Reimbursement from a broker
Total extraordinary income*Silent reserve as per Swiss banking regulation.

There was no extraordinary expense in 2015 and 2014.

36 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of operating result broken down according to domestic and foreign origin,
according to the principle of permanent establishment

Subtotal net from interest operations
Subtotal result from commission business and services
Result from trading activities
Personnel expenses
General and administrative expenses
Subtotal operating expenses
Value adjustment on participations and depreciation andamortisation of tangible fixed assets and intangible assets
Change to provisions and other value adjustments,and losses
Operating result

2015
2014
Domestic
Foreign
Domestic
Foreign
CHF
CHF
CHF
CHF
47 376–49 899–332 892–
331 373–
34 579 549–
26 768 709–(8 002 222) (4 218 232)
(8 372 453) (5 458 319)
(7 692 202) (5 703 013)
(6 079 068) (5 979 125)
(15 694 424) (9 921 245) (14 451 521) (11 437 444)
(519 147)(369 612)(900 494)–
17 845 752 (10 290 857)

(488 201)(457 172)(247 651)–
11 962 608 (11 894 616)

Presentation of current taxes, deferred taxes and disclosure of tax rate

Current tax expenses
Total taxes
Average tax rate

2015
CHF

2014
CHF

(1 366 955)
(1 366 955)
2015

(598 985)(598 985)
2014

18,1%

37,3%

The fluctuation observed in the tax rate is due to the Geneva professional tax because the latter is not proportionate
to the profit but to the total gross income. In year like 2014 when profit is modest inproportion to gross income, theGeneva professional tax significantly raises the tax rate up.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 37

REPORT OF THE STATUTORYAUDITOR ON THE FINANCIAL
STATEMENTS
to the General Meeting of Shareholders of Dukascopy Bank SA, Geneva
As statutory auditor, we have audited the accompanying financial statements of DUKASCOPY BANK SA, which comprisethe balance sheet, income statement, statement of changes in equity and notes for the year ended 31 December 2015.
Board of Directors' Responsibility
The Board of Directors is responsible is responsible for the preparation of the financial statements in accordance withthe requirements of Swiss law and the company's articles of incorporation. This responsibility includes designing,
implementing and maintaining an internal control system relevant to the preparation of financial statements that are
free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible forselecting and applying appropriate accounting policies and making accounting estimates that are reasonable in thecircumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform theaudit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers the internal control system relevant to the entity's preparation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control system. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as
evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements for the year ended 31 December 2015 comply with Swiss law and thecompany's articles of incorporation.

38 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Dukascopy Bank SA, Geneva
Report of the Statutory Auditor
on the Financial Statements
to the General Meeting of Shareholders

REPORT ON OTHERLEGAL REQUIREMENTS
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists, which has been designed for the preparation of financial statements according to the
instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company's
articles of incorporation.We recommend that the financial statements submitted to you be approved.

KPMG SA
Philippe Ruedin

Nicolas Moser

Licensed Audit Expert

Licensed Audit Expert

Auditor in Charge

Geneva, 29 April 2016

Enclosure:– Financial statements (balance sheet, income statement, statement of changes in equity and notes)– Proposed appropriation of available earnings

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 39

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of the capital adequacy2015
CHF ('000)
22 000383
7 060(3 371)26 072

Share capital
General legal reserve
Profit brought forward./. Participations
Total eligible capital (CET1)*

2014
CHF ('000)
22 000332
6 104(1 994)26 442*The Bank counted neither the net profit 2015 nor the Reserves for general banking risks which would increase
the regulatory capital by CHF 5.5 mio.

2015
Used
approach*Credit risks
Risks without counterparty
Market risksof which on currenciesof which on equity instrumentsof which on gold and commodities
Operational risks
Total required capital
Surplus of eligible capital

Swiss standardised
Swiss standardised
standardised
standardised
standardised
standardised
basic indicator

Required capital
CHF ('000)
2 442
459
5 770
4 482
163
1 125
4 611
13 28212 790* The Bank uses the transitory rules allowed by the capital adequacy ordinance and is therefore not fully applying
the Basel III regulation yet.

2014
Used
approach*Credit risks
Risks without counterparty
Market risksof which on currenciesof which on gold and commodities
Operational risks
Total required capital
Surplus of eligible capital

Swiss standardised
Swiss standardised
standardised
standardised
standardised
basic indicator

Required capital
CHF ('000)
1 352
722
4 164
3 540
624
4 223
10 46115 981* The Bank uses the transitory rules allowed by the capital adequacy ordinance and is therefore not fully applying
the Basel III regulation yet.
40 | DUKASCOPY BANK SA ANNUAL REPORT 2015

FINANCIAL STATEMENTS
and proposed appropriation of available earnings

NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2015

Disclosure of amounts due from/to related parties

Ratio between eligible capital and required capital1
1,2,3
Solvency ratios

2015
196,3%
15,7%

2014
252,8%
20,2%¹ before coverage of large exposures excess² 10.5% minimum is required³ the solvency ratio would reach 19.0% in 2015 if we would count the net profit 2015 and the Reserves for generalbanking risks contributed in 2015.

Capital adequacy disclosures: capital ratios 2015
CET 1 Capital Ratio
T1 ratio
Ratio regarding the regulatory capital
CET1 requirements according to CAO
Of which capital buffers according to CAO
Of which countercyclical buffers
Available CET1 to cover the minimum and buffer requirements,
after deducting AT1 and T2 requirements which are fulfilled with CET1
Capital target ratios for CET1 as per the FINMA circ. 11/2 plus the countercyclical buffer
Available CET1
Capital target ratios for T1 as per the FINMA circ. 11/2 plus the countercyclical buffer
Available T1
Regulatory capital target ratios according to the FINMA circ. 11/2 plus the countercyclical buffer
Available regulatory capital

Ratio
15.7%
15.7%
15.7%
4.5%
0.0%
0.0%
8.7%
7.0%
8.7%
8.5%
7.2%
10.5%
5.2%

Capital adequacy disclosures: leverage ratio 2015

Tier 1 capital
Exposure Measure
Leverage Ratio

26 072
184 745
14,1%

Medium short-term liquidity coverage ratio LCR
LCR Q1 2015
LCR Q2 2015
LCR Q3 2015
LCR Q4 2015

Ratio
262,2%
259,7%
294,8%
348,9%DUKASCOPY BANK SA ANNUAL REPORT 2015 | 41

CONSOLIDATEDFINANCIALSTATEMENTS

42 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEET
as at 31 December 2015

ASSETS
Liquid assets
Amounts due from banks
Amounts due from customers
Positive replacement values of derivative financial instruments
Financial investments
Accrued income and prepaid expenses
Participations non-consolidated
Tangible fixed assets
Other assets
TOTAL ASSETS

31.12.2015
CHF
37 818 353
99 566 325
1 017 336
775 125
40 052 872
3 785 436
808 085
930 7283 737
184 757 997

31.12.2014
CHF
95 024 810
47 662 280
87 1291 393 870
28 934 315
1 773 999
808 085
1 447 607
18 533
177 150 628

LIABILITIESAmounts due to banks
Amounts due in respect of customer deposits
Negative replacement values of derivative financial instruments
Accrued expenses and deferred income
Other liabilities
Provisions
Reserves for general banking risks
Bank's capital
Retained earnings reserve
Currency translation reserve
Consolidated profit of the year
TOTAL LIABILITIESCHF
34 231 697
110 388 649
775 186
2 577 651
828 572
1 000 000
2 100 000
22 000 000
7 906 520
128 9422 820 780
184 757 997

CHF
35 151 126
106 597 797
675 206
2 032 111
2 396 312
225 793–
22 000 000
6 675 492
104 580
1 292 211
177 150 628

31.12.2015
CHF

31.12.2014
CHF

CONSOLIDATED OFF–BALANCE SHEET
as at 31 December 2015

Off–balance sheet commitments
Contingent liabilities
Irrevocable commitments

116 992
878 000

125 381822 000

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 43

CONSOLIDATED STATEMENT OF INCOME
for the year ended 31 December

Result from interest operations
Interest and discount income
Interest and dividend income from financial investments
Interest expense
Gross result from interest operations
Change in value ajustments from default risks and losses
from interest operations
Subtotal net result from interest operations

