TIDMPCX
RNS Number : 7998Z
Principle Capital Holdings S.A.
29 September 2009
PRINCIPLE CAPITAL HOLDINGS S.A.
("Principle Capital", the "Company" or the "Group")
Consolidated Interim Statements for the six month period ended 30 June 2009
Highlights:
Financial:
* Turnover, excluding performance fees, of GBP3.74 million, up 51% on 2008
(GBP2.47 million)
* Performance fee of GBP2.58 million (of which GBP2.46 million was accrued in the
year ended 31 December 2008) from South African Property Opportunities plc
crystallised at 30 June 2009, subject to final audit. Of this, GBP0.84 million
accrued in the period (2008 performance fees accrued: GBP0.72 million)
* Administrative/operating expenses of GBP4.81 million, up 46% on 2008 (GBP3.28
million)
* Profit in the financial period of GBP0.71 million (2008: loss of GBP0.73
million)
* Net assets of GBP35.1 million (equivalent to 188p per share) (31 December 2008:
GBP35.1 million, (or 189p per share))
* cash and listed investments at 30 June 2009 of GBP2.75 million and unlisted
investments of GBP3.62 million
* Annualised investment management and fund and trust administration fees as at 31
August 2009 of approximately GBP8.4 million, up 9% compared to 31 August 2008
(GBP7.7 million), excluding performance fees
Operational:
* Fee earning assets under management between 1 January 2009 and 30 June 2009 flat
at US$1.12 billion, allowing for cross holdings between the funds (31 December
2008: US$1.12 billion)
* Fee earning assets under management as at 31 August 2009 down by 2% to US$1.14
billion since 31 August 2008 (US$1.16 billion), allowing for cross holdings
between the funds
* Successful buyout of Principle Capital Investment Trust plc means that PCIT will
remain in the Principle Capital stable of funds, having previously been in the
process of winding-up
* Sirius Real Estate Limited reported a portfolio valuation of EUR500 million as at
31 March 2009; signed a new EUR45 million credit facility with Berlin Hyp
* Principle Energy has signed heads of terms with a global energy group securing
the sale of its entire ethanol production for the first five years of
production. Fund raising efforts continuing
* The board of South African Property Opportunities plc ("SAPRO") has announced
intention to terminate our joint venture's management contract in October 2010.
Our managed funds have requisitioned a general meeting to review the actions of
the SAPRO board. At 31 August 2009, SAPRO represented 11% of assets under
management
* PME African Infrastructure Opportunities ("PME") interim results for the six
months to 30 June 2009 confirmed a potential US$14.5 million or 18% uplift in
the value of PME's investments over their cost and a 9% growth in adjusted net
asset value per share
* Continue to develop existing and new investment products and developing internal
distribution function primarily aimed at the alternative asset class, in
emerging markets
1 Including those generated by our associates and after allowing for our joint
venture partners' share
Commenting on the results, Brian Myerson, Executive Chairman of Principle
Capital, said:
"In the circumstances of the dismal global economic backdrop we have had a very
productive six months and I am pleased to report that our assets under
management have largely remained unaffected. We have five distinct fund
operations and a growing fund and trust administration business. We can be
pleased with the general performance of our funds in these difficult times and
there are several highlights. During the period we have focused on addressing
the residual issues that have affected us like many other financial services
businesses, particularly with a listed fund bias, and we have made good progress
in that regard. We have also attracted strong investor interest in our new
products and are very pleased to have secured some outstanding new fund managers
to work with on them."
For more information, please contact:
+---------------------------------+------------------------------------+------------------------------+
| Principle Capital | Jonathan Sieff | +44 20 7240 3222 |
| | Mark Whitfeld | +44 20 7240 3222 |
+---------------------------------+------------------------------------+------------------------------+
| | | |
+---------------------------------+------------------------------------+------------------------------+
| Bell Pottinger | Dan de Belder/Victoria Geoghegan | +44 20 7861 3232 |
+---------------------------------+------------------------------------+------------------------------+
| | | |
+---------------------------------+------------------------------------+------------------------------+
| Singer Capital Markets | Jeff Keating | +44 20 3205 7500 |
+---------------------------------+------------------------------------+------------------------------+
www.principlecapital.com
Chief Executive's Statement
For the six months to 30 June 2009
1. Introduction
Despite a very difficult first half of the year for financial services
businesses generally, I am pleased to report that assets under management have
held steady at US$ 1.12 billion.
