Results for the six months to 30 June 2012

Charlemagne Capital LimitedResults for the six months to 30 June 2012

Tuesday 18 September 2012

Financial Summary

·; Group AuM US$2.3 billion as at 30 June 2012, down 2.2% since 1 January 2012

·; Net management fees down 7.6% on the previous six months, reflecting the lower average AuM in the first half of 2012

·; Operating profit down 71.1% on prior year period

·; Interim dividend of 0.6 US cents per share declared and paid during the period in respect of the year ended 31 December 2011

·; The Group has not declared an interim dividend (2011: 0.4 US cents) in respect of the half year to 30 June 2012

·; Net assets attributable to shareholders of US$25.1 million (December 2011: US$26.2 million) includes cash and cash equivalents of US$25.5 million.

Jayne Sutcliffe, Chief Executive, commented:

"The first half of the year was characterised by two very different quarters: Q1 saw emerging markets make a solid start to the year on the back of better global economic prospects and some hope that the eurozone sovereign debt crisis might be under control. However, Q2 saw emerging markets lose value as concern grew over the eurozone's financial position.

"With emerging markets currently trading at a substantial discount to more developed countries, we expect the sector to provide significant opportunities for those investors looking for future growth. As the developed world continues to offer low growth and slow recovery, an increasing appetite for emerging markets is creating a positive outlook. In spite of the challenging environment and significant impact on revenues of asset reductions over recent periods, we have delivered a small operating profit for the half-year and have retained a strong capital base. As such, we remain confident about the future prospects of the business and continue to deliver strong investment returns for our investors."

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

Singer Capital Markets Limited

Jonny Franklin-Adams Tel. 020 3205 7500

Nick Donovan

This announcement is not for publication or distribution to persons in the United States of America, its territories or possessions or to any US person (within the meaning of Regulation S of the US Securities Act of 1933, as amended). Neither this announcement nor any copy of it may be taken or transmitted into Australia, Canada or Japan or to Canadian persons or to any securities analyst or other person in any of those jurisdictions. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian or Japanese securities law. The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about and observe any such restrictions.

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of the Charlemagne Capital Group. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. 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.

This statement is aimed at providing information regarding the Assets under Management on which revenue is derived by Charlemagne Capital Limited. The unaudited data contained in this statement are currently provisional and all such data are subject to change. This statement is produced in order to provide greater disclosure to investors and potential investors and to ensure that they all receive equal access to the same information at the same time.

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 2012 and the movements experienced in each product range in the period since 1 January 2012.

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 made a solid start to the year on the back of better global economic prospects, particularly in the US, and some hope that the eurozone sovereign debt crisis might be under control. Share prices were propelled higher as a degree of confidence returned to world markets with investors more prepared to buy into risk assets. Given that Europe had been of principal concern for investors over the last three years, it was not surprising that Emerging Europe was the strongest regional performer, driven by Russia and Turkey. Investors also sought to look through the policy implications of the once-a-decade changes in the Chinese leadership. Chinese stocks rose, though underperformed those of India and Korea. Encouragingly, the first quarter was a good environment for stock picking as company-specific developments reasserted their usual influence on share price movements. This benefited the performance of Charlemagne's portfolios, with particular support coming from certain smaller and frontier market company holdings. However over the second quarter of 2012 emerging markets lost value, with most of the losses occurring in May on renewed concerns for the financial position of the eurozone, though such concerns had been partially assuaged by the end of the period. Evidence of slower economic growth also had some impact, with commodity prices falling in response. Weakness was broad-based, but was particularly prevalent in Brazil and in oil-rich Russia as Brent crude fell 20%. Oil importing China outperformed, while Turkey was the only major emerging market not to fall over the quarter.

Overall, the MSCI EM index rose by 3.9% over the 6 months. Group Assets under Management stood at US$2.28 billion at the end of June, supported by net positive investment performance of 4.4% but overall were down 2.2% since the start of the year due to net outflows of 6.4%. Over the period, the relative performance of Charlemagne's equity strategies was strong, with six of the eight Magna sub-funds in the top half of their FactSet Morningstar peer group comparisons and none in the bottom quartile. The OCCO Eastern European Fund reopened during the period and the US$120 million new capacity has been fully allocated with US$70 million still to be received in the third quarter. The fund has therefore been closed once again to new investors. The Magna range saw net inflows particularly into the Latin American and GEMs Dividend strategies. Institutional mandates experienced outflows mainly in the first quarter which were partially offset in the second quarter with the acquisition of a new US$130 million institutional Latin American mandate.

The fall in average AuM from the prior year period resulted in a consequent reduction in net revenues and operating profit for the half year. Net management fees were US$9.7 million (2011: US$12.1 million). The overall net management fee margin increased to 79 basis points on average reflecting the fact that the majority of net outflows arose from lower margin business. Net crystallised performance fees were US$0.9 million (2011: US$0.1 million). Operating profit decreased by 71% to US$0.6 million (2010: US$2.1 million). Since the end of June, markets have improved with the MSCI Emerging markets index rising 1.7% to 31 August 2012. AuM as at the end of August stands at US$2.34 billion and accruing performance fees for 2012, arising mainly from the OCCO fund, which have not crystallised are US$4.4 million compared with US$0.2 million as at the same date in 2011.

