Gottex Annual Report 2014

Transcription

ANNUAL REPORT
& FINANCIAL STATEMENTS
2014
GLOBAL EXPERTISE IN ASSET MANAGEMENT
Gottex Fund Management
Holdings Limited
Contents
01 Performance highlights
02 Chairman and Chief Executive Officer’s Statement
06This is Gottex
10 Chief Financial Officer’s review
14 Gottex Board & Executive Management Committee
16 Directors’ report
18 Corporate Governance Report
35 Independent Auditor’s Report
36 Consolidated Income Statement
37 Consolidated Statement of Comprehensive Income
38 Consolidated Statement of Financial Position
39Consolidated Statement of Cash Flows
40 Consolidated Statement of Changes in Equity
41 Notes to the Consolidated Financial Statements
PERFORMANCE HIGHLIGHTS
Gottex Fund Management Holdings is a leading independent provider
of multi-asset, alternative and innovative investment solutions. We offer
a variety of financial services and products for institutional and private
investors exposed to alternative, as well as to the traditional sector,
including Mainland China and Asia focused funds.
Business highlights
Completed integration with EIM Group, achieving
USD 20 million in cost savings when compared to
combined expense base in Q4 2013
Development of liquid alternatives investment
We are very pleased that
we completed the merger between
Gottex and EIM at the end of
September 2014
Gottex Yellow Mountain UCITS Fund launch, a daily
liquidity fund offering direct access to Shanghai listed
A-Shares for institutional and retail clients
Total fee-earning assets of USD 8.2 billion
at 31 December 2014
Total gross revenues of USD 33.3 million
Financial highlights
Fee-earning assets (USDbn)
2014
8.2
2013
5.3
Gross revenues (USDm)
2014
2013
33.3
46.4
INTRODUCTION STRATEGIC REVIEW GOVERNANCE FINANCIALS
ANNUAL REPORT & FINANCIAL STATEMENTS 2014 01
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER’S STATEMENT
‘We aim to provide a broad set of institutional quality solutions to
institutional investors, family offices and individuals, grounded in the
Group’s long standing experience in alternative investment strategies.’
Arpad Busson
Chairman
Joachim Gottschalk
Chief Executive Officer
We are very pleased that we completed the merger
between Gottex and EIM at the end of September 2014
and also with the progress achieved with the integration
of people, processes and systems. Both groups have
been operating in recent years in a challenging hedge
fund space, affected by moderate average returns and
fee pressures which have impacted the industry the
world over. This naturally led to a reduced revenue
base for both groups and although the merger has
enabled us to extract significant synergies, we have
been hampered by regulatory delays that delayed the
merger synergies which in turn has contributed to a
substantial USD 19.2 million loss for the Group in the
last financial year, the largest in the Group’s history.
The Board and management are deeply aware of
the need to address such losses, and management
are (i) implementing various measures to do so, whilst
dealing with a ‘dynamic’ operating environment and
(ii) will continuously monitor developments within and
outside the Group and take measures where necessary.
The operating environment remains demanding but
with USD 20 million of synergies (when compared to
Q4 2013) in place by Q2 2015, we are continuing a
serious reduction in the Group’s cost base and we will
reallocate resources to strategic areas. In addition, we
do believe we have established a robust platform and
have made good progress with selected and promising
new initiatives coming on line in Q2, which we will outline
in more detail in the remainder of this statement. We are
aiming to be operationally breakeven in Q4 2015.
Overview
This is the eighth Annual Report of Gottex Fund
Management Holdings Limited1 as a public company.
During 2014 the Group took important steps to establish
the growth platform we have been pursuing through
the merger with the EIM Group. Our teams have worked
extremely hard to achieve these synergies and have
worked determinedly and showing great spirit in bringing
both groups together.
1 ‘Gottex’, ‘GFM’, ‘GFMH’ or ‘the Company’ and together with its subsidiaries, ‘the Group’.
02 GOTTEX FUND MANAGEMENT HOLDINGS LIMITED
Going forward, we aim to provide a broad set of
institutional quality solutions to institutional investors,
family offices and individuals, grounded in our long
standing experience in alternative investment strategies.
Our business will focus on the following areas:
Alternative investment solutions, including
liquid alternatives.
Our teams have worked
extremely hard to achieve synergies
and have worked determinedly
and showing great spirit in bringing
both groups together
Multi-asset investment solutions, investing
in 8 or more asset classes with a dynamic
alternatives allocation.
Asian investment opportunities with a progressive
perspective, like onshore China securities and
Asia focused hedge funds.
All this is complemented by a proprietary state-of-the-art
risk management system that allows us to assess risks
of specific investments, and aggregate these in relation
to the wider portfolio and overall markets.
In addition, some of our institutional clients have asked
us to make our risk management tools available,
which we have started doing through our independent
subsidiary LumRisk.
Alternative Investment Solutions
Our alternative solutions and multi manager business
will provide customised and sector focused investment
propositions, risk-management and monitoring tools
and advisory services to institutional clients including
family offices to make optimal use of the correlation
and risk-adjusted returns when combining traditional
portfolios with alternative strategies. One of our key
initiatives going forward will be cost efficient liquid
alternatives, where we plan to offer our investors
transparent access to hedge fund like returns through
dynamic alternative risk premia products. We believe
the ongoing focus of institutional investors on overall
fee levels across alternative investments will continue
to drive this interest.
In addition, we have continued to develop our advisory
platform, as can be seen from our partnerships with
leading independent investment consultants in Australia,
Scandinavia and in the United Kingdom. Gottex’s deep
hedge fund knowledge (of strategies, managers and
alternative beta instruments), expertise in manager
selection, portfolio construction, risk monitoring and
experienced investment professionals on three major
continents are combined with the consultants overall
deep understanding of their clients’ portfolios and asset/
liability requirements, resulting in alternative investment
advice tailor made to local institutional clients.
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER’S STATEMENT CONTINUED
Multi-Asset Solutions
2014 review
Our multi-asset business received a welcome boost
in October 2014 with the arrival of James Hughes,
previously CIO at HSBC Insurance. His background
in active multi-asset solutions complements the cost
efficient smart beta multi-asset approach we offer
in regulated highly liquid products in the US, UK and
Europe. Both approaches invest in 8 to 10 asset classes
(i.e. are truly multi-asset) and offer high allocations
to alternatives with the aim to generate above average
returns over long periods of time.
2014 turned out to be a challenging year for global
capital markets and sustained positive performance
was rare across asset classes and investment strategies.
Demand for multi-asset products was healthy in 2014
and we expect it to remain strong in the foreseeable
future as investors value the benefits of real diversification
accessible through liquid products. We are looking to
capitalise on this by launching further dynamic multiasset products, focusing on growth and income, in Q2
2015. We have positive indications for the multi-asset
funds as investors search for yield away from fixed
income products.
Asian Investment Solutions
There were material developments in our Asian
business during 2014. This included HS Group with
the first USD 310 million close of its seeding fund for
Asian hedge funds and now on track for a final close
in Q2 2015 aiming for a total amount of over USD
500 million. The fund completed its first seeding
investment in Pleiades in 2014, which grew in the
meantime to USD 600 million, and is preparing its
second investment for June 2015. In addition, as part
of our partnership with VStone Asset Management,
we are launching the Gottex Yellow Mountain UCITS
Fund, a daily liquidity fund offering direct access to
China A-Shares. The final component of our Asian
offering is our market leading Asian hedge fund
and long only multi-manager products, which have
generated returns of up to 12.9% in 2014 after
generating 14.7% the previous year. It is our in-depth
knowledge of the Asian hedge fund market, coupled
with experienced investment professionals on the
ground in the region, which allows us to select local
hedge fund managers with superior risk adjusted
return potential.
Hedge funds did not have a spectacular year, with
relatively low performance. However, assets in the
industry continued to grow, standing at USD 2,845 billion
at the end of 2014.
On the multi-asset side positive performance continued
during the year, although the second half was somewhat
more challenging. Demand for multi-asset products has
remained healthy, in particular in light of uncertainty
around bond and equity holdings.
In Asia, equity markets started the year poorly, but
recovered in 2H2014 with a spectacular increase. Asian
focused hedge funds did very well when compared to
the broader Asian markets, ending the year up 6% after
a negative start in Q1. We see increased client interest
in alternative and long only Asian investments.
Our own products performed in line with their benchmarks,
but we would like to highlight several which particularly
stood out. Our Asian long only Beta Select product
returned 11.9% in 2014, after +17.9% and +14.7% in 2013
and 2012. Our Multi-Asset Balanced UCITS Fund was
up 6.0% in its first year after launch and our diversified
hedge fund multi-manager account generated 4.2% last
year, after adding 8.2% during 2013.
In terms of fee generating assets we ended the year
at USD 8.2 billion, including USD 3.8 billion of low fee
generating advisory mandates. The reduction in average
fee rates, as well as net asset outflows at Gottex and EIM,
led to total gross revenues for 2014 of USD 33.3 million,
which includes the revenues from EIM Group as of
the completion of the merger on 30 September 2014.
The operating cost within the original Gottex entities fell
by 16%, when compared to 2013. It is important to note
that we originally had expected regulatory approval and
completion of the transaction by April/May 2014 and
this delay led to a further delay in extracting synergies
from the merger.
2015
Our focus this year will be the following:
Final integration of Gottex and EIM, including
full realisation of the identified synergies.
Manage our cost base to be operationally break
even by the end of 2015.
Generating strong performance across our entire
product line.
Developing our Dynamic Alternative Risk Premia
(DARP) offerings.
Capitalising on the existing demand for liquid
multi-asset growth and income products for
retail and institutional clients.
Offering global Investors direct access to Chinese
A-Shares and fixed income in co-operation with
our local partner VStone Asset Management.
Expand our private wealth management services
leveraging the expertise of our wealth management
affiliated 2PM.
Thank you
Management and staff have worked extremely hard
during 2014 and have continued to do so this year.
We can also assure you that the principal shareholders,
board members and executives are fully aligned,
dedicated and committed to the long term future of
the Company. We would like to thank our investors
and clients for their continued support and trust and
our colleagues for all their hard work and dedication.
Arpad Busson
Chairman
Joachim Gottschalk
THIS IS GOTTEX
Our organisation
Gottex Fund Management Holdings Group is a leading
provider of alternative, multi-asset and Asian investment
solutions and advisory services. Founded in 1992,
Gottex had USD 8.2 billion in total assets as at
31 December 2014. Gottex offers a variety of investment
products, ranging from global alternative investment
solutions to Asian hedge fund and long only solutions
as well as multi-asset investment products. In addition,
it provides related services, including a managed
account platform LUMX Solutions Services and Real
Asset investing. At 30 September 2014 Gottex merged
with the EIM Group.
People
Clients
Gottex’s core competencies are centred on clients
and investments: highly skilled investment and
management team; disciplined, transparent and
structured investment process; state of the art
infrastructure and risk management; global footprint
and network; and product design innovation and
excellence that maximise risk adjusted returns.
Gottex’s clients are predominantly institutional with
pension funds and other institutional investors such as
banks, insurance and endowments representing 67% of
AUM as at 31 December 2014. Our clients are distributed
across the world with 48% located in Europe, 14% in
North America and 38% in the APAC region as at the
end of 2014. Total fee generating assets of the Group
amount to USD 8.2 billion as at 31 December 2014 of
which global alternative solutions discretionary assets
of USD 3.3 billion and advisory assets of USD 3.3 billion,
multi-asset assets of USD 0.5 billion, Asian assets of
USD 0.8 billion and LUMX assets of USD 0.5 billion.
The Group currently employs 127 people, including
46 investment professionals, in offices located across
three continents in Geneva (Nyon), New York, Boston,
Hong Kong and London. This allows the firm to combine
in-depth local knowledge of financial markets and
investors with the strength of a global presence and
infrastructure. Gottex sees the extensive experience
of its staff as a key strength: for example, the average
experience of the senior investment managers is 22 years.
Core competencies
Financials
In 2014 Gottex generated USD 33.3 million in gross
revenues. The Group’s statement of financial position
includes USD 8.6 million debt and shows USD 35.6 million
in total equity.
Our office locations
Luxembourg
London
Guernsey
New York
Boston
Nyon
Monaco
Hong Kong
Distribution of people by region1
Europe
USA
Asia
Distribution of people by function1
85
27
21
Client profile by region2
Investment
Marketing & Client
services
Support &
management
47
16
70
Client profile by type2
Europe
APAC & ROW
North America
48%
38%
14%
Total Assets under Management2
2014 - USD 8.2bn
Alternative solutions 85%
Asia
9%
Multi-Asset solutions 6%
Total Assets under Management2
2013 - USD 5.3bn
Alternative solutions 81%
Multi-Asset solutions 12%
Asia
7%
1 The staff figures are excluding the four of the Non-Executive Directors
of the Group.
2 Based on management estimates.
Other Institutional 46%
Financial
Intermediaries28%
Pension Fund
21%
HNW & Family Office 5%
Selected performance returns 20143
%
MN Portable Alpha S&P 500 (Non-Erisa)
14.17
S&P 500 Total Return Index
13.69
Gottex Penjing Asia Opportunities Fund
12.79
Gottex Penjing Asia Equity Fund
7.67
Gottex Penjing Asia Fund
4.76
EurekaHedge APAC FOF Index
6.41
Gottex Penjing Asia Market Independent Fund
4.52
Gottex Multi-Asset growth Strategy
11.44
HFRI Fund-of-Fund Composite Index
3.35
Gottex Alternative Credit Strategy
3.83
HFRI Fund-of-Fund Conservative Index
3.16
Gottex Market Neutral Strategy
2.25
Gottex Market Neutral Plus Strategy
2.00
Gottex Multi-Asset Balanced Fund
6.02
Gottex Endowment Strategy Fund
0.30
FP Frontier MAP Balanced Strategy
4.56
EIM A.A.A. Long Only Fund – European Equities
6.10
EIM A.A.A. Long Only Fund – Natural Resources Equities 9.60
EIM Long Only SICAV Obligations Internationales
8.70
3 Performance for an individual investor may vary from performance stated above
as a result of investing in a non-USD share class, the timing of their investment(s)
in the fund, and the investor’s eligibility to participate in ‘new issues’.
THIS IS GOTTEX CONTINUED
Products and services
Illiquids management/Global Fixed Income
Realisation strategy (2012)
Unwinding publicly listed legacy fund of hedge fund
portfolio, including work-out services.
Alternative solutions
Gottex’s alternative solutions range from discretionary
investment solutions via advisory services to operational
infrastructure.
LumRisk risk reporting and management (2009)
Providing risk reporting and investment guidelines
and limit monitoring services for hedge fund or
broader portfolios of institutional investors.
Discretionary investment
Market Neutral strategy (1999)
The strategy seeks to generate consistent returns
over the medium term with low correlations to
major stock and fixed income market indices
through a diversified portfolio of hedge funds which
substantially hedge any direct first order exposure
to major stock and bond markets. Return of 2.3%
in 2014.
Alternative Credit strategy (2011)
The strategy seeks to capture the return potential
in various areas of the credit markets and invests
in ‘alternative credit’ hedge funds to offer a better
risk-adjusted return than fixed income. Return of
3.8% in 2014.
LUMX/LUMA managed account platform (2008)
LUMX/LUMA managed account platform offering
onshore and offshore, regulated and unregulated
managed accounts and providing full transparency
of underlying investment portfolio of hedge funds.
Multi-asset solutions
Gottex’s multi-asset solutions are portfolios invested
simultaneously in up to 10 asset classes and range
from discretionary investment solutions and active
management to advisory services.
Multi-asset customised account (2009)
A European version of the multi-asset endowment
strategy for a large family office. Return of 5.5%
in 2014.
Customised separate account (2008)
The strategy seeks to invest into selected relative
value and event driven hedge fund strategies.
Return of 6.3% in 2013.
FP Frontier MAP Balanced strategy (2005)
An onshore UK NURS multi-asset product with
moderate volatility. Return of 4.6% in 2014.
Customised separate account (2012)
The strategy seeks to invest into diversified hedge
fund strategies. Return of 4.2% in 2014.
Frontier MAP Moderate strategy (2005)
An offshore multi-asset product with moderate
volatility. Return of 17.8% in 2014.
AAA Evolution 2012
Multi-strategy fund of UCITS-compliant hedge
funds, with equity diversification bias. Return of
0.5% in 2014.
Gottex Endowment Strategy Fund (2013)
A US mutual fund employing a multi-asset,
multi-strategy, alternative investments oriented
‘endowment style’ investment programme.
Advisory services
Diversified hedge fund portfolio white label (2006)
Providing advice and due-diligence on a broad range
of hedge funds products managed by private banks.
Gottex Multi-Asset Balanced Fund (2014)
A UCITS smart beta product with daily liquidity
investing in nine different asset classes. Return
of 6.0% in 2014.
Hedge fund management/ERS (2011)
Transitioning and unwinding legacy hedge fund
portfolio of institutional investor, including work-out
services.
EIM Long Only European Equities (1997)
A UCITS product with daily liquidity investing
in European equities. Return of 6.1% in 2014.
Asia
Milestones
Gottex’s Asian solutions range from discretionary hedge
fund investment solutions via hedge fund seeding to
mainland Chinese investment products in co-operation
with VStone Asset Management.
2014
Hedge fund investment solutions
2013
Gottex Penjing Asia strategy (2005)
The strategy seeks to maximise risk-adjusted return
with moderate volatility from an Asian fund of hedge
funds portfolio, ranging from market independent
strategies to directional L/S equity. Return of 4.5%
in 2014.
Gottex Penjing Asia Equity strategy (2007)
The strategy aims to generate equity-like return
with reduced volatility through investing in Asian
directional L/S equity fund of hedge funds portfolio.
Gottex Penjing Asia Market Independent strategy
(2007)
The strategy pursues steady and moderate
return with low correlation to returns of major
equity indices from an Asian fund of hedge funds
portfolio. Return of 4.2% in 2014.
Gottex Penjing Asia Beta Select strategy (2011)
The strategy aims to achieve long-term capital
growth by making investments in a range of
underlying Asian equity funds. Return of 11.9%
in 2014.
Completion of EIM merger
Launch of US/EU regulated
multi-asset funds
Acquisition of Frontier Investment
Management
Announcement of EIM merger
Launch of Multi-Asset Endowment RIC
Acquisition of Penjing Asset Management
2012
Launch of Alternative Credit Fund
Gottex Real Asset Fund completes
investment period
2011
Launch of Absolute Return Fund
2010
L
aunch of Gottex Solutions Services
Launch of Multi-Asset Endowment Fund
2009
Final closing of Gottex Real Asset Fund
2008
Launch of the first Enhanced Index Product
First advisory mandate
IPO on the SIX Swiss Exchange
2007
Assets reach USD 7 billion
2006
Other investment solutions
Gottex HS Group Asian seeding strategy (2014)
HS Group partners selectively with top-tier
investment teams to establish institutional quality
hedge funds in Asia.
Gottex Yellow Mountain UCITS Fund
(expected launch Q2 2015)
The strategy aims to generate higher returns
by investing in mainland Chinese A-Shares.
2005
Expansion into Asia: Hong Kong office opens 2004
2003
E
xpansion into the US
2002
Launch of the first structured products
2001
Assets reach USD 100 million
2000
First institutional client for Fund of Funds
1999
Launch of the Gottex Market Neutral Fund
1992
Gottex Fund Management founded
CHIEF FINANCIAL OFFICER’S REVIEW
Tim Roniger
Senior Managing Director,
Chief Financial Officer &
Chairman of the Risk Committee
“During an extremely challenging year, the Group
has made a significant reduction in the underlying
cost base, managed the integration of EIM and the
settling down of prior acquisitions into the Group.”
The year under review, 2014, was an extremely
challenging year, with the Group recording a reduction
in AuM and a significant loss. At the same time the Group
has made a significant reduction in the underlying cost
base, managed the integration of EIM and the settling
down of prior acquisitions into the Group.
The operating loss for the year was USD 19.3 million
compared to the prior year of USD 9.8 million. Included
within this loss are total acquisition–related charges of
USD 2.0 million, restructuring costs of USD 2.0 million
and a goodwill impairment charge of USD 1.2 million.
Excluding these costs the operating loss would be
USD 14.1 million compared to an equivalent loss in
the prior year of USD 2.4 million.
The operating environment continues to remain
challenging but the Group has made significant strides in
reducing its cost base, with USD 20 million of annualised
synergies expected to be in place by Q2 2015. As a result
we aim to become operationally breakeven by the end
of 2015.
Group results
Excluding non–cash related items the Group generated
a cash operating loss (before acquisition related and
restructuring charges) of USD 11.9 million (2013: loss of
USD 0.7 million)
Overall, the Group generated an after tax loss for the
year of USD 19.2 million versus a loss of USD 10.6 million
in the prior year.
Revenues
Our revenues are principally composed of fee income,
which comprises the different kinds of fees we earn as
part of our business: management fees, performance
fees, structured product fees, and other fees including
advisory fees.
Management fees
By their nature, management fees represent a more
predictable and sustainable component of revenue
than performance fees as they do not directly depend
on the relevant product’s performance, and as such
management fees represent a significant recurring
revenue stream for Gottex. In most cases, management
fees are calculated by reference to the average AuM
of the relevant funds during the measurement period.
Management fees are recognised in the accounting
period in which the relevant services are provided, and
are generally payable monthly in arrears. We recognise
the management fees as revenue on a monthly basis
and report fees earned but not paid as trade receivables
in our statement of financial position.
Management fees have decreased by 16.5% to
USD 27.9 million from USD 33.4 million in 2013, as
a result of lower assets under management during
the year.
Performance fees
Performance fees are generated as a result of positive
fund performance and are fees that we are entitled
to receive under the fee agreements over the various
funds that we manage. Gottex earned USD 4.5 million
in performance fees, a decrease compared to the figure
of USD 11.9 million in the prior year.
Generally, 25% of performance fees for certain funds
have been deferred in 2014 and held in escrow for
two years in line with our deferred incentive fee
arrangements. During 2014, USD 0.5 million was
released to the Income Statement, and at 31 December
2014, USD an amount of USD 2.8 million is potentially
available for release over the next two years.
Variable costs
The Group pays referral fees to third parties as
commission for client introductions and ongoing client
services and in addition also pays some specific rebates
of management and performance fees to clients.
Gross profit and gross margin
Revenues, net of variable costs, were USD 29.4 million,
down 25.4% on the prior year of USD 39.4 million.
These net revenues as a percentage of gross revenues,
representing the gross margin percentage, and has
increased to 88.3% from 84.8% in the prior year.
Fixed costs
The majority of our fixed costs relate to personnel
expenses, reflecting the Group’s biggest asset: namely
its people. The total operating costs for the year were
USD 47.8 million in 2014, a small reduction on the prior
year figure of USD 48.0 million.
However, included within these costs are amounts
relating to acquisition-related costs: deferred
consideration and intangible assets amortisation,
which under IFRS are required to be expensed within
the consolidated income statement as operating costs.
This charge in 2014 was USD 2.3 million and in 2013 was
USD 4.9 million. (In addition there is a USD 0.3 million
credit (2013: charge of USD 1.2 million) related to
the acquisitions on the face of the income statement.)
Furthermore there are restructuring costs of USD
2.0 million, related principally to the integration of Gottex
and EIM during 2014. The total operating costs for the
year before these acquisition and restructuring costs
would have been USD 43.5 million in 2014 compared
to USD 41.7 million in 2013.
Included within the costs for 2014 are operating costs
relating to the businesses acquired in the current and
preceding years; a full year’s operating costs in relation
to Penjing and Frontier and three months’ in relation
to EIM. The prior year included a full year’s operating
costs in relation to Penjing, and six months’ in relation
to Frontier and no operating costs associated with EIM.
Personnel expenses
In order to attract and retain clients and to manage our
funds successfully, we strive to recruit and retain highly
skilled professionals. As a result the largest portion of
our operating costs relates to the compensation of our
professionals. Personnel expenses for the year ended
December 2014 were USD 32.5 million compared to
USD 36.6 million a year earlier, a net decrease of 11.2%,
however included in personnel costs are acquisitionrelated charges of USD 1.2 million (2013: USD 4.3 million),
mainly comprising an earnout on performance fees,
and restructuring costs of USD 0.4 million, a one-off
charge related to past service benefits on the retirement
benefits liability, and after adjusting for these costs,
personnel expenses have reduced year-on-year by 4.6%.
Wages and salaries
Of the total personnel expenses of USD 32.5 million,
approximately USD 19.8 million or 60.9% related to
salaries (excluding acquisition-related personnel
charges) and approximately USD 5.1 million or 15.7%
related to bonus and profit share remuneration,
compared to total personnel expenses of USD 36.6
million in 2013, of which approximately 51.5% related to
salaries and approximately 24.8% related to bonus and
profit share remuneration. Included within total wages
and salaries in 2014 is an amount of USD 1.0 million
(2013: USD 3.8 million), which relates to cash deferred
consideration on acquisitions, and which under IFRS
is required to be expensed within the consolidated
income statement as personnel costs. Termination costs
of USD 1.1 million have been expensed in the year.
CHIEF FINANCIAL OFFICER’S REVIEW
CONTINUED
Share-based payments
The share-based payments charge for 2014 has
increased slightly to USD 1.5 million from USD 1.3 million
in the prior year. The decrease in the level and value of
equity awards that have been made in recent years,
has been more than offset by the new bonus share
awards in 2014.
Included within this charge is an amount of
USD 0.2 million (2013: 0.5 million) which relates to
deferred consideration on acquisitions, and which
under IFRS is required to be expensed within the
consolidated income statement as personnel costs.
Head count
Full time equivalent head count increased from 110
employees at 31 December 2013 to 133 employees
at 31 December 2014 due principally to the merger with
EIM and the average number of employees over the year
was 108. The ratio of AuM to head count has increased
from USD 48.1 million AuM per employee at 31 December
2013 to USD 61.7 million at 31 December 2014.
Marketing and representation expenses
The Group also incurs marketing and representation
expenses, which include travel and entertainment
expenses and communication costs. These costs have
reduced to USD 1.6 million from USD 1.9 million for
the year ended 31 December 2014.
General and administrative expenses
General and administrative expenses include professional
and consulting fees, occupancy and equipment costs,
business development expenses, information processing
and other costs. This overall cost category increased
by 32.5% to USD 11.0 million (excluding acquisitionrelated charges, related to the amortisation of intangible
assets, of USD 1.1 million and restructuring costs of
USD 1.6 million) for the year ended 31 December 2014
from approximately USD 8.3 million in the prior year.