Whilst fund raising markets remained closed in the first half as investors
sorted out their own positions and future allocations, we have focused on two
strategic efforts. First, we have been working hard to preserve the existing
assets under management. In this regard Principle Capital, L.P. ("PCLP"), a fund
managed by one of our Group companies, has successfully launched a takeover
offer for Principle Capital Investment Trust plc ("PCIT"), whose future had been
the subject of much debate earlier in the year. This is a positive turnaround
for this fund strategy and we now plan to continue running with the activist
strategy through these combined vehicles. Given the market dislocations, some
attractive opportunities have emerged and we hope to be active in the market
again in the final quarter of this year. Further we have, through PCLP and PCIT
significantly increased our exposure to both Sirius Real Estate Limited ("SRE")
and South African Property Opportunities plc ("SAPRO"), where we are also
investment managers, at what we believe to be highly discounted prices.
Second, we have continued to focus on our development as a premier alternative
asset management franchise with strong emerging market expertise. We have taken
the opportunity to secure several outstanding investment professionals with whom
we are now working to develop new investment product. Further, we have been able
to take some useful soundings from potential investors which we believe will
stand us in good stead as investors begin allocating funds again.
In total, as at 30 June 2009, Principle Capital had fee earning assets under
management, allowing for cross holdings between the funds, of US$ 1.12
billion. This was the same level as at 31 December 2008 (US$ 1.12 billion),
however it has subsequently increased to US$ 1.14 billion as at 31 August 2009.
The Group produced a profit in the financial period of GBP 0.71 million. Of this
profit, GBP 0.84 million has been accrued by Proteus Property Partners Limited,
our 52% owned subsidiary, as a result of the increase in the performance fee
which had been accrued at 31 December 2008 as being potentially due from
SAPRO. The whole performance fee crystallised at 30 June 2009, at GBP 4.96
million (our 52% share of which would be GBP 2.58 million), subject to final
audit. Further we have benefited from increases in the share prices of our
holdings in both PCIT and SAPRO, which increased by GBP 0.86 million since 31
December 2008.
We continued to invest in developing the business during the period and the
results of these efforts are highlighted by the continued growth in turnover,
primarily represented by investment management and fund and trust administration
fees, the generation of which is the Group's core focus. Turnover, excluding
non-recurring performance fees, for the period were GBP 3.74 million, up 51% on
the same period in 2008 (GBP 2.47 million). Administrative and operating
expenses also increased, to GBP 4.79 million, up 46% on the same period in 2008
(GBP 3.28 million). This is a result of our investment in certain key hires
compared to the same period last year, investment in new products and as a
result of a one-off reorganisation programme. We expect to see some of the
benefit of cost reductions arising from the reorganisation in the second half of
the year.
As at 30 June 2009, the Group had net assets of GBP35.1 million (equivalent to
188p per share), which was the same as at 31 December 2008. Of that, GBP 2.75
million was represented by cash and listed investments and GBP 3.62 million in
unlisted investments. A significant part of the balance sheet is made up of
goodwill, which was created following the acquisition of Silex and the
minorities buy-out of our fund operations business Principle Capital Partners in
October 2007. This was formally tested as at 31 December 2008 and there was no
impairment indicated.
At present we have six fee generating operations, producing annualised recurring
management/advisory fees (including those generated by our associates, and
allowing for our joint venture partners' share) as at 31 August 2009 of
approximately GBP 8.4 million, up 9% compared to 31 August 2008 (GBP 7.7
million). This amount is calculated after allowing for our joint venture
partners' share in these operations and excludes any non-recurring
performance related revenues.
2. Investment Management
Principle Capital Investment Trust plc ("PCIT") and Principle Capital, L.P.
("PCLP")
PCIT and PCLP follow an activist investment strategy. PCIT is advised by
Principle Capital Fund Managers Limited ("PCFM") and PCLP is managed by
Principle Capital GP Limited ("PCGP"). PCFM and PCGP are 100% owned Group
subsidiaries.
PCIT and PCLP both enjoyed solid recoveries in the first half of the year, with
their ungeared, long only UK small and mid cap focus. PCIT's NAV was up 14.6%
and PCLP up 27.6% against the FTSE All Share Index which fell 1.7%. However, the
FTSE Small Cap ex Investment Trusts index was also up strongly, recording a
24.1% rise. At 30 June 2009, the combined net asset values of PCLP and PCIT,
after excluding the cross holding was GBP64 million (30 June 2008: GBP 80
million).
The key event in the first half of this year has been that PCLP successfully
launched a cash offer for PCIT, through which it was able to secure control of
PCIT at a significant discount to its underlying net asset value. In March of
this year, PCIT had been pushed by certain investors to wind itself up, because
the shares had persistently suffered from a large discount to net asset value.
In order to give those shareholders the option to exit, PCLP was able to
construct a cash offer and, as a result since the period end, PCIT is now a
subsidiary of PCLP and will be taken private shortly. We would like to thank the
investors in PCLP for their continued support.
