Charlemagne Capital Limited
Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
ISIN No. KYG2052F1028
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
CONTENTS
Page(s)
Five Year Financial Highlights
2
Current Year Highlights
3
Company Information
4
Chairman's Statement
5
Financial and Operating Review
6-7
Board of Directors
8-9
Report of the Directors
10-12
Corporate Governance Report
13-14
Directors’ Remuneration Report
15-16
Statement of Directors’ Responsibilities
17
Report of the Independent Auditors
18
Audited Financial Statements
Consolidated Statement of Comprehensive Income
19
Consolidated Statement of Financial Position
20
Consolidated Statement of Changes in Equity
21
Consolidated Cash Flow Statement
22
Company Statement of Financial Position
23
Notes to the Financial Statements
24-47
Directors of Principal Subsidiaries
48
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
FIVE YEAR FINANCIAL HIGHLIGHTS
Year Ended 31 December
2011
2012
2013
2014
2015
Assets under Management at year
end
US$2.33bn
US$2.63bn
US$2.73bn
US$2.25bn
US$1.90bn
Management Fees
US$22.6m
US$20.5m
US$23.9m
US$25.9m
US$20.7m
Performance Fee and other
Revenues excluding non-recurring
items*
US$5.2m
US$10.2m
US$17.4m
US$2.7m
US$4.1m
Operating Profit before taxation
and non-recurring items*
US$6.1m
US$5.1m
US$9.5m
US$3.1m
US$0.5m
Net Profit after taxation and noncontrolling interest
US$3.3m
US$1.9m
US$4.2m
US$1.5m
US$2.3m
Earnings per share attributable to
ordinary shareholders
US1.2 cents
US0.7 cents
US1.5 cents
US0.5 cents
US0.8 cents
* In the opinion of the Directors, stating revenues and operating earnings before taxation excluding
non-recurring items more accurately reflects the sustainable earnings of the Group and its ongoing activities.
2
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
CURRENT YEAR HIGHLIGHTS

Assets Under Management – US$1.90 billion – a decrease of 15.6%

Operating Profit – US$0.5 million – a decrease of 83.9%

Net Profit after Tax and Non-Controlling Interest – US$2.3 million – an increase of 53.3%

Earnings per share – 0.8 US cents per share – an increase of 60.0%

Management Fees – US$20.7 million – a decrease of 20.1%

Performance Fees – US$4.3 million – an increase of 79.2%

Total Dividends paid and declared in respect of 2015 – US$2.9 million (2014: US$2.9 million)
3
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
COMPANY INFORMATION
EXECUTIVE DIRECTORS
J. A. Sutcliffe (Chief Executive)
J. D. N. McAndry
A. L. Jones (resigned on 31 January 2016)
H. L. Jones
NON-EXECUTIVE DIRECTORS
M. P. Baer (Chairman)
J. J. van Duijn
J. Mellon
Rt. Hon. Lord Lang of Monkton, PC
COMPANY SECRETARY
J. D. N. McAndry
REGISTERED OFFICE
Ugland House, P.O. Box 309, South Church Street,
George Town, Grand Cayman, Cayman Islands, B.W.I.
MAILING ADDRESS
St Mary’s Court, 20 Hill Street,
Douglas, Isle of Man, IM1 1EU
NOMINATED ADVISER AND BROKER
N+1 Singer
One Bartholomew Lane, London EC2N 2AX
AUDITORS
KPMG Audit LLC
41 Athol St, Douglas, Isle of Man, IM99 1HN
PRINCIPAL BANKERS
Barclays International
Victoria St, Douglas, Isle of Man, IM99 1AJ
SOLICITORS
Stephenson Harwood
One, St Paul’s Churchyard, London EC4M 8SH
REGISTRARS
Capita IRG (Offshore) Limited
12 Castle Street, St Helier, Jersey JE2 3RT
CREST DEPOSITARY
Capita IRG Trustees Limited
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
4
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Chairman’s Statement
The Emerging Markets sector ended 2015 with a loss for the year as a whole with the MSCI Emerging Markets Index down 14.92%
on a net basis in US$ following a volatile third quarter which saw the index fall by over 15%.
Once again there have been substantial net outflows from the industry asset class over the year with total outflows at roughly
double the level experienced in each of the two preceding years. By comparison, the Group has seen net inflows over the second
half of the year and overall the total net outflows experienced in the first half were predominantly due to the rebalancing of an
existing institutional mandate which also had a large cross holding in Magna. In total this mandate accounted for an outflow of
US$182 million. In a difficult environment for our asset class, Charlemagne’s investment performance has been consistently strong.
Over the last three years, all eight of the Magna mutual funds have been in the top half of their Morningstar ratings, with four in
the first quartile. Last year, we had four in the first quartile, two in the second and only one in the fourth. The OCCO long-short
fund produced another positive year in Dollar terms, despite weakness in the underlying markets and the continued strength in the
greenback. In our view this is largely due to the quality of our investment team and process.
The Group ended the year with Assets under Management (“AuM”) of US$1.9 billion, 15.6% lower than at the beginning.
Management fees decreased year on year and despite an increase in performance fees received, total revenues and profits before
tax for the year were reduced. We remain committed; however, to ensuring our investment management capabilities and
resources are appropriate to meet our objectives of sustainable, superior investment performance and growth in assets.
For 2015, total industry-wide outflows from emerging markets funds overall came to $73bn, a considerable acceleration compared
with $25bn in the previous year and a figure which exceeds even that of the crisis years of 2008 and 2009. In this environment,
investors appear to be focusing on managers which they believe can add alpha in the long term. These last few years have, in our
view, strengthened the case for active fund management in emerging markets, in particular for our research-based focus on
sustainable quality growth. We are pleased to have won two new institutional mandates; one from a southern European/Italian
asset manager into our award-winning MENA strategy, the other from a Scandinavian pension fund into our consistentlyperforming Latin America strategy. We saw outflows from a longstanding client account as a one-off rebalancing of their portfolios.
Apart from this, we have been pleased with the efforts and results of the client-facing part of the business, based on the strength of
our excellent investment performance over the last few years as outlined above. We are working on a number of new marketing
initiatives but acknowledge that significant inflows will only come after sentiment for the asset class improves.
The Directors have again decided that, in view of the exceptionally difficult conditions encountered during the year and, given the
strength of the Group’s balance sheet, it is appropriate to support the level of a further interim dividend for 2015 from reserves.
Shareholders have already received 0.5 cents per share in respect of the first interim distribution for 2015. A further amount of 0.5
cents per share is now being declared in respect of the second interim distribution for 2015.
The Company is scrutinising costs with a view to achieving savings where possible but is committed to retaining a strong
operational base that is well-placed to absorb a significant increase in assets under management. Such an increase would have a
positive effect on the profitability of our business. We are also well positioned to take full advantage of an upturn in the markets.
I would like to thank the staff and all involved parties for supporting the efforts of Charlemagne. We continue to operate in an
extremely volatile environment and we remain focussed on our objective of achieving superior returns for our clients and
shareholders.
Michael Baer
14 March 2016
5
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Financial and Operating Review
Financial Results
Profit, after taxation and non-controlling interests, was US$2.3 million for the year ended 31 December 2015 compared with
US$1.5 million in 2014. Operating profit before tax and non-recurring items was US$0.5million, compared with US$3.1 million in
2014. The decrease was the result of lower management fees generated in the year. Management fees fell by 20.1% to US$20.7
million (2014: US$25.9 million). The average level of assets under management throughout the period was down 20% year on year
with the Group’s net management fee margin remaining at 95 basis points (“bps”) during the year (2014: 95 bps).
AuM at year end stood at US$1.9 billion, 15.6% lower than at the beginning of the period, with negative performance as a result of
the performance of the wider markets and net outflows from all categories.
Net performance fees of US$4.3 million (2014: US$2.4 million) were earned during the year, US$2.2 million earned from OCCO
(2014: US$ 0.06 million), US$0.4 million from property funds (2014: US$0.6 million) and US$1.7 million from other funds (2014: US$
1.7 million).
Operating expenses for the year were down to US$24.3 million (2014: US$25.4 million) mainly as a result of the decrease in
personnel costs. Notwithstanding this, the Group’s operating profit margin for the year fell to 1.8% (2014: 10.9%) due to the
decrease in revenue.
After taxation and other income and expenditure, earnings per share attributable to shareholders were 0.8 US cents per share
(2014: 0.5 US cents per share) on a fully diluted basis. Earnings after taxation include US$3.2m in respect of an exceptional tax
credit received that represents 1.1 US cents per share.
In the absence of unforeseen circumstances it remains the Directors’ intention that the bulk of cash generated will be returned to
shareholders by means of dividends. Despite the exceptional market conditions pertaining in this financial year, the Directors
believe it is appropriate to support the level of dividend for 2015 by utilising some of the Group’s cash reserves in order to pay
dividends in excess of the cash generated from operations. However, this policy will be kept under review by the Group in the light
of developing circumstances in future years.
The Group continues to hold substantial cash balances above that required for regulatory capital purposes. Net assets attributable
to shareholders have decreased from US$24.3 million to US$23.62 million before payment of an interim dividend of 0.5 US cents
per share which has been declared by the Directors and will be paid on 22 April 2016 at a cost of US$1.45 million. It is not proposed
to recommend a final dividend as interim dividends have been recommended by the board in order that the funds can be paid to
shareholders more quickly than would otherwise be the case.
Operations and Investment Review
The overall decrease in AuM of US$351 million for the full year comprised a decrease in market values of US$216 million and net
outflows of US$135 million.
Emerging markets fell again during the year, with half of the decline due to weakness of underlying currencies. The asset class has
now underperformed developed markets for the last five years. By region, Latin America has been especially weak, driven by
Brazil, whose market is down 75% in Dollar terms over those five years. The further decline in the oil price in 2015 is seen as a
symptom of the economic slowdown in some leading economies, although over 80% of MSCI Emerging Markets are net importers
of oil and as such benefits from this decline. The 70% fall in the oil price is effectively a tax cut for emerging markets consumers,
especially as and when currencies stabilise against the Dollar. Corporate earnings need to break their habit of undershooting
expectations. This has been a headwind for the last few years but lower materials costs and greater capital spending discipline
should help as businesses adjust to a lower growth environment.
6
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Financial and Operating Review (continued)
Operations and Investment Review (continued)
Our investment approach is based on finding and analysing the best companies in the markets in which we invest, looking at factors
such as barriers to entry, return on equity, cash flow generation and treatment of minority shareholders including the payment of
dividends, as well as the valuation at which the market prices these businesses. In the long term, we believe this approach
generates strong outperformance and we expect it to continue to do so in the coming years.
Magna UCITS Funds
2015 saw net outflows from the Magna range. The GEMS Dividend sub fund continued to attract net inflows during the year
however this was counteracted by small outflows across the rest of the range and the large redemption resulting from the
rebalancing of the institutional mandate with a large cross holding in Magna. Over the last three years, all eight of the Magna
mutual funds have been in the top half of their Morningstar ratings, with four in the top quartile.
At the end of 2015, there were nine sub-funds within the Magna Umbrella Fund with a total AuM of US$508 million (2014: US$654
million).
OCCO
The environment during 2015 continued to be difficult for the OCCO strategy. However performance for the fund was positive
despite the negative performance of the markets. Assets declined from US$525 million at the end of 2014 to US$493 million as at
the end of 2015 due to net outflows.
