CHAIRMAN AND CHIEF EXECUTIVE`S

Transcription

CHAIRMAN AND CHIEF EXECUTIVE’S
STATEMENT
ANNUAL REPORT
& FINANCIAL STATEMENTS
2013
GLOBAL EXPERTISE IN ASSET MANAGEMENT
C GOTTEX FUND MANAGEMENT HOLDINGS LIMITED
Gottex Fund Management
Holdings Limited
Contents
01 Performance highlights
02 Chairman and Chief Executive’s Statement
04 This is Gottex
08 Business review
11 Chief Financial Officer’s review
16 Gottex Board & Executive Management Committee
18 Directors’ report
20 Corporate Governance Report
37 Independent Auditor’s Report
38 Consolidated Income Statement
39 Consolidated Statement of Comprehensive Income
40 Consolidated Statement of Financial Position
41 Consolidated Statement of Cash Flows
42 Consolidated Statement of Changes in Equity
43 Notes to the Consolidated Financial Statements
PERFORMANCE HIGHLIGHTS
Gottex Fund Management Holdings Group is a leading independent provider
of alternative and multi-asset investment solutions and advisory services.
We offer a variety of investment solutions related to global hedge fund and Asian
focused portfolios, and a range of multi-asset endowment style products.
Business highlights
Agreed to merger with EIM Group, a leading
European alternative asset manager, subject
to shareholder and regulatory approval
Completed majority acquisition of London-based
multi-asset firm Frontier Investment Management
‘We continue to drive forward our
diversification strategy into the multi-asset
absolute return sector, while remaining
focused on our core hedge fund
solutions business’
Agreed to acquire minority stake in Shanghai-based
asset management firm in November 2013, subject
to regulatory approval
Total fee-earning assets of USD 5.3 billion
at 31 December 2013
USD 21.2 million in cash reserves and liquid financial
investments with a debt-free balance sheet
Total gross revenues of USD 46.4 million
Financial highlights
Fee-earning assets (USDbn)
2013
5.3
2012
7.0
Gross revenues (USDm)
2013
46.4
2012
47.9
INTRODUCTION STRATEGIC REVIEW GOVERNANCE FINANCIALS
ANNUAL REPORT & FINANCIAL STATEMENTS 2013 01
CHAIRMAN AND CHIEF EXECUTIVE’S
STATEMENT
Joachim Gottschalk
Chairman of the Board
& Chief Executive Officer
In December 2013 we announced that we reached
agreement on the proposed merger of EIM Group,
a multi-manager and alternative solution provider,
which is an important step forward in our growth
strategy. In that light, I would like to emphasise
and focus on our diversification efforts: the
acquisition of London based multi-asset firm
Frontier Investment Management which extends
our Multi-Asset Endowment business into Europe,
the very strong performance of our Asian Penjing
products (up between 10% and 25% in 2013) and
the increased APAC presence through partnerships
in Australia, New Zealand, Japan and mainland
China. Our alternative multi-manager solutions
business saw an addition of advisory and consulting
services to address the changing landscape created
by the entry of mainstream consultants into the
investment arena. The positive performance across
our diverse product line has seen growing interest
recently due to underperforming bond markets.
Overview
This is the seventh Annual Report of Gottex Fund
Management Holdings Limited1 as a public company.
The Group took an important step to realise its growth
strategy with the announcement of the proposed
merger of EIM Group, subject to regulatory and
shareholder approval. By combining two leading
investment firms, both groups are taking a natural step
towards becoming a global 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 investment solutions across asset
classes and geographies as well as risk advisory and
infrastructure services. We aim to complete the
transaction by early May 2014.
1 ‘Gottex’, ‘GFM’, ‘GFMH’ or ‘the Company’ and together with its subsidiaries, ‘the Group’.
02 GOTTEX FUND MANAGEMENT HOLDINGS LIMITED
During 2013, the funds and products managed by our
Group have had a very good year in performance terms
and our market neutral products generated meaningful
incentive fees. In addition, there were strong returns
from other multi-manager products: the alternative
credit product was up 8.5% and the enhanced S&P 500
equity product generated 38.8%. In July 2013 we
completed the acquisition of a majority stake in Frontier
Investment Management, a London-based firm
managing liquid multi-asset products. On the Asia side
the Gottex Penjing products had an excellent year with
the flagship Asia product up 15.7% and directional Asia
long/short equity returning 23.0% for the year. We
entered into an exciting joint venture with Shanghaibased VStone Asset Management to develop a range of
onshore China investment products providing investors
access to RMB denominated equity and bond products.
Asset flows to the traditional fund of hedge fund
providers remained muted during the year, although
general hedge fund interest has risen considerably since
the marked underperformance of bonds during 2013.
Gottex naturally was affected by the same trends and
lost a major segregated multi-manager account in
January 2013, whilst other redemptions were slightly
above historic ranges. In terms of multi-asset and Asian
products, there is clear demand for the former whilst
Asian flows were affected by outflows from emerging
markets and the uncertainty around China’s economic
outlook. This resulted in inflows in the multi-asset
business. Our total fee-earning assets decreased from
USD 7.0 billion at 31 December 2012 to USD 5.3 billion by
31 December 2013. This consisted of USD 3.8 billion of
global multi-manager assets, USD 350 million of Asian
assets, USD 660 million of multi-asset products and
USD 510 million on our advisory mandates and managed
account platform. The overall decline in average assets
when compared with 2012 was largely offset by higher
performance fees and led to total gross revenues for
2013 of USD 46.4 million. Our operating cost fell 4.5% to
USD 41.7 million, but when excluding the USD 1.5 million
Frontier operating cost consolidated during the year,
achieved more than our 7.5% operating cost efficiency
target for 2013.
The Group showed an operational loss prior to acquisition
related charges and a one-off fund deferred expenses
write-off in 2013 of USD 2.3 million versus USD 3.9
million loss in the previous year. Excluding acquisition
related charges, Gottex was close to being a cash flow
positive company in 2H 2013 with a cash operating loss
for the six months of USD 0.2 million. A USD 1.4 million
deferred expenses write-off of a North American fund
vehicle during the second half and USD 6.4 million of
aquisition-related charges related to the Frontier
and the Penjing acquisitions as well as the anticipated
merger with the EIM Group impacted net results after
tax which showed a loss of USD 10.6 million. The Group
has a solid foundation, showing a financial position
statement with no debt and cash reserves and liquid
financial investments of USD 21.2 million, which were
affected during the year by the Company purchasing
601,789 Gottex shares and cash consideration outlays
for the Penjing and Frontier acquisitions.
non-executive chairman of the combined group as
well as a large minority shareholder once the Gottex-EIM
transaction is completed. Completion of the deal is
subject to regulatory and shareholder approval and we
would like to invite all our shareholders to vote favourably
on the resolutions related to the merger at the planned
AGM on 16 April 2014. As part of the merger, management
believes that for the combined group cost savings of
USD 10-12 million in operational synergies are achievable,
when compared to the 2H 2013 combined cost base.
Review of the year
In terms of performance, we are confident that alternative
investment returns will continue to exceed bond returns
during 2014, which should drive asset flows to the
alternative solutions industry. However, we do expect
ongoing fee pressure due to the low cost competition
from traditional financial consultants positioning
themselves as investment managers, although worries
about their perceived conflicts of interests are emerging.
As for our other strategic growth initiatives in 2014,
we will focus on increasing our presence within the liquid
multi-asset business and broadening our Asian product
range including domestic China products and our
distribution networks.
Looking back, the summer of 2013 might have been
the turning point for the alternative fund industry, when
a very clear positive divergence arose in performance
of hedge funds and government bonds, as shown by
the HFR Composite Index up 9.2% and the BarCap
Aggregated Bond Index down 2.0%. Our diversification
into the multi-asset management business accelerated
in 2013 with the majority acquisition of Frontier. A key
strategic benefit of the acquisition included Frontier’s
existing product range of liquid multi-asset products
using smart beta investing, which in turn led to the recent
launch of two regulated multi-asset funds both offering
daily liquidity for investors in US and Sweden. With
respect to our Asian activities, 2013 was a productive
year, including the agreement of the joint venture with
VStone Asset Management, Shanghai, the proposed
launch of our Asian hedge fund seeding business in
co-operation with HSL in Hong Kong and the expansion
of our APAC distribution network through partnerships
with Staples Rodway in New Zealand, Astmax in Japan
and Zenith partners in Australia. Finally, towards the end
of the year we announced a transformational development
in the combination of EIM Group, (including a minority
stake in 2PM, a Monaco based private wealth management
business) which will add USD 2.5 billion of assets to our
Group, as well as a strong team of investment professionals
and sophisticated skills in terms of customised solutions.
2014
Our main focus in 2014 will be the successful integration
of Gottex and EIM, generating strong performance
in our products for our clients, further developing our
expansion into Asia and raising assets on the back of
such performance and our comprehensive range of
investment solutions in the hedge fund, multi-asset and
Asian range. The EIM Group integration has progressed
well to date and the co-operation between the Gottex
and EIM management teams has been exemplary.
I very much look forward to working closely with
Mr Arpad Busson, who is expected to become the
Thank you
Management and staff have continued to work extremely
hard during the past 12 months. Our clients value Gottex
as a firm with experienced and skilled professionals, who
have a deep understanding of the alternative investment
process. I would like to extend my thanks to all members
of staff for their efforts, as well as to our valuable clients
and shareholders. I also would like to welcome at this
point our new colleagues from EIM who will be joining
us once regulatory and shareholder approval is received.
I am looking forward to working together with all of you
in the merged business.
Outlook
We expect 2014 to be a year of transformation and
growth on the back of our merger of the EIM Group and
launch of our liquid and regulated multi-asset products
in the US and EU (which provide retail investors with
access to alternative investments until now only available
to high net worth individuals) as well as an increasing
interest in our strong performing Asian products.
Joachim Gottschalk
Chairman and Chief Executive Officer
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
has USD 5.3 billion in total assets as at 31 December
2013. Gottex offers a variety of investment products,
ranging from global hedge fund 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
LUMA Solutions Services and Real Asset investing.
In December 2013 Gottex announced the proposed
merger with the EIM Group, subject to regulatory and
shareholder approval.
People
Clients
Gottex’s core competencies are centred on clients
and investments: a highly skilled investment and
management team; a disciplined, transparent and
structured investment process; state of the art
infrastructure and risk management; a global footprint
and network; and product design innovation and
excellence that maximise risk adjusted returns.
Gottex’s clients are predominantly institutional with
pension funds representing 46% of AuM and other
institutional investors such as banks, insurance and
endowments representing 35% as at 31 December 2013.
Our clients are distributed across the world with 62%
located in Europe, 25% in North America and 6% in the
APAC region as at the end of 2013. Total fee generating
assets of the Group amount to USD 5.3 billion as at
31 December 2013 of which there are global multimanager assets of USD 3.8 billion, multi-asset AuM
of USD 0.7 billion, Asian AuM of USD 0.3 billion and
LUMA assets of USD 0.5 billion.
The Group currently employs 111 people, including
42 investment professionals, in offices located across
three continents including Lausanne, 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
23 years.
Core competencies
Financials
In 2013, Gottex generated USD 46.4 million in gross
revenues. The Group has a strong statement of financial
position with no debt, USD 21.2 million in cash reserves
and liquid investments and USD 28.6 million in total equity.
Our office locations
Luxembourg
London
Guernsey
New York
Boston
Lausanne
Zurich
Hong Kong
Distribution of people by region1
Distribution of people by function1
Europe
USA
Asia
56
34
20
Client profile by region2
Investment
Marketing & Client
services
Support &
management
42
14
Pension Fund
Other Institutional
Private Bank
HNW & FO
46%
35%
11%
8%
54
Client profile by type2
Europe
USA
APAC
RoW
62%
25%
6%
7%
Total Assets under Management2
2013 - USD 5.3bn
Hedge fund solutions 81%
Multi-Asset solutions 12%
Asia
7%
Total Assets under Management2
2012 - USD 7.0bn
Selected performance returns 20133
Gottex Portable Alpha S&P 500 (Non-Erisa)
S&P 500 Total Return Index
Gottex Penjing Asia Equity Fund
Gottex Penjing Asia Fund
Gottex Constellar strategy
EurekaHdg APAC FOF Index
Gottex Penjing Asia Market Independent Fund
Gottex Multi-Asset Growth strategy
HFRI Fund-of-Fund Composite Index
Gottex Alternative Credit strategy
HFRI Fund-of-Fund Conservative Index
Gottex Market Neutral strategy
Gottex Multi-Asset Endowment strategy
Gottex Market Neutral Plus strategy
Frontier Balanced
38.81%
32.39%
22.95%
15.74%
13.57%
11.96%
10.17%
9.52%
8.79%
8.50%
7.69%
6.18%
5.12%
4.51%
1.17%
Hedge fund solutions92%
Multi-Asset solutions 2%
Asia
6%
1 T he staff figures are excluding the four Non-Executive Directors of the Group.
2 Based on management estimates.
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
Hedge fund solutions
Gottex’s hedge fund solutions range from discretionary
investment solutions via advisory services to operational
infrastructure.
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 6.2%
in 2013.
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
8.5% in 2013.
Constellar diversified strategy (2006)
This multi-strategy product aims to achieve positive
absolute returns in any market environment with
moderate volatility. Return of 13.4% in 2013.
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.
Advisory services
Diversified hedge fund portfolio advice (2005)
Providing advice and due-diligence on a broad range
of hedge funds to FOHF products managed by
commercial banks.
Hedge fund management/Edex Recovery
Services (2011)
Transitioning and unwinding legacy hedge fund
portfolio of institutional investor, including
work-out services.
Illiquids management/Global Fixed Income
Realisation strategy (2012)
Unwinding publicly listed legacy fund of hedge
fund portfolio, including work-out services.
Risk reporting and management (2009)
Providing risk reporting and investment guidelines
and limiting monitoring services for hedge fund
portfolios of institutional investors.
Managed account platform (2008)
LUMA-GSS 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 Endowment strategy (2009)
The strategy is a diversified investment portfolio
investing in seven asset classes globally, utilising an
endowment-like portfolio structure to achieve its
investment objective. Return of 5.1% in 2013.
Multi-Asset Endowment RIC (2009)
A US SEC 1940 Act registered RIC version of the
multi-asset endowment strategy investing in seven
different asset classes. Up 7.6% in 2013.
Multi-Asset customised account (2009)
A European version of the multi-asset endowment
strategy for a large family office. Return of 9.5%
in 2013.
Frontier MAP Balanced strategy (2005)
A European version of the multi-asset endowment
strategy for a large family office. Return of 1.2%
in 2013.
Gottex Endowment Strategy Fund (2013)
A US mutual fund with daily liquidity employing a
multi-asset, multi-strategy, alternative investments
oriented ‘endowment style’ investment programme.
Gottex Multi-Asset Balanced Fund (2014)
A UCITS smart beta product with daily liquidity
investing in nine different asset classes.
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.
2013
Hedge fund investment solutions
2012
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 15.7%
in 2013.
Gottex Penjing Asia Equity strategy (2007)
The strategy to generate equity-like return with
reduced volatility through investing in Asian
directional L/S equity fund of hedge funds portfolio.
Return of 23.0% in 2013.
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 10.2% in 2013.
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 14.7%
in 2013.
Other investment solutions
Gottex HSL Strategic Asian seeding strategy
(expected launch 2014)
HSL aims to partner selectively with top-tier
investment teams to establish institutional quality
hedge funds in Asia.
VStone A-share non-benchmark strategy
The strategy aims to generate higher returns
than the early benchmark by running a nonbenchmark A-share mandate and employing
bottom-up research.
Acquisition of Frontier Investment
Management
Announcement of EIM merger
Launch of Multi-Asset Endowment RIC
Acquisition of Penjing Asset Management
2011
Launch of Alternative Credit Fund
2010
Launch of Absolute Return Fund
2009
Gottex Real Asset Fund completes
investment period
Integration of Constellar Fund
Launch of Gottex Solutions Services
Launch of Multi-Asset Endowment Fund
2008
Zurich office opens
2007
Launch of the first Enhanced Index Product
Final closing of Gottex Real Asset Fund
First advisory mandate
IPO on the SIX Swiss Exchange
2006
Launch of the Tiger Fund
2005
Expansion into Asia: Hong Kong office opens
2004
Assets reach USD 4 billion
2003
Expansion 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
Launch of first Asset Based Fund
BUSINESS REVIEW
Corporate developments
Hedge Fund Solutions
On 16 December 2013, Gottex announced it had
reached agreement with EIM Group to merge their
business activities, subject to regulatory and shareholder
approval. The transaction will enhance the global
footprint of the Group with offices in London, Boston,
New York, Geneva (Nyon), Shanghai, Hong Kong,
Guernsey and affiliated offices in Luxembourg, Monaco,
Australia and New Zealand. The fee earning assets
of the combined group are expected to be close to
USD 10 billion during 2014, spanning across its
investment, advisory and risk management solutions
as well as private wealth management through EIM
Group’s equity interest in 2PM, a Monaco based PWM
firm with just under USD 2 billion of AuM. The all-share
transaction is based on an exchange of shares where
the EIM shareholders will receive up to 14 million newly
issued Gottex shares. Gottex shareholders would own
approximately 70% of the enlarged group and EIM
shareholders approximately 30%. The transaction will
be subject to approval of relevant regulatory authorities,
as well as Gottex shareholders with regards to the issue
of the new shares. To that end, Gottex shareholders
will be asked to vote at the AGM to be held on 16 April
2014 to approve the authority for the Directors to issue
new shares, as well as various corporate governance
related resolutions.
