RNS Number : 4636J
Asset Management Investment Co.PLC
03 December 2008
For immediate release 3rd December 2008
ASSET MANAGEMENT INVESTMENT COMPANY PLC
FINAL RESULTS FOR THE YEAR TO 30 SEPTEMBER 2008
Asset Management Investment Company PLC ('AMIC'), the specialist investor in the global asset management industry, announces its results
for the year to 30 September 2008.
Highlights
* Net assets �23.6 million (30 September 2007 �27.6 million)
* Gearing 9% (30 September 2007 17%)
* NAV per share 125.46p (30 September 2007 133.76p)
* Pre-tax revenue profit �1.79 million (30 September 2007 �2.08 million)
* Final dividend 4.5p net per share (2007 4.0p net per share)
Chairman's statement
In my statement which accompanied the annual report for 2007 sent to shareholders on 10 January 2008 I was able to comment on the
favourable operating environment for the asset management industry continuing through much of the second half of that year. The dislocation
in credit markets which commenced in August 2007 had at the time of my statement little effect on the companies in the AMIC portfolio and no
negative effect on valuations or on income from these investments. Since then the world has changed, and your Company's investment portfolio
has not been immune from the economic turmoil which has had no parallel since the great depression of the early 1930's.
The falling stock markets which are anticipating world recession and possibly deflation and depression inevitably have had a severe
negative impact on the asset management industry and the values attributed to asset management companies. In valuing your Company's unquoted
investments your Directors are required to take a careful and prudent approach, which includes comparison with valuations in the quoted
sector and transactions occurring in the industry. The exceptional conditions in the course of the year resulted in downward reviews of
these valuations and a year-end Net Asset Value per share of 125.46p compared with 133.76p on 30 September 2007. However, since the year-end
this trend has accelerated and the Net Asset Value per share as 28 November 2008 was 107.24p.
The revenue picture has been much better. Your Company's three principal sources of revenue are the receipts from FX Concepts, IFDC
Group and City of London Investment Group. FX Concepts and IFDC Group report in United States dollars and the fee income of City of London
is substantially received in United States dollars. The weakness of sterling against the United States dollar since the year-end is
therefore enhancing current income, and may provide some cushion against the possibility of lower revenue receipts.
Investment portfolio
Your company holds two quoted investments, City of London Investment Group plc and Integrated Asset Management plc. City of London
invests in emerging markets through the medium of international closed-end companies and funds and inevitably has suffered a reduction in
the level of funds under management as a consequence of markets. In accordance with the strategy adopted by your Company in October 2006 the
holding was reduced in the course of the year with the sale of 281,275 shares for a consideration of �0.94 million at a price per share of
335p compared to the share price of 140p as at 28 November 2008. Integrated Asset Management in March completed the acquisition of the
Altigefi hedge fund group in Paris to achieve assets under management of $2.8 million. The company's business is as a manager of funds of
hedge funds and an institutional broker, and the unfashionable sector in which it operates, the AIM listing and poor liquidity have all
contributed to an extremely depressed share price despite a strong balance sheet and a viable business.
IFDC Group S.A., a manager of funds invested in the Japanese stock market, continues to be the largest investment in the portfolio and a
major contributor to our revenue, although the extreme weakness in the Japanese market has inevitably had a negative impact on the level of
funds under management. FX Concepts Inc, an investment manager in the foreign exchange markets, has been less affected by stock markets and
has had another excellent year, with close to $15.0 billion under management and revenues which are again well ahead of the level which
ensures that AMIC will receive the maximum revenue of $1.4 million from its note. Lombardia Capital Partners, located in California, who
are managers of large cap, mid cap and small cap equity portfolios invested in the United States stock markets, have suffered a
market-related fall in funds under management to approximately $1.4 billion, but continue to maintain an excellent investment management
performance in each investment area.
Three exits from investments were completed in the course of the year. Your Company's interest in Hillview Capital Advisors, a private
wealth management company located in New York City, was sold to the management of Hillview in December 2007 for a total consideration of
$1.3 million, comprising a first payment of $0.5 million received in December 2007, a deferred payment of $0.54 million and the remainder
due in stage payments.