Institutional Business
This category includes segregated accounts and, pooled funds tailored to the needs of institutions and some sub-advisory/white
label accounts. This category saw a decrease in asset values due to negative investment performance and outflows, mainly from
the rebalancing of one mandate. At the end of the year, Institutional Mandates had a total AuM of US$806 million (2014: US$966
million).
Specialist
This comprises principally a range of Private Equity property funds and funds targeting opportunities in frontier markets. At the
end of the year, Specialist Mandates had a total AuM of US$91 million (2014: US$103 million).
7
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Board of Directors
Michael Baer
Independent Non Executive Director and Chairman
Michael was appointed Non-Executive Director and Chairman of Charlemagne Capital in March 2006. He is Chairman and Founder
of Baer Capital Partners, a Dubai based Asset Management and Corporate Finance company which specializes in the Indian market.
Before that, Michael was the Head of Private Banking and Member of the Executive Board at Julius Baer Group. He has over 20
years of experience in investment banking, trading and private banking in New York, London, Frankfurt, Tokyo, Hong Kong, and
Zurich. Michael is a graduate of the Sloane School of Management at the Massachusetts Institute of Technology, where he
currently serves on the Dean’s Advisory Council.
Jayne Sutcliffe
Chief Executive
Jayne is responsible for the development and implementation of the Group’s overall strategy, new initiatives, corporate issues and
the Group’s sales activities. Jayne became Group Chief Executive of Charlemagne Capital upon its launch in June 2000. Jayne began
her career with Asian specialist Thornton Management before moving to Tyndall Holdings plc in 1988 to work on the development
of an Asian and Emerging Markets operation. In 1990, she co-founded Regent Pacific Group Limited (“Regent”) and was responsible
for establishing and running its European operations. Jayne graduated with a masters degree in Theology from Oxford University.
Jane McAndry
Executive Director, Company Secretary
Jane joined Charlemagne as a Director of Charlemagne Capital (IOM) Limited in July 2007. She was appointed Group Company
Secretary in August 2007 and Director in February 2008. She became Managing Director of the Group’s Isle of Man based
subsidiaries from 1 April 2009. Jane previously spent seven years in senior roles with the Isle of Man Financial Services Authority.
Prior to that, Jane was Legal Director of Intertrust (Isle of Man) Limited, part of an international tax planning and fiduciary group.
She began her legal career in Edinburgh where she qualified as a Scottish Solicitor, and has wide ranging legal experience.
Adrian Jones
Executive Director
Adrian Jones was Operations Director of Charlemagne Capital (IOM) Limited, a position he has held between September 2008 and
31 January 2016. He joined the Charlemagne Group in 1997 as Head of Settlements in the Isle of Man and, after periods in Trading
and as Head of Operations, he relocated to London in 2005 to become Head of Middle Office. He returned to the Isle of Man in
2008 as Head of Operations. Before joining the Group he was a Dealer at Standard Bank Stockbrokers. Mr Jones started his career
in 1990 at Clerical Medical International. He is a Fellow of the Chartered Institute for Securities and Investment.
Lloyd Jones
Finance Director
Lloyd Jones joined Charlemagne as Chief Financial Officer in April 2010. He took over day to day responsibilities for the Group's
finance operations with effect from 1 June 2010 and was appointed a director of Charlemagne Capital (IOM) Limited, the Group's
Isle of Man operating subsidiary, on 1 January 2011. Mr Jones is a Chartered Accountant (FCA) and has an MBA in Finance; he also
has extensive financial and operational expertise at a senior level, most recently as Finance Director and Head of Operations at
Nedgroup Investments (IOM) Limited.
8
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Board of Directors (continued)
Jacob Johan (Jaap) van Duijn
Independent Non Executive Director
Jaap was appointed non-executive director and the senior independent director of Charlemagne Capital from 1 March 2006. Until
2005 he was chief strategist of Robeco Group, where as chief investment officer he had previously been a member of the group
executive committee and board of directors until 2003. He currently holds a wide range of appointments, including member of the
Supervisory Board of Value8, a Dutch investment firm listed on the Amsterdam stock exchange, member of the Investment
Committee of Dutch insurance company TVM, member of the Investment Committee of KWF Fight Against Cancer, and board
memberships of a number of charitable foundations.”
James Mellon
Non Executive Director
Jim was appointed Non-Executive Director of the Company in August 1997 and was Chairman from that time until March 2006. He
began his career with GT Management in the US and in Hong Kong and later became the co-founder and Managing Director of
Thornton Management (Asia) Limited based in Hong Kong and was a Director of Tyndall Holdings plc. He is Chairman and cofounder of Regent. He is currently a Director of Fixed Odds Group Limited, Webis Holdings plc, Burnbrae Limited, Sleepwell Hotels
Limited, Speymill Property Managers Limited and various other investment companies. James Mellon has a masters degree in
Politics, Philosophy and Economics from Oxford University.
Rt Hon Lord Lang of Monkton, PC
Independent Non Executive Director
Ian Lang was appointed a Non-Executive Director of Charlemagne Capital from 1 March 2006. From 1979 to 1997 he was a Member
of Parliament and served as Secretary of State for Scotland and President of the Board of Trade and Secretary of State for Trade &
Industry. In 1997 he was made a life peer, and now chairs the House of Lords Select Committee on the Constitution. He is a former
Director of General Accident plc, CGU plc and the Automobile Association. Lord Lang is currently Chairman of Marsh and McLennan
Companies Inc. He was Chairman of the UK Prime Minister’s Advisory Committee on Business Appointments (2009-2014).
9
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Report of the Directors
The Directors herein present their annual report and the consolidated financial statements of the Group for the year ended 31
December 2015.
Principal Activities
The Group's principal activities consist of asset management and related activities.
Results and Dividends
The Group's profit for the year ended 31 December 2015 and the state of affairs of the Group and the Company at that date are set
out in the financial statements on pages 19 to 23 and notes on pages 24 to 47.
An interim dividend of 0.5 US cents per ordinary share in respect of the year ended 31 December 2014 was paid on 24 April 2015 to
those shareholders on the register on 27 March 2015. This dividend was distributed from retained earnings during 2015.
A second interim dividend of 0.5 US cents per ordinary share in respect of the year ended 31 December 2015 was paid on 6
November 2015 to those shareholders on the register on 2 October 2015. This dividend was distributed from retained earnings
during 2015.
A further interim dividend of 0.5 US cents per ordinary share in respect of the year ended 31 December 2015 will be paid on 22
April 2016 to those shareholders on the register on 29 March 2016.
Summary Financial Information
The results and the assets and liabilities of the Group for the current and the last two financial years (extracted from the audited
financial statements) are set out below in summary:Results
For the year ended
31 December 2015
US$’000
For the year ended
31 December 2014
US$’000
For the year ended
31 December 2013
US$’000
24,793
28,549
41,255
Operating Profit
450
3,110
9,467
Profit before tax
Taxation
450
3,224
3,110
(84)
9,467
(279)
3,674
(1,348)
3,026
(1,507)
9,188
(5,032)
2,326
1,519
4,156
86
38,203
38,289
13,316
24,973
60
37,068
37,128
11,264
25,864
164
52,831
52,995
19,277
33,718
Revenue
Profit after tax
Non-controlling interests
Net profit from ordinary activities
Assets and liabilities
Property and equipment
Current assets
Total assets
Total liabilities
Net assets
10
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Report of the Directors (continued)
Subsidiaries
Particulars of the Company’s subsidiaries are set out in note 14 to the financial statements.
Property and equipment
Details of movements in property and equipment of the Group during the year are set out in note 13 to the financial statements.
Borrowings
The Group had no bank borrowings as at 31 December 2015 (2014: Nil).
Share Capital and Share Options
Details of the movements in the Company’s share capital and share options during the year are set out in notes 20 and 22
respectively to the financial statements.
Details of Share Repurchases
During the year ended 31 December 2015, the Company did not repurchase any of its own shares for cancellation (2014: nil).
Pre-Emptive Rights
There are no provisions for pre-emptive rights under the Company’s Articles of Association or the Companies Law of the Cayman
Islands which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders, except as disapplied by a
resolution of the Company in General Meeting.
Reserves
Details of movements in the reserves together with details of their availability for distribution, as calculated in accordance with the
Companies Law of the Cayman Islands, are set out in the Consolidated Statement of Changes in Equity and note 21 to the financial
statements.
Directors
The Directors of the Company who held office during the year and to date were:Michael Baer (Chairman)*
Jacob Johan (Jaap) van Duijn*
Rt Hon Lord Lang of Monkton, PC*
James Mellon*
Jayne Sutcliffe
Jane McAndry
Adrian Jones (resigned on 31 January 2016)
Lloyd Jones
* non-executive Director
11
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Report of the Directors (continued)
Directors’ Interests in Contracts
Except as disclosed in note 6 to the financial statements, no Director had a beneficial interest in any material contract to which the
Company or any of its subsidiaries was a party during the year.
Directors’ Service Contracts
No Director has a service contract with the Company which is not terminable by the Company within six months without payment
other than statutory compensation.
Substantial Shareholders
In addition to the holdings of certain Directors’ as disclosed in the Directors’ Remuneration Report on page 16, the Company has
been made aware of the following positions in the equity of Charlemagne Capital Limited which exceed 3% of the Ordinary Shares
in issue as at 14 March 2016.
Number of Ordinary
Shares
15,857,523
14,622,547
14,460,800
14,247,889
13,000,000
Majedie Asset Management Limited
River & Mercantile Asset Management Ltd
Chelverton Asset Management Ltd
Paul J. Isaac
Artemis Investment Management Ltd
Percentage of Issued
Capital
5.45%
5.03%
4.97%
4.90%
4.47%
Auditors
KPMG Audit LLC retire and, being eligible, offer themselves for re-appointment. A resolution for the reappointment of KPMG Audit
LLC is to be proposed at the forthcoming annual general meeting.
On behalf of the Board
Jane McAndry
Director & Company Secretary
14 March 2016
12
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Corporate Governance Report
For the year ended 31 December 2015
In 2006, the Company gained admission to trading on AIM. As an AIM company, the Company is not required to comply with The
UK Corporate Governance Code (the “Code”). Nevertheless, the Company seeks to comply with the spirit of the code without
adopting any of the provision as far as is practicable having regard to its size and nature and the current stage of its development.
The Board of Directors
The Board currently consists of seven Directors of whom three are Executive and four are Non-Executive, including the Chairman,
Michael Baer. The posts of Chairman and Chief Executive are held by different Directors with Jaap van Duijn as the senior NonExecutive Director. All Directors are required to submit themselves for re-election at least once every three years.
The Board meets regularly, provides strategic direction to management and has a schedule of specific matters reserved for board
decision. In particular the Board is responsible for:






Setting the Company’s and Group’s strategy;
Development of new areas of business;
Formation, acquisition and disposals of subsidiaries or other assets over 10 per cent of net assets or profits of the Group
(whichever is the higher);
Approval of capital projects involving more than 3 per cent of net assets or profits of the Group (whichever is the higher);
Communications with shareholders and the stock market; and
Annual consideration of the effectiveness of internal controls.
The Board is supplied with appropriate information to allow it to perform its duties. All Directors may take independent
professional advice at the expense of the Company in performing their duties.
The Directors are aware of the risks inherent in the Group’s business and understand the importance of identifying and evaluating
these risks. The Board has adopted procedures and controls to enable it to manage these risks. The Isle of Man Financial Services
Authority is considered to be the lead regulator in relation to the Group’s regulated activities.
