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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Acp Capital | LSE:APL | London | Ordinary Share | GB00B0T9K295 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.375 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 6409E
ACP Capital Limited
30 September 2008
ACP Capital Limited
Interim results for the six month period ending 30 June 2008
ACP Capital ("ACP Capital", "ACP" or the "Company"; AIM: APL), a Jersey-incorporated integrated finance and asset management company,
today announces its interim results for the six month period ended 30 June 2008.
Highlights:
* £38.4 million invested in ACP Mezzanine Limited ("ACPM") resulting in the Company owning 54.17% of the share capital of ACPM and
making it a subsidiary of the Company
* Revaluation of investment and loan portfolio resulting in a consolidated unrealised loss of £30.4 million (2007: unrealised gain
of £3.5 million)
* Net asset value per share at 30 June 2008: £1.03 (30 June 2007: £1.19)
* Loss per share £0.0716 (30 June 2007: earnings per share £0.0429)
* Consolidated cash and cash equivalents at the balance sheet date of £88.3 million (30 June 2007: £127.7 million)
* EGM held on 17 July 2008 at which Mr. John Chapman, Mr. James Lowenstein and Mr. Patrick McCann were elected directors and Messrs
Vago, Youngblood, Discepolo, Braxton, Larsen and Georges were removed as directors
* No further investments made since August 2008; a loan commitment of circa EUR10.7 million relating to Leasecom Group SAS remains
outstanding
* Pfaff advised that it had filed for insolvency on 11 September 2008. The directors are of the opinion that it is unlikely that the
loan and accrued interest (EUR9,061,250) will be repaid to ACP Mezzanine. GCI, in which the Company owns circa 29% is a significant investor
in Pfaff and the insolvency of Pfaff will have a negative impact on GCI. These balances are included on the balance sheet as at 30 June
2008. Please refer to note 7b for further details
* Decision to terminate Deutsche Bank AG facility made on 25 September 2008 resulting in breakage fees for the Company of circa £2.4
million (and ACP Mezzanine of EUR3.2 million) but exit from an uneconomic facility
* Intention to monetise the Company's assets over time and return cash to investors, subject to shareholders' approval
For further information:
Chris Wells / Stewart Wallace of Collins Stewart Europe Limited - +44 (0) 207 523 8350
www.acpcapital.com
John Chapman, Chairman of ACP Capital Limited, said:
Dear Shareholders:
I am new to ACP and have just become Chairman following a July shareholder vote. My brief is unambiguous: run off the group's assets
paying due attention to price, efficiently rationalise the group's structure, satisfy our obligations and return all excess capital to
shareholders. Toward these ends, we have been in preliminary negotiations with direct investee companies. No disposals of assets at this
early stage but no reason for pessimism either. We have eliminated our leverage and are net cash. We have five new directors including a
director responsible for ensuring improved internal controls and reporting are in place. We have put a lot of effort into being able to
announce a return of capital but we are not yet in a position to do so. We will do our best to get an announcement out over the next several
weeks.
Here I would like to present the Company's results for the first half of the year, when the Company was under former management, and a
synopsis of the unusual events that transpired over the last several months.
Before doing so, I would like to make two observations. First, our portfolio is simple. It comprises investments in the equity of four
quoted companies (one of which is our affiliate, ACPM) and two unquoted companies, investments in the debt of a quoted company and an
unquoted company, investments in several structured products, and cash. Second, we have an overly complex legal structure that includes a
Jersey parent, several UK and Jersey affiliated companies and a partnership, and some affiliated companies in Cyprus and Germany that are no
longer directly relevant to our business. Given the precipitous exit of the former directors and the apparent lack of documentation and
procedures, we have had to spend substantial time and money working with counsel to get a handle on this structure. This exercise is now
close to conclusion.
The May 2008 Request For Return of Capital
Dissatisfied with ACP's execution of its business model and compensation practices, ACP's largest shareholder, owning close to 30% of
ACP's shares, served a written request on the board in mid-May 2008. That request noted that ACP's shares had been trading at a significant
discount to NAV and requested an opportunity to redeem some shares for cash. This shareholder requested that the Company refrain from
participating in ACPM's offering scheduled for the following month and from making any new investments until it had received shareholder
approval for doing so. As of mid-May 2008, the Company had uninvested cash of circa £45.7 million. The request also asked for a meeting with
ACP's board to discuss the merit of these ideas.