In February the Company announced the disposal of its investment in Principal Investment Holdings Limited for a total consideration
satisfied partly at completion and partly by a deferred payment. �2.45 million in cash (representing 80% of the value of the investment)
was received on completion of the sale in March, and the balance of the consideration, calculated by reference to the performance of the
FTSE 100 Index in 2008, is scheduled to be received on the first anniversary of completion. The current level of the FTSE Index suggests
that it is unlikely that the deferred element will be received.
For a considerable period your Board and management were working to achieve a satisfactory outcome in connection with your Company's
investment in Financial Management Advisors, a fixed income manager located in California. As previously reported a full provision was made
against the value of the investment following FMA receiving an unfavourable judgement in a significant litigation in December 2006.
Finally, your Company achieved an exit from the investment when the business was sold to First Western Bank of Colorado for a total
consideration to AMIC of $ 0.7 million.
Corporate developments
Your Board took the decision to apply the proceeds from the disposal of Principal and the shares in City of London to the reduction of
the balance of the revolving credit facility provided by Investec Bank (UK) Limited. This resulted in the balance being eliminated, and
borrowings from Investec were further reduced on the receipt of the third tranche of $4 million from FX Concepts payable on 2 July 2008,
leaving a balance of $4 million which will be repaid on 2 July 2009.
On 4 September 2008 your Company announced that it had received notification from FX Concepts, Inc. of its intention to exercise the
call option which it held in respect of the 20,014 ordinary shares of FX Concepts Inc held by AMIC at a price of $500 per share. The total
amount receivable by your Company of approximately $10.0 million was converted into sterling on 31 October 2008 using a forward contract at
a �/US$ exchange rate of 1.755 and the gross sterling equivalent of approximately �5.7 million was subsequently received. The investment
held by AMIC in the 10% promissory loan note issued by FX Concepts Inc and the significant revenue derived from the note remain unaffected
by the exercise of this call option.
Your Board consulted with major shareholders and its advisers to determine the most appropriate method for returning the proceeds of
this sale to Shareholders in accordance with the strategy approved by Shareholders in October 2006. In formulating the return of cash the
Board was mindful to ensure that all Shareholders were treated equally and that substantially all of the proceeds of the sale, after costs,
were returned to Shareholders. On 21 November 2008 a circular was sent to Shareholders detailing the arrangements for returning 27p per
share in cash, which is expected to be completed early in February 2009.
Your Company will continue the programme of buying back ordinary shares for cancellation as and when the opportunity is available.
Between 1 October 2007 and 30 September 2008 1,737,093 ordinary shares were bought back and cancelled at a cost of �2.0 million, equal to
8.4% of the ordinary share capital in issue at the start of the financial year.
Financial results
Revenue profit before tax and minority interests for the year was �1.79 million (2007: �2.08 million), a decrease of 14%. Profit after
taxation decreased by 17.1% to �1.37 million (2007: �1.65 million) and revenue return per ordinary share decreased by 11.2% to 6.96p (2007:
7.83p). Your Board is recommending payment of a final dividend of 4.5p net per share (2007: 4.0p net per share), which, together with the
interim dividend of 2.0p net per share (2007: 1.5p net per share) paid on 15 August 2008, will make a total payment of 6.5p net per share
(2007: 5.5p net per share). The final dividend will be proposed at the Annual General Meeting on 5 February 2009 for payment on 10 February
2009 to shareholders on the register at the close of business on 23 January 2009. At 30 September 2008 the gearing (being the proportion of
interest bearing debt to total assets) stood at 9% (30 September 2007: 17%).
Outlook
Throughout the world there are major economic and financial problems, which your Board believe will take a considerable time to be
resolved. The current year is likely to be a difficult one throughout the financial sector, including the asset management industry. It is
not possible to forecast when growth will return to stock markets, and until then asset management companies will have to operate with lower
levels of funds under management, revenues and earnings than in recent years. However, your Board is confident that in general the principal
investments held by AMIC are well managed businesses, well equipped to deal with the problems of these difficult times and well positioned
to take advantage of the recovery in markets which will come in due course.