Non-Executive Directors
The Board includes Non-Executive Directors who bring strong, independent judgement, knowledge and experience to the Board’s
deliberations.
The Board has determined that three of its number, Michael Baer, Jaap van Duijn and Lord Lang, can be regarded as independent
for the purposes of the Combined Code. James Mellon, the fourth non-executive Director, has interests in a sufficient number of
shares (as set out on page 16) not to be considered by the Board to be independent for the purposes of the Code.
The Non-Executive Directors each have a letter of appointment, which sets out the terms of their appointment and their expected
time commitment. Their fees are determined by the Board.
Board Committees
The Board has established an Audit Committee and a Remuneration Committee with formally delegated duties, responsibilities and
terms of reference. For the time being the Board has not established a Nominations Committee but has committed to do so at an
appropriate future date.
The Board also has the power to establish ad hoc committees as necessary to allow executives to make immediate decisions on
matters reserved to the Board within strict guidelines approved by the Board in advance.
13
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Corporate Governance Report (continued)
Audit Committee
The Audit Committee is chaired by Jaap van Duijn and its other members are Michael Baer and Lord Lang. All of the members of
the Committee are Non-Executive Directors. The Audit Committee meets at least three times each year and Executive Directors
and senior management may be invited to attend all or part of the meetings. The external auditors of the Company attend the
meetings and have unrestricted access to the Committee and its Chairman.
The purpose of the Audit Committee is to assist the Board in discharging its corporate governance responsibilities in relation to the
Company’s external auditors and to provide assurance over the reliability and appropriateness of the disclosure in the financial
statements. The Audit Committee also reviews the effectiveness of internal controls.
Remuneration Committee
The Remuneration Committee was chaired by Lord Lang during the year. The membership of the Committee remains as Michael
Baer, Jaap van Duijn, Lord Lang and Jayne Sutcliffe. The terms of reference for this committee state that it is only quorate if at least
two Independent Non-Executive Directors are present thus ensuring that all recommendations are made independently of the
Executives.
The Remuneration Committee meets as required but at least twice in each year. It considers all material elements of remuneration
policy, remuneration and incentives of Executives and senior employees with reference if necessary to independent research and
professional advice. It also reviews all allocations to employee share related incentive schemes. Recommendations are made by
the Committee to the Board on the framework for executive remuneration and its cost. The Board is then responsible for ratifying
the remuneration packages of individual Directors and senior employees together with share related incentive allocations for all
employees.
The Directors consider that the structure which is in place is appropriate for an entrepreneurial company where a significant
proportion of the equity is owned by employees, Directors and their related interests.
14
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Directors’ Remuneration Report
For the year ended 31 December 2015
Employee compensation is based on the principles that bonus pools will be predominantly proportionate to profits and that equity
participation is available to staff at all levels commensurate with their grade, thus ensuring that all staff members have the
incentive to work towards the same profitability goals and there is an alignment of interests between employees and external
shareholders.
Executive Directors
Executive Directors’ salaries are reviewed annually by the Remuneration Committee. Consideration is given to the full
compensation package including allocations from the bonus pool arrangements, which may in certain circumstances be allocated to
personal pension plan arrangements. Other than Jayne Sutcliffe, Executive Directors may receive share based incentives.
The Executive Directors received healthcare membership for themselves and their immediate family. The Group currently provides
the opportunity for Isle of Man based Executive Directors and employees to participate in a defined contribution Group Personal
Pension Plan.
The Executive Directors are employed under continuing contracts of employment that can be terminated by either party under
notice provisions of up to six months with no additional provision for compensation payable by the Company on early termination
beyond the minimum notice period.
Non-Executive Directors
The contracts of the Non-Executive Directors can be terminated by either party under notice provisions of one month with no
provision for compensation payable by the Company on early termination. The Non-Executive Directors received the fees disclosed
below and do not receive any other group benefits.
Statement of Directors’ Remuneration
The total remuneration and fees of the Directors who held office during the year ended 31 December 2015 are set out below:
Emoluments 2015
US$000
Emoluments 2014
US$000
NON-EXECUTIVE
Michael Baer
Jacob Johan (Jaap) van Duijn
Rt Hon Lord Lang of Monkton, PC
James Mellon
125
63
63
50
125
63
63
50
EXECUTIVE
Jayne Sutcliffe
Jane McAndry
Adrian Jones
Lloyd Jones
350
266
226
191
500
313
296
290
Further details on Directors’ Remuneration are set out in note 5 to the financial statements.
15
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Directors’ Remuneration Report (continued)
Directors’ Share Interests
The Directors who held office during the year and at 31 December 2015 were interested in the equity of Charlemagne Capital
Limited as set out below.
Ordinary shares of US$0.01 each
Directors
James Mellon
Jayne Sutcliffe
Rt Hon Lord Lang of Monkton, PC
Michael Baer
Jane McAndry
Adrian Jones
Lloyd Jones
Jacob Johan (Jaap) van Duijn
Notes
A, B & C
D
Number of Shares and Nature of Interest
Other
Option
Total Interest
Interests
Entitlements
2015
5,668,163
50,001,334
55,669,497
31,708,519
31,708,519
100,000
100,000
800,000
800,000
1,266,719
1,266,719
1,341,719
1,341,719
1,196,938
1,196,938
200,000
200,000
Personal
Interest
Total Interest
2014
55,669,497
31,708,519
100,000
800,000
1,266,719
1,341,719
1,196,938
200,000
A.
a number of shares under “other interests” are held by Galloway Limited, which is indirectly wholly owned by
the trustee of a settlement under which James Mellon has a life interest.
B.
a number of shares under “other interests” are held by Indigo Securities Limited, which is indirectly wholly
owned by the trustee referred to in Note A above.
C.
a number of shares under “other interests” are held on behalf of Burnbrae Limited, which is indirectly wholly
owned by the trustee referred to in Note A above.
D.
shares under “other interests” are held on behalf of the trustees of discretionary trusts, under which
Jayne Sutcliffe and members of her family may become beneficiaries.
16
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Statement of Directors’ Responsibilities
in Respect of the Directors’ Annual Report and the Financial Statements
The Directors are responsible for preparing the Directors’ Annual Report and the Group and Parent financial statements in
accordance with applicable law and regulations. As requested by the AIM Rules of the London Stock Exchange they are required to
prepare the Group Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
EU and have elected to prepare the Parent Company Financial Statements on the same basis.
The financial statements are required by law to give a true and fair view of the state of affairs of the Group and parent company for
that year.
In preparing these financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent
Company will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy at any time its financial position. They have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation governing the preparation and dissemination of financial statements may differ from one
jurisdiction to another.
17
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Report of the Independent Auditors
Report of the Independent Auditors, KPMG Audit LLC, to the members of Charlemagne Capital Limited
We have audited the financial statements of Charlemagne Capital Limited for the year ended 31 December 2015 which comprise
the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs), as
adopted by the EU.
This report is made solely to the Company’s members, as a body. 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 17, the Directors are responsible for the
preparation of financial statements that 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 (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall
presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Directors’ report to identify material inconsistencies with
the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.
Opinion on the financial statements
In our opinion the financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the
Group’s and Company’s affairs as at 31 December 2015 and of the Group’s profit for the year then ended.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man
IM99 1HN
14 March 2016
18
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Consolidated Statement of Comprehensive Income
Note
Year ended
31 December 2015
US$’000
Year ended
31 December 2014
US$’000
Revenue
4
24,793
28,549
Expenses
Personnel expenses
Other costs
5
(18,052)
(6,291)
(19,742)
(5,697)
Profit before tax
7
450
3,110
Taxation
9
3,224
(84)
3,674
3,026
1,348
2,326
3,674
1,507
1,519
3,026
-
-
Total Comprehensive Income for the Year
3,674
3,026
Total Comprehensive income attributable to
Non-Controlling Interests
Owners of the Company
Total Comprehensive Income for the Year
1,348
2,326
3,674
1,507
1,519
3,026
US$
US$
Profit after tax
Profit after Tax attributable to
Non-Controlling Interests
Owners of the Company
Profit after tax
6(c)
Other Comprehensive Income
Foreign currency translation differences
Earnings per share
Basic
12
0.008
0.005
Diluted
12
0.008
0.005
The notes on pages 24 to 47 form an integral part of these financial statements
19
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Consolidated Statement of Financial Position
Note
As at
31 December 2015
US$’000
As at
31 December 2014
US$’000
86
60
86
60
9,560
10,911
17,732
9,889
9,689
95
17,395
Total current assets
38,203
37,068
Total assets
38,289
37,128
Non-current assets
Property and equipment
13
Total non-current assets
Current assets
Investments
Trade and other receivables
Taxation
Cash and cash equivalents
15
17
18
Equity
Issued share capital
Reserves
20
21
2,909
20,714
2,909
21,420
Shareholders’ equity
Non-Controlling Interest
21
6(c)
23,623
1,350
24,329
1,535
24,973
25,864
13,144
172
13,316
11,264
11,264
38,289
37,128
Total equity
Current liabilities
Trade and other payables
Financial liabilities at fair value through profit and loss
Total current liabilities
19
23
Total equity and liabilities
Approved by the Board of Directors on 14 March 2016.
Lloyd Jones
Director
Jane McAndry
Director
The notes on pages 24 to 47 form an integral part of these financial statements
20
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Consolidated Statement of Changes in Equity
Share
Capital
At 1 January 2015
Comprehensive income
for the period
Share based payment
plans (note 22)
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Total
attributable
to the
Owners of
the Company
US$’000
2,909
6,520
11,403
(16)
213
3,300
24,329
1,535
25,864
-
-
2,326
-
-
-
2,326
1,348
3,674
-
-
(29)
16
(110)
-
(123)
-
(123)
-
-
(2,909)
-
-
-
(2,909)
(1,533)
(4,442)
2,909
6,520
10,791
-
103
3,300
23,623
1,350
24,973
NonControlling
Interest
US$’000
US$’000
Dividends (note 11)
At 31 December 2015
Share
Premium
Share
Capital
At 1 January 2014
Share issued
Comprehensive income
for the period
Share based payment
plans (note 22)
Dividends (note 11)
At 31 December 2014
Retained
Earnings
Share
Premium
Retained
Earnings
Treasury
Shares
Share
Option
Reserve
Treasury
Shares
Share
Option
Reserve
Foreign
Currency
Exchange
Reserve
Foreign
Currency
Exchange
Reserve
NonControlling
Interest
Total
Equity
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Total
attributable
to the
Owners of
the Company
US$’000
2,804
105
6,520
-
13,919
-
(105)
2,143
-
3,300
-
28,686
-
5,032
-
33,718
-
-
-
1,519
-
-
-
1,519
1,507
3,026
-
-
329
89
(1,930)
-
(1,512)
-
(1,512)
2,909
6,520
(4,364)
11,403
(16)
213
3,300
(4,364)
24,329
(5,004)
1,535
(9,368)
25,864
The notes on pages 24 to 47 form an integral part of these financial statements
21
Total
Equity
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Consolidated Cash Flow Statement
Operating Profit
Adjustments for:
Depreciation
Provision for unrealised loss/(gain) on investments
Loss on disposal of investments
Equity settled incentive plans
Other incentive plans
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Tax received/(paid)
Note
Year ended
31 December 2015
US$'000
450
Year ended
31 December 2014
US$'000
3,110
7,13
7
38
501
149
689
(1,222)
919
3,319
110
(356)
439
(1,512)
702
10,431
(8,497)
(397)
4,843
4,030
(64)
2,101
(4,640)
(6)
(64)
(2,545)
(1,533)
(2,909)
(5,004)
(4,364)
(4,442)
(9,368)
337
(7,883)
Net cash generated from operating activities
Investing activities
Proceeds from sale of investments
Purchase of investments
Purchase of property and equipment
13
Net cash used in investing activities
Financing activities
Dividend paid to non-controlling interest
Dividends paid
14
11
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
18
17,395
25,278
Cash and cash equivalents at the end of the year
18
17,732
17,395
The notes on pages 24 to 47 form an integral part of these financial statements
22
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Company Statement of Financial Position
Note
As at
31 December 2015
US$'000
As at
31 December 2014
US$'000
2,821
2,821
2,821
2,821
512
12,375
272
104
19,342
1,722
Total current assets
13,159
21,168
Total assets
15,980
23,989
Non-current assets
Interests in subsidiaries
14
Total non-current assets
Current assets
Trade and other receivables
Amounts due from subsidiaries
Cash and cash equivalents
17
25
18
Issued share capital
Reserves
20
21
2,909
4,154
2,909
247
Shareholders’ equity
21
7,063
3,156
Current liabilities
Amounts due to subsidiaries
Financial liabilities at fair value through profit and loss
Trade and other payables
25
23
19
8,678
172
67
20,786
47
8,917
20,833
15,980
23,989
Total equity and liabilities
Approved by the Board of Directors on 14 March 2016.