Net finance income
The net finance income was USD 0.9 million for the
year ended 31 December 2014 compared to net
finance costs of USD 0.3 million for the year ended
31 December 2013 and primarily relates to the reduction
in the value of the put liability associated with the
Frontier acquisition in the year.
Impact of acquisitions
A goodwill impairment charge of USD 1.2 million has
been taken in the year to 31 December 2014 in respect
of the goodwill created as a result of the Frontier
acquisition. This is offset by a credit of USD 0.7 million
mainly related to a reduction in the capitalised
consideration payable to the selling shareholders of
Frontier. The combined transaction costs expensed
in the year relating to the acquisition of EIM were
USD 0.6 million.
Taxation
The overall tax charge was USD 0.3 million for the
year ended 31 December 2014 (2013: credit of
USD 0.3 million), made up of current year taxes of
USD 0.2 million and deferred taxes of USD 0.1 million.
Each year the Group undertakes an evaluation of its
tax position including a transfer pricing review. As the
business diversifies and grows globally, the effective tax
rate may increase reflecting the increasing proportion
of the Group’s earnings among higher tax jurisdictions.
Non-controlling interest
The loss attributable to the non-controlling interest
was USD 0.3 million (2013: USD 0.9 million), which, in
2014, mainly reflects the mix of a 20% minority ownership
of Frontier and the 50% share of losses in the GFMH
ABL Fund.
Loss per share
The basic and diluted loss per share for the year was
USD (0. 57); (2013: USD (0.33)). Potential ordinary shares
are treated as dilutive when, and only when, their
conversion to ordinary shares would decrease earnings
per share or increase loss per share from continuing
operations. The expected effect of the Group’s potential
ordinary shares would be antidilutive and therefore have
been excluded from the calculation for the year ended
31 December 2014 and 31 December 2013.
An adjusted loss per share for continuing operations
has been presented to reflect the results of the
Group in the way that managemet views the business.
The adjusted loss per share has been calculated by
adding back (i) the impairment of the goodwill on the
Frontier acquisition; (ii) share of loss attributable to the
Group in respect of the revaluation of the investment
held in GFMH ABL; (iii) the net recovery of the impairment
of receivable; (iv) termination cost; (v) restructuring
costs; and (v) costs expensed in connection with
the acquisitions of EIM, Frontier and Penjing.
The adjusted basic and diluted loss per share is
USD (0.40) (2013: USD (0.06)).
Balance Sheet
As a result of the three significant acquisitions in recent
years, the Group has goodwill and intangible assets
relating to investment management contracts of
USD 38.2 million on its balance sheet, which form
52.0% of total assets
Net current assets of the Group are USD 0.1 million
(2013: USD 3.8 million) and total equity is USD 35.6
million versus a prior year figure of USD 28.6 million.
Included with non-current liabilities is a retirement
benefit liability of USD 4.8 million (2013: USD 0.6 million),
relating to the pension funds for the Swiss employees
of the Group. Under IAS 19R, the Group is required to
record this retirement benefit liability, but in reality
there is no commitment by the Group or any subsidiary
company to provide any financial assistance to support
any pension liabilities and all pension funds are
outsourced and managed by Swiss Life.
The Group has made significant
strides in reducing its cost base and
management aim to become
operationally breakeven
by the end of 2015
Included with non-current and current liabilities are
shareholder loans from the two largest shareholders
of GFMH of USD 8.6 million at the balance sheet date,
highlighting the commitment from these shareholders
to the future of the Group.
Shareholder Equity
The issued share capital at 31 December 2014
represented 48,502,184 shares.
The Board is not proposing a dividend in the current year.
The payment of future dividends will depend on our
performance, financial position, general economic
conditions and the provisions of applicable company law.
Should the Group accumulate capital which the Board
does not believe is required for further growth, the
Board will give consideration to returning capital to
shareholders in an appropriate manner. The cash and
liquid reserves currently held gives the Group the
flexibility to pursue its strategic aims and so, at present,
there is no intention to distribute to shareholders from
these reserves.
On 30 March 2015 the two largest shareholders
of the Company agreed to provide a loan facility
of USD 2.5 million each, in total USD 5 million, to the
Company which is to be available from 30 March 2015
until 1 November 2016. The interest rate is three month
Libor plus 2.5% and drawings may be made by the
Company on 30 days’ notice. In addition these
shareholders agreed to defer the repayment date of
existing loans of USD 2.4 million from 31 March 2016
to 1 November 2016.
Tim Roniger
Chief Financial Officer
GOTTEX BOARD & EXECUTIVE
MANAGEMENT COMMITTEE
Arpad Busson
Joachim Gottschalk
Non-Executive Director
& Chairman
Became a Non-Executive Chairman of the Company
in 2014. Mr Busson is the founder of the EIM Group,
which was merged with Gottex in September 2014.
Mr. Busson is a founding member of the Alternative
Investment Management Association.
Is a German citizen. He founded the Gottex Group in
1986 and Gottex Fund Management in 1992. Prior to
founding Gottex, Mr. Gottschalk was with the Lausanne
based financial services firm, Tradition SA for 14 years.
Eric Bissonnier
David Staples
Executive Director,
Co-Chief Investment Officer
Alternative Solutions &
Portfolio Manager
& Chairman of the
Audit Committee
Is a French citizen. Prior to the merger in September
2014, Mr Bissonnier was the Chief Strategist, the
Chairman of the Global Investment Committee and
President of the Executive Committee of the EIM Group.
Became a Non-Executive Director of the Company
in 2007. Previously Mr. Staples was a partner at
PricewaterhouseCoopers LLP and Head of Tax for
the south-east region of the UK.
Christopher Preston
William Woolverton
Senior Managing Director
& General Counsel
in 2014. Mr. Preston is a principal of Preston Capital
Partners, providing consultancy services to private
and institutional clients.
Is an American citizen. He joined the Group in
October 2005. Previously Mr. Woolverton was
a senior member of the financial services group
Dechert LLP, an international law firm.
Michael Azlen
Hywel Evans
Chief Investment Officer
Managing Director
& Deputy General Council
Is a Canadian citizen He joined the Group in July 2013
when Gottex acquired a controlling interest in Frontier
Investment Management. Mr. Azlen has more than
20 years of experience in asset management.
Is a British citizen. Prior to the merger in September 2014.
Mr Evans was a Managing Director and General Counsel
of the EIM Group. Prior to joining EIM, Mr. Evans spent nearly
ten years at Man Group Plc as senior in-house counsel.
Maximillian Gottschalk
Kevin Maloney
Executive Director,
Head of Asian Business
& Head of Marketing
Executive Director,
Co-Chief Investment
Officer & Head of Funds
of Funds Business
Is a German citizen. He joined the Group in August
1998 and is the co-founder of Gottex Fund of Hedge
Funds Business. Previously Mr. Gottschalk was at
Bear Stearns & Co Inc., New York.
Is an American citizen. He joined the Group in September
2003. Previously Mr. Maloney was a Managing Director
at Putnam Investments, in the areas of Product Design,
Financial Engineering and Quantitative Research.
Bruno Pfister
Michael Garrett
& Senior Director
Became a Non-Executive Director of the Company in 2007.
In December 2014, Mr. Pfister joined Rothschild as chairman
of Rothschild’s wealth management and trust unit and
also chairman of the board of Rothschild Bank Zurich.
Tim Roniger
Chief Financial Officer &
Chairman of the Risk Committee
Is a Swiss citizen. He joined the Group in May 2004.
Previously Mr. Roniger spent 13 years at Merrill Lynch
in senior roles in both the Fixed Income and Equity
Capital markets divisions.
in 2007. Mr. Garrett retired from Nestlé SA as
Executive Vice President in 2005 but continues
to serve as a Board member for Nestlé India.
Andre Keijsers
Head of Corporate Strategy
& Human Resources
Is a Dutch citizen. He joined the Group in January 2008.
Previously Mr. Keijsers was the CFO of CME’s Swapstream
group, and the Chief Strategy Officer at Scoot.com,
a multi-channel directory enquiry service.
Board & Executive Management Committee
Board
Executive Management
Committee
DIRECTORS’ REPORT
The Directors of Gottex Fund Management Holdings
Limited (‘GFMH’ or ‘the Company’) present their Annual
Report to shareholders together with the audited
consolidated financial statements of the Company
and its subsidiaries for the year ended 31 December
2014. The purpose of the Annual Report is to provide
information to members of the Company. This Annual
Report contains certain forward looking statements with
respect to the operations, performance and financial
condition of the Group. By their nature, these statements
involve uncertainty since future events and circumstances
can cause results to differ from those anticipated.
Nothing in this Annual Report should be construed as a
profit forecast. The following definitions apply throughout
this report unless the context requires otherwise.
‘Company’ means GFMH, a limited liability company
registered in Guernsey with a registered number 47547.
The ‘Group’ means the Company and its subsidiaries
and subsidiary undertakings.
Incorporation
GFMH was incorporated in Guernsey on 15 August
2007. It operates in accordance with the provisions of
The Companies (Guernsey) Law, 2008, as amended.
Principal activity
The principal activity of the Company is to be the
ultimate parent company of the Group.
Directors’ responsibilities for
the financial statements
The Directors are responsible for preparing the
consolidated financial statements and the Company’s
financial statements in accordance with applicable
Guernsey law and generally accepted accounting principles.
Guernsey company law requires the Directors to prepare
financial statements for each financial year which gives
a true and fair view of the state of affairs of the Company
and of the profit and loss of the Company for that
year. In preparing those financial statements and the
consolidated financial statements, the Directors should:
select suitable accounting policies and then apply
them consistently;
make judgements and estimates that are reasonable;
and
prepare the consolidated accounts and the
Company’s accounts on the going concern basis,
unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper
accounting records of the Company which are sufficient
to show and explain its transactions and are such as to
disclose with reasonable accuracy, at any time, the
financial position of the Company and to enable the
Directors to ensure that its Income Statement and
Statement of Financial Position are prepared properly
and in accordance with any relevant enactment for the
time being in force. The Directors are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
So far as the Directors are aware, there is no
relevant audit information of which the Company’s
auditor is unaware and each has taken all the steps he
ought to have taken as a director to make himself aware
of any relevant information and to establish that the
Company’s auditor is aware of the information.
Results
The results of the operations of the Group for the year
ended 31 December 2014 are set out in the Consolidated
Financial Statements on pages 36 to 86 of the
Annual Report.
The loss of the Group for the financial year ended
31 December 2014 was USD 19.2 million (2013:
USD 10.6 million). Revenue decreased by 28.2% from
USD 46.4 million in 2013 to USD 33.3 million in 2014.
Business review
Within this report is set out a fair review of the
business of the Group during the financial year ended
31 December 2014, including an analysis of the Group
at the end of the financial year.
This information is shown in the following sections:
Chairman and Chief Executive Officer’s statement
on pages 2 to 5;
Business Review on pages 6 to 9; and
Chief Financial Officer’s Review on pages 10 to 13.
Dividends
Annual General Meeting
The Directors do not recommend any dividend in respect
of the year of 2014.
The Annual General Meeting of the Company will be
held in Guernsey on 24 April 2015 at Redwood House,
St Julian’s Avenue, St Peter Port, Guernsey, GY1 1WA
at 2.00pm, BST.
Directors
The Directors are responsible for the management of
the business of the Company and may exercise all
powers of the Company subject to applicable legislation
and regulation, and the Company’s Memorandum and
Articles of Incorporation.
The names of the Directors as at the date of this
report together with biographical details are set out
on pages 14 and 15 of the Annual Report. The details
of the Directors’ interests are shown in the Corporate
Governance Report on page 30.
Employees
The Group employed 133 people as at 31 December
2014 throughout its offices located in Boston, Guernsey,
Hong Kong, Nyon, London, New York, and Monaco.
The Notice of the Annual General Meeting accompanies
this report.
The report was approved by the Board of Directors on
30 March 2015.
Joachim Gottschalk
Kevin Maloney
Chief Executive Officer Executive Director
30 March 2015
The Group is committed to providing equal opportunity
for all employees and applicants without regard to race,
colour, religion, sex, sexual orientation, age, national origin,
disability, veteran status, or any other category protected
by law. This policy applies to all employment practices
and personnel actions including advertising, recruitment,
testing, screening, hiring, selection for training, upgrading,
transfer, demotion, layoff, termination, rates of pay, and
other forms of compensation.
Going concern
The Directors consider that the Company has
adequate resources to continue in operation for
the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the
consolidated financial statements.
Secretary
The Secretary of the Company for the year ended
31 December 2014 and subsequently to the date of this
report was Elian Corporate Services (Guernsey) Limited.
Auditors
A resolution to reappoint Ernst & Young Ltd as auditors
to the Company and to authorise the Directors to
determine their remuneration will be proposed at
the Annual General Meeting.
CORPORATE GOVERNANCE REPORT
General framework
To avoid duplication of information, cross-referencing
is made in some sections.
Gottex Fund Management Holdings Limited (‘GFMH’) 1
has adopted this Corporate Governance Report for
the year ended 31 December 2014. Unless otherwise
indicated, the information provided in this report reflects
the situation at 31 December 2014.
1. Group structure and shareholders
1.1 Group structure
GFMH is the holding Company of the Group and
has its registered office in St. Peter Port, Guernsey.
Its registered shares are listed on the SIX and are
included in the Swiss Performance Index (‘SPI’).
This Corporate Governance Report explains the
principles of management and control of the Group
at the highest corporate level in accordance with
the Directive on Information relating to Corporate
Governance (the Corporate Governance Directive, RLCG)
issued by the SIX Swiss Exchange (‘SIX’).
At 31 December 2014, its market capitalisation amounted
to approximately CHF 70.3 million (based on the closing
price of its shares of CHF 1.45 on 31 December 2014).
The principles of the Group’s corporate governance are
set forth in the Articles of Incorporation (the ‘Articles’) and
the organisational regulations of the Board of Directors
(‘Organisational Regulations’). These documents will be
reviewed by the Board of Directors (the ‘Board’) from
time to time to ascertain whether they are appropriate
for their purpose.
Swiss Security Number: 3381261
ISIN: GG00B247Y973
SIX Ticker Symbol: GFMN
Common Code: 032705758
Gottex Fund Management Holdings Limited Corporate Structure
GFMH
100%
EIM
Lux
EIM
Asia
EIM
USA
E.I.M.
Holding
FIM Frontier IM (Jersey) Limited, Frontier Ltd
& Frontier Investment Management LLP UK
GAL Gottex America Limited (Bermuda)
100%
GMSA
100%
GFM Sàrl Gottex Fund Management Sàrl (Switzerland)
100%
GFM US Gottex Fund Management Limited (Delaware)
GFMH Gottex Fund Management Holdings Limited
(Guernsey)
GUS
GFM HK Gottex Fund Management (Hong Kong) Limited
60%
100%
100%
86.98%
100%
E.I.M.
SA
GAL
GSP Gottex Structured Products Ltd (Bermuda)
GSS Gottex Solution Services Sàrl (Switzerland)
PAML Penjing Asset Management Ltd (Cayman)
PAM HK Gottex Penjing Asset Management (Hong Kong)
SWCP Ltd South West Capital Ltd (Cayman)
10.8%
HSL
EIM Lux EIM Participations Luxembourg SA
(Luxembourg)
EIM Asia EIM (ASIA) PTE, LTD (Hong Kong)
EIM USA EIM Management (USA) Inc. (New York)
86.98%
FIM, Ltd
& IM LLP
13.02%
GP
Sàrl
LumRisk LumRisk SA (Nyon)
56%
E.I.M. Holding E.I.M. Holding SA (Nyon)
ZGA
E.I.M. SA E.I.M. SA (Nyon)
EIM Monaco EIM (Monaco) S.A.M (Monaco)
EIM UK EIM (United Kingdom) Ltd (London)
GFM
Sàrl
2PM 2PM Monaco S.A.M. (Monaco)
ERG ERG Asset Management LLC (Delaware)
GFMH ABL GFMH ABL Ltd (Cayman)
84.21%
Asia MFO Gottex Asia Multi-family Offices Ltd
(Cayman)
15.79%
100%
100%
2PM
GP Sàrl Gottex Partners Sàrl (Luxembourg)
EBT Employee Benefit Trust (Guernsey)
Staples
Rodway
FIM,
Jersey
EIM
Monaco
EIM
UK
GMSA Gottex Management SA SICAR (Luxembourg)
GUS Gottex U.S. Management Sàrl (Luxembourg)
33.3%
GSP
100%
100%
13.02%
100%
GFMH
ABL
80%
100%
GTX UK Gottex Asset Management (UK) Limited
Asia
MFO
EBT,
Guernsey
50%
LumRisk
Abbreviation Key
37.04%
PAML
100%
PAM
HK
100%
GFM
HK
100%
GTX
UK
100%
GSS
100%
SWCP
LTD
GFM
US
50%
ERG
1 ‘Gottex’, GFMH or the ‘Company’ and together with its subsidiaries, the ‘Group’.
Staples Rodway Staples Rodway Funds Limited (NZ)
HSL HS Group Ltd (Hong Kong)
ZGA Zenith Advisors Pty Ltd (Australia)
1.2 Significant shareholders
The following table shows the number and percentages of shareholders who held 3% or more of shares of GFMH
at 31 December 2014.
Name of shareholder
Rozel Trustees (Channel Islands) Limited
Gottex Fund Management Holdings Limited1
Joachim Gottschalk & Associates Ltd 2
RBC cees Trustee Limited and RBC Dexia Trust*
Opal Fortune Inc3
Bennett Peter William
Other
Total of shares
1
Number
%
14,000,000
373,880
8,979,050
4,129,169
2,235,210
1,651,082
17,133,793
48,502,184
28.86
0.78
18.51
8.51
4.61
3.40
35.33
100.00
*Relates to Employee Benefit Trust
For a full review of the disclosure reports that were
made to the Company and the SIX Disclosure Office
during the year 2014, and then published on the SIX
electronic publication platform in accordance with article
20 of the Swiss Federal Act on Stock Exchanges and
Securities Trading, please refer to the search facility
of the SIX Disclosure Office at: http://www.six-swissexchange.com/shares/companies/major_shareholders_
de.html
1.3 Cross-shareholdings
The Company is not aware of cross-shareholdings
exceeding 3% of the capital or voting rights on both sides.
2. Capital structure
2.1 Capital structure
The Company’s issued share capital at 31 December
2014 is CHF 48,502,184 divided into 48,502,184 shares
of CHF 1 per share.
2.2 Authorised and conditional share capital
Unless otherwise provided in the Articles, the Board
may issue new shares out of the authorised share
capital only with the authority of a resolution of a
General Meeting adopted by a simple majority of the
votes cast by shareholders at a General Meeting of
shareholders (the ‘General Meeting’).
1By virtue of their transaction agreement dated December 15, 2013, Rozel
Trustees (Channel Islands) Limited and the Company constitute an organised
group under the Swiss Federal Act on Stock Exchanges and Securities Trading
and together hold 14,373,880 shares, 29.64% of issued share capital. The
transaction agreement relates to the merger of the businesses of the Company
and the EIM Group. This merger was based on an exchange of shares where the
former shareholder of the EIM Group, Rozel Trustees (Channel Islands) Limited,
received 14,000,000 shares in the Company. Rozel Trustees (Channel Islands)
Limited is the trustee of The Albion Trust, whose beneficiaries include members
of the Busson family. The transaction agreement provides, among others, that
the Company could seek to acquire from the GMFH Employee Benefit Trust (EBT)
700,000 shares in the Company and, upon request by Rozel Trustees (Channel
Islands) Limited, would reduce its share capital by cancelling such shares.
According to the Articles, the Board has been authorised
to issue new shares out of the authorised share capital
as follows, without any requirement for additional
approval at a General Meeting:
Article 4: General reserve of shares
In respect of any shares issued under the authority
of this Article, the Directors may decide to restrict or
exclude the pre-emptive subscription rights of existing
members, as set out in Article 7(a), without approval
of the members in General Meeting provided that the
requirements of Article 7(e) are met.
Out of the authorised and unissued share capital of
the Company, the Directors may issue in aggregate
up to a current maximum of 6,000,000 shares of
CHF 1.00 each for any purpose in the best interests
of the Company that the Directors deem fit.
Employee Share Ownership Plans
2,724,800 shares of CHF 1.00 each following
due exercise of any options granted to the employees
of the Company or its subsidiaries in accordance
with and as further set out in one or several employee
share ownership plans as may be adopted by the
Directors from time to time (the ‘Employee Share
Ownership Plans’).
Please see section 2.7.
2Joachim Gottschalk and Associates Limited is owned by the Gottschalk Family Trust.
3Opal Fortune Inc is a Bahamian group owned and controlled by John-Paul Bailey.
CONTINUED
2.3 Changes in capital
As of 31 December 2014, the Company’s issued share
capital was CHF 48,502,184 divided into 48,502,184
shares of CHF 1 per share.
In September 2014, the Company issued 14,000,000
shares in respect of the acquisition of the EIM Group,
8,100,000 were delivered to Rozel Trustees (Channel
Islands) Limited on issue and 5,900,000 shares were
held in escrow until 15 January 2015, when they were
delivered to Rozel Trustees (Channel Islands) Limited.
In the last quarter of 2014 the Company agreed
in principle to enter into an agreement to purchase
700,000 shares from the GFMH Employee Benefit
Trust (EBT) and to choose to cancel these shares
by way of a capital reduction.
In 2012, in an Extraordinary General Meeting, a share
buyback programme was approved. The objective of
the share buyback programme is to offset the dilution
effect of the newly issued shares which form part of
the consideration for any acquisition. The initial key
parameters of the programme are as follows:
Company shares authorised to be acquired is
an initial 1,750,000 shares;
the minimum price to be paid shall be 10% below
the average market price of the shares on the SIX
on the most recent trading day before the purchase
is made;
the maximum price to be paid shall be 10% above
the average market price of the shares on the SIX
on the most recent trading day before the purchase
is made;
on any given trading day, purchases shall be limited
up to a maximum of 25% of the average daily trading
volume of the shares on the SIX calculated by
reference to the previous 30 trading days; and
such authority expired on the conclusion of the
Company’s Annual General Meeting on 16 April 2014.
Under this share buyback programme, the Company
had repurchased 532,492 shares in the market,
representing 1.1% of outstanding shares, at an average
price of CHF 2.02 per share for a total consideration
of CHF 1.1 million.
The Company does not intend to renew the share
buyback programme at the present time.
Under a Deed of Option, 3,255,086 GFMH shares have
been issued over the years from 2009 to 2012 to the
two minority shareholders of Gottex US Management
Sarl, SICAR, a subsidiary company, and within the three
years ended 31 December 2014, the number of these
shares issued was 2,946,312. Since 2 October 2012
Gottex US Management Sarl, SICAR has been a fully
owned subsidiary of the Company.
2.4 Shares
The only equity securities that the Company has issued
are registered shares with a nominal value of CHF 1.00
each. The issued shares are fully paid.
Each such share confers the right to one vote at the
Company’s shareholders’ meetings, subject to the power
of the Board under the Articles to withdraw voting rights
in certain circumstances and except for shares recorded
in the register of members in the default nominee
account of SIS SegaIntersettle AG (‘SIS’) which, as a
result of being recorded in this account and for the
period for which they continue to be so recorded, shall
not have any voting rights nor related rights (right to
request that the Board call a General Meeting, right to
put a matter on the agenda of a General Meeting, right
to participate, be represented or speak at General
Meetings). Each share equally entitles its holder to (i)
dividends; (ii) a share of the surplus liquidation proceeds
(if any) in the case of a liquidation of the Company; and
(iii) pre-emptive subscription rights.
2.5 Profit sharing certificates
The Company has no profit sharing certificates in issue.
2.6 Limitation on transferability and nominee
registrations
The transferability of the shares is restricted by virtue
of the Articles.
2.6.1 Limitations on transferability of the shares
Transfer of the shares is effected by entry into the
Company’s register of members upon corresponding
application of the acquirer or its nominee. Until the
acquirer has been notified to the Company, the shares
sold are recorded in the register of members in the
default nominee account of SIS and carry neither voting
rights nor the right to request that the Board call a
General Meeting, the right to put a matter on the agenda
for a General Meeting, or the right to participate, be
represented or speak at General Meetings.
The Board may, in accordance with the Articles, refuse to
register a transfer of a share. In such a case, the Board
will send to the transferee a notice of refusal within 20
days after the date on which the application for
registration was lodged with the Company and the
transferee will be registered in the register of members
without voting rights in respect of those shares.
As to the authority conferred to the Board by the Articles
to withdraw voting rights attaching to shares, please see
section 6.1.1 below.
2.6.2 Reason for granting exceptions in the year
under review
Not applicable.
granted under the employee benefit plan, of which
300,000 shares have been issued to the Employee
Benefit Trust in prior years, leaving a remaining
2,724,800 shares to be issued.
2.6.3 Admissibility of nominee registrations,
along with an indication of percentage clauses,
if any, and registered conditions
Please see section 6.1.1.
Long-Term award plans
The Board has put in place Long-Term award plans
which align Senior members of the management team
with the long-term goals of the Group. The plans will vest
over three years and such awards would be subject to
meeting certain targets and objectives of the Company.
2.6.4 Procedures and conditions for cancelling
privileges and limitations on transferability set forth
in the Articles
Not applicable.
In the current year as part of the bonus award restricted
share awards have been made.
2.7 Convertible bonds and warrants/options
3. Board of Directors
During 2013, the Company entered into a call and put
arrangement with the selling shareholders of Frontier
over the remaining 20% of the outstanding shares of
Frontier, currently held as non-controlling interests.
The Company has various employee share option and
employee share plans in place in which all employees of
the Group are eligible to participate (refer to details in
the Financial Statements note 28). The Company may
issue a number of shares corresponding to up to 10%
of the Company’s outstanding share capital. The current
Articles authorise the Board to issue a maximum
of 3,024,800 shares in total in connection with awards
As at 31 December 2014, the Board consisted of nine
members (each, a ‘Director’), five of whom are NonExecutive Directors. Subject to certain non-delegable
powers and duties of the Board, the Board has
delegated the management and the operative and
administrative day-to-day business of the Company and
its subsidiaries to the Executive Management Committee
(‘EMC’). The scope of delegation comprises all powers
which are not reserved to the Board by Guernsey Law,
the Articles or the Organisational Regulations.
3.1 Members of the Board of Directors*
Name
Age
Nationality
Education
Joachim Gottschalk
Maximilian Gottschalk
68
42
German
German
Business
Finance and Marketing
Eric Bissonnier
48
French
Kevin Maloney
57
American
Arpad Busson
Michael W.O. Garrett
Bruno Pfister
Christopher Preston
David Staples
51
71
55
60
57
French
British & Australian
Swiss
British
British
Position
Head of Asian Business,
Head of Marketing
Economics
Co-Chief Investment Officer
Finance and Economics
Co-Chief Investment Officer,
Head of Funds of Funds Business
Business
Non-Executive Chairman
Business Administration
Law, Finance
Business
Economics and Accounting Non-Executive Director
* Douglas Brown resigned from the Board as of 22 April 2014 and William Landes resigned from the Board as of 30 June 2014.