Global hedge funds had a good run in 2013 generating
positive returns of 9.2% (as measured by the HFRI
Weighted Composite Index 1), in particular when
compared with the negative return of the bond market
during the year, but behind well performing equity
markets. Asset flows to the hedge fund industry2 were
positive during the year, with asset flows to traditional
fund-of-funds providers declining. When taking into
account the growing flows to so called ‘implemented
solutions’ or ‘fiduciary mandates’ of large asset
consultants, the overall assets deployed by both
constituencies remain stable since the end of the
financial crisis. The financial press as well as industry
commentators believe this business model, implemented
by a large number of asset consultants, could hold
substantial conflicts of interest. The fund of hedge fund
industry remains under the influence of this strategic
trend, but we believe the cyclical trend of moderate
performance is turning, therefore improving the outlook
for the industry.
The Board of Gottex proposes that Joachim Gottschalk
will remain Group CEO of the combined business,
while EIM’s founder Arpad Busson will become
Non-Executive Chairman. All senior Gottex executives
will remain on the Executive Management Committee,
which will be enlarged by two members from EIM,
namely Eric Bissonnier, as Co-CIO of the hedge fund
multi-manager business, and Hywel Evans who will
serve as European senior counsel.
Management strongly believes that merging the two
firms will create valid benefits for both firms’ clients
and shareholders. The combination of the two
investment teams will create deeper and broader
resources in the alternative solution and advisory space,
uniting complementary strategy skills sets, as well as
EIM’s more tailor made approach with Gottex’s more
product driven solutions. The combination will better
allow the Group to retain and attract human talent,
who are crucial for the value creation for clients.
1 T
he HFRI Weighted Composite Index provides an overview of the average
performance of 2,000 hedge fund managers; the index is equally weighted.
The index is unmanaged and uninvestable and the figures do not reflect
any deductions for fees, expenses or taxes. (Gottex has not selected or
eliminated any index based solely on performance).
2 HFR Global Hedge Fund Industry Report (Dec 2013).
At the end of August, the Gottex flagship Market Neutral
strategy regained its high water mark and accrued
USD 0.7 million of incentive fees during the 2H 2013.
Our more diversified multi-strategy Constellar strategy
added 13.6% in 2013 after generating 11.2% during 2012
and is placed within the top 5% of best performing
funds among its peer group over the last five years.
The Alternative Credit strategy had a third strong year
in succession, up 8.5% in 2013. This strategy is used by
investors as a substitute for their general fixed income
holdings. Most impressive was the enhanced S&P 500
equity product which added 38.8% in 2013. Global hedge
fund multi-manager assets decreased by USD 1.6 billion
to USD 3.8 billion in 2013, of which half was the result
of the loss of a large managed account and associated
advisory mandate in January 2013. Our asset-based
fund of hedge funds strategies continue with their
controlled deleveraging process which is expected
to last until 2016.
Edex Recovery Solutions (our joint venture with Eden
Rock Group) continues to win mandates to manage
illiquid and distressed hedge fund portfolios and is
currently managing USD 641 million. Our managed
account platform business LUMA GSS was affected by
reduced usage of managed accounts by its institutional
clients and assets decreased by USD 540 million as a
result of client outflows. Finally, the gross estimated fair
value of the Gottex Real Asset Fund (GRAF) stood at
USD 572 million at the end of 2013. GRAF expects its
realisations to start taking place in 2H 2014. Gottex
believes GRAF will probably start paying incentive fees
towards 2015, assuming it exceeds the hurdle rate of 8%
return for its investors, which it is on track to do.
Multi-Asset Solutions
We continued our diversification strategy in the multiasset space by acquiring a majority stake in Londonbased Frontier Investment Management in July 2013.
The consideration involved a combination of Gottex
shares (up to 0.45 million using a share price at Q2 2013)
and additional cash, payable over a period of two years
and adjusted for Frontier’s future revenues. Michael
Azlen, Frontier’s CEO, has become European CIO of
Gottex’s multi-asset business. Frontier manages a liquid
multi-asset concept using smart beta in an alternativesoriented endowment style framework. One of the
key benefits of the partnership is Frontier’s range of
regulated liquid multi-asset products investing in nine
asset classes simultaneously including traditional equity
and bonds, emerging market equity and bonds, hedge
funds, real estate, commodities, private equity and
hedge funds. Using this framework we launched a daily
liquidity UCITS product on behalf of a large Swedish
insurance company in January 2014. Prior to that, Gottex
launched a daily liquidity US mutual fund in co-operation
with the largest independent broker platform in the
USA in December 2013. As a result, retail investors are
provided with alternative investments which until now,
were only available to high net worth individuals.
The strongest performers of our multi-asset product
range were the European multi-asset Cougar strategy,
returning 9.5% in 2013 and the Global Asset Allocation
Growth strategy which was up 17.1% over the year.
In addition, Gottex won multi-asset mandates in New
Zealand in co-operation with Staples Rodway and
with a family office based in Hong Kong.
We have seen growing demand for this product line
in 2013. Our Multi-Asset Fund segment increased by
USD 520 million to USD 670 million by December 2013,
of which USD 440 million assets were Frontier assets
(acquired July 2013) and the remainder in other Gottex
multi-asset products.
Asia
After our acquisition of Penjing Asset Management, Hong
Kong in 2012, which established one of the leading Asian
alternative multi-manager teams, we further broadened
our Asian product offering in November 2013 through our
joint venture with VStone Asset Management, Shanghai.
VStone is a well-established private asset manager offering
a range of mainland China investment products. VStone is led
by Dr. Jiwu Chen, the former CIO of Fullgoal Fund Management
and China Life and manages around RMB 5 billion in
assets. The Joint Venture (‘JV’) will provide institutional
and qualified private investors access to the China onshore
market (including A-Shares) and to China’s bond and
mutual fund sector. Conversely, the partnership will operate
as Gottex’s distribution channel in mainland China.
Gottex will acquire a minority stake in a newly formed
JV, to which VStone will transfer its existing products
and business activities. The transaction will include a
cash consideration from both parties and Gottex will
issue covered warrants over 1.725 million Gottex shares
or roughly 3.5% of its issued share capital (after the
proposed EIM Group merger) to the principals of VStone
at an exercise price of CHF 3.50.
2013 was another excellent year for our Asian multimanager product range with the flagship Gottex Penjing
Asia strategy up 15.7% (+10.0% in 2012), the conservative
Gottex Penjing Asia Market Independent strategy added
10.2% (+6.5% in 2012), the directional Gottex Penjing Asia
Equity strategy posted +23.0% (+14.5% in 2012) and the
directional Gottex Penjing Asia Beta Select strategy
returned +14.7% in 2013. This showed strong relative
and absolute performance against the Eureka Hedge
APAC FOF1 , which added 12.0% in 2013. This excellent
performance was recognised as for the second year in
a row, Gottex Penjing won the HFM 2013 FOF specialist
award. In addition, in October 2013 Gottex announced its
JV partnership with Headland Strategic, to provide seed
capital and institutional guidance to best-in-class hedge
fund managers in Asia.
During the year, Gottex has focused on broadening
its distribution network in the APAC region through the
following partnerships: Staples Rodway in New Zealand,
Astmax in Japan and Zenith partners in Australia.
Assets in our Asian business reduced by USD 60 million
to USD 350 million, mainly as a result of a reduction
in concentration risk by a client.
Strategy and plans
Gottex’s long-term objective is to become a diversified
asset manager focused on the following business areas:
alternative investment solutions, multi-asset investment
solutions, Asian focused investment solutions as well
as risk management and alternative advisory services.
The proposed merger with EIM Group is a significant step
in this direction. Both parties remain strong supporters
of the alternative multi-manager model, in particular
since the summer of 2013, where for the first time in
five years, hedge funds materially outperformed bonds.
However, we expect the business model to evolve in a
broader range of customised and advisory mandates,
as well as intra-asset solutions. Furthermore, scale will
be important in this industry to handle the ever growing
regulatory requirements and accommodate the
appropriate cost-income structure to maintain an
institutional framework.
1 T he Eureka Hedge Asia Pacific FOF Index provides an overview of the average
performance of fund of hedge fund managers that invest primarily in the Pacific
Region; the index is equally weighted. The index is unmanaged and uninvestable
and the figures do not reflect any deductions for fees, expenses or taxes.
(Gottex has not selected or eliminated any index based solely on performance.)
BUSINESS REVIEW CONTINUED
In addition to our core multi-manager business, we will
continue to drive our diversification efforts into the liquid
and regulated multi-asset space with products designed
for retail investors and into Asia, areas which we believe
will show structural demand in the short and medium
term. In the light of diversification and scale, we will
continue to explore non-organic opportunities, to add
further critical mass to our strategic initiatives, to extract
synergies in terms of products, clients or cost, as well
as enhancing our distribution capabilities.
EIM Group merger
The execution of the merger and the integration of the
EIM business will be a core task of the Group during
the first half of the year. During this period, we will
maintain our investment performance and believe the
combination of both investment teams will allow us to
create enhanced performance and products for our
clients. We will be focusing on the distribution of a strong
combined product and service offering. We believe that
operational synergies of USD 10-12 million are achievable
for the combined firm, when compared to the cost base
of the second half of 2013. As a result we expect the
merger to be accretive on an operational profit, as
well as on a fully diluted earnings per share basis within
12 months, excluding any potential revenue synergies.
Hedge Fund Solutions
Our global Hedge Fund and Alternative Solution
business will be directly involved in the EIM integration
process during 2014, with a focus on growing scale,
which will likely involve non-organic opportunities.
On the product side we expect to see more activity in
customised products, supported by EIM’s long standing
expertise in this area, and enhanced alternative riskmanagement and advisory services, although the
latter will be at lower average fee levels.
In addition, bond substitution and replication products
in the line of our Alternative Credit strategy are expected
to prosper in coming years. As for the Gottex Real Asset
Fund, we expect its first realisations towards the second
half of this year. We will continue to expand our services
with regards to illiquid investment workouts and
opportunities, in particular through Edex Recovery
Solutions, a JV between Gottex and Eden Rock Group.
Finally, we expect risk management and alternative
advisory services to become a more important offering
to our existing and prospective clients going forward.
Multi-Asset Solutions
Two key goals for the Multi-Asset business are the
growth of our recently launched regulated daily liquidity
US Mutual Fund and our Luxembourg registered UCITS
Fund. Most of the competing global multi-asset products
have a relative higher weighting in bonds and lower in
alternatives and we expect this dichotomy to pay
dividends in performance terms in the coming years.
Both are off to a good start and have experienced
considerable investor interest from institutional as well
as from retail investors. We will explore private wealth
management opportunities in co-operation with 2PM,
the Monaco based Private Wealth Manager, in which
Gottex will hold a 30% interest once the acquisition of
the EIM Group is completed.
Asian Solutions
In our Asian business, we plan to leverage the strong
performance of our Gottex-Penjing products, which
have posted double digit returns over the last two years.
Through our partnership with VStone Asset Management,
we will soon start offering onshore mainland China
products denominated in Renminbi to European and
North American investors. In addition, we will explore
opportunities to service the rapidly growing HNWI
market in Asia through customised multi-asset and
alternative solutions.
Outlook
We remain positive on the demand outlook for liquid
and regulated multi-asset products and Asian focused
investment solutions. We also expect the take up of
alternative tailor-made portfolios to increase, as a hedge
of potentially rising long-term interest rates. ‘Implemented
Consulting and Fiduciary Mandates’ offered by asset
consultants acting as investment managers, will continue
to impact allocation to the traditional fund of fund
providers, despite being questioned due to perceived
conflict of interest. Integrating the activities of the EIM
Group, whilst maintaining performance for clients, will be
our main task this year. Looking forward, we will continue
to consider non-organic opportunities that enable us to
achieve strategic goals within our business units.
CHIEF FINANCIAL OFFICER’S REVIEW
Group results
Tim Roniger
Senior Managing Director,
Chief Financial Officer &
Chairman of the Risk Committee
The Group made an operating loss of USD 2.3 million
(before all acquisition-related charges and a fund
deferred expense write off of USD 1.4 million) for
the year to the end of 31 December 2013 compared
with an operating loss of USD 3.9 million a year
earlier. Excluding non-cash related items, the Group
generated a cash operating loss of USD 0.7 million
(2012: loss of USD 0.5 million) for the full year.
Non-cash items are considered to be amortisation,
depreciation, and share based award charges.
The operating loss for the year comprised an operating
loss of USD 1.6 million in the first half compared to an
operating loss of USD 0.7 million in the second half, with a
cash operating loss in the first half of USD 0.5 million vs. a
cash operating loss in the second half of USD 0.2 million,
a total cash operating loss in the year of USD 0.7 million.
After taking into account one off incremental operating
costs, and adjusting for the full year effect of the
operating costs of new businesses in 2013 and 2012,
we achieved our 7.5% operating cost efficiency target
for 2013 and reduced overall operating costs.
Overall, the Group generated an after tax loss for the
year of USD 10.6 million versus a loss of USD 8.7 million
in the prior year.
The loss due to the equity shareholders of the parent
company is USD 9.7 million as opposed to USD 7.7 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. 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 18.5% to
USD 32.2 million from USD 39.5 million in 2012, directly
as a result of lower assets under management.
CONTINUED
Performance fees
Fixed costs
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 11.9 million
in performance fees, an increase of 254.7% on the prior
year at USD 3.4 million, and largely reflects the excellent
performance of our funds under management.
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 was
USD 48.0 million in 2013, an increase of 8.1% on the
prior year figure of USD 44.4 million.
25% (USD 1.8 million) of performance fees for certain
funds have been deferred in 2013 and held in escrow
for two years in line with our deferred incentive fee
arrangements. During 2013, USD 0.8 million was
released to the Income Statement, and at 31 December
2013, USD 2.2 million is potentially available for release
over the next two years.
Advisory fees
Advisory fees are earned in connection with advisory
mandates that we manage on a non-discretionary
basis. The Group generates advisory fees as a fixed
percentage of the related AuM, with no performancebased element. These revenues have declined from
USD 0.9 million in the prior year to USD 0.4 million
in 2013 due to lower levels of advisory assets
under management.
Structure and leverage fees
Income generated from our structured product and
leverage fees decreased to USD 0.7 million in 2013
from USD 1.3 million in 2012 also due to lower assets
under management.
GSS fees
Fees earned from GSS-LUMA services amounted to
USD 1.2 million down from USD 2.8 million in the previous
year. The reduction was mainly due to the overall
reduction in assets.
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.
These costs decreased by 15.8% from USD 8.4 million in
2012 to USD 7.1 million in 2013. The average percentage
vs. revenue was approximately 16.0% vs. approximately
19.5% in the prior year mainly due to the mix in ratio of
management and performance fees.
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 2013 was USD 4.9 million and in 2012 was
USD 0.7 million. The total operating costs for the year
before such costs described above and also before a
USD 1.4 million charge for deferred fund expenses
written off, would have been USD 41.7 million in 2013,
a reduction of 4.5% from USD 43.7 million in 2012.
Included within the costs for 2013 are operating costs
relating to the recently acquired businesses; a full year’s
operating costs in relation to Penjing and six months’ in
relation to Frontier. The prior year included six months’
operating costs in relation to Penjing.
Gross profit and gross margin
Revenues, net of variable costs, were USD 39.4 million,
only slightly down on the prior year of USD 39.6 million.
These net revenues as a percentage of gross revenues,
representing the gross margin percentage, have
increased to 84.8% from 82.5% in the prior year, and
reflects the change in mix in higher performance fees
vs. management fees.
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 2013 were USD 36.6 million compared to
USD 34.9 million a year earlier, a net increase of 5.0%,
however included in personnel costs are acquisitionrelated charges of USD 4.3 million, mainly comprising an
earnout on performance fees, and after adjusting for
these cost personnel expenses have reduced year-onyear by 5.9%.
Wages and salaries
Of the total personnel expenses of USD 36.6 million,
approximately USD 18.9 million or 51.5% related to
salaries (excluding acquisition-related personnel
charges) and approximately USD 9.1 million or
24.8% related to bonus and profit share remuneration,
compared to total personnel expenses of USD 34.9 million
in 2012, of which approximately 51.3% related to salaries
and approximately 28.0% related to bonus and profit
share remuneration. Included within total wages
and salaries in 2013 is an amount of USD 3.8 million
(2012: USD 0.4 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.
Share-based payments
The share-based payments charge for 2013 has
decreased to USD 1.3 million from USD 2.9 million in
the prior year. This decrease in 2013 continued to be
due to the reduction in the level of equity awards that
have been made in recent years and also historical
awards which have now been fully charged.
Included within this charge is an amount of USD 0.5 million
(2012: 0.2 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 decreased from 112
employees at 31 December 2012 to 110 employees
at 31 December 2013 and the average number of
employees over the year was 112. The ratio of AuM to
head count has reduced from USD 62.5 million AuM
per employee at 31 December 2012 to USD 48.1 million
31 December 2013.
Marketing and representation expenses
The Group also incurs marketing and representation
expenses, which include travel and entertainment
expenses and communication costs. These costs have
remained constant at USD 1.9 million for the years ended
31 December 2013 and 31 December 2012, despite a
full year’s operating cost for Penjing and six months’
for Frontier.
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
19.3% to USD 8.9 million (excluding acquisition-related
charges) for the year ended 31 December 2013 from
approximately USD 7.4 million in the prior year.
Included within this cost category is a USD 1.4 million
of deferred expenses write off in relation to a North
American Fund, as well as a full year’s operating costs
for Penjing and six months’ for Frontier.
