4th Sep 2007 07:01
Charlemagne Capital Limited04 September 2007 4 September 2007 Charlemagne Capital Limited Unaudited Results for the six months ended 30 June 2007 Charlemagne Capital Limited ("Charlemagne", or the "Group"), the specialistemerging markets equity investment manager, today announces unaudited resultsfor the six months ended 30 June 2007. Key Highlights • Group Assets under Management ("AuM") total up 9.8% since 2 January 2007 to US$5.1 billion as at 2 July 2007, up 27.6% since 3 July 2006 (US$4.0 billion), representing growth in existing funds as well as new funds and institutional business • Fund performance remains strong on both an absolute and relative basis with key funds outperforming their benchmarks over the short and long term • The Group's own label funds (Magna, OCCO and Specialist) have, in total, seen net subscriptions over the past six and twelve months despite the weak industry flow environment • Overall, the average management fee margin per dollar of AuM has risen by 4% (from 81.6 basis points (2 January 2007) to 84.6 basis points (30 June 2007)) during the first half of the year as a result of the change in category mix • Net management fees down 10% to US$19.0m versus June 2006, primarily due to higher monthly average AuM in the first half of 2006 • Ordinary interim dividend per share increased by 5% to 2.20 US cents • Special interim dividend per share unchanged at 1.65 US cents • Magna Africa Fund launched, raising US$70m • Naya Bharat Property Company launched, raising US$57m • Capital raising and listing on AIM of European Convergence Development Company, raising US$78m Commenting on the results, Jayne Sutcliffe, Chief Executive said: "We remain confident that new business initiatives in all four fund categoriesshould lead to improved flows in the second half of the year as long as marketconditions do not significantly deteriorate. Despite the recent turbulence inglobal markets, the fundamental case for emerging markets remains sound and wecontinue to find attractive growth opportunities throughout the GEMs universe.The Group remains confident that it is well positioned to continue to grow itsassets on a number of fronts and will continue to achieve healthy profit marginsthrough its increasingly diversified fee structures." Enquiries: Charlemagne Capital Tel. 020 7518 2100Jayne Sutcliffe, Chief ExecutiveDavid Curl, Finance Director Smithfield Consultants Tel. 020 7360 4900John Kiely / George Hudson There is a presentation for analysts and investors at 9.30pm today at theoffices of Smithfield Consultants, 10 Aldersgate St., London EC1A 4HJ. Notes to Editors: Charlemagne Capital is a specialist emerging markets equity investmentmanagement group. Charlemagne Capital Limited was admitted to the AIM market ofthe London Stock Exchange on 4 April 2006. Charlemagne's product range comprises mutual funds, hedge funds andinstitutional and specialist fund products primarily covering GEMs, EasternEurope, Latin America and Asia. Charlemagne Capital employs a range ofinvestment strategies including: long only, long/short, structured products andprivate equity. Charlemagne Capital's funds aim to exploit the inefficiencies inthe market via a strict bottom up approach and focused stock selection. Through the strong long-term investment performance track record of itsprincipal funds, Charlemagne Capital has established itself as a market leaderin emerging markets investment management. Its performance has been recognisedthrough numerous awards and top rankings for its funds, including the 2005Standard and Poor's 5-year best performing fund award in Austria, the 2006 SwissLipper Leaders 5-year award winner for Emerging Markets Europe and an AAA-ratingby Standard & Poor's for its Magna Eastern European Fund (a sub-fund of MagnaUmbrella Fund Plc). Chief Executive's Report The table below sets out the Group's Assets under Management ("AuM") as at 2July 2007 and the movements experienced in each product range in the periodsince 2 January 2007. 