31.12.2015
CHF

31.12.2014
CHF(30 212)
1 047 607
(969 942)
47 45318 561
665 115(633 777)
49 899−47 453−49 899596 382(289 644)
306 738551 707(223 751)
327 956

Result from trading activities

36 030 131

27 908 009

Operating expenses
Personnel expenses
General and administrative expenses
Subtotal operating expenses(13 503 829)
(14 035 170)
(27 538 999)

(14 432 576)
(12 305 727)
(26 738 303)

Value adjustment on participations and depreciation andamortisation of tangible fixed assets and intangible assets
Change to provisions and other value adjustments, and losses
Operating result(947 159)(902 378)
6 995 786

(946 121)(247 703)
353 737

Extraordinary income
Change in reserves for general banking risks
Taxes
Consolidated profit of the year

2 836
(2 100 000)
(2 077 842)
2 820 780

1 422 209
(483 735)
1 292 211

Result from commission business and services
Commission income from other services
Commission expense
Subtotal result from commission business and services

44 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED CASH FLOW STATEMENT
as at 31 December 2015

2015
Cash flow from operating activities(internal financing):
Result of the year
Change in reserves for general banking risks
Value adjustement on participations, depreciation andamortisation of tangible fixed assets and intangible assets
Provisions and other value adjustments
Accrued income and prepaid expenses
Accrued expenses and differred income
Other items
Subtotal
Cash flow from shareholder's equity transactions:
Recognised in reserves
Subtotal
Cash flow from transactions in respect of participations,
tangible fixed assets and intangible assets:
Participations
Other tangible fixed assets
Subtotal
Cash flow from banking operations:
Medium and long-term business (> 1 year)
Financial instruments
Short-term business:
Amounts due to banks
Amounts due in respect of customer deposits
Negative replacement values of derivative
financial instuments
Amounts due from banks
Amounts due from customers
Positive replacement values of derivative
financial instuments
Liquidity:
Liquid assets
Subtotal
Total

2014

Cash in-flow Cash out-flow
000 CHF
000 CHF
2 821
2 100
947
774

Cash in-flow
000 CHF
1 292

Cash out-flow
000 CHF
346

946
377
1 117
1 059

2 011
546
15
7 203

1 567
3 578

1 988
4 226

2 899

0

37
37

0

41
41

0

430
430

0

609
606
1 215

11 11912 972920

21 2754 261

51 904
930

436

3 791

552

100

12
112

618
57 20661 71568 91864 87368 91825 97230 19812 39526 04330 198DUKASCOPY BANK SA ANNUAL REPORT 2015 | 45

PRESENTATION OF THE CONSOLIDATED STATEMENTOF CHANGES IN EQUITY
as at 31 December 2015

Bank'scapital
CHF
Equity at start of current year
22 000 000
Allocation of previous year result−– Allocation to Retained earnings
reserve−– Allocation to Voluntary retained
earnings reserves and profit−
carried forward
Other allocations to (transfer
from) the Reserves for general−banking risks
Others−Profit (result of the year)−
Equity at end of current year
22 000 000

46 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Reserves
Currency Retained Consolidated
profitfor general translation earningof the yearbanking risks reserve
reserve
CHF
CHF
CHF
CHF

Total
CHF

−
−

104 580−

6 675 492−

1 292 211−

30 072 283−−−

1 292 211

(1 292 211)

−

−

−

−

−

−

2 100 000−−−

2 100 000−−
2 100 000

24 362−128 942(61 183)−
7 906 520−
2 820 780
2 820 780

(36 821)2 820 780
34 956 242

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

1. Name legal status and domicile of the GroupDukascopy Group (hereinafter the "Group") is headed by Dukascopy Bank SA (hereinafter the "Bank"), a limited company
under Swiss law headquartered in Geneva (Switzerland) autorised and regulated by FINMA as a bank and a securities dealer.
The Group’s scope of consolidation comprises all companies owned, either directly or indirectly, over 50% of the capital or
voting rights by the Bank or which are under dominant influence of the Bank by another manner, at the exception of Group
companies whose integration would not have any significantly influence on the consolidated financial statements.
In application of the above, Dukascopy Europe IBS AS, a European regulated broker based in Riga and Dukascopy Japan K.K.,
a Type-1 licensed brokerage company located in Tokyo are fully integrated in the consolidated financial statements of theGroup. SWFX – Swiss FX Marketplace SA, Dukascopy Community SA, Dukascopy Payments AS and their subsidiaries, if any,
are disclosed as non-consolidated participations in the consolidated balance sheet and are not integrated.
2. Accounting and valuation principles
2.1. General principles
The Group’s consolidated financial statements are established in accordance with the Swiss Code of Obligations, the Act on
Banks and Saving institutions, its related Ordinance and the FINMA circular 15/1. In the notes, certain figures are rounded for
publication but the calculations are based on the non-rounded figures, thus small rounding differences can arise. The
consolidated financial statements have been complied to present a true and faithful picture of the Group’s assets, financial
position and results (true and fair value principle).
Consolidation method
Entities under dominant influence of the Bank are consolidated according to the full consolidation method. This means assets,
liabilities, off-balance sheet transactions, income and expenses of fully consolidated companies are included in the Group’s
consolidated financial statements. All material business relations between consolidated companies are eliminated fromassets, liabilities, income and expenses. Net assets of Group companies are consolidated according to the purchase method.
In the case of combined entities, the combination is an amalgamation of the accounts, performed in keeping the same rules as
described above. If a significant influence is exercised over a company, the equity method is used for consolidation purposes. If
the year-end closing date for consolidated companies’ accounts is not 31 December, interim financial statements are compiled.
Entities are consolidated as from the date effective control over them passed to the Group; they are removed from the scopeof consolidation as from the date such control ceases.
General valuation principles
The consolidated financial statements are prepared on the assumption of an ongoing concern. The accounting is therefore
based on going-concern values.
Items are entered in the consolidated balance sheet as liabilities if they have arisen due to past events, if a cash outflow is
probable and their value can be reliably estimated. If a reliable estimate is not possible, then it is a contingent liability, whichis commented on in the notes.
The disclosed consolidated balance sheet items are valued individually.
In principle, neither assets and liabilities nor expenses and income are offset. Accounts receivable and account payable areoffset in the following cases:• deduction of value adjustments from the corresponding asset item;• offsetting of positive and negative replacement values of derivative financial instruments with the same
counterparty, if there are recognized and legally enforceable netting agreements in place.
2.2. Changes to accounting principles and valuation method
There was no such change in 2015.
However, it must be noted that the new FINMA circular 15/1 guiding the establishment of the financial statements,
applicable for the first time to the consolidated financial statements established as at 31.12.2015, have introduced new
DUKASCOPY BANK SA ANNUAL REPORT 2015 | 47

