Half Yearly Report

Friday 30 September 2016

Charlemagne Capital LimitedResults for the six months to 30 June 2016

Financial Summary

· Group AuM US$2.1 billion as at 30 June 2016, up 9.9% since 1 January 2016

· Net management fees down 15.5% on the prior year period

· Loss after tax and non-controlling interests US$1.4 million

· Operating loss US$1.0 million compared with profit of US$0.1 million in prior year period

· Interim dividend of 0.5 US cents per share declared and paid during the period in respect of the year ended 31 December 2015

· The Group has declared a special interim dividend of GB 3.0 pence per share for the 6 months ended 30 June 2016 conditional on the scheme implementing the recommended cash offer for the Company to be announced on 30 September 2016 becoming effective

· Net assets attributable to shareholders of US$20.8 million (December 2015: US$23.6 million) includes cash and cash equivalents of US$13.9 million and current asset investments of US$9.8 million.

Enquiries:

N+1 Singer - Tel. 020 7496 3000

Gillian Martin

Smithfield Consultants - Tel. 020 7360 4900

John Kiely

Ged Brumby

Financial Summary

Summary Financial Information

The results and the assets and liabilities of the Group for the current and comparative interim periods along with the last full financial year (extracted from the audited financial statements) are set out below in summary:-

Assets under Management ("AuM")

The table below sets out the Group's AuM as at 30 June 2016 and the movements experienced in each product range in the period since 1 January 2016.

Note: Closing AuM is stated as including all subscription and redemption orders received for the relevant funds as at the close of the period but not processed until the first dealing date of the following period.

Chief Executive's Report

Emerging markets equities gained during the first half of the year with a sharp fall in the initial weeks evolving into one of the better periods for the asset class in the last few years. Having declined 6.6% to the end of February, the MSCI Emerging Markets index ended the half with an overall gain of 6.4% over the six months. However, following the significant underperformance of the asset class over the last five years - MSCI EM was down 22% between the start of 2011 and the end of 2015 compared to a gain of 44% in MSCI World during the same period - industry-wide flows, which have amounted to withdrawals of over $100bn in the previous three years, continued to be negative during the period. This suggests investor positioning is very light and risk aversion high. From July, there has been some indication that this is starting to change, with 11 consecutive weeks of inflows into the asset class.

The portfolios the Group manages on behalf of clients have continued to perform well over the period, with four of the seven strategies in our Magna fund range in the first quartile of their respective FactSet Morningstar peer rankings. MENA and Frontiers performed particularly strongly during the half. The longer term numbers remain good, with five of the seven funds in the top half. The OCCO Eastern European Fund also continues to deliver consistent numbers in what has been a tough market environment.

The Group's assets under management rose from $1.9bn to $2.1bn during the half year, mainly due to market moves and investment performance. During the six months, overall flows for the Group were positive, in contrast to the negative flows seen by the industry as a whole referred to above. The average level of AuM during the period was US$1.9 billion compared with US$2.2 billion in the prior year period. Net management fees receivable were US$9.0 million compared with US$10.0 million for the previous six months and US$10.7 million for the comparable period in 2015, reflecting the decrease in AuM during the period and a small reduction in net revenue margin. Net crystallised performance fees in the period were US$0.3 million (2015: US$0.7 million) and accruing (non crystallised) performance fees for 2016 as at 30 June were US$8.5 million, compared with US$0.9 million as at the same date in 2015. Operating loss for the six month period was US$ 0.95 million (2015: profit US$ 0.05 million) and loss attributable to shareholders was US$ 1.38 million (2015: profit US$ 2.76 million following the receipt of an exceptional tax credit of US$ 3.2 million). Loss after tax attributable to shareholders represents negative earnings per share of 0.47 US cents for the period.

Group AuM at the end of August stands at US$2.19bn due to positive market performance and net inflows during the period since June. This level of AuM is still below break-even on a recurring fee basis therefore the quantum of performance fees at year end will be the principal determinant of the level of operating loss/profit for the year as a whole. Accruing (non-crystallised) performance fees as at 31 August are US$11.4 million, US$9.1 million of which relates to OCCO and are subject to a minority interest, compared with US$ 1.5 million as at the same date in 2015. The Group has a strong balance sheet with net assets attributable to shareholders of US$20.8 million, which include cash and cash equivalents of US$13.9 million and current asset investments of US$9.8 million.

Conversations with current and potential investors in our strategies in recent months have had a different tone to them compared with twelve or eighteen months ago. Whereas the focus was previously on the stock picking within the portfolios we manage, the discussions now are as likely to include a fair amount of time on the outlook for the asset class. After a long period of underperformance, many of those prescient enough to have been bearish in emerging markets equities are reconsidering their positions. After five years of disappointments, the second quarter was the first period for at least eight quarters in which positive earnings surprises have outnumbered negative ones. Emerging markets currencies are stable to stronger: current accounts are in a better state than two or three years ago, the increases in the US interest rates are, in our opinion, likely to be modest in nature and reasonably well spaced. The emerging markets GDP growth differential over developed economies, which has halved from over 4% to 2% in the last five years, is now starting to expand again. Finally, the Brexit vote and the upcoming elections in the US, France and Germany are a reminder that emerging markets do not have a monopoly of political risk.