3.1.1 Professional Background
Chairman of the Board
Arpad Busson is a French citizen and the Non-Executive
Chairman of the Company. In the 1980s, Mr. Busson
began raising assets for a number of hedge fund
managers who have since risen to global prominence.
In 1992, Mr. Busson founded the EIM Group in order to
provide tailor made solutions to the growing institutional
market for hedge funds and built the EIM Group into
one of the leading players in the industry. Mr. Busson
has served as an industry expert on a number of panels
for French, Swiss, German and US regulatory bodies,
and is a founding member of the Alternative Investment
Management Association. Mr. Busson is also actively
engaged in extensive charitable work, in particular as
a founding trustee of ARK (Absolute Return for Kids).
CONTINUED
Joachim Gottschalk is a German citizen and Chief
Executive Officer of GFMH. He founded the Gottex Group
in 1986 and Gottex Fund Management in 1992. Prior to
founding Gottex, Mr. Gottschalk spent 14 years with the
Lausanne based financial services firm Tradition SA. In
1980 Mr. Gottschalk was appointed Director responsible
for Continental Eastern Europe, and in 1984 he was
appointed to the board of Tradition SA and Tradition
Holding SA. Mr. Gottschalk started his career in 1965 with
Dresdner Bank AG in Munich, where he spent four years
prior to relocating to Lausanne.
Board of Directors and EMC members
(A) Board of Directors
Max Gottschalk is a German citizen, Senior Managing
Director, Head of Asian Business and Head of Marketing.
He joined the Group in August 1998 and is the co-founder
of Gottex’s Fund of Hedge Funds Business. He launched
Gottex’s first Fund of Hedge Fund product in 1999 and
ran the European business activity until 2011, when he
moved to Hong Kong to grow Gottex’s business in Asia.
Prior to joining the Group, Max worked at Bear Stearns
& Co Inc, New York, where he was responsible for hedge
fund sales in the fixed income derivatives group.
Mr. Gottschalk has a BA in Finance, Marketing and
International Business from the University of Virginia
where he graduated with Honours.
Kevin Maloney is an American citizen, Senior Managing
Director, Co-Chief Investment Officer and Head of
Funds of Fund Business. Prior to joining the Group in
2003 he worked for Putnam Investments where he
was a Managing Director, Head of Putnam’s Product
Design Team and the Director of the Financial
Engineering, and the Director of Quantitative Research
in Fixed Income. Previously, Dr. Maloney was a professor
of finance and economics at the Amos Tuck School
of Business at Dartmouth College. He has an MA
and PhD in Finance and Economics from Washington
University and a BA in Economics from Trinity.
Eric Bissonnier is a French citizen and Senior Managing
Director, Co-CIO Alternative Solutions. He began his
professional career as an MIS Analyst at Chase Private
Bank in Geneva where he subsequently managed
discretionary multi-asset class and multi-currency
portfolios. In 1998, E.I.M. S.A. recruited Mr. Bissonnier as
Hedge Fund Portfolio Manager and Research Analyst.
In 2003 he was appointed Chief Investment Officer for
Europe and Asia and Head of Portfolio Management and
Research. Mr. Bissonnier was President of EIM’s Executive
Committee and Chairman of the Global Investment
Committee. Mr. Bissonnier joined E.I.M. S.A. in November
1998 and joined Gottex with the completion of the merger
of the two firms in 2014. He is currently Co-CIO,
Alternative Solutions for the Gottex Group, member of
the Executive Committee and a Director of Gottex Fund
Management Holdings. He is a frequent speaker on
alternative strategies, asset allocation and risk
management at investment conferences worldwide. Mr.
Bissonnier holds an MSc in Economics from the University
of Geneva (Switzerland) and is a CFA Charter Holder.
Michael Garrett is a British and Australian citizen and
a Non-Executive Director. He became a Director of the
Company in 2007. Mr. Garrett began his 44-year career
with Nestlé in 1961 and has worked in Switzerland,
Australia, the UK and Japan. In 1974, Mr Garrett headed
Nestlé’s confectionery business in the UK before taking
a position in Australia first as Marketing Director and
subsequently as Managing Director of Nestlé Australia
Ltd. Mr. Garrett was assigned to Japan as Head of
Market between 1990 and 1993 before being appointed
as Zone Director and Member of the Executive Board of
Nestlé S.A., responsible for Asia and Oceania in March
1993. In July 1996, Mr. Garrett’s responsibilities were
expanded to include Africa and the Middle East. Mr.
Garrett sat on the World Trade Organisation Business
Advisory Council in Switzerland between 2002 and
2005 and was also a member of the Lausanne/Tokyo
Business Leaders Club and a visiting International Fellow
of the Sir William Tyree Foundation of the Australia
Industry Association. Mr. Garrett is a Board Member of
Nestlé India and also serves as a non-executive director
on the boards of Bobst Group in Switzerland and Hasbro
Inc. Mr. Garrett retired as a Non-Executive Director
from the board of Prudential Plc on 31 August 2013.
Mr. Garrett was recently appointed as a Member of the
Finance and Performance Review Committee of the
Board of the Prince of Wales International Business
Leaders Forum as well as being an international member
of the Swaziland Business and Economic Advisory Panel
under the auspices of the Global Leadership Foundation,
London. Mr. Garrett graduated from the IMD Business
School in Lausanne, Switzerland.
Bruno Pfister is a Swiss citizen and a Non-Executive
Director. He became a Director of the Company in 2007.
Mr. Pfister began his career working for Chase
Manhattan Bank in London and Geneva. Between 1988
and 1996, Mr. Pfister was a management consultant for
McKinsey & Co. In 1996, Mr Pfister joined LGT Group
where he assumed the responsibility for various strategic
projects before being appointed as Group CFO and CFO
of LGT Bank in Liechtenstein. In 1999, as a member of the
Credit Suisse Banking Executive Board, Mr. Pfister took
over as Head of Customer Segment and Product
Management at Credit Suisse. Mr. Pfister was with the
Swiss Life Group from August 2002 until 1 January
2006 as Chief Financial officer, from 1 January 2006, as
CEO International and from May 2008 until June 2014,
when he left the Group, as Group CEO. In December
2014, Mr Pfister joined Rothschild as chairman of
Rothschild’s wealth management and trust unit and
also chairman of the board of Rothschild Bank Zurich.
Mr. Pfister graduated from the University of Geneva with
a Master’s Degree in Law before being called to the bar
in Geneva. Mr. Pfister has an MBA from the Graduate
School of Management in Los Angeles.
David Staples is a British citizen, a Guernsey resident
and a Non-Executive Director. He became a Director
of the Company in 2007. He was a partner in
PricewaterhouseCoopers LLP (‘PWC’) from 1990 to 2003
and Head of Tax for the south-east region of the UK. Prior
to that he was Head of Tax Training and worked in both
the Audit and Financial Services teams. Since leaving
PWC, Mr. Staples has joined the boards of a number of
listed companies currently: MedicX Fund Limited (as
Chairman), Aberdeen Private Equity Fund Limited,
Henderson Far East Income Limited, Duet Real Estate
Finance Limited (as Chairman) and is also a nonexecutive director of Global Fixed Income Realisation
Limited. He is also on the Board of five private equity
funds advised by Apex and HSBC Private Bank (C.I.)
Limited. He is a Fellow of the Institute of Chartered
Accountants in England and Wales and an Associate of
the Chartered Institute of Taxation. He holds the Institute
of Directors’ Diploma in Company Direction and has a
BSc in Business Economics and Accounting from the
University of Southampton.
Christopher Preston is a British and a Swiss citizen and
a Non-Executive Director. He became a Director of the
Company in 2014, following a 30 year career in banking
and investment management, of which he spent more
than half on the executive board with institutions in the
UK, Switzerland, and Germany. Mr. Preston is a principal
of Preston Capital Partners, providing consultancy
services to private and institutional clients. His previous
executive posts include Country Manager for Bank of
America, CFO for Rothschilds Bank Zurich, Division
Executive for Citigroup Private Bank, Division Executive
for the Banque Cantonale Vaudoise, and CEO for Piguet
Galland & Cie. He holds, or has held, a number of nonexecutive positions including as Chairman, Swisscanto
Holding AG, Gérifonds S.A, Rothschild Fund Management
AG, Banque Piguet S.A., Rothschild Bank Switzerland (C.I.)
Ltd, and Citigroup Switzerland S.A. He holds a degree
in Law from Southampton University and a joint MBA
from Cranfield Institute of Technology and INSEAD.
3.1.1.1 Operational management tasks of the members
of the Board of Directors
Messrs. Busson, Garrett, Pfister, Preston and Staples
are Non-Executive members of the Board, while Messrs.
J. Gottschalk, M. Gottschalk, Maloney and Bissonnier
are members of the Board and the EMC.
3.1.1.2 Information on Non-Executive members of the
Board of Directors
All Non-Executive members of the Board, except for
Mr. Busson, independent, were not previously members
of the Gottex management and have no important
business connections with Gottex.
3.2 Other activities and functions
Please see above section 3.1.1 for each Directors’ other
activities and functions.
3.3 Elections and term of office
3.3.1 Principles of election procedures and limits on
term of office
The members of the Board are elected by a simple
majority of the votes cast at the General Meeting.
According to the Articles, the Board must consist of at
least seven members. The members of the Board shall
be elected annually at the Annual General Meeting.
There is no age limit at which a Board member is
required to retire. The office of a Board member shall
be vacated if:
(i)he ceases to be a Board member by virtue of any
provision of Guernsey Law or becomes prohibited
by Guernsey Law from, or is disqualified from, being
a Board member;
(ii) he resigns from office by notice to the Company;
(iii)the General Meeting of shareholders resolves by
ordinary resolution; or
(iv)he is subject to re-election and is not re-elected.
3.3.2 Time of last election and remaining term of office
Name
Last Election
Term Expires
Position
Joachim Gottschalk
2010
2012
2015
2015
Bruno Pfister
David Staples
Kevin Maloney
Arpad Busson
Eric Bissonnier
Christopher Preston
2012
2012
2010
2013
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
Head of Asian Business, Head of Marketing
Senior Managing Director, Co-Chief Investment Officer
Chairman and Non-Executive Director
Senior Managing Director, Co-Chief Investment Officer
CONTINUED
3.4 Internal organisational structure
3.4.1 Allocation of tasks within the Board of Directors
Name
Joachim Gottschalk
Kevin Maloney
Eric Bissonnier
Arpad Busson
Bruno Pfister
Christopher Preston
David Staples
3.4.2 Tasks and area of responsibility for each
committee of the Board of Directors
Audit Committee
The Audit Committee is comprised of Messrs. Staples
(Chairman), Pfister and Preston all of whom are
independent and are deemed financially literate.
The Audit Committee’s function is to assist the Board
in overseeing the executive management of the
Company’s financial reporting process, including
monitoring the integrity of the Company’s financial
statements and the independence and performance
of the Company’s external auditors.
The principal responsibilities of the Audit Committee are:
to review the adequacy of the system of internal
accounting procedures of the Company and the
Group, and to oversee that effective systems
of internal controls for finance matters and for
non-financial operating data are maintained;
to oversee that the financial performance of
the Company is properly measured, controlled
and reported;
to discuss the audit procedures with the auditors;
to review the audit results and related management
letters;
to review the services performed by the external
auditors of the Company in connection with
determining their independence;
to review the reports of the internal and external
auditors and;
to discuss their contents with the auditors and with
the EMC;
to review and discuss the interim financial statements
with the EMC, and to review and discuss the annual
financial statements with the EMC and the external
auditors;
to review periodically the financial results of the
Company and the Group as achieved;
Independent
Director
Committee
Audit
Committee
Lead Director
X
X
X
X
X
Chairman
Nomination
and Compensation
Committee
Chairman
X
X
to have overall supervisory responsibility to oversee
the proper implementation of the financial strategy
as approved by the Board;
to recommend any share repurchase programme
for approval by the Board;
to review and oversee the ongoing compliance of the
Company and the Group with legal and regulatory
requirements, accounting standards and the rules
and regulations of the SIX Swiss Exchange; and
to approve the form and contents of any press release
containing information about the Group’s earnings.
The Audit Committee may obtain advice and assistance
from internal or external legal, accounting or other
advisors as it deems advisable without having to seek
Board approval. The Audit Committee met four times
in 2014.
Nomination and Compensation Committee
The Nomination and Compensation Committee is
comprised of Messrs. Garrett (Chairman), Pfister, and
Staples, and all members are independent. The
Nomination and Compensation Committee’s function is
to assist the Board in performing both its management
and supervisory duties, in particular with regard to
planning the succession of members of the Board and
the Senior Management of the Company and the Group
as well as compensation of the members of the Board
and the Senior Management.
The principal responsibilities of the Nomination and
Compensation Committee are:
search and review of potential candidates qualified
to become Board members, and recommendation
of such individuals to the full Board for a nomination
for election by the shareholders;
review of nominations for re-election of Board
members;
recommendation of Board members for appointment
to a Board committee;
review of appropriateness of continued service on
the Board of Board members whose circumstances
(including business or professional affiliations or
responsibilities) have changed or who contemplate
accepting a directorship on another public group
board or an appointment to an audit or compensation
committee of another public group board;
review of the criteria, objectives and procedures
for selecting members of the EMC;
make recommendation to the Board for the
appointment of the members of the EMC (upon
motion of the Chief Executive Officer);
review of the general compensation strategy of the
Company and the Group;
make recommendations for approval by the Board of
compensation and benefits programmes (including in
respect of severance payments and payments upon
or in view of retirement) for the members of the EMC;
review and make recommendations for approval by
the Board of the terms of employment between the
Group and any member of the EMC;
recommendations for approval by the Board of the
remuneration of the Non-Executive Board members;
and
oversight of the system and procedures for the
education, development and orderly succession of
senior members throughout the Group, including,
at least annually, review of the short- and long-term
succession plans for the CEO and other Senior
Management positions.
The Nomination and Compensation Committee met
five times in 2014.
Independent Director Committee
The Independent Director Committee comprises Messrs.
Garrett (Lead Director), Pfister, Preston and Staples.
Each member must be disinterested in any particular
transaction upon which the Independent Director
Committee is required to give its recommendation to
the Board. The members of the Independent Director
Committee are responsible for protecting the interests
of the non-controlling shareholders of the Company.
The Board shall only resolve certain matters if a majority
of the members of the Independent Director Committee
so recommends.
Such matters are:
a proposed merger, takeover or other business
combination of the Company with any entity that is
controlled directly or indirectly by all or part of the
‘significant shareholders’ (which are shareholders (i)
who have, or in the three years preceding the relevant
transaction had, a function as a member of the
Board or the Senior Management of the Group, and
(ii) who, together with their related persons, directly or
indirectly hold more than 3% of the Company’s issued
voting rights) as long as such significant shareholders
collectively hold more than 33⅓% of the Company’s
issued voting rights;
any other related party transaction, other than as
to compensation, involving the Company or any
subsidiary on the one hand and all or part of the
significant shareholders (or any related persons
thereof) on the other hand;
a proposed repurchase by the Company of all the
shares not owned by the significant shareholders
as long as the significant shareholders directly or
indirectly hold more than 33⅓% of the Company’s
outstanding voting rights; or
any change to the powers and duties of the
Independent Director Committee.
The Independent Director Committee met four times
in 2014.
3.4.3 Work methods of the Board of Directors and
its committees
The Board meets as often as necessary, at least four
times a year. Meetings are called by the Chairman of
the Board by written notice that contains the agenda.
Any Board member may request the Chairman that a
meeting is called or that an item is put on the agenda.
During 2014, the Board met six times.
The Board committees regularly report to the full Board
on their findings and propose the appropriate actions.
3.5 Definition of areas of responsibility
The governing bodies have the responsibilities as follows:
Subject to the powers and duties conferred on the
shareholders of the Company by Guernsey Law and the
Articles, the Board is ultimately responsible for the
management of the business of the Company and for
supervising and monitoring such management.
Accordingly, the Board has both executive and
supervisory functions for which, according to the Articles,
it remains responsible even if, in performing these
functions, it is assisted by a Board committee or the
Group’s executive management.
CONTINUED
The Board has the following non-delegable and
inalienable duties: the determination of the overall
strategy of the business of the Group and the issuance
of the necessary instructions, the preparation and
issuing of internal regulations for the operation of the
Board, any Board committees and the EMC of the
Company from time to time, the appointment and
removal of persons entrusted with the management
and representation of the Company (including the
appointment and removal of members of Board
committees and members of the Company’s executive
management), the structuring of the Company’s
accounting system, its financial controls and financial
planning and the ultimate supervision of the persons
entrusted with the management of the Company and
the preparation of the directors’ reports, preparation for
General Meetings and the implementation of resolutions
of the General Meeting. The Board’s responsibility for
supervising and monitoring the Company’s
management team includes establishing
a suitable system of internal controls, receiving regular
reports on the progress of the business and approving
the annual financial statements and the interim
financial statements.
Subject to the non-delegable powers and duties
of the Board described above, the Board has
delegated the management and the operative and
administrative day-to-day business of the Company
and its subsidiaries to the EMC. The scope of delegation
comprises all powers which are not reserved to
the Board by Guernsey Law, the Articles or the
Organisational Regulations.
The Organisational Regulations reserve the following
powers to the Board:
the adoption of resolutions concerning the issuance
of unissued shares out of the authorised capital and
the sale, transfer and cancellation of Treasury shares
held by the Company to the extent that such power is
vested in the Board pursuant to Guernsey Law and
the Articles;
the approval of transactions for which the Board
reserves its decision-making power, in particular:
i. capital expenditures and investments exceeding
USD 5 million or its equivalent; and
ii. finance decisions exceeding USD 10 million
or its equivalent;
the approval of the annual investment and operating
budgets as well as the long-term plan of the
Company and the Group;
the resolution on any matters submitted to it by
the Board Committees;
approval of the terms of reference of any Board
Committees;
the exercise of shareholder rights in the subsidiaries,
as well as the ultimate control of the business
activities of the subsidiaries;
the establishment of the Company’s dividend policy;
the review and approval of any required filings with
regulatory authorities or stock exchanges (unless
delegated by the Organisational Regulations);
the approval of any registration statements,
prospectuses, listing particulars, notices and circulars
to holders of Company securities or
recommendations in respect of any matters which
may be submitted to holders of the Company’s
securities (unless delegated by the Organisational
Regulations); and
the response to any approach regarding a takeover
offer for the Company.
The members of the EMC are appointed by the Board
upon recommendation of the Nomination and
Compensation Committee.
The EMC reports directly to the CEO of the Board.
3.6 Information and control instruments
vis-à-vis the EMC
The Board, on a regular basis, is fully informed on
material matters involving the Company and the
Group’s business.
The Executive Directors, who are members of the EMC,
are expected to be present at each quarterly Board
Meeting and report quarterly to the Board. The Board
provides guidance to the EMC when necessary.
We have detailed written procedures and processes
for the management of operational risk. Operational
risk is also limited by automated systems, and the
implementation of our shadow book-keeping system
which ensures we are not wholly reliant on third party
administrators and custodians. This system has been
implemented in order to ensure that our funds’
administrators’ transaction entries are double checked
and reconciled, intra-month performance can be
estimated, and any possible discrepancies between the
administrator’s accounts and the Group’s funds shadow
accounts can be visibly detected and are subsequently
resolved on a monthly basis. The system also enables
the Group to maintain information on all investments to
better service clients and enable determination of fee
carve-outs for marketing agents.
4. Executive Management Committee
The executive management of the Company has been
delegated by the Board to the EMC. Accordingly, the EMC
has all the powers and duties that are not explicitly
reserved in the Organisational Regulations to the Board,
its Chairman or one of the Board committees.
The members of the EMC are appointed by the
Board upon recommendation of the Nomination and
Compensation Committee. The EMC reports directly
to the Board.
4.1 Members of the Executive Management Committee*
Name
Age
Nationality
Position
Employed
Joachim Gottschalk*
Maximilian Gottschalk*
68
42
German
German
January 1987
August 1998
Eric Bissonnier*
48
French
Tim Roniger
53
Swiss
William Woolverton
64
American
Andre Keijsers
49
Dutch
Kevin Maloney*
57
American
Hwyel Evans
43
British
Michael Azlen
52
Canadian
Head of Asian Business,
Head of Marketing
Co-CIO Alternative Solutions
Chief Financial Officer
General Counsel
Head of Corporate Strategy
and Human Resources
Head of Risk Management
Managing Director,
Deputy General Council
Chief Investment Officer,
September 2014
May 2004
October 2005
January 2008
September 2003
September 2014
July 2013
*Indicates an EMC member who is also a Board member.
Tim Roniger is a Swiss citizen, Senior Managing Director
and Chief Financial Officer of the Group, Chairman of
the Risk Committee and a member of the Gottex EMC.
Prior to joining the Group in 2004, Mr. Roniger had a
13-year career at Merrill Lynch, where he held senior roles
in Product Control and the Middle Office, in both the Fixed
Income and Equity Capital Markets divisions. Mr. Roniger
holds an Honours degree in Accounting and Finance and is
registered with the Institute of Chartered Accountants,
South Africa. Mr. Roniger performed his Articles and
qualified as a Chartered Accountant while working with
Ernst & Young in South Africa.
William Woolverton is an American citizen, the Group
Senior Managing Director and General Counsel of the
Group. He joined the Group in October 2005 to serve
as General Counsel, and he is a member of the Gottex
EMC. Mr. Woolverton has extensive experience as a senior
legal, regulatory and compliance executive in
the investment management industry and with major
global law firms. Prior to joining Gottex, Mr. Woolverton
was a senior member of the Financial Services Group of
Dechert LLP, an international law firm. From 1988 until
2004, he was Managing Director and General Counsel of
Putnam Investments where he was a member of the
Partners and Executive Committees. Prior to joining
Putnam, Mr. Woolverton was Senior Counsel of Alliance
Capital Management Corporation and an attorney at the
global law firm of Clifford Chance Rogers & Wells. Mr.
Woolverton is a magna cum laude graduate of Amherst
College, where he was elected to Phi Beta Kappa. He
attended King’s College, Cambridge University as a
Keasbey Fellow, where he was awarded a B.A. (Honours)
and M.A. degrees. Mr. Woolverton was awarded a J.D.
degree from the Columbia University School of Law. Earlier
in his career, Mr. Woolverton was a staff member of the
Committee on the Judiciary of the United States Senate in
Washington, D.C.
Andre Keijsers is a Dutch citizen, Senior Managing Director,
Head of Corporate Strategy and Human Resources of
the Group and a member of the Gottex EMC. Prior to
joining the Group in 2008 he worked at the CME (Chicago
Mercantile Exchange) where he served as Chief Financial
Officer of the Swapstream group of companies. Prior
to Swapstream until December 2000, Mr. Keijsers was
Chief Strategy Officer at Scoot.com, a multi-channel
directory enquiry service. Before joining Scoot.com in
1996, Mr. Keijsers was an Associate Director in Equity
Investment Banking at UBS in London.
CONTINUED
Mr. Keijsers started his career in the securities industry
in 1991 when he joined ABN AMRO Bank in their equity
investment banking group. Mr. Keijsers holds a Master’s
Degree in Computer Science from Nijmegen University
in the Netherlands and wrote his thesis whilst working
with Hitachi in Tokyo.
4.3 Management contracts
Michael Azlen is a Canadian citizen, Senior Managing
Director and Head of Multi-Asset Business. He joined
the Group in July 2013 when Gottex acquired a
controlling interest in Frontier Investment Management
(Frontier). Mr. Azlen has more than 20 years of
experience spanning the entire spectrum of asset
management including hedge funds, proprietary trading,
structured products and equity derivatives and founded
Frontier in 2004 to bring the first true multi-asset class
fund to the investment industry. Prior to founding
Frontier, Mr. Azlen was the Managing Director of Asset
Alliance International, a leading alternative investment
company with approximately USD 3.5 billion in assets
under management, where he was a member of the
Asset Alliance Investment Committee overseeing
approximately USD 500 million of hedge fund and
structured product assets. Prior to joining Asset Alliance
International, Mr. Azlen was a Senior Fund Manager
for a long/short hedge fund. Prior to this, Mr. Azlen was
a proprietary trader first at Scotia Bank, and then at
Canadian Imperial Bank of Commerce – CIBC World
Markets, where he also served as Vice President in the
Equity Derivative Products group. Mr. Azlen holds a Sloan
Masters Degree in Business from the London Business
School and is a Chartered Alternative Investment
Analyst (CAIA) and a Certified Financial Planner (CFP).
5.1.1Content and method of determining the
compensation paid and the shareholding programme
The compensation and incentive programme for
members of the EMC and other key employees at Gottex
may consist of all or some of the following components: 1)
salary; 2) benefits-in-kind; 3) cash bonus; 4) share
awards and share option awards, including long-term
incentive awards; and 5) waived management fees.
Salaries are reviewed annually and remain competitive
within the market. A formalised staff grouping structure
is in place which identifies the different salary level
ranges for each position and level of seniority within the
Group. Benefits-in-kind comprise pensions and other
benefits, for example, health care. Bonuses are
distributed annually based on a subjective evaluation by
the employee’s supervisor in conjunction with a review by
the EMC and the Nomination and Compensation
Committee. Bonuses for members of the EMC are
determined by the Nomination and Compensation
Committee. Many factors are taken into account
including meeting individual and team performance
objectives, as well as market compensation comparisons.
Such bonuses may be comprised of cash bonuses, share
awards and/or share options awards, and the mix is a
discretionary allocation.
Hywel Evans is a British citizen, Senior Managing Director
and Deputy General Counsel of the Group. Mr Evans
joined EIM in April 2011 to focus on developing EIM’s
managed account platform and became General
Counsel in the following year. Prior to joining EIM, Mr.
Evans spent nearly ten years at Man Group Plc as senior
in-house counsel working in the Product Legal and
Structuring Group. Between 1997 and 1999, Mr. Evans
completed his legal training with Pinsent Masons law firm
in London and, upon qualification as a Solicitor in 1999,
joined their Corporate Finance department. Mr. Evans
holds a BSc (Honours) degree in Business Administration
and an LLB Law degree, both from Cardiff University.
For information on the professional background of the
members of the EMC who are also Board members see
section 3.1.
4.2 Other activities and vested interests
Please see sections 3.1.1 and 4.1 for other activities
and interests.
