18th May 2009 07:00
18 May 2009
RESOLUTION LIMITED
Registered Office: Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands
Company Number: 49558
Interim Management Statement for the period 1 January 2009 to 31 March 2009
Resolution Limited aims to create value through the acquisition and restructuring of financial services companies in the UK and Western Europe. The Company targets a mid-teens percentage gross internal rate of return over the medium term, before any return from subsequent refinancings and/or re-ratings.
The Company has outsourced most of its operating functions, including the identification and assessment of acquisition opportunities and the design and execution of the restructuring and disposal process for acquired businesses, to Resolution Operations LLP ("ROL"), an FSA authorised UK limited liability partnership.
Following our listing in December 2008, ROL has been actively engaged in evaluating opportunities in the UK life assurance and asset management sectors on behalf of the Company. While detailed discussions have been held with certain vendors, the Board decided not to proceed with the specific acquisitions at that time.
Financial overview
The value of the Company's short term investments at 31 March 2009 was £649 million (31 December 2008 £653 million). Outgoings on operating expenses for the quarter were broadly offset by the investment return on the short term investments. The small reduction in investments over the quarter reflects the payment of the remaining accrued expenses related to the listing.
As previously disclosed, the short term investment mandate requires that at least 80% of the investments must be maintained at a credit rating of A1+/P1 (or its equivalent) with all investments required to be at or better than A1/P-1 (or its equivalent). Furthermore, under the mandate investments must have a maximum maturity of six months in the case of treasury bills and 100 days in the case of all other investments. The Company continues to apply this mandate to its invested assets.
During the period the Company undertook due diligence and related activities at a cost of approximately £4 million in connection with acquisition opportunities.
The unaudited net assets per share of the Company at 31 March 2009, assuming that all of the due diligence costs were to be expensed, were 97.6 pence.
Investigation
The Company was pleased to announce on 8 May that the FSA has closed an investigation into the Chairman and certain members of the ROL team relating to their former positions as directors of Resolution plc (now Pearl Group Holdings (No. 1) Limited). Following the close of the investigation, the FSA confirmed that any change of control application in relation to a potential acquisition by the Company will be considered in the normal way.
Outlook
We are fully engaged in assessing and progressing acquisition opportunities. Over the next 18 months, we anticipate that significant consolidation and restructuring will take place, which we believe will benefit investors in the UK life assurance and asset management sectors.
Enquiries:
Michael Biggs, Resolution Limited +44 (0)1481 745 368
Investors / analysts
Steve Riley, Resolution Operations LLP +44 (0)20 7016 9085
Media
Alex Child-Villiers, Temple Bar Advisory +44 (0)7795 425580
Note: Gross internal rate of return
The gross internal rate of return is the rate of interest such that the present value of all investor cash flows is zero. Investor cash flows are the net investor outflows and investor inflows. The investor outflows include the initial fund raising (including issue costs), future shareholder investments (for example, by way of rights issues or issue of shares as consideration for an acquisition); the investor inflows include all dividends and returns of capital made by the Company whether by cash or the distribution in specie of shares in acquired businesses to shareholders or otherwise.
Forward-looking statements
This interim management statement contains certain forward-looking statements with respect to Resolution Limited and its outlook. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the further. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.
Financial calendar
Interim results for 2009 26 August 2009
Website
www.resolution.gg
Related Shares:
FLG.L