Charles Wilkinson
Chairman
3 December 2008
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2008
Year ended Year
ended
30 September 2008 30
September 2007
Revenue Capital Total
Revenue Capital Total
Notes �'000 �'000 �'000 �'000
�'000 �'000
Gains/(losses) on fair value through profit or loss - (1,212) (1,212) -
2,578 2,578
Investment income 2,109 - 2,109 2,424
- 2,424
Administration expenses (287) (860) (1,147) (214)
(645) (859)
Profit/(loss) before finance costs and taxation 1,822 (2,072) (250) 2,210
1,933 4,143
Interest payable (75) (226) (301) (154)
(460) (614)
Movement on loan redemption derivative (11) (34) (45) (63)
(188) (251)
Interest receivable 54 - 54 87 -
87
Other finance charges
1,790 (2,332) (542) 2,080
1,285 3,365
Profit/(loss) on ordinary activities before taxation
Taxation (417) 229 (188) (424)
291 (133)
Profit/(loss) for the period 1,373 (2,103) (730) 1,656
1,576 3,232
Earnings per share
Return per ordinary share (basic) 3 6.96p (10.66p) (3.7p) 7.83p
7.46p 15.29p
Return per ordinary share (diluted) 3 6.96p (10.66p) (3.7p) 7.83p
7.46p 15.29p
The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The supplementary revenue and
capital columns are both
prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing
operations.
BALANCE SHEETS
for the year ended 30 September 2008
30 September 2008 30 September 2007
Group Company Group Company
Notes �'000 �'000 �'000 �'000
Non-current assets 2 2 3
3
Property, plant and equipment
Investments
Fair value through profit or loss
- Listed investments 3,765 3,765 6,964
6,964
- Unlisted investments 13,319 13,319 21,529
21,759
17,086 17,086 28,496
28,726
Current assets
Investment 5,614 5,614 -
-
Receivables 2,675 2,675 3,669
3,669
Cash and cash equivalents 1,233 1,233 1,424
1,399
Total assets 26,608 26,608 33,589
33,794
Current liabilities
Payables (400) (400) (196)
(390)
Bank loans (2,244) (2,244) (1,963)
(1,963)
Loan Redemption Derivative (295) (295) -
-
(2,939) (2,939) (2,159)
(2,353)
Total assets less current liabilities 23,669 23,669 31,430
31,441
Non-current liabilities
Bank loans - - (3,567)
(3,567)
Loan Redemption Derivative - - (251)
(251)
Net assets 23,669 23,669 27,612
27,623
Equity
Ordinary share capital 4,752 4,752 5,186
5,186
Special Reserve 4,433 4,433 6,438
6,438
Capital Redemption Reserve 8,764 8,764 8,330
8,330
Other capital reserves 3,367 3,367 5,766
5,470
Retained earnings 2,430 2,430 1,960
2,267
Own share reserve (77) (77) (68)
(68)
Total equity 23,669 23,669 27,612
27,623
Allocation of shareholders' funds
Net asset value per ordinary
25p share (basic) 4 125.46p 125.46p 133.76p
133.82p
Net asset value per ordinary
25p share (diluted) 4 125.46p 125.46p 133.76p
133.82p
STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 September 2008
Group
Total Special Reserve Capital Own shares Other Retained
earnings Total
Redemption capital
reserve reserve
reserve account
�'000 �'000 �'000 �'000 �'000 �'000
�'000
Net assets at 30 September 2007 27,612 6,438 8,330 (68) 5,766 1,960
27,612
Profit for the period (730) - - - (2,103) 1,373
(730)
Total recognised income and expenses for the period 26,882 6,438 8,330 (68) 3,663 3,333
26,882
Dissolution of subsidiary 11 - - - (296) 307 11
Cancellation of Ordinary shares (2,005) (2,005) 434 - - -
(2,005)
Ordinary dividend paid (1,210) - - - (1,210)
(1,210)
Movement in own shares (9) - - (9) - - (9)
Net assets at 30 September 2008 23,669 4,433 8,764 (77) 3,367 2,430
23,669
Company
Total Special Reserve Capital Own shares Other Retained
earnings Total
Redemption capital
reserve reserve
reserve account
�'000 �'000 �'000 �'000 �'000 �'000
�'000
Net assets at 30 September 2007 27,623 6,438 8,330 (68) 5,470 2,267
27,623
Profit for the period (730) - - - (2,103) 1,373
(730)
Total recognised income and expenses for the period 26,893 6,438 8,330 (68) 3,367 3,640
26,893
Cancellation of ordinary shares (2,005) (2,005) 434 - - -
(2,005)
Ordinary dividend paid (1,210) - - - - (1,210)
(1,210)
Movement in own shares (9) - - (9) - - (9)