Net finance income
The net finance cost was USD 0.3 million for the
year ended 31 December 2013 compared to net
finance income of USD 0.1 million for the year ended
31 December 2012 and relates to the charge for the
movement in the value of the put liability associated
with the Frontier acquisition from completion to
31 December 2013.
Significant items presented separately
on the Income Statement
Acquisition-related charges
The acquisition charges presented separately on
the consolidated income statement are USD 1.2 million
and comprise USD 0.4 million relating to Frontier,
USD 0.7 million relating to Penjing and USD 0.1 million
related to EIM.
Frontier
In July 2013 the Group acquired the majority of
shares in Frontier Investment Management, a UK
based multi-asset investment manager for an
upfront consideration of USD 5.4 million and a
deferred contingent consideration, for which the fair
value was estimated at USD 2.1 million. Goodwill of
USD 4.8 million has been capitalised on acquisition.
The acquisition-related charges of USD 0.4 million
comprise USD 0.2 million in respect of transaction
costs, USD 0.2 million in respect of changes in the
fair value of capitalised deferred consideration
since acquisition.
Penjing
In August 2012 the Group acquired Penjing Asset
Management, a Hong Kong based investment
manager. The Penjing acquisition-related charges
comprise USD 0.7 million in respect of changes in the
fair value of capitalised deferred consideration since
the prior year end. The prior year comparative for
Penjing was USD 0.5 million.
EIM Group
Transaction costs expensed in the Consolidated
Income Statement in respect of the proposed
acquisition of the EIM Group are USD 0.1 million.
CONTINUED
Impairment of receivables
Earnings per share
In 2013 the Group recorded a recovery of USD 0.5 million
for trade receivables which had been provided for in
prior years.
The basic loss per share for the year was USD (0.33);
(2012: USD (0.28)) and the diluted loss per share was
similar at USD (0.33); (2012: USD (0.28)). 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 2013
and 31 December 2012.
Net loss on financial assets
The net loss on financial assets for the year was
USD 1.4 million which has increased significantly on
the loss of USD 0.1 million in the prior year. Of the current
year charge, USD 1.7 million relates to the decrease in
net asset value of the investments in GFMH ABL,
compared to the prior year charge of USD 0.7 million,
which was partially offset by a gain in the GMAE fund
of USD 0.5 million.
Taxation
The tax charge was a credit of USD 0.3 million for the
year ended 31 December 2013 (2012: USD 0.5 million).
The current tax charge includes the release of a tax
provision of USD 1.3 million which had been made in
2007 and is no longer required. In addition there was
a deferred tax charge of USD 0.8 million, which mainly
relates to the write-off of deferred tax assets in the US.
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 0.9 million (2012: USD 1.0 million), which, in 2013,
mainly reflects a mix of six months’ minority ownership
of Frontier from July 2013 and the 50% share of losses
in the GFMH ABL Fund. In 2012 the non-controlling loss
reflected the mix of the non-controlling interest holding
of 7.65% of the trading subsidiaries (which came under
the Group ownership at the end of 2012) and the 50%
share of losses in the GFMH ABL Fund.
An adjusted earnings per share for continuing operations
has been presented to reflect the results of the Group
before the impairment of receivables, all acquisitionrelated charges and the devaluation of the investment
held by the Group in GFMH ABL fund. An equivalent
earnings per shares was presented in the prior year.
The adjusted basic and diluted loss per share is
(0.06) (2012: USD (0.13)).
Liquidity and capital resources
The Group had USD 21.2 million in cash and liquid
investments at 31 December 2013.
The net cash outflow from operating activities of
USD 7.1 million has increased from the prior year
outflow of USD 4.2 million by USD 2.9 million. The
increase is largely due to the increased loss in the year
to 31 December 2013 and current year tax outflow of
USD 0.2 million versus a net tax refund of USD0.9 million
in the prior year.
Taking into account the share-based charges,
amortisation, depreciation, acquisition-related charges,
and fund deferred expenses write-off, the Group had
a cash operating loss of USD 0.7 million for the current
year compared to the prior year cash operating loss of
USD 0.5 million.
Net cash (used in)/from investing activities has increased
significantly from an inflow of USD 1.0 million in 2012 to an
outflow of USD 1.1 million in 2013. This is mainly represented
by the net cash outflow in respect of subsidiaries
during the year of USD 5.3 million (2012: USD 1.5 million):
USD 3.4 million on Frontier and USD 1.7 million on
deferred consideration to Penjing, set off by a net cash
inflow of USD 3.1 million from the net disposals of
financial investments in GFMH ABL, the Tiger fund and
the Market Neutral fund. In 2012, the Group had a cash
outflow in respect of financial investments. Additionally
the Group received USD 1.8 million on liquidating the
UCITS fund – in 2012 it received USD 4.3 million in
respect of redemptions in UCITS.
The cash used in financing activities has reduced
by USD 9.4 million, from the prior year outflow of
USD 11.7 million to a current year cash outflow of
USD 2.3 million.
The outflow in 2012 mainly represented the share
buyback programme carried out in the first half of 2012,
costing USD 11.6 million, and in 2013 the equivalent
spend was USD 1.5 million. Furthermore, in 2013,
USD 0.7 million was paid to GFMH ABL non-controlling
interest holders compared to USD 0.1 million.
USD 11.9m
‘Performance fees earned in 2013 are
USD 11.9 million, a significant increase on
2012 reflecting the excellent performance
of our funds under management’
Cash and equity
The Group has a strong statement of financial position
with no debt, and USD 21.2 million in cash reserves
and liquid investments. The issued share capital at
31 December 2013 represented 34,502,184 shares.
Statement of financial position
A significant proportion of the Group’s assets remain
highly liquid, while the Group remains debt free. Cash
and cash equivalents form 14.8% (2012: 28.0%) of our
total assets. Investments in funds, which are held as
non-current assets represent 22.6% (2012: 26.8%)
of total assets.
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.
Tim Roniger
Chief Financial Officer
GOTTEX BOARD & EXECUTIVE
MANAGEMENT COMMITTEE
Joachim Gottschalk
Maximillian Gottschalk
Chairman of the Board
& Chief Executive Officer
Head of Asian Business
& Head of Marketing
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.
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.
David Staples
Douglas Brown
Non-Executive Director
& Chairman of the
Audit Committee
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.
William Woolverton
Senior Managing Director
& General Counsel
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.
Became a Non-Executive Director of the Company in 2007.
Mr. Brown is founder of DLB Capital, a private investment
firm. Previously Mr. Brown was Vice Chairman of Investment
Banking at Morgan Stanley.
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.
Kevin Maloney
William Landes
Co-Chief Investment
Officer & Head of Funds
of Funds Business
Senior Investment Partner
& Head of Multi-Asset Business
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.
Is an American citizen. He joined the Group in
April 2008. Previously Mr. Landes was Chief Executive
Officer at 2100 Capital and prior to that, a Managing
Director at Putnam Investments.
Bruno Pfister
Michael Garrett
& Senior Director
Became a Non-Executive Director of the Company in 2007.
Mr. Pfister has been with the Swiss Life Group since
August 2002, and currently is the Chief Executive Officer.
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.
Became a Non-Executive Director of the Company
in 2007. Mr. Garrett retired from Nestlé SA as
Executive Vice President in 2005 but continues
to serves as a Board member for Nestlé India.
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 2013. 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 prudent; 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.
Results
The results of the operations of the Group for the
year ended 31 December 2013 are set out in the
Consolidated Financial Statements on pages 38 to 90
of the Annual Report.
The loss of the Group for the financial year ended
31 December 2013 was USD 10.6 million (2012:
USD 8.7 million). Revenue decreased by 3.1% from
USD 47.9 million in 2012 to USD 46.4 million in 2013.
Business review
Within this report is set out a fair review of the
business of the Group during the financial year ended
31 December 2013, 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 02 to 03;
Business Review on pages 08 to 10; and
Chief Financial Officer’s Review on pages 11 to 15.
Dividends
Annual General Meeting
The Directors do not recommend any dividend in respect
of the year of 2013.
The Annual General Meeting of the Company will be
held in Guernsey on 16 April 2014 at Ogier 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 23 to 25 of the Annual Report. The details
of the Directors’ interests are shown in the Corporate
Governance Report on page 31.
The Notice of the Annual General Meeting accompanies
this report.
The report was approved by the board of Directors on
19 March 2014.
Joachim Gottschalk
Dr. William Landes
Director
Employees
The Group employed 110 people as at 31 December 2013
throughout its offices located in Boston, Guernsey, Hong
Kong, Lausanne, London, New York, and Zurich.
19 March 2014
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 2013 and subsequently to the date of this
report was Ogier 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 2013. Unless otherwise indicated, the
information provided in this report reflects the situation
at 31 December 2013.
1. Group structure and
shareholders’ policy
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’).
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.
These documents are reviewed by the Board of Directors
(the ‘Board’) from time to time to ascertain whether they
are appropriate for their purpose.
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’).
At 31 December 2013, its market capitalisation amounted
to approximately CHF 80.7 million (based on the closing
price of its shares of CHF 2.34 on 31 December 2013).
Swiss Security Number: 3381261
ISIN: GG00B247Y973
SIX Ticker Symbol: GFMN
Common Code: 032705758
Gottex Fund Management Holdings Limited Corporate Structure
Abbreviation Key
GFMH
FIM Frontier IM (Jersey) Limited
GAL Gottex America Limited (Bermuda)
GFM Sàrl Gottex Fund Management Sàrl
(Switzerland)
100%
100%
GFM US Gottex Fund Management Limited
(Delaware)
GUS
GMSA
EBT,
Guernsey
86.98%
GFMH
ABL
50%
FIM,
Jersey
80%
13.02%
GAL
60%
100%
33.3%
Asia MFO
GFM HK Gottex Fund Management (Hong
Kong) Limited
Staples
Rodway
86.98%
13.02%
12.5%
HSL*
GP Sàrl
LUMA
100%
PAM HK
100%
GFM HK
50%
ZGA
GSP Gottex Structured Products Ltd
(Bermuda)
GUS Gottex U.S. Management Sàrl
(Luxembourg)
GSS Gottex Solution Services Sàrl (Switzerland)
LUMA LUMA Solution Services Sàrl
PAM HK Penjing Asset Management
GFM Sàrl
GTX UK
GMSA Gottex Management SA SICAR
(Luxembourg)
EBT Employee Benefit Trust, Guernsey
100%
100%
GTX UK Gottex Asset Management (UK) Limited
GP Sàrl Gottex Partners Sàrl (Luxembourg)
GSP
100%
GFMH Gottex Fund Management Holdings
Limited (Guernsey)
SWCP LTD South West Capital Cayman
100%
GSS
100%
SWCP LTD
100%
GFM US
EDEX Edex Recovery Solutions, LLC (JV)
GFMH ABL GFMH ABL Limited
Asia MFO Gottex Asia Multi Family Offices Ltd
Staples Rodway Staples Rodway Funds
Limited
EDEX
HSL* Headland Strategic Ltd
ZGA ZG Advisors Pty Ltd
1 ‘Gottex’, ‘GFM’, ‘GFMH’ or the ‘Company’
and together with its subsidiaries, the ‘Group’.
* 18% voting rights.
1.2 Significant shareholders
The following table shows the number and percentages of shareholders who held 3% or more of shares of GFMH
Name of shareholder
Joachim Gottschalk and Associates Ltd
RBC cees Trustee Limited and RBC Dexia Trust*
Opal Fortune Inc.2
Bennett Peter William
Richard Leibovitch
Other
Total of shares
1
Number
%
8,892,922
4,448,180
2,235,210
1,620,029
1,433,576
15,872,267
34,502,184
25.77%
12.89%
6.48%
4.70%
4.16%
46.00%
100.00%
*Relates to Employee Benefit Trust
1.3 Cross-shareholdings
The Company is not aware of cross-shareholdings
exceeding 5% of the capital or voting rights on both sides.
2. Capital structure policy
2.1 Capital structure
The Company’s issued share capital at 31 December
2013 is CHF 34,502,184 divided into 34,502,184 shares
of CHF 1 per share.
2.2 Authorised share capital
Unless otherwise provided in the Articles, the Board
may issue new shares 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’).
According to the Articles, the Board has been authorised
to issue new shares 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 unissued share capital of the Company, the
Directors may issue in aggregate up to a current maximum
of 5,497,816 shares of CHF 1.00 each and such shares
have been allocated as follows:
2,773,016 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’).
At the Annual General Meeting (‘AGM’) on 16 April 2014,
the Board will seek aproval to issue in aggregate a
maximum of 20,000,000 shares of CHF 1.00 each in
the Company, for any purpose in the best interests of
the Company that the Directors deem fit.
Please see also section 2.7.
2.3 Changes in capital
As of 31 December 2013, the Company’s issued share
capital was CHF 34,502,184 divided into 34,502,184
shares of CHF 1 per share.
1 Joachim Gottschalk and Associates Ltd is owned by the Gottschalk Family Trust.
2 Opal Fortune Inc. is a Bahamian group owned and controlled by John-Paul Bailey.
CONTINUED
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 was renewed at the Company’s
AGM on 22 April 2013, and reapproval will be sought
at the Company’s next AGM on 16 April 2014.
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.
As to the authority conferred to the Board by the Articles
to withdraw voting rights attaching to shares, please see
sections 6.1.1 and 7.1.
2.6.2 Reason for granting exceptions in the year
under review
Not applicable.
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.
2.6.4 Procedures and conditions for cancelling
privileges and limitations on transferability set forth
in the Articles
Not applicable.
2.7 Convertible bonds and warrants/options
During the year, 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
Financial statements note 28). The Company may issue
a number of shares corresponding to up to 10% of the
Company’s issued share capital. The current Articles
authorise the Board to issue a maximum of 3,024,800
shares in connection with awards granted under the
employee benefit plan.
Long-term award plans
The Board of Directors has put in place long-term
awards which align Senior members of the management
team with the long-term goals of the Group. The awards
will vest over three years and are subject to meeting
certain targets and objectives of the Group (refer to
details in Financial Statements note 28).
3. Board of Directors
As at 31 December 2013, the Board consisted of eight
members, four of whom are Non-Executive 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 of the Board (the
‘Organisational Regulations’).
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.
3.1 Members of the Board of Directors*
Name
Age
Nationality
Education
Position
Joachim Gottschalk
67
German
Business
Maximilian Gottschalk
41
German
Finance and Marketing
William Landes
61
American
Finance and Economics
Kevin Maloney
56
American
Finance and Economics
Douglas L. Brown
Michael W.O. Garrett
Bruno Pfister
David Staples
59
71
54
56
American
British & Australian
Swiss
British
Business
Business Administration
Law, Finance
Economics & Accounting
Chairman of the Board,
Chief Executive Officer
Head of Asian Business,
Head of Marketing
Senior Investment Partner,
Co-Chief Investment Officer,
Head of Multi-Asset Business
Co-Chief Investment Officer,
Head of Funds of Funds Business
* Lawrence J. Lasser resigned from the Board as of 22 April 2013. 3.1.1 Professional Background
Chairman of the Board and Chief Executive Officer
Joachim Gottschalk is a German citizen, Chairman 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 and EMC members
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,
Mr. Gottschalk 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.
CONTINUED
William Landes is an American citizen, Senior Investment
Partner and is Co-Chief Investment Officer and Head of
Multi-Asset Business. He joined the Group in April 2008
and became a member of the EMC. Prior to this, Dr.
Landes was Chief Executive Officer at 2100 Capital and
before that he was a Managing Director at Putnam
Investments and headed Putnam’s Alternative Assets
initiative. During his tenure with Putnam, he also served
as head of the Global Investment Research team, the
Global Asset Allocation and Currency team and the
Fixed Income Mutual Fund portfolios. Prior to joining
Putnam in 1985, he was the Director of Fixed Income at
Loewi Asset Management Corporation, President and
Chief Executive Officer of William J. Landes and Company
Inc. Dr. Landes earned a PhD and an MA from the
University of Cincinnati and a BS from Findlay College in
Ohio. He has 29 years of financial services and
investment experience.
Kevin Maloney is an American citizen, Senior Managing
Director, Co-Chief Investment Officer and Head of Funds
of Fund Business. He joined the Group in September
2003, holding senior positions in Research and in Risk
Management prior to his current role. Prior to this 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.
Douglas Brown is an American citizen and Non-Executive
Director. He became a Director of the Company in 2007.
Between 1982 and 1986, Mr. Brown was with GE Credit
in strategic planning with a focus on acquisitions and
business planning and ran its Leveraged Sale Leaseback
programme. Between 1986 and 1993, Mr. Brown was an
Executive Director with First Boston in their Global Insurance
Group. Mr. Brown joined Morgan Stanley in 1993 where
he served as Co-Head of the Global Financial Institutions
Group, Head of the Global Insurance Group, Head of
Firm Relationship Management, and leader of the firm’s
China Financial Institutions Privatisation initiatives. Most
recently, Mr. Brown was Vice Chairman of Investment
Banking at Morgan Stanley. In 2006, Mr. Brown founded
DLB Capital, LLC a private investment firm. Mr. Brown is
one of the founding Investors of Hightower Advisors in the
United States, Board Member of Harvest Technology China,
Board Member of China Risk Finance and of Aegon USA.
Mr. Brown has an AB degree from Bowdoin College in
the United States.
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 U.K. and Japan. In 1974, Mr. Garrett
headed Nestlé’s confectionery business in the U.K. 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 Organization 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 as 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 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 has been with the Swiss Life Group since
August 2002, initially as Chief Financial Officer, then as
of 1 January 2006, as CEO International and since May
2008 as Group CEO. 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.
