RNS Number:1267P
Titanium Asset Management Corp
29 February 2008
This announcement replaces RNS 0360P released at 08:53 on 29 February 2008. The
only changes are that the figure on the balance sheet for 'cash and cash
equivalents' is 19,388 rather than 19,338 and on the cash flow statement the
figure for restricted cash investments is 55,587 rather than 55,857. The full
text of the corrected announcement is set out below.
TITANIUM ASSET MANAGEMENT CORP
FINAL RESULTS FOR THE PERIOD ENDED 31 DECEMEBR 2007
Chairman's Statement
I am delighted to present this statement as Chairman of Titanium Asset
Management Corp.
We successfully raised US$120mn and were admitted to trading AIM, a market
operated by the London Stock Exchange, in June 2007. This was a reflection of
the skills of our placing agent, Sunrise Securities Corp, and we are very
grateful for the support of our new shareholders.
As a special purpose acquisition company our strategy has been to acquire a
number of specialist asset managers and we have, I believe, made an encouraging
start in implementing this strategy through the purchase of two high quality
asset management firms, Wood Asset Management, Inc and Sovereign Holdings, LLC,
respectively a US equity and a US fixed income manager. We have had a number of
exploratory discussions with other firms and on January 8th 2008 announced the
signing of a non-binding Letter of Intent to acquire another asset management
business. . I am pleased to report that the Company is today announcing the
proposed acquisition of National Investment Services, Inc, an institutional
asset management firm with offices in Milwaukee and Chicago.
Two events that we did not foresee were, first, the sudden illness and then
death of Gary Wood shortly after we bought his firm. We were deeply saddened to
lose Gary after such a short period working together but it is a tribute to the
team that he assembled at Wood Asset Management that the firm has continued to
generate good investment performance and service its clients, now under the
direct management of my colleague and the Company's Chief Executive, John
Sauickie.
The second event has been the extreme dislocation in financial markets that has
occurred since last August. In addition to impacting directly on asset prices,
this has clearly increased risk aversion amongst investors and has in some cases
made it harder for us to implement business decisions with certain
counterparties.
While we should expect this volatility to continue for some months, we believe
that the recent actions of the US Federal Reserve will begin to restore a degree
of investor confidence as the year progresses. We do not expect recent market
events to prevent us from continuing to implement our business strategy. We are
looking to acquire high quality firms; to the extent that recent volatility has
'stress tested' asset managers it will, in our view, help us to identify truly
excellent businesses.
John Kuzan
Chairman
For further information:
Titanium Asset Management Corp.
John Sauickie, Chief Executive Officer + 1 941 361 2191
Nigel Wightman, Executive Director + 44 7789 277849
Seymour Pierce Ltd
Jonathan Wright +44 20 7107 8000
Penrose Financial
Gay Collins +44(0) 20 7786 4888
Kay Larsen
titanium@penrose.co.uk
CONSOLIDATED STATEMENT OF INCOME
For the period of February 2, 2007 (inception) to December 31, 2007
(in thousands except per share amounts)
Revenue $2,437
Operating expenses 3,905
--------
Operating loss (1,468)
Interest income 2,191
--------
Income before taxes 723
Income tax expense 280
--------
Net income $443
--------
Basic earnings per share 0.03
Diluted earnings per share 0.03
CONSOLIDATED BALANCE SHEET at December 31, 2007
ASSETS
Current assets
Cash and cash equivalents $19,388
Restricted cash 55,587
Other current assets 500
----------
Total current assets 75,475
Other assets
Goodwill 21 ,987
Intangible assets, net 15,340
Property and equipment 3
Deferred tax benefit 377
---------
37,707
----------
Total Assets $113,182
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accruals $1,258
Commitments
Temporary equity 55,587
Stockholders' equity
Common stock 2
Additional paid in capital 55,892
Retained earnings 443
-----------
Total stockholders' equity 56,337
----------
Total Liabilities and Stockholders' equity $113,182
----------
CONSOLIDATED CASH FLOW STATEMENT
For the period of February 2, 2007 (inception) to December 31,2007
Net income $443
Adjustments to reconcile net income to net cash and 1,654
cash equivalents provided by operating activities:
Depreciation and amortization charges
Changes in assets and liabilities:
Decrease (increase) in:
Fees receivable (388)
Deferred tax asset (377)
Other receivables (22)
Prepaid expenses and other assets (90)
Increase (decrease) in:
Accounts payable 149
Income taxes payable 657
Accrued expenses and other current liabilities 452
---------
Net cash provided by operating activities 2,478
---------
Cash flows from investing activities
Purchases of property and equipment (19)
Cash paid for acquisition of subsidiaries (33,965)
Restricted cash investments (55,587)
----------
Net cash used in investing activities (89,571)
Cash flows from financing activities
Issue of share capital 120,025
Costs associated with share issue (9,652)
Share capital redeemed (3,892)
----------
Net cash from financing activities 106,481
----------
Net increase in cash and cash equivalents $19,388
Cash and cash equivalents
Beginning -
----------
Ending $19,388
----------
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
For the period of February 2, 2007 (inception) to December 31, 2007
1 Summary of business and significant accounting policies
Nature of business
Titanium Asset Management, Corp. (the "Company") is a special purpose
acquisition company which seeks to acquire privately owned asset management
businesses. To date the Company has acquired two asset management businesses and
their results are consolidated with those of the company from October 1, 2007.