On 2 June, the board rejected the shareholder's requests and stated that it: (i) would not meet with the shareholder, (ii) would proceed
with the large participation in ACPM's secondary offering making ACPM a de-facto subsidiary of the Company, (iii) intended to continue
making new investments, and (iv) offered to assist the shareholder to sell its shares through a "block trade".
The ACPM Secondary Offering
On 4 June 2008, ACPM proceeded with the secondary offering. The ACPM offering was ultimately coercive because, notwithstanding that the
original intention was to raise money at EUR0.80 per share, its secondary fundraising was placed at EUR0.60 per share, a 21.5% discount to
the share price at the opening of the road show on 13 May 2008. Existing shareholders were faced with the unpleasant choice of either
subscribing for new shares or not subscribing and having their ownership interest diluted.
According to ACPM's RNS announcement on 7 May 2008, the objective was to raise EUR150 million to fund a purported "pipeline" of
mezzanine debt. The "pipeline's" largest component was a transaction called "Helios CDO Limited," a large collateralised debt obligation
("CDO") structured transaction comprising sixty-one small loans to German corporate borrowers sourced by a third party broker.
ACPM issued an RNS announcement dated 4 June 2008 stating that "the management of the investment manager, including the Executive
Directors Derek Vago and Eric Youngblood, committed to a combined minimum subscription of EUR1.25 million in the placing." Despite their
commitment to subscribe in the amount of EUR1.15 million, the two Executive Directors appear to have subscribed for less than 4% of that
amount. Rather than raising EUR150 million, the offering raised only EUR80 million. Almost 60% of the funds raised, EUR47.5 million (£38.4
million), was ACP's money. Furthermore, ACP exercised its right to purchase 1 million ordinary shares of ACPM granted on 20 July 2006 at
EUR1.00 per share.
The upshot of the ACPM secondary offering was that ACP increased its investment in ACPM from about 47% to about 54% through the
investment of £38.4 million. Management did not invest in a meaningful way. Existing shareholders who did not subscribe were diluted. The
Company now owns a controlling interest in ACPM. ACPM's results now must be consolidated with the Company's under IFRS rules. And finally
the Company's cash position was reduced by the £38.4 million investment in ACPM or 20 pence per ACP share which is close to 60% of today's
share price.
The 17 June Requisition
A little over a week after the ACPM secondary offering, on 17 June 2008, our largest shareholder requisitioned an extraordinary general
meeting of shareholders to replace six directors with three new ones. The idea was that the Company would be placed in "run off." The
Company would write no new business but, rather, would undertake an orderly realisation of its assets over a period of years with no forced
sale of any asset so as to achieve the highest risk adjusted return for shareholders.
Following the approach from the largest shareholder, but before the EGM it triggered, the Company and ACPM undertook a number of
transactions, not all of which were announced:
* On 11 June 2008, ACPM entered into a commitment to subscribe for EUR15 million of loan notes issued by an SPV formed to fund
Leasecom Group SAS ("Leasecom"), a so-called "strategic platform". On 13 June 2008 ACPM advanced about 28% of that commitment;
* On 16 June 2008 ACPM made a loan to PFAFF Industrie Maschinen ("PFAFF"), a German sewing machine manufacturer, for EUR9 million
("the PFAFF loan"). This investment was introduced by GCI Management AG, another "strategic platform." A wholly-owned subsidiary of GCI
Management, was the majority shareholder in PFAFF. The PFAFF loan was secured by a pledge over that entity's shares in PFAFF.