Mr. Pfister is Vice-Chairman of the Swiss Insurance
Association and Member of its Board Committee,
Member of the Board of Trustees and Member of the
Finance Committee of Avenir Suisse, the leading Swiss
Think Tank, Member of the Board of Directors of the
Swiss-American Chamber of Commerce as well as
Chairman of various boards of Swiss Life companies.
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
non-executive director of Global Fixed Income Realisation
Limited to which GTX UK is the investment manager. He is
also on the Board of five of Apax’s private equity funds
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.
(B) EMC members
Tim Roniger is a Swiss citizen, Senior Managing Director
and Chief Financial Officer of the Group and Chairman of
the Risk Committee. He joined the Group in May 2004.
Prior to this, 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
Executive Management Committee. 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 BA (Honours) and MA degrees. Mr. Woolverton
was awarded a JD 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, DC.
Andre Keijsers is a Dutch citizen, Senior Managing
Director, Head of Corporate Strategy and M&A of
the Group. He joined the Group in January 2008. Prior
to this he worked at the Chicago Mercantile Exchange
(CME) 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. 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.
3.1.1.1 Operational management tasks of the members
of the Board of Directors
Messrs. Brown, Garrett, Pfister and Staples are NonExecutive members of the Board of Directors, while Messrs.
J. Gottschalk, M. Gottschalk, W. Landes and K. Maloney are
members of the Board of Directors and the EMC.
3.1.1.2 Information on Non-Executive members
of the Board of Directors
All Non-Executive members of the Board of Directors
are 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 section 3.1.1.
3.4 Elections and term of office
3.4.1 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 to serve up to three-year terms. The Board
members shall be subject to re-election by rotation in such
a way that each year approximately one third of the Board
members shall stand for election so that, after a period
of three years, all Board members have been subject to
re-election. As a consequence, the term of office of some
Board members may be less than three years.
The Board members to retire from office in any year
shall include any Board member who wishes to retire
and those who have been longest in office since their
last election or re-election. Where two or more Board
members have been in office for an equal length of
time, the Board member to retire shall be determined
by agreement between them or by lot. 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 so resolves by
ordinary resolution; or (iv) he is subject to re-election
and is not re-elected.
CONTINUED
3.4.2 Time of last election and remaining term of office
Name
Last Election
Term Expires
Position
Joachim Gottschalk
2010
2012
2016
2015
Douglas L. Brown
William Landes
Kevin Maloney
Bruno Pfister
David Staples
2011
2013
2013
2012
2012
2013
2014
2016
2016
2015
2015
2016
Chairman of the Board, Chief Executive Officer
Senior Managing Director, Head of Asian Business,
Head of Marketing
Senior Managing Director, Co-Chief Investment Officer
Senior Managing Director, Co-Chief Investment Officer
From 2015, in line with the Minder Initiative, it is proposed that Directors will be required to be annually re-elected
at each AGM.
3.5 Internal organisational structure
3.5.1 Allocation of tasks within the Board of Directors
Name
Joachim Gottschalk
Douglas L. Brown
Bruno Pfister
David Staples
Independent
Director
Committee
Audit
Committee
Nomination
and Compensation
Committee
Chairman’s
Committee
X
X
X
Lead Director
X
X
X
X
Chairman
Chairman
X
X
From 2015, in line with the Minder Initiative, it is proposed that the Nomination and Compensation Committee
Chairman and members be elected annually at each AGM.
3.5.2 Tasks and area of responsibility for each
committee of the Board of Directors
Audit Committee
The Audit Committee is comprised of Messrs. Staples
(Chairman), Brown, and Pfister 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 nonfinancial 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;
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;
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 2013.
Nomination and Compensation Committee
The Nomination and Compensation Committee is
comprised of Messrs. Garrett (Chairman), Staples
and Pfister, 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;
make recommendations 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 recommendations 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 EMC;
review and make recommendations for approval by
the Board of the terms of employment between the
Group and any member of the EMC;
make recommendations for approval by the Board of
the remuneration of the Non-Executive Board
members; and
oversee 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
four times in 2013.
Independent Director Committee
The Independent Director Committee comprises Messrs.
Garrett (Lead Director), Brown, Pfister, 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 33 1/3% 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 bid for the shares of the Company by all
or part of the significant shareholders that, in the
aggregate, own directly or indirectly more than 33 1/3%
of the Company’s outstanding voting rights;
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 33 1/3% of the Company’s
outstanding voting rights; or any change to the powers
and duties of the Independent Director Committee.
In addition, the Independent Director Committee met
four times in 2013.
As the Chairman of the Board also serves as CEO of
the Group, the Board has appointed Mr. Garrett as Lead
Director of the Company. In particular, the Lead Director
(i) ensures an orderly process in evaluating the
performance of the Chairman and CEO and (ii) convenes
and chairs Board meetings to consider and resolve upon
matters where the Chairman has a conflicting interest.
CONTINUED
Chairman’s Committee
The Chairman’s Committee is comprised of the Executive
Directors. The purpose of the Chairman’s Committee is
to assist, support and advise the Board in fulfilling its
strategic and oversight functions. The Chairman’s
Committee brings all matters to the attention of the
Board that arise in the day-to-day management of the
Company and the Group as carried out by the Senior
Management of the Group and that are relevant for the
Board with a view to fulfilling its functions. Extraordinary
matters are reported to the Board without delay.
In addition, the Chairman’s Committee conveys the
resolutions and views of the Board to the meetings of
the Senior Management of the Group thus ensuring
adequate implementation of Board resolutions.
The Chairman’s Committee meets as often as the
business of the Group requires.
During 2013, the Chairman’s Committee met at least
four times.
3.5.3 Work methods of the Board of Directors
and its committees
The Board meets as often as necessary, at least four
times a year and on an ad hoc basis as required.
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 2013, the Board met at least five times.
The Board committees regularly report to the full Board
on their findings and propose the appropriate actions.
3.6 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.
The management responsibility vested in the Board that
is delegated includes the determination of the overall
strategy of the business of the Group, 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) and the structuring of the Company’s
accounting system, its financial controls and financial
planning. 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. In addition, the Board
prepares the annual Directors’ Report and is responsible
for preparing for General Meetings and implementing
shareholders’ resolutions passed at such meetings.
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 of the
Board (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;
(ii) f inance 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 Board.
3.7 Information and control instruments vis-à-vis
the Executive Management Committee
The Board, on a regular basis, is fully informed on
material matters involving the Company and the
Group’s business.
The four 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
administrators’ 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.
The Chairman’s Committee, which consists of the
Executive Directors, ensures that the Board is kept
informed about the day-to-day management of the
Company and the Group to the extent relevant for the
Board with a view to fulfilling its functions. Extraordinary
matters are reported to the Board without delay.
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*
67
German
January 1987
Maximilian Gottschalk*
41
German
William Landes*
61
American
Kevin Maloney*
56
American
Tim Roniger
52
Swiss
William Woolverton
63
American
Andre Keijsers
48
Dutch
Chairman of the Board,
Chief Executive Officer
Head of Asian Business,
Head of Marketing
Senior Investment Partner,
Head of Multi-Asset Business
Head of Risk Management
Chief Financial Officer
General Counsel
Head of Corporate Strategy
and Human Resources
August 1998
April 2008
September 2003
May 2004
October 2005
January 2008
*Indicates an EMC member who is also a Board member.
CONTINUED
4.2 Other activities and vested interests
Please see section 3.2.
4.3 Management contracts
Not Applicable.
5. Compensation, shareholdings
and loans policy
5.1 Content and method of determining the
compensation paid and the shareholding programme
Please refer to section 5.2.
5.2 Transparency of the compensations,
shareholdings and loans pertaining to issuers
domiciled abroad
5.2.1 Compensation of Directors
The compensation of the members of the Board and the
EMC is determined by the Board upon recommendation
of the Nomination and Compensation Committee.
The Board members may be paid travelling, hotel and
other expenses properly incurred by them in connection
with their attendance at meetings of the Board,
committees of the Board or General Meetings of
shareholders or otherwise in connection with the
discharge of their duties.
All Non-Executive Directors of the Company shall be
paid 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 in 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
Committees and General Meetings of the Company.
Effective from 1 October 2009, the Non-Executive
Directors agreed to reduce their cash base to USD 75,000
and take USD 25,000 equivalent in shares to effectively
align the interests of the Directors to the long-term goals
of the Group. Members of Senior Management are paid
a base salary, certain benefits and are eligible for bonuses
and any share-based compensation schemes. Additional
information is included in the section below.
Each Non-Executive Director receives an annual
remuneration of USD 100,000 per year.
Members of Senior Management are paid a base salary,
certain benefits and are eligible for bonuses and any
share-based compensation schemes.
5.2.2 Compensation for members of the Board of Directors (for the year ended 31 December 2013)
Name
Joachim Gottschalk
William Landes
Kevin Maloney
Douglas L. Brown
Bruno Pfister
David Staples
Lawrence J. Lasser
Total compensation for Board of Directors
Salary/fees
USD 000
Benefits
in kind
USD 000
Share based
payments
– fees
Waived
management
fees1
USD 000
Total
USD 000
600
705
772
772
75
75
75
75
25
3,174
9
20
29
29
–
–
–
–
–
87
–
–
–
–
25
25
25
25
8
108
262
263
–
–
–
–
–
–
–
525
871
988
801
801
100
100
100
100
33
3,894
5.2.3 Compensation for members of the EMC (for the year ended 31 December 2013)
The table below shows the total compensation for the seven members of the EMC.
Total
USD 000
Salary/fees
Bonus
Benefits in kind
Pensions
Waived management fees1
Total compensation for members of the Executive Management Committee
4,253
547
131
9
–
527
5,467
The Executive Management Committee includes all of the Executive Directors above, as well as certain key management
personnel. The highest paid member of the EMC for the year ended 31 December 2013 is Maximilian Gottschalk.
5.2.4 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 2013,
see table below.
Share options2
Executive Directors and
Executive Management
Committee members
Joachim Gottschalk
Maximilian Gottschalk3
William Landes3
Kevin Maloney
Tim Roniger
William Woolverton
Andre Keijsers3
Total
Number
of shares
held 2
Date
of grant
4,535,390
4,385,371
186,568 Apr 08
800,128
118,865 Jan 08
67,000 Jan 08
35,775 Jan 08
10,129,097
Exercise
price
USD
Number
Date
of grant
Exercise
Price
USD
Number
63.4
174,351
Apr 11
Apr 11
7.6
7.6
36,563
36,563
60.1
60.1
60.1
24,127
14,476
2,068
215,022
Apr 11
7.6
5,833
Apr 11
7.6
14,063
93,022
Number of
share
awards
outstanding
Number of
long-term
awards
outstanding*
60,901
42,175
13,354
13,354
–
–
2,621
141,405
–
613,876
1,319,833
920,814
306,938
306,938
306,938
3,775,337
Non-Executive Directors
Douglas L. Brown
Bruno Pfister
David Staples
Total
5,739
59,995
15,840
21,325
102,899
23,737
16,581
16,581
8,151
65,050
*T he long-term awards, which are designed to align senior management with the long-term goals of the Group, vest on 31 December 2015. The maximum number of
shares that could vest on 31 December 2015 is disclosed in table 5.2.4. Further details are shown in note 28 (l) new equity award of the consolidated financial statements.
1 The Group waives some management fees due on investments by employees into the funds managed by the Group.
2 Members of the Board of Directors and EMC own shares directly, through nominee accounts, family trusts and other corporate entities.
Mr. J. Gottschalk and Mr. M. Gottschalk have a beneficial interest in shares held by an independent trust.
3 The shares of William Landes, Andre Keijsers and a portion of Maximilian Gottschalk’s shares are held within the Employee Benefit Trust.
CONTINUED
5.2.5 Employment agreements with Executive
Board members and the other members of the
Executive Management Committee
Messrs. J. Gottschalk, M. Gottschalk, Roniger,
Woolverton, Keijsers, Landes and Maloney (each
an ‘Executive’) have each entered into employment
agreements with the Group effective from 1 January
2014. The terms of the employment agreements are
set out below. These terms are also the terms which
generally apply to other senior Group employees.
5.2.6 Terms and conditions of employment
Each employment agreement is for an initial period of
one year and thereafter is automatically extended for
one additional year unless the employing Group
Company (the ‘Employer’) or the Executive shall have
given 90 days’ written notice not to extend the period.
The Employer may terminate the employment
agreement at any time for cause (being: (a) conviction of
the Executive of a crime or the Executive pleading guilty
to a crime; (b) the intentional and material breach by the
Executive of the Employer’s Code of Ethics/Code of
Business Conduct; or (c) failure by the Executive to
comply with covenants relating to confidentiality, noncompetition, non-solicitation and non-disparagement).
5.2.7 Non-Executive Board members
Each Non-Executive Director has entered into a letter
of appointment. The annual compensation of each
Non-Executive Director is USD 100,000 comprised of
USD 75,000 in cash and USD 25,000 equivalent in
shares, effectively aligning the interests of the Directors
to the long-term goals of the Group.
5.2.8 Compensation incentive programme
The compensation and incentive programme at Gottex
may consist of all or some of the following components:
1) salary; 2) cash bonus; 3) stock options; 4) equity grants;
and 5) long-term incentive awards. 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 firm. Cash
bonuses are distributed annually based on a subjective
evaluation by the employee’s supervisor in conjunction
with a review by the Gottex Executive Committee and
the Nomination and Compensation Committee of the
Gottex Board of Directors. Our most senior investment
professionals bonuses are determined by the CEO and
approved by the Board’s Nomination and Compensation
Committee. Many factors are taken into account,
including meeting individual and team performance
objectives, as well as teamwork and market
compensation comparisons.
Cash bonuses are deferred for up to three years based
on the amount of compensation awarded.
Gottex may also offer key employees stock option grants,
restricted share awards and long-term incentive awards
as a means of compensating and retaining key talent;
these options vest over time. Additionally, Gottex
instituted a long-term incentive programme that is
structured to award shares based on the long-term
performance of the Group. Any shares awarded vest
over multiple year periods. Senior employees will have a
large part of their compensation either deferred or paid
through equity incentives, thereby aligning their interests
with that of the firm and its clients.
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 and 19
of the Articles, voting rights will 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).
With respect to the respective shares, the acquirer will
be recorded in the register of members as a shareholder
without voting rights. These limitations on registration
also apply to shares acquired or subscribed for by the
exercise of subscription, option or conversion rights.
The above regime has been applied to shares acquired
from 6 November 2007. In certain circumstances, the
Board may grant exceptions to the registration limitation
of 3%. There were no such exceptions granted during
the time frame beginning 1 January 2013 and ending
31 December 2013.
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 or to launch a public takeover offer, both
as set forth in the Articles (see also below section 7.1).
6.1.2 Reasons for granting exceptions
in the year under review
Please see above section 6.1.1.
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;
CONTINUED
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
authorisation 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.
6.3 Convocation of the General Meeting of
shareholders
All General Meetings other than AGMs are called
Extraordinary General Meetings. The AGM 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
AGM 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 AGM, 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 Swiss
newspapers referred on page 36.
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 AGM 2014 will be held on 16 April 2014. The
registrations appearing in the 2014 Company’s register
of members on 25 March 2014 have determined the
right to participate in, and the right to represent
shareholders at General Meetings.
The registration of transfers of shares will be suspended
by giving notice in La Gazette Officielle and in a German
language newspaper and a French language newspaper
in Switzerland.
6.6 Share buyback programme
7.2 Clauses on changes of control
As of 19 March 2014 the Company had purchased
388,492 shares in the market, representing 1.13% of
outstanding shares, at an average price of CHF 2.07
per share for a total consideration of CHF 0.8 million.
Apart from the accelerated vesting of unvested options
in the event of a takeover under the Group employee
share option plan (see 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).
The objective of the share buyback programme, which
was approved by shareholders at the Extraordinary
General Meeting held on 8 August 2012 with authority
to acquire up to 1.75 million shares, was to offset the
dilution effect of the newly issued shares which formed
part of the consideration for the Penjing acquisition and
also for any future acquisitions.
7. Changes of control and defence
measures policy
7.1 Duty to make an offer
The Articles provide that if a person who (directly,
indirectly or acting in concert with third parties) acquires
shares and thereby exceeds 33 1/3% of the issued shares
of the Company (as disclosed in its last annual or interim
report approved by the Board), the Board shall have the
right to request such acquirer to make a public takeover
offer for all the issued shares of the Company within
two months of the acquirer having crossed the relevant
threshold, and the acquirer shall be obliged to do so
upon receipt of such request.
For the purposes of determining whether the relevant
threshold has been exceeded and subject to Guernsey
Law, the relevant provisions of the Swiss Act on Stock
Exchanges and Securities Trading and the pertaining
Ordinance of the Swiss Federal Banking Commission
shall be applicable.
Subject to Guernsey Law, the Board shall use its
commercially reasonable endeavours to ensure that
the public takeover offer is made in accordance with the
relevant provisions of the Swiss Act on Stock Exchanges
and Securities Trading and the pertaining Ordinances
of the Swiss Federal Banking Commission and the
Swiss Takeover Board. The relevant provisions shall be
complied with by both the Company and the acquirer.
The Board has the right, if permitted by Guernsey Law,
to deny voting rights in respect of any shares of the
Company held by any shareholders or groups of
shareholders who do not comply with the obligation
to make a public tender offer. The Board may reinstate
the voting rights attached to such shares at any time
provided that the relevant person complies with the
obligation to make a public tender offer.
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 and additional fees paid to the
auditors
During 2013, EY were paid USD 0.9 million in audit
and non-audit fees.