2 January Net Reorganisation Net 2 July Movement 2007 subscriptions performance 2007 in AuM (US$m) (%) (US$m) (%) (US$m) (%) AuM period (US$m) (US$m) (%)-------- -------- ------ ------ ------ ------ ------- ------ -------- --------Magna 1,255 (22) (1.8%) (142) (11.3%) 194 16.5% 1,285 2.4%OCCO 333 17 5.1% - - 44 12.9% 394 18.3%Institutional 2,585 (293) (11.3%) 147 5.7% 306 12.2% 2,745 6.2%Specialist 472 178 37.7% (40) (8.5%) 67 12.4% 677 43.4%-------- -------- ------ ------ ------ ------ ------- ------ -------- --------Total 4,645 (120) (2.6%) (35) (0.8%) 611 13.4% 5,101 9.8%-------- -------- ------ ------ ------ ------ ------- ------ -------- -------- Within global emerging markets ("GEMs"), the first half of 2007 wascharacterised by buoyant equity markets but weak industry flows. In thiscontext, net fund outflows across our four fund/product categories were limitedto US$120m. Performance across our fund/product categories remained strong on arelative and absolute basis. AuM increased to US$5.1bn (up 27.6% from US$4.0bn as at 3 July 2006),representing growth in existing funds as well as new funds and institutionalbusiness. Revenue for the first half of the year was US$40.4m (2006: US$47.9m),of which US$19.0m (2006: US$21.0m) was from net management fees. Management feesfrom the Magna, OCCO and Institutional funds were up year on year for the firsthalf of the year. The Specialist fund category was lower as a result of the NovyNeft return of capital in June 2006. Net performance fees were US$16.4m (2006:US$26.8m). Accruing performance fees(1) which have not crystallised but havecrystallisation dates falling in 2007 were US$34.0m compared with US$0.3m as atthe same date in 2006, although the accruing amount may not necessarily beindicative of the eventual crystallised figure. The balance of the totalrevenues of US$5.0m (2006: US$0.1m) arose from investment and other income. The Group's own label funds (Magna, OCCO and Specialist) have, in total, seennet subscriptions over the past six and twelve months despite the weak industryflow environment. Overall, the average management fee margin per dollar of AuMhas risen by 4% (from 81.6 basis points (1 January) to 84.6 basis points (30June)) during the first half of the year as a result of the change in categorymix. The Group has made good headway with developing its capabilities for competingin the institutional mandate market place and we are pleased to announce twosuch appointments that have been made since the end of the first half. The firstis by Lansforsakringar, a major Swedish bank and insurer, and the second is by aleading European pension fund. These two mandates total approximately US$180m. Two new AIM listed vehicles, the European Convergence Development Company plcand Naya Bharat Property Company plc, were launched during the first half of theyear and we plan one further product launch in that category during 2007. Thesevehicles offer a greater stability of assets as they are "permanent capital".They also generate higher than average levels of management fees. The Magna product range has seen modest net outflows during the first half withthe positive impact of the launch of the Magna Africa Fund being offset byoutflows from the Magna Eastern Europe Fund. The Asian and Latin Americanproducts continue to generate healthy flows and are increasingly important fundswithin the Magna product range. The funds have performed well with the anchorfunds (GEMs, Eastern Europe, Asia and Latin America) all producing first orsecond quartile investment returns in both the last six months and the lasttwelve months. The Group will continue to pursue its policy of paying sustainable dividendsreflecting the long-term earnings and cash flow potential of the Group. For thefirst half of 2007, the Group is declaring an ordinary interim dividend of US2.2 cents (2006: US 2.1 cents) and a special interim dividend of US 1.65 cents(2006: US 1.65 cents). The Group will also continue its policy of buying backits shares in the marketplace from time to time should suitable opportunitiesarise. During the first half of the year, the Group bought back and cancelled1.75% of the issued share capital as at 31 December 2006, bringing the totalrepurchased since listing to 3.05% of shares outstanding as at the date of thisreport. We remain confident that new business initiatives in all four fund categoriesshould lead to improved flows in the second half of the year as long as marketconditions do not significantly deteriorate. Despite the recent turbulence inglobal markets, the fundamental case for emerging markets remains sound and wecontinue to find attractive growth opportunities throughout the GEMs universe.Fund performance remains strong on both an absolute and relative basis with keyfunds outperforming their benchmarks over the short and long term. Thus far, therecent equity market corrections have not had a material impact on either theGroup's AuM flows or its investment performance. However, should conditionsworsen, this may slow down industry wide growth which would also affectCharlemagne's short term growth prospects. The Group remains confident that it is well positioned to continue to grow itsassets on a number of fronts and will continue to achieve healthy profit marginsthrough its increasingly diversified fee