Not applicable.
5. Compensation, shareholdings and
loans policy
Senior management will usually have a significant part of
their compensation either deferred or paid as share
incentives, thereby aligning the interests of these key
employees with the interests of the Group. These key
employees may be offered additional share awards and/
or share options awards on a case-by-case basis, and in
addition, long term incentive plans as a means of
compensating and retaining key talent. Individual awards
may be tailored to meet the performance requirements
of the employee, such as asset under management
targets or profitability targets, and also simply designed
to retain the employee and therefore linked solely to
continued employment. The Group also has in place for
key employees a long term incentive share scheme,
which has share awards linked to the profitability of the
Group and the assets under management of the various
businesses of the Group. Shares awarded under this
scheme will vest over multiple year periods.
Waived management fees comprise management fees
on investments made by employees into funds managed
by the Group, which are waived by the Group.
All Non-Executive Directors of the Company shall be paid
a compensation for their services as Directors out of
the funds of the Company. Such compensation to Board
members (other than any Director who for the time
being holds an executive office or employment under
the Company or a subsidiary of the Group) shall be
determined by the Board upon recommendation of the
Nomination and Compensation Committee. The Board
members shall be paid out of the funds of the Group all
expenses properly incurred by them in the discharge of
their duties, including their expenses of travelling to and
from the meetings of the Board, meetings of the Board
Committee and General Meetings. Each Non-Executive
Director, except for the Non-Executive Chairman and
for Mr. Preston, receives an annual remuneration of
USD 100,000 per year. Effective 1 October 2009,
those Non-Executive Directors agreed to reduce their
cash base to USD 75,000 and take USD 25,000
equivalent in shares and effectively aligning the interests
of the Directors to the long-term goals of the Group.
The Non- Executive Chairman received an annual
remuneration of USD 125,000 in cash in 2014. The
annual compensation for Mr. Preston is USD 75,000
annually. Directors who are members of the EMC are
paid a base salary, certain benefits and are eligible for
bonuses and any share-based compensation schemes.
Additional information is included in the sections below.
5.1.2 Compensation of Members of the EMC
The compensation of the members of the Board and the
EMC is determined by the Board upon recommendation
of the Nomination and Compensation Committee.
Members of the EMC are paid a base salary, certain
benefits and are eligible for bonuses and any sharebased compensation schemes.
5.2 Transparency of the compensations, shareholdings and loans pertaining to issuers domiciled abroad
5.2.1 Compensation for members of the Board of Directors (for the year ended 31 December 2014)
Name
Joachim Gottschalk
Kevin Maloney
Eric Bissonnier
Arpad Busson
Michael W. O. Garrett
Bruno Pfister
Christopher Preston
David Staples
Total compensation for Board of Directors
Salary/fees
USD 000
Benefits
in kind
USD 000
Share based
payments1
USD 000
Waived
management
fees2
USD 000
Total
USD 000
543
594
600
137
125
75
75
19
75
2,243
11
2
31
11
–
–
–
–
–
55
–
–
150
694
–
25
25
8
25
927
205
196
–
–
–
–
–
–
–
401
759
792
781
842
125
100
100
27
100
3,626
5.2.2 Compensation for members of the EMC (for the year ended 31 December 2014)
The table below shows the total compensation for the eight members of the EMC.
Total
USD 000
Salary/fees
Bonus
Benefits in kind
Pension
Share based payments1
Waived management fees2
Total compensation for members of the EMC
3,968
35
165
36
894
401
5,498
1 Share-based payments consist of share option awards and share awards.
2 The Group waives some management fees due on investments by employees into the funds managed by the Group.
The highest paid member of the EMC for the year ended 31 December 2014 was Eric Bissonnier.
CONTINUED
5.2.3 Shareholdings and options of members of the Board and the EMC
For information relating to the shareholdings of members of the Board and the EMC at 31 December 2014,
see table below.
Share options
Executive Directors
and EMC members1
Joachim Gottschalk
Kevin Maloney
Eric Bissonnier
Andre Keijsers
Tim Roniger
William Woolverton
Michael Azlen
Hwyel Evans
Christopher Aliprandi
Total
Number
of shares
held 2
Date
of grant
Exercise
price
USD
4,579,316
4,399,735
773,312
–
–
118,865
67,000
116,774
–
–
9,938,227
–
–
–
–
Jan 08
Jan 08
Jan 08
–
–
–
–
–
–
–
54.1
54.1
54.1
–
–
–
–
15,840
21,325
59,995
–
97,160
–
–
–
–
–
–
–
–
–
–
–
–
Date
of grant
Exercise
Price
USD
–
–
–
–
2,068
24,127
14,476
–
–
–
46,671
–
Apr 11
–
–
Apr 11
Apr 11
–
–
–
–
–
6.9
–
–
6.9
6.9
–
–
–
–
–
36,563
–
–
14,063
5,833
–
–
–
–
56,459
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Number
Number
Number of
share
awards
outstanding
Number of
long-term
awards
outstanding2
34,950
–
18,837
613,876
3,269
920,814
–
–
–
306,938
–
306,938
–
306,938
–
–
–
–
–
–
57,056 2,455,504
Non-Executive Directors1
Arpad Busson
Bruno Pfister
David Staples
Christopher Preston
Total
–
28,860
20,430
28,860
–
78,150
–
–
–
–
–
–
1 Members of the Board and EMC own shares directly, through nominee accounts, family trusts and other corporate entities. Rozel Trustees (Channel Islands) Limited holds
14 million shares and is the trustee of the Albion Trust whose beneficiaries include members of the Busson family.
2 The long-term awards, which are designed to align Senior Management with the long-term goals of the Group, vest on 31 December 2015.
6. Shareholders’ participation
6.1 Voting-rights and representation restrictions
6.1.1 All voting-rights restrictions, along with an
indication of statutory group clauses and rules on
granting exceptions, particularly in case of institutional
voting-rights representatives
Each share entitles its holder to one vote at the
Company’s shareholders’ meetings, subject to the power
of the Board under the Articles to withdraw voting rights
in certain circumstances and except for shares recorded
in the register of members in the default nominee
account of SIS which, as a result of being recorded in this
account and for the period for which they continue to be
so recorded, shall not have any voting rights (see above
section 2.6.1). Acquirers of shares only have the right to
attend, and to cast their votes at a General Meeting to
the extent the shares held by them have not had their
voting rights withdrawn in accordance with the Articles.
Based on the authority conferred by Articles 18 of the
Articles, voting rights may be withdrawn that attach
to shares:
whose acquirer does neither explicitly declare that he
has purchased them in his own name and for his own
account nor acknowledge the right of the Company to
receive information relating to their beneficial owner
upon request, including the beneficial owner’s name,
address (and, if applicable, place of incorporation) as
well as the beneficial owner’s existing shareholdings
in the Company; or
with which the acquirer, directly, indirectly or acting in
concert with third parties would exceed the threshold
of 3% of the issued shares of the Company (as disclosed
in its last annual or interim report approved by the
Board); the Board may, however, grant exceptions
to the limitation of 3%, in particular with respect to
members who either (i) explicitly declare they have
acquired the shares in their own name and at their
own account or (ii) have acknowledged the right of
the Company to receive information relating to the
beneficial owner(s) of the shares upon request and
to make public such information.
In addition, the Articles authorise the Board to withdraw
the voting rights of shareholders who do not comply
with the obligations to notify the Company of substantial
shareholdings.
With respect to the respective shares, the acquirer will
be recorded in the register of members as a shareholder
without voting rights. The above limitations on registration
also apply to shares acquired or subscribed for by the
exercise of subscription, option or conversion rights.
6.1.2 Reasons for granting exceptions in the year
under review
Not applicable.
6.1.3 Procedure and conditions for abolishing voting
rights restrictions
The limitations on registration of acquirers of shares in the
register of members as shareholders with voting rights
may be abolished by Board resolution or by amendment
of the Articles to withdraw the corresponding authority
of the Board.
The respective Board resolution requires the affirmative
vote of a majority of the members of the Board present
at the meeting, which is quorate. Amendment of the
Articles, on the other hand, can be effected by resolution
of the General Meeting. Such resolution requires the
affirmative vote of the holders of a majority of no less
than 75% of the votes cast at the meeting.
6.1.4 Rules on participation in the General Meeting
A shareholder may appoint only one proxy to attend
the General Meeting for the total shares held by such
shareholder. If the Company proposes to its shareholders
that they may cast their votes through a proxy
designated by the Company, then the Company shall
also designate at its own expense an independent proxy
for the benefit of the shareholders.
If such proxies are appointed, the following rules shall apply:
any proxy given to the proxy designated by the
Company shall be deemed to be a proxy to vote in
favour of the motions of the Board. Proxies instructing
the proxy designated by the Company to abstain or
to vote against the motions of the Directors shall be
delivered forthwith to the independent proxy; and
the independent proxy shall cast his votes in
accordance with the instructions given to him by
the shareholders who have delivered such a proxy.
Failing instructions, the independent proxy shall vote
in favour of the motions of the Board.
The instrument appointing a proxy and the power of
attorney or other authority (if any) under which it is
made, or a notarially certified copy of such power or
authority, shall be deposited at the office or at such other
place as is specified for that purpose in the notice of the
General Meeting or in the instrument of proxy issued by
the Company before the time appointed for holding the
meeting at which the person named in the instrument
proposes to vote and in default the instrument of proxy
shall not be treated as valid.
A vote given or poll demanded by proxy or by the duly
authorised representative of a body corporate shall be
valid notwithstanding the previous withdrawal of the
authority of the person voting or demanding a poll unless
notice of the withdrawal was received by the Company
at the office or at such other place at which the
instrument of proxy was duly deposited before the
commencement of the meeting at which the vote is given
or the poll demanded.
6.2 Statutory quorums
Unless otherwise set forth in Guernsey Law or the Articles,
resolutions of the General Meeting are adopted by
simple majority of the votes cast at a General Meeting.
For so long as required under Guernsey Law, under the
Articles a special resolution of the General Meeting
(requiring not less than 75% of the votes cast at a
General Meeting) is required for the following matters:
any alteration to the Memorandum or Articles;
the ratification of any acts of the Board which, but for
Guernsey Law, would be beyond the Company’s
capacity by reason of anything contained in or
omitted from the Memorandum;
a change of name of the Company;
a reduction of the Company’s issued share capital,
capital redemption reserve or share premium account;
a resolution of the General Meeting that the Company
be wound up voluntarily, and where the Company is
being wound up voluntarily any resolution of the
General Meeting to delegate to its creditors the
power to appoint a liquidator and to fill any vacancy
in the office of liquidator, and to enter into any
arrangement regarding the powers to be exercised
by the liquidator and the manner in which they are to
be exercised;
the purchase by the Company of its own shares
off-market, such special resolution to include
autorisation of the terms of the proposed contract
between the Company and the seller;
the migration of the Company to another jurisdiction;
the amalgamation of the Company with another
Company; and
restriction or exclusion of the pre-emptive subscription
rights of shareholders as set forth in the Articles.
CONTINUED
6.3 Convocation of the General Meeting
of shareholders
All General Meetings other than Annual General Meetings
are called Extraordinary General Meetings. The Annual
General Meeting shall be held at least once every financial
year and no later than six months after close of the
Company’s financial year. No more than 15 months may
elapse between one Annual General Meeting and the next.
All General Meetings may be held at any place in
Guernsey or elsewhere.
The Board may call General Meetings. If there are not
sufficient Board members to call a General Meeting,
any Board member may call such a meeting.
Under the Articles, shareholders (other than
shareholders whose voting rights have been denied)
holding 5% or more of the shares issued at the time, have
the right to require the Board to call a General Meeting,
in which case the Board shall cause such General
Meeting to be held as promptly as practicable thereafter.
Under Guernsey Law, shareholders holding at least 10%
of the issued shares, excluding any shares held as
Treasury shares, are entitled to require the Board to
convene a General Meeting. If the Board does not, within
a period of 21 days beginning on the date of service of
the requisition, duly convene a General Meeting, the
requisitioning shareholders may, within a period of three
months beginning on that date, themselves convene
such a General Meeting.
Any General Meeting shall be called by at least 14 days’
notice, such notice being deemed to have commenced
on the day following the date of deemed receipt of the
notice as set out in the Articles. The notice shall specify
the day, time and place of the General Meeting and the
general nature of the business to be transacted and, in
the case of an Annual General Meeting, shall specify the
General Meeting as such.
Subject to the provisions of the Articles and to any
restrictions imposed on any shares, the notice shall be
given to all the shareholders, to all persons entitled to
a share in consequence of the death, bankruptcy or
incapacity of a shareholder and to the members of the
Board and auditors in accordance with the notice
provisions set out in the Articles. In addition, the Company
shall give notice of the General Meeting by way of an
announcement appearing once in a German language
newspaper and a French language newspaper in
Switzerland at least 21 days prior to the General Meeting.
The accidental omission to give notice of a General
Meeting to, or the non-receipt of notice of a General
Meeting by, any person entitled to receive notice shall
not invalidate the proceedings at the General Meeting,
provided that notice shall have been given in the
appropriate Swiss newspapers.
6.4 Agenda
Shareholders (other than members whose voting rights
have been denied) holding 5% or more of the shares
issued at the time, have the right to require the Board to
put an item on the agenda of a General Meeting; provided
that such request is lodged with the Company no later
than 45 days prior to the date of the General Meeting.
6.5 Registration into the share register
The Annual General Meeting 2015 will be held on
24 April 2015. The registrations appearing in the
Company’s register of members as at 23 April 2015 have
determined the right to participate in, and the right to
represent shareholders at General Meetings.
The registration of transfers of shares can be suspended
by giving notice in a German language newspaper
and a French language newspaper in Switzerland.
7. Changes of control and defence
measures policy
7.1 Duty to make an offer
By resolution of the members taken at the 2014 Annual
General Meeting, the Company decided to opt out of
the obligation of a shareholder who acquires shares
and thereby exceeds 33⅓% of the issued shares of the
Company to make a public tender offer. According to
the new article 13 of the Articles a person who (directly,
indirectly or acting in concert with third parties) acquires
shares and thereby exceeds 33⅓% of the issued shares
of the Company (as disclosed in its last annual or interim
report approved by the Board), shall not be required
to make a public takeover offer for all the issued shares
of the Company.
7.2 Clauses on changes of control
Apart from the accelerated vesting of unvested options
in the event of a takeover under the Group employee
share option plan (see above section 2.7) no contractual
provisions exist in favour of the Board or the EMC
with regard to a change of control of the Company.
8. Auditor’s policy
Ernst & Young Ltd, Route de Chancy 59, PO Box CH-1213,
Petit-Lancy 1, Geneva, Switzerland (‘EY’) has been
assigned the mandate to serve as auditors for the
Company and some of its subsidiaries. They assume
auditing functions according to laws, regulatory
requests, and the Articles for the Company. The Audit
Committee will annually assess the independence of
EY to determine whether they meet all independence
requirements, thus ensuring that independence of the
auditors is not jeopardised by conflicts of interests through
additional mandates. EY will inform the Audit Committee
annually of the measures they are taking to ensure their
own and their employees’ independence from the Group.
The Audit Committee assesses this information on behalf
of the Board.
8.1 Duration of the mandate and term of office
of the auditor in charge
EY were re-appointed as the Group’s external auditor
at the last AGM for a one-year period. The auditor in
charge of the audit engagement, John Alton, assumed
this position in 2012.
In accordance with the seven-year rotation requirement
established by the Swiss Code of Obligations for Swiss
companies, GFMH will ensure that the auditor in charge
of the Group’s audit will be replaced in accordance with
the above rule.
8.2 Auditing fees paid to the auditors
During 2014, EY were paid USD 1.0 million in audit fees.
8.3 Additional fees paid to the auditors
During 2014, Ernst & Young were paid USD 0.2 million
in non-audit fees. Non-audit services performed by
Ernst & Young were principally services in connection
with the acquisition during the year.
8.4 Informational instruments pertaining to the
external audit
The Group has appointed EY to perform all audit related
services. All services provided by EY have to be reviewed
by the Audit Committee with final approval by the Board
of Directors. A pre-approval may be granted either for
a specific mandate or in the form of a general preapproval authorising a limited and well-defined type
and amount of services.
The Audit Committee assists the Board in monitoring
the qualification, independence and performance of
the auditors and their auditor in charge. The Audit
Committee also prepares proposals for appointment
or removal of the external auditors for review and final
approval by the Board.
The Audit Committee reviews the annual written
statement submitted by the external auditors as to their
independence. They also review the engagement letter
between the Group and the external auditors and the
fees and terms of the planned audit work.
The external auditors provide timely reports to the
Audit Committee on critical accounting policies and
practices used, on alternative treatments of financial
information discussed with management, and other
material written communication between external
auditors and management. Reports are prepared at
least twice per annum.
The Audit Committee regularly meets with the auditor
in charge of the external auditors, at least annually.
At least once per year, the Chairman of the Audit
Committee discusses with the auditor in charge of EY
the audit work performed, the main findings and critical
issues that arose during the audit. The Audit Committee
reports back to the Board about their contacts and
discussions with the external auditors.
CONTINUED
9. Informational policy
GFMH, as a publicly traded company on the SIX, is
committed to communicating in a timely and consistent
way to shareholders, potential investors, financial
analysts, customers, suppliers, the media and other
interested parties. The Company ensures that material
information pertaining to its businesses is disseminated
in a manner that complies with its obligations under the
rules of the SIX.
The guiding principles of this informational policy, as it
relates to shareholders, are that the Company gives
equal treatment to shareholders in equal situations,
that any price-sensitive information is published in a
timely fashion, and that the information is provided in
a format that is as full, simple, transparent and as
consistent as possible.
The Company publishes annual and half yearly financial
information as set forth in the SIX rules.
Major announcements, such as financial results or
corporate activity that require an obligation to disclose
potentially price sensitive information through an ad hoc
notice filing are available on the Company’s internet
website (www.gottexholdings.com) which anyone can
access, whether or not that person is a shareholder.
The invitation to the Company’s Annual General Meeting
is sent to registered shareholders by mail and published
in the appropriate Swiss newspapers.
Enquiries may also be made to Gottex Investor Relations:
Mr. Andre Keijsers, Head of Corporate Strategy and
Corporate Communications
Investor.Relations@Gottexholdings.com
Andre.Keijsers@Gottex.com
10. Material changes since the end
of the business year
On 30 March 2015 Joachim Gottschalk and Associates
Ltd (‘JGA’) and Rozel Trustees (Channel Islands) Limited
agreed to provide a loan facility of USD 2.5 million each,
in total USD 5 million, to the Company which is to be
available from 30 March 2015 until 1 November 2016.
The interest rate is three month Libor plus 2.5% and
drawings may be made by the Company on 30 days’
notice. In addition JGA and Royal have each agreed
to defer the repayment date of an existing loan of
USD 1.2 million, USD 2.4 million in total, from 31 March
2016 to 1 November 2016.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF GOTTEX FUND MANAGEMENT HOLDINGS LIMITED
Ernst & Young Ltd
Route de Chancy 59
P.O. Box
CH-1213 Geneva
Phone
+41 58 286 56 56
Fax
+41 58 286 56 57
www.ey.com/ch
Geneva, 30 March 2015
Independent Auditor’s Report to the Members of Gottex Fund Management Holdings Limited
We have audited the consolidated financial statements of Gottex Fund Management Holdings Limited (the “Group” or “Company”)for the year
ended 31 December 2014 which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity and the related notes 1 to 32
(page 36 to 86). The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs).
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 16, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards on Auditing. Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the
amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Group’s
circumstances and have been consistently applied and adequately disclosed, the reasonableness of significant accounting estimates made by the
directors and the overall presentation of the financial statements. In addition, we read all the financial and nonfinancial information in the annual
report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.
Opinion on consolidated financial statements
In our opinion the financial statements:
– give a true and fair view of the state of the Group’s affairs as at 31 December 2014 and of its loss for the year then ended;
– have been properly prepared in accordance with IFRSs; and
– have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if,
in our opinion:
– proper accounting records have not been kept; or
– the financial statements are not in agreement with the accounting records; or
– we have not received all the information and explanations we require for our audit.
John Alton
Licensed Audit Expert
(Auditor in charge)
Michael Testa
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
Note
Revenue
Referral fee expense
Gross profit
Share of post tax losses from joint venture
Operating costs from operations
Impairment of goodwill
Acquisition related income/(charges)
Operating loss
Finance income
Finance cost
Net loss on financial assets
(Net impairment)/recovery of receivables
Share of post-tax (losses)/profits of associates
Loss before taxation
Income (charge)/credit
Loss for the year
2
3
17
5
14
5, 7
8
9
10
20
18
11
Attributable to:
Equity holders of the parent company
Loss for the year
2014
USD 000
2013
USD 000
33,341
(3,898)
29,443
(15)
(47,785)
(1,210)
253
(19,314)
859
(29)
(54)
(353)
(16)
(18,907)
(268)
(19,175)
46,439
(7,059)
39,380
(19)
(47,978)
–
(1,218)
(9,835)
74
(358)
(1,445)
500
167
(10,897)
337
(10,560)
(18,922)
(253)
(19,175)
(9,709)
(851)
(10,560)
The results for the year ended 31 December 2014 and 31 December 2013 are entirely derived from continuing operations.
Loss per share
Basic, for loss for the year attributable to ordinary equity holders
of the parent company
Diluted, for loss for the year attributable to ordinary equity holders
of the parent company
12
USD (0.57)
USD (0.33)
12
USD (0.57)
USD (0.33)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2014
USD 000
2013
USD 000
(19,175)
(10,560)
Items that will not be subsequently reclassified to profit and loss
Actuarial (loss)/gain on defined benefit pension plans (net of tax)
(968)
46
Items that may be subsequently reclassified to profit and loss
Exchange differences arising on translation of foreign operations
Other comprehensive (loss)/income for the year, net of tax
(1,031)
(1,999)
840
886
Total comprehensive loss for the year, net of taxation
(21,174)
(9,674)
(20,777)
(397)
(21,174)
(8,893)
(781)
(9,674)
Note
Loss for the year
Attributable to:
Equity holders of the parent company
27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
2014
USD 000
2013
USD 000
14
15
16
17, 18
19
20
22
30,049
8,376
2,414
2,742
764
545
2,301
47,191
10,422
3,431
13,985
296
859
–
2,330
31,323
20
20
10,574
5,193
595
7,482
2,475
26,319
17,420
4,037
34
9,169
–
30,660
73,510
61,983
44,948
(19,990)
34,396
(24,645)
34,709
913
35,622
30,234
(21,237)
23,117
(4,889)
27,225
1,410
28,635
21
22
11,435
266
11,701
6,149
355
6,504
21
21
5,781
20,147
259
26,187
6,343
20,501
–
26,844
37,888
73,510
33,348
61,983
Note
Non-current assets
Goodwill
Intangible assets
Financial investments
Investment in joint venture and associates
Property, plant and equipment
Other receivables
Deferred tax asset
Current assets
Trade debtors
Other receivables
Tax assets
Cash and cash equivalents
16
Total assets
Share capital
Treasury shares
Other reserves
Retained earnings
Equity attributable to equity holders of the parent company
Total equity
Non-current liabilities
Accruals and other creditors
Deferred tax liabilities
Current liabilities
Trade creditors
Other payables
Current tax liabilities
Total liabilities
Total equity and liabilities
Joachim GottschalkKevin Maloney
Group Chief Executive Officer Co-Chief Investment Officer
26
26
26
26
27
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
Operating activities
Loss before taxation
Adjustments for:
Amortisation of intangibles
Depreciation of property, plant and equipment
Loss on sale of property, plant and equipment
Write off of intangibles
Decrease/(increase) in receivables
(Decrease)/increase in payables
Income taxes paid (net)
Finance income
Finance cost
Net loss on financial assets
Share of post tax losses from joint venture
Share of post tax losses/(profits) from associates
Net cash outflow from operating activities
14
15
19
19
15
28
8
9
10
17
18
Investing activities
Interest received
Proceeds from sale of building held for sale
Proceeds from sale of investments
Purchase of intangible assets
Purchase of investments
Purchase of property, plant and equipment
Acquisition of subsidiaries net of cash acquired
Investment in associates
Cash received from reduction of investment in UCITS
Loan repaid by related party
Net cash from/(used in) investing activities
31
16
15
16
19
31
17
18
Financing activities
Interest paid
Cash paid to GFMH ABL non-controlling interest holders
Repayment of loan to related party
Loan from related party
Repayment of long term loan
Purchase of Treasury shares
Net cash used in financing activities
27
30
30
31
Net decrease in cash and cash equivalents in year
Opening cash and cash equivalents
Effect of foreign exchange rates
Closing cash and cash equivalents
2014
USD 000
2013
USD 000
(18,907)
(10,897)
1,210
1,301
601
171
155
1,494
10,239
–
987
375
–
1,337
(2,202)
(8,158)
(198)
(859)
29
54
15
16
(12,837)
1,993
(228)
(74)
358
1,445
19
(167)
(7,054)
93
7,177
9,602
(166)
(282)
(584)
215
–
–
–
16,055
74
–
3,712
(343)
(611)
(760)
(5,341)
(61)
1,834
351
(1,145)
(29)
(100)
(1,000)
500
(4,267)
(356)
(5,252)
(79)
(700)
–
–
–
(1,531)
(2,310)
(2,034)
(10,509)
9,169
347
7,482
19,329
349
9,169
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 January 2013
Share
capital
Treasury
shares
(Note
26)
USD 000
(Notes 26
and 28)
USD 000
30,234 (23,257)
Translation
reserve
USD 000
SharePooling
based
and
payment
other
reserve reserves
(Note 28) (Note 26)
USD 000 USD 000
Total
other
reserves
USD 000
(4,088)
10,778 16,266
Attributable
to equity
Nonholders of controlling
Retained
the parent
interest
earnings
company (Note 27)
USD 000
USD 000
USD 000
22,956
7,365
37,298
Loss for the year
–
–
–
–
–
–
(9,709)
(9,709)
Other comprehensive income
–
–
770
–
–
770
46
816
70
886
Total comprehensive income
–
–
770
–
–
770
(9,663)
(8,893)
(781)
(9,674)
Purchase of treasury shares
–
(1,531)
–
–
–
–
–
(1,531)
–
(1,531)
Recognition of
share-based payments
–
–
–
1,337
–
1,337
–
1,337
–
1,337
Utilisation of treasury shares
–
1,615
–
(291)
–
(291)
(756)
568
–
568
Reclassification due to
cancellation and vesting
of equity awards
–
1,936
(1,655)
(281)
–
–
–
Recognition of put liability
–
–
–
–
–
–
(1,554)
(1,554)
–
(1,554)
Recognition of non-controlling
interest on Frontier
–
–
–
–
–
–
–
–
698
698
interest on ZGA
interest on Asia MFO
Cash paid to GFMH BL non-controlling Interest
–
–
–
–
–
–
–
–
109
109
–
–
–
–
–
7
7
–
–
–
–
–
(700)
(700)
10,169 16,266
23,117
(4,889)
27,225
1,410
28,635
(18,922)
(18,922)
(253)
(19,175)
Balance at 1 January 2014
–
–
–
–
30,234 (21,237)
(1,655)
–
–
(3,318)
2,077
Total
equity
USD 000
39,375
(851) (10,560)
Loss for the year
–
–
–
–
–
–
Other comprehensive loss
–
–
(888)
–
–
(888)
(967)
(1,855)
(144)
(1,999)
Total comprehensive loss
–
–
(888)
–
–
(888)
(19,889)
(20,777)
(397)
(21,174)
14,714
–
–
11,918
11,918
–
26,632
–
26,632
Purchase of treasury shares
–
(356)
–
–
–
–
–
(356)
–
(356)
Recognition of
share-based payments
–
–
–
1,494
–
1,494
–
1,494
–
1,494
Utilisation of treasury shares
–
1,153
–
(502)
–
(502)
(160)
491
–
491
Reclassification due to
cancellation and vesting
of equity awards
–
450
–
(743)
–
(743)
293
–
–
–
Cash paid to GFMH ABL
non-controlling Interest
–
–
–
–
–
–
–
–
(100)
(100)
44,948 (19,990)
(4,206)
34,396 (24,645)
34,709
913
35,622
Issue of ordinary shares
in connection with
the acquisition of EIM
Balance at 31 December 2014
10,418 28,184
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Corporate information
Gottex Fund Management Holdings Limited (‘GFMH’ or ‘the Company’) is a company registered in Guernsey and
was listed on the SIX Swiss Exchange (‘SIX’) on 6 November 2007. GFMH was incorporated in Guernsey on 15 August
2007. The registered office of GFMH is Ogier House, St Julian’s Avenue, St Peter Port, GY1 1WA, Guernsey.
The consolidated financial statements for the year ended 31 December 2014 comprise GFMH and its subsidiaries
(together referred to as ‘the Group’). The Group acts principally as an investment manager and investment advisor for
hedge fund, multi-manager, multi-asset and Asian investment solutions.
