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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Acmh Ltd | LSE:ACMH | London | Ordinary Share | KYG006011079 | ORD EUR0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number : 6261E Absolute Capital Mgmt Holdings Ltd 30 September 2008 Absolute Capital Management Holdings ("ACMH" or "the Group") Interim Results for the period ended 30 June 2008 CHAIRMAN'S STATEMENT Introduction In the first six months of 2008, ACMH focussed on generating liquidity in its equity funds' portfolios and transitioning their trading strategies to European large- and mid-cap equities. In June 2008, the Group successfully de-merged its emerging market credit businesses operating under the Argo brand through a one for one share distribution. For the six months to 30 June 2008, the Group generated revenues of EUR6 million (2007: EUR62 million) and operating (loss)/profit of (EUR1.2 million) (2007: EUR35 million). Total assets under management ('AUM') as at 30 June 2008 were US$884 million (2007: US$3.25bn), reflecting in part the de-merger of the Argo funds. The Board is not recommending a dividend for the period ending 30 June 2008 (2007: EUR0.447 per share). Operating review With the de-merger of the Argo businesses, ACMH will refocus on its core strengths of managing European long-short equity funds through, research-driven trading strategies. We have also reduced the scale of the operating structure to correspond with the reduced size of the ongoing business. In January, we closed ACM Spain's office in Palma de Majorca, Spain and consolidated our operations to our offices in Zug, Switzerland and Grand Cayman, Cayman Islands. The Group now employs 23 staff, down from 81 at the commencement of the period under review. Under the restructuring plan approved by fund investors in October 2007, four of the Group's eight equity funds created side pocket portfolios to hold their illiquid assets and implemented a lock-in period on their more liquid A class portfolios through November 2008. Since then the Group has completed a comprehensive top-down analysis of the assets in the side pocket portfolios, the results of the analysis which were presented to the Investor Committee and during the first half of the year. Since then, the Group disposed of a number of positions in the funds' side pocket portfolios, though this process has not progressed as quickly as hoped for due to poor and deteriorating market conditions. Due to a high volume of redemption requests in the Absolute Activist Value Fund, the directors of the fund took the decision to close the A class portfolio effective 31 October 2008. The Absolute India Fund was closed in February 2008. In August 2008 the company was served with a lawsuit by the Cascade Fund, LLLP an investor in certain of the Company's equity funds. The lawsuit, filed in Colorado USA, relates primarily to the company's management of its equity funds and their investment strategies under former chief investment officer Florian Homm. Whilst intending to defend its interests against the Cascade's claim, the Company is reviewing broader recovery strategies for fund investors concerning such matters. As previously announced, ACMH has instructed Berwin Leighton Paisner LLP and PricewaterhouseCoopers to carry out a review of its funds' investment strategies under the management of Florian Homm, focusing in particular on the funds' illiquid investments. This review is expected to be completed shortly. In June 2008, the Group appointed Jonathan Treacher as Non-Executive Chairman, and Glenn Kennedy as Chief Executive Officer. We have also appointed two new investment professionals in the first half of the year including the creation of a new position, Head of Portfolio Advisory, to oversee the portfolio management, trading and risk management activities. Outlook While the performance of certain of our funds' A class portfolios in the first six months of the year has been encouraging, looking ahead, the Group expects to have substantial redemptions from its funds at the end of their lock-up period and will continue to monitor its funds' viability and the Group's fund product offering. The Group is also working toward launching new fund structures to accommodate its refocused large cap trading strategies, and to hold, market and dispose of its funds' remaining illiquid assets after the end of the restructuring period in November 2008. Enquiries: Absolute Capital Management Tel: Holdings Limited +41 41 560 9660 Jonathan Treacher Glenn Kennedy Panmure Gordon Tel: +44 (0)20 7459 3600 Dominic Morley Callum Stewart Cardew Group Tel: +44 (0)20 7930 0777 Tim Robertson Shan Shan Willenbrock David Roach CONSOLIDATED INCOME STATEMENT (unaudited) for the period ended 30 June 2008 Note Half year to 30.6.08 Half year to 30.6.07 Twelve months to 31.12.07 Continuing operations EUR'000 EUR'000 EUR'000 Subscription fees - 621 1,164 Management fees 4,981 20,633 39,408 Incentive fees 195 38,494 44,927 Redemption fees 835 835 - Other income - 1,096 2,150 Revenue 6,012 61,680 87,649 Legal and professional (7) (355) (1,870) expenses Management and incentive fees (1,656) (8,120) (15,081) payable Operational expenses (1,076) (1,769) (4,730) Employee costs (2,210) (15,732) (24,043) Foreign exchange loss (250) (98) (155) Depreciation (31) (68) (146) Excess of acquirer's interest - 40 40 in net value of identifiable net assets Bad debts written off - - (911) Operating profit excluding 782 35,578 40,753 exceptional items AIM listing costs - (388) - Exceptional costs (1,689) - (74,105) Operating loss/(profit) (907) 35,240 (33,352) Financial revenue 54 473 772 Unrealised (loss)/gain on (372) 287 (334) investments (Loss)/profit on continuing (1,224) 36,000 (32,914) operations before taxation Tax on continuing operations 5 - (3,643) (3,539) (Loss)/profit on continuing (1,224) 32,357 (36,453) operations after taxation Discontinued Operations Profit after taxation from 8 4,256 discontinued operations Profit after taxation for the 3,032 period Earnings per share From continuing and discontinued operations (Loss)/Earnings per share 6 EUR 0.04 EUR 0.50 (EUR 0.54) (basic) (Loss)/Earnings per share 6 EUR 0.04 EUR 0.47 (EUR 0.51) (diluted) From continuing operations Earnings per share (basic) 6 (EUR 0.02) Earnings per share (diluted) 6 (EUR 0.02) CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) as at 30 June 2008 Note As at As at As at 31.12.2007 30.06. 30.06. 2008 2007 EUR'000 EUR'000 EUR'000 Assets Non-current assets Intangible assets - 89,341 20,481 Property, plant and machinery 142 482 346 142 89,823 20,827 Current assets Investment - Trade and other receivables 5,269 18,498 7,238 Cash and cash equivalents 3,321 27,802 20,984 8,590 46,300 28,222 Financial assets Investments at fair value 2,725 3,688 3,061 through profit or loss Loans and advances receivable 2 222 121 2,727 50,210 31,404 Total assets 11,458 140,033 52,231 Equity and liabilities Equity Issued share capital 9 769 688 692 Shares to be issued - 9,250 1,901 Share premium 82,015 96,959 99,955 Revenue reserve (56,801) 32,373 (45,497) Merger reserve (22,951) (22,951) (22,951) Other reserves 989 344 581 FX reserve (1) - (807) 4,020 116,664 33,874 Current liabilities Trade and other payables 5,151 19,341 15,876 Taxation payable 2,287 4,028 2,481 Total current liabilities 7,438 23,369 18,357 Total equity and liabilities 11,458 140,033 52,231 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY for the period ended 30 June 2008 (unaudited) Share Shares to be issued Share premium Revenue reserve Other Merger Foreign currency Total Capit reserv reserves translation reserve al es EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR' EUR' EUR'000 000 000 As at 31 December 2007 695 1,901 99,955 (55,577) 581 (22,951) (807) 23,794 Profit for the year - - - 3,032 - - - 3,032 Issue of 4,184,626 shares to 42 - 1,647 - - - - 1,689 vendors of Argo (EUR0.01 each at EUR0.404) Issue of 3,500,000 shares to 35 (1,901) 1,866 - - - - - vendors of TCA (EUR0.01 each at EUR0.802) Discontinued operations - (21,453) (4,256) - - - (25,709) Share-based payments - - - - 409 - - 409 Cumulative exchange - - - - - - 806 806 differences translation of foreign operations As at 30 June 2008 769 0 82,015 (56,801) 989 (22,951) (1) 4,020 Other reserves' includes reserves in respect of share-based payments made to employees of the Group and others providing similar services. The revenue reserve represents the cumulative income statement result for ACMH. The movement in the share premium account represents the carrying value of the Argo businesses assets distributed as part of the demerger. The movement on the revenue reserve represents the income statement result attributed to the Argo businesses for the five and half months to 13 June 2008, demerger date. CONDENSED CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 June 2008 (unaudited) Half year to Half year to Year to 30.06.2008 30.06.2007 31.12.2007 EUR'000 EUR'000 EUR'000 Net cash inflows from operating (4,452) 31,161 43,405 activities Cash flows from investing activities Interest income received 165 473 772 Purchase of subsidiaries - (11,490) (8,362) Purchase of property, plant and 144 - (9,593) equipment Disposal of property, plant and - - 146 equipments Repayment of loans - 3,085 - Financial investments (6,190) (124) (182) Taxation paid - (118) - Net cash inflow / (outflow) (5,881) (8,173) (17,219) from investing activities Cash flows from