RNS Number:8058A
Absolute Capital Mgmt Holdings Ltd
25 July 2007
Absolute Capital Management Holdings Limited
("ACMH" or the "Group")
Interim Results for the period ended 30 June 2007
ACMH, the fund management company focused on delivering investment returns
through the management of absolute return equity and debt funds, today announces
its interim results for the period ended 30 June 2007.
HIGHLIGHTS
Financial
*Assets under management including acquisitions now $3.25bn, up 165% since
30 June 2006, and 110% since 1 January 2007
*Management and performance fees up by 139% and 148%, respectively
(compared to 6 months to 30 June 2006)
*Industry leading operating profit margin of 58% (before share-based
payments)
*Revenue up 149% to Euro61.7 million (2006: Euro24.8 million)
*Pre-tax profit up 215% to Euro36.0 million (2006: Euro11.4 million)
*Substantial progress in building a market leading portfolio of absolute
return funds: ten of our 12 funds are now in excess of $100 million
*Basic EPS* up 117% to Euro0.50 (compared to 6 months to 30 June 2006)
*Proposed interim dividend of Euro0.133
* Excluding non-cash items
Operational
*Successful integration of Argo Capital Management, acquired in January
2007, adding significant product diversification and revenue from debt/
finance opportunities in emerging markets
*Creation of a new division, Absolute Capital Management Property Limited
("ACMPL") in order to develop a long/short equity presence in the global
real estate market, through managing the AIM listed North Real Estate
Opportunities Fund
*Development of in-house client services team in Europe and North America
to distribute the growing range of absolute return funds
*To manage the increased size and continued growth of the business, we
have appointed a Chief Operating Officer and separated the role of Chairman
and Chief Executive
*Strong investment performance during first half of 2007: event-driven and
long/short funds averaged in excess of 18% annualised net return in H1 2007;
the Argo emerging market debt, the Argo funds averaged 14% annualised net
return in H1 2007
*Three recent award nominations: AIM Company of the year 2007 (AIM);
Alternative Investment News Leader of the Year (Alternative Investment
News); and again nominated as HFR's European Hedge Fund Group of the Year
*Significant institutional share placing to leading institutional
investors, increasing the free float to over 40%
Assets Under Management 1 July 2007, $m 1 January 2007, $m 30 June 2006, $m
EQUITY
Absolute Return
Europe 490 478 447
Absolute European
Catalyst 273 185 218
Absolute Germany 381 218 199
Absolute East West 222 138 94
Absolute Octane 342 288 215
Absolute Large Cap 137 105 53
Absolute Activist
Value 241 42 July 2006
Absolute India 18 19 July 2006
------------ ------------- --------------
Sub total Equity 2,104 1,473 1,226
------------ ------------- --------------
EMERGING MARKET DEBT
The Argo Fund 484 446 January 2007
Argo Global Special
Situations 455 380 ...
Argo Capital
Partners Fund 73 52 ...
------------ ------------- --------------
Sub total Debt 1,012 878
------------ ------------- --------------
REAL ESTATE
North Real Estate
Fund* 140 July 2007
------------ ------------- --------------
Total 3,256 2,351 1,226
------------ ------------- --------------
*Acquired 9 July 2007
Sean Ewing, Chairman and Chief Executive Officer, said: "We have increased
assets under management by 165% since 30 June 2006. Organic growth continues to
be strong, with demand from institutional investors for our expanding portfolio
of alternative investment products. We believe that the creation of ACMPL is
well timed to take advantage of long/short opportunities in the current global
real estate market."
"The development of an internal distribution team will support organic growth
from a growing global customer base. As we continue to execute our business
strategy we are well positioned to exploit the significant and growing demand
from global investors for consistent, low volatility absolute returns."
Enquiries:
ACMH
Sean Ewing, Jonathan Treacher, Darren Sisk T: +41 41 560 96 60
Panmure Gordon
Dominic Morley T: +44 (0)20 7614 8388
Cardew Group
Tim Robertson, Shan Shan Willenbrock, David Roach T: +44 (0)20 7930 0777
CHAIRMAN'S STATEMENT
Absolute Capital Management (AIM: ACMH), the fund management group focused on
delivering investment returns through the management of absolute return funds,
continued to make significant progress in the six month period ended June 2007,
with strong performance in all of the key indicators - management fee income,
performance fee income, assets under management and profitability, as well as
further development of the Group's strategy.