These consolidated financial statements were authorised for issue by the Board of Directors on 30 March 2015
and are subject to approval at the Annual General Meeting of shareholders on 24 April 2015.
1
Accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the reporting
periods, is set out below.
a) Basis of preparation The consolidated financial statements are prepared in accordance with the Companies (Guernsey) Law, 2008,
as well as International Financial Reporting Standards (‘IFRS’) and are presented in US Dollars (‘USD’). The numbers
are shown in USD000s in all tables, except where otherwise indicated. The financial statements are drawn up on the
historical cost basis of accounting, except that certain financial instruments are designated as at fair value through
profit and loss.
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period or in the period
of revision and future periods if the revision affects both current and future periods. Judgements made by
management in the application of IFRS that have a significant effect on the financial statements and estimates
with a significant risk of material adjustment in the next period are discussed below.
The Directors consider that the Group has adequate resources to continue in operation for the foreseeable
future and accordingly these consolidated financial statements have been prepared on a going concern basis.
The assessment is based on the Group’s three year business plan and the continued support of its members.
Please refer also to note 32.
The Group adopted the following amendments and interpretations during the year and this has not resulted in any
material changes to the financial position or performance of the Group nor resulted in any additional disclosures,
other than described below.
Standard or
interpretation
Title
Impact on Group
IAS 32
IFRS 10
IAS 36
IAS 39
Offsetting Financial Assets and Financial Liabilities
Investment Entities (Amendments)
Recoverable Amount Disclosures for Non-Financial Assets
Novation of Derivatives and Continuation of Hedge Accounting
No material impact
No material impact
No material impact
No material impact
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1
Accounting policies (continued)
a) Basis of preparation (continued)
At the date of these consolidated financial statements, the following Standards and Interpretations that are
potentially relevant to the Group and which have not been applied in these financial statements were in issue but
not yet effective for these consolidated financial statements.
Standard or
interpretation
Description
IFRS 9
Financial Instruments
Effective date
Annual periods beginning on
or after 1 January 2018
IFRS 11
Accounting for Acquisitions of Interests
Annual periods beginning
in Joint Operations
on or after 1 January 2016
IFRS 15
Revenue from Contracts with Customers Annual periods beginning
IAS 16
Clarification of Acceptable Methods
of Depreciation and Amortisation
IAS 19
Defined Benefit Plans:
Employee Contributions
on or after 1 July 2014
IAS 27
Equity Method in Separate
Financial Statements
IAS 28
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
Annual Improvements 2010-2012 Cycle
Annual periods beginning on or
after 1 July 2014
Annual periods beginning on or
after 1 July 2014
on or after 1 July 2016
Expected Impact on Group
No material impact
No material impact
Work in progress
No material impact
No material impact
No material impact
No material impact
No material impact
No material impact
No material impact
Based on the current structure and nature, the adoption of these Standards and Interpretations in future years will
have no expected material impact on the Group financial statements with the exception of IFRS 15 where the Group
is still assessing the potential impact. The Group has adopted and will adopt all relevant new standards when they
become effective.
b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of GFMH and all its subsidiaries at the
year-end date.
Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of the voting rights so as to obtain benefits
from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries
are prepared for the same reporting period as the parent company, using consistent accounting policies.
All intercompany transactions, balances and unrealised gains and losses on transactions between the Group
companies are eliminated in preparing the consolidated financial statements.
A change in the ownership of a subsidiary, without a change of control, is accounted for as an equity transaction.
Losses are attributed to the non-controlling interest even if that results in a deficit balance.
1
b) Basis of consolidation (continued)
If the Group loses control over a subsidiary, it:
derecognises the assets (including goodwill) and liabilities of the subsidiary;
derecognises the carrying amount of any non-controlling interest;
derecognises the cumulative translation differences, recorded in equity;
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
recognises any surplus or deficit in profit or loss; and
reclassifies the parent’s share of components previously recognised in other comprehensive income to profit
or loss or retained earnings, as appropriate.
The entities included within the financial statements are disclosed below:
Name
Country of incorporation/registration
Gottex Fund Management Sàrl (‘GFM Sarl’)
Gottex Solution Services, Sàrl (‘GSS’)
Lumrisk SA†††
E.I.M Holdings S.A†††
E.I.M S.A†††
Gottex Asset Management (U.K.) Limited (‘GTX UK’)
Frontier Investment Services Limited (‘FISL’) ††
Frontier Investment Management LLP (‘FIML’) ††
EIM (United Kingdom) Ltd†††
Gottex Management SA, SICAR (‘GMSA’)
Gottex Partners (Luxembourg), Sàrl (‘GP Sarl’)
Gottex US Management Sàrl (‘GUS’)*
EIM Participations Lux. S.A.†††
Gottex Fund Management Limited (‘GFM US’)
EIM Management (USA) Inc†††
Gottex Fund Management (Hong Kong) Limited (‘GFM HK’)
Penjing Asset Management (HK) Limited (‘PAMHK’) †
EIM (Asia) Pte Limited†††
Gottex America Limited (‘GAL’)
Gottex Structured Products Limited (‘GSP’)
Penjing Asset Management Limited (‘PAML’) †
SWCP Cayman Limited (‘SWCP’)
GFMH ABL Limited (‘GFMH ABL’)
Gottex Asia Multi-Family Offices Limited (‘Asia MFO’)
The Gottex Employee Benefit Trust (‘EBT’)
Frontier Investment Management (Jersey) Limited (‘FIM’) ††
ZG Advisors Proprietary Limited (‘ZGA’)
EIM (Monaco) SAM†††
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
England and Wales
England and Wales
England and Wales
England and Wales
Luxembourg
Luxembourg
Luxembourg
Luxembourg
United States of America
Hong Kong
Hong Kong
Singapore
Bermuda
Bermuda
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Jersey
Jersey
Australia
Monaco
†
Together ‘Penjing’
†† Together ‘Frontier’
††† Together ‘EIM’
*In liquidation
At 31 December 2014 the Group held a 100 per cent interest in all of the above subsidiaries, apart from Frontier
in which it had an 80% interest, Asia MFO in which it had a 60% interest, GFMH ABL in which it had a 50% interest and
ZGA in which it had a 56 per cent interest, and the EBT, which the Group consolidates in accordance with the criteria
set out in IFRS 10.
1
Joint ventures and associate companies included within the financial statements are disclosed below:
Name
ERG Asset Management LLC (‘Edex’)
Gottex Staples Rodway Funds Limited (‘Staples Rodway’)
Personalised Portfolio Management 2PM (‘2PM’)
Headland Strategic Limited (‘HSL’)
Country of incorporation/registration
Joint venture
Associate
Associate
Joint venture
New Zealand
Monaco
Cayman Islands
EBT
The Group has an employee benefit trust (‘EBT’) that has been established in connection with share-based payment
arrangements. In accordance with the criteria set out in IFRS 10 the Group has consolidated this EBT.
GFMH ABL Fund Limited (‘GFMH ABL’)
The Group directly controls 50% of GFMH ABL. It is considered that the remaining 50%, which is held by directors and
employees of the Group, is held by related parties and therefore the Group considers that it has control of GFMH ABL.
The Group has consolidated this entity within its financial statements since the inception of the company in 1 July
2008. Over the subsequent years GFMH ABL has redeemed a portion of its outstanding shares in equal proportions
for all shareholders.
In 2014 GFMH ABL has further redeemed part of its outstanding shares in equal proportions for all shareholders
and the Company and the non-controlling interest shareholders of GFMH ABL received USD 0.1 million each.
GFMH ABL has an independent director and the investment manager, which is GFM Sàrl, is a wholly owned subsidiary
of GFMH and does not receive any remuneration for its investment management services.
ERG Asset Management LLC (‘ERG’)
On 11 January 2012, EDEX, a limited liability company, was formed in Delaware, with 100,000 Class A units at a
nominal value of USD 1 per unit. GFM US invested in 51,000 class A units and an unrelated third party, Eden Rock
Partners Limited (‘Eden’) invested in the remaining 49,000 Class A Units.
A limited liability company agreement (the ‘Agreement’) was executed dated 27 March 2012. It provides for the rights
and liabilities of members, and the management of the company. The signatories to the Agreement are GFM US and
Eden, the members of EDEX.
On 30 October 2014 the board of EDEX agreed to change the company’s name to ERG Asset Management LLC.
Although GFM US owns 51% of the units of ERG, it controls the company on an equal basis with Eden, under the
contractual rules of the Agreement via a Board of Managers. The Board of Managers has the current ability to direct
the relevant activities of ERG. Furthermore under the contractual rules of the Agreement, GFM US is entitled to
distributions of 50%, an equal distribution to Eden.
The Group has accounted for ERG as a joint venture under the equity method.
Gottex Staples Rodway Funds Limited (‘Staples Rodway’)
Staples Rodway Funds Limited was incorporated under the New Zealand Companies Act 1993 on 20 April 2011.
On 2 April 2013, it changed its name to Gottex Staples Rodway Funds Limited. Staples Rodway has 210,000 issued
shares outstanding, and 70,000 shares were issued to GFM Sarl at on 23 June 2013 for a consideration of
NZD 75,000.
The three shareholders of GSR Funds have equal shareholding of that entity and a contractual shareholders’
agreement exists setting out the terms under which the shareholders in GSR Funds have agreed to operate
GSR Funds and also the rights and obligations of the shareholders.
GFM Sarl has control over 1/3 of the Staples Rodway. Management considers that it has significant influence
and have accounted for Staples Rodway as an associate.
1
Headland Strategic Limited (‘HSL’)
HSL was incorporated in the in the Cayman Islands on 21 May 2013. A shareholders agreement in relation
to HSL was executed on 30 September 2013 and following this GFM Sarl invested in 10,980, ‘A’ voting shares and
200 ‘B’ non-voting shares at a total nominal value of USD 1,118, which gave GFM SARL 18 per cent voting rights in
the Company. In addition GFM SARL has control over one seat on the Board, which gives it a 20 per cent voting.
In these circumstances, Management considers that it has significant influence and have accounted for HSL
as an associate.
In addition, the Group had made a working capital advance of USD 0.4 million to HSL in the year ended 31 December
2013. Management expect that this will be repaid by H2 2015, and the repayment of the advance will trigger the
conversion of GFM Sarl’s ‘A’ voting shares to non voting ‘B’ shares.
Gottex Asia Multi-family Offices Ltd (‘Asia MFO’)
During 2013 GFM Sarl entered into a venture with Total Delight Holdings Limited (‘TDHL’) to launch a fund to support
multi- asset investing for family offices. Asia MFO was incorporated in the Cayman Islands on 25 April 2013. Asia
MFO was incorporated with authorised share capital of USD 110,000, consisting of 30,000 A shares and 80,000 B
shares. The initial share capital issued is USD 50,000, consisting of 30,000 A shares and 20,000 B shares. GFM Sarl
has invested in 30,000 A shares at nominal value for USD 30,000 which carry 60% voting and equity rights and TDHL
have invested in 6,600 B shares with equity rights vesting over four years. The remaining 13,400 shares issued are
accounted for as Treasury shares.
Management have consolidated Asia MFO from the date of incorporation in accordance with IFRS 10 but expect
to liquidate this entity during 2015.
ZG Advisors Pty Ltd (‘ZGA’)
GFM Sárl entered into a venture with Z Alternatives Pty Ltd (‘ZAP’) and Orchard Advisors Pty Ltd (‘Orchard’), both
of Australia, to establish a new company to provide hedge fund advisory and hedge fund investment solutions
to clients in Australia and New Zealand. ZGA was incorporated on 26 July 2013 in Victoria, Australia. GFM Sárl has
56% of the equity and voting rights of ZGA and at 31 December 2014 it holds 200,000 shares. During the year to
31 December 2014 it invested USD 72,000 in cash in ZGA.
Management have consolidated ZGA from the date of incorporation in accordance with IFRS 10.
c)Revenue
Revenue comprises the fair value of the sale of services after eliminating sales within the Group and represents
amounts receivable for services provided in the normal course of business. Revenue is recognised to the extent
that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.
Management fees and other revenue generated from the Group’s asset management activities are recognised
in the income statement over the period for which these investment management services are provided.
The Group is entitled to earn performance fees from a number of funds if the actual investment performance of
fund’s assets exceeds defined benchmarks, including high water marks, by an agreed level of outperformance in
a set time period. The Group’s performance fee arrangements are assessed at the interim and year end reporting
dates, and the performance fees are recognised only when the performance criteria are met.
d) Referral fee expense
Referral fee expenses comprise third party commissions for client introductions and on-going client service, and
some specific rebates to clients of the underlying Gottex funds. These costs are recognised in the income statement
over the period for which the related investment management services are received.
1
e) Segment reporting
IFRS 8 Segmental Reporting requires an entity to report financial and descriptive information about its reportable
segments, which are operating segments or aggregations of operating segments, and requires identification
of operating segments on the basis of internal reports that are regularly reviewed by the entity’s chief operating
decision maker in order to allocate resources to the segment and assess its performance. The Group operates
in one primary business segment as disclosed in note 4.
f) Retirement benefit costs
The Group operates defined benefit pension plans for GFM Sàrl and EIM SA and defined contribution pension plans
for GFM HK, Penjing and Frontier.
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on
retirement, usually dependant on one or more factors such as age, years of service and compensation. The assets
or liabilities recognised in the statement of financial position in respect of defined benefit pension plans represent
the present value of the defined benefit obligation at the reporting date less the fair value of plan assets. The defined
benefit obligation is calculated annually using the projected unit credit method.
Cumulative actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions
are recognised immediately in other comprehensive income.
For the defined contribution plans the Group contributes to an insurance plan on a mandatory basis. The Group
has no further payment obligations once the contributions have been paid. The contributions are recognised as
an employee expense when they are accrued. Prepaid contributions are recognised as an asset to the extent that
a cash refund or a reduction in the future payments is available.
g)Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the
term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are
also spread on a straight-line basis over the lease term.
h) Finance income and finance costs
Finance income comprises interest income, which is recognised in the income statement as it accrues, using the
effective interest rate method.
Finance costs comprise interest payable on borrowings calculated using the effective interest method.
i)Goodwill
Goodwill represents the excess of the fair value of purchase consideration over the net fair value of identifiable assets
and liabilities acquired.
Goodwill is recognised as an asset at cost and subsequently measured at cost less accumulated impairment. For
the purposes of impairment testing, goodwill is allocated to those cash generating units that have benefited from the
acquisition. The carrying value of goodwill is reviewed for impairment at least annually or where there is an indication
that goodwill may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount,
then the impairment loss is allocated first to reduce the carrying amount of the goodwill allocated to the unit and then
to the other assets of the unit on a pro rata basis. Any impairment of goodwill is recognised immediately in the income
statement and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
1 Accounting policies (continued)
j) Intangible assets
The costs of acquiring bespoke asset management software have been capitalised separately as intangible assets.
Their estimated useful lives are two-three years.
Investment management contracts are intangible assets recognised on the acquisition of subsidiaries. They are
capitalised at their fair value at the date of acquisition and their estimated lives are five years.
Amortisation is charged so as to write off the costs of the assets over their estimated useful lives using the
straight-line method.
Intangibles are stated at cost less accumulated amortisation and impairment losses. All such intangible assets
are reviewed for impairment in accordance with IAS 36 ‘Impairment of Assets’ on an annual basis or when there
are indications that the carrying value may not be recoverable.
k) Financial assets and liabilities
Investments
The Group classifies its investments as financial assets at fair value through profit or loss, designated as such
at inception by management. The Group manages its investments and the performance on a fair value basis in
accordance with its documented investment strategy.
Purchases and sales of investments are recognised on the settlement date – the date on which the financial asset
is delivered to the entity that purchased it. Investments are derecognised when the rights to receive cash flows from
the investments have expired or have been transferred and the Group has transferred substantially all risks and
rewards of ownership.
Realised and unrealised gains and losses arising from changes in the fair value of the financial assets at fair value
through profit or loss category are included in the income statement in the period in which they arise.
The fair value is determined at monthly reporting dates by management based on the net asset value of the
investments, as communicated by the managers or independent administrators of the investment funds.
Trade and other receivables
Trade and other receivables are measured at initial recognition at their fair value and are subsequently measured
at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable
amounts are recognised in the income statement when there is evidence that the asset is impaired.
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short term
deposits with an original maturity of three months or less.
Throughout both years reported, cash and cash equivalents were represented by amounts held at bank.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the underlying contractual
arrangements. An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
k) Financial assets and liabilities (continued)
Borrowings
Interest bearing loans and overdrafts are initially measured at fair value net of direct issue costs and are
subsequently measured at amortised cost, using the effective interest rate method. Finance charges, including
premiums payable on settlement or redemptions and direct issue costs are accounted for on an amortised cost basis
and taken to the income statement using the effective interest rate method, and are added to the carrying value
of the instrument.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost,
using the effective interest rate method.
Equity instruments
Equity instruments issued are recorded at the proceeds received, net of direct issue costs.
Treasury shares
Own equity instruments which are re-acquired (treasury shares) are deducted from equity. No gain or loss
is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity
instruments, but will be recognised directly in retained earnings.
Derivative financial instruments
The Group does not use any derivative financial instruments for speculative purposes.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives
when their risks and characteristics are not closely related to those of host contracts and the host contracts are
not carried at fair value with unrealised gains or losses reported in the income statement.
l) Unconsolidated structured entities
The majority of funds for which the Group acts as investment manager are unconsolidated structured entities.
The Group has made investments into a number of these funds, which are detailed in note 16. The Group receives
investment management and performance fees from these funds and these returns vary depending on the
performance of the funds.
m) Property, plant and equipment
Property, plant and equipment assets are carried at cost less accumulated depreciation and any recognised
impairment in value.
Depreciation is charged so as to write off the costs of assets, over their estimated useful lives, using the straight-line
method, with the annual rates applicable to the principal categories being:
Leasehold properties
Fixtures and fittings
Office equipment
– over the lease period
– three years
– three years
All tangible fixed assets are reviewed for impairment in accordance with IAS 36 ‘Impairment of Assets’, when there
are indications that the carrying value may not be recoverable.
n)Provisions
Provisions are recognised in the statement of financial position when the Group has a present legal or constructive
obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the
obligation at the reporting date. Where the effect is material, the provision is determined by discounting the expected
future cash flows at an appropriate discount rate.
o) Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The presentational currency
of the Group is USD.
o) Foreign currencies (continued)
Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the dates of
the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at
the rates prevailing on the reporting date. Exchange differences arising on the settlement of monetary items, and
on the retranslation of monetary items, are included in the income statement for the year. Non-monetary items that
are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates
of the initial transactions. Non-monetary items that are measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was determined.
Financial statements of foreign operations
On consolidation the assets and liabilities of the Group’s overseas operations are translated into USD at exchange
rates prevailing on the reporting date. Income and expense items are translated into USD at the average exchange
rates for the year. Exchange differences arising, if any, are taken directly to the Group’s translation reserve in equity.
p)Taxation
The tax expense included in the income statement comprises current and deferred tax.
Current tax is the expected tax payable based on the taxable profit for the year, using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the accounts and
the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised for all deductible temporary differences and carried forward tax credits or tax losses to the extent that it
is probable that taxable profits will be available to utilise against these assets. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with in equity.
q) Share schemes
Employees (including senior executives) of the Group receive remuneration in the form of share-based payment
transactions, whereby employees render services as consideration for equity instruments, ‘equity settled
transactions’.
The cost of equity settled transactions with employees is measured by reference to the fair value of the award at
the date on which it is granted. The fair value of such awards is determined by reference to the share price or by using
an appropriate option pricing model.
The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the vesting conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the awards (‘the vesting date’).
The cumulative expense recognised for the equity settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group’s best estimate of the numbers of equity
instruments that will ultimately vest. The income statement charge for a period represents the movements in
cumulative expenses recognised at the beginning and end of that period. No expense is recognised for awards that
ultimately do not vest.
There are no cash settled awards.
1
r) Critical accounting judgements and key sources of estimation uncertainty
The Group makes estimates and assumptions concerning the future and exercises judgement in applying its
accounting policies. This could mean that the resulting accounting estimates are different from the related actual
results; however this would not be expected to be significant due to the fact that such estimates and judgements
are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The estimates and assumptions that may have a significant impact on the carrying amounts of assets and liabilities
within the next financial year or require significant judgement in applying accounting policies are discussed below.
Equity awards
The Group has entered into various equity award arrangements. The fair value of these awards has been estimated
by the Directors using valuation techniques in accordance with IFRS 2 ‘Share-based payment’.
Valuations are used to determine fair values and where performance targets (such as AuM growth) affect such
valuations, changes in assumptions may result in the value of these awards charged to the consolidated income
statement.
Taxation
The Group has legal entities and operating presence in different jurisdictions, each of which has a different tax regime.
As the Group evolves, it is exposed to contingent liabilities relating to various different taxes. It is possible that the tax
authorities in any jurisdiction may make assessments contrary to the tax positions taken by the Group which could
in turn affect the outcome of the Group’s future results after taxation.
The Group has recognised certain operating losses incurred as deferred tax assets. The valuations of these assets
are subject to estimates and judgements, and changes in the estimate of their fair value could have a significant
effect on the Group’s income statement in future periods.
Valuations
The Group holds investments in certain Gottex fund of funds which are recorded at fair value through profit or loss
at inception. Subsequent measurement of the fair value is determined at monthly reporting dates by management
based on net asset values of the investments, as communicated by managers or independent administrators of
the investment funds.
There is an internal process in place in the Group which monitors and verifies the valuations continuously and
in addition the Group’s global pricing committee formally review the valuations on a case by case basis.
These valuations are subject to estimates and judgements which could affect the net asset valuation determined
which could in turn have a significant effect on the carrying amount of assets recognised in the Group’s statement
of financial position.
Referral fees
In certain circumstances, management may use estimates in the calculation of referral fees at the reporting date.
This is due to insufficient external information being made available to the Group during the preparation of the
financial statements.
Acquisitions
The Group has made major acquisitions over the prior three years, which are explained in detail in the notes to
these consolidated financial statements. The fair value of the contingent consideration at the acquisition date is
estimated and included within any goodwill capitalised, or if under IFRS 3 Business Combinations it is required to
be expensed over a vesting period in the consolidated income statement, it is recognised as a liability at its fair
value at the acquisition date. Changes in the fair value of contingent consideration until settlement could affect
the profit or loss in future periods.
Intangible assets have also been recognised at their fair value at the acquisition dates in respect of any existing
investment management contracts or other intangible assets.
Goodwill from acquisitions is tested annually for impairment. Such impairment reviews are based on the best
estimates available at the date of review, and changes in the underlying assumptions could lead to a change
in future periods.
2Revenue
The revenue of the Group may be analysed as follows:
Management fees
The Group earns investment management fees. These fees are recognised in the accounting period in which the
relevant services are provided. The fees are usually receivable monthly or quarterly in arrears.
Performance fees
The Group earns investment management performance fees based on performance of investments. The fees are
usually receivable semi-annually in arrears. 25% of performance fees for certain funds are deferred each year and
held in escrow for two years, after which they are released to the income statement.
Advisory fees
The Group earns advisory fees in connection with advisory mandates, managed on a non-discretionary basis.
GSS fees
The Group earns fees from the monitoring services provided to onshore managed account platforms, risk reporting
services and transparency services under the GSS umbrella.
Structure and leverage fees
The Group earns fees for services in arranging leverage and liquidity facilities for the Gottex fund of hedge fund
products and for structuring principal protected note products that are issued and marketed by third party
investment banks.
Management fees
Performance fees
Structure and leverage fees
Advisory fees
Total revenue
3
2014
USD 000
2013
USD 000
27,865
4,497
532
447
33,341
33,429
11,881
725
404
46,439
Referral fee expense
Referral fee expenses comprise third party commissions for client introductions and on-going client service, and some
specific rebates to clients of the underlying Gottex funds.
Management fees
Performance fees
4
2014
USD 000
2013
USD 000
3,293
605
3,898
4,913
2,146
7,059
Segmental analysis of results
Revenue from investment management services and assets under management (‘AuM’) can be and are categorised
by strategy, fund type and asset class. In addition the structured products group, GSP, undertakes negotiation and
structuring of competitive leverage and liquidity contracts with leverage and liquidity providers, as well as the
structuring of investment products.