We have, through PCLP and PCIT significantly increased our exposure to both
Sirius Real Estate Limited and South African Property Opportunities plc, where
we are also investment managers. And whilst PCIT and PCLP are a small part of
the funds under management, we are excited about the prospects for activist
investing in the current climate and expect to make some interesting new
investments in the final quarter.
South African Real Estate
South African Property Opportunities plc ("SAPRO") has made excellent progress
at the portfolio level but has also suffered from the sector wide problems with
discounts to net asset value. This has resulted in a strategic review of the
company.
SAPRO, whose investment manager is Proteus Property Partners Limited
("Proteus"), in which the Group has a 52% interest is focused on funding and
managing real estate developments in southern Africa. It has made investments in
15 development projects to date across a wide range of sectors, including
industrial, mixed use and residential. In its interim results for the six months
to 31 December 2008, it reported an adjusted net asset value of GBP 79 million
(127 pence per share) up 16% since 30 June 2008, despite the global real estate
downturn during that period. It had minimal gearing and a valuation of its
portfolio of developments showed a 38% uplift over base cost (including post
acquisition capex), with the average development being only 13.5 months since
acquisition.
In spite of this strong performance, following pressure from shareholders
looking for a solution to the share price to net asset value discount, a
strategic review has resulted, inter alia, in the prospective termination, with
effect from October 2010, of the management contract which Proteus has with
SAPRO. SAPRO accounts for approximately 11% of our funds under management.
In the light of SAPRO's excellent performance at the portfolio level, upsetting
the management arrangements without even attempting to negotiate alternative
terms seems illogical. Through the combined PCIT and PCLP funds we are the
second largest shareholder in SAPRO and have requisitioned a general meeting
asking for an independent board who would then conduct their own review of the
management arrangements.
Reflecting the excellent performance of SAPRO, as at 30 June 2009, Proteus has
earned a GBP 4.9 million performance fee, subject to final audit by SAPRO's
auditors.
PME African Infrastructure
PME African Infrastructure Opportunities plc ("PMEAIO") has made steady progress
in developing its existing portfolio and is well placed to make new investments
with US$ 83 million in cash available as at 30 June 2009. PMEAIO's investment
manager is PME Infrastructure Managers Limited ("PMEIM"), in which the Group has
a 31.67% interest. As of the most recent announcement, PMEAIO had committed
US$89.5 million, of which US$ 78.7 million had been drawn down. These five
investments cover telecommunications, transport leasing and logistics. It is
also in advanced negotiations on two further projects.
In the first half of the year, to 30 June 2009, PME reported a 9% growth in
adjusted net asset value per share, which is extremely creditable given the
experiences of many other alternative private equity strategies. The fund has
given Principle Capital a significant foothold in the African investment market.
Africa continues to be of great interest, especially given the relative strength
of the Chinese and Indian economies and the exceptional rally in commodities
experienced in the last few months.
Principle Energy Limited
The objective of Principle Energy Limited ("Principle Energy") is to become a
leading producer of low-cost ethanol in southern Africa. Principle Energy has
secured approval from the government of Mozambique for its first project,
covering 20,000 hectares of land, in the central region of the country near
Dombe.
This first site comprises a greenfield project which will build a single large
scale integrated ethanol-from-sugarcane production facility, with completion
expected by 2012. Principle Energy raised approximately US$50 million of equity
funding for the project in 2007.
The focus of efforts in the first half has been to prepare for the fund raising
which will be required to take the project to completion. It is expected to
require approximately US$ 150 million of equity and US$ 200 million of debt.
Strong indications of interest have been secured, primarily from development
finance institutions, but also private institutions as well. As a result,
various key steps have had to be completed prior to a successful fund raising,
one of which was securing a key offtake arrangement with a major global energy
company. We are pleased to say that heads of terms were signed in June and
provides for all of Principle Energy's ethanol to be taken for a minimum of five
years. The final quarter of this year will be focused on completing the fund
raising.
Sirius Real Estate Limited
Sirius Real Estate Limited ("Sirius") invests primarily in large mixed-use
commercial real estate assets in Germany which can be (or have already been)
sub-divided into flexible workspaces, offering high quality managed business
accommodation to local businesses, predominantly SMEs. In its last financial
statements for the year ended 31 March 2009, Sirius had gross assets of EUR 543
million. Our partners in the asset manager are Kevin and Frank Oppenheim, who
own 24% each and senior management who own the remaining 4%.
The business model aims to drive significant increases in rental values through
relatively low capex, by taking typically old inefficient warehouse space and
converting it into space more appropriate for modern business as well as
creating a better quality business environment for its clients. Undoubtedly the
economic situation in Germany has made life difficult for smaller businesses,
but equally the offering is defensively priced and offers flexibility in its
lease terms which appeals to small and medium sized businesses in uncertain
times.
