RNS Number:0217P
ACP Capital Limited
29 February 2008
29 February 2008
ACP CAPITAL LIMITED
Preliminary Results for the Year Ended 31 December 2007
ACP Capital Limited ("ACP Capital" or the "Company": APL.LN), the
Jersey-incorporated asset management and niche integrated finance company
focused on European small and medium-sized enterprises ("SMEs"), today announces
its preliminary and unaudited results for the year ended 31 December 2007 (the "
Period").
Highlights
* Operating income1 of �17.5 million (2006: �4.0 million) and net operating
income2 of �13.2 million (2006: �0.1 million)
* Net asset value per share at the end of the Period of 1.17p per share (31
Dec 2006: 1.12p) - no distressed assets, no credit losses and no exposure to
US subprime markets
* Recommended final dividend of 3.5p per share (2006: 3.0p per share), in
line with the target stated at the time of the secondary placing in March
2007
* Substantial capital raise in March 2007, increasing the Company's share
capital by �150 million before costs - no anticipated need for additional
equity capital to support the intended development plans for 2008
* Investments in two local origination platforms - Leasecom in France and
GCI Management in Germany
* ACP Mezzanine, the sub-investment grade lender that ACP Capital manages,
reported strong 2007 results with a dividend of Euro0.095 per share, surpassing
its dividend target of Euro0.09 per share stated at the time of its listing
* Preparation for move from AIM to the Official List of the London Stock
Exchange - expected by the end of 2008
* �30 million of senior debt assets warehoused for the future managed
vehicle ACP Capital High Income, supported by a dedicated �125 million,
committed funding line
(1) Operating income: Investment income and Fees receivable
(2) Net operating income: Profit before Change in fair value of investments,
Net foreign exchange gains (losses) and Income taxes
Derek Vago, Chief Executive Officer of ACP Capital Limited, commented:
"With the establishment of ACP Capital's business model, operations have shown
strong progress during 2007, generating �17 million of diversified operating
income and �13 million of net operating income. During the Period we established
our first two local origination platforms and our managed vehicle, ACP
Mezzanine, had excellent performance. Equally satisfying are the continued
development of Leasecom into a diversified lending business and our close
collaboration with GCI Management.
We will continue focus on establishing additional local SME origination
platforms in the core countries of France, Germany, Italy and the UK, and
shortly expect to announce further progress in this area. With a cash balance of
�60 million at the end of 2007, we have significant capital and do not
anticipate any need for additional equity capital to support our growth in 2008.
Our asset management business has progressed not only with the performance of
ACP Mezzanine, but also through our efforts in creating further managed
vehicles. We are currently warehousing �30 million of senior debt assets for ACP
Capital High Income and have put in place a committed leverage facility. We are
also in discussions with potential joint venture partners in various niche
infrastructure sectors as part of our preparations for the launch of ACP Capital
Infrastructure."
Director's Review
ACP Capital's operations have performed strongly in its second year of trading,
generating operating income of �17.5 million (up from �4.0 million in 2006),
consisting of interest income of �7.3 million, dividend income of �4.4 million
and fees receivable of �5.7 million, and net operating income of �13.2 million
(up from �0.1 million in 2006). Following mark-to-market declines in fair value
of investments of �(14.6) million, with a majority relating to long-term equity
investments in ACP Mezzanine Ltd ("ACP Mezzanine": ACPM.LN) and the SME
origination platforms (2006: gain of �15.8 million), the overall business
generated a net income of �1.4 million during the Period, representing diluted
earnings per share of 0.79p. The Directors have recommended a total dividend of
3.5p per share, which is in line with the target stated at the time of the
secondary placing in March 2007. The dividend will be paid on 7 April 2008,
subject to shareholder approval at the Annual General Meeting on 3 April 2008.
As at 31 December 2007, the Company had a total asset base of �244.3 million
after �(14.6) million of mark-to-market declines in fair value of investments
and �2.9 million of foreign exchange gains during the Period. Total liabilities
amounted to �11.2 million, which resulted in net assets at the end of the Period
of �233 million, or �1.17 per share (2006: �1.12 per share). ACP Capital has no
exposure to assets in the US, no exposure to the US subprime market, and
negligible exposure to UK residential mortgages.
Importantly, ACP Capital has reached three critical milestones during the
Period:
* Following the substantial capital raise of �150 million before costs, ACP
Capital foresees no immediate need to raise further equity to fulfil its
short-term development plans;
* The establishment of its first two local origination businesses through
the investments in Leasecom Group SAS ("Leasecom") and GCI Management AG ("GCI
Management: GCI.GR"); and
* An operating business that has positive cash flow and consistent
improvements in operating income and net operating income.