Net assets at 30 September 2008 23,669 4,433 8,764 (77) 3,367 2,430
23,669
STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 September 2007
Group
Share capital Special Reserve Capital Own shares Other
Retained earnings Total
Redemption capital
reserve reserve
reserve account
�'000 �'000 �'000 �'000 �'000 �'000
�'000
Net assets at 30 September 2006 5,396 9,380 7,107 (171) 3,179 2,227
27,118
Profit for the period - - - - 1,576 1,656
3,232
Total recognised income and expenses for the period 5,396 9,380 7,107 (171) 4,755 3,883
30,350
Cancellation of Ordinary shares (210) (918) 210 - - -
(918)
Cancellation of ZDP shares - (2,024) 1,013 - 1,011 - -
Ordinary dividend paid - - - - -
(1,923) (1,923)
Movement in own shares - - - 103 - -
103
Net assets at 30 September 2007 5,186 6,438 8,330 (68) 5,766 1,960
27,612
Company
Share capital Special Reserve Capital Own shares Other
Retained earnings Total
Redemption capital
reserve reserve
reserve account
�'000 �'000 �'000 �'000 �'000 �'000
�'000
Net assets at 30 September 2006 5,396 9,380 7,107 (171) 2,995 2,544
27,251
Profit for the period - - - - 1,464 1,646
3,110
Total recognised income and expenses for the period 5,396 9,380 7,107 (171) 4,459 4,190
30,361
Cancellation of ordinary shares (210) (918) 210 - - -
(918)
Cancellation of ZDP shares - (2,024) 1,013 - 1,011 - -
Ordinary dividend paid - - - - -
(1,923) (1,923)
Movement in own shares - - - 103 - -
103
Net assets at 30 September 2007 5,186 6,438 8,330 (68) 5,470 2,267
27,623
CASH FLOW STATEMENTS
for the year ended 30 September 2008
30 September 2008 30 September 2007
Group Company Group Company
�'000 �'000 �'000 �'000
Net income from operations before tax (542) (542) 3,365 3,240
Depreciation 1 1 7 7
Decrease in receivables 994 994 4,140 4,129
Increase/(decrease) in payables 334 140 (572) (546)
Losses/(gains) on investments held at fair value through profit and loss 1,212 1,212 (2,578) (2,493)
Loss on derivative 44 44 251 251
Net payment to EBT scheme (9) (9) 103 103
Cash generated by operations 2,034 1,840 4,716 4,691
Taxation 103 103 - -
Net cash inflow from operating activities 2,137 1,943 4,716 4,691
Investing activities
Purchase of investments - - (2) (2)
Sale of investments 3,938 4,157 2,656 2,656
Net cash inflow from investing activities 3,938 4,157 2,654 2,654
Net cash inflow from opearating and investing activities 6,075 6,100 7,370 7,345
Financing activities
Repurchase of ZDP shares - - (2,024) (2,024)
Repurchase of ordinary shares (2,005) (2,005) (918) (918)
Repayment of loan (4,286) (4,286) (4,671) (4,671)
Drawdown of loan 1,000 1,000 - -
Equity dividend paid (1,210) (1,210) (1,923) (1,923)
Net cash outflow from financing (6,501) (6,501) (9,536) (9,536)
Decrease in cash (426) (401) (2,166) (2,191)
Effect of foreign exchange rate changes 235 235 467 467
Changes in cash and cash equivalents (191) (166) (1,699) (1,724)
Cash and cash equivalents at beginning of period 1,424 1,399 3,123 3,123
Cash and cash equivalents at end of period 1,233 1,233 1,424 1,399
Asset Management Investment Company PLC
Notes to the Financial Statements:
1. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), comprising
standards and interpretations issued by the International Accounting Standards Board ("IASB") as adopted by the European Union and in
accordance with Companies Act 1985. The Consolidated financial Statements are presented in pounds sterling, rounded to the nearest
thousand.
The financial statements are prepared under the historic cost convention except for measurement at fair value of investments. The
financial statements have been prepared on an ongoing basis. The principal accounting policies adopted are set out below. Where
presentational guidance set out in the Statement of Recommended Practice ("the SORP") for investment trusts issued by the Association of
Investment Companies ("the AIC") in December 2005 is consistent with the requirements of IFRS, the directors have sought to prepare the
financial statements on a basis compliant with the recommendations of the SORP.