8.3 Informational instruments pertaining to the
external audit
The Group has appointed Ernst & Young to perform all
audit related services. All services provided by Ernst &
Young 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 pre-approval authorising a limited and
well-defined type and amount of services.
CONTINUED
The Audit Committee assists the Board of Directors
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 of Directors.
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 Ernst & Young the
audit work performed, the main findings and critical
issues that arose during the audit. The Audit Committee
reports back to the Board of Directors about their
contacts and discussions with the external auditors.
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 out in the SIX rules.
In Switzerland, the Company will publish any notices
required by Guernsey Law, its Articles and the SIX rules
in the Neue Zürcher Zeitung and Le Temps. 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 AGM is sent to registered
shareholders by mail and published in the two Swiss
newspapers mentioned above.
Enquiries may also be made to Gottex Investor Relations:
Mr. Andre Keijsers, Head of Corporate Strategy
and Corporate Communications.
[email protected]
[email protected]
10. Material changes since the end
of the business year
There have been no material changes since the end
of the business year.
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, 19 March 2014
We have audited the consolidated financial statements of Gottex Fund Management Holdings Limited for the year ended 31 December 2013 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 31 (page 38 to 90). 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 18, 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 (UK and Ireland). 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 company’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.
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 company’s affairs as at 31 December 2013 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:
Under the Companies (Guernsey) Law, 2008 we are required 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 2013
Note
Revenue
Referral fee expense
Gross profit
Share of post-tax (losses)/profits from joint venture 2
Operating costs from operations
Acquisition related charges
Operating loss
Finance income
Finance cost
Recovery of impairment/(impairment of receivables)
Share of post-tax profits/(losses) of associates
Loss before taxation
Income tax credit
Loss for the year
2
3
17
5, 7
5, 7
8
9
10
20
18
11
Attributable to:
Equity holders of the parent company
Loss for the year
2013
USD 000
2012
USD 000
Revised1
46,439
(7,059)
39,380
(19)
(47,978)
(1,218)
(9,835)
74
(358)
(1,445)
500
167
(10,897)
337
(10,560)
47,948
(8,381)
39,567
231
(44,399)
(538)
(5,139)
147
(26)
(81)
(3,897)
(204)
(9,200)
516
(8,684)
(9,709)
(851)
(10,560)
(7,650)
(1,034)
(8,684)
The results for the year ended 31 December 2013 and 31 December 2012 are entirely derived from continuing operations.
Loss per share
Diluted, for loss for the year attributable to ordinary equity holders
of the parent company
Basic, for loss for the year attributable to ordinary equity holders
of the parent company
12 USD (0.33)
USD (0.28)
12 USD (0.33)
USD (0.28)
1 Restated for IAS 19R adjustments and retrospective adjustments due to the finalisation of the Penjing acquisition.
2 Certain joint ventures have become part of the Group’s core business and are therefore now disclosed as part of the operating result.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2013
USD 000
2012
USD 000
Revised1
(10,560)
(8,684)
46
(180)
Items that may be subsequently reclassified to profit and loss
Exchange differences arising on translation of foreign operations
840
89
Other comprehensive income/(loss) for the year, net of taxation
886
(91)
(9,674)
(8,775)
(8,893)
(781)
(9,674)
(7,754)
(1,021)
(8,775)
Note
Loss for the year
Items that will not be subsequently reclassified to profit and loss
Actuarial gain/(loss) on defined benefit pension plans (net of taxation)
Total comprehensive loss for the year, net of taxation
Attributable to:
Equity holders of the parent company
27
1 Restated for IAS 19R adjustments.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
2013
USD 000
2012
USD 000
Revised1
14, 31
15
16
17, 18
19
22
10,422
3,431
13,985
296
859
2,330
31,323
5,283
1,866
18,503
1,911
448
3,158
31,169
20
20
17,420
4,037
34
9,169
30,660
10,130
8,538
6
19,329
38,003
61,983
69,172
30,234
(21,237)
23,117
(4,889)
27,225
1,410
28,635
30,234
(23,257)
22,956
7,365
37,298
2,077
39,375
21
6,504
6,504
5,614
5,614
21
21
6,343
20,501
26,844
7,026
15,978
1,179
24,183
33,348
61,983
29,797
69,172
Note
Non-current assets
Goodwill
Intangible assets
Financial investments
Investment in joint venture and associates
Property, plant and equipment
Deferred tax asset
Current assets
Trade debtors
Other receivables
Tax assets
Cash and cash equivalents
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
Current liabilities
Trade creditors
Other payables
Current tax liabilities
Total liabilities
Total equity and liabilities
Joachim Gottschalk
Dr William Landes
Director and 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
(Increase)/decrease in receivables
Increase/(decrease) in payables
Income taxes (paid)/refunded (net)
Finance income
Finance cost
Share of post tax losses/(profits) from joint venture
Share of post tax (profits)/losses from associates
Net cash outflow from operating activities
Investing activities
Interest received
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 and joint ventures
Acquisition of LUMA
Consolidation of GUS cash balance
Cash received from redemption of investment in UCITS
Loan repayment from related party
Net cash (used in)/from investing activities
Financing activities
Interest paid
Cash paid to GFMH ABL non-controlling interest holders
Purchase of Treasury shares
Net cash used in financing activities
Net decrease in cash and cash equivalents in year
Opening cash and cash equivalents
Effect of foreign exchange rates
Closing cash and cash equivalents
15
19
19
28
8
9
10
17
18
16
15
16
19
31
17
18
27
2013
USD 000
2012
USD 000
(10,897)
(9,200)
987
375
1,337
(2,202)
1,993
(228)
(74)
358
1,445
19
(167)
(7,054)
678
433
75
2,856
1,921
(1,850)
918
(147)
26
81
(231)
204
(4,236)
74
3,712
(343)
(611)
(760)
(5,341)
(61)
–
–
1,834
351
(1,145)
40
1,111
(225)
(2,520)
(292)
(1,527)
(26)
(50)
158
4,316
985
(79)
(700)
(1,531)
(2,310)
(110)
(11,636)
(11,746)
(10,509)
(14,997)
19,329
349
9,169
34,188
138
19,329
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 January 2012
Change in accounting policy
Restated balance
Share
capital
Treasury
shares
(Note
26)
USD 000
(Notes 26
and 28)
USD 000
Translation
reserve
USD 000
26,172 (13,527)
(4,164)
Sharebased
payment
reserve
(Note 28)
USD 000
Pooling
and
other
reserves
(Note 26)
USD 000
Total
other
reserves
USD 000
10,678 14,206
Retained
earnings
USD 000
Attributable
to equity
holders of
the parent
company
USD 000
Noncontrolling
interest
(Note 27)
USD 000
Total
equity
USD 000
20,720
10,271
43,636
10,631
54,267
–
–
–
–
–
–
(169)
(169)
–
(169)
26,172
(13,527)
(4,164)
10,678
14,206
20,720
10,102
43,467
10,631
54,098
Loss for the year
–
–
–
–
–
–
(7,650)
(7,650)
(1,034)
(8,684)
Other comprehensive Income1
–
–
76
–
–
76
(180)
(104)
13
(91)
Total comprehensive income
–
–
76
–
–
76
(7,830)
(7,754)
(1,021)
(8,775)
882
–
–
–
2,060
2,060
–
2,942
–
2,942
Purchase of treasury shares
–
(11,636)
–
–
–
–
–
(11,636)
–
(11,636)
Recognition of
share-based payments
–
–
–
2,749
–
2,749
–
2,749
107
2,856
Reclassification due to
cancellation and vesting
of equity awards
–
1,906
–
(2,649)
–
(2,649)
743
–
–
–
3,180
–
–
–
–
–
4,350
7,530
(7,530)
–
Issue of ordinary shares in connection with the
acquisition of Penjing
Consolidation of GUS and purchase of non-controlling
interest
Cash paid to GFMH ABL
non-controlling Interest
Balance at 1 January 20131
–
–
30,234 (23,257)
–
(4,088)
–
–
–
–
(110)
(110)
10,778 16,266
–
22,956
7,365
37,298
2,077
39,375
Loss for the year
–
–
–
–
–
–
(9,709)
(9,709)
(851)
(10,560)
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)
–
(1,655)
(281)
–
–
–
Recognition of put liability
–
–
–
–
–
–
(1,554)
(1,554)
–
(1,554)
Recognition of
non-controlling interest
on Frontier
–
–
–
–
–
–
–
–
698
698
Recognition of non- controlling interest on
other subsidiaries
–
–
–
–
–
–
–
–
116
116
–
–
–
–
–
–
–
–
(700)
(700)
30,234 (21,237)
(3,318)
10,169 16,266
23,117
(4,889)
27,225
1,410
28,635
Cash paid to GFMH ABL
non-controlling Interest
Balance at 31 December 2013
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 2013 comprise GFMH and its subsidiaries
(together referred to as ‘the Group’). The Group acts principally as an investment manager and investment advisor for
fund of funds activity.
These consolidated financial statements were authorised for issue by the Board of Directors on 19 March 2014 and
are subject to approval at the Annual General Meeting of shareholders on 16 April 2014.
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 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
IFRS 10
Consolidated Financial Statements
IFRS 11
Joint Arrangements
IFRS 12
Disclosure of Interests in Other Entities
IFRS 13
Fair Value Measurement
IAS 19
Employee Benefits
IAS 27
Separate Financial Statements (2011)
IAS 28
Investments in Associates and Joint Ventures
IAS 1
Presentation of Items of Other Comprehensive Income
IFRS 7
Disclosures — Offsetting Financial Assets and Financial Liabilities
Annual Improvements 2009 – 2011 cycle
See Below
No material impact
No material impact
No material impact
See Below
No material impact
No material impact
No material impact
No material impact
No material impact
Adoption of IFRS 10
The Group reassessed the control conclusion for the funds and clients it managed at 1 January 2013. The Group
concluded that it is an agent in accordance with IFRS 10 and consequently such investments are not consolidated
in accordance with IFRS 10. The adoption of IFRS 10 has had no significant impact on the financial statements of
the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1
Accounting policies (continued)
a) Basis of preparation (continued)
Adoption of IAS 19
The Group adopted IAS 19 (revised) ‘Employee Benefits’ on 1 January 2013 and has applied the consequent
adjustments retrospectively in accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and
Error’ in the these financial statements, which has resulted in the restatement of the prior period.
The impact of the adoption of IAS 19 (revised) ‘Employee Benefits’ has resulted in an increase in the pension liability
of USD 0.3 million at 31 December 2012 (30 December 2011: USD 0.2 million) with a corresponding debit to equity
after taking account of any deferred taxation impact.
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. As a result these Standards and Interpretations do
not impact these consolidated financial statements.
Standard or
interpretation
Description
Effective date
Expected Impact on Group
IFRS 9
Financial Instruments
Currently no effective date
set by the IASB
No material impact
IAS 32
Financial Instruments: Presentation:
Offsetting Financial Assets and
Financial Liabilities
Annual periods beginning
on or after 1 January 2014
No material impact
IAS 36
Recoverable Amount Disclosures
for Non-Financial Assets
No material impact
IAS 39
Financial Instruments: Recognition and
Measurement: Novation of Derivatives
and Continuation of Hedge Accounting
No material impact
IFRS 10, IFRS
12 and IAS 27
Investment Entities (Amendments
to IFRS 10, IFRS 12 and IAS 27)
No material impact
Annual Improvements 2010-2012 Cycle
No material impact
Annual Improvements 2011-2013 Cycle
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. The Group has adopted and will adopt all
relevant new standards when they become effective.
b) Basis of consolidation
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
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 consolidated financial statements are disclosed below:
Name
Country of incorporation/registration
Gottex Fund Management Sàrl (‘GFM Sàrl’)
Gottex Solution Services, Sàrl (‘GSS’)
Gottex Management SA, SICAR (‘GMSA’)
Gottex Partners (Luxembourg), Sàrl (‘GP Sàrl’)
Gottex US Management Sàrl (‘GUS’)
Luma Solution Services, Sàrl (‘LUMA’)
Gottex Fund Management Limited (‘GFM US’)
Gottex Fund Management (Hong Kong) Limited (‘GFM HK’)
Gottex Penjing Asset Management (HK) Limited (‘PAMHK’)*
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 Office Limited (‘Asia MFO’)
The Gottex Employee Benefit Trust (‘EBT’)
Frontier IM (Jersey) Limited (‘FIM’)
Gottex Asset Management (U.K.) Limited (‘GTX UK’)
Frontier Investment Services Limited (‘FISL’)
Frontier Investment Management LLP (‘FIML’)
ZG Advisors Pty Limited (‘ZGA’)
Switzerland
Switzerland
Luxembourg
Luxembourg
Luxembourg
Luxembourg
United States of America
Hong Kong
Hong Kong
Bermuda
Bermuda
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Jersey
Jersey
England and Wales
England and Wales
England and Wales
Australia
†
†
†
* Together ‘Penjing’
† Together ‘Frontier’
At 31 December 2013 the Group held a 100 per cent interest in all of the above subsidiaries, apart from Frontier in
which it had an 80 per cent interest, Asia MFO in which it had a 60 per cent interest, GFMH ABL and ZGA in which
it had a 50 per cent interest, and the EBT, which the Group consolidates in accordance with IFRS 10.
EBT
The Group has an employee benefit trust (‘EBT’) that has been established in connection with share-based payment
arrangements. In accordance with IFRS 10, the Group has consolidated this EBT.
GFMH ABL Fund Limited (‘GFMH ABL’)
The Group directly controls 50 per cent of GFMH ABL. It is considered that the remaining 50 per cent, 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 2013 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 0.7 million each.
1
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.
Gottex Absolute Return UCITS Fund (‘UCITS’)
On 1 July 2010 GFM Sàrl subscribed for 50,000 shares in UCITS for a total value of USD 6.3 million, which was
equivalent to a 67.3 per cent holding in UCITS.
For the year ended 31 December 2010, the Group consolidated UCITS, but subsequently the Group’s ownership was
diluted, as new subscriptions were made into the fund, and on 31 March 2012 UCITS was deconsolidated. For the nine
months to 31 December 2012 UCITS was equity accounted for as an associate.
At 31 December 2012 the Group’s ownership was 31 per cent (2011: 34 per cent) and Management considered that
the Group had the capability of exerting significant influence so UCITS continued to be equity accounted for as an
associate.
On 15 February 2013 UCITS was wound up. Proceeds from the wind up were USD 1.8 million. The Group results
included a gain from UCITS of USD 0.2 million.
Gottex US Management Sàrl, SICAR (‘GUS’)
On 6 November 2007, the Group acquired 25 per cent of GUS. GUS owns (directly and indirectly) non-controlling
holdings of certain of the Group’s existing subsidiaries: GFM Sàrl, GTX UK, GAL, GSP, GP Sàrl, GFM HK and SWCP.
The 25 per cent acquisition in GUS resulted in the Group increasing its effective holdings in these subsidiaries by
3.25 per cent.
GUS acts solely as an investment vehicle for investments in the Group’s subsidiaries and its future investment
activities are significantly limited through a shareholders’ agreement with the Company. As a result, the purchase
of the investment in GUS was treated as an increase in the Group’s effective holding in its subsidiaries and a decrease
in the related non-controlling interests. The Group accounted for this transaction using the entity concept method,
where the difference between the cost of the additional interests in the non-controlling interests and the movement
in the share of assets and liabilities was reflected as a transaction between owners within equity.
On 3 September 2012 a shareholder of GUS partially exercised his put option to sell a proportion of his shares in GUS
to the Company in exchange for a fixed ratio of shares in the Company. Accordingly, on 2 October 2012, the Company
issued 1,178,525 shares to the shareholder. There was no net transfer of value between the Company and the
shareholder, but the transaction on 2 October 2012 did result in the Company assuming control over GUS. This
transaction does not represent a business combination but has resulted in GUS being consolidated into these
financial statements from 2 October 2012.
On 29 and 30 November 2012 the two remaining shareholders of GUS exercised in full their put option to sell all
their remaining shares in GUS to the Company in exchange for a fixed ratio of shares in the Company. Accordingly,
on 18 December 2012, the Company issued 1,767,787 shares to the shareholders. There was no net transfer of value
between the Company and the shareholder, but the transaction resulted in the Company now holding the entire
share capital of GUS.
Until 2 October 2012 when it assumed control, the Group accounted for GUS as an associate. From 3 October 2012
the Group has fully consolidated GUS.
EDEX
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.
Although GFM US owns 51 per cent of the units of EDEX, 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 EDEX. Furthermore under the contractual rules of the Agreement, GFM US is entitled
to distributions of 50 per cent, an equal distribution to Eden.
The Group has accounted for EDEX as a joint venture under the equity method.
1
LUMA
In the year ended 31 December 2012, LUMA was accounted for as a joint venture. Gottex Partners (Luxembourg),
Sàrl acquired the remaining 50 per cent of LUMA for USD 50,000 on 1 January 2012 and LUMA was therefore
consolidated into the Group from that date. The acquisition date fair value of assets and liabilities was USD 59,000
and the negative goodwill arising of USD 9,000 has been credited to the income statement in the year to
31 December 2012.
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 of which 70,000 shares were issued to GFM Sarl at on 23 June 2013 for a consideration of USD 60,000.
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 Staples Rodway. Management considers that it has significant influence and have
accounted for Staples Rodway as an associate.
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 the right to appoint one director to the Board, which gives it a 20 per cent voting
right. 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. Management expect that this
will be repaid by the end of 2014, and the repayment of the advance will trigger the conversion of GFM Sarl’s ‘A’ voting
shares will be converted into 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
with authorised share capital of USD 110,000, consisting of 30,000 A shares and 80,000 B shares. The initial share
capital issued was 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 per cent voting and equity rights and TDH have invested
in 6,600 B shares with equity rights vesting over four years. The remaining 13,400 shares issued will be accounted
for as Treasury shares.