ACP Capital will continue its preparations for a move from AIM to the Official
List of the London Stock Exchange. The Rule 6 letter was submitted in July 2007
and the change of listing is expected to occur by the end of 2008.
Strategic Highlights
In March 2007, ACP Capital raised �150 million before costs in a secondary
capital raise targeting primarily UK and US institutional investors. The
proceeds are intended to be used in the establishment of ACP Capital's
pan-European origination network targeting the SME segment as well as for the
growth of its asset management business.
In July 2007, ACP Capital provided a senior debt bridge of Euro142 million for IFR
Capital plc's ("IFR Capital": IFR.LN) acquisition of Homann Chilled Food GmbH,
alongside a Euro75 million bridge provided by ACP Mezzanine. This unrated senior
debt bridge was refinanced in December 2007 and syndicated into rated senior
term facilities.
ACP Capital operates within the two main business areas of Asset Management and
SME Origination, which target the SME segment in Europe and with a predominant
focus on France, Germany, Italy and the UK. The Company views this segment as an
'under-served' market with vast opportunities:
* The European SME market consists of a number of privately owned,
smaller corporations with broad but small-scale financing needs, which presently
are not adequately serviced;
* Larger banks are increasingly reviewing their efforts in this market
due to new regulatory constraints (i.e. Basel II) which may restrict them to low
margin senior debt lending to these smaller companies; and
* There is a preference among many SMEs for 'one-stop-provider'
solutions that creates an opportunity for independent integrated finance
players, such as ACP Capital, that can provide financing across the capital
structure.
Through its managed vehicles, such as its sub-investment grade lender ACP
Mezzanine, ACP Capital intends to offer the European SME market a variety of
financing solutions, from senior debt to equity, and often combined into an
integrated finance offering. To facilitate origination in this segment, ACP
Capital is in the process of developing a network of localised established
origination businesses in France, Germany, Italy and the UK. During the Period,
ACP Capital established two such origination businesses through investments in
Leasecom in France and GCI Management in Germany.
Leasecom Group SAS - In June 2007, ACP Capital acquired approximately 45% of
Leasecom Group SAS, the holding company for France's leading independent IT
lease finance broker. Leasecom has approximately 200 employees in nine offices,
and approximately 15,000 SME customers. ACP Capital sees great potential in
developing Leasecom into a diversified lender to the French SME sector,
extending its balance sheet and operational capabilities, and enhancing its
ability to manage its portfolio and refine its origination and pricing strategy.
The progress so far can be summarised as follows:
* ACP Mezzanine has agreed to provide a Euro100 million committed funding
line;
* A new scoring system is being implemented;
* A new car leasing subsidiary is being established; and
* Leasecom is in the process of applying for a Banque de France license
in order to be able to launch a new corporate debt offering.
GCI Management AG - During the Period, ACP Capital has acquired, through
participation in secondary capital increases and market purchases, an
approximate 29% equity stake in GCI Management, which is listed in Frankfurt.
GCI Management is a leading German SME-focused private equity and consultancy
company targeting German-speaking markets in Europe. It has approximately 30
employees, five offices and is headquartered in Munich. One of its key holdings
is an investment together with management in a German lending platform for the
Mittelstand, Vantargis. GCI Management has been collaborating closely with ACP
Capital, sourcing both equity investment and lending opportunities.
These two separate businesses mirror ACP Capital's origination strategy, with
two distinct origination routes to target the ultimate customer:
* In the smaller part of the SME sector (with enterprise values
generally below Euro50 million), margins are traditionally quite high but companies
can be difficult to access as a result of the sector's diversified and
fragmented nature. These smaller SMEs are accessed via a 'wholesale' strategy,
e.g. providing a committed funding line to a company like Leasecom, which then
provides its financing products directly.
* Larger SME companies (with enterprise values generally between Euro50
million and Euro250 million) offer sufficient economic scale to be accessed
directly, e.g. by providing smaller leveraged loan packages. Such opportunities
are sourced via companies such as GCI Management, who are often interested in
direct investments in the equity of these SMEs.
Asset Management
Through its subsidiary ACP Investment Management Limited, ACP Capital is
currently the mandated manager of ACP Mezzanine. ACP Mezzanine is ACP Capital's
first managed vehicle and is designed to take advantage of the planned flow of
asset opportunities generated primarily from the Company's localised origination
platforms.