The Company, through its wholly owned subsidiaries provides equity, fixed income
and balanced investment management services to corporate and individual clients
throughout the United States. The Company does not take title to, or custody of,
client securities.
Cash equivalents and concentration of credit risk
For the purposes of reporting cash flows, the Company considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents. The Company periodically maintains cash balances with a financial
institution, which at times throughout the year exceeds the federally insured
limits. Management believes that the use of a credit quality financial
institution minimizes the risk of loss associated with cash and cash
equivalents.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Basis of consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All inter-company transactions have
been eliminated in consolidation.
Revenue recognition
Revenue represents fees receivable for investment management and advisory
services provided during the period. Management fees are recognised in
accordance with the contractual arrangement and as the services are provided.
Property and equipment
Property and equipment are stated at cost. Cost includes expenditures for major
improvements and replacements with significant capital additions. Maintenance,
repairs and minor renewals, which do not materially extend the life of assets,
are charged to expense as incurred. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets as follows:
furniture and fixtures - 2 years
Impairment of long-lived assets
The Company complies with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. This statement requires that long-lived assets be reviewed
for impairment when events or circumstances indicate that their carrying amount
may not be recoverable. In management's opinion, no such events or changes in
circumstances have occurred in the current year.
Goodwill and intangibles
Goodwill is the excess of the amount paid to acquire a business over the fair
value of the net assets acquired. Pursuant to SFAS No. 142, Goodwill and Other
Intangible Assets, the carrying amount of goodwill is reviewed for impairment
annually or whenever events or changes in circumstances indicate that the
carrying amount might not be recoverable. If the fair value of the operations to
which the goodwill relates is less than the carrying amount of the unamortized
goodwill, the carrying amount will be reduced with a corresponding charge to
expense.
We will test goodwill for impairment at least annually (first day of our fourth
quarter), or more often if deemed necessary based on certain circumstances. Our
goodwill impairment test will be a two-step process: Step 1 - test for potential
impairment by comparing the fair value of each reporting unit with its carrying
amount; if the fair value of the reporting unit is greater than its carrying
amount (including recorded goodwill), then no impairment exists and Step 2 is
not performed; Step 2 - if the carrying amount of the reporting unit (including
recorded goodwill) is greater than its fair value, then the amount of the
impairment, if any, is measured and recorded as needed.
Intangible assets with definite lives are amortized over their estimated useful
life and reviewed for impairment in accordance with SFAS 144. Intangible assets
with definite lives are amortized using the straight-line method over their
estimated useful lives.
The value of the non-compete agreement signed in connection to the Wood Asset
Management, Inc. acquisition (see note 14) has been charged to expense
($829,000) in operating expenses, as of December 31, 2007, due to the untimely
death of the previous owner with whom the agreement was with.
Leases
Rentals paid under operating leases are charged to the profit and loss account
in the period when they become payable.
Earnings per share
Earnings per share is computed by dividing net income by the weighted average
number of shares of common stock and restricted stock outstanding during the
period. Warrants have been treated as dilutive to the extent that they are
exercisable below the average share price for the period.
Temporary equity
The proceeds from the issue of common shares bearing the right to require
repayment as explained in Note 13 have been classed as temporary equity to
reflect the potential for stockholders to require repurchase of their shares.