Less than ninety days after the drawdown, PFAFF voluntarily filed for insolvency. According to a report issued by a "stakeholder
conference" on the eve of insolvency, PFAFF suffered from an unworkable capital structure including liquidity constraints, high overheads,
"over-aged" product lines, uncompetitive product pricing and other issues. It appears as of this writing that any recovery from the PFAFF
loan investment will be minimal. As a result of the integrated finance strategy pursued by former management, these consequences will be
felt at the Company both through its ownership of about 29% of GCI and about 54% of ACPM;
iii. On 18 June 2008 and 8 July 2008, the Company and ACPM, respectively, renegotiated their financing
arrangements with Deutsche Bank. The amendments to the facilities resulted in a steep increase in the minimum
return criteria to be paid to Deutsche Bank through 2012. This had the effect of increasing costs to shareholders
resulting from the change in control on 17 July 2008. As a result of the decreased valuation of the underlying
CDO and ABS portfolios and large margin calls, the facilities were largely cash collateralised;
iv. Finally, both ACP and ACPM were taking substantial steps to complete investments in the Helios CDO Limited
transaction. The plan was that the Company would have invested EUR15.0 million and ACPM EUR56.6 million (together
56% of the transaction) in several classes of notes issued by a Lehman Brothers structured CDO. The notes had
eight year maturities. The underlying portfolio comprised sixty-one loans to German Mittelstand borrowers in
amounts between circa EUR0.5 million and circa EUR3.5 million.
The July Option and Share Awards Vesting
The Company called the extraordinary general meeting for 17 July 2008. At a board meeting held on 16 July 2008, the board took steps to
ensure that options over approximately 12.8 million ACP shares granted to the former executive directors immediately vested and were
exercised should the resolutions proposed at the EGM be passed.
As a result of this action, following the EGM, the three former executive directors owned or controlled a total of approximately 27.4
million Company shares or approximately 13.2% of the Company's share capital. It appears that this ownership or control was achieved through
a cash investment of approximately £7.5 million. Furthermore, the massive granting of these options will further negatively affect the
Company's income statement for the year ending December 2008.
The Extraordinary General Meeting
On 17 July 2008 about 53% of the Company's shares outstanding and about 64% of those shares voting at the meeting voted to remove all of
the Company's directors save for those based in Jersey. So, as of 17 July 2008 the Company's board comprised five directors - James
Lowenstein, Patrick McCann and myself as well as the two incumbent Jersey directors. Between the time our largest shareholder asked the
Company to cease making new investments and the EGM removing the former directors, the Company's cash position had been reduced from about
£45.7 million to £12.8 million.
On 25 July, the three former executive directors resigned from their employment positions with the Company's group by lawyers' letters
alleging "constructive dismissal," and ceased to be members of ACP's advisor, ACP Capital UK LLP. The story is not a pretty one.
The New Board and New Management Team
So what has been accomplished since the general meeting in July? First, we have strengthened our board of directors by adding
substantial depth on the legal and accounting sides. We now have five new independent directors: James Lowenstein, Patrick McCann, Stephen
Coe, Antony Gardner-Hillman, and me. I am a lawyer and Chartered Financial Analyst with substantial experience in winding up funds, selling
off their assets and returning the proceeds to shareholders. Tony is an Oxford University educated lawyer who was a partner with one of
Jersey's main law firms and a founder of one of Jersey's substantial trust companies. He brings twenty-five years of legal and regulatory
experience to the board. Steve is a chartered accountant with many years of hands on experience in the offshore funds industry. His brief is
to head the audit committee and implement appropriate reporting and financial controls. Patrick is a barrister in Dublin and Jim is former
US ambassador to Luxembourg. Jim, Patrick and Steve all have experience in winding up investment companies.
Following the changes at board level, we undertook a comprehensive examination of the office to reduce overheads and to assemble a small
team that could manage and sell the assets. We also moved into less expensive office space. We looked at the staff and decided that we could
accomplish our goals with fewer people. We selected a core group of six ACP staff whom we believed had the right skills and familiarity with
our portfolio. Lyndon Miles will be the ACP group's new managing director. Lyndon has many years' experience in debt finance and was
formerly a director with the Company. In addition to overall responsibility for the office, Lyndon will oversee the disposal of our debt
portfolio. Jean-Christophe Gas will be second in charge at the director level. JC has many years experience in corporate finance and was
formerly a Vice-President with the Company. Both Lyndon and JC will work together under my direct supervision and will have sufficient
support to accomplish our objectives of disposing of all assets at the right price in the best interest of shareholders.
Helios CDO Limited is Blocked and Leverage Eliminated
Given the state of the world's financial markets, proceeding with a large structured transaction like the Helios CDO transaction and
having a leverage facility with Deutsche Bank seemed imprudent and in any event was contrary to the wishes of our shareholders. So,
following the EGM, both ACP and ACPM declined to participate in the Helios CDO transaction and informed Deutsche Bank that we intended to
terminate our leverage facilities.