We believe the business model is sound and scaleable and we are seeing some
interesting opportunities in the region to expand our activities there.
New products
We continue to work with a highly regarded European fund manager about promoting
an ethical/environmental fund opportunity and we have deepened our relationships
with our target European pension funds, as well as exploring opportunities to
secure commitments from US investors.
We are also well advanced with an infrastructure fund opportunity in India,
where we have been able to secure the services of an eminent infrastructure
investment team. We are targeting investors for the fund in the final quarter of
this year and into the beginning of next year.
As our alternative funds platform expands, we are in advanced discussions with a
number of investment professionals and teams about the creation of alternative
fund strategies that resonate with our own strategy. Recent market dislocations
have thrown up a number of opportunities with highly experienced managers
looking to build funds that will provide investors with new ways to access
growth in emerging markets.
3. Fund and Trust Administration
Silex, our Fund and Trust Administration business which we acquired in October
2007, made an excellent contribution in the first half of the year. In the
period, Silex generated profits of GBP 464,113 on turnover of GBP 1.4 million.
Silex provides fund and trust administration services to approximately US$ 2
billion of client assets, including five listed funds and several unlisted
funds. We have had a number of discussions regarding the expansion of this
division and are increasing its licenses to undertake complementary activities.
4. Company Investments
At 30 June 2009, the Company held investments of GBP 5.3 million, covering PCIT,
Principle Energy, SAPRO and certain minority interests in the Sirius Real Estate
portfolio, which it acquired alongside the asset manager.
5. Strategy
It is our medium term aim to broaden our alternative fund strategies to
approximately ten products and across a broader geographic range, with a bias
towards emerging markets. Whilst fund raising opportunities have been limited in
the first half, this has been a good time to build operationally and to develop
new products and alliances.
At its core, the Group has 17 staff. However, including our wider network of
fund management and administration operations, there are over 150 people in
offices in Geneva, London, Berlin, Singapore, Cape Town, Johannesburg, Durban
and Beira (Mozambique). We continually look at ways in which synergies can be
extracted from our various activities.
6. Outlook
I am pleased that we kept our business steady and maintained our funds under
management comfortably over the US$1 billion mark in what can only be described
as the worst investing environment in a generation. It is good to have resolved
the issues at PCIT and we are cautiously optimistic for our chances of raising
at least two new products within the next six months. We continue to forecast
strong demand for alternative products and exposure to emerging markets to
generate returns in an otherwise low growth environment and we remain well
positioned to benefit from these trends.
Jonathan Sieff
Chief Executive Officer
To the Shareholders of
PRINCIPLE CAPITAL HOLDINGS S.A.
6, rue Adolphe
Fischer
L-1520 Luxembourg
AUDITOR'S REPORT ON REVIEW OF CONDENSED
CONSOLIDATED INTERIM FINANCIAL INFORMATION
We have reviewed the accompanying condensed consolidated statement of
financial position of Principle Capital Holdings S.A. as of 30 June 2009 and the
related condensed consolidated statements of comprehensive income, changes in
equity and cash flows for the six-month period then ended (the "condensed
consolidated interim financial information"), and a summary of significant
accounting policies and other explanatory notes. The Board of Directors is
responsible for the preparation and presentation of this condensed consolidated
interim financial information in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union. Our responsibility is to express a
conclusion on this condensed consolidated interim financial information based on
our review.
Scope of review
We conducted our review in accordance with the International Standard on Review
Engagements 2410, "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity". A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying condensed consolidated interim financial information is
not prepared, in all material respects, in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European Union.
Luxembourg, 29 September 2009 KPMG Audit S.à
r.l.