Lloyd Jones
Director
Jane McAndry
Director
The notes on pages 24 to 47 form an integral part of these financial statements
23
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements
1.
The Company
Charlemagne Capital Limited (formerly Regent Fund Management (Cayman) Limited and Regent Europe Limited) was incorporated in the
Cayman Islands as an exempt company with limited liability (registered number CR-75327) on 29 July 1997. The Company’s registered office is
at P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies. The consolidated
financial statements of the Company for the year ended 31 December 2015 comprise the Company and its subsidiaries (together referred to as
the “Group”).
2.
Basis of Preparation
Going Concern Basis of Accounting
The consolidated financial statements have been prepared on a going concern basis. Note 23 of the financial statements sets out the Group’s
objectives, policies and processes for managing capital and its financial risk management objectives, together with details of financial
instruments and exposure to credit risk and liquidity risk. The Group has a strong cash position. Management prepare forecasts, including
sensitivity analysis, which demonstrate that the Group will continue to operate within its available resources. After making these enquiries, the
Board considers that the Group has adequate resources to meet its business needs and it is therefore appropriate to adopt the going concern
basis in preparing these financial statements.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted
by the European Union (EU). The financial statements were authorised for issue by the Directors on 14 March 2016.
Basis of Measurement
The consolidated financial statements are prepared on the historical cost basis except for the following that are stated at their fair value:
financial instruments at fair value through profit or loss including derivative financial instruments. Recognised assets and liabilities that are
hedged are stated at fair value in respect of the risk that is hedged.
Functional and Presentation Currency
The Company’s shares are issued in United States Dollars (“US Dollars”) as the US Dollar is a more widely recognised currency internationally
than the local currency of the Cayman Islands. The functional and presentation currency of the Parent Company and subsidiary financial
statements is US Dollars and not Cayman Islands Dollars reflecting the fact that the transactions are denominated in US Dollars.
Use of Estimates and Judgements
The preparation of financial statements in conformity with IFRS, as adopted by the EU, requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have
the most significant effect on the amount recognised in the financial statements are described in note 26.
Changes in Accounting Policies
A number of new standards, amendments to standards and interpretations, as adopted by the EU, are effective for annual periods beginning
after 1 January 2015, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a
significant effect on the consolidated financial statements of the Group.
The notes on pages 24 to 47 form an integral part of these financial statements
24
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
3.
Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and
have been applied consistently by the Group entities.
Basis of Consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Group. Control exists where the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, potential
voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent
that there is no evidence of impairment.
Investments in structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding control, such as
when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of contractual arrangements.
The Group’s interests in structured entities are described in note 15(b).
Foreign Currency
Foreign currency transactions
Transactions in foreign currencies are translated to US Dollars at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the reporting date are translated to US Dollars at the foreign exchange rate ruling at
that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities denominated
in foreign currencies, which are stated at historical cost, are translated to US Dollars at the foreign exchange rate ruling at the date of the
transaction.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to US Dollars
at foreign exchange rates ruling at the reporting date. The income and expenses of foreign operations are translated to US Dollars at the
foreign exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income, and
presented in the “foreign currency exchange reserve” in equity. When a foreign operation is disposed of, in part or in full, the relevant amount
in the foreign currency exchange reserve is transferred to profit or loss.
Derivative Financial Instruments
The Group uses derivative financial instruments including forward exchange contracts to manage its exposure to foreign exchange, interest
rate and equity market risks arising from operational, financing and investment activities and for trading purposes.
Derivative financial instruments are recognised initially at fair value; any attributable transaction costs are recongised in profit or loss as
incurred. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair
value is recognised immediately in profit or loss.
The notes on pages 24 to 47 form an integral part of these financial statements
25
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
3.
Significant Accounting Policies (continued)
Property and Equipment
Items of property and equipment are measured at cost less accumulated depreciation and impairment losses.
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of items of property and equipment taking
into account the items’ residual value. The estimated useful lives are as follows:
Furniture and fixtures
5 years
Computer equipment
3 years
Other equipment
4 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Investments at Fair Value Through Profit or Loss
Classification and measurement
An instrument is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial
recognition. Financial instruments are designated at fair value through profit or loss if the Group manages such investments and makes
purchase and sale decisions based on their fair value in accordance with the Group’s risk management or investment strategy. Upon initial
recognition attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or
loss are measured at fair value, and changes therein are recognised in profit or loss. All investments are designated at fair value through profit
or loss.
Recognition and derecognition
The Group recognises financial assets at fair value through profit or loss on the date it commits to purchase the instruments. From this date
any gains and losses arising from changes in fair value of the assets are recorded. These assets are derecognised when the contractual rights
to receive cash flows from the assets have expired or when the Group has transferred the right to receive the contractual cash flows in a
transaction in which substantially all risks and rewards of ownership are transferred.
Fair value measurement principles
The value of financial instruments is based on their quoted market price, where available, at the balance sheet date without any deduction for
transactions costs. If a quoted market price is not available on a recognised exchange or from a broker/dealer for non-exchange traded
financial instruments, the fair value of the instrument is estimated by the Board of Directors.
The following represents the fair value hierarchy of financial instruments measured at fair value in the statement of financial position. The
hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the
financial assets and liabilities. The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value
measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
The notes on pages 24 to 47 form an integral part of these financial statements
26
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
3.
Significant Accounting Policies (continued)
Trade and Other Receivables
Trade and other receivables are measured at amortised cost less impairment losses.
Trade and Other Payables
Trade and other payables are measured at amortised cost.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits. For the purpose of the statement of cash flows, cash and cash
equivalents would be presented net of bank overdrafts if any existed.
Impairment of Non Financial Assets
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated. All impairment losses and reversals are recognised in
profit or loss.
Share Capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of tax effects.
Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is
recognised as a change in equity. Repurchased shares are classified as cancelled shares and presented as a deduction from total equity.
Treasury shares
Shares issued to the Charlemagne 2005 Employee Benefit Trust (note 22) are accounted for as treasury shares within equity (see note 20).
Dividends
Dividends are recognised as a liability in the year in which they are declared and approved.
The notes on pages 24 to 47 form an integral part of these financial statements
27
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
3.
Significant Accounting Policies (continued)
Revenue Recognition
Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably,
revenue is recognised in profit or loss as follows:(a)
investment management, administration and advisory fees contractually receivable by the Group, net of rebates, are recognised in the
year in which the respective fees are earned. Performance fees arising upon the achievement of specified targets are recognised at
the respective funds' year-ends, when such performance fees are confirmed as receivable, or when there is a crystallising event,
including but not limited to redemption of shares against which performance fees have been accrued;
(b)
profit or loss on sale of investments is recognised when title is passed;
(c)
interest is recognised on a time apportioned basis using the effective interest rate;
(d)
dividend income from unlisted investments is recognised when the shareholder's right to receive payment is established. Dividend
income from listed investments is recognised when the share price of the investment turns ex-dividend;
(e)
revenue related to provision of services is recognised on an accruals basis.
Operating Lease Payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Employee Benefits
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an
expense, with a corresponding increase in liabilities, over the period the employees become unconditionally entitled to payment. The liability
is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense
in profit or loss.
The fair value of employee stock options is measured using a Black-Scholes or binomial lattice model. Measurement inputs include share price
on measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments (based on
general option holder behaviour), expected dividends, and a risk-free interest rate. Service and non-market performance conditions attached
to the transactions are not taken into account in determining fair value.
The notes on pages 24 to 47 form an integral part of these financial statements
28
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
3.
Significant Accounting Policies (continued)
Income Tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available against which the asset can be utilised. A deferred tax asset is reduced to
the extent that it is no longer probable that the related tax benefit will be realised.
From time to time the Group receives inquiries from revenue authorities into its taxation affairs, as is common for entities operating
international transfer pricing policies. It is the policy of the Group to account for any taxation due as a result of such inquiry in the year in
which the substance of any settlement becomes probable.
Investment in Subsidiaries and Associates
The Company’s investments in the subsidiaries and associates are stated at cost less impairment losses.
Comparative Figures
Where necessary, comparative figures have been adjusted to conform to changes in presentation for the current year.
Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period,
adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which
comprise convertible notes and share options granted to employees.
4.
Revenue
Fund management and related fees, net of rebates
Performance fees
Investment (loss) on assets designated at fair value through profit or loss
Other income
Year ended
31 December 2015
US$'000
Year ended
31 December 2014
US$'000
20,714
4,296
(501)
284
25,881
2,431
(83)
320
24,793
28,549
The notes on pages 24 to 47 form an integral part of these financial statements
29
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
5.
Personnel Expenses
Salaries
Performance related bonuses
Share Based Incentive Plans (see note 22)
Compulsory social security contributions
Directors’ Emoluments
Fees
Short-term employee benefits
Pension contributions
Year ended
31 December 2015
US$'000
Year ended
31 December 2014
US$'000
10,525
5,016
838
1,673
11,131
5,846
906
1,859
18,052
19,742
Year ended
31 December 2015
US$'000
Year ended
31 December 2014
US$'000
301
899
134
301
1,287
112
1,334
1,700
The highest paid Director had emoluments of US$0.35 million (2014: US$0.50 million).
The number of full time employees of the Group as at the end of the year was 64 (2014: 66).
The Group operates a discretionary bonus scheme, as approved by the Board, which is based on the Group’s divisional profit before tax.
Bonuses are accounted for in the financial year in which the bonus is earned.
The notes on pages 24 to 47 form an integral part of these financial statements
30
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
6.
Related Party Transactions
Identity of related parties
The Group is related to its subsidiaries (note 14), and to its Directors and executive officers. The Group provides investment management
services for a number of collective investment schemes where Group companies are investment advisers of underlying funds, which meet the
criteria of related parties. In return the Group receives management fees for provision of these services.
Transactions with Directors and executive officers
As at 31 December 2015 Directors of the Company and their immediate interests controlled 32% (2014: 32%) of the voting shares of the
Company. The Directors’ Remuneration Report on pages 15 and 16 gives details of share interests and remuneration.
Summary of transactions
The following is a summary of transactions with related parties during the current and prior years. All such transactions were entered into in
the ordinary course of business.
a.