Management have consolidated Asia MFO from the date of incorporation in accordance with IFRS 10.
ZG Advisors Pty Ltd. (‘ZGA’)
GFM Sarl has 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 The authorised
share capital of ZGA is AUD $ 550,000, consisting of 500,000 ordinary shares at AUD 1 per share and consisting of
50,000 ‘A’ shares at AUD 1 per share. GFM Sarl has invested in 125,000 shares at par, which gives the Group 50 per
cent of the equity and voting rights of ZGA.
Management have consolidated ZGA from the date of incorporation in accordance with IFRS 10.
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.
1
c) Revenue (continued)
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 high water marks are met and the
performance fees crystallise (semi-annually), with the exception of performance fees relating to Penjing, where the
performance fees only crystallise at the year end reporting date.
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.
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 a defined benefit pension plan for GFM Sàrl 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 plan the Group contributes to an insurance plan on a mandatory basis or to an
employee’s personal pension plan. 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.
The Group held no finance leases throughout the years reported.
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.
1
i) Goodwill (continued)
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.
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.
Intangible assets acquired on the acquisition of subsidiaries are investment management contracts.
They are capitalised at their fair value at the date of acquisition. Their estimated useful lives are five years.
Amortisation is charged so as to write off the costs of the assets over their estimated useful lives using the straightline 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.
1
k) Financial assets and liabilities (continued)
Bank borrowings
Interest bearing bank 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) 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, other than land, 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.
m)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.
n) 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.
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.
1
n) Foreign currencies (continued)
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.
o)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.
p) 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.
q) 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; these estimates are continually reassessed and evaluated to mitigate any significant variation.
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.
1
q) Critical accounting judgements and key sources of estimation uncertainty (continued)
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’.
Where valuation techniques are used to determine fair values, assumptions are made to estimate the valuation
parameters. Changes in these assumptions could affect the valuation of these awards.
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, particularly in respect of the future profitability of certain entities within the
Group, 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 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 acquisitions during the year, which are explained in more detail in the notes. The fair value
of the contingent consideration at the acquisition date is estimated and included within any goodwill capitalised.
An intangible asset has been recognised at the acquisition date in respect of the valuation of existing investment
management contracts. The valuations of contingent consideration and intangible assets are subject to estimates
and judgements, and changes in the estimate of the fair value of contingent consideration could have a significant
effect on the Group’s income statement in future periods.
The Group conducts a goodwill impairment review annually by comparing the carrying value of the relevant cash
generating unit to its recoverable amount.
r) 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 disclosed 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.
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 in arrears.
2
Revenue (continued)
Performance fees
The Group earns investment management performance fees based on performance of investments. The fees
are mainly receivable semi-annually in arrears.
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.
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
GSS fees
Advisory fees
Total revenue
3
2013
USD 000
2012
USD 000
32,237
11,881
1,192
725
404
46,439
39,531
3,350
2,844
1,281
942
47,948
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
2013
USD 000
2012
USD 000
4,913
2,146
7,059
7,817
564
8,381
Segmental analysis of results
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.
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
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
Total GFM assets
GSS
2013
USD 000
2012
USD 000
31,717
9,214
4,316
45,247
1,192
46,439
41,078
2,705
1,321
45,104
2,844
47,948
The AuM has been analysed by fund type in the table below:
AuM
Global Multi-Manager
Asian Multi-Manager
Multi-Asset
GSS
2013
USD million
2012
USD million
3,770
352
662
509
5,2931
5,387
410
142
1,049
6,988
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 GFMH.
Revenue
Cayman Islands
Europe
British Virgin Islands
USA
Asia Pacific
2013
USD 000
2012
USD 000
26,642
7,510
4,336
6,056
1,895
46,439
25,334
11,690
7,145
3,779
–
47,948
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.
1 Client assets represented in both GFM and GSS amounted to USD 0.4 million
4
Segmental analysis of results (continued)
AuM
Cayman Islands
Europe
USA
British Virgin Islands
Asia Pacific
2013
USD million
2012
USD million
3,037
856
690
494
216
5,293
3,692
1,704
551
1,041
–
6,988
Non-current assets by main geographical location located in the country of domicile of GFMH are nil. The Group’s
non-current assets located in foreign countries are presented below:
Switzerland
USD 000
US
USD 000
UK
USD 000
Asia Pacific
USD 000
Total
USD 000
–
211
–
–
133
344
–
–
238
116
354
5,139
1,970
–
–
222
7,331
5,283
1,250
58
–
388
6,979
10,422
3,431
58
238
859
15,008
Switzerland
USD 000
US
USD 000
UK
USD 000
Luxemburg
USD 000
Hong Kong
USD 000
Total
USD 000
–
309
–
–
217
526
–
–
–
257
66
323
–
–
–
–
65
65
–
–
1,654
–
–
1,654
5,283
1,557
–
–
100
6,940
5,283
1,866
1,654
257
448
9,508
At 31 December 2013
Goodwill
Intangible assets
Investment in associate
Investment in joint venture
Property plant and equipment
At 31 December 2012
Goodwill
Intangible assets
Investment in associate
Investment in joint venture
Property plant and equipment
Information about major customers
Approximately 70.4 per cent of revenue in the 12 months to 31 December 2013 (61.8 per cent of revenue in the 12 months to
31 December 2012) came from five underlying funds (2012: five funds), all 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 2013
MN Plus
Gottex Real Asset Fund
MN Master
ABI
Portable Alpha
Other
Year to 31 December 2012
Revenue
USD 000
Revenue
%
Revenue
USD 000
Revenue
%
10,312
8,622
7,737
3,676
2,305
13,787
46,439
22.2%
18.6%
16.7%
7.9%
5.0%
29.6%
100.0%
9,884
7,770
5,482
3,606
2,881
18,325
47,948
20.6%
16.2%
11.4%
7.6%
6.0%
38.2%
100.0%
5
Operating costs
2013
USD 000
2012
USD 000
6
6,7
32,311
4,336
36,647
8,877
546
1,908
47,978
34,319
569
34,888
7,438
130
1,943
44,399
7
1,218
49,196
538
44,937
Note
Personnel expenses before acquisition-related charges
Personnel expenses: acquisition-related charges
General and administrative expenses before acquisition-related charges
General and administrative expenses: acquisition-related charges
Marketing and representation services
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.
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/(gains)
15
19
2013
USD 000
2012
USD 000
987
375
2,176
911
82
678
433
2,703
1,004
(204)
2013
USD 000
2012
USD 000
869
42
911
822
182
1,004
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 0.1 million
(2012 USD 0.1 million).
6
Personnel expenses and employees
a) Personnel expenses
The aggregate remuneration of employees (including executive directors) including Frontier and Penjing
acquisition-related expenses disclosed in note 7 was:
Note
Wages and salaries
Social security expenses
Net pension cost
Termination costs
Sundry personnel expenses
23
28
2013
USD 000
2012
USD 000
31,816
1,432
154
233
1,337
1,675
36,647
28,711
1,683
204
–
2,856
1,434
34,888
6
Personnel expenses and employees (continued)
b) Employee numbers
The average total monthly number of employees (including executive directors) was:
Number
Number of employees – average during the year
Number of employees – at 31 December
7
2013
2012
112
110
103
2013
2012
242
660
188
–
128
1,218
4,336
546
6,100
358
6,458
–
1
–
537
–
538
569
130
1,237
26
1,263
112
Note
Frontier adjustment to deferred consideration
Penjing adjustment to deferred consideration
Frontier acquisition-related transaction costs
Penjing acquisition-related transaction costs
EIM acquisition-related transaction costs
Acquisition-related 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 cost
Total acquisition-related charges
5
5
9
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. The remuneration paid to Frontier and Penjing’s selling shareholders
as deferred consideration is expensed through the Group income statement within acquisition-related charges1 and
where such selling shareholders are employees, under IFRS such amounts are included in personnel costs.
Excluding all such acquisition related charges detailed above, the operating loss would be USD 3.7 million
(2012: USD 3.9 million).
The EIM acquisition is expected to complete in the first half of 2014 subject to regulatory approval.
8
Finance income
Interest on bank deposits
Income from investments in Gottex funds
2013
USD 000
2012
USD 000
5
69
74
40
107
147
1 For the non employee selling shareholders the deferred management considerating was part of goodwill not expensed. Only revisions to the original estimate go though
profit and loss.
9
Finance cost
Note
2013
USD 000
2012
USD 000
31
304
54
358
–
26
26
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
2013
USD 000
2012
USD 000
16
1,715
62
(281)
90
(59)
(82)
1,445
699
(484)
(193)
86
(39)
12
81
2013
USD 000
2012
USD 000
238
(1,322)
(1,084)
747
–
747
(337)
108
(129)
(21)
(487)
(8)
(495)
(516)
3.4%
5.6%
2013
USD 000
2012
USD 000
Weighted average Group tax rate %*
(30.0)
(46.1)
Expected Group tax credit
Share based payments
Tax losses carried forward**
Adjustment in respect of prior years
(2,991)
–
3,976
(1,322)
(337)
(4,246)
–
3,867
(137)
(516)
GFMH ABL
GMAE Fund
Market Neutral Fund
GVA ABL Fund
Tiger Fund
Other funds
11 Income tax 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 – continuing operations
Reconciliation of the taxation charge
*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 2013, the Group has approximately USD 27.2 million (2012: USD 15.1 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 2013 (2012: USD nil) for these losses.
11 Income tax credit (continued)
At 31 December 2013, the Group has approximately USD 6.7 million (2012: USD 8.4 million) of carried forward
tax losses which would be available to offset against future taxable income and a related deferred tax asset of
USD 1.7 million has been recognised in the statement of financial position of the Group at 31 December 2013
(2012: USD 2.2 million). Furthermore, at 31 December 2013, the Group had recognised a deferred tax asset
of 0.4 million (2012: USD 0.4 million) related to share based payments and a deferred tax asset of 0.2 million
(2012: USD 0.4 million) related to deferred bonuses at 31 December 2013.
12 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing net profit/(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 earnings/(loss) per share is calculated by dividing the net profit/(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.
Earnings/(loss)
Note
Net loss attributable to ordinary equity holders of the parent for basic and diluted
loss per share
Adjustments to net loss attributable to ordinary equity holders of the parent*
Revaluation of investments in respect of GFMH ABL
Impairment of loans to funds
Write-off of recovery of deferred fund expenses
Adjusted net loss attributable to ordinary equity holders of the parent for basic and
diluted (loss) /earnings per share
10
20
2013
USD 000
2012
USD 000
(9,709)
(7,650)
858
(440)
6,062
1,176
349
2,375
1,263
–
(2,053)
(3,663)
2013
000
2012
000
29,279
26,945
–
–
29,279
26,945
Shares
Number
Weighted average number of ordinary shares (excluding treasury shares) for basic earnings/
(loss) per share
Adjustments for dilutive potential ordinary shares
Weighted average number of ordinary shares (excluding treasury shares) for diluted earnings/
(loss) per share
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 2013 and 31 December 2012 of the Group’s potential ordinary shares would be antidilutive and
therefore have been excluded from the calculation above.
12 Earnings/(loss) per share (continued)
Earnings/(loss) per share
2013
USD 000
2012
USD 000
Basic loss per share
Adjustments for dilutive potential ordinary shares
Diluted loss per share
(0.33)
–
(0.33)
(0.28)
–
(0.28)
Basic loss per share
(Recovery)/impairment of receivables
Write-off of deferred fund expenses
Adjusted basic loss per share
(0.33)
0.03
(0.02)
0.22
0.04
(0.06)
(0.28)
0.01
0.09
0.05
–
(0.13)
Diluted loss per share
(Recovery)/impairment of receivables
Write-off of deferred fund expenses
Adjusted diluted loss per share
(0.33)
0.03
(0.02)
0.22
0.04
(0.06)
(0.28)
0.01
0.09
0.05
–
(0.13)
*T he Group has presented an adjusted (loss)/earnings per share for the year ended 31 December 2013 and 31 December 2012 in order to portray the results of the Group
in the way that management views the operations in the years. The adjusted (loss)/earnings per share have been calculated by adding back the share of loss attributable
to the Group in respect of the revaluation of the investment held in GFMH ABL, the (recovery)/impairment of receivables, the write-off of deferred fund expenses and costs
expensed in relation to the acquisition of Penjing, Frontier and EIM.
13Dividends
In the years to 31 December 2013 and 31 December 2012 the Company paid no dividend to its shareholders.
No dividend has been proposed by the Board in 2013 in respect of the 2013 results.
14Goodwill
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.
On 4 July 2013, the Group acquired the majority of the share capital of Frontier. The goodwill recognised in the
accounts in 2013 for the acquisition was USD 4.8 million (note 31).
On 12 August 2012, the Group acquired the entire share capital of Penjing. The goodwill recognised in the accounts
in 2013 for the acquisition was USD 5.3 million (note 31).
Penging
USD 000
Frontier
USD 000
Total
USD 000
Cost (Restated)
At 1 January 2012
Acquisition of subsidiaries
At 31 December 2012
–
5,283
5,283
–
–
–
–
5,283
5,283
At 1 January 2013
5,283
–
–
4,763
5,283
4,763
Translation differences
At 31 December 2013
–
5,283
376
5,139
376
10,422
14Goodwill (continued)
Impairment testing
At 31 December 2013 the goodwill created on the Penjing acquisition was tested for impairment by comparing the
carrying value of the cash generating unit to its recoverable amount, which was based on the value in use calculation.
The key assumption used in determining the values in use calculation are:
Forecast EBITDA determined based on five years forecasts and projections prepared by Management and
approved by the Board;
Long term growth rate of three per cent, determined based on Management’s expectations of economic growth in
the relevant market; and
Pre-tax risk adjusted discount rate, 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. This was determined at 15 per cent.
No impairment of the goodwill was required.
15Intangible assets
Intangible assets comprise capitalised investment management contracts related to the acquisition of Penjing and
Frontier 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 2012
Additions
At 31 December 2012
Accumulated amortisation
At 1 January 2012
Amortisation charge
At 31 December 2012
Net book value at 31 December 2012
Cost
At 1 January 2013
Additions
At 31 December 2013
Accumulated amortisation
At 1 January 2013
Amortisation charge
At 31 December 2013
Investment
management
contracts
USD 000
Software
USD 000
Total
USD 000
–
1,754
–
(2)
1,752
5,650
–
225
–
5,875
5,650
1,754
225
(2)
7,627
–
(167)
(167)
1,585
(5,083)
(511)
(5,594)
281
(5,083)
(678)
(5,761)
1,866
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
The movement in cost during the year ended 31 December 2013 relates to the recognition of an intangible asset
of USD 2.0 million in connection with the acquisition of Frontier (see note 31).
16 Financial investments
Financial investments consist principally of investments in Gottex fund of 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 2012
Additions
Acquisitions of subsidiaries
Additions – Total
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
Translation
At 31 December 2012
At 1 January 2013
16,948
2,520
148
2,668
(689)
(422)
(1,111)
(699)
618
(81)
79
18,503
18,503
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
Translation
At 31 December 2013
611
(1,127)
(2,585)
(3,712)
(1,715)
270
(1,445)
28
13,985
The disposals in the year mainly comprise USD 1.1 million from the Gottex Tiger Fund, USD 0.9 million from Market
Neutral Investments and USD 0.4 million of MAE investments, as well as USD 1.1 million from GFMH ABL.
The revaluation in the year includes a loss in respect of the investments held by GFMH ABL of USD 1.7 million (2012:
USD 0.7 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
Financial investments
31 December 2013
31 December 2012
Level 2
Level 3
Total
Level 2
Level 3
Total
12,015
1,970
13,985
13,487
5,016
18,503
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 2013 and 31 December 2012 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
2013
USD 000
2012
USD 000
5,016
(1,840)
9
(1,215)
1,970
6,697
(823)
168
(1,026)
5,016
There were no transfers between Level 2 and Level 3 in the years ended 31 December 2013 and 31 December 2012.
The loss during the year ended 31 December 2013 for financial investments that are held as at 31 December 2013 is
USD 396,000 (2012: USD 787,000) and is presented within the income statement.
17 Investment in joint venture
EDEX
On 11 January 2012, the Group invested USD 26,000 in EDEX. The Group has accounted for EDEX as a joint venture
under the equity method. Further details are shown in the note 1b) Basis of consolidation.
In addition Gottex received USD 0.3 million as a recovery of its costs in supporting EDEX.
The summarised financial information of 100 per cent of EDEX is as follows:
2013
USD 000
2012
USD 000
3,191
(3,228)
(37)
2,194
(1,731)
463
Group’s share of (loss)/profit
(19)
231
Non-current assets
Current assets
Total assets
12
707
719
23
569
592
(243)
476
(79)
513
238
257
Income
Expenses
(Loss)/profit for the year
Current liabilities
Total net assets
Group’s share of total net assets
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 has made losses in the period to 31 December 2013 and these losses have been set against the original
investment of the Group. At 31 December 2013 the share of the Group’s losses that are unrecognised are USD
45,000. These losses mainly relate to fund start up cost and the related fund is expected to be launched during the
course of 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 33 1/3 per cent of GSR Funds. Management believes they have
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 loss in the period was USD 1,000.
UCITS
On 15 February 2013 UCITS was wound up. Proceeds from the wind up were USD 1.8 million. The Group results
included a gain from UCITS of USD 0.2 million.