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

disclosure requirements and various changes to the consolidated balance sheet, consolidated statement of income andnotes. For instance, the Group had to offset value adjustments and corresponding asset items while such items werepreviously published on a gross basis. Comparative figures 2014 have been adapted according to the changes introduced by
the FINMA circular 15/1, without any impact on consolidated net assets and consolidated net profit. As permitted by the
FINMA circular 15/1, no comparative figures are published in relation with items which are published for the first time.
Financial instrumentsa. Liquid assets
Liquid assets are recognized at their nominal value.
b. Amounts due from banks and amounts due from customers
They are recognized at their nominal value less any necessary value adjustments. Amounts due in respect of precious metal
account deposits are valued at fair value.
The Group is not active in credit activities. However, loans and advances on salaries may be granted to employees of the
Bank and amounts receivable from clients may appear in the normal course of the Bank’s core activities.
Doubtful receivables, i.e. obligations entered with clients for which the debtor is unlikely to meet its future obligations, arevalued individually and depreciated by means of individual value adjustments. Impaired receivables and any collateralobtained are valued at their liquidation value, and any adjustments in value are made in light of the debtors'
creditworthiness. If the repayment of a loan depends exclusively on the proceeds of the collateral, a value adjustment ismade for the entire unsecured portion of the receivable.
If a receivable is classed as entirely or partially irrecoverable or a receivable is waived, the receivable is derecognised bybooking it against the corresponding value adjustment.
Recovered amounts from receivables written off in earlier periods are recognized in “Change in value adjustments for default
risk and losses from interest operations” in the consolidated statement of income.
c. Amounts due to banks and amounts due in respect of customer deposits
These items are recognized at their nominal value. Amounts due in respect of previous metal account deposits are valued atfair value.
d. Positive and negative replacement values of derivative financial instruments
Trading operations comprise execution of client orders and transactions of the Bank for its own account including hedging
transactions. The Trading assets and liabilities relating to trading operations of the Group are exclusively recognized in the
consolidated off-balance sheet due to the nature of such transactions (spot forex, spot precious metals and derivatives). Spot
trading transactions executed by the Group are accounted for according to the value date principle. This implies thatbetween the trade date and the value date, spot transactions are disclosed as derivatives instruments. Explanations below
concerning derivative financial instruments traded by the Group also apply to such spot trading operations.
Trading assets and liabilities are valued and recognized at fair value. Fair value is the price based on a price-efficient andliquid market.
The price gain or loss resulting from the valuation is recorded via the item “Result from trading operations”.
Derivative financial instruments are used for trading and for hedging purposes.
Trading purposes
The valuation of derivative financial instruments for trading purposes is done according to the fair value and the positive or
negative replacement value is recorded in the corresponding item. The fair value is based on market prices.
The realized result from trading operations and the unrealized result from valuations relating to trading operations arerecorded via the item “Result from trading operations”.

48 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Hedging purposes
The Group also uses derivative financial instruments as part of its assets and liabilities management (ALM) to hedge against
market risks. The Bank’s subsidiaries active in brokerage activities have the obligation to hedge all their trading operations
with the Bank. Hedging operations are valued and disclosed as trading operations. Derivatives are used for economic
hedging purpose and the Group does not apply hedge accounting.
Use of swaps
The Group uses currency swaps to rollover spot foreign exchange and precious metals transactions to the next spot
settlement date until positions are closed.
Netting
The Group offsets positive and negative replacement values with the same counterparty within the terms of the recognized
and legally enforceable netting agreements.
e. Financial investments
Financial investments only count Swiss and US government bonds acquired with the intention to hold them until maturity.
The valuation is based on the acquisition cost principle with the agio/disagio (premium/discount) accrued/deferred over the
residual term to maturity (accrual method).
If held-to-maturity financial investments are sold or reimbursed early, the realised gains and losses, which correspond to theinterest component, are accrued/deferred over the residual term to maturity of the transaction via the item “Other assets” or“Other liabilities”. Value adjustments for default risk are recorded immediately under “Changes in value adjustments fordefault risk and losses from interest operations”.
Participations non-consolidated
Participations owned by the Bank which are not consolidated include equity securities of companies that are held for long-term
purposes, irrespective of any voting rights. They are valued at historical costs minus any value adjustments due to businessreasons. Each non-consolidated participation is tested for impairment as of the consolidated balance sheet date. This test isbased on indicators reflecting a possible impairment of individual assets. If any such indictors exist, the recoverable amount iscalculated. The recoverable amount is calculated for each individual asset. The recoverable amount is the higher amount of the
net selling price and the value in use.
An asset is impaired if its carrying amount exceeds its recoverable amount. If the asset is impaired, the book value is reduced
to match the recoverable amount and the impairment is charged via the item “Value adjustments on participations andamortization of tangible fixed assets and intangible assets”.
Realized gains from the sale of non-consolidated participations are recorded via the item “Extraordinary income” and realized
losses are recorded via the item “Extraordinary expenses”.
Tangible fixed assets
Investments in tangible fixed assets are capitalized as an asset if they exceed the minimal value for recognition of CHF 1’000.
Tangible fixed assets are recognized at acquisition cost minus the scheduled accumulated amortization over the estimatedoperating life.
Tangible fixed assets are amortised at a consistent rate over an estimated operating life via the item “Value adjustments onparticipations and amortization of tangible fixed assets and intangible assets”.
The estimated operating lives of the different categories of tangible fixed assets and the amortization methods are as follows:- Fixtures and fittings
4 years, on a straight-line basis- Furniture
4 years, on a straight-line basis- IT hardware
3 years, on a degressive* basis- Vehicles
5 years, on a degressive* basis- Software
5 years, on a degressive* basis* The amortization rate is applied to the accounting value at the beginning of the year.
DUKASCOPY BANK SA ANNUAL REPORT 2015 | 49

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Acquisition cost of tangible fixed assets acquired during the year are depreciated at the same rate on a prorata basis.
Objects used by the Group as the lessee as part of a finance lease are recorded via the item “Tangible fixed assets” at cash
purchase value. The leasing liabilities are disclosed, depending on the counterparty, in the items “Liabilities with banks” or“Other liabilities”.
Each tangible fixed assets is tested for impairment as of the consolidated balance sheet date. This test is based on indicatorsreflecting a possible impairment of individual assets impaired. If any such indicators exist, the recoverable amount iscalculated. The recoverable amount is calculated for each individual asset.
The recoverable amount is the higher amount of the net selling price and the value in use. An asset is impaired if its carrying
amount exceeds its recoverable amount. If the asset is impaired, the book value is reduced to match the recoverable amountand the impairment is charged via the item “Value adjustments on participations and amortization of tangible fixed assets
and intangible assets”.
If the impairment test shows that the operating life of an intangible asset has changed, the residual carrying amount should
be depreciated systematically over the newly estimated useful life.
Realized gains from the sale of tangible fixed assets are recorded via the item “Extraordinary income” and realized losses arerecorded via the item “Extraordinary expenses”.
Provisions
The Group records provisions based on its assessment of the risks of loss and probable liabilities, based on past events, ofwhich the amount and due date are uncertain but assessable. Legal and factual obligations are valued regularly. If an outflow
of resources is likely and can be reliably estimated, a corresponding provision is created.
Existing provisions are reassessed at each consolidated balance sheet date. Based on this reassessment, the provisions are
increased, left unchanged or released. Currently, provisions exclusively relate to legal risks and deferred tax. The variation ofprovisions is recorded in the consolidated statement of income via “Changes in provisions and other value adjustments andlosses”.
Provisions are released via the consolidated statement of income if they are no longer needed on business grounds.
Reserves for general banking risks
Reserves for general banking risks are prudently created reserves to hedge against the risks in the course of business of theGroup. The creation and release of Reserves for general banking risks are recognized via the item “Changes in reserves forgeneral banking risks” in the consolidated statement of income. The Reserves for general banking risks are subject to tax
when they exceed certain criteria. The portion of Reserves for general banking risks which is not subject to current tax
triggers the recording of deferred tax in the item “Provisions” in the consolidated balance sheet via the item “Taxes” in the
consolidated statement of income.
Taxes
Current taxes are recurring, usually annual, taxes on profits, capital and total income (Geneva professional tax). Transactionrelated taxes are not included in current taxes.
Liabilities from current tax are disclosed via the item “Accrued liabilities and deferred income”.
Deferred taxes, stemming from temporary timing differences between the taxable and accounting values of assets andliabilities, are booked as deferred taxes in the item “Provisions” on the liabilities side of the consolidated balance sheet.
Deferred taxes are calculated based on the tax rate applied to the Bank. Expenses due to current and deferred taxes aredisclosed in the consolidated statement of income via the item “Taxes”.
Off-balance sheet transactions
Off-balance sheet disclosures are at nominal value. Provisions are created in the liabilities in the consolidated balance sheet
for foreseeable risks.