Approximately 78% (2014: 77%) of the turnover from investment management, administration, performance incentive fees, advisory
fees and commissions is derived from funds over which the Directors consider the Group has influence by virtue of its management,
administration and advisory roles.
b.
Certain Directors and the Group have shareholdings in certain funds managed by Charlemagne Capital Group companies.
c.
During 2009 the Group established a subsidiary entity and entered into an economic interest agreement with this entity in respect of
one of the management contracts held by the Group. An employee of the Group holds a 49.9% non-controlling interest in the shares
of this entity and has an option to acquire a further 12.6% of the shares in issue (see notes 14 and 22).
7.
Profit from Operations
The Group's profit from operations was arrived at:-
Year ended
31 December 2015
US$'000
Year ended
31 December 2014
US$'000
Revenue Items
Realised loss on disposal of current investments
Fees rebates from current investments
Unrealised loss/(profit) on current investments & currency forward contracts
Interest income
Net foreign exchange loss
(63)
501
(51)
79
439
(356)
(84)
214
Expense Items
Depreciation
Auditors' remuneration
Operating lease rental on property
38
128
639
110
138
645
After charging or (crediting):
The notes on pages 24 to 47 form an integral part of these financial statements
31
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
8.
Segment Reporting
Year to 31 December 2015
US$'000
US$'000
US$'000
US$'000
US$'000
-
OCCO
8,789
2,164
-
Institutional
5,103
280
-
Specialist
1,287
486
-
Other
(501)
284
Total
20,714
4,296
(501)
284
Segment Revenue
6,901
10,953
5,383
1,773
(217)
24,793
Segment Result
Unallocated Expenses
5,847
6,917
5,078
1,465
(217)
19,090
(18,640)
US$'000
Magna
5,535
1,366
-
Net Management Fees
Net Performance Fees
Return on Investment
Other Income
Results from Operating Activities
450
US$m
US$m
US$m
US$m
US$m
US$m
654
(36)
(110)
525
(49)
17
966
(47)
(114)
103
(3)
(9)
-
2,248
(135)
(216)
508
493
805
91
-
1,897
US$'000
Magna
6,132
1,742
-
US$'000
US$'000
US$'000
US$'000
US$'000
OCCO
11,317
56
-
Institutional
6,535
-
Specialist
1,897
633
-
Other
(83)
320
Total
25,881
2,431
(83)
320
Segment Revenue
7,874
11,373
6,535
2,530
237
28,549
Segment Result
Unallocated Expenses
6,455
6,971
6,146
2,092
237
21,901
(18,791)
Asset under Management at
Beginning of Year
Net Subscriptions/(Redemptions)
Net Performance
Asset under Management at End of
Year
Year to 31 December 2014
Net Management Fees
Net Performance Fees
Return on Investment
Other Income
Results from Operating Activities
3,110
US$m
US$m
US$m
US$m
US$m
US$m
Asset under Management at
Beginning of Year
Net Subscriptions/(Redemptions)
Net Performance
560
142
(48)
664
(113)
(26)
1,373
(225)
(182)
134
(13)
(18)
-
2,731
(209)
(274)
Asset under Management at End of
Year
654
525
966
103
-
2,248
In accordance with IFRS 8 Operating Segments, the Group presents segment information in respect of its business segments that is
consistent with information reviewed by management and based on the internal reports regularly reviewed by the Group’s Chief
Operating Decision Maker in order to assess each segment’s performance and to allocate resources to them.
The notes on pages 24 to 47 form an integral part of these financial statements
32
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
9.
Taxation
Recognised in the income statement
Year ended
31 December 2015
US$’000
Year ended
31 December 2014
US$’000
-
84
30
-
Amount recovered in respect of prior years
(3,254)
-
Total income tax expense/(refund)
(3,224)
84
Current tax expense:
Current year
Under provided in prior year
Reconciliation of effective tax rate
Year ended
Year ended
31 December 2015
31 December 2014
US$’000
US$’000
450
3,110
Profit before tax
Income tax using the domestic corporation tax rate
0%
-
0%
-
Effect of different tax rates in foreign jurisdictions
0%
-
2.70%
84
Under provided in prior years
Amount recovered in respect of prior years
6.67%
30
0.08%
-
-723.11%
(3,254)
0%
-
-716.44%
(3,224)
2.70%
84
As reported in the consolidated financial statements of the Group for the year ended 31 December 2014, the Group, in consultation with the
beneficiaries of the Charlemagne Employee Benefit Trust (the “EBT”), had commenced discussions with HMRC with a view to taking advantage
of the beneficial terms offered under the published EBT Settlement Opportunity arrangement. A formal agreement was entered into on 23
March 2015 and all potential issues of significance have now been resolved. Under the terms of the settlement agreement contributions to
the Charlemagne Employee Benefit Trust made in previous years have now been allowed as a deduction from taxable income in respect of
those years of assessment ultimately resulting in the net amount of tax recovered shown above.
10.
Profit Attributable to Shareholders
The net profit attributable to shareholders reflected in the financial statements of the Company itself amounts to US$6.8 million (2014: profit
US$0.2 million).
11.
Dividends
Dividends per share of 1.0 US cents (2014: 1.5 US cents)
Year ended
31 December 2015
US$'000
Year ended
31 December 2014
US$'000
2,909
4,364
A second interim dividend of 0.5 US cents (GB0.3393p) per ordinary share in respect of the year ended 31 December 2014 was paid on 24 April
2015 to those shareholders on the register on 27 March 2015 and was distributed from retained earnings in 2015.
An interim dividend of 0.5 US cents (GB0.3209p) per ordinary share in respect of the year ended 31 December 2015 was paid on 6 November
2015 to those shareholders on the register on 2 October 2015 and was distributed from retained earnings in 2015.
An interim dividend of 0.5 US cents (GB0.3513p) per ordinary share in respect of the year ended 31 December 2015 will be paid on 22 April
2016 to those shareholders on the register on 29 March 2016 and will be distributed from retained earnings in 2016.
The notes on pages 24 to 47 form an integral part of these financial statements
33
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
12.
Earnings Per Share
The calculation of basic earnings per share of the Group is based on the net profit attributable to shareholders for the year of US$2.33 million
(2014: US$1.52 million) and the weighted average number of shares of 290,885,616 (2014: 290,482,876) in issue during the year.
The calculation of diluted earnings per share of the Group includes options that have vested but not yet been exercised and the weighted
average number of share options where the specified performance conditions have been satisfied, but the service criteria have not yet been
met (note 22). The weighted average number of shares in respect of diluted earnings per shares is 292,037,136 (2014: 299,483,594) for the
year.
13.
Property and equipment
Group
Furniture and
Fixtures
US$'000
879
-
Computer and Other
Equipment
US$'000
1,136
8
(2)
Total
US$'000
2,015
8
(2)
At 31 December 2014
879
1,142
2,021
At 1 January 2015
Acquisitions
Fully depreciated items disposed
879
-
1,142
64
(143)
2,021
64
(143)
At 31 December 2015
879
1,063
1,942
Depreciation and impairment:
At 1 January 2014
Provided during the year
Disposals
784
37
-
1,067
75
(2)
1,851
112
(2)
At 31 December 2014
821
1,140
1,961
At 1 January 2015
Provided during the year
Fully depreciated items disposed
821
10
-
1,140
28
(143)
1,961
38
(143)
At 31 December 2015
831
1,025
1,856
Carrying amounts:
At 31 December 2014
58
2
60
At 31 December 2015
48
38
86
Cost:
At 1 January 2014
Acquisitions
Disposals
There was no property and equipment in the Company.
Assets which were purchased at a historic cost of US$1.6m (2014: US$1.5m) and are fully depreciated are still being used by the Group.
The notes on pages 24 to 47 form an integral part of these financial statements
34
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
14.
Interests in Subsidiaries
Company
Cost
At 1 January 2014
US$’000
5,880
At 31 December 2014
5,880
At 1 January 2015
Addition
5,880
-
At 31 December 2015
5,880
Impairment
At 1 January 2014
Charge for the year
3,059
-
At 31 December 2014
3,059
At 1 January 2015
Charge for the year
3,059
-
At 31 December 2015
3,059
US$’000
Carrying Amount
At 31 December 2014
2,821
At 31 December 2015
2,821
Balances with subsidiaries are included within current assets and current liabilities within the parent company statement of financial position.
Particulars of the principal subsidiaries of the Company at 31 December 2015 and 31 December 2014 are as follows:
Name
Place of
Incorporation/
Operation
Issued and Fully
Paid Share Capital
Percentage of Equity
Interest Attributable
to the Company
Direct
Charlemagne Capital
(IOM) Limited
Principal
Activities
Indirect
Isle of Man
Ordinary
100%
GBP20,000
Charlemagne Capital
United Kingdom
Ordinary
100%
(UK) Limited
GBP100
Charlemagne Capital
Isle of Man
Ordinary
100%
(Investments) Limited
GBP1
Charlemagne Capital (Services)
Isle of Man
Ordinary
100%
Limited
GBP2,000
Charlemagne Capital (OCCO EE)
Isle of Man
Ordinary
50.1%
Limited
GBP100,000
Dividends of US$1,533k (2014: US$5,004k) were paid to non-controlling interests in Charlemagne (OCCO EE) Limited.
Investment
Management
Investment Advice
and Marketing
Investment
Personnel
Internal Servicing
Company
Profit after tax of Charlemagne (OCCO EE) Limited for the year ended 31 December 2015 was US$2,702k (2014: US$3,077k) and net assets as
at 31 December 2015 were US$2,777k (2014: US$3,147k).
The notes on pages 24 to 47 form an integral part of these financial statements
35
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
15.
a)
Investments
Current investments – at fair value through profit or loss
Group
Equity securities in certain funds managed by Charlemagne Capital Group held for
future incentive payments (note 22)
Equity securities in certain funds managed by Charlemagne Capital Group
31 December 2015
US$’000
31 December 2014
US$’000
2,510
7,050
2,819
7,070
9,560
9,889
There were no investments held by the Company.
The group’s exposure to credit and market risks, and fair value information related to investments are disclosed in note 23.
b)
Interests in structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the
entity, such as when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of contractual
arrangements. The Group has assessed whether the funds it manages are structured entities, through review of the above factors. The Group
considers the following as structured entities – Open Ended Investment Companies (“OEICs”), Closed End Investment Companies and certain
mutual funds, limited partnerships and other pooled funds. Segregated mandates managed on behalf of clients and investment trusts are not
considered structured entities.
The structured entities are generally financed by the purchase of units or shares by investors, although certain funds, mainly property,
infrastructure and private equity funds, are also permitted to raise finance through loans from third parties. The Group does not provide a
guarantee for the repayment of any borrowings held by these entities. The structured entities allow clients to invest in a portfolio of assets in
order to provide a return through capital appreciation and/or investment income. Accordingly, they are susceptible to market price risk arising
from uncertainties about future values of the assets they hold. Market risks are discussed further in note 23.
In certain cases, the Group will also purchase units or shares for the purpose of providing seed capital or to hedge against liabilities from
deferred variable pay awards. There are no differences in the rights attached to the equity held by the Group from those held by other
investors.
AuM within structured entities all of which are unconsolidated is shown below:
Unconsolidated structured entities:
Open ended funds
Closed ended funds
31 December 2015
US$’m
31 December 2014
US$’m
955
61
1,231
51
1,016
1,282
The Group has an interest in the structured entities listed above through the receipt of management fees based on a percentage of the net
asset value and, in certain funds, contractually agreed performance fees, as well as investment returns where the Group has an equity holding
in the entity.
