RNS Number : 2585H
Titanium Asset Management Corp
03 November 2008
Titanium Asset Management Corp.
("Titanium" or the "Company")
Restated Interim Accounts
Titanium has restated its interim accounts for the six months ended 30 June 2008 followings its filing of a Form 10 registration
statement with the SEC in July 2008 and as part of the process of that registration statement becoming effective, which occurred in
September 2008.
On October 29, 2008, the Board of Directors of Titanium, including its Audit Committee, concluded that, as a result of losses of certain
investment advisory accounts at Wood Asset Management, Inc. following the death of Gary Wood and the loss of an institutional account at
Sovereign Holdings, LLC, its customer relationship intangible assets associated with the acquisitions were impaired. The impairment of these
intangible assets is expected to result in a non-cash charge of approximately $1.8 million for the quarter ended June 30, 2008. None of the
impairment charge will result in future cash expenditures.
For further information:
Titanium Asset Management Corp.
Nigel Wightman, Chairman and CEO + 44 7789 277849
Seymour Pierce Ltd
Jonathan Wright +44 20 7107 8000
Titanium Asset Management Corp.
Interim report and unaudited accounts for the period from
January 1, 2008 to June 30, 2008
(Restated)
BALANCE SHEET as at June 30, 2008 (Unaudited)
(amounts in thousands)
June 30, June 30, 2007
Note 2008
(restated)
ASSETS
Current Assets
Debtors - trade debtors $ 2,426 -
- prepaids and other 1,302 -
receivables
Cash and cash equivalents 31,138 25
Total Current Assets 35,866 25
Other Assets
Goodwill 29,419 -
Intangible assets 34,634 -
Property and equipment -
190
Deferred tax asset 1,128 -
Total Other Assets 65,371 -
Total Assets $ 101,237 25
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued expenses $ 537 -
Income taxes 31 -
Accounts payable 92 -
Deferred revenue 218 -
Guaranteed payment for acquisition 1,000 -
Other creditors 37 -
Total Current Liabilities 1,915 -
Guaranteed payment for acquisition 903 -
COMMITMENTS
Stockholders' Equity -
Share capital 4 2 1
Additional paid in capital 5 99,462 24
Profit and loss account 5 (1,045) -
Total Stockholders' Equity 98,419 25
Total Liabilities and $ 101,237 25
Stockholders' Equity
Titanium Asset Management Corp.
Interim report and unaudited accounts for the period from January 1 , 2008 to June 30, 2008
STATEMENT OF OPERATIONS
For the period from January 1,2008 to June 30, 2008
(amounts in thousands except per share amounts)
6 months to Inception
June 30, (2 Feb 2007) to June 30,2008
2008
(Restated)
Turnover $ 6,706 -
Amortisation and depreciation -
Impairment of intangible (2,002)
(1,792)
Other operating expenses (5,988) -
Operating Loss (3,076) -
Interest receivable 868 -
Loss before taxes (2,208) -
Income tax (expense) benefit 720 -
Net Loss $ (1,488) -
Net Loss Per Share, Basic (0.07) -
Net Loss Per Share, Fully (0.07) -
Diluted
Weighted Average Shares 20.45mn 2.88 mn
Outstanding, Basic
Weighted Average Shares 20.45mn 2.88 mn
Outstanding, Fully Diluted
Titanium Asset Management Corp.
Interim report and unaudited accounts for the period from January 1, 2008 to June 30, 2008
STATEMENT OF CASH FLOWS
For the period from January 1, 2008 to June 30, 2008
(amounts in thousands)
Inception (February
Jan 1, 2008 to June 30, 2008 2, 2007) to
(Restated) June 30,2007
Net loss $ (1,488) -
Adjustments to reconcile net income to net cash
and cash equivalents provided by operating
activities:
Depreciation and amortisation charges 3,794 -
Changes in operating assets and liabilities:
(Increase) in debtors (102) -
(increase) in deferred tax asset (751)
(Decrease) in current liabilities (975) -
Net Cash generated by Operating Activities 478 -
Cash flows from investing activities
Cash paid for acquisitions less cash acquired (31,226) -
Purchase of property and equipment (72) -
Release of restricted cash 55,587
Net cash generated from investing activities 24,289 -
Cash Flows from Financing Activities
Cash paid for the repurchase of shares (12,017) -
Proceeds from issuance of share capital - 25
Net Increase in Cash $ 12,750 25
Cash and cash equivalents, Beginning of Period $ 19,388 Nil
Cash and cash equivalents, End of Period $ 32,138 25
Titanium Asset Management Corp.
Interim report and unaudited accounts for the period from January 1, 2008 to June 30, 2008
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Organization, business and operations
Titanium Asset Management Corp. (the "Company") was incorporated in Delaware on February 2, 2007 as a blank check company, the objective
of which is to acquire one or more operating companies engaged in the asset management industry.
The Company was successfully listed on the London Alternative Investment Market on 21 June 2007. The listing raised net proceeds of
$110.4 million. The Company completed its third acquisition on March 31, 2008 and as a result has become an operating company. The Company
intends to seek a registration statement with the SEC within 120 days of the period end with a view to obtaining a listing on NASDAQ.