Réviseurs d'Entreprises
David Wallace
Condensed consolidated statement of comprehensive income
for the period from
1 January 2009 to 30 June 2009
(expressed in GBP)
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | Group | | Group |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | June | | June |
| | | 2009 | | 2008 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | GBP | | GBP |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| TURNOVER | | 4,553,656 | | 3,189,574 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| OTHER INCOME | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Unrealised gains / (losses) on investments | | 862,728 | | ( 788,789) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Realised gains on sale of investments | | - | | 103,218 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Other operating income | | 78,129 | | 44,214 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | 5,494,513 | | 2,548,217 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Administrative expenses | | ( 3,458,049) | | ( 2,054,580) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| External charges | | ( 1,335,706) | | ( 1,226,773) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| OPERATING PROFIT/(LOSS) | | 700,758 | | ( 733,136) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Interest income | | 36,560 | | 63,217 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Interest expense | | ( 283) | | ( 731) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Share of gains / (losses) of associate companies | | 27,144 | | - |
+---------------------------------------------------+ +--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | 764,179 | | ( 670,650) |
| PROFIT/(LOSS) BEFORE INCOME TAX | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Income tax expense | | ( 56,513) | | ( 59,443) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| PROFIT/(LOSS) FOR THE PERIOD | | 707,666 | | ( 730,093) |
+ + + +---------------------------------------------------+ +
| | | | | |
+ + + +---------------------------------------------------+ +
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| OTHER COMPREHENSIVE INCOME | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Foreign currency translation differences | | ( 68,820) | | ( 7,871) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | | 638,846 | | ( 737,964) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Income/(loss) attributable to: | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Shareholders of parent company | | 259,707 | | ( 847,984) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Non-controlling interest | | 447,959 | | 117,891 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Total comprehensive income/(loss) | | | | |
+---------------------------------------------------+ +--------------+---------------------------------------------------+--------------+
| attributable to: | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Shareholders of parent company | | 186,947 | | ( 855,855) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Non-controlling interest | | 451,899 | | 117,891 |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Earnings/(loss) per share | | 1.46p | | (5.2p) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| Diluted earnings/(loss) per share | | 1.46p | | (5.2p) |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
| | | | | |
+---------------------------------------------------+----------+--------------+---------------------------------------------------+--------------+
Condensed consolidated statement of financial position
as at 30 June 2009
(expressed in GBP)
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | Group | | | Group |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | June 2009 | | | Dec 2008 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | GBP | | | GBP |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| ASSETS | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Property, plant and equipment | | | 486,900 | | | 513,415 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Goodwill | | | 25,041,465 | | | 25,041,465 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Investment in associates | | | 821,869 | | | 799,453 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Other investments | | | 4,355,478 | | | 3,479,520 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| TOTAL NON-CURRENT ASSETS | | | 30,705,712 | | | 29,833,853 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Debtors | | | 2,668,465 | | | 2,419,803 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Other assets | | | 6,355,760 | | | 4,611,487 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Assets held for sale | | | 888,482 | | | 523,787 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Available-for-sale financial | | | 61,020 | | | 49,328 |
| assets | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Cash and cash equivalents | | | 1,063,829 | | | 2,067,794 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| TOTAL CURRENT ASSETS | | | 11,037,556 | | | 9,672,199 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| TOTAL ASSETS | | | 41,743,268 | | | 39,506,052 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| EQUITY | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Called up share capital | | | 18,644,806 | | | 18,644,806 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Share premium | | | 22,392,125 | | | 22,392,125 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Foreign exchange differences | | | (138,422) | | | (65,662) |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Non-distributable reserve | | | 25,176 | | | 25,176 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Accumulated losses | | | (5,484,204) | | | (5,810,973) |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Equity attributable to | | | 35,439,481 | | | 35,185,472 |
| shareholders | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Non-controlling interest | | | 2,032,750 | | | 1,893,887 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| TOTAL EQUITY | | | 37,472,231 | | | 37,079,359 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Deferred tax liabilities | | | 6,822 | | | 6,261 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Creditors | | | 2,366,067 | | | 1,730,588 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| Deferred income | | | 1,898,148 | | | 689,844 |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
| TOTAL EQUITY AND LIABILITIES | | | 41,743,268 | | | 39,506,052 |
| ASSETS | | | | | | |
+----------------------------------+---------+-----+-------------+---+----------+-------------+
Condensed consolidated statement of cash flows
for the period from 1 January
2009 to 30 June 2009
(expressed in GBP)
+---------------------------+---+----------+---------------+-+---------------+
| | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| | | | Group | | Group |
+---------------------------+---+----------+---------------+-+---------------+
| | Notes | June 2009 | June 2008 |
+---------------------------+--------------+-----------------+---------------+
| | | | GBP | | GBP |
+---------------------------+---+----------+---------------+-+---------------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Profit / (loss) for the | | | 707,666 | | (730,093) |
| period | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Adjustments for: | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Depreciation | | | 82,070 | | 50,793 |
+---------------------------+---+----------+---------------+-+---------------+
| Unrealised (gains) / losses | | (862,728) | | 788,789 |
| on investments | | | | |
+-------------------------------+----------+---------------+-+---------------+
| (Gains) / losses on disposal of | - | | (259) |
| property, plant and equipment | | | |
+------------------------------------------+---------------+-+---------------+
| Realised (gains) / losses on | | - | | (103,218) |
| investments | | | | |
+-------------------------------+----------+---------------+-+---------------+
| Share option reserve | | | 67,062 | | 52,202 |
| increase | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Share of (gains) / losses of associated | (27,144) | | - |
| companies | | | |
+------------------------------------------+---------------+-+---------------+
| Interest expense | | | 283 | | 731 |
+---------------------------+---+----------+---------------+-+---------------+
| Income tax expense | | | 56,513 | | 59,443 |
+---------------------------+---+----------+---------------+-+---------------+
| (Increase) / decrease in | | | 176,244 | | (114,651) |
| debtors | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| (Increase) / decrease in | | | (1,744,273) | | - |
| other assets | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Increase / (decrease) in | | | 1,843,783 | | (588,623) |
| creditors | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| | | | 299,476 | | (584,886) |
+---------------------------+---+----------+---------------+-+---------------+
| Interest paid | | | (283) | | (731) |
+---------------------------+---+----------+---------------+-+---------------+
| Tax paid | | | (79,625) | | (27,612) |
+---------------------------+---+----------+---------------+-+---------------+
| Net cash inflow / (outflow) from | 219,568 | | (613,229) |
| operating activities | | | |
+------------------------------------------+---------------+-+---------------+
| | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Acquisition of property, plant and | (55,555) | | (324,048) |
| equipment | | | |
+------------------------------------------+---------------+-+---------------+
| Loans granted to third | | | (304,311) | | (500,779) |
| parties | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Loan to associate company | | | (120,595) | | - |
+---------------------------+---+----------+---------------+-+---------------+
| Acquisition of associates | | | (10,662) | | - |
+---------------------------+---+----------+---------------+-+---------------+
| Purchase of subsidiary | | | (442) | | - |
| undertaking | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Purchase of investments | | | (376,387) | | (44,733) |
+---------------------------+---+----------+---------------+-+---------------+
| Proceeds from sale of | | | 1,006 | | 791,614 |
| investments | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Net cash used in | | | (866,946) | | (77,946) |
| investing activities | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Dividends paid to former shareholders of | - | | (556,626) |
| Silex | | | |
+------------------------------------------+---------------+-+---------------+
| Dividends paid to | | (313,600) | | - |
| non-controlling interests | | | | |
+-------------------------------+----------+---------------+-+---------------+
| Net cash used in | | | (313,600) | | (556,626) |
| financing activities | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| | | | | | |
+---------------------------+---+----------+---------------+-+---------------+
| Net decrease in cash and cash | | (960,978) | | (1,247,801) |
| equivalents | | | | |
+-------------------------------+----------+---------------+-+---------------+
| Cash and cash equivalents at the | 2,067,794 | | 3,221,974 |
| beginning of the period | | | |
+------------------------------------------+---------------+-+---------------+
| Effect of exchange rate fluctuations on | (42,987) | | (23,610) |
| cash held | | | |
+------------------------------------------+---------------+-+---------------+
| Cash and cash equivalents at the end of | 1,063,829 | | 1,950,563 |
| the period | | | |
+------------------------------------------+---------------+-+---------------+
| | | | (1) | | |
+---------------------------+---+----------+---------------+-+---------------+
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2009
(expressed in GBP)
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| | Called up | Share | Foreign | |Accumulated |Shareholder's |Non-controlling | Total |
| | share | premium | exchange |Non-distributable | losses |equity (Group | interest | equity |
| | capital | |Differences | reserve | | share) | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| As at 1 January 2008 | 16,249,806 | 23,287,500 | 21,415 | 3,546 | (5,949,532) | 33,612,735 | 172,297 | 33,785,032 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Comprehensive income for the | | | | | | | | |
| period | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Profit/(loss) for the period | - | - | - | - | (847,984) | (847,984) | 117,891 | (730,093) |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Other comprehensive income | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Foreign exchange | - | - | (7,871) | - | - | (7,871) | - | (7,871) |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Total comprehensive income for | - | - | (7,871) | - | (847,984) | (855,855) | 117,891 | (737,964) |
| the period | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Transactions with owners, | | | | | | | | |
| recorded directly in equity | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Share based payments | - | - | - | - | 52,202 | 52,202 | - | 52,202 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| As at 30 June 2008 | 16,249,806 | 23,287,500 | 13,544 | 3,546 | (6,745,314) | 32,809,082 | 290,188 | 33,099,270 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| As at 1 July 2008 | 16,249,806 | 23,287,500 | 13,544 | 3,546 | (6,745,314) | 32,809,082 | 290,188 | 33,099,270 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Comprehensive income for the | | | | | | | | |