Regarding the leverage, our calculations showed that notwithstanding the combined breakage costs of over EUR6 million, it was in ACP's
interest to terminate those facilities. We have now done so and both ACP and ACPM are unlevered.
With the elimination of the Deutsche leverage facilities, our portfolio is relatively straightforward.
Our Portfolio and Results
On a look-through basis as of 30 June, about 56% of our investments and loan portfolio comprised investments in IFR Capital, an
AIM-quoted food retailer and manufacturer. We also have equity and debt investments in Leasecom, an unlisted French leasing business; equity
in Davenham, an AIM-quoted, Manchester-based specialist commercial finance company; equity in GCI Management, a Frankfurt-quoted investment
company; a loan to GCI Automotive Holding; investments in CDO and CLO structured products, primarily through our investment in ACPM; and
cash.
Our results for the period to 30 June 2008 are a consolidated loss of £15.0 million, resulting primarily from the write-down of ACPM's
structured portfolio and a reduction in value of our listed investments in IFR Capital, GCI Management and Davenham. Because, following the
ACPM secondary, we now have a controlling interest in ACPM, we are required to consolidate ACPM's financial statements with ours. About 29%
of ACPM's portfolio comprises structured debt products - the CDO and CLO products that are so topical these days. Those products had
previously been carried at cost.
The ACPM board determined that given the substantially discounted pricing in the market, historic cost was an inappropriate valuation
methodology and that market price based on indicative pricing gave a truer indication of the value of these assets. This, and the
revaluation of several other assets has led to a write down at ACPM of approximately EUR28.5 million, which, because of our 54% interest in
ACPM results in a contributed loss to the Company of EUR12.5 million. Other factors contributing to the decrease in the Company's NAV
include the decline in the IFR Capital equity price from EUR0.735 to EUR0.505, the decline in the GCI Management equity price from EUR3.91
to EUR1.87 and the decline in the Davenham equity price from £2.13 to £1.17.
Since 30 June 2008 the market for structured products has weakened further as have the equity prices of ACPM, IFR Capital, GCI
Management and Davenham, our four quoted investee companies.
On 11 September PFAFF filed for insolvency. The PFAFF insolvency is expected to have a double effect on the Company through the
so-called "integrated finance strategy" developed by former management: first through its 54% interest in ACPM (which has a EUR9 million
loan to PFAFF) and second through its circa 29% interest in GCI.
Depending on how the PFAFF insolvency plays out, how the equity markets price the IFR Capital, GCI Management and Davenham common
equity, and what shape the structured product market is in at year end, the Company's year-end valuation may be further adversely affected.
As I said, the picture is not a particularly pretty one.
I, our directors, and our employees all appreciate your support in these difficult times.
Respectfully yours,
John D. Chapman
Chairman
29 September 2008
About the Company:
ACP Capital is a Jersey-incorporated closed-ended investment company quoted on AIM. Through its regulated Jersey subsidiary, it is also
the investment manager and majority shareholder of ACP Mezzanine.
The board of ACP Capital is carrying out an in-depth review of the assets and businesses of ACP Capital with a view to minimising or
curtailing future spending on new acquisitions and, in due course and subject to the necessary regulatory requirements, initiating a gradual
realisation of the group's assets as opportunities arise. It is also intended that any net proceeds received by ACP Capital on the disposal
of any assets will be returned to shareholders.
For further information:
Chris Wells / Stewart Wallace of Collins Stewart Europe Limited - +44 (0) 207 523 8350
www.acpcapital.com
Independent Review Report of ACP Capital Limited
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 30 June 2008 which comprises the Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Statement of Changes
in Equity, Consolidated Cash Flow Statement, and the related notes. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review
of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the
United Kingdom. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an
independent review 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, for our review work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the Rules of the AIM Market.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report
based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union and the Rules of the AIM Market.