The Board is pleased to announce that the strong financial performance achieved
through 2006 has continued into 2007. For the six months ended 30 June 2007,
revenue was Euro61.7 million (2006: Euro24.8 million) and profit before tax was Euro36.0
million (2006: Euro11.4 million). On an IFRS basis, in the first half, Group
operating profit was up 155% to Euro35.6 million before non-cash related charges of
Euro0.34 million in respect of share-based payments, generating basic earnings per
share of Euro0.50, an increase of 117% on the same period last year. Diluted
earnings per share was Euro0.47, an increase of 135% on the same period last year.
We are pleased to announce an interim dividend of Euro0.133 (8.9p) per share
payable on 24 August 2007 to shareholders on the register as at close of
business on 3 August 2007.
Assets under management stood at $3.1 billion as at 1 July 2007. Since then, the
addition of the North Real Estate Fund has increased assets under management to
$3.25 billion in twelve funds across equity and emerging market-fixed income,
with ten funds being over $100m and five over $300m. The successful integration
of Argo Capital Management, acquired in January 2007 added significant product
diversification and revenue from fixed income opportunities in emerging markets.
We have announced the creation of a new division, Absolute Capital Management
Property Limited ("ACMPL") in order to develop our long/short equity presence in
the global real estate market. ACMPL acquired the management contract of the
North Real Estate Opportunities Fund (NREOF), an AIM listed property investment
and development company, which raised Euro100m at IPO in August 2006. NREOF has
substantially committed its IPO proceeds to what we believe to be attractive
property investments in Romania, Ukraine and Moldova, and is providing us with
substantial expertise and scope for growth.
In the spring of 2007 we appointed an in-house distribution team in Europe and
North America to distribute the growing range of absolute return funds, and
initial progress in broadening and deepening our client reach has been
encouraging.
The Group's development was recognised by the industry when it was awarded joint
winner of Best Hedge Fund Group at the industry's Hedge Fund Review's 2006
European Award Ceremony. In 2007, the Group was again nominated as the European
Hedge Fund Group of the Year, and as Global Leader of the Year by Alternative
Investment News, the only non-US group in this category.
Management
ACMH has grown very rapidly, with assets under management of US$3.25 billion,
operating from 11 offices worldwide and employing some 80 people. In order to
more effectively manage the increased size and continued growth of the business,
it has been decided to split the roles of Chairman and Chief Executive.
The Board is therefore pleased to announce that Jonathan Treacher, previously a
non-executive director of ACMH who has been actively assisting management over
recent months, will be appointed as Chief Executive and Sean Ewing will fulfil
the role of non-executive Chairman. This reflects Sean's desire to spend more
time with his young family after a very successful but highly time intensive 20
years in fund management. It is intended that Sean Ewing will remain as
non-executive Chairman while the Board seeks to appoint a new non-executive
Chairman. Following this, Sean Ewing will then move onto a more flexible
consultancy role for the Group.
The Board is pleased to announce that following a number of senior investment
appointments, and senior operational appointments, made over the last 12 months
(including legal counsel, fund accounting and investment staff) the newly
created position of Chief Operating Officer will be filled by Rob van Oostveen.
Rob has for the last ten years filled a number of senior roles at ABN Amro
including Head of Fund Accounting, Head of Portfolio Management, and more
recently Chief Operating Officer of Equities. He holds MBA and CFA
qualifications.
As part of the above the group is implementing an internal reorganisation to
ensure continued accountability and responsibility on the executive boards of
its operating subsidiaries in line with appropriate reporting and governance of
an ever larger and growing group. In this regard Florian Homm and Andreas Rialas
will continue to have overall responsibility in their capacities as Co-Chief
Investment Officers for the Absolute Capital and Argo divisions of the group's
business, respectively. In addition, Florian Homm has been appointed a director
of Absolute Capital Management Equity Limited, a wholly owned subsidiary of ACMH
recently formed to assume the management of the Absolute-branded long/short
equity funds from ACMH, while Andreas Rialas will serve as a director of, and
will have overall responsibility for ACMPL. Following the implementation of the
internal reorganisation, ACMH itself will assume the role of a holding company
for the group's equity, debt and real estate fund management businesses.