| period | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Profit/(loss) for the period | - | - | - | - | 894,963 | 894,963 | 1,603,699 | 2,498,662 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Other comprehensive income | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Foreign exchange | - | - | (79,206) | - | - | (79,206) | - | (79,206) |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Total comprehensive income for | - | - | (79,206) | - | 894,963 | 815,757 | 1,603,699 | 2,419,456 |
| the period | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Transactions with owners, | | | | | | | | |
| recorded directly in equity | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Shares issued | 2,395,000 | (895,375) | - | - | - | 1,499,625 | - | 1,499,625 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Share based payments | - | - | - | - | 61,008 | 61,008 | - | 61,008 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Non-distributable reserve | - | - | - | 21,630 | (21,630) | - | - | - |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| As at 31 December 2008 | 18,644,806 | 22,392,125 | (65,662) | 25,176 | (5,810,973) | 35,185,472 | 1,893,887 | 37,079,359 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2009
(expressed in GBP)
(continued)
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| | Called up | Share | Foreign |Non-distributable |Accumulated |Shareholder's |Non-controlling | Total |
| | share | premium | exchange | reserve | losses |equity (Group | interest | equity |
| | capital | |Differences | | | share) | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| As at 1 January 2009 | 18,644,806 | 22,392,125 | (65,662) | 25,176 | (5,810,973) | 35,185,472 | 1,893,887 | 37,079,359 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Comprehensive income for the | | | | | | | | |
| period | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Profit/(loss) for the period | | | | | 259,707 | 259,707 | 447,959 | 707,666 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Other comprehensive income | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Foreign exchange | - | - | (72,760) | - | | (72,760) | 3,940 | (68,820) |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Total comprehensive income for | - | - | (72,760) | - | 259,707 | 186,947 | 451,899 | 638,846 |
| the period | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Transactions with owners, | | | | | | | | |
| recorded directly in equity | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Share based payments | - | - | - | - | 67,062 | 67,062 | - | 67,062 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Increase in non controlling | - | - | - | - | - | - | 564 | 564 |
| interests | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| Dividends paid to | - | - | - | - | - | - | (313,600) | (313,600) |
| non-controlling interest | | | | | | | | |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
| As at 30 June 2009 | 18,644,806 | 22,392,125 | (138,422) | 25,176 | (5,484,204) | 35,439,481 | 2,032,750 | 37,472,231 |
+--------------------------------+------------+------------+-------------+-------------------+-------------+---------------+-----------------+------------+
Notes to the Condensed Consolidated Interim Financial Information
for the period from 1 January 2009 to 30 June 2009
1 General
Principle Capital Holdings S.A ("the Company") is a holding company of a Group
("the Group") established to raise and manage investment funds. The Company has
two divisions: Investment Management, and Fund and Trust Administration.
The Investment Management business includes Principle Capital Investment Trust
Plc (PCIT), the Company's open-ended fund, Principle Capital, LP (PCLP) and
South African Property Opportunities Plc (SAPRO).
The registered office of the Company is at 58, rue Charles Martel, L-2134
Luxembourg and the Company is registered with the "Registre de commerce et de
société au Grand-Duché de Luxembourg" under section B, number 98.144. The
Company is established for an unlimited period. The Company is listed in London
on the AIM stock exchange.
2 Significant Accounting Policies
2.1 Statement of compliance
These condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the European
Union. They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the consolidated
financial statements of the Group as at and for the year ended 31 December 2008.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 29 September 2009.
2.2 Change in accounting policy
As of 1 January 2009 the Group determines and presents operating segments based
on the information that internally is provided to the Board of Directors, who
are the Group's chief operating decision makers. This change in accounting
policy is due to the adoption of IFRS 8 Operating Segments. Previously operating
segments were determined and presented in accordance with IAS 14 Segment
Reporting. The new accounting policy in respect of segment operating disclosures
is presented as follows.
Comparative segment information has been re-presented in conformity with the
transitional requirements of IFRS 8. Since the change in accounting policy only
impacts presentation and disclosure aspects, there is no impact on earnings per
share.
The Group applies revised IAS 1 "Presentation of Financial Statements (2007)",
which became effective as of 1 January 2009. As a result, the Group presents in
the consolidated statement of changes in equity all owner changes in equity,
whereas all non-owner changes in equity are presented in the consolidated
statement of comprehensive income. This presentation has been applied in these
condensed interim financial statements as of and for the six months period ended
on 30 June 2009.
Comparative information has been re-presented so that it also is in conformity
with the revised standard. Since the change in accounting policy only impacts
presentation aspects, there is no impact on earnings per share.
2.3 Basis of Consolidation
(a) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the condensed consolidated interim financial statements from the
date that control commences until the date that control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any non
controlling interest. The excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognised directly in the
income statement.
IntraGroup balances, and any unrealised gains and losses or income and expenses
arising from intraGroup transactions, are eliminated in preparing the condensed
consolidated interim financial statements. Unrealised gains arising from
transactions with associates and jointly controlled entities are eliminated to
the extent of the Group's interest in the entity. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
(b) Associates
Associates are all entities over which the Group has significant influence but
not control, generally accompanying a shareholding of between 20% and 50% of the
voting rights. Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost.