Our investment performance has also continued to be strong since the end of the period under review. As ours is a bottom-up process; stock selection ultimately drives returns. We are confident that quality will continue to drive markets going forward and expect emerging markets to start to look beyond downward earnings revisions and to anticipate a recovery, whether this is later this year or next. Emerging markets look inexpensive at a forward PE ratio of just 10x and now trade at a discount of some 20% to developed countries, following two years of underperforming larger markets. With smaller companies within emerging markets at last showing better relative returns, we are confident that our strategy will continue to add value over time.

The trading environment remains challenging, with markets volatile, investor confidence fragile and fund flows subdued. The Group has negotiated these conditions well; achieving the key objective of making money for our investors, but overall reduced asset values have had a direct impact on group revenues. We have continued to improve operational efficiency and to take action on costs, where such measures are not to the detriment of delivering investment performance for clients, but market values will need to rise in order for the group to see meaningful levels of profitability from recurring fee sources.

In spite of the significant impact on revenues of asset reductions in recent periods, we see good reasons to remain confident about the future prospects of the business. Firstly, we continue to believe that emerging markets will provide high growth opportunities for investors - emerging markets now contribute half of global GDP, up from 31% in 1990, their economies account for 85% of the global population and the IMF expects emerging market economies to grow by an average 6% in 2013, three times the forecast for developed economies. Second, the increased appreciation of the potential for emerging market equities is leading to increased appetite, with a shift from the predominance of domestic equities to international and emerging market in particular. Critically, as emerging market specialists we have strong investment performance in key strategies and a depth of experience and expertise across regions and across market cycles which provides us with a competitive position.

Jayne Sutcliffe

Chief Executive

18 September 2012

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 2011.

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 2011.

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 0.6 US cents (GB 0.3786) (2011: 1.3 US cents, GB 0.7983p) per ordinary share in respect of the year ended 31 December 2011 was paid on 27 April 2012 to those shareholders on the register on 30 March 2012 and was charged to the income statement in 2012.

The Group has not declared an interim dividend in respect of the half year to 30 June 2012.

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 2012 are 2,243,793 shares (December 2011:  3,262,185 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 2012 of US$0.012m (2011: profit of US$1.5m) and the weighted average number of shares of 277,612,891 (2011: 277,123,431) 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 2012 of US$0.012m (2011: profit of US$1.5m) and the weighted average number of shares of 277,612,891 (2011: 279,776,419) 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 issued 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 conditions.

Equity Settled

The Group has established several share based incentive programmes that entitle certain employees to acquire shares in the Company subject to the vesting conditions set out below at an exercise price that was set at the date of grant.

Notes to the Consolidated Interim Financial Statements (continued)

10. Share Based Incentive Plans (continued)

The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of share options that are expected to vest.

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

The options outstanding at 30 June 2012 have an exercise price between GBPNil and GBP0.748 and a weighted average contractual life of 1.5 years. Outstanding share options are contingent upon specified performance and service criteria being satisfied.

The fair values of the options granted during the period are measured at the grant date using a Black-Scholes or binomial lattice model and spread over the two year vesting period of these schemes. The values are adjusted to reflect the actual number of shares that are expected to vest and recognised as an employee expense with a corresponding increase in equity.

An employee of the Group holds a 49.9% minority interest in the shares of a group entity and has an option to acquire a further 12.6% of the shares in issue. The Group has retained an option to re-acquire the shares held by the employee for a nominal sum under certain conditions, should the employee's option no longer be exercisable for any reason. As at the grant date, the Directors believe that the option granted to the employee had no significant value. All options involved in this arrangement expire on 31 December 2018.

The share options are granted under service and non-market performance conditions. Such conditions are not taken into account in the grant date fair value measurement of the services received. There are no market conditions associated with the share option grants.

Notes to the Consolidated Interim Financial Statements (continued)

10. Share Based Incentive Plans (continued)

Cash Settled

As at the reporting date the Charlemagne 2005 Employee Benefit Trust ("the EBT") holds 2,243,793 Company shares, which had a fair value of US$329,846 as at 30 June 2012 (31 December 2011: 3,262,185 shares; US$541,866), based on the market price as at that date, after adjusting for the waiver of dividend rights at an assumed dividend yield of 5%. The Directors of CCSL, have previously recommended to the Trustee of the EBT that the Company shares held by the EBT should continue to be held until performances targets and service targets are met, after which time the shares should be sold. The Trustee of the EBT may at its discretion allocate the proceeds to discretionary sub-trusts of which certain employees and their families are beneficiaries.

During the period 2,415,546 awards met their service criteria and the associated liabilities were met at fair market value. The number of share awards outstanding at 30 June 2012 is 1,146,380 and these are due to vest in October 2012 contingent upon specified service criteria being satisfied.

The fair value of the future cash settlement is spread over the vesting period, and recognised as an expense in the accounts with a corresponding increase in liabilities. The fair value is re-measured at each reporting date, with any adjustment in the cumulative fair value being recognised in the reporting 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 2012, total liabilities in respect of cash-settled share-based incentive plans were US$88,086 (31 December 2011: US$437,069). No liabilities had vested by the end of the period.