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Fortis Funds (Nederland) N.V. - BNP Paribas Investment Partners

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<strong>Fortis</strong> <strong>Investment</strong>s<br />

<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V.<br />

Halfjaarverslag 2009<br />

30-06-2009


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Contents<br />

Report of the Board of Directors 2<br />

CONDENSED INTERIM FINANCIAL STATEMENTS<br />

Condensed interim balance sheet 5<br />

Condensed interim income statement 6<br />

Condensed interim statement of changes in equity 7<br />

Condensed cash flow statement 8<br />

Selected notes to the condensed interim financial statements 9<br />

Other information 13<br />

1


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Report of the Board of Directors<br />

Corporate developments<br />

On 1 April 2008, <strong>Fortis</strong> <strong>Investment</strong>s and ABN AMRO Asset Management combined to form an asset<br />

management company which initiated a number of integration activities.<br />

On 1 November 2008, ownership over ABN AMRO <strong>Investment</strong> Management <strong>Funds</strong> B.V. changed<br />

from ABN AMRO Asset Management (Netherlands) B.V. to <strong>Fortis</strong> <strong>Investment</strong> NL Holding N.V.<br />

followed by ABN AMRO <strong>Investment</strong> Management <strong>Funds</strong> B.V. acquiring the entire assets of <strong>Fortis</strong><br />

<strong>Funds</strong> (<strong>Nederland</strong>) N.V. (hereafter the amalgamated company) under universal title in which the<br />

acquired company ceased to exist. Subsequently the name ABN AMRO <strong>Investment</strong> Management<br />

<strong>Funds</strong> B.V. has been changed to <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. and the legal form changed from a<br />

private limited company to a public limited liability company.<br />

In the condensed Interim Report 2008 we reported on <strong>Fortis</strong> <strong>Investment</strong>s intended strategic<br />

partnership with Ping An. As at the end of September 2008, it was announced that this partnership<br />

would not pursue.<br />

The ownership of <strong>Fortis</strong> and therefore also indirectly of <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. changed due to<br />

the nationalization in fall 2008. The Belgian and Netherlands Governments purchased almost 100%<br />

and the Luxembourg government almost 50% of the shares in the <strong>Fortis</strong> bank entity in their country.<br />

During 2008, the range of funds managed by <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. was rationalized. The<br />

fund ranges of former ABN AMRO Asset Management and <strong>Fortis</strong> <strong>Investment</strong>s were combined to<br />

reach synergies and to create a stronger combined fund range.<br />

On 13 May 2009, <strong>BNP</strong> <strong>Paribas</strong> acquired approximately 75% of the shares in <strong>Fortis</strong> Bank S.A.,<br />

Brussels. The remaining 25% of the issued share capital is held by the Belgian State and minority<br />

shareholders. Through this transaction, <strong>BNP</strong> <strong>Paribas</strong> <strong>Investment</strong> <strong>Partners</strong> (“<strong>BNP</strong>P IP”) and <strong>Fortis</strong><br />

<strong>Investment</strong>s are now part of the same group of companies, combined to use this excellent opportunity<br />

to create synergies and form an ambitious, top-tier asset management company with an expanded<br />

global footprint. Recently, the integration discussions between <strong>Fortis</strong> <strong>Investment</strong>s and <strong>BNP</strong>P IP have<br />

started, however they are in such a preliminary stage that no decisions have yet been made on the<br />

new corporate structure of the combined entities, including <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. (also the<br />

“Company”).<br />

In the coming period, there will be an additional focus on the merger with <strong>BNP</strong> <strong>Paribas</strong>. In the second<br />

quarter of 2009, a new fund was introduced, the <strong>BNP</strong> <strong>Paribas</strong> Convertible Bond Fund 2011. It<br />

currently has EUR 85 mln assets under management.<br />

2


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Half year results in 2009<br />

The Company’s net profit decreased by EUR 11.4 million to EUR 0.2 million compared to the same<br />

period in 2008. The earned management fees dropped significantly as a result of lower assets under<br />

management; EUR 9.5 billion at 30 June 2009 compared to EUR 14.1 billion a year earlier. Although<br />

impacted by a new transfer pricing policy the fee margin improved from 19% (30 June 2008) to 22%<br />

(30 June 2009).<br />

The administrative expenses decreased by EUR 5.2 million to EUR 2.8 million due to effects coming<br />

from the new transfer pricing policy. Given the negative trend in market conditions, financial income<br />

went down from EUR 0.7 million at 30 June 2008 to EUR 0.2 million over the same period last year.<br />

Compliance<br />

The Board of Directors paid significant attention to applicable law and regulations, including the<br />