The directors have declared a special interim dividend of GB3.0 pence per share for the 6 months ended 30 June 2016, conditional on the scheme implementing the recommended cash offer for the Company to be announced on 30 September 2016 becoming effective.

Jayne Sutcliffe

Chief Executive

30 September 2016Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

Notes to the Condensed Consolidated Interim Financial Statements

1. Basis of Preparation and Significant Accounting Policies

The condensed consolidated interim financial statements have been prepared on a condensed basis, in accordance with the requirements of International Accounting Standard 34 "Interim Financial Reporting". They do not include all of the information required in annual financial statements in accordance with IFRS and where appropriate should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2015.

The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2015.

The condensed consolidated interim financial statements are prepared on the historical cost basis except that the following are stated at their fair value: financial instruments at fair value through profit or loss including derivative financial instruments. Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.

2. Segment Reporting

3. Taxation

Income tax expense is recognised in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Amounts accrued for income tax expense in one interim period may be adjusted in a subsequent period of that financial year if the estimate of the effective rate of income tax changes.

The amount recovered in respect of prior years during 2015 relates to the Charlemagne Employee Benefit Trust settlement agreement entered into with HMRC on 23 March 2015. Under the terms of the settlement agreement contributions to the trust made in previous years were allowed as a deduction from taxable income in respect of those years of assessment resulting in the amount of tax recovered shown above.

4. Dividends

An interim dividend of 0.5 US cents (GB 0.3513p) (2015: 0.5 US cents, GB 0.3393p) per ordinary share in respect of the year ended 31 December 2015 was paid on 22 April 2016 to those shareholders on the register on 29 March 2016 and was charged to the income statement in 2016.

The Group has declared an interim dividend of 3.0 GB pence per ordinary share in respect of the half year to 30 June 2016 conditional on the scheme implementing the recommended cash offer for the Company to be announced on 30 September 2016 becoming effective.

5. Receivables

6. Accounts Payable, Accruals and Other Payables

7. Issued Share Capital

As at the date of issuing the financial statements there were 290,885,616 ordinary shares of US$0.01 each issued and fully paid.

8. Earnings per Share

The calculation of basic earnings per share of the Group is based on the net loss attributable to shareholders for the six months to 30 June 2016 of US$1.378m (2015: profit of US$2.757m) and the weighted average number of shares of 290,885,616 (2015: 290,885,616) in issue during the period.

The calculation of diluted earnings per share of the Group includes the effect of those outstanding share options where specified performance conditions have been satisfied but which have not yet vested. The calculation of diluted earnings per share of the Group is based on the net loss attributable to shareholders for the six months to 30 June 2016 of US$1.378m (2015: profit of US$2.757m) and the weighted average number of shares of 291,210,725 (2015: 294,850,476) in issue during the period.

9. Share Based Incentive Plans

During the period the Group did not issue any new share based incentive programmes to its employees and none of the previously granted options vested or expired.

Equity Settled

At the beginning and end of the period there were 1,527,148 share options outstanding with a weighted average exercise price of GBP0.031.

Cash Settled

There were no cash settled awards in existence during the period.

Other incentive plans

During the year ended 31 December 2014, awards of shares in the Magna Global Emerging Markets Fund ("the Fund") were issued to certain employees subject to the vesting conditions set out below. The fair value of the awards granted is spread over the vesting period, and recognised as an expense in the accounts with a corresponding increase in liabilities. The fair value of the awards is measured by reference to the fair value of the equivalent number of shares held by the Company with the intention that they will be utilised to settle these awards as they vest.

The total number of shares subject to the award as at 30 June 2016 was 139,295.656 (2015: 156,843.762) with 100% of the shares allocated to each employee vesting upon three years' service provided that the Fund outperforms the MSCI Emerging Market Index (USD) ("the benchmark") by 1% to 2.99% per annum over the whole life of the award. If the Fund outperforms the benchmark by 3% or more, 110% of the shares subject to the award vest but if the Fund's performance is less than the benchmark plus 0.99%, then 80% of the shares subject to the award vest.

The amount charged as an expense during the 6 months to June 2016 in respect of these awards is US$245,883.

Expenses in respect of share based incentive plans

The following amounts have been charged as an expense within these financial statements:

10. Financial Instruments - Fair Values

a) Accounting Classification and Fair Values

The following table shows the carrying amounts and fair values of financial assets and financial assets and financial liabilities, including their levels in the fair value hierarchy.

b) Measurement of Values

i) Valuation techniques

The valuation technique applied to level 2 financial instruments is based on the net asset value per share of the relevant investments which are published by their appointed custodian.

Level 3 financial assets consist solely of investments in a private company. The fair value of this investment is determined based on the most recent net assets of the company.

There have been no changes to the valuation techniques used during the period.

ii) Level 3 fair values

Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.