Gross revenue includes US$19.6m (2014: US$32.6m) of fees received from structured entities managed by the Group, of which US$19.6m
(2014: 32.6m) relates to related parties. In addition, the Group recognised a net loss on investments held in structured entities of US$501k
(2014: US$83k) during the year.
The notes on pages 24 to 47 form an integral part of these financial statements
36
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
15.
b)
Investments (continued)
Interests in structured entities (continued)
The table below summarises the carrying values in the balance sheet, representing the Group’s interests in unconsolidated structured entities,
as at 31 December 2015:
31 December 2015
US$’000
31 December 2014
US$’000
5,217
5,414
9,553
7
9,881
8
14,777
15,303
Trade and other receivables
Investments - current
Open-ended funds
Closed-end funds
Maximum exposure to loss
The Group does not have a direct exposure to the AuM it manages, with the associated risks and rewards residing with external investors,
except where the Group holds an equity interest. The Group’s maximum exposure to loss is therefore limited to future fee income and the
carrying value of assets relating to structured entities at each reporting date, as highlighted above, where the net asset value of the entities is
reduced through withdrawals by investors and/or adverse performance.
Financial support
The Group has not provided financial support to any consolidated or unconsolidated structured entity through guarantees over the repayment
of borrowings, or otherwise, and has no contractual obligations or current intention of providing financial support in the future.
16.
Deferred Taxation
There is an unrecognised deferred taxation asset of US$13,445 (2014: deferred taxation asset of US$12,107) representing the tax effect of
depreciation in excess of capital allowances.
17.
Trade and Other Receivables
Group
31 December
31 December
2015
2014
US$’000
US$’000
Trade customers
Other receivables
EBT settlements
Prepayments
Company
31 December
31 December
2015
2014
US$’000
US$’000
6,763
1,969
1,398
781
6,177
2,688
824
491
21
92
12
10,911
9,689
512
104
As at 31 December 2015, there were US$412k margin deposits held by the Group (2014:$nil) in respect of the normal trading in currencies,
futures and options (note 23).
The group’s exposure to credit and market risks, and impairment losses related to trade and other receivables are disclosed in note 23.
The notes on pages 24 to 47 form an integral part of these financial statements
37
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
18.
Cash and Cash Equivalents
Bank balances
Call deposits
Term deposits
Cash and cash equivalents
19.
Group
31 December
31 December
2015
2014
US$’000
US$’000
471
191
8,876
16,198
8,385
1,006
17,732
17,395
Company
31 December
31 December
2015
2014
US$’000
US$’000
27
33
245
1,689
272
1,722
Group
31 December
31 December
2015
2014
US$’000
US$’000
Company
31 December
31 December
2015
2014
US$’000
US$’000
Trade and Other Payables
Accrual for performance awards
EBT settlements
Other incentive plans
Other accruals and payables
7,586
1,398
1,391
2,769
7,324
702
3,238
67
47
13,144
11,264
67
47
31 December
2015
US$’000
31 December
2014
US$’000
20,000
20,000
Issued and fully paid
At beginning of year 290,885,616 (2014: 280,385,616)
ordinary shares of US$0.01 each
Shares issued; nil (2014: 10,500,000)
2,909
-
2,804
105
At end of year; 290,885,616 (2014: 290,885,616) fully paid
2,909
2,909
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 23.
20.
Issued Share Capital
Shares
Authorised
2,000,000,000 ordinary shares of US$0.01 each
During the years ended 31 December 2014 and 2015, the Company did not repurchase any of its own shares. The Company issued 10,500,000
new ordinary shares of US$0.01 each during 2014.
Included within share capital are nil (2014: 1,581,974) shares which are held on behalf of a subsidiary of the Company (see note 22). These are
accounted for as treasury shares and are included as a debit reserve within equity.
As at the date of signing the financial statements there were 290,885,616 (2014: 290,885,616) ordinary shares of US$0.01 each issued and fully
paid, no shares (2014: 1,581,974) were held as treasury shares with the intention that they will be utilised to settle equity settled share
awards.
The notes on pages 24 to 47 form an integral part of these financial statements
38
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
21.
Share Capital and Reserves
Under Cayman Island law all categories of reserves are distributable. However, under normal circumstances the Company considers that only
retained profits are distributable to shareholders. In the previous periods, the Company has repurchased some of its own shares. These
shares were cancelled upon repurchase and accordingly the issued share capital of the Company was reduced by their nominal value.
The Board’s policy is to maintain an adequate capital base so as to maintain investor, creditor and market confidence and to sustain future
development of business. The Board of Directors monitors the return on capital and the level of dividends to ordinary shareholders.
There were no changes to the Group’s approach to capital management during the year.
Two of the Company’s subsidiaries are subject to externally imposed capital requirements and are required to submit periodic returns
summarising their financial resources. These companies have complied with relevant regulatory requirements in all material respects during
the year.
22.
Share Based Incentive Plans
Equity Settled
The Group has established several share based incentive programmes that entitle certain employees to acquire shares in the Company subject
to the vesting conditions set out below at an exercise price that was set at the date of grant.
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at
grant date and spread over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of share options
that are expected to vest.
Grant Date
21 November 2006
Options
Issued
50,903
Options
Remaining
25,071
29 September 2014
1,149,136
1,149,136
352,941
352,941
1,552,980
1,527,148
27 October 2015
Total Share Options
Vesting Conditions
Equal parts vesting over three, four and five years’ service
plus achievement of EPS performance targets
Two and a half years’ service and Magna Performance
targets
Three years service plus achievement of AuM
performance target
Contractual life
of Options
10 years
2.5 years
10 years
The number and weighted average exercise price of outstanding share options is as follows:
Outstanding at beginning of year
Granted during the year
Vested during the year
Outstanding at the end of the year
Weighted average exercise price
GBP0.004
GBP0.085
GBP0.00
GBP0.03
The notes on pages 24 to 47 form an integral part of these financial statements
39
Number of Options
3,978,063
352,941
(2,803,856)
1,527,148
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
22.
Share Based Incentive Plans (continued)
Equity Settled (continued)
The options outstanding at 31 December 2015 have an exercise price between GBPNil and GBP0.748 and a weighted average contractual life
of 3.2 years. Outstanding share options are contingent upon specified performance and service criteria being satisfied.
During the year 2,803,856 nil price share awards vested and were exercised.
As at 31 December 2015 25,071 options had vested but had not been exercised. The average exercise price of these options is GBP0.705.
The fair values of the options granted during the year are measured at the grant date using a Black-Scholes or binomial lattice model and
spread over the vesting period of these schemes. The values are adjusted to reflect the actual number of shares that are expected to vest and
recognised as an employee expense with a corresponding increase in equity.
The estimate of the fair value of the share options and share awards granted has been calculated by reference to the face value of the award
adjusted for the loss of dividends over the vesting period. All other options are measured using a binomial lattice model to estimate the early
exercise behaviour. The contractual life of the options is used as an input to this model.
Fair value of share options/awards and assumptions
21 Nov 2006
EPS
Targets
29 Sep
2014
Service
Targets
27 Oct
2015
Service and AuM
Targets
Fair value at measurement date (GBP)
0.20
0.122
0.023
Share price at grant date (GBP)
0.705
0.1388
0.085
Exercise price (GBP)
0.705
Nil
0.085
Expected volatility (% p.a.)
40.0
40.0
60.0
Option life (years)
10
2.5
10
Assumed dividend yield (% p.a.)
5.0
5.0
7.0
Risk-free interest rate (% p.a.)
4.8
0.25
0.25
The share options are granted under service and non-market performance conditions. Such conditions are not taken into account in the grant
date fair value measurement of the services received. There are no market conditions associated with the share option grants.
On 24 December 2014, the Company appointed North Bridge Capital LLC, a US registered broker-dealer, to act as its placement agent in
marketing its long-only funds and strategies to institutions in the US. Under the terms of the relevant agreement, North Bridge receives an
equity incentive consisting of:
a.
b.
an initial option granted on signing the agreement to acquire up to 1% of the issued share capital on the date of the agreement at an
exercise price equal to the closing price on that day subject to raising US$100m of new assets; and
an undertaking by CCL to grant subsequent options to North Bridge upon incremental increases in AUM at a discount of 10% to
market value up to a limit of 9.99% of the issued share capital once US$2billion has been raised.
As at the grant date, the Directors believe that the option granted to North Bridge had no significant value.
An employee of the Group holds a 49.9% non-controlling interest in the shares of a group entity and has an option to acquire a further 12.6%
of the shares in issue. The Group has retained an option to re-acquire the shares held by the employee for a nominal sum under certain
conditions, should the employee’s option no longer be exercisable for any reason. As at the grant date, the Directors believe that the option
granted to the employee had no significant value. All options involved in this arrangement expire on 31 December 2018.
The notes on pages 24 to 47 form an integral part of these financial statements
40
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
22.
Share Based Incentive Plans (continued)
At 1 January 2015 the trustees of the Charlemagne 2005 Employee Benefit Trust (EBT) held 1,581,974 shares in the Company. During the year
all shares were transferred to employees in respect of share awards that vested and were exercised leaving nil shares held by the EBT as at 31
December 2015.
Cash settled
There were no cash settled share-based incentive plans in issue during the year.
Other incentive plans
During the prior year awards of shares in the Magna Global Emerging Markets Fund (“the Fund”) were issued to certain employees subject to
the vesting conditions set out below. The fair value of the awards granted is spread over the vesting period, and recognised as an expense in
the accounts with a corresponding increase in liabilities. The fair value of the awards is measured by reference to the fair value of the
equivalent number of shares held by the Company with the intention that they will be utilised to settle these awards as they vest.
The total number of shares subject to the award as at 31 December 2015 was 156,843.762 (2014: 164,468.112) with 100% of the shares
allocated to each employee vesting upon three years’ service provided that the Fund outperforms the MSCI Emerging Market Index (USD)
(“the benchmark”) by 1% to 2.99% per annum over the whole life of the award. If the Fund outperforms the benchmark by 3% or more, 110%
of the shares subject to the award vest but if the Fund’s performance is less than the benchmark plus 0.99%, then 80% of the shares subject to
the award vest.
The amount charged as an expense within these financial statements in respect of these awards is US$689,493 (2014: US$702,424).
Expenses in respect of share based incentive plans
The following amounts have been charged as an expense within these financial statements:
Year to
31 December 2015
US$
148,542
689,493
838,035
Equity settled incentive plans
Other incentive plans
Total charged to employee costs
Year to
31 December 2014
US$
203,560
702,424
905,984
Included in the charge for equity settled incentive plans shown above were amounts totalling US$nil (2014: US$102,387) relating to directors.
The notes on pages 24 to 47 form an integral part of these financial statements
41
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
23.
Financial Instruments – Fair Values and Risk Management
a)
Accounting Classification and Fair Values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value
hierarchy.
31 December 2015
Financial assets measured at fair value
Designated
at fair value
Current investments
Financial assets not measured at fair
value
Trade and other receivables
Taxation
Cash and cash equivalents
Financial liabilities measured at fair
value
Forward exchange contracts used for
hedging
Financial liabilities not measured at
fair value
Trade and other payables
Carrying amount
Other
Loans and
financial
receivables
liabilities
Fair value
Total
Level 1
Level 2
Level 3
Total
US$’000
9,560
US$’000
-
US$’000
-
US$’000
9,560
US$’000
-
US$’000
9,553
US$’000
7
US$’000
9,560
9,560
-
-
9,560
-
9,553
7
9,560
-
10,911
17,732
-
10,911
17,732
-
28,643
-
28,643
172
-
-
172
-
172
-
172
172
-
-
172
-
172
-
172
-
-
13,144
13,144
-
-
13,144
13,144
No transfer between levels 1 and 2 in the fair value hierarchy occurred in the year.