financing activities Issue of share capital - 1,515 1,515 Dividends paid - (29,907) (38,967) Net cash (outflow) from - (28,392) (37,452) financing activities Net (decrease)/increase in cash (10,333) (5,404) (11,266) and cash equivalents Cash and cash equivalents as 20,984 33,206 33,206 beginning of year Net cash outflow on (6,909) discontinued operations Exchange (losses)/gains on cash (421) (956) and cash equivalents Cash and cash equivalents as at 3,321 27,802 20,984 end of year NOTES TO THE FINANCIAL STATEMENTS for the period ended 30 June 2008 1. CORPORATE INFORMATION The company is incorporated as an exempt company with limited liability in the Cayman Islands. The company is domiciled in the Cayman Islands. Its principal activity is that of provision of investment management and advisory services to mutual funds. The functional currency of Group undertakings is Euros. The Group has 23 employees (2007: 80 employees). Group subsidiaries Country of incorporation Absolute Capital Management (UK) Limited United Kingdom Absolute Capital Management Holding Switzerland AG Switzerland Absolute Capital Management (Spain) S.L. Spain ACM Equity Limited Cayman Islands ACM Advisory AG Switzerland Absolute General Partner Limited Cayman Islands TCA Group Cayman Islands 2. BASIS OF PREPARATION The condensed financial statements have been prepared in accordance with the International Accounting Standards (IAS 34), Interim Financial Reporting. The interim results for the six-month periods ended 30 June 2008 and 30 June 2007 are unaudited. Results for the year ended 31 December 2007 are audited. The accounting policies are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2007. Subsidiaries are consolidated from the date that control was transferred into the Group and cease to be consolidated from the date that control is transferred from the Group. It is possible the Group may not have adequate resources to defend and/or settle any successful claims that may arise from the former management's fund investment strategies. The financial statements have been prepared on the assumption that the Group continues to be a going concern. 3. SEGMENTAL ANALYSIS The Group operates as a single asset management business, and the directors do not consider the different sources of revenue and geographic regions within the business as separate business segments within the meaning of IAS 14 Segment Reporting. 4. SHARE-BASED PAYMENTS There were 2.5 million options to acquire ordinary shares 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 EUR 0.3m (2006: EUR 0.3m) has been recognised in the six-month period ending 30 June 2008. 5. TAXATION The Company is registered as an exempt company in the Cayman Islands and consequently no tax is payable in the Cayman Islands. Taxation of up to 6.4% will be levied on Company profits of the branch office in the Swiss Canton of Zug. Taxation rates applicable to the Singaporean, Cypriot, Spanish and UK subsidiaries range from 0% to 30%. 6. (LOSS)/EARNINGS PER SHARE (Loss)/earnings per share is calculated by dividing the net (loss)/profit for the year by the weighted average number of shares outstanding during the year. Number of shares Number of shares Number of shares 30.06.2008 30.06.2007 31.12.2007 '000 '000 '000 Weighted average of ordinary 76,932 64,940 67,102 shares for basic earnings per share Effect of dilution: share - 4,120 1,020 options Effect of dilution: shares to - - 3,500 be issued Weighted average number of 76,932 96,060 71,662 ordinary shares for diluted earnings per share 7. BUSINESS COMBINATIONS Discontinued Operations - Argo Businesses As a result of a shareholder vote at an EGM on 13 June 2008, the Group effected the distribution of the Argo businesses to shareholders, to be managed and owned as an independent entity under Argo Group Limited, a new entity formed during the period. The assets that were distributed to shareholders represented 100% of the share capital of the following entities, known collectively as "the Argo Businesses": Argo Capital Management (Asia) Pte. Limited Argo Capital Management Limited Argo Capital Management (Cyprus) Limited Argo Capital Management Property Limited North Asset Management SARL (Luxembourg) North Asset Management SARL (Romania) Argo Group Limited Argo Investor Services Limited At the date of this report and in the opinion of the Directors, the carrying value of the Argo businesses assets distributed are detailed below: Demerger of Argo Group Total EUR'000 Carrying value of net assets discontinued At 13.6.2008 Current assets Cash and cash equivalents 6,909 Investments 6,190 Trade and other receivables 7,027 Non-current assets Property, plant and machinery 234 Intangible assets 2,515 Loans and advances