Although gross revenue is reviewed in detail by revenue source, internal financial reporting and performance
monitoring and measurement is not further segregated below this revenue level for use in the business. The chief
operating decision maker, which is considered to be the Executive Management Committee, reviews the costs, profit,
assets and liabilities on a Group basis. Accordingly, all significant decisions are based upon the analysis of the Group
as one segment. Therefore the Directors have concluded that there is one operating segment within the meaning
of IFRS 8 Segment Reporting and the financial results of this segment are equivalent to the financial statements
of the Group as a whole.
4 Segmental analysis of results (continued)
Information about products and services
The revenue has been analysed by fund and revenue type in the table below.
Revenue
Global Multi-Manager
Asian Multi-Manager
Multi-Asset
2014
USD 000
2013
USD 000
26,790
4,227
2,324
33,341
32,909
9,214
4,316
46,439
The AuM has been analysed by fund type in the table below.
2014
USD million
AuM
Global Multi-Manager
Asian Multi-Manager
Multi-Asset
7,538
218
444
8,200
2013
USD million
4,279
352
662
5,293
Information about geographical areas
The revenue has been analysed by country of origin of customer, i.e. the domicile of the fund. No Revenue is derived
from or located in the country of domicile of the Group.
Revenue
Cayman Islands
Europe
British Virgin Islands
USA
Asia Pacific
2014
USD 000
2013
USD 000
13,278
10,379
1,333
2,650
5,701
33,341
26,642
7,510
4,336
6,056
1,895
46,439
The AuM has been analysed by country of origin of customer, i.e. the domicile of the fund. No AuM is derived from
or located in the country of domicile of the Group.
AuM
Cayman Islands
Europe
USA
British Virgin Islands
Asia Pacific
1 Client assets represented in both GFM and GSS amounted to USD 0.4 million
2014
USD million
2013
USD million
3,264
2,554
652
328
1,402
8,200
3,037
856
690
494
216
5,293
4
Segmental analysis of results (continued)
At 31 December 2014
Goodwill
PPE
Intangible assets
Investment in joint venture
Investment in associate
Switzerland
USD 000
US
USD 000
UK
USD 000
Monaco
USD 000
Asia Pacific
USD 000
Total
USD 000
21,135
236
6,038
–
–
27,409
–
222
–
223
–
445
3,631
78
1,456
–
–
5,165
–
22
–
–
2,519
2,541
5,283
206
882
–
–
6,371
30,049
764
8,376
223
2,519
41,931
Switzerland
USD 000
US
USD 000
UK
USD 000
Monaco
USD 000
Asia Pacific
USD 000
Total
USD 000
–
133
211
–
–
344
–
116
–
238
–
354
5,139
222
1,970
–
–
7,331
–
–
–
–
–
–
5,283
388
1,250
–
58
6,979
10,422
859
3,431
238
58
15,008
At 31 December 2013
Goodwill
PPE
Intangible assets
Investment in joint venture
Investment in associate
Information about major customers
Approximately 56.1% of revenue in the 12 months to 31 December 2014 (62.2% of revenue in the 12 months to 31 December
2013) came from 6 underlying funds (2013: five funds), most of which have a diversified client base. No other single fund
accounts for five per cent or more of the Group’s revenue. Further analysis is shown in the table below.
Year to 31 December 2014
Gottex Real Asset Fund
MN Master
Penjing Asia Fund
MN Plus
IFC (D) Trust
Frontier Multi Asset Platform
Other
Year to 31 December 2013
Revenue
USD 000
Revenue
%
Revenue
USD 000
Revenue
%
7,363
3,028
2,437
2,160
1,933
1,783
14,637
33,341
22.1%
9.1%
7.3%
6.5%
5.8%
5.3%
43.9%
100.0%
7,737
3,676
5,802
10,312
–
1,365
17,547
46,439
16.7%
7.9%
12.5%
22.2%
–
2.9%
37.8%
100.0%
5
Operating costs
2014
USD 000
2013
USD 000
30,830
1,225
436
32,491
10,997
32,311
4,336
–
36,647
8,877
1,065
546
1,597
13,659
1,635
47,785
–
9,423
1,908
47,978
14
1,210
–
7
(253)
48,742
1,218
49,196
Note
Personnel expenses before acquisition – related charges
Personnel expenses: acquisition – related charges
Personnel expenses – restructuring charges
Personnel expenses
General and administrative expenses before acquisition –
related and restructuring charges
General and administrative expenses: acquisition – related charges
7
6
7
General and administrative expenses: restructuring charges
General and administrative expenses
Marketing and representation services
Acquisition – related (income)/charges
Acquisition – related charges comprise costs arising only in connection with the acquisition of subsidiaries, and include
transaction costs and the deferred consideration in respect of the acquisitions that are required to be expensed
through the income statement. They do not reflect the operating expenses of the subsidiary acquired.
Restructuring costs includes onerous lease costs, termination costs and additional pension charges in respect of
changes to the Swiss pension arrangements.
Operating costs are stated after charging amounts included within general and administrative expenses as follows:
Note
Amortisation charge of intangibles
Depreciation of property, plant and equipment
Operating lease charges – land and buildings
Auditors’ remuneration (see below)
Foreign exchange losses
15
19
2014
USD 000
2013
USD 000
1,301
601
3,294
1,228
355
987
375
2,176
911
82
2014
USD 000
2013
USD 000
1,013
215
1,228
869
42
911
Fees payable to the Group’s auditors, included in the income statement related to:
Audit fees
Non-audit fees
Fees payable to auditors of entities within the Group, other than the Group’s auditors were USD 0.2 million
(2013: USD 0.1 million).
6
Personnel expenses and employees
a) Personnel expenses
The aggregate remuneration of employees (including executive directors) was:
2014
USD 000
2013
USD 000
25,970
1,593
793
1,133
1,494
1,508
32,491
31,816
1,432
154
233
1,337
1,675
36,647
Number
2014
2013
Number of employees – average during the year
108
133
112
Note
Wages and salaries
Social security expenses (including pension expenses)
Net pension cost
Termination costs
Sundry personnel expenses
23
28
b) Employee numbers
The average total monthly number of employees (including executive directors) was:
Number of employees – at 31 December
7
110
Acquisition-related charges
Note
Frontier adjustment to deferred consideration
Penjing adjustment to deferred consideration
Frontier acquisition – related transaction costs
EIM acquisition – related transaction costs
Acquisition related (income)/charges on the face of the Income Statement
Acquisition related personnel expenses
Acquisition related amortisation of intangible
Total acquisition related charges included with operating costs
Acquisition related finance (income)/cost
Total acquisition related charges
31
5
5
8
2014
2013
(675)
(166)
–
588
(253)
1,225
1,065
2,037
242
660
188
128
1,218
4,336
546
6,100
(766)
1,271
358
6,458
Under the terms of the share purchase agreement the purchase price of Frontier and Penjing included deferred
consideration which is contingent on the retention level of AuM, net management fees, operating costs and in certain
cases the retention of key employees. In addition a percentage of Penjing’s performance fees are to be paid to the
selling shareholders as contingent consideration.
Changes in the estimate of the deferred consideration paid to Frontier and Penjing’s selling shareholders that was
originally capitalised within goodwill on acquisition are required under IFRS to be expensed in the Income Statement
and are included in Acquisition related charges on the face of the Income Statement.
The deferred consideration paid to Frontier and Penjing’s selling shareholders that is required under IFRS to
be treated as remuneration expensed through the Group income statement and is included in personnel costs.
Excluding all such acquisition related charges detailed above and the goodwill impairment of USD 1.2 million,
the operating loss would be USD 16.1 million (2013: USD 3.7 million).
8
Finance income
Note
Interest on bank deposits
Movement in value of put option liability
Income from investments in Gottex funds
9
31
2014
USD 000
2013
USD 000
–
766
93
859
5
–
69
74
2014
USD 000
2013
USD 000
29
–
–
29
–
304
54
358
Finance cost
Interest payable on loans
Movement in value of put option liability
Unwinding of discount on deferred consideration
10 Net loss on financial assets
The net loss/(gain) on financial assets designated at fair value through profit or loss is analysed as follows:
Note
2014
USD 000
2013
USD 000
16
140
(74)
(88)
58
9
9
54
1,715
62
(281)
90
(59)
(82)
1,445
2014
USD 000
2013
USD 000
194
3
197
71
–
71
268
238
(1,322)
(1,084)
747
–
747
(337)
1.4%
3.4%
GFMH ABL
GMAE Fund
Market Neutral Fund
GVA ABL Fund
Tiger Fund
Other funds
11 Income tax charge/(credit)
Current tax – current year
Current tax – prior year
Current tax
Deferred tax – current year
Deferred tax – prior year
Deferred tax
Effective Group tax rate
11 Income tax credit (continued)
Reconciliation of the taxation charge
Weighted average Group tax rate %*
Expected Group tax income
Reversal of previously recognised deferred tax asset
Tax losses carried forward**
Non-deductable expense for tax purposes – impairment of goodwill
Adjustment in respect of prior years
2014
USD 000
2013
USD 000
(37.0)
(30.0)
(6,990)
826
5,981
448
3
268
(2,991)
–
3,976
–
(1,322)
(337)
* T he weighted average Group tax rate is calculated taking into account the official tax rate of the countries that the Group’s various entities are registered in and
their individual contributions to the profit for the year. As the Group diversifies and grows globally, the tax rate may increase.
** At 31 December 2014, the Group has approximately USD 60.9 million (2013: USD 27.2 million) of carried forward tax losses which had not been recognised at the
reporting date. These tax losses do not time expire. Due to the expected profitability and potential structure of the relevant entities, it is not considered probable
that relevant future taxable income will be available against which the unused tax losses can be utilised. Accordingly no deferred tax asset has been recognised
in the statement of financial position of the Group at 31 December 2014 (2013: USD nil) for these losses.
At 31 December 2014, the Group had approximately USD 11.0 million (2013: USD 6.7 million) of carried forward tax
losses which would be available to offset against future taxable income and a related deferred tax asset of USD
2.3 million before set-off was recognised in the statement of financial position of the Group (2013: USD 1.7 million).
The Group recognised a deferred tax asset of 0.3 million (2013: USD 0.4 million) related to share based payments
and a deferred tax asset of 0.1 million (2013: USD 0.2 million) related to deferred bonuses at 31 December 2014.
12 Loss per share
Basic loss per share is calculated by dividing net loss for the year attributable to ordinary equity holders of the parent
by the weighted average number of ordinary shares outstanding during the year.
Diluted loss per share is calculated by dividing the net loss attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Net Loss
Note
Net loss attributable to ordinary equity holders of the parent for basic loss per share
Adjustments to net loss attributable to ordinary equity holders of the parent 1,2
Revaluation of investments in respect of GFMH ABL
Net impairment/(recovery) of receivables
Termination costs
Restructuring costs
Write-off recovery of costs from funds
Adjusted net loss attributable to ordinary equity holders of the parent
for diluted loss per share
14
2014
USD 000
2013
USD 000
(18,922)
(9,709)
1,210
140
311
1,071
1,980
–
858
(440)
–
–
979
–
6,062
1,176
(13,231)
(2,053)
1 T
he Group has presented an adjusted loss per share for the year ended 31 December 2014 and 31 December 2013 in order to portray the results of the Group in the way
that management views the operations in the years. The adjusted loss per share have been calculated by adding back the (i) the impairment of the goodwill on the Frontier
acquisition; (ii) share of profit attributable to the Group in respect of the revaluation of the investment held in GFMH ABL, (iii) the net impairment/(recovery) of receivables;
(iv) termination costs; (v) restructuring costs and (vi) costs expensed in relation to the acquisition of EIM, Frontier and Penjing.
2 These adjustments are tax-effected where appropriate.
12 Loss per share (continued)
Shares
Number
Weighted average number of ordinary shares (excluding treasury shares)
for basic loss per share
Adjustments for dilutive potential ordinary shares
Weighted average number of ordinary shares (excluding treasury shares)
for diluted loss per share
2014
000
2013
000
33,412
29,279
–
–
33,412
29,279
Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would
decrease earnings per share or increase loss per share from continuing operations. The expected effect for the year
ended 31 December 2014 and 31 December 2013 of the Group’s potential ordinary shares would be antidilutive and
therefore have been excluded from the calculation above.
Loss per share
2014
USD 000
2013
USD 000
Basic loss per share
Adjustments for dilutive potential ordinary shares
Diluted loss per share
(0.57)
–
(0.57)
(0.33)
–
(0.33)
Basic and diluted loss per share loss per share
Revaluation of investments in respect of GFMH ABL
Net impairment/(recovery) of receivables
Termination costs
Restructuring costs
Write-off recovery of costs from funds
Adjusted basic and diluted loss per share
(0.57)
0.04
–
0.01
0.03
0.06
0.03
–
(0.40)
(0.33)
–
0.03
(0.02)
–
–
0.22
0.04
(0.06)
13Dividends
In the years to 31 December 2014 and 31 December 2013 the Company paid no dividend to its shareholders.
No dividend has been proposed by the Board in 2014 or 2015 in respect of the 2014 results.
14Goodwill
Over the last three years the Group has acquired several businesses and goodwill from these acquisitions is
presented in the following table:
EIM
USD 000
Penging
USD 000
Frontier
USD 000
Total
USD 000
Cost (restated)
At 1 January 2013
Acquisition of subsidiaries
Translation differences
At 31 December 2013
Cost
At 1 January 2014
–
–
–
–
5,283
–
–
5,283
–
4,763
376
5,139
5,283
4,763
376
10,422
–
21,135
5,283
–
5,139
–
10,422
21,135
At 31 December 2014
–
21,135
–
5,283
(298)
4,841
(298)
31,259
At 1 January 2014
–
–
–
–
Impairment in year
At 31 December 2014
–
–
–
–
(1,210)
(1,210)
(1,210)
(1,210)
Net book value at 31 December 2014
21,135
5,283
3,631
30,049
–
5,283
5,139
10,422
Impairment
Impairment testing
At 31 December 2014 the goodwill created on the Penjing and the Frontier acquisitions was tested for impairment by
comparing the carrying value of the cash generating unit to its recoverable amount, which was based on the a value
in use calculation.
The key assumptions used in determining the values in use calculation are as follows:
Penjing
Forecast EBITDA determined based on five years forecasts and projections prepared based by Management
and approved by the Board.
Long term growth rate of determined based on Management’s expectations of economic growth in the relevant
market of 3% (2013: 3%).
Pre-tax risk adjusted discount rate of 13.6% (2013: 15.0%), based on the risk free rate for 10 year government
bonds, adjusted for the equity market risk premium and the risk adjustment beta, applied to reflect the risk of
the specific cash generating unit relative to the market as a whole.
No impairment of the goodwill was required.
Applying a pre-tax discount rate of 13.6%, the impairment test for Penjing resulted in a recoverable amount that
exceeded its carrying amounts by USD 0.5 million. An increase in the pre-tax discount rate assumption only to 14.0%
would result in the recoverable amount of Penjing to be equal to its carrying amount.
A decrease in the long term growth rate assumption only to 2.5% would result in the recoverable amount of Penjing to
be equal to its carrying amount.
A decrease in the annual revenues assumption only by 5% would result in the recoverable amount of Penjing to be
equal to its carrying amount.
Frontier
Forecast EBITDA determined based on five years forecasts and projections prepared based by Management
and approved by the Board.
Long term growth rate of determined based on Management’s expectations of economic growth in the relevant
market of 1.5%.
14 Goodwill (continued)
Pre-tax risk adjusted discount rate of 14.8%, based on the risk free rate for 10 year government bonds, adjusted
for the equity market risk premium and the risk adjustment beta, applied to reflect the risk of the specific cash
generating unit relative to the market as a whole.
The cash generating unit of the Frontier goodwill was identified at acquisition as the MAE business and its recoverable
amount at 31 December 2014 was estimated at USD 7.4 million.
Management concluded that impairment of USD 1.2 million was required at 31 December 2014.
It is reasonably possible that there could be further impairment if there were a change in the underlying assumptions.
A reasonably possible change in the discount rate assumption only of +10%/-10% would lead to an increase of
USD 0.8 million/decrease of USD 0.8 million in the impairment charge in the year.
A reasonable possible change in the long term growth rate assumption only of +10%/-10% would lead to a decrease
of USD 0.1 million/ increase of USD 0.1 million in the impairment charge in the year.
A reasonable possible change in the annual revenues assumption only of +10%/-10% would lead to a decrease of USD
0.7 million/ increase of USD 0.7 million in the impairment charge in the year.
15Intangible assets
Intangible assets comprise capitalised investment management contracts acquired in business combinations and
capitalised bespoke asset management software costs. The amortisation period for these assets is over a period
of two-five years.
Cost
At 1 January 2013
Additions
At 31 December 2013
Accumulated amortisation
At 1 January 2013
Amortisation charge
At 31 December 2013
Cost
At 1 January 2014
Additions
Disposals
At 31 December 2014
Accumulated amortisation
At 1 January 2014
Amortisation charge
Disposals
At 31 December 2014
Investment
management
contracts
USD 000
Software
USD 000
Total
USD 000
1,752
2,047
–
162
3,961
5,875
–
343
–
6,218
7,627
2,047
343
162
10,179
(167)
(546)
(713)
3,248
(5,594)
(441)
(6,035)
183
(5,761)
(987)
(6,748)
3,431
3,961
6,054
–
–
(126)
9,889
6,218
270
166
(567)
(5)
6,082
10,179
6,324
166
(567)
(131)
15,971
(713)
(1,065)
–
36
(1,742)
8,147
(6,035)
(236)
412
6
(5853)
229
(6,748)
(1,301)
412
42
(7,595)
8,376
The movement during the year ended 31 December 2014 relates to the recognition of intangible assets of USD 6.3 million
in connection with the acquisition of EIM (2013: USD 2.0 million in connection with the acquisition of Frontier).
16 Financial investments
Financial investments consist principally of investments in Gottex funds some of which are listed on the Irish Stock
Exchange, mainly in market neutral and asset based funds and are recorded at fair value through profit or loss.
Fair value is determined by management based on the net asset value of the Group’s investments, as communicated
by the managers or independent administrators of the investment funds. The revaluation of such investments is
presented within note 10.
USD 000
Fair value
At 1 January 2013
Additions
Disposals – Investments in GFMH ABL
Disposals – Other
Disposals – Total
Revaluation to fair value – Investments in GFMH ABL
Revaluation to fair values – Other
Revaluation to fair value – Total
At 31 December 2013
At 1 January 2014
Acquisition of subsidiary
Additions
Disposals – Investments in GFMH ABL
Disposals – Other
Disposals – Total
Revaluation to fair value – Investments in GFMH ABL
Revaluation to fair values – Other
Revaluation to fair value – Total
At 31 December 2014
18,503
611
(1,127)
(2,585)
(3,712)
(1,715)
270
(1,445)
28
13,985
13,985
264
282
(233)
(9,369)
(9,602)
(140)
86
(54)
14
4,889
Financial investments are recognised as non-current assets of USD 2.4 million and current assets of USD 2.5 million.
The disposals in the year included USD 1.5 million from Market Neutral investments and USD 5.5 million of MAE
investments, as well as USD 1.4 million from the GVA MN Fund.
The revaluation in the year includes a loss in respect of the investments held by GFMH ABL of USD 0.1 million
(2013: USD 1.7 million). The Group holds a 50 per cent shareholding in this entity and certain directors and employees
of the Group hold the remaining 50 per cent shareholding. The Directors consider that the Group has de facto control
of this entity and therefore the entity has been consolidated within these financial statements.
The following table shows financial instruments recognised at fair value, analysed between those whose fair value
is based on:
those involving inputs (other than quoted prices in active markets for identical assets or liabilities) – Level 1 that
are observable for asset and liability, either directly (as prices) or indirectly (derived from prices) – Level 2; and
those with inputs for the asset or liability that are not based on observable market data (unobservable inputs)
– Level 3.
USD 000
31 December 2014
31 December 2013
Level 2
Level 3
Total
Level 2
Level 3
Total
3,112
1,777
4,889
12,015
1,970
13,985
16 Financial investments (continued)
The following table presents additional information about Level 3 financial investments measured at fair value.
Both observable and unobservable inputs may be used to determine the fair value of positions that the Group has
classified within the Level 3 category. As a result, the gains and losses for financial investments within the Level 3
category may include changes in fair value that were attributable to both observable (e.g., changes in market interest
rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.
The reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between
the beginning and the end of the years ended 31 December 2014 and 31 December 2013 is as follows:
Balance at 1 January
Net loss in year, shown in the income statement
Additions
Disposal at fair value
Balance at 31 December
2014
USD 000
2013
USD 000
1,970
(230)
293
(256)
1,777
5,016
(1,840)
9
(1,215)
1,970
There were no transfers between Level 2 and Level 3 in the years ended 31 December 2014 and 31 December 2013.
The loss during the year ended 31 December 2014 for financial investments that are held as at 31 December 2014
is USD 186,000 (2013: USD 396,000) and is presented within the income statement.
17 Investment in joint venture
ERG
On 11 January 2012, the Group invested USD 26,000 in ERG. The Group has accounted for ERG as a joint venture
under the equity method. Further details are shown in the note 1b) Basis of consolidation.
In addition the Group received USD 0.2 million (2013: USD 0.3 million) as a recovery of costs in supporting ERG.
The summarised financial information of 100 per cent of ERG is as follows:
Income
Expenses
Loss for the year
Group’s share of loss
2014
USD 000
2013
USD 000
2,910
(2,939)
(29)
3,191
(3,228)
(37)
(15) (19)
2
671
673
12
707
719
(227)
(243)
Total net assets
446
476
Group’s share of net total assets
223
238
Total non-current assets
Total current assets
Total assets
Total current liabilities
18 Investment in associates
HSL
On 11 January 2013, the Group invested USD 1,000 in HSL. The Group has accounted for HSL as an associate under
the equity method. Further details are shown in the note 1b) Basis of consolidation.
HSL made losses in the period to 31 December 2013 and these losses were set against the original investment of
the Group. At 31 December 2014 the share of the Group’s losses that were unrecognised were USD 108,000 (2013:
USD 45,000). The losses mainly relate to fund start-up costs and the related fund launched in H2 2014.
Staples Rodway
On 30 May 2013 the Group invested USD 60,000 in Staples Rodway Funds Limited, renaming the company to Gottex
SR Funds Limited (‘GSR Funds’). Gottex acquired 33⅓% of GSR Funds. Further details are shown in the note 1b) Basis
of consolidation.
The Group’s share of the loss for the period was USD 58,000 (2013: USD 1,000), which is comprised of the Group’s
share of operating loss of USD 23,000 and USD 35,000 which is the write-down to USD 1 following a management
decision at 31 December 2014 to sell the investment for this amount.
Personalised Portfolio Management 2PM (‘2PM’)
On 30 September 2014 the Group acquired EIM, which has an investment of 37.04% in 2PM, a private wealth management
company and its subsidiaries, and the Group recognised this at fair value on completion of the acquisition.
The Group has significant influence over the operations of the business and therefore have accounted for the
investment as an associate using the equity method.
The Group’s share of the profit of the 2PM group for the period since acquisition is USD 42,000.
UCITS
On 15 February 2013 UCITS was wound up. Proceeds from the wind up were USD 1.8 million. The Group included
a gain from UCITS of USD 0.2 million in its 2013 results.
The summarised financial information of the Group’s investments in associates (after excluding all flows to/from
and balances in/with Group entities) is as follows:
31 December 2014
USD 000
Revenue
(Loss)/profit for the
year/period
The Group’s share
of (loss)/profit
Total assets
Total liabilities
Total net assets
Group’s share of
net total assets
31 December 2013
USD 000
HSL
Staples
Rodway
2PM
Total
HSL
UCITS
Staples
Rodway
Total
987
312
1,920
3,219
–
6
327
333
(416)
(70)
112
(374)
(257)
(71)
(3)
(331)
–
136
(802)
(666)
(58)
131
(52)
79
42
7,222
(4,645)
2,577
(16)
7,489
(5,499)
1,990
(1)
101
(349)
(248)
169
–
–
–
(1)
220
(46)
174
167
321
(395)
(74)
–
–
2,519
2,519
–
–
58
58
Reconciliation of share of equity to the carrying amount
Equity
2,577
Participation
37.04%
Share in equity
955
Goodwill
1,564
Carrying amount
2,519
19 Property, plant and equipment
Cost or valuation:
At 1 January 2013
Additions
Disposals
At 31 December 2013
Accumulated depreciation:
At 1 January 2013
Depreciation charge
Disposals
At 31 December 2013
Cost or valuation:
At 1 January 2014
Additions
Disposals
At 31 December 2014
Accumulated depreciation:
At 1 January 2014
Depreciation charge
Disposals
At 31 December 2014
Short term
leasehold
USD 000
Fixtures
& fittings
USD 000
Office
equipment
USD 000
Total
USD 000
425
34
–
–
69
528
1,046
445
–
(1)
4
1,494
4,511
281
18
(2)
10
4,818
5,982
760
18
(3)
83
6,840
(409)
(18)
–
(5)
(432)
96
(956)
(72)
1
(34)
(1,061)
433
(4,169)
(285)
2
(36)
(4,488)
330
(5,534)
(375)
3
(75)
(5,981)
859
528
240
–
(228)
150
690
1,494
147
180
(438)
(644)
739
4,818
197
121
(957)
(60)
4,119
6,840
584
301
(1,623)
(554)
5,548
(432)
(108)
57
(65)
(548)
142
(1,061)
(242)
436
423
(444)
295
(4,488)
(251)
959
(12)
(3,792)
327
(5,981)
(601)
1,452
346
(4,784)
764
2014
USD 000
2013
USD 000
10,574
348
3,893
952
15,767
17,420
634
2,330
1,073
21,457
545
16,312
–
21,457
The Group held no assets under finance leases during any of the years reported.
20 Trade and other receivables
Current receivables
Trade debtors
Amount due from related parties
Other debtors
Prepayments and accrued income
Non-current receivables
Other receivables
Total trade and other receivables
20 Trade and other receivable (continued)
Current debtors
Trade receivables principally comprise amounts due for management and performance fees. The Directors consider
that the carrying amount of trade and other receivables approximates their fair value.
Trade and other receivables are non-interest bearing. At 31 December 2014, the Group carried out an impairment
review and concluded that a provision was required against trade debtors of USD 1.6 million (2013: USD 0.2 million)
of which USD 0.9 million (2013: USD nil) is recognised in (Net impairment)/recovery of receivables on the face of
the consolidated income statement. In addition USD 0.5 million (2013: USD 0.5 million) of management fees that
had previously been provided for were recovered during the year and this amount was also recognised in (Net
impairment)/recovery of receivable on the face of the consolidated income statement.
For terms and conditions relating to related parties, refer to note 30.
