RNS Number:0016B
Absolute Capital Mgmt Holdings Ltd
05 April 2006
Absolute Capital Management Holdings Limited
("ACMH" or "the Company")
Preliminary Results for the year ended 31 December 2005
ACMH, the fund management company focused on delivering investment returns
through the management of absolute return funds, today announces its preliminary
results for the year ended 31 December 2005.
Highlights
Financial
* Assets under management up 114% to US$841million (2004: US$393 million)
* Pre tax profit up 170% to Euros 15.7 million (2004: Euros 5.8 million)
* Turnover increased by 208% to Euros 30.5 million (2004: Euros 9.9 million)
* Basic earnings per share increased by 169% to Euros 0.31(2004: Euros 0.12)
Operational
* Investment management team further strengthened
* Successful launch of 2 new funds in 2005 plus the recent successful launch of
the Absolute Large Cap Fund in February 2006
* Significant development and investment in strengthening systems, risk
management, personnel, infrastructure, and research capabilities
Since the year end
* Fund Performance has been ahead of target return levels in the first three
months of 2006
* Funds under Management have grown from US$841million at the end of 2005 to
US$1.085 billion as at 31 March 2006 an increase of some 29% since the
beginning of this year
* Admission to trading on AIM in March 2006
Sean Ewing, Chairman and CEO, commented: "2005 saw a doubling of assets under
management and further increases since the year end have taken us over
US$1billion. This rapid growth reflects our track record as consistently strong
performers focused on achieving an absolute return on invested capital rather
than looking to outperform a given benchmark."
Enquiries:
ACMH Sean Ewing, Chairman and CEO T 020 7659 6155
M: 07768 255 472
Cardew Group Tim Robertson T: 020 7930 0777
Shan Shan Willenbrock
Chairman's Statement
ACMH's inaugural results as a quoted company on the London AIM market are
characterised by strong growth in both pre-tax profits up 170% to Euros 15.7
million from Euros 5.8 million in 2004 and turnover up 208% to Euros 30.5
million, from Euros 9.9 million in 2004. During 2005, all of the funds under the
Company's management performed either in line with or in excess of stated
performance targets and in the top quarter of their respective sectors. A number
of the funds performed exceptionally.
Financial Review
Success against our yardstick of building shareholder value is demonstrated not
only by the significant increases in our headline numbers, but also by all key
measures.
The largest contributors to turnover were management fees of Euros 8.7 million
(up 133% from Euros 3.7 million in 2004) and performance fees of Euros 20.5
million (up 253% from Euros 5.8 million).
Assets under management during the year increased to US$841m (up 114%) as a
result of net inflows of US$324 million, and growth due to positive investment
performance of US$124m.
Assets under management by strategy
Strategies: 31 December 31 December
2005 2004
US$ US$
________________________________________________________________________________
Absolute Return Europe 346.7 258.7
Absolute European Catalyst Fund 211.8 79.3
Absolute Germany Fund 167.9 54.7
Absolute East/West Fund 41.7 n/a
Absolute Octane Fund 72.9 n/a
Absolute Large Cap Fund * n/a n/a
________________________________________________________________________________
* Began trading in February 2006.
A number of key ratios were above industry averages, and are tending to
improve. The ratio of total revenue to average assets under management
rose in 2005 to 4.40% (Euro30.51m Rev / Euro693 AUM) from 3.06% in 2004 (Euro9.92m
Rev / Euro324m AUM). This was as a result of strong fund performance and an
increase in performance related fees to average assets under management.
Performance related fees rose to 3.14% (Euro20.54m / Euro693m) from 1.78% in 2004
(Euro5.76m/Euro324m).
The total cost/income ratio of the business decreased to 51% in 2005, largely
reflecting improved asset growth and performance. This level of costs is
comfortably below the industry average.
As stated at the time of our admission to AIM, the Company intends to distribute
cash on a regular basis through the payment of dividends.
Operational review
During the year we recruited 12 additional key staff. The appointments were
split with 6 new individuals joining our support team in areas such as Risk
Management and Financial Control and 6 additional research and investment
professionals. The Company has been successful in securing talent from a number
of established investment houses and aims to provide the environment both
physical and fiscal to continue to attract such high quality individuals.
We also invested in new systems, and processes and improved the quality of our
communication with investors. Our investment process moved to a team based
approach. We replaced our complete infrastructure and established a group stand
alone disaster recovery business continuity capability.
The work ethic and commitment by our people is partly reflected in these very
good results however it does not reflect the enthusiasm and passion which they
display on a daily basis.