Financial Supervision Act (Wet op het financieel toezicht (Wft)) and the in 2008 published DUFAS<br />

Principles of Fund Governance. The Company’s Board assured that required amendments, where<br />

necessary, were made in a timely manner, in prospectuses and other public information, internal<br />

procedures, organisation and guidelines, amongst others.<br />

Internal control framework and risk assessment policies<br />

Although the Company is not exposed significantly to financial risks from financial instruments,<br />

market movements may impact financial results as net income from fees is closely related to the<br />

underlying net asset value of the investment funds while administrative expenses are only up to a<br />

certain extend related to movements in net asset value. Furthermore, the performance of the<br />

Company might be affected by a significant loss of clients due to weak performances of our<br />

investments funds, changes in strategy by our distribution partners, inability to deliver the products<br />

our clients need, operational errors and negative sentiment in the market in general.<br />

The Board of Directors of <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. is responsible for the daily business, but the<br />

daily operations are outsourced to other <strong>Fortis</strong> <strong>Investment</strong>s entities and external parties. The Board<br />

has designed policies, procedures and structures as well as reporting lines to monitor outsourced<br />

activities, to control operational activities and to identify risks. The internal control framework has<br />

been designed to achieve the Company goals by effectively evaluating and monitoring risks. Within<br />

this framework Compliance department ensures overall compliance with external regulations and<br />

applicable law. The department of Operational Risk Management assures the accuracy of the internal<br />

control measures and administration descriptions.<br />

.<br />

Amsterdam, 28 August 2009<br />

The Board of Directors<br />

J.L. Roebroek (Chairman)<br />

C.A.M. Haas M.C. Van Beusekom M.P. Maagdenberg<br />

3


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

CONDENSED INTERIM FINANCIAL STATEMENTS<br />

4


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Condensed interim balance sheet<br />

(x € 1,000)<br />

Notes<br />

30-Jun-09<br />

31-Dec-08<br />

ASSETS<br />

Current assets<br />

Trade and other receivables 10,874 13,645<br />

Cash and cash equivalents 47,169 44,656<br />

58,043 58,301<br />

Total assets 58,043 58,301<br />

EQUITY AND LIABILITIES<br />

EQUITY<br />

Equity attributable to the equity holders of the Company<br />

Share capital 3 227 227<br />

Share premium 3 12,102 12,102<br />

Retained earnings 2,614 14,032<br />

14,943 26,361<br />

LIABILITIES<br />

Current liabilities<br />

Trade and other payables 43,100 31,940<br />

43,100 31,940<br />

Total equity and liabilities 58,043 58,301<br />

The notes on pages 9 to 13 are an integral part of these financial statements.<br />

5


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Condensed interim income statement<br />

(x € 1,000)<br />

Half year ended 30 June<br />

Notes 2009 2008<br />

Management and other fees 47,924 94,265<br />

Distribution, sales and advisory costs (43,159) (76,041)<br />

Income from fees - net 4,765 18,224<br />

Administrative expenses (4,711) (9,339)<br />

Operating profit 54 8,885<br />

Finance income 173 723<br />

Finance income 173 723<br />

Profit before income tax 227 9,608<br />

Income tax expenses 4 (58) (2,448)<br />

Net profit for the year 169 7,160<br />

The notes on pages 9 to 13 are an integral part of these financial statements.<br />

6


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Condensed interim statement of changes in equity<br />

(x € 1,000)<br />

Attributable to equity<br />

holders of the Company<br />

Share Other Share Retained Total<br />

Capital Reserve Premium Earnings Equity<br />

Notes<br />

At 1 January 2008 454 - 11,875 16,370 28,699<br />

Profit for the period 7,160 7,160<br />

Dividend 2007 (13,925) (13,925)<br />

At 30 June 2008 454 - 11,875 9,605 21,934<br />

Profit for the period 4,427 4,427<br />

Business combination (227) - 227 -<br />

At 31 December 2008 227 - 12,102 14,032 26,361<br />

Profit for the period 169 169<br />

Dividend 2008 5 (11,587) (11,587)<br />

At 30 June 2009 227 - 12,102 2,614 14,943<br />

The notes on page 9 to 13 are is an integral part of these financial statements.<br />

7


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Condensed interim cash flow statement<br />

(x € 1,000)<br />

Half year ended<br />

Notes 2009 2008<br />

Operating activities<br />

Profit before income tax 227 7,160<br />

Adjustment to reconcile profit before income tax to net cash flows<br />

Working capital adjustments:<br />

Decrease/ increase in trade and other receivables 2,771 6,656<br />

Increase/ decrease in trade and other payables 11,102 4,998<br />

Net cash flows used in operating activities 14,100 18,814<br />

Investing activities<br />

<strong>Investment</strong>s - -<br />

Net cash flows used in investing activities - -<br />

Financing activities<br />

Equity: Proceeds from capital contribution - -<br />

Equity: Dividend paid to the equity holder of the Company (11,587) (13,925)<br />