50 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Pension benefit obligations
The Group’s employees based in Switzerland are insured for retirement, death or disablement through a defined contribution
pension scheme. The Group bears the costs of the occupational benefit plan for employees and survivors as per the legal requirements. The employer contribution arising from the pension scheme are included in “Personnel expenses” on an accrual basis.
Employee benefit obligations mean all commitments resulting from the pension fund to which Group’s employees are insured.
There is an economic benefit if the Group has the ability to reduce its future employer's contributions. A contrario, there is aliability if, owing to a shortfall in the pension fund, the Group wants or has to participate in the financing of the pension fund.
The Group assesses whether there is an economic benefit or economic obligation arising from pension schemes as of theconsolidated balance sheet date. The assessment is based on the contracts and financial statements of the pension funds(established under Swiss GAAP FER 26 in Switzerland).
The identified economic benefit (including the employer contribution reserves without a waiver of use) are recorded in “Other
assets”. If an economic obligation is identified for an individual pension fund, it is recorded in “Provisions”. The difference withthe corresponding value of the prior period are recorded in the consolidated statement of income in “Personnel expenses”.
2.3. Recording of business transactions
All business transactions, except trading operations, concluded up to the consolidated balance sheet date are recorded as of
their trade date (trade date principle) and valued according to the above-mentioned principles. Any trading operations
includin spot foreign exchange transactions, foreign exchange forwards, swaps or any other derivative financial instrument
entered into but not yet fulfilled are recorded in accordance with the settlement date accounting method. Between the tradedate and the settlement date, these transactions are disclosed at replacement value via the item “Positive replacement valuesof derivatives financial instruments” or “Negative replacement value of derivative financial instruments”.
2.4. Treatment of foreign currencies
For each Group company, income and expenses denominated in foreign currencies are converted, in the individual company
accounts, at the exchange rate prevailing on the transaction date.
Group companies’ assets and liabilities in foreign currencies are converted at the exchange rate of the consolidated balance
sheet date. Currency gains and losses resulting from currency translation are included in the respective statement of incomeof individual Group companies. On consolidation, assets and liabilities of Group companies are converted into Swiss francs atthe exchange rate of the consolidated balance sheet date at the exception of the shareholders’ equity which is converted athistorical rate. Income and expenses of Group companies are converted at the exchange rate averaged over the reporting
period. Exchange differences resulting from conversion into Swiss francs of individual financial statements are recognized in
the consolidated balance sheet in the item “Currency translation reserve”.
At the consolidated balance sheet date, the main exchange rates used to convert assets and liabilities in foreign currencies
were as follows:

USD
EUR
GBP
CAD
JPY
AUD
NZD
NOK
SEK
SGD

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

2015
CHF
1.00230
1.08815
1.47700
0.724400.00834
0.730650.68455
0.11395
0.11846
0.702962014
CHF
0.99435
1.20295
1.548900.855400.008310.812150.775200.133390.127620.75027
DUKASCOPY BANK SA ANNUAL REPORT 2015 | 51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

The average exchange rates used to convert the statement of income of consolidated subsidiaries were as follows:

EUR
JPY

1.00
1.00

2015
CHF
0.067910.00809

3. Risk Management
Due to its core business consisting in offering fully automated (Straight-Through-Processing) brokerage services via
innovative in-house developed IT solutions, the Group is mostly subject to operational, market and legal risks. The Bank
provides IT and trading technology to all Group companies under white labeling agreements. Besides, the Bank is the soleGroup company which is allowed to take market risks. As a consequence, operational and market risks of the Group areconcentrated at the Bank.
Since the Group is not active in credit activities and only executes client orders based on collateral (client margin deposits
and bank guarantees), its credit risk exposure is normally limited to possible default of institutional trading counterparties.
The identification, measurement, monitoring, management of risks and maintenance of the Group’s stability, even in case of
extraordinary events such as the abandon of the EURCHF peg by the Swiss National Bank on 15 January 2015, is a priority for
the Group’s shareholders. The key elements of risk management and Group consolidated supervision are the following:- a comprehensive risk policy and internal regulation defining among others the risk appetite and risk limits which
are commensurate with the Bank’s risk capacity;- the permanent monitoring of risk limits and compliance with applicable regulatory capital, risk diversification andliquidity requirements at local and Group levels;- a risk control function and risk officer in charge of monitoring the Bank’s and Group’s risk profile and risk
management capabilities;- proper segregation of duties;- wide application of the four-eyes principle and IT-based controls in business operations;- three lines of defense: risk management by business units, risk control and compliance functions and internal audit
at local and Group levels;- a comprehensive internal reporting on relevant risks.
The Bank’s Board of Directors is the supreme organ of the risk management organization of the Group. It has established ananalysis of the main risks the Bank and the Group are exposed to. Based on its risk analysis, the Board of Directors has
adopted a General Risk Policy aiming at limiting and managing the main risks affecting the Bank where most of the Group’s
risks are concentrated. In addition, the Board of Directors has adopted Group risk limits and an internal regulation governing
the consolidated supervision of the Group by the Bank. The General Risk Policy defines the risk appetite, the main risk limits
and features of the risk measurement and risk management of the Bank. The Board of Directors monitors compliance withthe limits as well as the implementation of the risk policy based on a comprehensive quarterly reporting on risks and Group
consolidated supervision.
The executive management of each Group company is responsible for the execution of the Group and local policies. It
ensures a suitable risk management organization is in place as well as the use of an adequate risk monitoring system. It
monitors the use of limits and ensure that an adequate internal reporting is in place, including to the attention of the Bank’s
officers in charge of the Group consolidated supervision. The Group and local risk control and compliance functions are
independent of business operations. They monitor all risks as the second line of defense and establish most of the quarterly
reporting about risks to the local and Bank’s executive management and Board of Directors.

52 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Operational risks
Operational risks are defined as the risk of losses due to inadequacy or failure of internal procedures, people and systems or
due to external events. This definition includes risks related to client data confidentiality and legal risks, including fines bysupervisory authorities and settlements. As Group offering highly automated services accessible through the Internet, theGroup much relies on IT systems and Internet connections to operate. Automation brings high efficiency, eliminates humanerrors but at the same time means dependency on the availability and integrity of IT systems and Internet connections that
the Group protects through advanced security solutions and permanent monitoring of the system components.
The operational risks are measured but calculating the probability and extent of possible financial damages due to negative
events such as an error in client order execution or the breach of a regulation (compliance risk). The Bank has documented
operational risks and key controls aiming at mitigating such risks (e.g. four eyes principle, reconciliations, automated controls,internal regulation, etc.) in a systematic manner via an internal regulation which is approved annually by the Board of
Directors and based on the FINMA circular 2008/21. The operational risk management framework also includes a BusinessContinuity Management (BCM) documentation, which rules the maintenance or the resumption of business operations incase of occurrence of critical situations such as a natural disaster affecting the Bank or Group companies. The effectiveness of
the Business Continuity Management of the Bank is tested annually. In other Group entities, the BCM documentation isadapted to local operations and applicable regulation.
The Bank establishes risk indicators, mainly based on operational incidents and losses which allow the Bank’s risk control
function to report about operational risks in a systematic and objective way to the Bank’s executive management andBoard of Directors.
The management of operational risks is one of the priorities of the Group since it has a direct effect on its stability andattractiveness as trusty service provider.
Market risks – trading operations
Due to the Group’s specialization in forex trading, market risks are concentrated on currency risk. Market risks related to otherfinancial instruments offered by the Group (precious metals, stocks, commodities, etc.) are minor in comparison to currency
risks. As mentioned above, the Bank is the sole Group company which accepts and manage market risks on trading activities.
The management of market risks deriving from trading operations is a priority risk management activity and a cornerstone of
the Group’s financial stability. In particular, the volatility on the forex market may trigger significant impact on the Group’s
financial situation due to the Bank’s currency risk exposure via the item “Result from trading activities”. For various reasons
including for benefiting from bid and ask spreads, the Bank permanently keeps a certain portion of market exposure derivingfrom client orders execution.
The Bank applies prudent market risks limits and sophisticated monitoring of market risk exposure via automated hedging
logics and 24h human and automated surveillance.
The Bank automatically measures its market risk exposure on a permanent and real time basis. The IT system automatically
caps such market risk exposure under the limits decided by the executive management and the Board of Directors. Thoselimits have been set sufficiently carefully to ensure that Swiss banking capital adequacy requirements are complied with at
all time. If deemed necessary, the Bank’s advanced technology allows it to fully exclude exposure deriving from trading on allor specific instruments, for instance in anticipation of exceptional market events such as the abandon of a currency peg by aCentral Bank.
Market risks – other currency risks
The Group entities have limits applicable to currency risk exposure deriving from currency discrepancies between assets andliabilities. These limits are monitored on a regular basis and sufficient currency congruence is maintained between assets andliabilities through the assets and liabilities management (ALM).