The total trade and other receivables, except for USD 952,000 (2013: USD 1,073,000) included in prepayments
and accrued income, are classified as financial assets.
21 Trade and other payables – current and non-current
Note
Current liabilities
Trade creditors
Amount due to related parties
Other tax and social security
Other creditors
Accruals
Amount due to related parties
Other creditors
Retirement benefit liability
Accruals
Total trade and other payables
23
2014
USD 000
2013
USD 000
5,781
5,122
1,434
5,060
8,531
25,928
6,343
30
1,406
10,386
8,679
26,844
3,498
2,005
4,783
1,149
11,435
–
3,870
578
1,701
6,149
37,363
32,993
Trade creditors principally comprise amounts outstanding for referral fee expenses and on-going costs. The Directors
consider that the carrying amount of trade payables approximates to their fair value. Trade and other payables are
non-interest bearing and are normally settled on 60 to 90 day terms in the case of trade payables and on a specific
case by case basis for other payables.
For terms and conditions relating to related parties, refer to note 30.
Accruals consist principally of wages and salaries. The Directors consider that the carrying amount of accruals
approximates their fair value.
21Trade and other payables – current and non-current (continued)
Non-current other creditors represent principally amounts accrued in respect of the Frontier and Penjing acquisitions.
The total trade and other payables, except for other tax and social security, the accruals (both current and noncurrent), and certain amounts included in other creditors (both current and non-current) related to the Penjing and
Frontier acquisitions, are classified as financial liabilities.
Financial liabilities measured at fair value and categorised as Level 3 financial liabilities are comprised of contingent
consideration liabilities in respect of Penjing and Frontier. The valuation of these liabilities is based on unobservable
inputs which include the AUM levels, future net revenue levels and operating cost levels and also the value of the
share price of GFMH, which affects the value of shares issued as deferred consideration.
Changes in the value of these financial liabilities are recognised in the Consolidated Income Statement and are
disclosed within the charges included in notes 5 and 7.
The reconciliation of these financial liabilities is as follows:
Balance at 1 January
Additions
Net movement in year, (credited)/expensed in the Income Statement
Settled in year
Balance at 31 December
2014
USD 000
2013
USD 000
4,500
–
(841)
(3,283)
376
2,235
2,128
902
(765)
4,500
22 Deferred tax assets/(liabilities)
The following are the components of the deferred tax assets and liabilities recognised by the Group and movements
thereon during the current and prior reporting period.
Deferred tax
asset
– Losses
USD 000
Deferred
tax asset
- Sharebased
payments
USD 000
Deferred
tax asset
- Accelerated
depreciation
USD 000
Deferred
tax asset
- Bonus
accrual
USD 000
Deferred
tax asset
– Retirement
benefit
Liability
USD 000
At 1 January 2013
(Debited)/credited to income
Debited to other
comprehensive income
At 31 December 2013
2,203
–
(572)
–
405
–
(11)
–
18
–
(10)
–
453
–
(240)
–
15
1,646
–
394
–
8
At 1 January 2014
(Debited)/credited to income
Credited to other
comprehensive income
At 31 December 2014
1,646
725
37
–
394
–
(115)
–
(36)
2,372
(24)
255
Total
Deferred
Tax Asset
USD 000
Deferred
Tax Liability
– Intangible
Asset
USD 000
Total
deferred
tax
(Assets/
(liabilities)
USD 000
79
–
(6)
(5)
3,158
–
(839)
(5)
–
(413)
92
–
3,158
(413)
(747)
(5)
–
213
1
69
16
2,330
(34)
(355)
(18)
1,975
8
–
–
–
213
–
(191)
–
69
571
61
230
2,330
1,296
(208)
230
(355)
(1,296)
137
–
1,975
–
(71)
230
(1)
7
(22)
–
(32)
899
(115)
3,533
16
(1,498)
(99)
2,035
Deferred tax assets and liability within the same legal entity of USD 1.2 million have been set off in the consolidated
balance sheet at 31 December 2014 which resulted in a total deferred tax asset of USD 2.3 million and a total
deferred tax liability of USD 0.3 million.
23 Retirement benefits
The Group provides post-employment benefits to its employees in accordance with the local statutory regulations
of the countries in which its employees are located.
Defined Contribution Plan
GFM HK transferred all of its employees to Penjing at the beginning of the year, and a defined contribution scheme is
operated for all of these employees. The contributions for the years ended 31 December 2014 and 31 December 2013
were USD 46,000 and USD 48,000, respectively. Frontier, acquired in July 2013, also operates a defined contribution
scheme for all of its employees. The contributions for the year ended 31 December 2014 were USD 15,000 and
the comparative from the date of acquisition to 31 December 2013 was USD 9,000. GTX UK paid contributionsof
USD 15,000 in respect of one employee (2013: USD nil).
Defined Benefit Plan
GFM Sàrl operates a defined benefit scheme for all of its employees with Fondation Commune Banque Cantonale
Vaudoise, whereby the employer and the employees contribute equally.
EIM SA operates a defined benefit scheme for all of its employees with Fondation Collective Swiss Life whereby
the employer contributes at least as much as the employee.
The Companies’ obligations under the Swiss pension schemes are to pay defined contributions. However in
accordance with the Swiss law ‘LPP/BVG’, the pension schemes incorporate certain guarantees, such as minimum
interest accumulation at defined rates, conversion of capital at defined rates upon transfer of vested benefits and
potential life-long pension annuities. The pension schemes have been reported as defined benefit pension plans
in accordance with IFRS.
The pension plans are maintained by foundations that are separate legal entities from the Companies. The plans
provides coverage to all Switzerland-domiciled employees for retirement, death and disability.
The Foundations are governed by a board of trustees and supervised by the Supervisory Authority.
The liability recognised in the consolidated balance sheet in respect of the defined benefit pension plans is the
present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will
be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to other comprehensive income in the period in which they arise.
Service costs and net interest on the net defined benefit liability are recognised immediately in the income statement.
23 Retirement benefits (continued)
The table below outlines where the Group’s post-employment amounts related to the Swiss pension scheme are
included in the financial statements:
A reconciliation of the present value of the defined benefit obligation and the fair value of scheme assets to the
assets and liabilities recognised in the statement of financial position is as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Liability recognised in the statement of financial position
2014
USD 000
2013
USD 000
(14,368)
9,585
(4,783)
(3,060)
2,482
(578)
717
97
(1,223)
18
(1,205)
(88)
26
(62)
7
(1,198)
10
(52)
Net expense recognised in the income statement
Recognised in the defined benefit scheme obligations
Actuarial losses due to financial assumptions
Experience adjustments
Recognised in the defined benefit scheme assets
Return on scheme assets excluding interest
Net expense recognised in other comprehensive income
The significant actuarial assumptions used in the actuarial valuations include:
Weighted discount rate
2014
2013
1.04%
2.25%
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Sensitivity Analysis
Change in
assumption
Increase in
assumption
Decrease in
assumption
Discount rate
0.25%
-2.7%
+2.6%
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating
the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value
of defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has
been applied as when calculating the pension liability recognised within the statement of financial position.
The expense recognised in personnel expenses in the income statement was as follows:
Current service cost
Past service cost/(credit)
Net Interest cost
2014
USD 000
2013
USD 000
260
436
21
717
161
(77)
13
97
The past service cost is related to the plan change decided and approved in 2014 and effective as of 1 January
2015. The difference between the liability of the modified and the previous pension plan was immediately recognised
in the cost of 2014 and was USD 436,000.
Movements in the present value of the defined benefit scheme obligations in the current year were as follows:
At 1 January
Current service cost
Past service (cost)/credit
Interest cost
Contributions from employees
Actuarial gains/(losses)
Benefits paid/transferred
At 31 December
2014
USD 000
2013
USD 000
(3,060)
(10,549)
(260)
(436)
(99)
(178)
(1,205)
689
730
(14,368)
(3,132)
–
(161)
77
(64)
(148)
62
389
(83)
(3,060)
2014
USD 000
2013
USD 000
2,482
7,848
78
7
230
178
(689)
(549)
9,585
2,470
–
51
(10)
148
148
(389)
64
2,482
Movements in the fair value of defined benefit scheme assets in the year were as follows:
At 1 January
Interest on scheme assets
Return on scheme assets excluding interest
Contributions from employer
Contributions from employees
Benefits paid/ transferred
At 31 December
The pension fund assets are not invested separately for each employer but globally. The weighted actual allocation
at 31 December 2014 and actual allocation at 31 December 2013 is shown below.
31 December 2014
Cash
Equities
Bonds
Real estate
Other investments
Quoted
Unquoted
Total
–
47.7%
20.7%
22.0%
6.5%
96.9%
3.1%
–
–
–
–
3.1%
3.1%
47.7%
20.7%
22.0%
6.5%
100.0%
31 December 2013
Cash
Equities
Bonds
Real estate
Other investments
Quoted
Unquoted
Total
–
26.9%
38.9%
9.6%
11.3%
86.7%
13.3%
–
–
–
–
13.3%
13.3%
26.9%
38.9%
9.6%
11.3%
100.0%
2014
USD 000
2013
USD 000
3,026
6,570
9,596
1,865
5,169
7,034
The entities expect to pay contributions of USD 0.7 million to its defined benefit plans in 2015.
24 Operating lease commitments
Minimum lease payments under non-cancellable leases are payable as follows:
Land and buildings
Within one year
Between one and five years
The Group leases various properties under non-cancellable operating lease agreements. The leases have varying
terms and renewal rights.
25 Contingent assets, liabilities and capital commitments
The Group had no contingent assets, contingent liabilities or capital commitments at either of the reporting dates,
other than those described below:
Taxation
The Group has legal entities and operating presence in different jurisdictions, each of which has different tax regimes.
As the Group evolves, it is exposed to contingent liabilities relating to various different taxes. It is possible that the tax
authorities in any jurisdiction may make assessments contrary to the tax positions taken by the Group. Agreement
with the tax authorities in such a situation would then be subject to negotiation based on the facts, circumstances
and applicable tax law, as a result of which the Group may agree to renounce its contingent tax assets and/or to pay
additional taxes. The possible assessments of the various tax authorities are largely uncertain and it is not possible
to quantify the likely outcome of any subsequent negotiations or the timing of any related settlements. Contingent
liabilities at 31 December 2014 which are considered possible, but not probable, of crystallization are not quantifiable
but are not expected to be material.
Arbitration
The Group has been in arbitration with two third party marketing agents for a number of years. Two partial awards
have been rendered in the proceedings to date, which have decided preliminary notions, however the proceedings
are moving very slowly and are still at a relatively early stage. Management believe that it is not possible to make a
reliable estimate of the amount of an obligation owed by the Group, if any indeed is owed. On this basis management
have made no provision. However, as the claimants’ initial claim was USD 1.0 million, management believe that the
exposure is not likely to be more than this figure.
26 Capital and reserves
a) Allotted and fully paid capital
2014
Ordinary shares @ CHF1.00 each
b)
2013
Number
of shares
Nominal value
CHF 000
Number
of shares
Nominal value
CHF 000
48,502,184
48,502
34,502,184
34,502
Number
of shares
Nominal value
CHF 000
34,502,184
14,000,000
48,502,184
34,502
14,000
48,502
Movement in allotted and fully paid up share capital
At 1 January 2013 and 1 January 2014
Issue of shares for the acquisition of EIM
At 31 December 2014
31
Movements in share capital in the year to 31 December 2014
On 16 April 2014 the shareholders of the Company approved the issued 14,000,000 ordinary shares to the former
shareholders of EIM as the consideration for the acquisition of EIM. The new shares rank pari passu in all respects with
the existing shares of the Company. The new shares were listed on the SIX Swiss Exchange on 30 September 2014.
Movements in share capital in the year to 31 December 2013
There were no movements in share capital in the year to 31 December 2013.
Rights of shareholders
Shareholders have the right to attend and to vote at a general meeting. Each share carries one vote.
The Company may by ordinary resolution declare dividends in accordance with the respective rights of the shareholders.
In the case of a winding-up, shareholders have the right to a pro rata share of any surplus.
Treasury shares
Investments in shares of GFMH held by the EBT and own shares held by GFMH are classified in equity as treasury
shares and are accounted for at historical cost.
Translation reserve
The movement in the translation reserve comprises all foreign exchange differences arising from the translation
of the financial results of foreign entities included in the consolidation.
Share-based payment reserve
The share-based payment reserve represents the charges made under IFRS 2 ‘Share-based payments’ discussed
in note 28. In addition, on the vesting of awards, the cancellation of awards and the issue of shares, transfers are
made from the share-based payment reserve to other components of equity.
Pooling and other reserves
The balance of the pooling and other reserves arose from the pooling of interest accounting on the purchase of
subsidiaries and the reclassification of reserves in 2007, and the subsequent transfer of cancelled share premium
in 2008. The movement in the year ended 31 December 2014 comprises the excess of the fair value over the par
value of the shares issued for the EIM acquisition.
27 Non-controlling interest
At 1 January
Share of total comprehensive loss
Cash paid to GFMH ABL non-controlling interest holders
Consolidation of Frontier
Consolidation of ZGA
Consolidation of Asia MFO
At 31 December
2014
USD 000
2013
USD 000
1,410
(397)
(100)
–
–
–
913
2,077
(781)
(700)
698
109
7
1,410
The share of recognised income and expense for 2014 attributable to the non-controlling interest is comprised of
50% of the income and expense of the GFMH ABL (2013: 50%), 20% of the recognised income and expense of Frontier
(2013: 20% from the date of acquisition), 44% for ZGA (2013: 50% from the date of investment) and 40% for Asia MFO
(2013: 40% from the date of investment).
The share of recognised income and expense is comprised of the loss for the year attributable to the non-controlling
interest and a share of the translation reserve.
28 Share-based payments
Share-based payment reserve in equity:
At 1 January
Recognised in the income statement – share-based payments
Recognised in the income statement – share-based payments relating to Penjing acquisition
Recognised in the income statement – share-based payments relating to Frontier acquisition
Reclassification/utilisation during the year
At 31 December
2014
USD 000
2013
USD 000
10,169
10,778
1,339
53
102
1,494
838
287
212
1,337
(1,245)
10,418
(1,946)
10,169
Share Awards
Since listing in 2007 the Company has made awards of shares to employees under various share award schemes.
The fair value of each award was estimated by reference to the share price at the date of grant, with an appropriate
adjustment for expected dividends foregone, where appropriate.
a) The Restricted award plan
These awards have been made to various employees and either vest evenly over the vesting period or cliff vest.
The fair values of each award at the date of grant range from USD 1.36 to USD 7.15 per share.
Movement in share awards
Share awards outstanding at the beginning of the year
Share awards granted in the year
Share awards vested in year
Share awards forfeited in year
Share awards outstanding at the end of the year
2014
2013
71,151
476,401
(36,201)
–
511,351
110,867
–
(37,959)
(1,757)
71,151
A charge for the year ended 31 December 2014 of USD 0.2 million (2013: USD 0.2 million) has been made in relation
to these awards.
28 Share-based payments (continued)
b) NED awards
For certain non-executive directors (‘NEDs’) 25 per cent of their annual fees are comprised of share awards, valued
at an amount equivalent to the original cash fee sacrificed. The share awards vest to the NEDs at the time of the
re-election or retirement of each director. At 31 December 2014, 180,768 shares had been granted to the NEDs, and
of these 12,618 shares had vested (2013: 140,038 shares had been granted, and of these 74,988 shares had vested)
A charge for the year ended 31 December 2014 of USD 0.1 million (2013: USD 0.1 million) has been made in relation
to these awards.
c) The Bonus Share awards – 2010
The Group made awards of 110,737 restricted shares in April 2011 which formed part of the annual bonus awards
to employees for the year ended 31 December 2010. The share awards vest over a three year period in equal
portions, vesting evenly on each anniversary of the date of award and the only vesting condition is that the
participant is in the employment of the Group for this period.
The charge for the year ended 31 December 2014 was USD 10,123 (2013: 0.1 million) and these awards are now
fully expensed.
Share awards vested in the year
2014
2013
30,871
(30,871)
–
68,479
(37,608)
30,871
d) The Bonus Share option awards – 2010
The Group made awards of 46,652 share options in April 2011 which formed part of the annual bonus awards to
employees for the year ended 31 December 2010. The share options vest over three years from the date of grant
and the only vesting condition is that the participant is in the employment of the Group for this period.
At 31 December 2014 there remained 45,497 (2013: 46,652) share options outstanding, of which all were exercisable.
A charge for the year ended 31 December 2014 of USD 8,205 (2013: USD 30,319) has been made in relation to these
awards and these awards are now fully expensed.
e) The Bonus Share awards – 2011
The Group made awards of 155,016 restricted shares in May 2012 which formed part of the annual bonus awards to
employees for the year ended 31 December 2011. The share awards vest over a three year period in equal portions,
vesting evenly on each anniversary of the date of award and the only vesting condition is that the participant is in the
employment of the Group for this period.
The charge for the year ended 31 December 2014 was USD 14,051 (2013: USD 0.1 million).
Share awards vested in year
Share awards forfeited in year
2014
2013
85,750
(49,450)
(3,031)
33,269
155,016
(69,266)
–
85,750
f) The Bonus Share awards – 2012
The Group made awards of 32,419 of restricted shares in April 2013 which form part of the annual bonus awards
to employees for the year ended 31 December 2012. The share awards will vest over a three year period in equal
portions, vesting evenly on each anniversary of the date of award and the only vesting condition is that the
participant is in the employment of the Group for this period.
Although these share awards were not legally granted until 2013, the Directors believe that it is appropriate to
recognise, and have recognised the expense for these share awards over a performance period commencing
1 April 2012 as employees have begun rendering services from that date.
f) The Bonus Share awards – 2012 (continued)
The charge for the year ended 31 December 2014 was USD 7,058 (2013: credit of USD 4,266).
Granted
in 2013
Fair values at date of grant per share
USD per share
Share awards granted in year
Share awards vested in the year
Share awards lapsed in year
3.00
2014
2013
32,419
–
(17,070)
(5,173)
10,176
–
32,419
–
–
32,419
g) The Bonus Share awards – 2014
The Group made share awards of value USD 1.2 million of restricted shares in 2015 which form part of the annual
bonus awards to employees for the year ended 31 December 2014. The share awards will vest over a period of
up to three years in equal portions, vesting evenly on each anniversary of the date of award and the only vesting
condition is that the participant is in the employment of the Group for this period.
Although these share awards were not legally granted until 2015, the Directors believe that it is appropriate to
recognise, and have recognised the expense for these share awards over a performance period commencing
1 April 2014 as employees have begun rendering services from that date.
The charge for the year ended 31 December 2014 was USD 0.6 million.
h) One-off employee share award 2010
An equity award was made to an individual employee on 1 January 2010. The value of this award is dependent upon
the profitability of selected funds for the year ending 31 December 2012, and the average share price at that time.
The Group has estimated the value of this award, using weighted probability forecasts of net revenue and share
prices, and has valued this award at USD 0.1 million at 31 December 2013 (2012: USD 0.9 million). The award will vest
in equal tranches on 1 July 2014, 31 December 2014, 1 July 2015, 31 December 2015 and the only vesting condition
is that the participant is in the employment of the Group for this period.
The charge for the year ended 31 December 2014 was USD 0.1 million (2013: USD 5,373).
i) The Share option plan
Under the terms of the GFMH Employee Share Option Plan, (‘the Share option plan), certain employees have been
granted options over the Company’s shares. The share options generally vest over three years from the date of grant
and the only vesting condition is that the participant is in the employment of the Group for this period.
At 31 December 2014 184,704 (2013: 385,212) share options were exercisable. All of these options were under water
at 31 December 2014.
No charge was made for the year ended 31 December 2014 (2013: USD nil) has been made in relation to these
awards as these awards were fully expensed in prior years.
j) The LTIP plan
During the year to 31 December 2010, the Group made 369,962 share awards to certain employees of the Group.
The fair value of these awards was estimated by professional external valuers using a Monte Carlo model. The fair
value per award as at the date of grant was determined to be USD 10.7.
The number of share awards that could have finally vested was dependent on two performance criteria: (i) the
absolute share price increase in the underlying share over the three year vesting period and (ii) the share price
increase of the underlying share relative to the average share price increase of a defined peer group over the three
year vesting period to April 2013. The maximum number of awards that could have vested was 300 per cent of the
original number of awards. At April 2013 professional external valuers confirmed that no share awards had vested
and the awards lapsed.
No charge was made for the year ended 31 December 2014 (2013: USD 0.3 million) has been made in relation to
these awards as these awards were fully expensed in prior years.
k) The new equity award
The Group made awards of 4.7 million shares with a fair value of USD 2.98 per share to eight key employees
in March 2013, and further awards of 0.2 million each to two employees in September 2013 and November 2013
with a fair value of USD 4.76 and USD 3.07 per share respectively.
The vesting date of these awards is 31 December 2015, and the vesting is dependent on the achievement of
set profitability levels and net new business within the Group over the vesting period, as well as the continued
employment of the relevant employees.
No charge was made for the year ended 31 December 2014 (2013: credit of USD 40,554) has been made in relation
to these awards.
l) One-off employee share award 2013
The Group made an award of 150,000 shares to an employee in November 2013. The shares generally vest
in three equal tranches of 50,000 shares each year from 31 December 2013. The fair value per share is USD 3.07.
The vesting is linked to the achievement of raising assets (at minimum fee levels) on a cumulative basis over the
vesting period until 31 December 2015.
A charge for the year ended 31 December 2014 of USD 0.3 million (2013: USD 51,995) has been made in relation
to this award.
EBT
In 2007, the Company established an EBT in order to benefit all employees of the Group companies. The trustee of
the EBT is RBC cees Trustee Limited.
At 31 December 2014, the EBT held 3,781,320 shares (2013: 4,242,744 shares) in GFMH which had a fair market value
of USD 5.7 million (2013: USD 11.1 million). The market price per share at 31 December 2014 and 31 December 2013
was USD 1.48 and USD 2.63 respectively.
29 Financial risk management
Financial risk management relates to risk to the Group in respect of its own assets and liabilities, and risks to the fund
products and accounts to which it provides investment management services. In the latter case, this primarily relates
to a decline in the value of assets under management due to a decrease in asset values or net redemptions that
would lead to a decline in fee income.
The Group has limited exposure to financial instruments in respect of its own assets and liabilities which include fund
investments, cash deposits, trade and other receivables, trade and other payables and loans to funds for which it
acts as investment manager.
The Group does not enter into any speculative derivative transactions. From time to time the Group may enter into
certain derivative transactions in order to risk manage its foreign exchange exposure.
The main risks arising from financial instruments are foreign currency risk, net asset value risk and credit risk, and
limited exposure to interest rate risk and liquidity risk. The Directors review and agree policies for managing each of
these risks which are summarised below.
Market risk
The Group is exposed to market risk through its use of financial instruments and specifically to foreign currency risk,
interest rate risk, and net asset value risk.
a) Foreign currency risk
Foreign currency risk is the risk that the Group will sustain losses through adverse movements in currency exchange
rates. The Group’s exposure to foreign currency risk is limited as the majority of the Group’s transactions are carried
out in USD, which is the functional currency of most Group entities. Exposures to currency exchange rates arise from
financial instruments such as cash and cash equivalents, trade and other receivables and trade and other payables
held in currencies other than functional currencies within the Group’s subsidiaries. The principal exposure arises from
such financial instruments denominated in Swiss Francs, Sterling and Euro.
29 Financial risk management (continued)
a) Foreign currency risk (continued)
The following table illustrates the sensitivity of the currency valuation of the Group’s financial investments at the
year-end on the net result before tax for the year. The sensitivity analysis is based on the Group’s financial
instruments held in currency, namely Swiss Francs (CHF), Sterling (GBP) and Euro (EUR) exchange rates against the
USD, at each reporting date and assumes all other variables remain constant. The percentages used have been
determined based on the average market volatility in exchange rates for the 12 months prior to the year end.
Volatility
CHF/USD
GBP/USD
EUR/USD
Effect on net result before tax
2014
%
2013
%
2014
USD m
2013
USD m
3.9
5.0
6.2
2.0%
5.1%
3.0%
0.1
Less than 0.1
Less than 0.1
Less than 0.1
Less than 0.1
Less than 0.1
In all of the above scenarios, there would be no impact on equity other than retained earnings.
b) Interest rate risk
The Group is exposed to changes in market interest rates related to its holding in cash and cash equivalents. All such
holdings are at variable rates.
The current market environment was taken into account in the choice of the appropriate interest rate movement for
this sensitivity analysis and it was considered that due to the significantly low interest rates experienced globally in
2014, and the predicted growth in the world’s major economies in 2015 that interest rate movements that could
impact the Group are likely to increase rather than decrease. Accordingly, a 50 basis point (2013: 50 basis point)
increase in the average rate reflects the movement should the global economy continue recovering in 2015 while no
decrease (2013: no decrease) was considered appropriate. All other variables were held constant. There would be
no impact on equity other than retained earnings and non-controlling interest.
A calculation has been performed to illustrate the sensitivity of the net results for the year to a reasonably possible
increase in interest rates of 50 basis points (2013: 50 basis points). This sensitivity analysis used the average interest
rate received for the year ended 31 December 2014 of 0.02 per cent (2013: 1.41 per cent) as its base interest rate, and
therefore a possible increase in the interest rate of 50 basis points would result in an interest rate of 0.52 per cent
(2013: 1.91 per cent).
If interest rates increased by 50 basis points (2013: 50 basis points) the net result for the year would increase by less
than USD 0.1 million (2013: USD 0.1 million).
c) Net asset value risk
The Group is exposed to other price risk in terms of the value of its investments held at fair value through profit or
loss, which are valued based on the net asset value, as communicated by the managers or the independent
administrators of the investments funds. There has been no reclassification of any financial assets in either of the
reporting years. Details of the Group’s investments are set out in note 16.
A calculation has been performed to illustrate the sensitivity of the net results for the year to a reasonably possible
change in net asset values of these investments. These changes are considered to be reasonably possible based on
observation of the previous volatility of net asset values over the 12 months prior to the reporting date. The impact
on the results for the year of a reasonably possible increase/decrease in net asset values of 3.75 % (2013: 7.7%) is
that the net result for the year would increase/decrease by USD 0.1 million (2013: USD 1.1 million). There would be
no impact on equity other than retained earnings and the non-controlling interest in respect of the investments in
GFMH ABL.
Liquidity Risk
It is the Group’s policy to ensure that it has sufficient working capital to cover all forecast committed requirements
for the next 12 months. The liquidity and funding risks, related processes and policies are overseen by the Directors
and a rolling review is carried out by them on a regular basis to ensure that the Group has such sufficient funds.