Kingston Smith LLP
Chartered Accountants
Devonshire House
60, Goswell Road
London
EC1M 7AD
Dated: 29 September 2008
Consolidated Income Statement (Unaudited)
For the period ended 30 June 2008
6 months ended 30 6 months ended 30 Full year ended 31 December
June 2008 June 2007 2007
Unaudited Unaudited Audited
£ £ £
Operating income
Investment income 7,362,976 3,306,932 11,710,009
Fees receivable 3,455,542 2,017,511 5,734,489
Total operating income 10,818,518 5,324,443 17,444,498
Operating expenses
Interest payable and other (668,514) (14,644) (322,064)
related financing costs
Other operating expenses (3,417,625) (1,327,185) (2,661,698)
Equity-settled share-based (1,896,373) (512,253) (1,207,248)
payments
Total operating expenses (5,982,512) (1,854,082) (4,191,010)
Net operating income 4,836,006 3,470,361 13,253,488
Change in fair value of (20,520,052) 3,472,814 (12,678,348)
investments
Impairments of loans and (9,887,298) - -
receivables
Net foreign exchange gains / 10,589,662 (348,874) 987,825
(losses)
Negative goodwill 1,127,177 - -
(Loss) / profit before tax (13,854,505) 6,594,301 1,562,965
Income taxes 3 - (57,022) (83,055)
(Loss) / profit for the period (13,854,505) 6,537,279 1,479,910
Attributable to:
Equity shareholders (14,208,435) 6,537,279 1,479,910
Minority interests 353,930 - -
(13,854,505) 6,537,279 1,479,910
(Loss) / earnings per share 4
(pence)
Basic (7.16) 4.44 0.85
Diluted (7.16) 4.29 0.83
Consolidated Balance Sheet (Unaudited)
As at 30 June 2008
6 months ended 30 6 months ended 30 Full year ended 31
June 2008 June 2007 December 2007
Unaudited Unaudited Audited
£ £ £
Assets
Non-current assets
Investments
Investments measured at fair 169,658,210 102,920,354 164,676,271
value through profit or loss
Loans and receivables 49,608,230 15,594,569 16,012,561
219,266,440 118,514,923 180,688,832
Property, plant and equipment 14,681 13,684 27,233
Trade and other receivables - 100,000 -
Total non-current assets 219,281,121 118,628,607 180,716,065
Current assets
Investments measured at fair 537,991 - -
value through profit or loss
Trade and other receivables 6,398,107 1,707,018 2,610,567
Cash and cash equivalents 88,347,308 127,723,421 59,855,959
Total current assets 95,283,406 129,430,439 62,466,526
Total assets 314,564,527 248,059,046 243,182,591
Equity & reserves
Issued share capital 196,096 199,531 199,531
Share premium 216,734,311 216,734,311 216,734,311
Capital redemption reserve 3,435 - -
Share-based payment reserve 4,151,875 962,107 1,657,102
Shares held for Employee Share (1,699,298) - -
Award Plan
Translation reserve (215,069) - -
Retained earnings (17,152,338) 19,616,789 14,559,419
Total shareholders' equity 202,019,012 237,512,738 233,150,363
Minority interest 54,937,482 - -
Total equity 256,956,494 237,512,738 233,150,363
Liabilities
Non current liabilities
Loans and borrowings 53,138,639 8,833,594 9,188,157
Total non current liabilities 53,138,639 8,833,594 9,188,157
Current liabilities
Trade and other payables 4,386,339 1,586,631 761,016
Current income tax payable 83,055 126,083 83,055
Total current liabilities 4,469,394 1,712,714 844,071
Total liabilities 57,608,033 10,546,308 10,032,228
Total equity and liabilities 314,564,527 248,059,046 243,182,591
Net asset value per share 1.03 1.19 1.17
Mr. J. Chapman
Chairman
Consolidated Cash Flow Statement (Unaudited)
For the period ended 30 June 2008
6 months ended 30 6 months ended 30 Full year ended 31
June 2008 June 2007 December 2007
Unaudited Unaudited Audited
£ £ £
Cash flow from operating
activities
Investment income 6,840,478 3,702,227 11,695,798
Fees received 1,296,389 1,236,675 5,698,894
Operating expenses (1,393,647) (1,337,922) (2,645,365)
Taxes paid - - (69,061)
Net cash inflow from 6,743,220 3,600,980 14,680,266
operations
Cash flow from investing
activities
New lending / investments (10,720,950) (51,642,906) (233,309,998)
Sale / repayment of 3,812,277 12,866,175 113,881,100
investments
Acquisition of subsidiary net 32,938,914 - -
of cash acquired
Purchase of property, plant - - (17,026)
and equipment
Net cash inflow / (outflow) 26,030,241 (38,776,731) (119,445,924)
from investing activities
Cash flow from financing
activities
Proceeds from issues of share - 145,290,791 145,290,833
capital net of issue costs
Purchase of own shares (1,699,298) - -
Interest payable and other (802,663) - (281,021)
financial costs
Repayment of finance (1,058,270) - -
Drawdown of loan 2,522,168 8,833,594 9,947,352
Dividends paid (6,983,618) (1,994,681) (1,988,377)
Net cash (outflow) / inflow (8,021,681) 152,129,704 152,968,787
from financing activities
Net increase in cash and cash 24,751,780 116,953,953 48,203,129
equivalents
Cash and cash equivalents at 59,855,959 10,769,468 10,769,468
the start of the period
Effect of exchange rate 3,739,569 - 883,362
fluctuations
Cash and cash equivalents at 88,347,308 127,723,421 59,855,959
end of period
Included within cash and cash equivalents of £88,347,308, £19.6 million is held on a margin account to offset a facility from Deutsche
Bank AG.