structures. Jayne Sutcliffe Chief Executive 4 SEPTEMBER 2007 Consolidated Income Statement Expressed in United States Dollars Notes Unaudited Unaudited Audited Six months Six months Year to to to 30 June 2007 30 June 2006 31 December 2006 US$'000 US$'000 US$'000-------------------------- ------ ---------- ---------- ---------- Revenue 2 40,398 47,873 91,167 ExpensesPersonnel expenses 9 (18,690) (19,969) (39,192)Other costs (2,959) (1,893) (5,041)-------------------------- ------ ---------- ---------- ---------- Operating Profit 18,749 26,011 46,934 Listing costs 3 - (3,540) (3,540)-------------------------- ------ ---------- ---------- ----------Profit before tax 18,749 22,471 43,394 Taxation 4 (2,644) (3,593) (6,003)-------------------------- ------ ---------- ---------- ---------- Profit after tax 16,105 18,878 37,391 Minority Interest - (29)-------------------------- ------ ---------- ---------- ---------- Profit after tax and Minority Interest 16,105 18,878 37,362Dividends 5 (13,371) (6,540) (17,473)-------------------------- ------ ---------- ---------- ---------- Retained earnings for the period 2,734 12,338 19,889-------------------------- ------ ---------- ---------- ---------- US$ US$ US$Earnings per share Basic and diluted 10 0.056803 0.062553 0.124929-------------------------- ------ ---------- ---------- ---------- Consolidated Statement of Recognised Income and Expense Expressed in United States Dollars Notes Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000-------------------------- ------ --------- --------- --------- Movements in exchange differences on (22) 279 (74)the translationof the financial statements ofentities not accounted forin United States Dollars(Decrease) in fair value of cash flow - (400) (400)hedge ------ --------- --------- -----------------------------------Net (expense) for the period (22) (121) (474)recognised directly in equity ------ --------- --------- -----------------------------------Net profit for the period 16,105 18,878 37,391-------------------------- ------ --------- --------- ---------Total recognised income for the period 16,083 18,757 36,917-------------------------- ------ --------- --------- --------- Consolidated Balance Sheet Expressed in United States Dollars Notes Unaudited Audited As at As at 30 June 31 December 2006 2007 US$'000 US$'000-------------------------- ------ ---------- --------- Non-current assets Property and equipment 937 470Interest in jointly controlled entity 25 25-------------------------- ------ ---------- ---------Total non-current assets 962 495-------------------------- ------ ---------- --------- Current assets Current investments 6,791 4,671Receivables 6 26,270 43,205Cash and cash equivalents 24,211 15,479-------------------------- ------ ---------- ---------Total current assets 57,272 63,355-------------------------- ------ ---------- ---------Total assets 58,234 63,850-------------------------- ------ ---------- --------- Issued share capital 11 2,889 2,941 Reserves 26,142 30,906-------------------------- ------ ---------- --------- Shareholders' equity 29,031 33,847 Minority Interest 29 29-------------------------- ------ ---------- --------- Total equity 29,060 33,876-------------------------- ------ ---------- --------- Current liabilities Accounts payable, accruals and other 7 27,378 27,843payablesTaxation 4 1,796 2,131-------------------------- ------ ---------- ---------Total current liabilities 29,174 29,974-------------------------- ------ ---------- ---------Total equity and liabilities 58,234 63,850-------------------------- ------ ---------- --------- Consolidated Cash Flow Statement Expressed in United States Dollars Unaudited Unaudited Audited Six months to Six months Year to to 30 June 2007 30 June 31 December 2006 2006 US$'000 US$'000 US$'000Operating Profit 18,749 26,011 46,934Adjustments for: Depreciation 196 101 207Exchange loss/(gain) on property and 52 (30) (43)equipmentProvision for unrealised (profit)/loss (21) 1,997 4,615on foreign exchangecontracts and investmentsPurchase of investments (2,705) - (2,567)Proceeds from sale of investments 815 9,558 15,151Loss/(Profit) on disposal of (95) 800 (2,425)investmentsDecrease in receivables 16,935 52,635 29,977Decrease in accounts payable, accruals (465) (18,127) (12,682)and other payablesDividend and Distribution received - 4,558 4,558from jointly controlled entityTax paid (2,909) (5,085) (9,293)Share based incentive scheme - (6,280) (6,280) Foreign currency transaction 121 (279) (74)adjustment ---------- --------- -----------------------------------Cash flows from operating activities 30,673 65,859 68,078-------------------------- ---------- --------- --------- Investing