Option granted in relation to share issue
The fair value of the option granted to Sunrise Securities Corp. has been
credited to non-current liabilities. The cost of the option has been netted off
against reserves along with the other costs of admission.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and other loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
2 Cash and cash equivalents
2007
Cash held by Group companies $19,388
Cash held in trust for the Company 55,587
----------
$74,975
----------
The trust amount is held in a trust fund at a branch of J.P. Morgan Chase Bank,
N.A. maintained by Continental Stock Transfer and Trust Company, as trustee,
pursuant to an investment management agreement. The proceeds held in the trust
fund will not be released except upon a number of events as set forth in the
document published by the Company in connection with its admission to AIM.
3 Stockholders' equity
The company has authorized 54,000,000 shares of Common Stock, 720,000 shares of
Restricted stock and 1,000,000 shares of Preferred Stock, all with a par value
of $0.0001 per share. As of December 31, 2007 the Company had issued and
outstanding Common Stock shares and Restricted Stock shares of 22,993,731 and
696,160 respectively. As of December 31, 2007, no Preferred Stock shares have
been issued and accordinfgly the associated rights have not been established.
During the period the Company executed various Private Placement offerings of
Common Stock and Restricted Stock as follows:
Date Class Number Price Proceeds Purpose
(in $
thousands)
02/02/07 Common stock 2,880,000 0.7c 20 Start up capital
02/02/07 Restricted 720,000 0.7c 5 Start up capital
shares
06/21/07 Units 1 20,000,000 $6.00 120,000 Finance
acquisitions
10/01/07 Common stock 727,273 $5.50 - Wood acquisition
10/01/07 Common stock 181,818 $5.50 - Sovereign
acquisition
1 Each unit comprised 1 common share and 1 warrrant to subscribe for common
shares at $4. The warrants expire on June 20, 2011.
The holders of Common Stock arising from the issue of units on June 21, 2007 are
entitled to require the Company to repurchase their shares if at the time the
Company seeks approval for a business combination and the stockholders vote
against the proposal. The holders of Common Stock are also entitled to require
the Company to repurchase their shares if the Company seeks approval to extend
the deadline for a qualifying business combination and the shareholders vote
against the proposal. The repurchase price will be a per share price equal to a
pro-rata share of the trust fund, including interest earned and net of expenses
and taxes thereon.
As part of the AIM listing the Company granted an option to Sunrise Securities
Corp to acquire 2 million units at a price of $6.60. This option has been valued
at $2,091,000 and is recorded as a non-current liability on the balance sheet of
the Company.
4 Acquisitions
The financial statements include the results for Wood Asset Management Inc and
Sovereign Holdings LLC from October 1, 2007, the date of acquisition. As at
December 31, 2007 Titanium Asset Management Corp held 100% of the issued share
capital of Wood Asset Management Inc and a 100% economic interest in Sovereign
Holdings LLC.
Wood Asset Management Inc
Details Consideration Fair value Goodwill
Cash $29,164 $-
Shares issued 4,000 -
Existing customers - 12,026
Non-compete agreement - 829
Brands - 444
--------- --------- ---------
$33,164 $13,299 $19,865
--------- --------- ---------
Sovereign Holdings LLC
Details Consideration Fair value Goodwill
Cash $4,801 $-
Shares issued 1,000 -
Existing customers - 2,665
Non-compete agreement - 833
Brands - 181
-------- -------- --------
$5,801 $3,679 $2,122
-------- -------- --------
5 Earnings per common share
The calculation of basic earnings per ordinary share is based on the profit for
the year of $442,210 and on 14,312,262 common shares, being the weighted average
number of common shares in issue during the year.
The diluted earnings per share is based on profit for the year before
extraordinary items of $442,210 and on 17,489,985 common shares, calculated as
follows:
2007
Basic weighted average number of shares 14,312,262
Dilutive effect of warrants 3,177,723
-------------
6 Report and Accounts
The report and accounts of the Company for the period from inception to 31
December 2007 and being despatched to stockholders shortly. Copies of the report
and accounts will be available to the public free of charge from the offices of
Seymour Pierce, 20 Old Bailey, London EC4M 7EN for at least one month and will
be available to be downloaded from the Company's website at www.ti-am.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SESFMUSASEIE
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