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008
General Information
ACP Capital Limited (the "Company") is a company incorporated on 30 August 2005 and registered in Jersey under registration number
91066. The Company's shares were admitted to trading on AIM on 6 January 2006. The Company and its subsidiaries (together the "Group") carry
on business as investment holding and management companies.
Basis of Preparation
The unaudited interim financial statements have been prepared on the basis of the accounting policies set out in the Group's Report and
Financial Statements for the period ended 31 December 2007. The interim financial statements comply with IAS 34 "Interim Financial
reporting". The interim financial statements and the comparative information for the periods ended 30 June 2007 and 31 December 2007 do not
constitute statutory financial statements within the meaning of the Companies (Jersey) Law 1991. The Report and Financial Statements for the
period ended 31 December 2007 contained an unqualified audit report and the audit report did not contain any statement of matters that
needed to be brought to the attention of the members.
The interim financial statements were authorised for issue by the Directors on 29 September 2008.
Taxation
The income tax charge represents UK Corporation tax charged at standard rate of 30% on the Group's share of profits arising in ACP
Capital UK LLP, a limited partnership in which ACP Capital's subsidiary, ACP Capital (UK) Limited, is the controlling partner. The company
and a number of the subsidiaries are registered in Jersey as exempt companies and are, therefore, not liable to Jersey income tax on profits
derived outside Jersey. Confirmation has been obtained from the Comptroller of Income Tax in Jersey that, by concession, the companies will
be liable to tax in Jersey only in respect of income, other than bank interest income, arising in Jersey. During the period no income, other
than bank interest income, arose in Jersey. The subsidiaries resident in Cyprus had no income subject to Cyprus company taxes in the
period.
The Company has exempt status for Jersey taxation purposes for the year of assessment 2008. Effective 1 January 2009, Jersey's tax
regime will change. The new regime will impose a general corporate income tax rate of 0%. A 10% rate will apply to certain regulated
financial services companies and 20% rate will apply to utilities and income from Jersey land (i.e. rents and development profits). Jersey
registered companies will be treated as resident for tax purposes and will be subject to zero or ten percent standard income tax rate.
Since the Company is not a regulated financial service entity, the effect of the new tax regime is limited to the change of status from
exempt to liable to Jersey income tax at 0%.
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008 (Continued)
4. Earnings Per Share
The calculation of the basic earnings and diluted earnings per share attributable to the equity shareholders of the Company is based on the
following data:
6 months ended 30 6 months ended 30 Full year ended 31
June 2008 June 2007 December 2007
Unaudited Unaudited Audited
£ £ £
(Loss) / profit for the period (14,208,435) 6,537,279 1,479,910
attributable to equity
shareholders
Weighted average number of 198,529,632 147,108,737 173,535,776
ordinary shares for the
purposes of basic earnings per
share
Effect of dilutive potential
ordinary shares:
Share options - 5,109,838 4,949,411
Weighted average number of 198,529,632 152,218,575 178,485,187
ordinary shares for the
purposes of diluted earnings
per share
Share options in Share options in issue for the period ended 30 June 2008 have been excluded from the calculation of diluted earnings
per share for that period as they are anti-dilutive. Therefore, the basic and diluted earnings per share figure for that period is the
same.
5. Segment Reporting
The Group operates only one business and in one geographical segment. Accordingly, no additional segment analysis is disclosed.
