Half Yearly Report

Charlemagne Capital LimitedResults for the six months to 30 June 2013

Tuesday 17 September 2013

Financial Summary

· Group AuM US$2.4 billion as at 30 June 2013, down 8.1% since 1 January 2013

· Net management fees up 10.2% on the previous six months, reflecting the higher average AuM in the first half of 2013

· Operating profit up 116.7% on prior year period

· Interim dividend of 1.0 US cents per share declared and paid during the period in respect of the year ended 31 December 2012

· The Group has declared an interim dividend of 0.5 US cents per share (2012: nil) in respect of the half year to 30 June 2013

· Net assets attributable to shareholders of US$25.8 million (December 2012: US$27.8 million) includes cash and cash equivalents of US$22.6 million.

Jayne Sutcliffe, Chief Executive, commented:

"The first half of 2013 has seen strong performance in Charlemagne's key investment strategies, with 92% of funds managed outperforming their benchmarks. Notably, the Magna Emerging Markets Dividend Fund, which established a full three year track record as of June 2013, has achieved first quartile performance over all periods since inception and has outperformed the MSCI EM index by 7.6% for the year to date with lower volatility than the index.

"More broadly however, it has been a difficult period in which to grow asset levels as markets have declined and investor sentiment towards emerging markets has been muted. Emerging market equities continue to see volatility and there is no doubt that risk appetite for the asset class has been tempered.

"Looking ahead, scope for a sustained recovery in asset prices remains uncertain, but emerging market equities are now trading at the widest discount to developed markets since the financial crisis and we believe that this may prove to be an attractive re-entry point for investors. With our bottom up stock picking approach based on detailed analysis we are confident of the long term prospects of our business."

Enquiries:

Charlemagne Capital

Jayne Sutcliffe, Chief Executive Tel. 020 7518 2100

Lloyd Jones, Finance Director

Smithfield Consultants

John Kiely Tel. 020 7360 4900

Ged Brumby

N+1 Singer

Jonny Franklin-Adams Tel. 020 7496 3000

Nick Donovan

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 2013 and the movements experienced in each product range in the period since 1 January 2013.

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

2013 has seen strong performance in Charlemagne's key investment strategies, with 92% of funds managed outperforming their benchmarks. However, it has been a difficult period in which to grow asset levels as markets have declined and investor sentiment towards emerging markets has been muted, resulting in outflows from this asset class. This has been compounded by the continued underperformance of emerging markets relative to developed markets which have provided positive returns for investors. Momentum has stalled as investors have reassessed asset allocations and emerging markets suffered outflows in the second quarter in reaction to the US Federal Reserve's commitment to taper easing measures. Performance of key investment strategies has continued to be strong over the period and we have seen some success in fund raising for certain strategies, but the combination of declines in market values and an environment with negative industry flows has made it difficult to make progress in asset growth.

Group Assets under Management ('AuM') stood at US$2.42 billion at the end of June, down 8.1% since the start of the year due to net negative investment performance of 5.1% and net outflows of 3.0%. This compares to a fall in the MSCI EM Index over the period of 9.6%. During 2013, the relative performance of Charlemagne's key equity strategies has been strong, with seven of the nine Magna sub-funds in the top half of their FactSet Morningstar peer group and all key institutional strategies being ahead of their respective benchmarks. Notably, the Magna Emerging Markets Dividend Fund, which established a full three year track record as of June 2013, has achieved first quartile performance over all periods since inception and has outperformed the MSCI EM index by 7.6% for the year to date with lower volatility than the index. The positive overall net inflows into the Magna funds over the first half of the year are predominantly due to subscriptions into this strategy. The institutional business benefitted from a new Eastern European mandate win in addition to inflows into existing mandates. The OCCO Eastern European Fund also suffered net outflows as some investors reassessed their exposure to the asset class. Since the end of June, there has been little overall change in markets with positive performance in July being reversed in August. AuM as at the end of August stands at US$2.44 billion.

Average AuM in the period was U$2.6 billion compared with US$ 2.4 billion in the prior year period. Net management fees receivable were US$11.9 million compared with US$10.8 million for the previous six months and US$9.7 million for the comparable period of 2012. This reflects the higher average AuM over the period and a small increase in net margin to 89 basis points arising from the impact of OCCO higher fee classes. Net crystallised performance fees in the period were US$0.5 million (2012: US$0.9 million) and accruing (non crystallised) performance fees for 2013 as at 31 August, arising mainly from the OCCO fund, are US$10.0 million compared with US$4.4 million as at the same date in 2012. Operating profit increased to US$1.3 million (2012: US$0.6 million) and profit attributable to owners of the company increased to US$0.372 million (2012: US$0.012 million) which represents earnings per share of 0.13 US cents. The Directors consider it appropriate to support the level of dividend by utilising some of the Group's cash reserves and have therefore declared an interim dividend of 0.5 US cents per share.