ACP Mezzanine
ACP Mezzanine, the sub-investment grade lender with a primary strategy of
originating, structuring and underwriting sub-investment grade loans to the SME
market, showed substantial progress during 2007. The managed vehicle reported
diluted earnings per share of Euro0.10 and exceeded its dividend target with a
recommended total dividend for 2007 of Euro0.095 per share. Through the raising of
a new committed five-year facility from Deutsche Bank, ACP Mezzanine also
eliminated any short-term financing risk. The facility amounted to Euro150 million
and was entered into on improved terms over ACP Mezzanine's previous leverage
facility, including lower financing costs, the option of leveraging unrated
assets and extending the maturity from two years to five years. In light of the
successful performance and its robust pipeline of possible investments, ACP
Mezzanine intends to launch a secondary capital raise, targeting up to Euro200
million of new equity. Conditional on the completion of this equity capital
raise, ACP Mezzanine expects, subject to shareholder approval, to change its
listing from AIM to Euronext Amsterdam.
Further managed vehicles
ACP Capital is currently in the process of creating three further managed
vehicles: ACP Capital High Income, ACP Capital Infrastructure and ACP Capital
Strategic Equity. Prior to the launch of any of the proposed managed vehicles,
ACP Capital envisages acquiring and warehousing assets to be transferred at the
time of launch as well as having the appropriate financing structure in place.
All managed vehicles will be managed by ACP Capital either directly or through
any of its subsidiaries and will have agreements with management and performance
fee elements.
ACP Capital High Income - a tailored senior debt fund with capital protection
intending to invest in a diverse range of European and US senior debt assets
across industry sectors and asset classes, to be sourced from ACP Capital's
localised origination businesses and the secondary market. As at 31 December
2007, ACP Capital had �30 million of senior debt assets warehoused for ACP
Capital High Income and a �125 million committed funding line in place, provided
by Deutsche Bank. ACP Capital has started discussions with potential fund
raisers regarding the launch of this vehicle.
ACP Capital Infrastructure - intends to invest in infrastructure assets within
niche sectors, such as renewable energy, transport and public finance
initiatives (PFI). For each asset class, ACP Capital Infrastructure intends to
have management agreements in place with experienced asset managers who are to
be responsible for the day-to-day management of the assets. ACP Capital is
currently in discussions regarding two to three potential joint ventures, with a
targeted launch in 2008.
ACP Capital Strategic Equity - an equity fund that intends to make direct equity
investments in European SME companies as well as invest in and being co-sponsor
(and as such participating in the carry structure) of localised SME-focused
private equity funds. The target is to build up a portfolio of diversified
European equity assets across different geographies, industry sectors and
company sizes. This vehicle is expected to accelerate as local origination
platforms, such as GCI Management in Germany, are further developed. Further
collaborations in ACP Capital's key markets are anticipated to be announced
shortly.
Dividend
The Directors of ACP Capital recommend a dividend for 2007 of 3.5p per share.
The dividend is subject to shareholder approval at the Annual General Meeting to
be held on 3 April 2008, and, should it be approved at that meeting, will be
paid on 7 April 2008 to all shareholders on the register at close of business on
14 March 2008.
Liquidity Analysis
As at 31 December 2007, the Company had �59.8 million of cash and cash
equivalents. ACP Capital's ongoing costs are fully covered by the income
generated by the Company's operations.
Net Asset Value
The Company's net asset value at 31 December 2007 amounted to �233.1 million or
�1.17 per share. This compares with net asset value of �86.7 million and �1.12
per share as at 31 December 2006.
The net asset value at the end of the Period consisted of:
Value
31-Dec-07
(� 000's) Comments
Asset Management
ACP Mezzanine 31,055 47.5 million shares at share price of Euro0.89
SME Origination
Leasecom Group SAS 24,349 Circa 45% shareholding, valued at initial
investment
GCI Management AG 11,978 4.1 million shares at share price of Euro3.95
Davenham Group plc 16,135 7.6 million shares at share price of �2.125
Other Assets, including warehoused
assets for future managed vehicles
Senior debt assets 49,254 Senior debt assets (no credit impairments or
losses)
IFR Capital 30,207 55.9 million shares at share price of Euro0.735
IFR Preferred Equity 17,711
Cash and cash equivalents 59,835
Other assets 3,797
Total Assets 244,321
Interest-bearing
Loans and borrowings 9,188 Relates to leverage against warehoused assets for
ACP Capital High Income
Non-interest bearing
Total current liabilities 2,054
Total Liabilities 11,242
Total Net Asset Value 233,079
Net asset value per share 1.17 199.53 million shares outstanding
Note: ACP Capital share price as at 31 December 2007: �0.725
Enquiries:
Rob Bailhache & Nick Henderson, Financial Dynamics +44 (0) 207 269 7200
(Media Relations)
Sacha Macintosh, ACP Capital UK LLP +44 (0) 844 800 4530
Chris Wells, Stewart Wallace, Collins Stewart +44 (0) 207 523 8350
For further information on ACP Capital, please visit www.acpcapital.com.
Analyst Presentation
There will be an analyst presentation to discuss the results at 9:30 am on 29
February 2008 at Financial Dynamics, Holborn Gate, 26 Southampton Buildings,
WC2A 1PB.