The funds under the management of the Company continue to deliver above average
returns with lower volatility. The Absolute Large Cap Fund is up over 10% in its
first two months since launch in February 2006. The Absolute Octane Fund was up
nearly 50% in its first six months since launch during 2005.
Performance to 31 December 2005
Size Year Since Annualised Down Months
to Date Inception Performance
_________________________________________________________________________________________
Single Launch date Euro m % % %
Strategy
_________________________________________________________________________________________
Absolute
Return Europe Mar-02 285.6 15.33 93.68 18.82 1 out of 46
Absolute
European
Catalyst Fund Oct-03 174.5 17.96 66.34 25.38 3 out of 27
Absolute
Germany Fund Jan-04 138.2 16.08 51.79 23.20 1 out of 24
Absolute
East/West Fund Jul-05 34.4 10.38 10.38 21.84 0 out of 6
Absolute
Octane Fund Jul-05 60.1 48.39 48.39 120.20 0 out of 6
We hope to announce the launch of additional exciting funds over the coming
months.
Outlook
During the year we implemented the successful execution of the first phase in
our business strategy. Funds under management are now in excess of US$1billion,
a 29% increase. Net inflows in the first quarter of 2006 were US$100m some 185%
ahead of the US$35m in Q4 2005. This demonstrates significant institutional
interest in funds under the management of the Company and the impact of this
momentum
Our margins remain amongst the highest of any asset management business, a
reflection of a very low fixed cost base and an alignment of interest with both
our fund investors and shareholders. These factors together give us confidence
that we have created a strong base from which to continue to grow and develop
the Company.
Sean Ewing
Chairman
5 April 2006
FINANCIAL RESULTS
Consolidated Statement of Income
For the year ended 31 December 2005
2005 2004
Note Euro Euro
Subscription fees 388,249 225,383
Redemption fees 868,451 181,845
Management fees 8,720,763 3,748,704
Incentive fees 20,535,642 5,760,021
__________ __________
Revenue 30,513,105 9,915,953
Legal and professional expenses (271,406) (791,739)
Management and incentive fees payable (8,654,996) (2,919,786)
Operational expenses (976,881) (421,547)
Employee costs 3 (5,068,466) -
Foreign exchange gain/(loss) 18,776 (5,165)
Excess of acquirer's interest in net value of
identifiable net assets 14,254 -
Depreciation (3,355) (659)
__________ __________
15,571,031 5,777,057
Financial revenue 114,877 40,979
Unrealised gain on investments 312 7,327
__________ __________
Profit for the year before taxation 15,686,220 5,825,363
Taxation (35,663) -
__________ __________
Profit for the year after taxation
attributable to members of the Company 15,650,557 5,825,363
========== ==========
Earnings per share (basic) Euro0.31 Euro0.12
========== ==========
Earnings per share (diluted) Euro0.30 Euro0.11
========== ==========
Consolidated Balance Sheet
At 31 December 2005
31 December 31 December
2005 2004
Notes Euro Euro
Assets
Non current assets
Property, plant and machinery 46,553 1,870
___________ ___________
46,553 1,870
Current assets
Trade and other receivables 6,696,433 2,858,219
Cash at bank 3,026,610 44,761
Financial assets
Investments at fair value through the
profit and loss 600 128,814
Loans and advances receivable 187,205 1,555,794
___________ ___________
187,805 1,684,608
___________ ___________
9,910,848 4,587,588
___________ ___________
Total assets 9,957,401 4,589,458
=========== ===========
Equity and liabilities
Equity
Issued share capital 500,000 2,296,797
Share premium 22,769,453 20,671,176
Revenue reserve 3,761,551 2,415,076
Other reserves 269,341
Merger reserve (22,950,745) (22,950,745)
___________ ___________
Total equity 4,349,600 2,432,304
___________ ___________
Current liabilities
Trade and other payables 5,568,951 2,157,154
Taxation payable 38,850 -
___________ ___________
Total current liabilities 5,607,801 2,157,154
___________ ___________
Total equity and liabilities 9,957,401 4,589,458
=========== ===========
Consolidated Statement of Changes in Shareholder' Equity
For the year ended 31 December 2005
Share Share Revenue Other Merger
Capital Premium Reserve Reserves Reserve Total
Euro Euro Euro Euro Euro Euro
As at 1
January 2004 2,296,797 20,671,176 2,689,713 - (22,950,745) 2,706,941
Profit for the
year - - 5,825,363 - - 5,825,363
Distribution
to former
shareholders
and FM Fund
Management
Limited - - (6,100,000) - - (6,100,000)
__________ __________ __________ ________ __________ __________
As at 31
December 2004 2,296,797 20,671,176 2,415,076 - (22,950,745) 2,432,304
Profit for the
year - - 15,650,557 - - 15,650,557
Distribution
on 13 May 2005
of Euro0.03 per
share - - (6,124,082) - - (6,124,082)
Distribution
on 1 December
2005 of
Euro0.1636 per
share - - (8,180,000) - - (8,180,000)
Issue of
7,103,497
shares of
Euro0.01 each at
par 71,035 - - - - 71,035
Issue of
2,439,580
shares of
Euro0.01 each at
Euro0.049 per
share 24,396 95,604 - - - 120,000
Share based
payments - - - 379,786 - 379,786
Exercise of
share options - 110,445 - (110,445) - -
Reorganisation
of share
capital (1,892,228) 1,892,228 - - - -
__________ __________ __________ ________ __________ __________
As at 31
December 2005 500,000 22,769,453 3,761,551 269,341 (22,950,745) 4,349,600
========== ========== ========== ======== ========== ==========
The revenue reserve has been prepared on the pooling of interest basis and
represents the retained earnings of the FM Fund Management business as if it had
always been part of the group throughout the year. Since the business was
acquired on 13 May 2005, the retained profit of the group is Euro3,561,839.