Net cash flows used in financing activities (11,587) (13,925)<br />

Net increase /decrease in cash and cash equivalents 2,513 4,889<br />

Cash and cash equivalents at 1 January 44,656 45,467<br />

Cash and cash equivalents at 30 June 47,169 50,356<br />

The notes on pages 9 to 13 are an integral part of these financial statements.<br />

8


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Selected notes to the condensed interim financial<br />

statements<br />

1. Corporate information<br />

<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V (the Company) is a public limited liability company (“naamloze<br />

vennootschap”) domiciled in The Netherlands and is a wholly-owned subsidiary of <strong>Fortis</strong> <strong>Investment</strong><br />

NL Holding N.V., which in turn is a wholly owned subsidiary of <strong>Fortis</strong> Bank S.A.. 1<br />

The Company was incorporated in The Netherlands on 30 December 1966. The organisation chart of<br />

the group to which the Company belongs is as follows:<br />

<strong>BNP</strong> <strong>Paribas</strong><br />

<strong>Fortis</strong> Bank S.A.<br />

<strong>Fortis</strong> <strong>Investment</strong> NL Holding N.V.<br />

<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V.<br />

The Company acts, amongst others, as director for other companies and operates as management<br />

company for investment institutions and investment funds. <strong>Investment</strong> funds offered to Dutch private<br />

clients are registered with the Netherlands Authority for the Financial Markets (AFM). The Company<br />

is subject to supervision of the Netherlands Central Bank (DNB) and the AFM and holds a license<br />

under the Wft (Wet op het financieel toezicht).<br />

These financial statements of <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. have been authorised for issue by the<br />

Board of Directors on 28 August 2009.<br />

2. Summary of significant accounting policies<br />

The principal accounting policies applied in the preparation of these financial statements are set out<br />

below. These policies have been consistently applied to all the years presented, unless otherwise<br />

stated. The financial statements are presented in euro, which is also the functional currency of the<br />

group to which the Company belongs, rounded to the nearest thousand, unless otherwise stated.<br />

2.1 Basis of preparation<br />

The condensed interim financial statements for the six months ended 30 June 2009 have been<br />

prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed interim financial<br />

statements should be read in conjunction with the financial statements for the year as at 31<br />

December 2008 2 .<br />

1 Also see Report of the Board of Directors, Corporate developments<br />

2 Please see www.fortisinvestments.com<br />

9


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

2.2 Accounting policies<br />

The same principles are used for the valuation of the assets and liabilities and determination of<br />

results as in the financial statements for the year ended 31 December 2008.<br />

3. Share capital and share premium<br />

Number of shares Ordinary Share Total<br />

shares premium<br />

x € 1,000 x € 1,000 x € 1,000<br />

At 1 January 2008 500 227 828 1,055<br />

Business combination 11,274 11,274<br />

At 31 December 2008 500 227 12,102 12,329<br />

Issued and paid up capital<br />

On 1 November 2008, the Company’s articles of association were amended with regard to share<br />

capital for the conversion of NLG to EUR ex article 178b Part 5, book 2 of the Dutch Civil Code.<br />

Before this amendment NLG amounts were converted into EUR in accordance with article 178c of the<br />

Dutch Civil Code. After conversion the authorised share capital amounts to EUR 450,000 consisting<br />

of 1,000 shares with a face value of EUR 450 each.<br />

In accordance with article 178a Part 5, book2 of the Dutch Civil Code a legal reserve is recognised for<br />

the difference between the value of the issued capital by using the official European Union conversion<br />

rate and the amended value in the articles of association.<br />

At 30 June 2009, 500 shares have been issued and fully paid.<br />

Share premium<br />

Share premium increased in 2008 due to the acquisition of the amalgamated company by the<br />

Company on 1 November 2008. The amalgamated company’s issued capital has been reclassified<br />

into share premium.<br />

Distribution of profit<br />

Dividends are recognised as a liability in the period in which they are declared.<br />

4. Income tax expenses<br />

The standard and effective tax rate for the period from 1 January to 30 June 2009 was 25.5% (2008:<br />

25.5%).<br />

5. Dividends<br />

Dividend 2008 (EUR 11.587 thousand) was paid in June 2009.<br />

10


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

6. Commitments<br />

Capital commitments<br />

Capital expenditure contracted for at the balance sheet date, but not yet incurred does not exist.<br />