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Market risks – interest rate risks
The Group is not active in credit or other interest generating activities. The Group’s exposure to interest rate risks mostly
derives from government bonds bought and deposited by the Bank with trading counterparties as trading collateral. Only
the Bank is exposed to interest rate risks. Since the Bank intends to hold those bonds until maturity, the identified interest
rate risks should not materialize in losses. The Bank calculates and reports about interest rate risks on a quarterly basis.
Credit risk
The Group is not active in credit activities. However, in the frame of its core trading activities, a credit risk exists if clients are
not able to honor payment obligations collected during their trading (settlement of trading losses and payment of fees). For
that reason, the Group only accepts to trade on a covered basis. The trading platforms automatically monitor the credit risk
relating to clients by way of margin call and margin cut functionalities which shall ensure that the Group remains covered bysufficient collateral at any time. In some circumstances, the margin call and margin cut functionalities of the Group may not
suffice to fully prevent certain client accounts to become negative. In such cases, the Group collects unsecured receivables.
Also, the Bank may grant short term unsecured loans and advances to Bank’s employees.
Counterparty risk in interbank business
The Group deposits its liquidity and trades (mainly to hedge client transactions) with more than 20 different banks and otherinstitutional trading counterparties external to the Bank’s ECN marketplace such as brokers and other marketplaces.
Counterparty and default risks relating to banks and other trading counterparties are mitigated by the fixation of exposure
limits approved by the competent officers including the Bank’s Board of Directors. The respect of the risk limits is controlled
on a daily basis and limits are adapted as often as deemed necessary.
In principle, the Group works only with first-class counterparties. Before entering into a business relationship with acounterparty in interbank business, the Group performs an assessment of the counterparty risk and sets a risk exposure limit
accordingly. The limit depends significantly on the rating, if any, and on the capital adequacy of the counterparty which arereassessed on an annual basis or more frequently if deemed necessary. The Group is attentive to financial news and public
information circulating about its counterparties. In case of negative information concerning the stability of a counterparty,
its creditworthiness is verified. If deemed necessary, risk limits and credit risk exposures are adjusted or suppressed by the
local and Group executive management and risk control function.
Liquidity
Due to the nature of its business activities, the Group has abundant liquidities and no long term monetary commitment. The
Group is exclusively financed by its own capital, client deposits and therefore does not need to raise funds on the money
market. Bank’s subsidiaries deposit most of their liquidity with Dukascopy Bank. As a result the liquidity risk of the Group is
low and requires limited monitoring. The liquidity risk management strategy of the Bank and an emergency liquidity plan
have been approved by the Board of Directors. The latter identify reserves of liquidity, liquidity risk indicators and steps
necessary to maintain sufficient liquidity for the Bank and the Group, including in case of liquidity stress situation.
The Bank’s Treasurer monitors the liquidity situation of the Group. He/she ensures that the Group limits are complied with.
The Group liquidity situation and concentration risks are monitored by the Bank’s risk control function and reported
quarterly to the executive management and to the Board of Directors.
4. Methods used for identifying default risks and determining the need for value adjustments
4.1. Amounts due from customers
The Bank is the sole Group company accepting bank guarantees as collateral. With regard to receivables covered by bankguarantees, the credit risk mostly relates to banks having issued such guarantees and the default risk is determined as
explained in section 4.2. below. If the bank having issued the bank guarantee defaults, the receivable becomes unsecured
and default risks are assessed as described below, like for all other unsecured receivables.

54 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

The Group considers that a risk of default exists on unsecured receivables if a payment of interests or a reimbursement ofprincipal is not honored in due date or if the debtor disputes such payment obligation or indicates that he/she will not beable to honor them. In such cases, the Group enquires about the debtor’s intentions and financial situation and evaluates
the chances of recovering the receivable. A value adjustment is recorded for the portion of receivable whose recovery is
considered uncertain.
4.2. Amounts due from banks
In principle, the Group only takes credit risk exposure towards counterparties having sound creditworthiness. The Groupconsiders that a counterparty is defaulting in case the latter refuses to honor a payment order in due time, or is declaredbankrupted or placed under special administration due to insolvency/going concern issues. In such cases, the counterparty’s
situation is evaluated. A value adjustment is recorded on the portion of receivable whose recovery is considered uncertain.
4.3. Process for determining value adjustments and provisions
Value adjustments and provisions are reassessed at each balance sheet date. Changes in value adjustments and provisions
are approved by the executive management unless they simply result from a use of provision in conformity with its purposeor the recovery of an impaired receivable.
5. Valuation of collateralCollateral provided by clients is normally made of cash, in any currency accepted in deposit by the Group. As far as the Bankis concerned, collateral also may comprise up to 80% of bank guarantees issued by Swiss or European banks having a Baa or
superior Long-Term senior debt Moody’s rating. With the joint approval of the Bank’s risk control function and executive
management, the Bank may accept bank guarantees derogating the above criteria. Bank guarantees must be denominatedin same currency as the client account reference currency. Collateral is valued at nominal value of the cash or bankguarantees. The Bank applies no haircut to collateral and grants a leverage for the trading of certain instruments.
6. Business policy regarding the use of derivative financial instruments and hedge accounting
Trading of OTC financial instruments with clients, including trading of certain financial derivatives (CFD and binary options),is the core business of the Group. As per Swiss legislation, the main instrument offered by the Group, namely leveraged
margin trading on currencies and precious metals without delivery, does not qualify as derivative financial instrument, while
it is often regarded as a CFD instrument in other jurisdictions. Therefore, depending on the qualification of leveraged margin
trading, the Group may be seen as a pure provider of financial derivative instruments. The Group does not trade credit
derivatives.
Dukascopy Group executes all trading operations in full STP (Straight-through-Processing).
The Group also uses derivative financial instruments for risk management purposes, mainly to hedge against market risks(including currency risk) mostly deriving from clients trading operations. By policy, the brokerage subsidiaries of the Bank
must hedge all their trading operations with Dukascopy Bank, which is their unique trading venue. In its trading activity,
including when dealing with its subsidiaries, the Bank always act as principal. The Bank hedges its own market risks byentering into hedging trades with external institutional counterparties or with clients. The Bank does not use hedge
accounting.
7. Material events after the consolidated balance sheet dateNo material events occurred after the consolidated balance sheet date that could have a material impact on the financial
position of the Group as of 31 December 2015.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of collateral for loans/receivables and off-balance-sheet transactions, as well as impairedloans/receivables
Loans(before netting with value adjustments)
Amounts due from customers
Total at 31 December 2015
(before netting with value adjustments)
Total at 31 December 2014
(before netting with value adjustments)
Total at 31 December 2015
(after netting with value adjustments)
Total at 31 December 2014
(after netting with value adjustments)
Off-balance sheet commitments
Contingent liabilities*
Irrevocable commitments
Total at 31 December 2015
Total at 31 December 2014

Secured by
mortgages
CHF−

Other collateral
CHF
689 784

UnsecuredCHF
2 521 287

Total
CHF
3 211 071−

689 784

2 521 287

3 211 071−

18 01782 734

100 751−689 784

327 552

1 017 336−

18 01769 11287 129−−−−116 992−
116 992
125 381−878 000
878 000
822 000

116 992
878 000
994 992
947 381*Contingent liabilities are bank guarantees issued by the Bank on behalf of clients, fully secured by client cash deposits

Breakdown of impairedloans/receivables
Total at 31 December 2015*
Total at 31 December 2014

Gross debt
amountCHF

Estimated liquidation
proceeds of collateral
CHF

Net debt
amount
CHF

Individual value
adjustments
CHF

2 193 735
41 686–

2 193 735

2 193 735–

41 68617 331* CHF 2'186'869.- relate to some clients of Dukascopy Japan K.K. who got negative account balances pursuant to the abandonof the CHF/EUR floor rate on 15.01.2015.