On pooling of interests, the excess of the consideration given by the company
over the book value of the assets and liabilities of the underlying fund
management business is recognised in a merger reserve.
Other reserves are in respect of share based payments made to employees of the
group and others providing similar services.
Consolidated Cash Flow Statement
For the year ended 31 December 2005
2005 2004
Notes Euro Euro
Net cash inflow from operating activities 15,675,820 7,243,726
__________ __________
Cash flows from investing activities
Interest income received 114,877 40,979
Purchase of subsidiaries (1,500) -
Proceeds on sale of investment 128,626 -
Purchase of property plant and equipment (48,038) (1,870)
Cash acquired on purchase of subsidiary 33,914 -
Loans made to shareholders (67,110) (1,555,794)
Repayment of loans 1,352,788 -
__________ __________
Net cash inflow/(outflow) from investing
activities 1,513,557 (1,516,685)
__________ __________
Cash flows from financing activities
Distributions (14,304,082) (6,100,000)
Loans made - (8,245)
Issue of share capital 120,000 -
__________ __________
Net cash outflow from financing (14,184,082) (6,108,245)
__________ __________
Net cash inflow/(outflow) 3,005,295 (381,204)
========== ==========
Notes to the Financial Statements
1. Accounting Policies
(a) Accounting convention
These financial statements have been prepared in accordance with International
Financial Reporting Standards.
(b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the group. 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.
The Company was incorporated on 26 August 2004 and on 13 May 2005 it acquired
the business of providing investment management and advisory services to mutual
funds from FM Fund Management Limited. As the acquisition is between entities
under common control, it is outside the scope of IFRS 3 "Business Combinations",
and the combination has been accounted for as a pooling of interest, as if the
group, as currently constituted, had been in place throughout the whole period
covered by these financial statements. Consequently assets and liabilities of
the underlying fund management business are recorded at their previous book
values.
Notwithstanding the Company being incorporated on 26 August 2004, the
consolidated income statement and cash flow statement for the year and the
comparatives for the consolidated balance sheet, income statements, statement of
changes in equity and cash flow statement have been presented as though the
business has always been part of Absolute Capital Management Holdings Limited,
in order to compare meaningfully the performance of the underlying group. The
business acquired was in existence before 1 January 2004, and hence the
financial statements are presented with the earliest year commencing 1 January
2004. The accounts of FM Fund Management Limited had previously been prepared in
accordance with International Financial Reporting Standards and no adjustment is
necessary on recognition in the accounts of Absolute Capital Management Holdings
Limited on a pooling of interests basis.
On pooling of interests, the excess of the consideration given by the Company
over the book value of the assets and liabilities of the underlying fund
management business is recognised in a merger reserve.
2. Taxation
The Company is registered as an exempt company in the Cayman Islands and
consequently no tax is payable in the Cayman Islands. The group is liable to
United Kingdom and Spanish tax at basic rates of 19% and 35% respectively.
Provision of Euro38,850 has been made in respect of current period profits of
United Kingdom and Spanish subsidiaries of which Euro35,663 has been charged to the
consolidated statement of operations as being post acquisition.
2005 2004
Euro Euro
Taxable profits of the group at 0% - -
Taxation on Spanish and UK subsidiaries 35,663 -
______ ______
Taxation charge for the year 35,663 -
====== ======
No provision for deferred taxation has been recognised in the financial
statements as amounts incurred are insignificant.