receivable 258 Current liabilities Trade and other payables 4,320 Taxation payable 250 Net assets 18,564 Intangible assets 7,145 Carrying Value 25,709 Distribution 25,709 25,709 Net cash outflow on disposal Consideration received in cash and cash equivalents 0 Less: cash and cash equivalent balanced disposed of 6,909 6,909 8. ANALYSIS OF PROFIT FROM DISCONTINUED OPERATIONS The Combined results of the discontinued operations (the Argo businesses) included the income statement set out below. Period ended 13.06.08 EUR*000 Management fees 8,504 Other income 121 Revenue 10,868 Legal and professional expenses (102) Management and incentive fees payable (79) Operational expenses (1,003) Employee costs (5,530) Foreign exchange gain/ (loss) 41 Depreciation (30) Operating profit excluding exceptional items 4,166 Operating profit 4,166 Financial revenue 111 Profit on ordinary activities before taxation 4,277 Taxation (21) Profit for the period after taxation attributable to 4,256 members of the company 9. SHARE CAPITAL 30.06.2008 30.06.2007 31.12.2007 Authorised Ordinary shares of EUR0.01 each 500,000,000 500,000,0000 500,000,000 Issued and fully paid Opening balance 69,246,994 54,125,000 54,125,000 Issued during the period 7,684,626 14,737,500 15,121,994 Closing ordinary shares of 76,931,620 68,625,000 69,246,994 EUR0.01 each During the period, the company issued 7,684,626 fully paid ordinary shares of EUR 0.01 each. 10. DIVIDEND The Directors have not proposed a dividend for the period. 11. POSSIBLE AND ACTUAL CLAIMS RELATING TO FORMER MANAGEMENT'S FUND INVESTMENT STRATEGIES In November 2007, Berwin Leighton Paisner ("BLP") was instructed by the Company to undertake a review of the activity relating to illiquid investments by funds managed by ACMH during the period when investment strategy was under the control of Florian Homm (the former chief investment officer of ACMH). BLP have instructed PricewaterhouseCoopers ("PwC") to assist them by carrying out a forensic investigation. As at the date of this report, BLP's investigation is not yet complete. Dependent on the conclusions of such reviews and the resultant reports, it is possible that adversely affected parties may consider and/or commence litigation against the Company, or that the Company may commence litigation against third parties. It is not possible to quantify the possible claims which may arise against the Company and these financial statements have been prepared on the assumption that no such claims other than those described below will arise. On 3 July 2008 the Company announced that it had received reports that a lawsuit naming it, its subsidiary Absolute General Partner Limited and certain former executives had been filed in the United States District Court for the District of Colorado by the Cascade Fund, LLLP on behalf of itself and other similarly situated persons. The Company accepted service of the lawsuit on 13 August 2008. The Cascade Fund, LLLP is an investor in the Absolute Return Europe Fund Limited and the Absolute East West Fund Limited. The lawsuit alleges that the Company's equity funds' offering memoranda contained misrepresentations concerning their investment restrictions, investment objectives and policies, that the Company's equity funds' net asset values were misrepresented, and that the Company's former Chief Investment Officer Florian Homm was party to a fraudulent scheme involving the equity funds' purchase of penny stocks promoted by Todd Ficeto and Hunter World Markets, Inc. in which Homm held a secret 50% ownership interest, among other allegations. The Cascade Fund, LLLP claims compensatory damages of an unspecified amount on its own behalf and on behalf of other members of the class for all damages sustained as a result of the allegations together with costs, from the Company. No provision has been made for this claim as the Company. Whilst intending to defend its interests opposite the Cascade's claim, the Company is reviewing broader recovery strategies for fund investors concerning such matters. 12. GOING CONCERN In the event that significant legal claims against the Company arise as result of the matters referred to in Note 11 above or related matters, the Company may not have adequate resources to defend these claims or settle any successful claims which may arise. In such circumstances, the company would cease to be a going concern. Consistent with the assumptions in Note 11 that no further claims will arise, the financial statements have been prepared on the assumption that the company continues to be a going concern. This information is provided by RNS The company news service from the London Stock Exchange END IR VKLFLVKBLBBF
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