56 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of derivative financial instruments (assets and liabilities)
Trading instruments
OTC transactions

Currencies:– forward contracts*– swaps
Total currencies
Precious metals:– forward contracts*– swaps
Total precious metals
Indices:– CFD
Total indices
Others:– CFD
Total others
Total at 31 December 2015 before impact of netting contractsof which determinated of using valuation models
Total at 31 December 2014 before impact of netting contractsof which determinated of using valuation models
Total at 31 December 2015 after impact of netting contracts
Total at 31 December 2014 after impact of netting contracts

Positive
replacement
valuesCHF

Negative
replacement
valuesCHF

Contract
volumesCHF

2 846 180
2 520 950
5 367 130

2 746 884
2 556 742
5 303 626

1 258 459 862
1 644 544 312
2 903 004 174

17
1 995
2 012

55 32429 95985 28314 449 657
32 398 318
46 847 975

9 406
9 406

4 159
4 159

9 737 823
9 737 823

16 396
16 396
5 394 944–
2 658 141–775 125
1 393 870

1 938
1 938
5 395 006–
1 939 477–
775 186675 206

2 521 143
2 521 143
2 962 111 115–
1 960 157 264–* Represent the spot trading transactions which are accounted for according to the value date principle.

Breakdown by counterparty
Positive remplacement values after impact
of netting contacts
Total at 31 December 2015

Centralclearing
housesBanks andsecurities
dealers

Otherscustomers–

520 573254 552

Total

775 125

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 57

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Financial investments

Debt securitiesof which bonds held to maturity
Total
including securities eligible for repo transactionsin accordance with liquidity regulations

Book value
2014
2015
CHF
CHF
40 052 872
28 934 315
40 052 872
28 934 315

Fair value
2015
2014
CHF
CHF
40 550 740
29 207 260
40 550 740 29 207 260

40 052 872

40 550 740

28 934 315

29 207 260

Breakdown of counterparties by Fitch rating
AAA to AADebt securities:
Book value of bonds
held to maturity

A+ to A-

BBB+ to BBB-

BB+ to B-

Lower than B-

Without rating

40 052 872

Presentations of non-consolidated participations
2014
Non-consolidated
participations

Without listed value
Total
non-consolidated
participations

Cost
value
CHF

Value
adjustment
CHF

2015
Value
Disposals
Book value
at end of year Additions Reimbursement adjustment
CHF
CHF
CHF
CHF

Book value
at end of year
CHF

808 085–808 085–––808 085808 085–808 085–––808 085

58 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Disclosure of companies in which the bank holds a permanent direct or indirect significant participations
Consolidated participations
brokerage
brokerage

Share capital
CHF
1 479 241
5 488 259

social media
e-moneydormant

100 000
608 085
100 000

brokerage

2 765 738

social media
dormant
dormant

100 000
608 085
100 000

Activity
Dukascopy Europe IBS AS
Dukascopy Japan K.K.
Non-consolidated participations
Dukascopy Community SA
Dukascopy Payments AS
SWFX-Swiss FX Marketplace SA
Dukascopy Europe IBS AS
Non-consolidated participations
Dukascopy Community SA
Dukascopy Payments AS
SWFX-Swiss FX Marketplace SA

2015
Head
Share
officecapital in %
Riga
100%
Tokyo
100%

Vote
in %
100%
100%

Held
directly
100%
100%

GenevaRiga
Geneva
2014
Riga

100%
100%
100%

100%
100%
100%

100%
100%
100%

100%

100%

100%

GenevaRiga
Geneva

100%
100%
100%

100%
100%
100%

100%
100%
100%

The Group’s scope of consolidation comprises all companies owned, either directly or indirectly, over 50% of the capital or voting
rights by the Bank or which are dominant influence of the Bank by another manner, at the exception of Group companies whose
integration would not have any significantly influence on the consolidated financial statements, as SWFX – Swiss FX Marketplace
SA (total balance sheet CHF 83'894, net loss CHF 701), Dukascopy Community SA (total balance sheet CHF 228'514, net profit CHF
65'675), Dukascopy Payments AS (total balance sheet CHF 546'757, net loss 6'887).
Dukascopy Japan K.K. was acquired in August 2015. Dukascopy Europe IBS AS and Dukascopy Japan K.K. are fully integrated inconsolidated financial statement of the Group.

Presentations of tangible fixed assets
2014

2015

Book value at
Accumulated Book value at
Disposals(difference ofDepreciation end of year
Cost value depreciation end of year Additions change
included)
CHF
CHF
CHF
CHF
CHF
CHF
CHF
22 749 467 (22 667 603)
81 86422 35944 993(58 690)(540)
Softwares(6 718 413) 1 365 743
422 386885 735(888 469)(13 925)
Other tangible fixed assets 8 084 156
30 833 623 (29 386 016) 1 447 607
444 745930 728(947 159)(14 465)
Total fixed assets

Leasing

Future leasing installments arising from operating leasesof which, may be terminated within one year

2016
CHF
1 824 581
280 2812017
CHF
1 133 2282018
CHF
890 539

2019
CHF
890 539

2020
CHF
745 336

2021
CHF
10 290DUKASCOPY BANK SA ANNUAL REPORT 2015 | 59

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of other assets and liabilities
2015
CHF

OTHER ASSETS
OthersTotal other assets
OTHER LIABILITIESWire transfers
Indirect taxes to be paid
OthersTotal other liabilities

2015
CHF

3 737
3 737

18 53318 533524 812288 888
14 872
828 572

2 088 435
271 746
36 131
2 396 312

Assets pledged as collateral or assigned to guarantee own commitments, as well as assets under reservationof ownership
2015

2014

Book value of pledged
Book value of pledged
assets and assets
assets and assets
Effective
Effective
assigned as collateral commitments assigned as collateral commitments
CHF
CHF
CHF
CHF
1 700 623
19 907 237
9 529 393
31 261 303
Swiss and US government bonds
237 219237 219235 969
235 969
Deposits made with banks to secure guarantees
1 937 842
20 144 456
9 765 362
31 497 272
Total

Indications relating to pension funds
A collective pension fund plan exists for the employees based in Switzerland (Caisse Inter-Entreprises-CIEPP). This fund is a defined
contributions scheme. There is no employer contribution reserve and there no identifiable economic benefit to be capitalised in thebalance sheet (2014: nil). The overfunding in the pension fund is based on its unaudited accounts as of 31 December 2015 (coverage ratio
is 112%).
Based on the last audited financial statements of the Caisse Inter-Entreprises-CIEPP as at 31 December 2014, the coverage ratio was
117.4% (31 December 2013: 112.6%).
The employees based in Russia Federation were affilated to a defined contributions scheme pension fund of the Russian state which has
been cancelled in 2015. Since 2015, employees based in Russia are no longer insured by any pension fund.
The employees based in Japan are affilated to a defined contributions scheme pension fund of the Japan state. This fund does not allow
any employer's contribution reserve.
There is no pension funds for the consolidated entities of the Group.

Pension expenses included in "Personnel expenses" at 31 December were as follows:
Over/underfunding
31.12.15

Economic interestof the Bank
2015

2014

Change ineconomic interest
versus prior year

−

−

−

Pension plans
with overfunding
60 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Contributions
paid
in 2015360 302

Pension expenses
in personnel expenses
2015

2014

360 302428 983

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentations of value adjustments and provisions, reserves for general banking risks and changes therein
during the current year
Use in
New
Balance at conformity with
Recoveries, creations
Balance at
31 December
designated
Reclassifi- Currency
past duecharged Releases 31 December
2014
purposecations differencesinterest
to income to income
2015
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF

Provisions fordeferred taxes
Provisions forother business risks
Total provisions
Reserves forgeneral banking risks
Value adjustments
for default risks andcountry risks –of which, value
adjustments fordefault risks in respectof impairedloans/receivables

–

–

–

–

–

700 000–

700 000

225 793(125 793)–––

200 000–

300 000

225 793(125 793)

–

–

–

–

–

2 100 000–

2 100 000

17 331(12 650)

–

189

–

2 189 540

(675)

2 193 735

900 000

1 000 000

Provisions for other business risks include provisions for legal fees and litigations arising out of the normal conduct ofDukascopy Group's activities.
Provisions are valued according to the best estimate principle. Reserves for general banking risks have not been taxed.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 61

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Disclosure of amounts due from/to related parties
2015
Amounts
Amountsdue fromdue toCHF
CHF
Holders of qualified participation
Group companies
Linked companies
Transactions with members of governing bodies
Other related parties

2 625

406 4312014
Amounts
Amountsdue fromdue toCHF
CHF
13 00084 170679

Dukascopy Bank engaged into transactions with related parties in the normal course of its business. Thesetransactions mainly include rent, marketing services and software development support. Besides, all subsidiaries of
the Bank hedge their trading operations with Dukascopy Bank.
Transactions with related parties are conducted at arm's length.