31 December 2014
Financial assets measured at fair value
Current investments
Financial assets not measured at fair
value
Trade and other receivables
Taxation
Cash and cash equivalents
Financial liabilities not measured at
fair value
Trade and other payables
Designated
at fair
value
Carrying amount
Other
Loans and
financial
receivables liabilities
Fair value
Total
Level 1
Level 2
Level 3
Total
US$’000
9,889
US$’000
-
US$’000
-
US$’000
9,889
US$’000
-
US$’000
9,881
US$’000
8
US$’000
9,889
9,889
-
-
9,889
-
9,881
8
9,889
-
9,689
95
17,395
-
9,689
95
17,395
-
27,179
-
27,179
-
-
11,264
11,264
-
-
11,264
11,264
No transfer between levels 1 and 2 in the fair value hierarchy occurred in the year.
All financial assets and liabilities of the Company measured at fair value are considered to be level 2 in the fair value hierarchy.
The notes on pages 24 to 47 form an integral part of these financial statements
42
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
23.
Financial Instruments – Fair Values and Risk Management (continued)
b)
Measurement of Values
i)
Valuation techniques
The valuation technique applied to level 2 financial instruments measured at fair value is based on the net asset value per share of the relevant
investments which are published by their appointed custodian.
Level 3 financial assets consist solely of investments in a private company. The fair value of this investment is determined based on the most
recent net assets of the company.
There have been no changes to the valuation techniques used during the year.
ii)
Level 3 fair values
Reconciliation of Level 3 fair values
The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.
Equity securities available for sale
206
8
(206)
8
8
(1)
7
Balance at 1 January 2014
Additions
Disposals
Balance at 31 December 2014
Balance at 1 January 2015
Total gains or losses recognised in profit or loss
Balance at 31 December 2015
c)
Financial Risk Management
Financial assets of the Group include cash and cash equivalents, investments and other receivables. Financial liabilities include accruals and
other payables. The carrying amounts of these other assets approximate their fair values.
The Group operates a central Treasury function based upon weekly cash flow forecasts for each of the operating entities and the Group as a
whole. This enables the regulatory liquidity requirements to be managed accurately for each entity subject to them. The Group normally
operates a position of holding US dollars for all amounts in excess of working capital needs held in local currencies. Such balances are placed
on deposit with major banks taking account of prudent spreading of risk. Where a decision is taken to hold local currency balances in excess of
working capital needs, it is required that an Executive Director approves the position. All currency positions are formally monitored monthly by
the Board as part of the Group’s reporting procedures.
There is strict segregation between the investment management and deal settlement functions.
The Group has established a Group Risk Committee that reports to the directors and oversees how management monitors compliance with the
Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the
Group.
In the course of the Group's normal trading in currencies, futures and options, margin deposits of varying amounts of cash are held by the Group's
brokers. As at 31 December 2015, margin deposits were US$412k (2014: US$nil).
The notes on pages 24 to 47 form an integral part of these financial statements
43
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
23.
Financial Instruments – Fair Values and Risk Management (continued)
c)
Financial Risk Management (continued)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s reputation.
The Group is exposed to liquidity risk to the extent that it holds stakes in certain financial instruments for which no developed market exists.
Therefore, the Group might be unable to sell such stakes quickly at close to fair value. This risk is managed by the Group by means of cash flow
planning to ensure that future cash requirements are anticipated and, where financial instruments have to be sold to meet these requirements, the
process is carried out in a controlled manner intended to minimize the liquidity risk involved.
Residual contractual maturities of financial liabilities:
As at 31 December 2015
Non-derivative financial liabilities
Trade Payables
Performance related awards
EBT settlements
Other incentive plans
Other
Total
Derivative financial liabilities
Forward exchange contracts used for hedging:
-Outflow
-Inflow
As at 31 December 2014
Non-derivative financial liabilities
Trade Payables
Performance related awards
Other incentive plans
Other
Total
Carrying
Amount
US$’000
731
7,586
1,398
1,391
2,038
13,144
Total
US$’000
731
7,586
1,398
1,391
2,038
13,144
Less than 1
Month
US$’000
583
1,522
991
3,096
Between 1-3
Months
US$’000
148
1,630
1,398
481
3,657
More than 3
Months
US$’000
4,434
1,391
566
6,391
172
172
(8,249)
8,077
(172)
(686)
673
(13)
(1,373)
1,346
(27)
(6,190)
6,058
(132)
Carrying
Amount
US$’000
1,315
7,324
702
1,923
11,264
Total
US$’000
1,315
7,324
702
1,923
11,264
Less than 1
Month
US$’000
1,315
3,137
920
5,372
Between 1-3
Months
US$’000
319
319
More than 3
Months
US$’000
4,187
702
684
5,573
The non-derivative financial liabilities of the Company are all repayable in less than 1 month.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and
arises principally from the Group’s receivables from customers and investment securities.
The majority of debtors arise from fund management and related activities of the Group. As such the Group is able to determine that the credit risk
is considered minimal in relation to the majority of its debtors. For other debtors a credit evaluation is undertaken on a case by case basis and
provisions made when considered necessary. To reduce exposure to credit risk arising from non-performance by counterparties in derivative
transactions, the Group’s policy is to transact business through brokers with high credit ratings wherever practicable. The Group invests available
cash and cash equivalents with various banks. The Group is exposed to credit-related losses in the event of non-performance by counterparties to
financial instruments but, given the financial institutions involved, management does not expect any counterparty to fail to meet its obligations.
The notes on pages 24 to 47 form an integral part of these financial statements
44
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
23.
Financial Risk Management (continued)
Credit risk (continued)
At the reporting date, the maximium credit exposure of the Group’s financial assets exposed to credit risk amounted to the following:
US$’000
Past due:
1-30 days
US$’000
Past due:
31-90 days
US$’000
Past due:
more than 90 days
US$’000
Amounts due from funds
Interest and other receivables
Cash and cash equivalents
6,628
927
17,732
-
2,133
-
450
773
-
Total
25,287
-
2,133
1,223
Past due:
1-30 days
Past due:
31-90 days
Past due:
more than 90 days
As at 31 December 2015
As at 31 December 2014
Neither past due
or Impaired
Neither past due
or Impaired
US$’000
US$’000
US$’000
US$’000
Amounts due from funds
Interest and other receivables
Cash and cash equivalents
5,307
2,095
17,395
-
605
413
-
813
456
-
Total
24,797
-
1,018
1,269
The credit risk on transactions with funds primarily relates to transactions awaiting settlement. This risk is considered low due to the short
settlement period involved and the credit quality of the funds involved. Included in receivables past due more than 90 days are amounts totalling nil
(2014: nil) after allowing for a total impairment provision of US$557,534 (2014: US$ 263,294).
The cash and cash equivalents held by the Group are held by a number of international banks and it is the Group’s policy to avoid concentrating
credit risk in any one institution.
The maximum credit exposure of the Company’s financial assets exposed to credit risk amounted to US$13,159k (2014: US$21,168k). Included in
receivables past due more than 90 days were $42k (2014: US$38k) without impairment provision.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and equity prices will affect the Group’s income or the value of its
holding of financial instruments.
The Group is exposed to market risk directly via its investment holdings and indirectly via assets under its management, from which its fee income is
derived. As the investments held directly and indirectly are mostly in the emerging markets, there is a concentration of this risk and any general
movement in these markets would have a significant impact on the Group’s income and the value of the Group’s investments.
Foreign currency risk
The Group is exposed to foreign currency risk on investments, income and expenses denominated in currencies other than US Dollars, principally
sterling expenses and Euro income. The Group assesses its hedging requirements and executes forward foreign exchange transactions so as to
reduce the Group’s exposure to currency market movements.
In respect of monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level
by buying or selling foreign currencies at spot rates when necessary to address short term imbalances.
The notes on pages 24 to 47 form an integral part of these financial statements
45
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
23.
Financial Risk Management (continued)
Foreign currency risk (continued)
The Company and the Group’s exposure as at the reporting date was as follows:
Company
EUR
US$’000
31 December 2015
Cash and Cash Equivalents
GBP
US$’000
EUR
US$’000
DKK
US$’000
GBP
US$’000
CHF
US$’000
-
23
-
2
Investments
-
133
124
-
1,412
2,566
237
Debtors
-
-
-
1,489
52
2,585
-
Creditors
-
(67)
-
(455)
-
(3,528)
-
29
(44)
2
1,291
52
3,035
237
Company
EUR
US$’000
GBP
US$’000
Group
AUD
US$’000
EUR
US$’000
DKK
US$’000
GBP
US$’000
CHF
US$’000
2,770
2,890
283
Total
31 December 2014
Cash and Cash Equivalents
29
Group
AUD
US$’000
19
1,632
Investments
-
-
3
-
228
8
-
Debtors
-
52
-
2,537
-
1,970
-
Creditors
-
(29)
-
(521)
-
(2,216)
-
19
1,655
3
2,252
-
5,414
283
Total
As at 31 December 2015, had the US Dollar strengthened by 1% in relation to all other currencies, with all other variables held constant, the net
assets of the Group would have been decreased in both profit and equity by US$46,164 (2014: US$79,520). A weakening of the US Dollar by 1%
against the above currencies would have had an equal and opposite effect.
Interest rate risk
The Group and the Company are exposed to interest rate risk with regard to holdings in cash and cash equivalents. All cash holdings and cash
equivalents are held in accounts with variable rates. The Group and the Company do not have any borrowings and therefore is not materially
exposed to interest rate rise. Surplus funds are placed on short term deposit.
Other price risk
Price risk arises from equity securities held by the Group. As at the reporting date these assets amounted to the following:
Investment Assets
31 December 2015
US$’000
31 December 2014
US$’000
7
8
Total Equities
Shares in open ended collective investment scheme
7
9,553
8
9,881
Total Investment Assets
9,560
9,889
Equities:
Listed
Unlisted
The majority of the Group’s investments are readily realisable into cash. A 3% increase in the reported market price of these assets at the
reporting date would lead to a US$286,800 increase in the value of those investments (2014: US$296,670). An equal and opposite decrease in
the reported Net Asset Values would have decreased the value of the investments by an equal and opposite amount.
The notes on pages 24 to 47 form an integral part of these financial statements
46
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Financial Statements (continued)
24.
Operating Leases
At the end of the reporting year, the future minimum lease payments due under operating lease commitments during the lease terms are as
follows:
Group
Within 1 year
In the second to fifth years, inclusive
Over five years
Total
31 December 2015
US$’000
31 December 2014
US$’000
281
616
269
616
756
447
1,166
1,819
The group leases a number of offices under operating leases. The lease terms vary between 5 years to 15 years. One of the 5 year leases has
an option to break after 3 years and the 15 year lease has an option to break after the 7th year. During the year an amount of US$639k was
recognised as expense in profit or loss in respect of operating leases (2014: US$645k). The rent paid to the landlord is increased to market
rent at intervals as stated in lease agreements and the Group does not participate in the residual value of the office as all the risks and rewards
of the offices are with the landlords.
25.
Amounts due to and from Subsidiaries
The amounts due to and from subsidiaries are unsecured, repayable on demand and bear interest at commercial rates.
26.