Outlook
We are broadly positive as regards the outlook for the rest of year. Our assets
under management have increased by 165% since June 2007. Our organic growth is
materially ahead of both our peer group and the market in general. Assuming that
fund performance remains in line with target returns, the Board believe that the
business is well positioned and structured to make further significant progress.
Sean Ewing
Chairman and Chief Executive Officer
25 July 2007
Fund Performance to 30 June 2007
Performance
--------------------------------------------------------------------------------------
Size June Year to Date Since Inception Annualised Open / Closed Positive months %
--------------------------------------------------------------------------------------
Strategy Launch date $ m % % % %
EQUITY
Absolute
Return Europe Mar-02 490 1.20 5.33 118.81 15.81 Open 97%
European
Catalyst Fund Oct-03 273 2.31 9.29 101.43 20.53 Open 91%
Absolute
Germany Fund Jan-04 381 0.82 13.79 98.88 21.71 Open 95%
Absolute East
West Fund Jul-05 222 2.05 10.38 53.60 23.93 Open 96%
Absolute
Octane Fund Jul-05 342 1.44 7.26 91.97 38.55 Closed 96%
Absolute
Large Feb-06 137 -0.37 6.35 28.39 19.29 Open 88%
Cap Fund
Absolute
Activist Fund Jul-05 241 0.53 8.94 16.46 29.37 Open 100%
Absolute
India Feb-06 18 0.46 7.90 29.37 16.46 Open 100%
Fund
DEBT
Argo Fund Mar-02 484 1.76 6.74 192.51 17.77 Open 96%
Argo Global
Special
Situations
Fund Oct-03 455 2.28 8.15 48.86 15.64 Open 91%
Argo Capital
Partners Fund Aug-06 73
REAL ESTATE
North Real
Estate
Opportunities
fund acquired
July-07 140
Absolute Capital Management Holdings Limited
CONDENSED CONSOLIDATED STATEMENT OF INCOME
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
Note Euro Euro Euro
Subscription fees 621,192 262,935 964,059
Management fees 20,633,233 8,633,926 19,728,911
Incentive fees 38,494,020 15,546,641 29,715,218
Redemption fees 834,992 313,828 589,963
Other income 1,096,379 22,606 1,483,259
-------- -------- --------
Revenue 61,679,816 24,779,936 52,481,410
Legal and professional
expenses (355,490) (204,340) (524,533)
Management and incentive
fees payable (8,119,692) (5,674,418) (9,956,388)
Operational expenses (1,768,546) (748,957) (2,322,429)
Employee costs (15,732,441) (4,145,261) (9,554,765)
Foreign exchange gain /
(loss) (97,586) (19,417) (80,954)
Excess of acquirer's
interest in net value of
identifiable net assets 39,588 - -
Depreciation (67,948) (12,909) (47,645)
-------- -------- --------
Operating profit
excluding
share-based payments and 35,577,701 13,974,634 29,994,696
AIM listing costs
Share-based payments 2 (338,102) (2,114,940) (2,703,584)
AIM listing costs - (565,413) (566,204)
-------- -------- --------
Operating profit 35,239,599 11,294,281 26,724,908
Financial revenue 473,439 123,943 436,856
Unrealised gain on
investments 287,238 - 400,208
-------- -------- --------
Profit on ordinary
activities before 36,000,276 11,418,224 27,561,972
taxation
Taxation 3 (3,643,120) (35,207) (502,756)
-------- -------- --------
Profit for the period
after
taxation attributable to 32,357,156 11,383,017 27,059,216
members of the company ======== ======== ========
Earnings per share 4 Euro 0.50 Euro 0.23 Euro 0.52
(basic) ======== ======== ========
Earnings per share
(diluted) 4 Euro 0.47 Euro 0.20 Euro 0.46
======== ======== ========
Absolute Capital Management Holdings Limited
CONDENSED CONSOLIDATED BALANCE SHEET
30 June 30 June 31 December
2007 2006 2006
Note Euro Euro Euro
Assets
Non current assets
Intangible
assets 5 89,340,957 15,721,917 14,913,094
Property,
plant and
machinery 482,105 269,246 406,662
-------- -------- --------
89,823,062 15,991,163 15,319,756
Current assets
Trade and
other