62 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of the maturity structure of financial instruments
Due
Cancellable Within
3 months
CHF
CHF

Within 3 to
12 months

Within1 to 5 years

CHF

CHF

No
Over
maturity 5 years

Total
CHF

ASSETSAt sight
CHF

Liquid assets

37 818 353

–

–

–

–

–

–

37 818 353

Amounts due from banks

99 330 356

235 969

–

–

–

–

–

99 566 325

759 077258 259

–

–

–

–

–

1 017 336

financial instruments

775 125

–

–

–

–

–

–

775 125

Financial investments

–

–

–

40 052 872––

40 052 872

Amounts due from customers

CHF

CHF

Positive replacement values of derivative

Total current assets
at 31 December 2015

138 682 911

494 228–– 40 052 872–– 179 230 011

Total current assets at 31 December 2014

143 888 289

279 800––

28 934 315–– 173 102 404

Amounts due to banks

34 231 697

–

–

–

–

–

–

Amounts due in respect of customer deposits

110 388 649

–

–

–

–

–

Third-party liabilities
34 231 697– 110 388 649

Negative replacement values of derivative
financial instruments

775 186775 186

Total third-party liabilities
at 31 December 2015

145 395 532

–

–

–

–

–

Total third-party liabilities at 31 December 2014

142 424 129

–

–

–

–

–

– 145 395 532– 142 424 129

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of assets and liabilities by domestic and foreign origin in accordance with the domicile principle
ASSETSin CHF ('000)
Liquid assets
Amounts due from banks
Amounts due from customers
Positive replacement valuesof derivative financial instruments
Financial investments
Accrued income and prepaid expenses
Participations
Tangible fixed assets
Other assets
Total assets
LIABILITIESAmounts due to banks
Amounts due in respect of customer
deposits
Negative replacement valuesof derivative financial instruments
Accrued expenses and deferred income
Other liabilities
Provisions
Reserves for general banking risks
Bank's capital
Retained earnings reserve
Currency translation reserve
Consolidated profit of the year
Total liabilities

64 | DUKASCOPY BANK SA ANNUAL REPORT 2015

2015

2014

Domestic
8 385
76 322722

Foreign
29 43323 244295

Total
37 81899 566
1 017

Domestic
80 80615 51821

Foreign
14 21932 1446755
28 008
1 404
200
587
1
115 684720
12 045
2 382
608
344
3
69 074775
40 053
3 786
808
931
4
184 758576
28 934
1 146
200
843
–
128 044

818
1 394
–
28 934
628
1 774
608
808
605
1 448
18
18
49 107 177 151

12 70021 53134 23116 80618 34535 1517 766

102 623

110 3898 246

98 352106 598

272
2 298
828
1 000
2 100
22 000
7 906
129
3 390
60 389

503
280
1
–
–

775
2 578
829
1 000
2 100
22 000
7 906
129
2 821
184 758

108
1 844
2 294
226
–
22 000
6 675
105
1 292
59 596

567
188
103
–
–

675
2 032
2 397
226
–
22 000
6 675
105
1 292
177 151–(569)
124 369–––
117 555

Total
95 02547 662
88

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of total assets by country / group of countries
2015
ASSETSSwitzerland
Europe excluding Switzerland
USA and Canada
Others
Total

Absolute
CHF ('000)
115 684
53 202
12 4073 465
184 758

2014
Share
%
62,6
28,8
6,7
1,9
100,0

Absolute
CHF ('000)
128 044
39 320
9 433
354
177 151

Share
%
72,3
22,2
5,3
0,2
100,0

Breakdown of total assets by credit rating of country groups (risk domicile view)
2015
SERV Rating
1
2
3
4
5
6
7
0
Total

Absolute
CHF ('000)
65 630
75
784
119
1 813
92
277
284
69 074

Share
%
95,0
0,1
1,2
0,2
2,6
0,1
0,4
0,4
100,0

The Bank does not use an internal rating system for country risk management. SERV is rating issued by OECD.

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 65

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of assets and liabilities broken by most significant currencies of the bank
ASSETS
EUR
JPY
GBP
CHF
USD
OthersTotal
in CHF ('000)
37 81829 433
8 385
–
–
–
–
Liquid assets
99 56614 685
7 610
8 677
3 685
59 4675 442
Amounts due from banks
1 017
37
35
–
195
708
42
Amounts due from customers
Positive replacement values
775
–
775
–
–
–
–
of derivative financial instruments
40 053–28 008––12 045–
Financial investments
3 786
622
1 286
108
28
1 514
228
Accrued income and prepaid expenses
808
–
808
–
–
–
–
Participations
931
2
917
–
12
–
–
Tangible fixed assets
4
4
–
–
–
–
–
Other assets
184
758
44
783
47
824
8 785
3 920
73 734
5 712
Total assets
Claims arising from spot exchange
and swap transactions
77 235 701 491 1 332 292 333 657 194 513 322 923 2 962 111
Total at 31 December 2015
125 059 746 274 1 406 026 342 442 198 433 328 635 3 146 869
LIABILITIESAmounts due to banks
34 23212 337
1 425
2 687
867
16 688228
Amounts due in respect of customer
deposits
110 389
32 559
7 296
4 509
311
61 522
4 192
Negative replacement valuesof derivative financial instruments
775
–
775
–
–
–
–
Accrued expenses and deferred income
2 578
698
1 459
7
108
262
44
Other liabilities
828
73
616
2
129
8
–
Provisions
1 000
–
1 000
–
–
–
–
Reserves for general banking risks
2 100
–
2 100
–
–
–
–
Bank's capital
22 000–22 000––––Retained earnings reserve
7 906
–
7 906
–
–
–
–
Currency translation reserve
129
–
129
–
–
–
–
Consolidated profit of the year
2 821
1
3 390
–
–
–
(570)
Total liabilities
184 758
48 096 45 668
7 205
78 601
4 472
716
Delivery obligations arising from spot
exchange and swap transactions
78 958 682 471 1 342 761 349 599 186 056 322 266 2 962 111
Total at 31 December 2015
127 054 728 139 1 421 362 356 804 186 772 326 738 3 146 869
Net position by currency–(1 995) 18 135 (15 336) (14 362) 11 661
1 897

66| DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of contingent liabilities and contingent assets
2015
CHF
116 992
116 992

Contingent liabilities
Other contingent liabilities
Total contingent liabilities

2015
CHF

Contingent assets
Other contingent assets
Total contingent assets––

Breakdown of the result from trading activities
Trading income
Leveraged margin trading
Binary options
Total

2015
CHF
35 339 633
690 498
36 030 131

2014
CHF
27 765 070
142 939
27 908 009

Breakdown by underlying risk
2015
CHF
1 318 725
30 348 225
4 363 181
36 030 131

Result from trading activities from:
Equity securities
Foreign currency
Commodities / precious metals
Total

In 2015 the Bank paid negative interests in the amount of CHF 45 873 in relation with bank deposits in EUR and CHF.

Breakdown of personnel expenses
Personnel expenses
Salariesof which, expenses relating to share-based compensation
and alternative forms of variable compensation
Benefits
Other personnel expenses
Total personnel expenses

2015
CHF
10 971 694

2014
CHF
11 550 733−
2 381 853
150 282
13 503 829−
2 773 845
107 998
14 432 576

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 67

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Breakdown of general and administrative expenses
General and administrative expenses
Premises
IT related expenses
Legal and consulting
Post, telecommunications and data
Expenses for vehicles
Office supply
Audit feesof which for financial and regulatory auditsof which for other services
Marketing and communication
Travels
OthersTotal general and administrative expenses

2015
CHF
2 397 224
1 984 137
1 361 425
612 02045 108
216 056
294 051
294 051–
5 901 437
856 694
367 018
14 035 170

2014
CHF
2 262 029
1 940 090
1 232 590
737 850
52 820245 627274 782274 782–
4 227 361
984 733
347 845
12 305 727

2015
CHF
675
1 000
1 161
–
–
–
–
2 836

2014
CHF
4 637
–
–
345 750370 000
692 850
8 972
1 422 209

Explainations regarding extraordinary income and expenses
Extraordinary income
Release of provision on doubtful debtors
Disposal of fully depreciated fixed assets
Deposits abondonned by clients
Release of reserve for general banking risks
Release of provision for litigations
Reversal of accrued liabilities recorded in previous years
Reimbursement from a broker
Total extraordinary income*Silent reserve as per Swiss banking regulation.