At 31 December 2012 the Group owned 31 per cent of UCITS and accounted for this investment as an associate under
the equity method. In the year ended 31 December 2012 the Group redeemed part of its outstanding shares at fair
value and received USD 4.3 million.
GUS
Until 2 October 2012 when it assumed control, the Group accounted for GUS as an associate and the share of loss
included in the income statement for the period to 2 October 2012 was USD 12,000. At 31 December 2013 and 2012
the Group had fully consolidated GUS.
The summarised financial information of the Groups investments in associates (after excluding all flows to/from and
balances in/with Group entities) is as follows:
31 December 2013
USD 000
Revenue
(Loss)/profit for the year/period
Group’s share of profit/(loss)
Total assets
Total liabilities
Total net assets
Group’s share of total net assets
HSL
UCITS
Staples
Rodway
Total
UCITS
GUS
Total
–
(257)
6
(71)
327
(3)
333
(331)
144
(43)
–
(164)
144
(207)
(1)
169*
(1)
167
(130)*
(74)
(204)
101
–
220
321
5,781
–
5,781
(349)
(248)
–
–
(46)
174
(395)
(74)
(360)
5,421
–
–
(360)
5,421
–
–
58
58
1,654
–
1,654
*The Group’s share of profit/(loss) also includes the effect of changes in ownership over the period.
31 December 2012
USD 000
19 Property, plant and equipment
Short term
leasehold
USD 000
Cost or valuation:
At 1 January 2012
Additions
Disposals
At 31 December 2012
Accumulated depreciation:
At 1 January 2012
Depreciation charge
Disposals
At 31 December 2012
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
Fixtures
& fittings
USD 000
Office
equipment
USD 000
4,395
232
37
(174)
21
4,511
Total
USD 000
499
6
59
(139)
–
425
1,008
54
14
(33)
3
1,046
5,902
292
110
(346)
24
5,982
(431)
(61)
83
–
(409)
16
(930)
(53)
31
(4)
(956)
90
(3,990)
(319)
157
(17)
(4,169)
342
(5,351)
(433)
271
(21)
(5,534)
448
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
The Group held no assets under finance leases during either of the years reported.
20 Trade and other receivables
Current debtors
Trade debtors
Amount due from related parties
Other debtors
Prepayments and accrued income
Total trade and other receivables
2013
USD 000
2012
USD 000
17,420
634
2,330
1,073
21,457
10,130
449
3,619
4,470
18,668
Current debtors
Trade and other 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 except for the loans advanced to the funds (see below). During
the year ended 31 December 2013, USD 0.5 million of management fees that had previously been provided for were
recovered and this amount was credited to the income statement. At 31 December 2012 a provision was made against
trade debtors of USD 0.4 million.
For terms and conditions relating to related parties, refer to note 30.
The total trade and other receivables, except for USD 1,072,000 (2012: USD 4,470,000) included in prepayments
and accrued income, are classified as financial assets.
Loans to Funds
In prior years, the Group has made loans of a gross value of USD 8.0 million to funds for which it acts as
investment manager.
At 31 December 2013 and 2012 the carrying amount of the loans is USD nil and an impairment charge of
USD 3.9 million was made in the year ended 31 December 2012.
21 Trade and other payables – current and non-current
Current liabilities
Trade creditors
Amount due to related parties
Other tax and social security
Other creditors
Accruals
Other creditors
Retirement benefit liability
Deferred tax liability
Accruals
Total trade and other payables
2013
USD 000
2012
USD 000
6,343
30
1,406
10,386
8,679
26,844
7,026
49
1,738
5,594
8,597
23,004
3,870
578
355
1,701
6,504
1,521
662
–
3,431
5,614
33,348
28,618
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.
21 Trade and other payables – current and non-current (continued)
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.
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 in year
Net movement in year, expensed in the Income Statement
Settled in year
Balance at 31 December
2013
USD 000
2012
USD 000
2,235
2,128
902
(765)
4,500
–
2,236
(1)
–
2,235
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.
At 1 January 2012
Credited to income
Credited to other
comprehensive income
Translation
At 31 December 2012
At 1 January 2013
(Debited)/credited to income
Debited to other
comprehensive income
Translation
At 31 December 2013
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
1,744
438
–
400
5
–
18
–
–
401
52
–
21
2,203
–
405
–
18
2,203
–
(572)
–
405
–
(11)
–
15
1,646
–
394
Total
deferred
tax asset
USD 000
Deferred
tax
liability
– Intangible
asset
USD 000
Total
deferred
tax
Assets/
(liabilities)
USD 000
59
–
20
2,622
495
20
–
–
–
2,622
495
20
–
453
–
79
21
3,158
–
–
21
3,158
18
–
(10)
–
453
–
(240)
–
79
–
(6)
(5)
3,158
–
(839)
(5)
–
(413)
92
–
3,158
(413)
(747)
(5)
–
8
–
213
1
69
16
2,330
(34)
(355)
(18)
1,975
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 operates a defined contribution scheme for all of its employees. The contributions for the years ended
31 December 2013 and 31 December 2012 were USD 15,000 and USD 14,000, respectively. Penjing, acquired in
August 2012, also operates a defined contribution scheme for all of its employees. The contributions for the years
ended 31 December 2013 were USD 33,000 and the comparative from the date of acquisition to 31 December 2012
was USD 17,000. Frontier, acquired in July 2013, also operates a defined contribution scheme for all of its employees.
The contributions from the date of acquisition to 31 December 2013 were USD 9,000.
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.
The Company’s obligations under the Swiss pension scheme are to pay defined contributions. However in accordance
with the Swiss law ‘LPP/BVG’, the pension scheme incorporates 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 scheme has been reported as a defined benefit pension plan in accordance
with IFRS.
There were certain amendments to the pension plan from 2013, principally regarding insured salary, financing of
the plan and in conversion rate. The impact of these changes was recognised in past service costs directly within
the income statement. The characteristics of the plan as of 31 December 2013 were as follows:
Employees insured up to a salary of CHF 120,000
Financing by employee contributions = 50 per cent
Financing by employer contributions = 50 per cent
Conversion rate = 5.8 per cent-6.8 per cent (increasing with retirement age)
The pension plan is maintained by a foundation that is a separate legal entity from the Company. The plan provides
coverage to all Switzerland-domiciled employees for retirement, death and disability.
The Foundation is governed by a board of trustees and supervised by a supervisory authority: Autorité de
surveillance LPP et des fondations de Suisse occidentale.
The liability recognised in the balance sheet in respect of the defined benefit pension plan 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 equity in 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.
The table below outlines where the Group’s post employment amounts related to the Swiss pension scheme are
included in the financial statements:
23 Retirement benefits (continued)
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
Net expense recognised in the income statement
Recognised in the defined benefit scheme obligations
Actuarial gains/(losses) due to financial assumptions
Experience adjustments
Recognised in the defined benefit scheme assets
Return on scheme assets excluding interest
Net (gain)/expense recognised in other comprehensive income
2013
USD 000
2012
USD 000
(3,060)
2,482
(578)
(3,132)
2,470
(662)
97
169
(88)
26
(62)
179
45
224
10
(52)
(17)
207
The significant actuarial assumptions used in the actuarial valuations include: need each key assumption and sensitivities
Discount rate
2013
2012
2.25%
2.0%
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%
-2.8%
+2.9%
Assumptions regarding future mortality as set forth below are set based on Swiss BVG/LLP 2010 mortality tables
which include generational mortality rates allowing for future projections of increasing longevity.
Assumptions regarding future mortality
Longevity at age 65 (use plan retirement age) for current pensioners:
– male
– female
Longevity at age 65 (use plan retirement age) for future pensioners (age 45):
– male
– female
2013
2012
19.8
22.1
19.7
22.0
21.6
23.9
21.6
23.9
The above sensitivity analyses are 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 credit
Net Interest cost
2013
USD 000
2012
USD 000
161
(77)
13
97
158
–
11
169
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 charges
Interest cost
Contributions from employees
Actuarial gains/(losses)
Benefits paid
Translation
At 31 December
2013
USD 000
2012
USD 000
Revised
(3,132)
(161)
77
(64)
(148)
62
389
(83)
(3,060)
(2,630)
(158)
–
(68)
(151)
(224)
173
(74)
(3,132)
2013
USD 000
2012
USD 000
2,470
51
(10)
148
148
(389)
64
2,482
2,206
57
17
150
150
(173)
63
2,470
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 transferred
Translation
At 31 December
The pension fund assets are not invested separately for each employer but globally. The actual allocation at
31 December 2013 and 31 December 2012 is shown below.
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%
31 December 2012
Cash
Equities
Bonds
Real estate
Other investments
Quoted
Unquoted
Total
–
27.5%
42.9%
11.8%
11.8%
94.0%
6.0%
–
–
–
–
6.0%
6.0%
27.5%
42.9%
11.8%
11.8%
100.0%
2013
USD 000
2012
USD 000
1,865
5,169
7,034
2,407
5,435
7,842
The entity expects to pay contributions of USD 150,000 to its defined benefit plan in 2014.
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. There are no operating lease commitments due after five years.
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 2013 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. Three 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
2013
Ordinary shares @ CHF1.00 each
b)
2012
Number
of shares
Nominal value
CHF 000
Number
of shares
Nominal value
CHF 000
34,502,184
34,502
34,502,184
34,502
Number
of shares
Nominal value
CHF 000
30,693,803
862,069
2,946,312
34,502,184
30,694
862
2,946
34,502
Movement in allotted and fully paid up share capital
At 1 January 2012
Issue of shares for the acquisition of Penjing
Issue of shares for the acquisition of GUS
At 31 December 2012
At 1 January 2013 and 31 December 2013
34,502,184
34,502
Movements in share capital in the year to 31 December 2013
There was no movements in share capital in year to 31 December 2013.
Movements in share capital in the year to 31 December 2012
On 16 August 2012, the Company issued 862,069 shares as part of the consideration for the acquisition of Penjing
to the former shareholders.
On 2 October 2012 the Company issued 1,178,525 shares and on 18 December 2012 it issued a further 1,767,787
shares to the shareholders of GUS for the remaining shareholding in GUS. There was no net transfer of value between
the Company and the shareholder, but the transaction on 2 October 2012 did result in the Company assuming control
over GUS.
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 2012 comprises the excess of the fair value over the par value
of the shares issued for the Penjing acquisition. 72 GOTTEX FUND MANAGEMENT HOLDINGS LIMITED
27 Non-controlling interest
At 1 January
Share of total comprehensive loss
Cash paid to GFMH ABL Non-controlling interest holders
Consolidation of GUS
Consolidation of Frontier
Consolidation of ZGA
Consolidation of Asia MFO
Movement in share-based payment reserve
At 31 December
2013
USD 000
2012
USD 000
2,077
(781)
(700)
–
698
109
7
–
1,410
10,631
(1,021)
(110)
(7,530)
–
–
–
107
2,077
The share of recognised income and expense for 2013 attributable to the non-controlling interest is comprised of
50 per cent of the operating income and expense of the GFMH ABL for the year as well as 20 per cent of the recognised
income and expense of Frontier since their date of acquisition, 50 per cent for ZGA and 40 per cent for Asia MFO.
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. The loss for the year ended 31 December 2012 attributable to noncontrolling interest is calculated using a blended non-controlling interest percentage share of 7.65 per cent for the
non-controlling interests of the Group, excluding GFMH ABL in 2012 for the period until the non-controlling interest
was extinguished. The blended rate is a mixture of the opening non-controlling interest percentage of 8.76 per and
the changes to the non-controlling interest percentage through the exercise of the GUS put option, as explained in
note 1b) Basis of consolidation.
The non-controlling interest percentage of 50 per cent at 31 December 2013 is solely in respect of GFMH ABL.
28 Share-based payments
Note
Share-based payment reserve in equity:
At 1 January
Recognised in the income statement – share-based payments
relating to the Penjing acquisition
relating to the Frontier acquisition
6
Less amount included in non-controlling interest
Reclassification/utilisation during the year
At 31 December
27
2013
USD 000
2012
USD 000
10,778
10,678
838
287
2,627
229
212
1,337
–
2,856
–
(1,946)
10,169
(107)
(2,649)
10,778
28 Share-based payments (continued)
In the year ended 31 December 2013 the charge for share-based payments related to the following types of awards:
On-going plans
Share awards and options
The LTIP plan
Penjing acquisition-related remuneration
Frontier acquisition-related remuneration
2013
USD 000
2012
USD 000
490
348
287
212
1,337
1,347
1,280
229
–
2,856
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. The only vesting condition is that the participant is
in the employment of the Group for the vesting period.
a) The Restricted award plan
The majority of these share awards were, issued in November 2007 at the date of listing, to vest over a four year
period in equal portions, with one quarter vesting on each anniversary of the date of award and therefore the final
vesting date was in 2012. However further share awards have been made since that date to certain employees.
Fair values at date of grant per share
1 year vesting – USD per share
2 year vesting - USD per share
Movement in share awards
Share awards outstanding at the beginning of the year
Share awards vested in year
Share awards forfeited in year
Share awards outstanding at the end of the year
Granted
in 2011
Granted
in 2010
Granted
in 2008
Granted
in 2007
7.15
7.15
7.15
7.15
5.55-8.62
5.55-8.62
5.55-8.62
5.55-8.62
4.29–42.14
4.01–39.45
3.74–36.76
3.47–34.07
59.45
56.29
52.49
48.70
2013
2012
110,867
(37,959)
(1,757)
71,151
207,510
(96,643)
–
110,867
A charge for the year ended 31 December 2013 of USD 0.2 million (2012: USD 0.4 million) has been made in relation
to these awards.
b) The 2009 Additional Share award plan
In January 2009, the Company made share awards to certain employees of the Group. The fair value of these
awards was estimated by reference to the share price at the date of grant, with an appropriate adjustment for
expected dividends foregone. The share awards vest over a four year period in equal portions, with one quarter
vesting 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.
b) The 2009 Additional Share award plan (continued)
Of those share awards forfeited in 2010, 44,266 share awards were reinstated to an individual who returned
to the employment of the Group in 2012.
Granted
in 2009
Share awards forfeited in year
3.07-6.02
2.65-5.20
2.23-4.38
1.82-3.56
2013
2012
436,946
(436,946)
–
–
802,139
(343,060)
(22,133)
436,946
The charge for the year to 31 December 2013 was USD nil (2012: USD 0.4 million) as the award was fully expensed
in prior years.
c) The 2010 Additional Share award plan
In 2010, the Company made 191,032 share awards to certain employees of the Group. The fair value of these awards
was estimated by reference to the share price at the date of grant, with an appropriate adjustment for expected
dividends foregone. 42,258 share awards vested at the date of grant, 47,758 share awards vested at 31 December
2010 and 47,758 share awards vested on 31 December 2011, 47,758 share awards vested on 31 December 2012, and
2,500 shares vested on 31 December 2013. The only vesting condition was that the participant is in the employment
of the Group for this period.
Granted in 2010
Vesting at date of grant – USD per share
Vesting at 31 December 2010 – USD per share
5.276
5.276
5.171
5.065
4.960
2013
2012
2,500
(2,500)
–
50,258
(47,758)
2,500
A charge for the year ended 31 December 2013 of USD 3,720 (2012: USD 0.1 million) has been made in relation to
these awards, and these awards have now been fully expensed.
d) NED shares
From 1 October 2009, 25 per cent of the non-executive directors’ (NEDs) annual fees are comprised of shares, valued
at an amount equivalent to the original cash fee sacrificed. The shares vest to the NEDs at the time of the re-election
or retirement of each director. At 31 December 2013, 140,038 shares had been granted to the NEDs, and of these
74,988 shares had vested (2012: 95,740 shares had been granted, and of these 38,779 shares had vested).
A charge for the year ended 31 December 2013 of USD 0.1 million (2012: USD 0.1 million) has been made in relation
to these awards.
e) 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 fair value of these awards was estimated by reference to the
share price at the date of grant. The employees are entitled to accrued dividends during the vesting period. The share
awards vest over a two 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 2011, the Directors believe that it is appropriate to
recognise, and have recognised the expense for these share awards over a performance period commencing 1
January 2010 as employees began rendering services from that date.
The charge for the year ended 31 December 2013 was USD 0.1 million (2012: USD 20,000).
Granted
in 2012
Share awards vested in the year
7.15
7.15
2013
2012
68,479
(37,608)
30,871
110,737
(42,258)
68,479
f) The Bonus Share option awards – 2011
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.
Although these share options were not legally granted until 2011, the Directors believe that it is appropriate to
recognise, and have recognised the expense for these share awards over a performance period commencing
1 January 2010 as employees began rendering services from that date.
The fair value of the share options has been determined using a Black-Scholes model. The parameters used as inputs
to this model were as follows:
Share options outstanding at 31 December 2013
Share price – USD
Exercise price – USD*
Expected volatility – per cent
Expected life – years
Risk free rate – per cent
Dividend yield – per cent
46,652
6.9
7.42
50.24
8
2.0
3.0
Fair value per option at date of grant – USD
3.06
*translated at the year-end exchange rate
Weighted average remaining contractual life for options outstanding at end of the year
6 years
At 31 December 2013 there remained 46,652 (2012: 46,652) share options outstanding and none of which were
exercisable.
Expected volatility was calculated by reference to the historical volatility of the share price of a peer group as at
the time of the grants of the options, the Company itself had only been listed since 6 November 2007.
A charge for the year ended 31 December 2013 of USD 30,319 (2012: credit of USD 34,000) has been made
in relation to these awards.
g) 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 fair value of these awards is based on the value of the bonus
awarded to employees. The employees are entitled to accrued dividends during the vesting period. The share awards
vest over a two 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.
recognise, and have recognised the expense for these share awards over a performance period commencing 1 April
2011 as employees began rendering services from that date.