Those analysts wishing to attend or to register to dial-in on the conference
call are asked to contact Rob Bailhache / Nick Henderson at Financial Dynamics
on +44 20 7269 7200 / +44 20 7269 7114 or at robert.bailhache@fd.com /
nick.henderson@fd.com.
About ACP Capital
ACP Capital Limited (LSE AIM: APL) is a Jersey-incorporated specialist
integrated finance and asset management company focused on European small and
mid-sized enterprises. ACP Capital provides equity, mezzanine and senior debt to
companies targeting an integrated finance solution across their capital
structure. ACP Capital aims to benefit from the strong growth in SME demand for
integrated finance to optimise corporate profitability and the reduced appetite
for SME lending among traditional banks owing to higher regulatory capital
requirements. ACP Capital is establishing localised origination platforms in
France, Germany, Italy, and the United Kingdom to originate lending and
investment opportunities to generate interest and fee income. In addition ACP
Capital earns management and performance-related fees from its listed investment
vehicles ACP Mezzanine Limited and IFR Capital Plc. Since January 2006 ACP
Capital has raised �215 million of public equity from leading institutional
investors in primary and secondary transactions.
Consolidated Income Statement
Year Ended Period Ended
31 December 2007 31 December 2006
Unaudited Audited
� �
Operating Income
Investment income 11,720,249 2,234,929
Fees receivable 5,734,489 1,798,883
Total Operating Income 17,454,738 4,033,812
Operating Expenses
Interest payable and other related financing (281,021) -
costs
Other operating expenses (2,724,100) (1,553,746)
Equity-settled share-based payments (1,207,248) (2,369,867)
Total Operating Expenses (4,212,368) (3,923,613)
Net Operating Income 13,242,369 110,199
Change in fair value of investments (14,618,172) 15,771,223
Net foreign exchange gains (losses) 2,879,364 (804,686)
Profit before tax 1,503,562 15,076,736
Income taxes (95,101) (69,061)
Profit for the period attributable to the equity 1,408,461 15,007,675
shareholders
Earnings per share
Basic (pence) 0.81p 22.92p
Diluted (pence) 0.79p 21.50p
Consolidated Balance Sheet
As at 31 December 2007 As at 31 December 2006
Unaudited Audited
� �
Assets
Non-current assets
Investments measured at fair value through profit or 140,327,623 62,281,436
loss
Loans and receivables 40,361,209 13,588,149
Property, plant and equipment 24,787 24,787
Total non-current assets 180,713,619 75,894,372
Current assets
Trade and other receivables 3,772,424 677,759
Cash and cash equivalents 59,835,339 10,769,468
Total current assets 63,607,763 11,447,227
Total assets 244,321,383 87,341,599
Liabilities
Non Current liabilities
Loans and borrowings 9,188,157 -
Total non current liabilities 9,188,157 -
Current liabilities
Trade and other payables 1,959,211 540,495
Current income tax payable 95,101 69,061
Total current liabilities 2,054,312 609,556
Total liabilities 11,242,469 609,556
Net Assets 233,078,914 86,732,043
Equity & Reserves
Issued share capital 199,531 77,237
Share premium 216,734,311 69,231,328
Share-based payment reserve 1,657,102 2,415,803
Retained earnings 14,487,970 15,007,675
Equity Shareholders' funds 233,078,914 86,732,043
Net Asset value per Share (�) 1.17 1.12
Consolidated Cash Flow Statement
Year Ended Period Ended
31 December 2007 31 December 2006
Unaudited Audited
� �
Cash and cash equivalents at start of period 10,769,468 -
Cash flow from operating activities
Investment income 11,706,037 1,672,110
Fees received 5,698,894 1,140,576
Other operating expenses (2,686,007) (1,360,322)
Taxes paid (69,061) -
Net cash outflow from operations 14,649,863 1,452,364
Cash flow from investing activities
New lending / investments (233,309,998) (86,585,723)
Sale / repayment of investments 113,881,100 26,246,652
Purchase of property, plant and equipment - (33,309)
Net cash outflow from investing activities (119,428,898) (60,372,380)
Cash flow from financing activities
Proceeds from issues of share capital 145,290,833 72,097,009
Amounts received from employees in respect of shares - 334,983
to be issued
Costs of issues of share capital - (2,742,508)
Interest Payable and other financing costs (281,021) -
Drawdown of loan 9,947,352 -
Dividends paid (1,988,377) -
Net cash inflow from financing activities 152,968,787 69,689,484
Effect of exchange rate fluctuations 876,119 -
Net increase in cash and cash equivalents 49,065,871 10,769,468
Cash and cash equivalents at end of period 59,835,339 10,769,468
This information is provided by RNS
The company news service from the London Stock Exchange
END
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