receivables 18,498,474 4,107,952 6,973,633
Cash and cash
equivalents 27,801,557 16,932,139 33,205,949
-------- -------- --------
46,300,031 21,040,091 40,179,582
Financial assets
Investments at
fair value
through profit
and loss 3,688,245 4,018,373 3,401,008
Loans and
advances
receivable 221,981 13,528 71,854
-------- -------- --------
3,910,226 4,031,901 3,472,862
-------- -------- --------
Total assets 140,033,319 41,063,155 58,972,200
======== ======== ========
Equity and liabilities
Equity
Issued share
capital 6 688,625 535,625 541,250
Shares to be
issued 9,250,000 10,058,823 9,250,000
Share premium 96,958,568 29,394,051 30,287,146
Revenue reserve 32,372,979 14,247,068 29,923,267
Other reserves 2 344,837 1,604,057 1,428,982
Merger reserve (22,950,745) (22,950,745) (22,950,745)
-------- -------- --------
116,664,264 32,888,879 48,479,900
-------- -------- --------
Current liabilities
Trade and
other payables 19,341,359 8,100,219 9,989,949
Taxation
payable 4,027,696 74,057 502,351
-------- -------- --------
Total current
liabilities 23,369,055 8,174,276 10,492,300
-------- -------- --------
-------- -------- --------
Total equity
and
liabilities 140,033,319 41,063,155 58,972,200
======== ======== ========
Absolute Capital Management Holdings Limited
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Shares to Share Revenue Other Merger Total
Capital be Issued Premium Reserve Reserves Reserve
Euro Euro Euro Euro Euro Euro Euro
As at 31
December
2006 541,250 9,250,000 30,287,146 29,923,267 1,428,982 (22,950,745) 48,479,900
Profit for
the period - - - 32,357,156 - - 32,357,156
Distribution
on 5 April
2007 (Euro0.447
per share) - - - (29,907,444) - - (29,907,444)
Issue of
12,300,000
shares
(Euro0.01
each at
Euro5.194) 123,000 - 63,758,550 - - - 63,881,550
Share-based
payments - - - - 338,102 - 338,102
Exercise of
share
options 24,375 - 2,912,872 - (1,422,247) - 1,515,000
-------- -------- -------- -------- -------- -------- --------
As at 30
June 2007 688,625 9,250,000 96,958,568 32,372,979 344,837 (22,950,745) 116,664,264
======== ======== ======== ======== ======== ======== ========
Absolute Capital Management Holdings Limited
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
Note Euro Euro Euro
Net cash inflow from
operating activities 31,161,056 18,091,414 33,687,834
Cash flows from investing activities
Interest income received 473,439 123,943 436,856
Purchase of subsidiaries 5 (11,489,798) (39,789) (39,789)
Purchase of property, plant
and equipment (124,088) (235,602) (407,754)
Cash acquired on purchase
of subsidiaries 5 3,085,218 - -
Repayment of loans - 173,677 115,351
Financial investments - (3,000,200) (3,000,200)
Flotation costs - (565,413) (566,204)
Taxation paid (117,775) - (39,255)
-------- -------- --------
Net cash inflow / (outflow)
from investing activities (8,173,004) (3,543,384) (3,500,995)
-------- -------- --------
Cash flows from financing activities
Issue of share capital 6 1,515,000 255,000 390,000
Dividends paid 7 (29,907,444) (897,500) (897,500)
Option exercise proceeds
received - - 500,000
-------- -------- --------
Net cash outflow from
financing (28,392,444) (642,500) (7,500)
-------- -------- --------
-------- -------- --------
Net cash inflow / (outflow) (5,404,392) 13,905,530 30,179,339
======== ======== ========
ANALYSIS OF CHANGES IN CASH DURING THE PERIOD
Euro
Cash and cash equivalents
as at 31 December 2006 33,205,949
Net cash inflow during the period (5,404,392)
--------
Cash and cash equivalents
as at 30 June 2007 27,801,557
========
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2007
1. BASIS OF PREPARATION
The condensed financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting.