There was no extraordinary expense in 2015 and 2014.

68 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of operating result broken down according to domestic and foreign origin,
according to the principle of permanent establishment

Subtotal net from interest operations
Subtotal result from commission business and services
Result from trading activities
Personnel expenses
General and administrative expenses
Subtotal operating expenses
Value adjustment on participations and depreciation andamortisation of tangible fixed assets and intangible assets
Change to provisions and other value adjustments,and losses
Operating result

2015
2014
Domestic
Foreign
Domestic
Foreign
CHF
CHF
CHF
CHF
47 37677
49 899–332 892(26 154)331 374(3 418)34 579 549
1 450 582 26 768 708
1 139 301
(8 002 222)
(5 501 607) (8 372 453)
(6 060 123)
(7 692 202)
(6 342 968) (6 079 068)
(6 226 659)
(15 694 424) (11 844 575) (14 451 521) (12 286 782)
(519 147)(428 012)(900 494)(1 884)17 845 752 (10 849 966)

(488 201)(457 920)(247 651)(52)
11 962 608 (11 608 871)

Presentation of current taxes, deferred taxes and disclosure of tax rate

Deferred taxes
Current tax expenses
Total taxes

Average tax rate

2015
CHF

2014
CHF

700 000
1 377 842
2 077 842–
483 735483 735

2015

2014

29,7%

27,2%

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 69

REPORT OF THE STATUTORYAUDITOR ON THE CONSOLIDATEDFINANCIAL STATEMENTS
to the General Meeting of Shareholders of Dukascopy Bank SA, Geneva
As statutory auditor, we have audited the accompanying consolidated financial statements of DUKASCOPY BANK SA,
which comprise the balance sheet, income statement, cash flow statement, statement of changes in equity and notes forthe year ended 31 December 2015.
Board of Directors' Responsibility
The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance withthe provisions governing the preparation of financial statements for Banks and the requirements of Swiss law. This
responsibility includes designing, implementing and maintaining an internal control system relevant to the
preparation and fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error. The Board of Directors is further responsible fir Selecting and applying appropriate,accounting policies and making accounting estimates that ate reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that weplan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers the internal control system relevant to the entity's preparationof the consolidated financial 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 entity's internal control system. An audit
also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting
estimates made, as well US evaluating the overall presentation of the consolidated financial statements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements for the year ended 31 December 2015 give a true and fair viewof the financial position, the results of operations and the cash flows in accordance with the provisions governing the
preparation of financial statements for Banks and comply with Swiss law.
70 | DUKASCOPY BANK SA ANNUAL REPORT 2015

Dukascopy Bank SA, Geneva
Report of the Statutory Auditor
on the Consolidated Financial Statements
to the General Meeting of Shareholders

REPORT ON OTHERLEGAL REQUIREMENTS
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists, which has been designed for the preparation of consolidated financial statements according to
the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.

KPMG SA
Philippe Ruedin

Nicolas Moser

Licensed Audit Expert

Licensed Audit Expert

Auditor in Charge

Geneva, 29 April 2016

Enclosure:
Consolidated Financial statements (balance sheet, income statement, cash flow statement,
statement of changes in equity and notes)

DUKASCOPY BANK SA ANNUAL REPORT 2015 | 71

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Presentation of the capital adequacy2015
CHF ('000)
22 000
129
7 906
(808)
29 227

Share capital
General legal reserve
Profit brought forward./. Participations
Total eligible capital (CET1)*

2014
CHF ('000)
22 000
105
6 675
(808)
27 972*The Bank counted neither the net profit 2015 nor the Reserves for general banking risks which would increase
the regulatory capital by CHF 4.9 mio.
2015
Used
Required capital
approach*
CHF ('000)

Credit risks
Risks without counterparty
Market risksof which on currenciesof which on equity instrumentsof which on gold and commodities
Operational risks
Total required capital
Surplus of eligible capital

Swiss standardised
Swiss standardised
standardised
standardised
standardised
standardised
basic indicator

2 521
465
6 166
4 867
163
1 136
4 792
13 94415 283* The Bank uses the transitory rules allowed by the capital adequacy ordinance and is therefore not fully applying
the Basel III regulation yet.

2014
Used
approach*Credit risks
Risks without counterparty
Market risksof which on currenciesof which on gold and commodities
Operational risks
Total required capital
Surplus of eligible capital

Swiss standardised
Swiss standardised
standardised
standardised
standardised
basic indicator

Required capital
CHF ('000)
1 367
724
4 171
3 547
624
4 342
10 60417 368* The Bank uses the transitory rules allowed by the capital adequacy ordinance and is therefore not fully applying
the Basel III regulation yet.

72 | DUKASCOPY BANK SA ANNUAL REPORT 2015

CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2015

Disclosure of amounts due from/to related parties

1

Ratio between eligible capital and required capital
Solvency ratios1,2,3

2015
209,6%
16,8%

2014
263,8%
21,1%¹ before coverage of large exposures excess² 10.5% minimum is required³ the solvency ratio would reach 19.3% in 2015 if we would count the net profit 2015 and the Reserves forgeneral banking risks contributed in 2015.

Capital adequacy disclosures: capital ratios 2015

CET 1 Capital Ratio
T1 ratio
Ratio regarding the regulatory capital
CET1 requirements according to CAO
Of which capital buffers according to CAO
Of which countercyclical buffers
Available CET1 to cover the minimum and buffer requirements,
after deducting AT1 and T2 requirements which are fulfilled with CET1
Capital target ratios for CET1 as per the FINMA circ. 11/2 plus the countercyclical buffer
Available CET1
Capital target ratios for T1 as per the FINMA circ. 11/2 plus the countercyclical buffer
Available T1
Regulatory capital target ratios according to the FINMA circ. 11/2 plus the countercyclical buffer
Available regulatory capital

Ratio
16.8%
16.8%
16.8%
4.5%
0.0%
0.0%
9.8%
7.0%
9.8%
8.5%
8.3%
10.5%
6.3%

Capital adequacy disclosures: leverage ratio 2015

Tier 1 capital
Exposure Measure
Leverage Ratio

29 227
186 418
15,7%

Medium short-term liquidity coverage ratio LCR
LCR Q1 2015
LCR Q2 2015
LCR Q3 2015
LCR Q4 2015

Ratio
287,7%
282,1%
316,8%
379,0%DUKASCOPY BANK SA ANNUAL REPORT 2015 | 73

CONTACTS

GENEVA
Head Office
ICC, Route de Pre-Bois 20, CH-1215
Geneva 15, Switzerland
Tel: +41 (22) 799 4888;
Fax: +41 (22) 799 4880;
info@dukascopy.com

RIGA

ZURICHKIEV

AgencyRepresentative OfficeBahnhofstrasse 52, OBC,
CH-8001 Zürich,
Switzerland
Tel: +41 (44) 214 6186
info@dukascopy.com

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MOSCOW

Representative Office

Consolidated Subsidiary

Representative OfficeLacplesa iela 20A,
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Fax: +37 16 721 87 30
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Lacplesa iela 20a–1,
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Phone: +371 67 399 000
Fax: +371 67 399 025
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109012, Moscow,
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Tel: +7 (499) 394 29 55
moscow@dukascopy.com

DUKASCOPY JAPAN K.K.

HONG KONGKUALA LUMPUR
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Jalan Stesen Sentral 2,
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Fax: +60 (3) 2298 82 01
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Tokyo 105-0001 Japan,
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www.dukascopy.com

Representative Office
701, 7/F, Tower 2, Silvercord,
30 Canton Road,
Tsim Sha Tsui, Kowloon,
Hong Kong
Tel +852 5804 93 75
Fax: +852 5804 93 75
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