The charge for the year ended 31 December 2013 was USD 0.1 million (2012: USD 0.2 million).
Granted in
2012
2.71
2.71
Share awards granted in year
2013
2012
155,016
–
(69,266)
85,750
–
177,183
(22,167)
155,016
h) 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 fair value of these awards is based on the value of the bonus
awarded to employees. The employees are entitled to accrued dividends during the vesting period. The share awards
will vest over a two 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.
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.
The credit for the year ended 31 December 2013 was USD 4,266 (2012: charge of USD 0.1 million).
Granted
in 2013
3.00
3.00
2013
Share awards granted in year
–
32,419
32,419
i) 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 2013 was USD 5,373 (2012: USD 0.3 million).
j) 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.
The fair value of the share options has been determined using a Black-Scholes model. The parameters used as inputs
to this model were as follows:
Share options outstanding at 1 January and 31 December 2013
Share price – USD
Exercise price – USD*
Expected volatility – per cent
Expected life – years
Risk free rate – per cent
Dividend yield – per cent
Fair value per option at date of grant – USD
Range of exercise prices for options outstanding at end of the year (USD*)
Weighted average remaining contractual life for options outstanding at end of the year
385,215
4.70-48.48
3.57-63.45
52.00-95.00
8
2.27-2.60
6.00-11.00
1.65-14.51
3.48-61.82
2.33 years
*translated at the year-end exchange rate
At 31 December 2013 385,212 (2012: 279,233) share options were exercisable. All of these options were under water
Expected volatility was calculated by reference to the historical volatility of the share price of a peer group as at the
time of the grants of the options, the Company itself had only been listed since 6 November 2007.
A charge for the year ended 31 December 2013 of USD nil (2012: USD nil) has been made in relation to these awards
as these awards were fully expensed in prior years.
k) 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.
A charge for the year ended 31 December 2013 of USD 0.3 million (2012: USD 1.3 million) has been made in relation to
these awards, and these awards are now expensed in full.
l) The new equity award
The Group made awards of 4.7 million equity share 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.
A credit for the year ended 31 December 2013 of USD 40,554 (2012: charge of USD 0.2 million) has been made in
relation to these awards.
m) One-off employee share award 2013
The Group made an equity award of 150,000 shares to an employee in November 2012. The shares generally vest in
three equal tranches of 50,000 shares each year at 31 December. 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 2013 of USD 51,995 (2012: USD 30,000) 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.
For all years up to and including the year ended 31 December 2013 the EBT has been consolidated within the
financial statements.
At 31 December 2013, the EBT held 4,242,744 shares (2012: 4,828,298 shares) in GFMH which had a fair market
value of USD 11.1 million (2012: USD 14.6 million). The market price per share at 31 December 2013 and 31 December
2012 was USD 2.63 and USD 3.03 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 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.
29 Financial risk management (continued)
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.
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
2013
%
2012
%
2013
USD m
2012
USD m
2.0%
5.1%
3.0%
2.5%
2.6%
3.6%
Less than 0.1
Less than 0.1
Less than 0.1
Less than 0.1
Less than 0.1
0.2
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 Group has no long term financing.
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 (2012: 50 basis points). As interest rates are currently exceptionally low,
a further decrease in rates is considered highly unlikely and therefore no sensitivity analysis for this scenario has been
performed. This sensitivity analysis used the average interest rate received for the year ended 31 December 2013 of
1.41 per cent (2012: 0.80 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 1.91 per cent (2012: 1.30 per cent) and a possible decrease in the interest
rate of 0 basis points (2012: 0 basis points) would result in an interest rate of 1.41 per cent (2012: 0.80 per cent).
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
2013, and the continuing negative or slow growth in the world’s major economies that interest rate movements are
likely to increase rather than decrease. Accordingly, a 50 basis point (2012: 50 basis point) increase in the average
rate reflects the movement should the global economy start recovering in 2014 while no decrease (2012: 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.
If interest rates increased by 50 basis points (2012: 50 basis points) the net result for the year would increase by
USD 0.1 million (2012: USD 0.1 million). Should interest rates decrease by zero basis points (2012: zero basis points),
the net result would decrease by USD nil (2012: USD nil).
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 7.7 per cent (2012: 4.5 per
cent) is that the net result for the year would increase/decrease by USD 1.1 million (2012: USD 0.8 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.
The tables below summarise the maturity profile of the Group’s financial liabilities at 31 December 2013 and
31 December 2012, based on contractual, undiscounted cash flows.
Analysed as:
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
Trade creditors
Amounts due to related parties
Other creditors
6,343
30
10,179
2,071
27
3,342
4,272
3
3,212
–
–
2,138
–
–
911
–
–
576
Analysed as:
At 31 December 2012
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
7,026
49
6,899
1,149
–
3,315
5,757
49
159
120
–
2,132
–
–
949
–
–
344
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:
Note
Trade and other receivables
20
2013
USD 000
2012
USD 000
9,169
20,384
29,553
19,329
14,198
33,527
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. 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.
Approximately 70.4 per cent of revenue in 2013 came from five underlying funds, all of which have a diversified client
base (2012: five underlying funds with diversified client bases accounted for 61.8 per cent of revenue). No other single
fund accounts for five per cent or more of the Group’s revenue.
Seven funds accounted for 73.6 per cent of the trade receivables at 31 December 2013 (at 31 December 2012 seven
funds accounted for 86.0 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 0.2 million (2012: USD 0.4 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 (2012: USD nil) 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.
None of the Group’s financial assets are secured by collateral or other credit enhancements. Nor does the Group
hold any collateral as security or any other credit enhancements. The Group has not obtained any assets during
the reporting period by taking possession of any collateral held, or calling on any other credit guarantees.
At 31 December 2013 GFM Sárl held loans receivable, from funds for which it acts as investment manager, with a
carrying value of USD nil (2012: USD nil) (see note 20). During 2012 an impairment provision of USD 3.6 million was
recorded which wrote the carrying value of the loans down to USD nil, and a provision of USD 0.3 million was made
against the associated interest debtor.
The credit risk for liquid funds and other short term assets is considered low, since the counterparties are reputable
institutions. At 31 December 2013, 22 per cent (2012: 50 per cent) of the Group’s cash and cash equivalents are held
with one such institution, and a further 20 per cent is held with three other institutions (2012: 38 per cent held with
three other institutions), on a global basis.
There is no other significant concentration of credit risk.
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 2013
Trade and other receivables at 31 December 2012
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
20,384
14,198
4,366
5,925
15,235
7,518
93
223
43
146
647
386
Capital Management
A primary objective of the Group’s financial management is to ensure that it maintains a strong credit rating and
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.
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.
Trade and other payables
Less cash and cash equivalents
Net debt
Equity
Capital
2013
USD 000
2012
USD 000
33,348
(9,169)
24,179
28,635
52,814
28,619
(19,329)
9,290
39,375
48,665
GTX UK, SWCP LLP (a subsidiary of SWCP Cayman Limited) and FIML, all subsidiaries of the Group, are registered
with the Financial Conduct Authority, London and GFM HK and PAMHK, also both subsidiaries of the Group, are
registered with the Securities and Futures Commission, Hong Kong. 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 2013
or 31 December 2012 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
2013
USD 000
2012
USD 000
5,579
558
9
610
6,756
5,750
1,110
17
2,177
9,054
30 Related party transactions (continued)
Termination benefits of USD 57,000 were paid to key management personnel in the year ended 31 December 2013
(2012: USD nil).
Included in the liabilities are bonus accruals for key management personnel of USD 3.0 million at 31 December 2013
(2012: USD 4.4 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 0.5 million in the year ended 31 December 2013 (2012: USD 0.6 million).
Analysis of related party transactions and balances
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
During the year ended 31 December 2012, 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
242
196
(49)
–
–
449
31 Acquisition of subsidiary
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’) which is 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.
Management believes that the acquisition will establish one of the leading alternatives oriented multi-asset
investment teams as well as complementing Gottex’s traditional fund of hedge funds business with a direct
investment multi-asset capability. The combination of Frontier with Gottex’s multi-asset business will create a
complete range of multi-asset investment capabilities from liquid low cost multi-asset index replication portfolios
to actively managed multi-asset funds. In addition, Frontier’s liquid and UK regulated investment products combined
with Gottex’s existing active approach to macro markets will allow the combined firm to offer products globally.
Gottex also believes it will be able to benefit from access to Frontier’s retail distribution in the UK through its wellestablished IFA channels.
Consideration
Total consideration is 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.
A further cash consideration of up to a maximum of USD 4.8 million and up to 1.7 million shares will be paid over
the two years following completion. This deferred management consideration 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.
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 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’.
The range of total contingent deferred consideration (including remuneration expense) that may be paid (in cash
and shares) is USD nil – USD 6.5 million, based on the current share price, 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.
The total fair value of the consideration recognised as at the acquisition date amounts is comprised of:
Total
USD 000
Cash consideration paid in 2013
Fair value of GFMH shares issued
Fair value of total contingent consideration liabilities
5,179
243
2,128
7,550
Amounts expensed in the income statement
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
2013 the estimated value of the total cash remuneration is USD 2.8 million and of this, USD 1.2 million has been
expensed in the year to 31 December 2013. The payable is included in current and non-current liabilities. At 31
December 2013 the estimated value of the total shares remuneration is USD 0.5 million and of this, USD 0.2 million
has been expensed as an equity-settled share based payment in the year to 31 December 2013.
Transaction costs related to the acquisition are USD 0.2 million and these have been expensed in the income
statement and paid in year to 31 December 2013.
.
31 Acquisition of subsidiary (continued)
Acquisition of Frontier in the year ended 31 December 2013 (continued)
Frontier acquisition-related costs
Total
USD 000
Deferred consideration (included in remuneration)
Transaction costs
Amortisation of the intangible asset
Adjustment to the contingent consideration at 31 December 2013
Included within operating profit
Finance costs
1,417
188
209
242
2,056
303
2,359
Fair values of the identifiable assets and liabilities of Frontier and Goodwill capitalised (provisional amounts)
The provisional fair values of the identifiable assets and liabilities of Frontier at 4 July 2013 amount 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
2,017
4
18
2,039
638
300
1,679
2,617
4,656
(668)
(90)
(758)
(413)
(413)
Total net assets
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 tax treatment of intangible
assets according to UK law.
The fair value of the acquired receivables corresponds to their gross amount.
31 Acquisition of subsidiary (continued)
Acquisition of Frontier in the year ended 31 December 2013 (continued)
Gottex has a call option to buy the remaining 20 per cent 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 per cent 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 1.6 million at
Completion and have recognised this liability within non-current liabilities in the Consolidated Statement of Financial
Position. The present value of the put financial liability at 31 December 2013 is estimated at USD 1.9 million and the
change in the value of the put option of USD 0.3 million has been expensed within the Consolidated Income
Statement.
Post acquisition net revenue and results of USD 1.7 million and USD nil respectively have been consolidated within the
Group results to 31 December 2013. Had the acquisition taken place at the beginning of 2013, estimated net revenue
and net loss for the Group for the full year to 31 December 2013 would have amounted to USD 41.4 million and
USD 11.0 million respectively. These results include the amortisation of the intangible asset recognised at acquisition
but do not include the remuneration charges relating to the consideration.
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 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.
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.
Management believe the acquisition provides compelling strategic benefits to the Group, including establishing a
leading local organisation in a region of strategic importance from an investment and an asset raising perspective.
The combined business will drive the Group’s expansion of Asian investment services on an accelerated and much
broader scale, both locally and globally. The Group also expects to benefit from investment management, distribution
and cost synergies.
Consideration
Total consideration is 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.
Further cash consideration of up to a maximum of USD 1.0 million and up to 431,035 shares will be paid in the second
year following completion. This deferred management consideration is contingent on the retention level of AuM of
Penjing and in certain cases, the retention of certain key employees. As a variable number of shares may be issued
as part of the contingent consideration arrangement in future periods, the entire contingent consideration has been
classified as a liability.
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.
31Acquisition of subsidiary (continued)
Acquisition of Penjing in the year ended 31 December 2012 (continued)
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’. The range of contingent
management deferred consideration that may be paid (in cash and shares) is USD nil – USD 2.6 million, and the
fair value of this deferred contingent management consideration was measured at USD 1.7 million at date of
acquisition using a range of AuM balances and the probability weighted average of payments associated with each
AuM outcome. During the year ended 31 December 2013 deferred management consideration of USD 0.4 million
and 159,214 shares were delivered to the selling shareholders.
Management identified the performance fees consideration which was included as part of the goodwill calculation in
accordance with IAS 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 was capitalised as contingent consideration in the goodwill
at acquisition is USD 0.6 million.
During the year ended 31 December 2013 deferred performance 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 amounts is 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
Amounts expensed in the income statement
Deferred management consideration – expensed
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 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.
At 31 December 2013 the estimated value of the total cash remuneration was USD 0.6 million and of this, USD 0.4 million
was expensed in the year to 31 December 2013 (2012: the estimated value of the total cash remuneration was
USD 0.6 million and of this, USD 0.2 million was expensed in the year to 31 December 2012). The payable was included
in current liabilities.
At 31 December 2013 the estimated value of the total shares remuneration was USD 0.6 million and of this, USD 0.3 million
was expensed as an equity-settled share based payment in the year to 31 December 2013 (2012: the estimated
value of the total shares remuneration was USD 0.8 million and of this, USD 0.2 million was expensed as an equitysettled share based payment in the year to 31 December 2013).
During the year ended 31 December 2013 deferred management consideration of USD 0.3 million and 142,512 shares
were delivered to the selling shareholders.
Deferred performance consideration – expensed
The remuneration relating to the deferred performance fee consideration to be expensed in 2013 amounts to
USD 2.3 million (2012: USD 0.2 million). During the year ended 31 December 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 have been expensed in the income
statement and paid in year to 31 December 2012.
Penjing acquisition-related costs
2013
USD 000
2012
USD 000
641
2,278
–
337
660
3,916
54
3,970
405
164
537
130
1
1,237
26
1,263
Provisional
fair value
USD 000
Final
fair value
USD 000
Intangible assets
Tangible fixed assets
Non-current assets
Trade debtors
Other receivables
Tax receivables
Current assets
Total assets
Trade creditors
Other payables
Accounts payable
Current liabilities
1,687
92
1,779
1,791
136
1,242
217
3,386
5,165
(845)
(455)
(13)
(1,313)
1,687
92
1,779
1,791
136
1,242
200
3,369
5,148
(740)
(455)
(13)
(1,208)
Net assets acquired
3,852
3,940
Goodwill
5,231
5,283
9,083
9,223
Management fee consideration
Performance fee consideration
Transaction costs
Amortisation of the intangible
Adjustment to the contingent consideration
Included within operating profit
Finance costs
Fair values of the identifiable assets and liabilities of Penjing and goodwill capitalised
The fair values of the identifiable assets and liabilities of Penjing at 12 August 2012 amount to:
Consideration
Since the acquisition date, the initial fair value of consideration and the net assets acquired have been adjusted by
USD 52,000 and USD 88,000 respectively.
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 fair value of the acquired receivables corresponds to their gross amount
Post acquisition net revenue and net profit of USD 1.4 million and USD 0.1 respectively were consolidated within the
Group results to 31 December 2012. Had the acquisition taken place at the beginning of 2012, estimated net revenue
and net loss for the Group for the full year to 31 December 2012 would have amounted to USD 41.8 million and
USD 8.6 million respectively.
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. The net investing cash outflow during the year ended 31 December 2012 in connection with this
transaction was USD 1.5 million, being the upfront cash consideration of USD 2.0 million and the additional payment
of USD 0.7 million less the cash balance acquired of USD 1.2 million at the acquisition date.
Transaction costs expensed of USD 0.5 million, were charged directly to the income statement and included within
operating cash flows for the year end 31 December 2012.
The goodwill is not expected to be deductible for tax purposes.
Acquisition of the EIM Group (‘EIM’)
On 16 December 2013 the Company’s board agreed to acquire the entire share capital of EIM, a leading alternative
investment manager subject to certain conditions including approval of Gottex shareholders. Completion is expected
in the first half of 2014. The all-share transaction is based on an exchange of shares where EIM shareholders are
expected to receive up to 14 million newly issued Gottex shares over a period of two years.
Designed and produced by Tayburn
Office addresses
United Kingdom
Gottex Asset Management (UK) Limited
5 Savile Row
London, W1S 3PD
United Kingdom
+44 2074 945100
T
F +44 2074 945197
USA
Gottex Fund Management Limited
28 State Street, 40th Floor
Boston, MA 02109
USA
T +1 617 532 0200
F +1 617 532 0219
Switzerland
Gottex Fund Management Sàrl
Avenue de Rhodanie 48
1007 Lausanne
Switzerland
T +41 21 617 15 50
F +41 21 617 33 80
Gottex Fund Management Limited
780 Third Avenue, 32nd Floor
New York, NY 10017
USA
T +1 212 937 6070
F +1 212 937 6639
Talstrasse 20
CH-8001 Zürich
Switzerland
T
+41 44 210 09 06
F +41 21 617 33 80
Luxembourg
Gottex Partners Sàrl
25A Boulevard Royal
L – 2449 Luxembourg
T
+352 2689 3320
F +352 2689 3330
Hong Kong
Gottex Penjing Asset Management (HK) Limited
26F, Henley Building
5 Queen’s Road Central
Hong Kong
T
+852 3968 5000
F +852 3968 5020
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
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
www.gottexholdings.com

CHAIRMAN AND CHIEF EXECUTIVE`S

Transcription

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International Conference on Research Innovation in