The interim results for the six-month periods ended 30 June 2007 and 30 June
2006 are unaudited. Results for the year ended 31 December 2006 are audited.
The accounting policies adopted are consistent with those followed in the
preparation of the group's annual financial statements for the year ended 31
December 2006.
Subsidiaries are consolidated from the date control is transferred to the group
and cease to be consolidated from the date control is transferred from the
group.
2. SHARE-BASED PAYMENTS
2.06 million options to acquire ordinary shares were outstanding at the end of
the period. The fair value of options granted is recognised as an expense with a
corresponding increase in equity. The fair value is calculated at grant date
using an options pricing model with this cost then being recognised over the
option period. A non-cash charge of Euro0.34m has been recognised in the six-month
period ending 30 June 2007.
3. TAXATION
Taxation has been calculated using the applicable corporation tax rates of each
group company.
4. EARNINGS PER SHARE
The calculations of earnings per share are based on the following numbers of
ordinary shares (in millions):
30 June 30 June 31 Dec
2007 2006 2006
Weighted average for basic earnings per share 64.94 50.29 52.14
Effect of potentially dilutive shares 4.12 7.40 6.07
------- ------- -------
Weighted average for diluted earnings per share 69.06 57.69 58.21
======= ======= =======
5. ACQUISITION OF ARGO CAPITAL MANAGEMENT
The group acquired 100% of the issued share capital of each of Argo Capital
Management Limited, Argonaftis Capital Management (Overseas) Limited and Argo
Capital Management (Asia) Pte. Limited (collectively, the "Argo Division") on 18
January 2007. The purchase consideration included the issue to the vendors of
12.3 million fully-paid ordinary shares of Euro0.01. The market value of one
ordinary share of the company immediately prior to the announcement of the
transaction was Euro5.19 and this is the amount that has been used to value the
acquisition.
At the date of this report and in the opinion of the Directors, the assets
purchased through the acquisition of the Argo Division have fair values as set
out below.
Argo Capital Argonaftis Argo Capital
Management Capital Management
Management (Asia) Pte.
(Overseas) Limited
Limited
Euro Euro Euro
Assets 9,414 29,882 8,472
Debtors 1,668,129 269,497 136,777
Cash at bank
and in hand 2,583,424 501,794 -
Creditors
within one
year (3,623,007) (467,185) (105,659)
Net assets
acquired 637,960 333,988 39,590
Goodwill 37,343,891 37,055,507 -
Excess of
acquirer's
interest in
net value of
identifiable
net assets - - (39,588)
---------- ---------- ----------
Total 37,981,851 37,389,495 2
---------- ---------- ----------
Satisfied by:
Payment in cash 5,623,096 5,261,120 2
Shares issued 31,940,775 31,940,775 -
37,563,871 37,201,895 2
Costs of
acquisition 417,980 187,600 -
---------- ---------- ----------
Total 37,981,851 37,389,495 2
---------- ---------- ----------
Where the consideration exceeds the fair value of the assets acquired, this has
been classified as an intangible asset in the group accounts. The excess of the
value of the fair assets acquired over the purchase consideration has been
recognised in full in the consolidated statement of income.
6. SHARE CAPITAL
During the period the company issued 14.74 million fully paid ordinary shares of
Euro0.01 each:
Number of
shares millions
Share options exercised at Euro0.24 1.63
Share options exercised at Euro1.00 0.50
Share options issued at Euro2.00 0.31
Issue of shares as consideration on
the acquisition of the Argo Division 12.30
--------
14.74
--------
7. DIVIDENDS
A dividend of Euro0.447 (comprising an ordinary dividend of Euro0.165 plus a special
dividend of Euro0.282) per ordinary share was declared on 12 March 2007. Qualifying
shareholders were deemed to be those on the register as at close of business on
23 March 2007. This dividend was paid on 5 April 2007.
An interim dividend of Euro0.133 (GBP 0.089) has been proposed by the directors and
will be paid to qualifying shareholders in sterling on 24 August 2007.
Qualifying shareholders will be deemed to be those on the register as at close
of business on 3 August 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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