The Group remains profitable overall in the year to date, but an increase in AuM is required in order to ensure sustainable profits on a recurring management fee basis. Under current circumstances, the generation of performance fees during the remainder of the year will be a significant factor in determining full year profit levels. We are focused on raising additional assets for our key investment strategies, particularly for the Global Emerging market strategies. We have the key critical component for asset raising which is strong, competitive investment performance, generated by a highly experienced, stable, and well resourced investment team; the Group has both capability and capacity to manage significantly higher levels of assets with marginal cost impact. On the basis of this, investor coverage generated by our core sales team has continued to increase, enhanced by selective third party distribution relationships, particularly outside of Europe. Reaching the 3 year track record of the Emerging Markets Income and Growth strategy at the end of the period was a key milestone in an area which is probably the most attractive emerging market asset class. Standing at US$170 million as at 31 August 2013, an increase of US$115 million since the start of the year, we have demonstrated a return to strong performance and an ability to outperform competitors.

Emerging market equities continue to see volatility and there is no doubt that risk appetite has been tempered. Having benefitted from the US Federal Reserve's asset purchase programme, the threat of tapering has caused these assets to come under pressure. Emerging markets are still heavily reliant on exports and demand from the West and are obviously impacted by slowing global growth. Private consumption will, over time, cause the emerging economies to become increasingly dependent on their own middle class, domestic led demand. The IMFs latest World Economic Outlook projects emerging market growth of a healthy 5.6% in 2013, up slightly from 2012 and significantly ahead of the 1.5% projected growth for developed economies. Scope for a sustained recovery in asset prices remains uncertain, but emerging market equities are now trading at the widest discount to developed markets since the financial crisis. For many investors, this may prove to be an attractive re-entry point. We remain focused, bottom up stock pickers. While investment styles come and go in the short term, we are confident that our research-driven investment process, based on a detailed analysis of the companies in which we invest, should provide superior returns in the long run.

Jayne Sutcliffe

Chief Executive

17 September 2013

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

 Notes to the Consolidated Interim Financial Statements

1. Basis of Preparation and Significant Accounting Policies

The 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 2012.

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 2012.

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. Comparative Figures

Where necessary, comparatives figures have been adjusted to conform to changes in presentation for the current period.

3. Segment Reporting

Notes to the Consolidated Interim Financial Statements (continued)

4. 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.

5. Dividends

An interim dividend of 1.0 US cents (GB 0.6583p) (2012: 0.6 US cents, GB 0.3786p) per ordinary share in respect of the year ended 31 December 2012 was paid on 26 April 2013 to those shareholders on the register on 5 April 2013 and was charged to the income statement in 2013.

The Group has declared an interim dividend of 0.5 US cents (GB 0.3133p) in respect of the half year to 30 June 2013.

6. Receivables

7. Accounts Payable, Accruals and Other Payables

Notes to the Consolidated Interim Financial Statements (continued)

8. Issued Share Capital

There were no movements in share capital during the current or prior year periods.

As at the date of issuing the financial statements there were 280,385,616 ordinary shares of US$0.01 each issued and fully paid.

Included within share capital at 30 June 2013 are 532,064 shares (December 2012:  1,409,076 shares) which are held on behalf of a subsidiary of the Company. These are accounted for as treasury shares and are included as a debit reserve within equity.

9. Earnings per Share

The calculation of basic earnings per share of the Group is based on the net profit attributable to shareholders for the six months to 30 June 2013 of US$0.372m (2012: profit of US$0.012m) and the weighted average number of shares of 279,446,541 (2012: 277,612,891) 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 profit attributable to shareholders for the six months to 30 June 2013 of US$0.372m (2012: profit of US$0.012m) and the weighted average number of shares of 290,792,326 (2012: 277,612,891) in issue during the period.

Shares held by Sanne Trust Company Limited and accounted for as treasury shares as disclosed in note 8 have been excluded from the earnings per share calculation.

10. Share Based Incentive Plans

During the period the Group did not issue any new share based incentive programmes to its employees. A number of previously granted options vested and some expired due to failure to meet their performance or service conditions.

Equity Settled

The number and weighted average exercise price of outstanding share options is as follows:

Notes to the Consolidated Interim Financial Statements (continued)

10. Share Based Incentive Plans (continued)

Cash Settled

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

Expenses in respect of share based incentive plans

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

As at 30 June 2013, total liabilities in respect of cash-settled share-based incentive plans were US$nil (31 December 2012: US$nil).