3. Employee Costs
2005 2004
Euro Euro
Wages and salaries 5,033,070 -
Social security costs 35,396 -
_________ _________
5,068,466 -
========= =========
In prior years the group had no employees. Remuneration of key management
personnel was made by the shareholders of FM Fund Management Limited.
4. Earnings Per Share
Earnings per share is calculated by dividing the net profit for the year by the
weighted average number of shares outstanding during the year.
2005 2004
Euro Euro
Net profit attributable to shareholders 15,650,557 5,825,363
========== ==========
2005 2004
Euro Euro
Weighted average of ordinary shares
for basis earnings per share 49,723,398 49,490,103
Effect of dilution : share options 1,948,529 1,948,529
__________ __________
Weighted average number of ordinary shares for
diluted earnings per share 51,671,927 51,438,632
========== ==========
5. Business Combinations
On 13 May 2005 the Company acquired a business of providing investment
management and advisory services to mutual funds from FM Fund Management
Limited. In consideration for the purchase of this business, the Company issued
229,679,733 shares of Euro0.01 each at Euro0.10 per share to FM Fund Management
Limited. Further consideration is payable based on the retained profits of the
business as at 13 May 2005. The directors have estimated this additional
consideration to be Euro6,124,082 giving a total cost of Euro29,092,055.
This is a related party transaction as the beneficial owner of the Company at
the time of the transaction was also an ultimate beneficial owner of 3% of the
issued share capital of FM Fund Management Limited. On completion of the
transaction the beneficial owners of FM Fund Management Limited became the
beneficial owners of the Company.
As this combination is between entities under common control it is recognised as
a pooling of interest as detailed in note 1(b). Accordingly the additional
consideration payable of Euro6,124,082 has been recognised as a distribution to
members.
On 10 June 2005 the group acquired 100% of the voting rights of Absolute Capital
Management (Spain) SL for consideration of Euro1,500. The final fair value of the
identifiable net assets and liabilities of Absolute Capital Management (Spain)
SL at the date of acquisition were:-
Euro
Trade and other receivables 278,192
Cash and cash equivalents 33,914
________
312,106
________
Trade and other payables 26,054
Loans payable to shareholders of Absolute Capital Management
Holdings Ltd 267,111
Taxation payable 3,187
________
296,352
________
Fair value of net assets 15,754
The excess of acquirer's interest in the net value of identifiable
assets, liabilities and contingent liabilities (14,254)
________
1,500
========
The group acquired Absolute Capital Management (Spain) SL for consideration less
than the fair value of the identifiable assets, liabilities and contingent
liabilities. The identification and measurement of identifiable assets,
liabilities and contingent liabilities has, together with the cost of
combination, been reassessed and the excess after reassessment has been
recognised in the consolidated income statement.
From the date of acquisition Absolute Capital Management (Spain) SL has
contributed a loss of Euro501,526 to the net profits of the group. The revenue and
profit for the group for the year would have been Euro30,606,648 and Euro15,488,027
had Absolute Capital Management (Spain) SL been owned throughout the year. The
only income of Absolute Capital Management (Spain) SL is derived from other
group companies and is eliminated upon consolidation.
6. Share Based Payments
The Company has granted share options to Doyne Investments Limited to subscribe
for the allotment of shares in consideration for Doyne Investments Limited
providing assistance with the admission of the Company on to the London
Alternative Investment Market, for the assistance in entering into joint venture
agreements with managers for a new fund, and for aiding in the negotiations and
completion of the purchase of the business of FM Fund Management Limited.
The expense recognised for employment costs of Euro5,068,466 includes share based
payment employee services for the year of Euro379,786 (31 December 2004: EuroNil). The
value of the options has been measured at intrinsic value based on the fair
value of the business of the Company at the measurement date compared with the
exercise price.
7. Events Subsequent to the Balance Sheet Date
On 3 March 2006 the Company was floated on the London Stock Exchange's
Alternative Investment Market.
On 24 February 2006 the directors declared a dividend of Euro897,500, which was in
respect of retained profits to 30 November 2005.
Options have been granted over 5,125,000 shares with exercise dates ranging from
3 March 2006 to 31 January 2012 and exercise prices ranging from Euro0.24 per share
to Euro2.00 per share.
8. Annual Report and Accounts
This preliminary announcement is extracted from the audited accounts which will
be posted to shareholders shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSDFALSMSESL
Absolute Capital (LSE:ACMH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Absolute Capital (LSE:ACMH)
Historical Stock Chart
From Jul 2023 to Jul 2024