activities Purchase of property and equipment (715) (52) (221)-------------------------- ---------- --------- ---------Cash flows (used in) investing (715) (52) (221)activities ---------- --------- ----------------------------------- Financing activities Shares repurchased (7,855) (47,118) (48,157)Listing cost - (3,540) (3,540)Shares issued - 6,280 6,280 Dividends paid (13,371) (6,540) (17,473)-------------------------- ---------- --------- ---------Cash flows used in financing (21,226) (50,918) (62,890)activities ---------- --------- ----------------------------------- Net increase in cash and cash 8,732 14,889 4,967equivalents Cash and cash equivalents at the 15,479 10,512 10,512beginning of the period ---------- --------- ----------------------------------- Cash and cash equivalents at the end 24,211 25,401 15,479of the period ---------- --------- ----------------------------------- Notes to the Consolidated Interim Financial Statements 1. Basis of Preparation The consolidated interim financial statements have been prepared on a condensedbasis, in accordance with the accounting policies applied to the most recentaudited statutory accounts and in accordance with the requirements ofInternational Accounting Standard 34 "Interim Financial Reporting". The consolidated interim financial statements are prepared on the historicalcost basis except that the following are stated at their fair value: financialinstruments at fair value through profit or loss including derivative financialinstruments. Recognised assets and liabilities that are hedged are stated atfair value in respect of the risk that is hedged. 2. Segment Reporting UnauditedSix months to 30 June 2007 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Magna OCCO Institutional Specialist Other TotalNet Management Fees 5,891 2,436 7,754 2,953 - 19,034Net Performance Fees 2,207 6,023 6,569 1,598 - 16,397Return on Investment - - - - 1,445 1,445Other Income 2 - - 3,301 219 3,522 -------- ------- -------- -------- -------- --------Segment Revenue 8,100 8,459 14,323 7,852 1,664 40,398 -------- ------- -------- -------- -------- -------- Segment Result 5,267 5,117 9,533 5,228 1,664 26,809Unallocated Expenses (8,060) --------Results from 18,749Operating Activities -------- UnauditedSix months to 30 June 2006 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Magna OCCO Institutional Specialist Other TotalNet Management Fees 5,688 2,361 7,451 5,468 - 20,968Net Performance Fees 5,043 1,811 2,830 17,106 - 26,790Return on Investment - - - (3,321) 666 (2,655)Other Income - - - - 2,770 2,770 -------- ------- -------- -------- -------- --------Segment Revenue 10,731 4,172 10,281 19,253 3,436 47,873 -------- ------- -------- -------- -------- -------- Segment Result 6,693 2,637 7,072 12,593 3,436 32,431Unallocated Expenses (6,420) --------Results from 26,011Operating Activities -------- 3. Listing costs The Company was admitted to the AIM market of the London Stock Exchange on 4April 2006. Total costs related to listing amounted to US$3.5m. Notes to the Consolidated Interim Financial Statements (Continued) 4. Taxation Income tax expense is recognised in each interim period based on the bestestimate of the weighted average annual income tax rate expected for the fullfinancial year. Amounts accrued for income tax expense in one interim period maybe adjusted in a subsequent period of that financial year if the estimate of theeffective rate of income tax changes. 5. Dividends Unaudited Unaudited Six months to Six months to 30 June 2007 30 June 2006 US$'000 US$'000----------------------------- ------------- ------------- Interim dividend of 4.6 US cents (2005: 2.0 13,371 6,540US cents) ------------- ------------------------------------------ An interim ordinary dividend of 2.2 US cents (GB 1.1405p) per ordinary share andan interim special dividend of US 2.4 cents (GB 1.2442p) per ordinary share inrespect of the year ended 31 December 2006 was paid on 24 April 2007 to thoseshareholders on the register on 23 March 2007 and was charged to the incomestatement in 2007. The interim dividend of 2 US cents per ordinary share in respect of the yearended 31 December 2005 was paid on 30 January 2006 and has been charged to theincome statement in 2006. 