6. Acquisition of Subsidiary
In June 2008, the Company exercised options as part of an Option Deed to acquire 1,000,000 shares in ACP Mezzanine Limited at EUR1.00
per share. The Company also subscribed for 79,219,798 shares as part of ACP Mezzanine's secondary placing of 133,333,333 shares for a
consideration of £47,531,879.
The Company had previously acquired 46.35% of ACP Mezzanine Limited in July 2006 for £32,106,018 and acquired a further 0.47% in June
2007 for £162,591. The initial investment was included in the accounts at market value. The transactions in June 2008 resulted in a
controlling interest of 54.17%. As the holding is now in excess of 50%, ACP Mezzanine Limited is accounted for as a subsidiary.
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008 (Continued)
7. Acquisition of Subsidiary (cont)
The net assets acquired in these transactions, and the goodwill arising, are as follow:
July 2006 June 2007 June 2008
£ £ £
Investments measured at fair - - 44,553,053
value through profit or loss
Loans and receivables - - 42,963,979
Trade and other receivables - - 1,487,969
Cash and cash equivalents 68,310,677 67,746,089 71,392,189
Loans and borrowings - - (37,647,258)
Trade and other payables (1,691,658) (1,677,676) (3,256,652)
Acquiree's fair value of net 66,619,019 66,068,413 119,493,280
assets before combination
Fair value of share of net 30,874,984 312,713 40,661,364
assets acquired
Goodwill 1,231,034 (150,122) (2,208,089)
Consideration 32,106,018 162,591 38,453,275
Net cash inflow arising on
acquisition:
Cash consideration paid (38,453,275)
Cash and cash equivalents 71,392,189
acquired
32,938,914
The Company's investment in ACP Mezzanine Limited had previously been carried in the balance sheet at fair value. In acquiring a
controlling stake, £3,286,836 of fair value losses and £2,107,020 of foreign exchange gains that were recognised in prior periods, have been
written back to the Income Statement in the current year.
In accordance with the requirements of IFRS 3 in accounting for piecemeal acquisitions, a total of £1,127,177 of negative goodwill arose on
the acquisition of ACP Mezzanine Limited.
The negative goodwill arising is attributable to the acquisition of the shares at a discount to ACP Mezzanine Limited's net asset value.
The results contributed by ACP Mezzanine Limited in the period between date of acquisition of a controlling interest and the balance sheet
date was a surplus of £769,000.
If the acquisition had been completed on 1 January 2008, total group revenue for the period would have been £16.956 million, and losses for
the period would have been £37.535 million.
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008 (Continued)
8. Post Balance Sheet Events
a) Changes to Directors
At an Extraordinary General Meeting held on 17 July 2008, Mr. Derek Vago, Mr. Eric Youngblood, Mr. Nikolaj Larsen, Mr. Alan Braxton, Mr.
Daniele Discepolo and Mr. Francois Georges were removed as Directors. At the same meeting, Mr. John Chapman, Mr. Patrick McCann, and Mr.
James Lowenstein were appointed as Directors.
On 17 September 2008, Ms. Hilary Valentine and Mr. Craig Stewart resigned as Directors. On the same date, Mr. Antony Gardner-Hillman and Mr.
Stephen Coe were appointed as Directors.
b) Pfaff Industrie Maschinen
As at 30 June 2008, loans and receivables include £7.1 million (EUR9 million) in respect of this investment; a further EUR61,250 of income
receivable on this facility is included within trade receivables. Any impairment in value of this investment results from events subsequent
to 30 June 2008 and no provision has been made in these consolidated financial statements for any loss that may eventually rise.
Pfaff is currently in discussions with its creditors, but it is expected that this one investment may detrimentally affect the net asset
value of ACP Mezzanine as the directors consider it unlikely that the loan and accrued interest will be repaid.
c) Deutsche Bank Facility
On 25 September 2008, the Company announced that it had agreed to terminate its sale and repurchase transaction with Deutsche Bank AG
(*Deutsche*) by settling all outstanding commitments, interest and associated breakage fees and as a consequence its balance sheet will be
in a net cash position and free of debt.
As a result of the early termination of the facility, a breakage fee of £2.4 million was paid to Deutsche on 25 September 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR IIFIEARIIVIT
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