2. Dividends
An interim dividend of 2.0p per share was paid on 15 August 2007 to the shareholders on the register on 25 July 2008. A final dividend
of 4.5p will be proposed at the next Annual General Meeting.
3. Return per share
Basic returns per ordinary share are calculated on the basis of retained net revenue after taxation of �1,373,000 (30 September 2007:
�1,656,000) divided by weighted average number of shares in issue during the period being 19,730,598 (30 September 2007: 20,642,632)
following adjustments for shares held in an Employee Benefit Trust.
4. Net asset value
The net asset value per ordinary share for the Group is based on a net asset value of �23,669,000 (30 September 2007: 27,612,000) and on
18,865,833 (30 September 2007: 20,642,632) ordinary shares in issue at year-end.
The basic net asset value per ordinary share as at 30 September 2008 is calculated on the basis of net assets attributable to equity
shareholders divided by the number of shares that would be in issue following adjustment for shares held in Employee Benefit Trust
(142,500).
5. Principal Risks
Market price risk
The Group's investment portfolio is exposed to mainly from uncertainty about future prices of investments held in its portfolio. It
represents the potential loss the group might suffer through holding market positions in the face of price movements. The Investment Manager
constantly monitors the price of listed investments held by the Group on a real-time basis. The Investment manager reports to the Board on
the unlisted investments and constantly monitors their carrying values.
Liquidity risk
Liquidity risk arises as the investment portfolio will comprise mainly unlisted securities, which represent a potential delay for
realisation. This risk is managed by the holding of cash balances to meet payments in the foreseeable future.
Foreign Currency risk
The Board has identified three principal areas where foreign currency risk could impact the Group:
Movements in exchange rates affect the value of investments
Movement in exchange rates affect the income received
Movement in exchange rates affect the value of bank borrowings and interest payments
Foreign currency risk arises as the income and capital value of the Group's investments can be affected by exchange rate movements as
some of the Group's assets and income are denominated in currencies other than sterling which is the Group's reporting currency. As at 30
September 2008, the Group had no open forward contracts. The Company may use short term forward currency contracts to manage capital
requirements.
Other market risk exposure
The Loan Redemption Derivative, being the movement in the equity-based derivative for the redemption premium payable to Investec
Bank on the date the last loan facility is settled in full, equal to 5% of the increase in market capitalisation of the LSE listed ordinary
shares of the Company from 13 September 2006, the date of funding. The Loan Redemption Derivative, valued at �295,000 (2007: �251,000) is
therefore exposed to market price changes.
Market share price risk
The Group's share price can trade at a discount to its underlying net asset value which is not a factor the Group is able to control.
Some influence over the discount may exercised by the use of the buy-back of shares in the market by the Group.
Regulatory risk
The Group operates in a regulatory environment and faces a number of regulatory risks. Any breach of regulations, such as Section 842 of
the Income and Corporation Taxes Act, the UKLA Listing Rules among other things could lead to detrimental outcomes. The Audit Committee
monitors compliance with regulations by reviewing internal control reports from both internally and externally.
6. Basis of preparation
The financial information set out above does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The statutory accounts for 2008 will be finalised on the basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies following the Annual General Meeting.
The information for the year ended 30 September 2007 has been extracted from the latest published audited accounts. The audited accounts
for the year ended 30 September 2007 have been filed with the Registrar of Companies. The report of the auditors on those accounts contained
no qualification or statement under either section 237(2) or (3) of the Companies Act 1985.
7. Responsibility Statement
We confirm to the best of our knowledge:
In accordance with Chapter 4 of the Disclosure and Transparency Rules we confirm, in respect of the Annual Report for the year ended 30
September 2008 of which this statement is an extract, that to the best of our knowledge:
the financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by
the European Union.
the Annual Report, to be published shortly includes a fair review of the information required by the Disclosure and Transparency Rules,
being an indication of important events that have occurred during the financial year and description of principal risks and
uncertainties.
*the Annual Report, to be published shortly includes details of related party transactions.
By Order of the Board
Bharat Bhagani
Company Secretary
3 December 2008
This information is provided by RNS
The company news service from the London Stock Exchange
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