Critical Accounting Estimates and Judgement in Applying Accounting Policies
The Directors considered the development, selection and disclosure of the Group’s critical accounting policies and estimates and the
application of these policies and estimates. Estimates and judgements are continually evaluated and are based on historical and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Fair value of financial instruments
The fair value of financial instruments that are not quoted in an active market are determined by the Directors by using valuation techniques.
Where valuation techniques are used to determine fair values, they are validated and periodically reviewed by qualified personnel
independent of the area that created them. To the extent practical, models use only observable data. However areas such as credit risk,
volatilities and correlations require the Directors to make estimates. Changes to the assumptions about these factors could affect reported
fair values of financial instruments.
27.
Contingent Liabilities
The Group was notified of a claim in the Employment Tribunal in the United Kingdom by an ex-employee during 2015. The hearing concluded
in December 2015 and the claim was rejected by an Employment Tribunal in February 2016 concluding that no compensation was awarded to
the ex-employee. There are no other significant contingent liabilities.
28.
Subsequent Events
There have been no significant events subsequent to the reporting date.
The notes on pages 24 to 47 form an integral part of these financial statements
47
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
DIRECTORS OF PRINCIPAL SUBSIDIARIES
CHARLEMAGNE CAPITAL (IOM) LIMITED
Asset management company in the Isle of Man
Directors are:
James Mellon (Chairman)
Anderson Whamond (Non-Executive)
Philip B. Games (Non-Executive)
Jane McAndry (Managing)
Adrian Jones
Lloyd Jones
CHARLEMAGNE CAPITAL (UK) LIMITED
Investment advisory and marketing company in the UK
Directors are:
Sir James Mellon KCMG (Non-Executive Chairman)
N. Jonathan Bradley (Non-Executive)
Jane McAndry
Vicky Kydoniefs
Varda Lotan
Julian P. Mayo
Gabor Sitanyi
CHARLEMAGNE CAPITAL (SERVICES) LIMITED
Global employment company in the Isle of Man
Directors are:
Jane McAndry
Adrian Jones (resigned on 14 December 2015)
Lloyd Jones
Anderson Whamond
CHARLEMAGNE CAPITAL (INVESTMENTS) LIMITED
Investment and subsidiary holding company in the Isle of Man
Directors are:
Jane McAndry
Adrian Jones (resigned on 14 December 2015)
Lloyd Jones
CHARLEMAGNE CAPITAL (OCCO EE) LIMITED
Internal servicing company in the Isle of Man
Directors are:
Jane McAndry
Adrian Jones (resigned on 14 December 2015)
Andrew Wiles
The notes on pages 24 to 47 form an integral part of these financial statements
48
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
CHARLEMAGNE CAPITAL LIMITED
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Charlemagne Capital Limited will be held at the offices of
Charlemagne Capital (IOM) Limited, St Mary’s Court, 20 Hill Street, Douglas, Isle of Man IM1 1EU on Friday 17 June 2016 at 12 noon
to transact the following business:
As ordinary resolutions:
1.
To receive and consider the Directors’ Report, Auditors' Report and the Audited Consolidated Financial Statements of
the Company for the year ended 31 December 2015.
Each year we will ask shareholders to consider the Annual Report and Financial Statements under Article 166 of the
Company’s Articles of Association (“the Articles”).
2.
To ratify the dividend declared by the Directors in respect of 2015 and confirm that no final dividend is paid.
Each year the Directors will declare interim dividends, subject to the availability of distributable reserves, and may declare a
final dividend. As in past years, an interim dividend was proposed instead of a final dividend in order that the amount could
be paid to shareholders without waiting for the approval of this meeting.
3.
To re-appoint KPMG Audit LLC, Isle of Man as auditors of the Company and authorise the Directors to approve their
remuneration.
Under Article 167 of the Articles, shareholders must approve the appointment of the auditors each year and authorise
the Directors to set their fees. In line with best practice, the Directors have delegated the authority to the Audit Committee to
set the auditors’ fees.
4.
To re-appoint James Mellon as a Director of the Company.
James Mellon has been a Director of the Company since August 1997 and is required to retire each year under Article 125 as
he is a Non-Executive Director who has been in office for more than 9 years. He is offering himself for re-election as a Director.
5.
To re-appoint Michael Baer as a Director of the Company.
Michael Baer has been a Director of the Company since March 2006 and is required to retire each year under Article 125 as he
is a Non-Executive Director who has been in office for more than 9 years. He is offering himself for re-election as a Director.
6.
To re-appoint The Rt. Hon. Lord Lang of Monkton (75) as a Director of the Company.
Lord Lang has been a Director of the Company since March 2006 and is required to retire each year under Article 125 as he
has reached the aged of 70. He is offering himself for re-election as a Director.
The notes on pages 24 to 47 form an integral part of these financial statements
49
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
7.
To re-appoint Jacob Johan van Duijn (72) as a Director of the Company.
Jacob Johan (Jaap) van Duijn has been a Director of the Company since March 2006 and is required to retire each year under
Article 125 as he has reached the aged of 70. He is offering himself for re-election as a Director.
8.
To re-appoint Jane Davidson Nairn McAndry as a Director of the Company.
Under Article 123 Jane Davidson Nairn McAndry is required to retire by rotation at every third Annual General meeting. She is
offering herself for re-election as a Director.
9.
To grant standing authority such that the Company be authorised generally and without conditions to make market
purchases of its ordinary shares (within the meaning of Section 163 of the UK Companies Act 1985) on such terms as the
Directors may from time to time determine provided that (a) it may not purchase more than 29,088,561 ordinary shares of
US$0.01 each; (b) it may not pay more than 5% (exclusive of expenses) over the average of the middle market price of the
ordinary shares for the five business days immediately before the day on which the Company agrees to buy the shares; (c)
this authority will expire upon the earlier of (i) the conclusion of the Annual General Meeting of the Company to be held in
2017 and (ii) fifteen months from the date upon which this resolution is passed, unless such authority is renewed prior to that
time (except in relation to the purchase of ordinary shares the contract for which was concluded before the expiry of such
authority and which might be executed wholly or partly after such expiry)
One of the options which the Directors feel is appropriate to have available to them would be to use retained income to
purchase shares in the open market when conditions are deemed appropriate. Under Article 69(B) this resolution will allow
up to 10% of the current issued capital of the Company, at the time of setting this agenda, to be repurchased in this way.
10.
To grant standing authority such that the Directors be authorised generally and without conditions to (a) allot up to
96,961,872 ordinary shares of US$0.01 each commencing on the day following the Company’s Annual General Meeting
t
convened on 17 June 2016 and ending on the earlier of the date of the Company’s Annual General Meeting to be held in
2017 and (if earlier) fifteen months following the Annual General Meeting convened for 2016, unless previously renewed,
varied or revoked by the Company in General Meeting prior to that date; (b) make an offer or agreement which would or
might require ordinary shares of US$0.01 to be allotted after expiry of this authority and the Directors may allot ordinary
shares in pursuance of that offer or agreement as if this authority had not expired.
Although no such circumstances are envisaged at present, the Directors may, for example, decide that it is in the best
interests of the Company to make acquisitions of other entities or of blocks of business from other entities in return for a
consideration settled with ordinary shares of the Company. Adoption of this authority under Article 7 would allow the
expansion of share capital by the allotment of a maximum of one third of the total shares in issue at the time of setting this
agenda for the purpose of such acquisitions. Note that, at present, the Directors may only allot shares pursuant to the
share option arrangements of the Company and its subsidiaries.
As a special resolution:
11.
Subject to standing authority granted under resolution 1 0 above, to waive pre-emption rights in relation to ordinary
shares of US$0.01 issued in respect of an annual number of ordinary shares allotted not exceeding 5% of the issued
share capital as shown by the latest published audited financial statements.
The notes on pages 24 to 47 form an integral part of these financial statements
50
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
In the event that the use of the powers contained under resolution 10 are exercised, shareholders would normally be given
the opportunity to exercise pre-emption rights to purchase the shares, perhaps by way of a rights issue. However Article 26
permits the shareholders to disapply these provisions, which are contained in Articles 18-25 inclusive, and, in accordance
with best practice, approval is sought to do so for issuance of shares below a level of 5% of the capital. In the unlikely
event that the shares to be allotted exceed this level shareholders would be given the opportunity to vote on the matter
at an Extraordinary General Meeting.
By Order of the Board
Jane Davidson Nairn McAndry
Secretary
th
Date: 20 May 2016
Registered Office
PO Box 309GT, Ugland House
South Church Street, George Town
Grand Cayman Cayman Islands
BRITISH WEST INDIES
Correspondence Address
St Mary’s Court, 20 Hill Street,
Douglas, Isle of Man
IM1 1EU
BRITISH ISLES
The notes on pages 24 to 47 form an integral part of these financial statements
51
Charlemagne Capital Limited Annual Report and Consolidated Financial Statements
For the year ended 31 December 2015
NOTES:
1
A member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and, on a poll, to vote
instead of him; a proxy need not be a member of the Company. In the case of joint holders, if more than one of such
joint holder is present, only the person whose name stands first in the Register of Members in respect of the
relevant joint holding will be entitled to vote, whether in person or by proxy.
2
Forms of Proxy have been mailed with this document. Duplicate copies may be obtained by contacting Capita Asset
Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU or by request to the Company Secretary,
Charlemagne Capital Limited, St Mary’s Court, 20 Hill Street, Douglas, Isle of Man, IM1 1EU, British Isles. Completion
and return of the relevant Form of Proxy will not preclude a member from attending and voting at the Meeting if he
so wishes. In the event that a member who has lodged a Form of Proxy attends the Meeting, his form of proxy will be
deemed to have been revoked.
3
In order to be valid, the instrument appointing a proxy for ordinary shareholdings and the power of attorney or other
authority (if any) under which it is signed, or a notarially certified copy of such power of attorney or authority, should
be deposited at Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF (Freepost RSBH-UXKSLRBC, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF) not less than 48 hours before the time appointed for
holding the meeting.
4.
In the case of holders of Depository Interests representing ordinary shares in the Company, a Form of
Direction must be completed in order to instruct Capita IRG Trustees Limited, the Depository, to vote on the holder's
behalf at the meeting. To be effective, a completed and signed form of direction (and any power of attorney or
other authority under which it is signed) must be deposited at Capita Asset Services, PXS1, 34 Beckenham Road,
Beckenham, Kent, BR3 4ZF (Freepost RSBH-UXKS-LRBC, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF)
not less than 72 hours before the time appointed for holding the meeting.
5.
Depository Interest Holders may instruct the Depository how to vote utilising the CREST electronic voting service. To
instruct the Depository how to vote or amend an instruction to vote via the CREST system, the CREST message must
be received by the issuer’s agent RA10 by 12 noon on 1 4 J u n e 2 0 1 6 . For this purpose, the time of receipt
will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications
Host) from which the issuer’s agent is able to retrieve the message. After this time any change of voting
instructions through CREST should be communicated to issuer’s agent by other means. CREST Personal Members or
other CREST sponsored members, and those CREST Members who have appointed voting service provider(s) should
contact their CREST sponsor or voting service provider(s) for assistance. For further information on CREST procedures,
limitations and system timings please refer to the CREST Manual.
6.
It is important that the correct voting form is used and if you are in any doubt you should contact Capita Asset Services,
The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
7.
Depository Interest Holders wanting to attend the Annual General Meeting should contact the Depository, Capita
IRG Trustees Limited, at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or email t o
[email protected] by no later than 12:00 noon on 14 June 2016.
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