Service Level Agreements<br />

The Company is committed to payments under service level agreements with <strong>Fortis</strong> <strong>Investment</strong><br />

Management Netherlands N.V. <strong>Fortis</strong> <strong>Investment</strong> Management Netherlands N.V. is providing finance<br />

and management services to the Company.<br />

7. Related-party transactions<br />

The Company has related-party transactions with its direct shareholder; <strong>Fortis</strong> <strong>Investment</strong> NL Holding<br />

N.V. and other <strong>Fortis</strong> <strong>Investment</strong>s related entities.<br />

In 2008 the Company had related-party transactions with its direct shareholder; ABN AMRO Asset<br />

Management (Netherlands) B.V., other ABN AMRO Asset Management related entities and other<br />

related-parties i.e. ABN AMRO Bank N.V. including its branches, other (non - Asset Management)<br />

ABN AMRO entities, Consortium banks and its key management. The company restated the amount<br />

reported in 2008 under line item ‘Other related parties’ for an amount of EUR 25.389 thousand as a<br />

consequence of the change of ownership over <strong>Fortis</strong> <strong>Investment</strong>s.<br />

The following transactions were carried out with related parties:<br />

Distribution, sales and advisory costs, interest and re-invoicing<br />

Six months ended 30 June<br />

2009 2008<br />

Shareholder 9,124 23,783<br />

Other <strong>Fortis</strong> <strong>Investment</strong>s/ ABN AMRO Asset Management entities 6,851 8,642<br />

15,975 32,425<br />

End balances arising from related-parties transactions:<br />

Receivables from related-parties:<br />

30-Jun-09 31-Dec-08<br />

Other <strong>Fortis</strong> <strong>Investment</strong>s/ ABN AMRO Asset Management entities 1,134 3,372<br />

1,134 3,372<br />

Receivables from related-parties relate to prepayments to third party clients on behalf of other <strong>Fortis</strong><br />

<strong>Investment</strong> entities and accrued interest on bank accounts. These receivables are not secured and<br />

non-interest bearing. Prepayments on behalf of other <strong>Fortis</strong> <strong>Investment</strong>s entities normally settle within<br />

30 - 90 days. Interest receivable normally settles quarterly.<br />

11


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Payables to related-parties:<br />

30-Jun-09 31-Dec-08<br />

Shareholder 5,183 4,922<br />

Other <strong>Fortis</strong> <strong>Investment</strong>s/ ABN AMRO Asset Management entities 1,478 5,990<br />

6,661 10,912<br />

Payables to related-parties relate to distribution, sales and advisory fees and internal settlement cost.<br />

The payables bear no interest. No guarantees are given. Depending on the underlying agreement<br />

payables settle normally within 30 - 90 days.<br />

8. Declaration of liability<br />

<strong>Fortis</strong> <strong>Investment</strong> Management S.A., having its offices at Avenue de l’Astronomie 14, 1210 Brussels,<br />

Belgium, declared that it assumes as per 1 January 2008 the joint and several liabilities for the debts<br />

resulting from Legal acts of the Company, such in accordance with Section 2:403, section 1(f) of the<br />

Dutch Civil Code.<br />

The financial data of <strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. is consolidated in the semi annual accounts of<br />

<strong>Fortis</strong> Bank S.A.<br />

The earlier declaration of liability assumed by ABN AMRO Holding N.V. has been withdrawn on 19<br />

December 2008.<br />

9. Events after the balance sheet date<br />

Compliance<br />

Financial Supervision Act (Wft)<br />

The license under the Financial Supervision Act requires the Company, amongst other requirements<br />

to:<br />

• Publish its condensed interim financial statements within 9 week after period ended;<br />

• Comply with a minimum amount of shareholders equity.<br />

Shareholders’ equity<br />

The shareholders’ equity of the Company amounts to at least EUR 125,000 together with<br />

supplementary shareholders’ equity of at least 0.02% of the amount by which the value of the assets<br />

under management exceeds EUR 250,000,000, up to a required maximum of EUR 10,000,000.<br />

The Company’s shareholders’ equity at 30 June 2009 (and 2008) is sufficient.<br />

12


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

OTHER INFORMATION<br />

13


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

Organisation<br />

<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V.<br />

Registered office<br />

De Entrée 99<br />

1101 HE Amsterdam<br />

The Netherlands<br />

Directors<br />

J.L. Roebroek (Chairman)<br />

C.A.M. Haas<br />

M.C. Van Beusekom<br />

M.P. Maagdenberg<br />

14


<strong>Fortis</strong> <strong>Funds</strong> (<strong>Nederland</strong>) N.V. Condensed Interim Report 2009<br />

30 June 2009 UNAUDITED<br />

15

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