NOTE 2 - Basis of Preparation
These report and accounts have been prepared in accordance with accounting principles generally accepted in the United States of
America.
The following accounting policies have been applied consistently in dealing with items which are material in realation to the financial
information of Titanium Asset Management Corp. set out in this report.
NOTE 3 - Summary of Significant Accounting Policies
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.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Income per common share Income per common share is computed by dividing net income by the weighted average number of shares of common
stock and restricted stock outstanding during the period. As the earnings per share are nil no separate estimate of the impact of dilution
has been prepared.
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.
The Company will test goodwill for impairment at least annually (first day of our fourth quarter), or more often if deemed necessary
based on certain circumstances. The 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
NOTE 3 - Summary of Significant Accounting Policies (cont)
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.
Option granted in relation to stock issuance The fair value of the option granted to Sunrise Securities Corp. has been credited to
additional paid in capital. 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.
Interim report and unaudited accounts for the period from January 1 , 2008 to June 30, 2008
NOTES TO FINANCIAL STATEMENTS
(amounts in thousands except number of shares)
NOTE 4 - Share Capital
Authorized Called up and fully paid
Number $ Number $
Common Stock $0.0001 54,000,000 5,400 21,117,723 2,266
Restricted Shares $0.0001 720,000 72 529,272 61
Preferred Stock $0.0001 1,000,000 100 0
5,572 2,327
The holders of Common Stock arising from the issue of units on 21 June 2007 were entitled to require the Company to repurchase their
shares if at the time the Company seeks approval for a business combination the stockholder votes against the proposal. In April 2008
2,208,452 common shares representing 9.75% of the issued share capital were repurchased for a total consideration of approximately $12
million. As a result of this repurchase, 333,777 shares of Common Stock and 83,444 shares of Restricted Stock were cancelled. Following the
acquisition of NIS on March 31, 2008 shareholders no longer have the right to require the Company to repurchase their shares.
The Restricted Shares carry no rights to dividends except in the case of a winding up of the Company. They convert on a one for one
basis to Common Stock if at any time within five years of their issue,
and subsequent to a Business Combination, the ten day average share price of the Common Stock exceeds $6.90.
No Preferred Stock had been issued at the balance sheet date and accordingly the rights attaching to the Preferred Stock have not been
set.
There were 20 million warrants in issue at the balance sheet date. Each warrant entitles the holder to subscribe for Common Stock at
$4.00 per share subsequent to a Qualifying Business Combination. There were 20 million warrants in issue at the balance sheet date.
The Company issued an option over 2 million Units to the placing agent. The option is exercisable at $6.60 following a Qualifying
Business Combination.
Titanium Asset Management Corp.
Interim report and unaudited accounts for the period from January 1, 2008 to June 30, 2008
NOTES TO FINANCIAL STATEMENTS
(amounts in thousands)
NOTE 5 - Reserves
Profit & Loss $000s Additional Paid in Capital $000s Total $000s
Brought forward at 1 January 443 55,892 56,335
2008
Net loss for the period (1,488) - (1,488)
Reallocation of temporary 55,587 55,587
equity
Shares repurchased - (12,017) (12,017)
(1,045) 99,462 98,417
NOTE 6 - Acquisition
The financial statements include assets acquired from National Investment Services Inc. on March 31, 2008. At March 31, 2008 Titanium
Asset Management Corp held 100% of the issued share capital of National Investment Services Inc. The goodwill related to the acquisition
will be fully deductible for tax purposes.
Details Consideration Fair value Goodwill
Cash $29,684 $- $-
Accrued acquisition costs 1,542 - -
Debtors - 3,123 -
Other current assets - 115 -
Property and equipment - (629) -
Current liabilities - 23,088 -
Existing customers 1,903 - -
Guaranteed payments - - -
_______ _______ _______
$33,129 $25,697 $7,432
Titanium Asset Management Corp.
Interim report and unaudited accounts for the period from January 1, 2008 to June 30, 2008
NOTES TO FINANCIAL STATEMENTS
(amounts in thousands)
NOTE 7 - Intangible assets
Goodwill Customers Non-compete Brands Total
Cost
At January 1, 2008 21,987 14,691 1,662 625 38,965
Additions (see note 6) 7,432 23,088 30,520
At June 30, 2008 29,419 37,779 1,662 625 69,485
Amortization
At January 1, 2008 697 898 43 1,638
Impairment 1,792 1,792
Charge for period 1,778 139 85 2,002
At June 30, 2008 4,267 1,037 128 5,432
Net book amount
At June 30, 2008 $29,419 $33,512 $625 $497 $64,053
Useful life (in months) N/A 60-180 36 36-48
NOTE 8 - Contingency
During the six months ended June 30, 2008 the Company received an invoice for $536,000 from the lawyers who worked on the placement of
the Company's shares on London's AIM market in June 2007. The Company is in dispute with the lawyers with respect to this invoice and at the
current time believes there is no liability. Accordingly no provision has been made in these accounts for the invoice. In the event that a
liability does arise the income statement will be unaffected and the Company does not expect its financial position to materially change.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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