6. Receivables Unaudited Audited Six months to Year to 30 June 2007 31 December 2006 US$'000 US$'000----------------------------- ------------- -------------Trade receivables 24,004 42,021Other receivables 1,709 687Prepayments 557 497----------------------------- ------------- ------------- 26,270 43,205----------------------------- ------------- ------------- 7. Accounts Payable, Accruals and Other Payables Unaudited Audited Six months to Year to 30 June 2007 31 December 2006 US$'000 US$'000----------------------------- ------------- -------------Provision for performance awards 15,402 13,482Accruals and other payables 11,976 14,361----------------------------- ------------- ------------- 27,378 27,843----------------------------- ------------- ------------- Notes to the Consolidated Interim Financial Statements (Continued) 8. Related Party Transactions Transactions with Directors and executive officers As at 30 June 2007, Directors of the Company and their immediate interestscontrolled 37.0% (2006: 33.3%) of the voting shares of the Company. Summary of transactions a. During the period US$73,136 (2006: US$65,983) was paid toBurnbrae Ltd, a company where ultimate ownership is connected with James Mellon,a director of Charlemagne Capital Limited, for rental of property. AndersonWhamond, a director of Charlemagne Capital Limited, was a Director of BurnbraeLtd during 2007. b. Transactions with funds managed by Charlemagne Capital Groupcompanies: Over 65% (2006: 78%) of the turnover from investment management, administration,performance incentive fees, advisory fees and commissions is derived from fundsover which the Directors consider the Group has influence by virtue of itsmanagement, administration and advisory roles. 9. Directors' Remuneration Total salaries of US$0.6m (2006: US$0.5m) were awarded to Directors during theperiod. An amount of US$10.1m has been accrued within personnel expenses inrespect of director and employee bonus awards. However, as at the date ofissuance of these Financial Statements, no individual bonus allocations (2006:nil) or contributions to the Charlemagne 2005 Employee Benefit Trust had beenmade (2006: nil, other than those relating to share based incentive plans (note11)). 10. Earnings per Share The calculation of basic earnings per share of the Group is based on the netprofit attributable to shareholders for the six months to 30 June 2007 ofUS$16.1m (2006: US$18.9m) and the weighted average number of shares of283,522,084 (2006: 301,793,392) in issue during the period. The calculation of diluted earnings per share of the Group is same as basicearnings per share as the share options outstanding have been issued contingentupon specified performance conditions being satisfied. As at 30 June 2007 theseperformance conditions had not been met. Shares issued during the year to Sanne Trust Company Limited (note 11) have beenexcluded from the earnings per share calculation as such shares are currentlyaccounted for as treasury shares. Notes to the Consolidated Interim Financial Statements (Continued) 11. Issued Share CapitalShares Unaudited Audited 30 June 31 December 2007 2006 US$'000 US$'000------------------------------------ --------- ---------Authorised2,000,000,000 ordinary shares of US$0.01 each 20,000 20,000------------------------------------ --------- --------- Issued and fully paidAt beginning of period; 294,061,772 (2006: 326,988,423) 2,941 3,270ordinary shares of US$0.01 eachShares issued; nil (2005: 3,422,185) - 34Shares repurchased; 5,156,900 (2006: 36,348,836) (52) (363)------------------------------------ --------- ---------At end of period; 288,904,872 (2006: 294,061,772) fully 2,889 2,941paid --------- --------------------------------------------- During the six months ended 30 June 2007, the Company repurchased 5,156,900 ofits own shares. During the six months ended 30 June 2006, the Companyrepurchased 35,448,836 of its own shares, of which 32,698,836 (10% of the totalshares in issue at the commencement of the period) were the result of acompulsory repurchase by the Company. During the six months ended 30 June 2006, the Company issued 3,422,185 sharesfor US$6.28m to Sanne Trust Company Limited (Trustee of the Charlemagne 2005Employee Benefit Trust) on 27 March 2006. Dividends on these shares have beenwaived by Sanne Trust Company Limited until further notice. As at the date of signing the financial statements there were 288,904,872ordinary shares of US$0.01 each issued and fully paid. -------------------------- (1) Performance fees accrue throughout the accounting period in the accounts ofeach respective fund. It is the Group's accounting policy only to recognise suchrevenues as they crystallise at the year-end date of the relevant fund or, incertain cases, on redemption. Levels of accrued performance fees at anyparticular time should not be seen as necessarily indicative of the eventualcrystallised figures, especially in periods of above average market volatility. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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