Due primarily to a number of large corporate acquisitions in the last few years as well as continuing operational
headwinds the Group’s working capital position has deteriorated recently. In order to manage this risk and continue
to adhere to the policy of maintaining 12 months working capital at all times a number of financial investments have
been liquidated.
c) Net asset value risk (continued)
On 30 March 2015, the two largest shareholders of the Company agreed to provide a loan facility of USD 5.0 million
to the Company until 1 November 2016. In addition it was agreed to defer the repayment date of an existing facility
of USD 2.4 million. Please see note 30 for further details.
The tables below summarise the maturity profile of the Group’s financial liabilities at 31 December 2014 and
31 December 2013, based on contractual, undiscounted cash flows.
Analysed as:
At 31 December 2014
Total
Carrying
amount
USD 000
Within
1 month
USD 000
Within
3 Months
USD 000
Within
12 months
USD 000
Within
2 years
USD 000
Within
3-7 years
USD 000
Trade creditors
Amounts due to related parties
Other creditors
5,781
8,620
7,065
2,241
3,537
1,298
3,523
1,051
3,841
17
533
439
–
1,577
911
–
1,922
576
At 31 December 2013
Total
Carrying
amount
USD 000
Within
1 month
USD 000
Within
3 Months
USD 000
Within
12 months
USD 000
Within
2 years
USD 000
Within
3-7 years
USD 000
6,343
30
14,256
2,071
27
7,418
4,272
3
3,212
–
–
2,139
–
–
911
–
–
576
Analysed as:
Trade creditors
Amounts due to related parties
Other creditors
Credit Risk
The Group’s exposure to credit risk is limited to the carrying amount of the following financial assets recognised at the
reporting date, as shown in the table below:
Trade and other receivables
2014
USD 000
2013
USD 000
7,482
15,360
22,842
9,169
20,384
29,553
The Group’s principal exposure to credit risk arises from the default of investment management clients in respect of
fees due and banks in respect of deposits.
Due to the recent global economic downturn and prolonged economic uncertainty the Group has incurred some
credit losses in recent years. This was primarily a result of some previously creditworthy counterparties experiencing
unforeseen difficulties.
In order to mitigate this risk the Group trades only with recognised, creditworthy third parties and it is the Group’s
policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition,
the Group periodically assesses the financial reliability of customers. Furthermore, the majority of the amounts
receivable is due from the various funds managed by the Group which further reduces the credit risk. Due to the
recent economic climate credit losses were unavoidable and it is likely that in the absence of these policies the Group’s
credit losses would have been greater. As the economic outlook continues to improve, the risk of such losses in the
future reduces.
Approximately 56.1 per cent of revenue in 2014 came from six underlying funds, all of which have a diversified client
base (2013: five underlying funds with diversified client bases accounted for 70.3 per cent of revenue). No other single
fund accounts for 5 per cent or more of the Group’s revenue.
Seven funds accounted for 66.5 per cent of the trade receivables at 31 December 2014 (at 31 December 2013 seven
funds accounted for 73.6 per cent of the trade receivables).
The Group considers that all of the above financial assets are of good credit quality, including those that are past due,
except for trade receivables of USD 1.6 million (2013: USD 0.2 million) which were considered to be impaired at the
reporting date and accordingly for which a provision was made. In addition, USD 0.5 million (2013: USD 0.5 million) of
provisions made in prior years was released during the year. Furthermore, a large portion of these assets – cash and
cash equivalents, is held with regulated financial entities.
The credit risk for liquid funds and other short term assets is considered low, since the counterparties are reputable
institutions. At 31 December 2014, 29 per cent (2013: 22 per cent) of the Group’s cash and cash equivalents are held
with one such institution, and a further 9 per cent is held with three other institutions (2013: 20 per cent held with
three other institutions), on a global basis.
The following table provides information on the ageing of the financial assets that are past due but not impaired.
There are no financial assets at the reporting date whose terms have been renegotiated.
Analysed as:
Trade and other receivables at 31 December 2014
Trade and other receivables at 31 December 2013
Total
carrying
amount
of financial
assets
in the
statement
of financial
position
USD 000
Financial
assets that
are neither
past due
nor
impaired
USD 000
Financial
assets that
are past
due but not
impaired
USD 000
Financial
assets that
are past
due but not
impaired
USD 000
Financial
assets that
are past
due but not
impaired
USD 000
Financial
assets that
are past
due but not
impaired
USD 000
Current
0-3 months
3-6 months
6-12 months
> 1 year
15,360
20,384
4,830
4,366
6,430
15,235
3,715
93
385
43
–
647
Capital Management
A primary objective of the Group’s financial management is to ensure that it maintains healthy capital ratios in order
to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, return
capital to shareholders, issue new shares or purchase its own shares on the market.
During the year, 14 million new shares were issued in connection with the acquisition of EIM (Note 31).
The Group classifies capital, for capital management purposes, as equity plus net debt. Net debt comprises interest
bearing loans and borrowings, trade and other payables, less cash and cash equivalents. The Group has no long term
interest bearing debt other than from related parties.
Trade and other payables
Less cash and cash equivalents
Net (funds)/debt
Equity
Capital
2014
USD 000
2013
USD 000
37,363
(7,482)
29,881
35,622
65,503
32,993
(9,169)
23,824
28,635
52,459
GTX UK and SWCP LLP (a subsidiary of SWCP Cayman Limited) are both subsidiaries of the Group and are registered
with the Financial Conduct Authority, London. PAMHK, also a subsidiary of the Group, is registered with the Securities
and Futures Commission, Hong Kong. EIM SA, also a subsidiary of the Group is registered with the Swiss Financial
Market Supervisory Authority (‘FINMA’), Switzerland. These entities are required by these bodies to maintain minimum
capital levels. None of these companies was in breach of these requirements at 31 December 2014 or 31 December
2013 or during either of the reporting periods presented. GFM Sàrl and GFM US are registered with the Securities
and Exchange Commission, US and they are not subject to any minimum capital requirements.
Other than the above, the Group is not subject to any externally imposed capital requirements.
30 Related party transactions
Group transactions
Transactions between and amongst GFMH and its subsidiaries, which are considered to be related parties,
have been eliminated on consolidation and are not disclosed in this note.
Remuneration of key management personnel
The key management personnel include the Directors, the Executive Management Committee and certain other
key employees.
The remuneration of key management personnel is set out below
Short-term benefits
Long-term employee benefits
Post-employment benefits
2014
USD 000
2013
USD 000
5,030
30
34
593
5,687
5,579
558
9
610
6,756
Termination benefits of USD nil were paid to key management personnel in the year ended 31 December 2014
(2013: USD 57,000).
Included in the liabilities are bonus accruals for key management personnel of USD 0.9 million at 31 December 2014
(2013: USD 3.0 million).
Certain key management personnel have made investments in some of the funds managed by the Group.
The management and performance fees on these investments were waived by the Group. In aggregate these
fees amounted to USD 0.4 million in the year ended 31 December 2014 (2013: USD 0.5 million).
Analysis of related party transactions and balances
During the year ended 31 December 2014, the Group entered into several related party transactions with
the following entities:
Name of party
Nature of relationship
Gottex Brokers
Two executive directors are the ultimate
beneficiaries of a non-controlling stake
Directors, executive committee members
and key management personnel
Key Management personnel
Property
charge
USD 000
Operating
expenses
USD 000
Net balance
outstanding
at year end
debtors/
(creditors)
USD 000
67
79
(27)
–
–
(8,272)
During the year ended 31 December 2014, the freehold properties owned by the EIM group were sold. As part of
the EIM transaction agreement, it was agreed that the net proceeds would be paid over to the selling shareholder
according to an agreed payment schedule although on 30 March 2015, it was agreed to extend the repayment date
for USD 1.2 million from 31 March 2016 to 1 November 2016. A current liability of USD 4.6 million and a non-current
liability of USD 3.5 million have been recognised in the consolidated balance sheet of the Group at 31 December 2014
(see note 21).
30 Related party transactions (continued)
Interest is payable annually on the outstanding balance at 2.5% per annum. GFMH can repay the full amount
at any time with 30 days’ notice. As at 31 December 2014, USD 1 million had been repaid.
GFMH has guaranteed USD 5.1 million of the loans by giving security over the shares owned by its subsidiary,
EIM SA, in 2PM, free and clear of any liens, encumbrances , charges or any other third party rights.
On 16 December 2014 a related party, Joachim Gottschalk and Associates Ltd (‘JGA’), a company controlled by
Messrs Joachim Gottschalk and Maximillian Gottschalk, granted the Group a loan of USD 0.5 million. On 10 February
2015, the loan was increased by a further USD 0.3 million and further receipts totalling USD 2.7 million are expected
during 2015. The loan is unsecured. USD 1.5 million is due to be repaid by 31 March 2016 and USD 2.0 million by
31 March 2017. Interest is payable on the loan at 2.5% per annum.
On 30 March 2015 the repayment date for amounts due of USD 1.2 million was extended from 31 March 2016
to 1 November 2016.
On 30 March 2015 JGA and Rozel Trustees (Channel Islands) Limited (‘Rozel’), a trust whose beneficiary include
members of the Busson family, agreed to provide a loan facility of USD 2.5 million each, in total, USD 5 million,
to the Company which is to be available from 30 March 2015 until 1 November 2016. The interest rate is three month
Libor plus 2.5% and drawings may be made by the Company on 30 days’ notice.
During the year ended 31 December 2013, the Group entered into several related party transactions with
the following entities:
Name of party
Nature of relationship
Gottex Brokers
Two executive directors are the ultimate
beneficiaries of a non-controlling stake
Directors, executive committee members
and key management personnel
Key Management personnel
Property
charge
USD 000
Operating
expenses
USD 000
Net balance
outstanding
at year end
debtors/
(creditors)
USD 000
135
205
(30)
–
–
634
31 Acquisition of subsidiary
Current year acquisition
Acquisition of EIM in the year ended 31 December 2014
On 30 September 2014, the Group acquired all of the share capital of EIM Participations Luxembourg S.A. and
its subsidiaries, (together known as ‘EIM’), an alternative investment group managing custom-tailored portfolios,
encompassing hedge funds and traditional strategies for institutional clients. EIM had approximately USD 2 billion
of assets under management as at 31 December 2014.
In combining two leading investment firms, Management believes both groups are taking a natural step towards the
goal of becoming a substantial diversified asset manager of significant scale. This platform for growth, with deeper
and broader capabilities, will allow the combined group to provide its clients with premier solutions in Multi-asset,
Multi-manager and Asia-focused investments as well as risk and infrastructure services.
Consideration
Total consideration was comprised entirely of shares and consisted of the First Tranche Consideration, which was
delivered on Completion, of 8,100,000 new GFMH shares and the Second Tranche Consideration of 5,900.000 new
GFMH shares which was delivered to an escrow account on Completion and transferred to the selling shareholder
on 15 January 2015. There was no deferred or contingent consideration.
The total fair value of the consideration i.e. the fair value of the GFMH shares issued and recognised at the acquisition
date was USD 26.6 million.
Amounts expensed in the income statement
Transaction costs related to the acquisition were USD 0.8 million in total: USD 0.6 million was expensed in the 2014
consolidated income statement and USD 0.2 million was expensed in the 2013 consolidated income statement.
31 Acquisition of subsidiary (continued)
Fair values of the identifiable assets and liabilities of EIM and Goodwill capitalised (provisional amounts)
The provisional fair values of the identifiable assets and liabilities of EIM at 30 September 2014 amounted to:
Provisional
fair value
USD 000
Intangible asset
Investments
Tangible fixed assets
Other receivables
Non-current assets
Trade debtors
Other receivables
Current assets
Total assets
Trade creditors
Other payables
Current liabilities
Retirement benefit liability
Total liabilities
Total net assets acquired
6,324
2,739
301
764
10,128
2,664
3,071
2,576
8,311
18,439
(507)
(3,036)
(3,543)
(2,701)
(6,244)
12,195
Goodwill
Building held for sale
Liabilities associated with EIM real estate
Consideration
21,135
7,177
(13,875)
26,632
The intangible asset recognised relates to the investment management contracts of EIM. The intangible asset
is amortised on a straight-line basis over the expected life of five years.
The fair value of the acquired receivables corresponds to their gross amount.
When the transaction agreement was signed in December 2013 EIM SA was the legal owner of two buildings in
Nyon, Switzerland. Per the terms of the transaction agreement the risks and rewards and the net proceeds from
the sale of these properties remained with the selling shareholder. Prior to the acquisition date one of the buildings
was sold and the net proceeds, after repayment of the related mortgage, were received by EIM SA. These net
proceeds are to be paid to the selling shareholder over the period until 2016 and a total amount of USD 6.4 million
was recognised as current and non-current payables at the acquisition date. In the period to 31 December 2014
an amount of USD 1.0 million was paid to the selling shareholder. The second building was held for sale at the
acquisition date and subsequently sold in December 2014, when the associated mortgage was repaid. The remaining
net proceeds of USD 3.0 are to be paid to the selling shareholder in 2015. These amounts are denominated in Swiss
Francs and have been retranslated into US Dollars at 31 December 2014.
Post-acquisition net revenue and net loss after tax of USD 2.7 million and USD 2.7 million respectively have been
consolidated within the Group results to 31 December 2014. Had the acquisition taken place at the beginning of 2014,
estimated net revenue and net loss after tax for the Group for the full year to 31 December 2014 would have amounted
to USD 38.6 million and USD 20.2 respectively.
The net investing cash inflow during the year ended 31 December 2014 in connection with this transaction was
the cash balance acquired of USD 2.6 million at the acquisition date.
Transaction costs expensed of USD 0.6 million in 2014, which have been charged directly to the income statement,
are included within operating cash flows.
The goodwill is not expected to be deductible for tax purposes.
Prior years’ acquisitions
Acquisition of Frontier in the year ended 31 December 2013
On 4 July 2013, the Group acquired the majority of the share capital of Frontier Investment Management (Jersey)
Limited and its subsidiaries, Frontier Investment Services Limited and Frontier Investment Management LLP (together
known as ‘Frontier’), one of the leading multi-asset investment management firms in the UK. Frontier had
approximately USD 439 million of assets under management as at 31 December 2013.
Consideration
Total consideration was comprised of a combination of cash and shares in GFMH. At completion, an initial cash
amount was paid of USD 5.2 million and the initial number of shares issued was 103,393 at a fair value of
USD 0.2 million.
Further deferred consideration of up to a maximum of USD 1.1 million and up to 0.3 million shares will be paid in
the second year following Completion. This deferred management consideration is contingent on the levels of net
management fees and operating costs of Frontier and in certain cases, the retention of a certain key employee.
A variable number of shares may be issued as part of the contingent consideration arrangement in future periods
and therefore the entire contingent consideration has been classified as a liability.
At the date of the acquisition, Management identified the deferred contingent management consideration which
may be included as part of the goodwill calculation in accordance with IFRS 3 ‘Business Combinations’ and also,
that which is considered to be classified as remuneration, and will be expensed through the income statement in
accordance with IAS 19 ‘Employee Benefits’ and IFRS 2 ‘Share based payments’. The range of contingent deferred
consideration that may be paid in total (in cash and shares) is USD nil – USD 6.5 million, and the fair value of the
deferred contingent management consideration that has been included within the goodwill calculation has been
measured at USD 2.1 million at date of acquisition.
During the year ended 31 December 2014 total deferred cash consideration of USD 3.2 million and 203,340 shares
were delivered to the selling shareholders. Of this, cash of USD 1.8 million and 103,604 shares related to deferred
management consideration expensed as remuneration and cash of USD 1.4 million and 97,736 shares related to
previously capitalised deferred consideration.
The total fair value of the consideration recognised as at the acquisition date was comprised of:
Total
Cash consideration paid in 2013
Fair value of GFMH shares issued
Fair value of total deferred contingent management consideration
5,179
243
2,128
7,550
Deferred management consideration expensed as remuneration
The remuneration relating to the deferred management consideration to be expensed through the income statement
is comprised of a combination of cash and shares in GFMH and is contingent on the future levels of net management
fees and operating costs of Frontier and in certain cases, the retention of a certain key employee for the vesting
period. The vesting period is equally split between one and two years following the completion date.
At 31 December 2014 the estimated value of the total cash remuneration was USD 1.9 million and of this, USD 0.7 million
has been expensed in the year to 31 December 2014 (2013: the estimated value of the total cash remuneration was
USD 2.8 million and of this, USD 1.2 million was expensed in the year). The payable is included in current liabilities.
At 31 December 2014 the estimated value of the total shares remuneration was USD 0.3 million and of this,
USD 0.1million has been expensed as an equity-settled share based payment in the year to 31 December 2014
(2013: the estimated value of the total shares remuneration was USD 0.5 million and of this, USD 0.2 million was
expensed as an equity-settled share based payment in the year).
During the year ended 31 December 2014 deferred consideration of cash of USD 1.8 million and 103,604 shares was
delivered to the selling shareholders.
Transaction costs
Transaction costs related to the acquisition were USD 0.2 million and these were expensed in the income statement
and paid in year to 31 December 2013.
Frontier acquisition-related costs
Deferred consideration (included in remuneration)
Transaction costs
Amortisation of the intangible asset
Adjustment to the contingent consideration during the year
Included within operating expenses
Finance costs
2014
USD 000
2013
USD 000
754
–
438
(675)
517
(766)
(249)
1,417
188
209
242
2,056
303
2,359
Fair values of the identifiable assets and liabilities of Frontier and Goodwill capitalised
The fair values of the identifiable assets and liabilities of Frontier at 4 July 2013 amounted to:
Provisional
fair value
USD 000
Intangible assets
Investments
Tangible fixed assets
Non-current assets
Trade debtors
Other receivables
Current assets
Total assets
Trade creditors
Corporation tax payable
Current liabilities
Deferred tax liability
Total net assets
2,017
4
18
2,039
638
300
1,679
2,617
4,656
(668)
(90)
(758)
(413)
(413)
3,485
Non-controlling interest @ 20%
(698)
Net assets acquired @ 80%
2,787
Goodwill
4,763
Consideration
7,550
The intangible asset recognised relates to the investment management contracts of Frontier. The intangible asset
is amortised on a straight-line basis over the expected life of five years.
Deferred tax has been provided on the value of the intangible asset in accordance with the special tax treatment
of intangible assets according to UK law.
The fair value of the acquired receivables corresponds to their gross amount
Gottex has a call option to buy the remaining 20% Frontier shares during the period beginning 30 calendar months
after Completion and ending 15 Business days thereafter and the selling shareholders have a put option to sell
the remaining 20% Frontier shares during the period beginning the day immediately following the end of call option
period and ending 15 Business days thereafter.
Management have concluded that the difference between the fair value of the assets under the call and the option
strike price is nil as Management believe that the option strike price is valued at fair value.
Management have also calculated the estimated present value of the put option liability at USD 0.8 million at
31 December 2014 (2013: USD 1.6 million) and have recognised this liability within non-current liabilities in the
Consolidated Statement of Financial Position. The change in the value of the put option of USD 0.8 million has been
credited to the consolidated income statement.
Post-acquisition net revenue and net profit of USD 1.7 million and USD nil respectively were consolidated within the
Group results to 31 December 2013. Had the acquisition taken place at the beginning of 2013,
estimated net revenue and net results for the Group for the full year to 31 December 2013 would have amounted
to USD 3.7 million and USD nil respectively.
The net investing cash outflow (i.e. relating to previously capitalised deferred consideration) during the year ended
31 December 2014 in connection with this transaction was the 1st anniversary cash consideration of USD 1.4 million.
The net investing cash outflow during the year ended 31 December 2013 in connection with this transaction
was USD 3.5 million, being the upfront cash consideration of USD 5.2 million less the cash balance acquired of
USD 1.7 million at the acquisition date.
Transaction costs expensed of USD 0.2 million, which were charged directly to the income statement, were included
within operating cash flows in the year ended 31 December 2013.
The goodwill is not expected to be deductible for tax purposes.
Acquisition of Penjing in the year ended 31 December 2012
On 12 August 2012, the Group acquired the entire share capital of Penjing Asset Management (‘Penjing’), which
is based in Hong Kong, and is one of the primary Asian alternative asset management providers.
Consideration
Total consideration was comprised of a combination of cash and shares in GFMH. At completion, an initial cash amount
was paid of USD 2.0 million and the initial number of shares issued was 862,069 at a fair value of USD 2.9 million and
during the year ended 31 December 2012 the Group part paid an additional consideration of USD 0.7 million based
on the value of net assets at acquisition.
During the year ended 31 December 2013 deferred management consideration of USD 0.7 million and 301,726 shares
were delivered to the selling shareholders as well as an additional payment of USD 1.4 million, made in cash on the
anniversary of the acquisition, based on the value of net assets at acquisition.
During the year ended 31 December 2014 deferred management consideration of USD 0.7 million and 301,726 shares
were delivered to the selling shareholders.
At the date of the acquisition, Management have identified the deferred contingent management consideration
which may be included as part of the goodwill calculation in accordance with IFRS 3 ‘Business Combinations’ and also,
that which is considered to be classified as remuneration, and will be expensed through the income statement
in accordance with IAS 19 ‘Employee Benefits’ and IFRS 2 ‘Share based payments’.
During the year ended 31 December 2014 deferred management consideration, which related to the capital
element of the consideration, of USD 0.4 million and 159,214 shares were delivered to the selling shareholders
(2013: USD 0.4 million and 159,214 shares).
In addition, the performance fees earned by Penjing are to be passed on to the selling shareholders, in a decreasing
proportion over the period to 2017.
Management identified the performance fees consideration which was included as part of the goodwill calculation in
accordance with IFRS 3 ‘Business Combinations’ and also the performance fees consideration which was considered
to be classified as remuneration and expensed through the income statement in accordance with IAS 19 ‘Employee
Benefits’. The value of the performance consideration that was capitalised as contingent consideration in the goodwill
at acquisition was USD 0.6 million.
During the year ended 31 December 2014 deferred performance consideration of USD 1.0 million was paid to the
selling shareholders (2013: deferred performance consideration, which related to the capital element of the
consideration, of USD 0.1 million was paid to the selling shareholders).
The total fair value of the consideration recognised as at the acquisition date was comprised of
Total
USD 000
Cash consideration paid in 2012
Fair value of GFMH shares issued
Fair value of total contingent consideration liabilities
Fair value of deferred consideration – additional payment
2,769
2,942
2,236
1,276
9,223
Deferred management consideration – expensed
The remuneration relating to the deferred management consideration to be expensed through the income statement
was comprised of a combination of cash and shares in GFMH and is contingent on the retention level of AuM of
Penjing and employees remaining in employment for the vesting period. The vesting period is equally split between
one and two years following the completion date.
During the year ended 31 December 2014 amounts, which related to the remuneration element of the consideration,
of USD 0.3 million and 142,512 shares were delivered to the selling shareholders (2013: USD 0.3 million and
142,512 shares).
Deferred performance consideration – expensed
The remuneration relating to the deferred performance fee consideration expensed in 2014 amounted to USD 0.3 million
(2013: USD 2.3 million). During the year ended 31 December 2014 deferred performance consideration of USD 2.3 million
was paid to the selling shareholders (2013: deferred performance consideration of USD 0.2 million was paid to
the selling shareholders).
Transaction costs
Transaction costs related to the acquisition were USD 0.5 million and these were expensed in the income statement
and paid in year to 31 December 2012.
Penjing acquisition-related costs
Management fee consideration
Performance fee consideration
Transaction costs
Amortisation of the intangible
Adjustment to the contingent consideration during the year
Included within operating expenses
Finance costs
2014
USD 000
2013
USD 000
186
285
–
337
(166)
642
–
642
641
2,278
–
337
660
3,916
54
3,970
31Acquisition of subsidiary (continued)
The intangible asset recognised relates to the investment management contracts of Penjing. The intangible asset
is amortised on a straight-line basis over the expected life which is five years.
Deferred tax has not been provided on the value of the intangible asset in accordance with the special tax treatment
of intangible assets according to Hong Kong law.
The net investing cash outflow during the year ended 31 December 2014 in connection with this transaction was
USD 0.9 million, being the 2nd anniversary cash consideration of USD 0.4 million and the capital element of the
performance consideration of USD 0.5 million.
The net investing cash outflow during the year ended 31 December 2013 in connection with this transaction was
USD 1.7 million, being the 1st anniversary cash consideration of USD 0.4 million and the additional payment of
USD 1.3 million.
32. Subsequent events
On 30 March 2015 JGA and Rozel agreed to provide a loan facility of USD 2.5 million each, in total USD 5 million,
to the Company which is to be available from 30 March 2015 until 1 November 2016. The interest rate is three month
Libor plus 2.5% and drawings may be made by the Company on 30 days’ notice. In addition JGA and Rozel have
each agreed to defer the repayment date of an existing loan of USD 1.2 million, USD 2.4 million in total, from
31 March 2016 to 1 November 2016.
Designed and produced by Tayburn
Office addresses
United Kingdom
Gottex Asset Management (UK) Limited
5 Savile Row
London W1S 3PD
United Kingdom
T
+44 2074 945100
F +44 2074 945197
Hong Kong
Gottex Penjing Asset Management (HK) Limited
26th Floor, Henley Building
5 Queen’s Road Central
Central, Hong Kong
T
+852 3968 5000
F +852 3968 5020
Switzerland
Gottex Fund Management Sàrl /
E.I.M. SA
Chemin de Chantavril 1
1260 Nyon
T
+41 22 363 68 00 / 64 64
F +41 22 518 17 10 / 64 66
The Channel Islands
Gottex Fund Management Holdings Limited
Ogier House, St Julian’s Avenue
St. Peter Port
Guernsey GY1 1WA
The Channel Islands
T
+44 14 8171 1473
F +44 14 8172 0815
Luxembourg
Gottex Partners Sàrl
25A Boulevard Royal
L-2449 Luxembourg
T
+352 2689 3320
F +352 2689 3330
USA
Gottex Fund Management Limited
One Boston Place
Suite 2600
201 Washington Street
Boston, MA 02108
USA
T +1 617 532 0200
F +1 617 532 0219
Gottex Fund Management Limited
750 Lexington Avenue, 26th Floor
New York, NY 10022
USA
T
+1 212 937 6070
F +1 212 937 6639
www.gottexholdings.com
Frontier IM (Jersey) Limited
13 Castle Street, St Helier
Jersey JE4 5UT
The Channel Islands
T
+44 15 3472 2787
F +44 15 3472 2770
Monaco
EIM (Monaco) S.A.M.
L’Estoril 31 Avenue Princesse Grace
98000 Monaco
T
+377 9777 6969
F +377 9777 5286

Gottex Annual Report 2014

Transcription

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