The Group's share of its associates' post-acquisition profits or losses is
recognised in the statement of comprehensive income, and its share of
post-acquisition movements in reserves is recognised in reserves. The cumulative
post-acquisition movements are adjusted against the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds
its interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of associates have been
changed where necessary to ensure consistency with the policies adopted by the
Group.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The condensed consolidated interim
financial statements are presented in Great British Pounds ("GBP"), which is the
company's functional and presentation currency.
(b) Transactions and balances
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
GBP at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date of
the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to GBP at foreign
exchange rates ruling at the dates the fair value was determined.
Changes in the fair value of monetary securities denominated in foreign currency
classified as available for sale are analysed between translation differences
resulting from changes in the amortised cost of the security, and other changes
in the carrying amount of the security. Translation differences related to
changes in amortised cost are recognised in profit or loss, and other changes in
carrying amount are recognised in equity.
Translation differences on non-monetary financial assets and liabilities are
reported as part of the fair value gain or loss. Translation differences on
non-monetary financial assets and liabilities such as equities held at fair
value through profit or loss are recognised in profit or loss as part of the
fair value gain or loss. Translation differences on non-monetary financial
assets such as equities classified as available for sale are included in the
available-for-sale reserve in equity.
(c) Financial statements of foreign operations
The assets and liabilities for foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to GBP at foreign
exchange rates ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated to GBP at rates approximating the foreign
exchange rate ruling at the dates of the transactions.
2.5 Property, plant and equipment
(a) Owned assets
Items of property, plant and equipment are stated at cost or deemed cost less
accumulated depreciation (see below) and impairment.
(b) Depreciation
Depreciation is charged to profit and loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives are as follows:
+--------------------+------------+-----------+----------------------------+
| Fixture and | 6-7 years | | 15% average depreciation |
| fittings | | | rate |
+--------------------+------------+-----------+----------------------------+
| Computer | 3 years | | 33% average depreciation |
| equipments | | | rate |
+--------------------+------------+-----------+----------------------------+
The residual value is reassessed annually.
2.6 Intangible assets
a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group's share of the net identifiable assets of the acquired
subsidiary/associate at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in "intangible assets". Goodwill on acquisitions of
associates is included in "investments in associates" and is tested for
impairment as part of the overall balance. Separately recognised goodwill is
tested annually for impairment and carried at cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
b) Acquisitions of non-controlling interests
Goodwill arising on the acquisition of a non-controlling interest in a
subsidiary represents the excess of the cost of the additional investment over
the carrying amount of the net assets acquired at the date of exchange.
2.7 Assets held for sale
Assets that are expected to be recovered primarily through sale rather than
through continuing use are classified as held for sale. The assets are measured
at the lower of their carrying amount and fair value less cost to sell.
Impairment losses on initial classification as held for sale and subsequent
gains or losses on remeasurement are recognized in profit and loss. Gains are
not recognized in excess of any cumulative impairment loss.
2.8 Financial assets
The Group classifies its financial assets at fair value through profit or loss,
loans and receivables, and available for sale. The classification depends on the
purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are classified as non
current as the company intends to hold them for the purpose of long term capital
growth.
Derivatives are also categorised as held for trading unless they are designated
as hedges. Derivatives are classified as short term.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are included
in current assets, except for maturities greater than 12 months after the
balance sheet date. These are classified as non-current assets. The Group's
loans and receivables comprise 'trade and other receivables'.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either
designated in this category or not classified in any of the other categories.
They are included in non-current assets unless management intends to dispose of
the investment within 12 months of the balance sheet date.
Regular purchases and sales of financial assets are recognised on the trade-date
- the date on which the Group commits to purchase or sell the asset. Unless fair
values are unavailable, investments are initially recognised at fair value plus
transaction costs for all financial assets not carried at fair value through
profit or loss. Financial assets carried at fair value through profit or loss
are initially recognised at fair value and transaction costs are expensed in the
income statement.
2.9 Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses.
2.10 Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits with an
original maturity of three months or less. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as
a component of cash and cash equivalents for the purpose of the statements of
cash flows.
2.11 Impairment
Except for the Group's investments designated at fair value through profit and
loss, the carrying amount of the Group's assets are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset's recoverable amount is estimated.
For goodwill, intangible assets that have an indefinite useful life and
intangible assets that are not yet available for use, the recoverable amount is
estimated at each annual balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset
exceeds its recoverable amount. Impairment losses are recognised in profit or
loss unless the asset is recorded at a revalued amount in which case it is
treated as a revaluation decrease.
2.12 Share based payment transactions
The share option programme allows Group employees, Senior Managers and
Directors, to acquire shares of the Company. 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 period during which
the employees become unconditionally entitled to the options. The fair value of
the options granted is measured using the Black-Scholes' model, taking into
account the terms and conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of share
options that vest except where forfeiture is only due to share prices not
achieving the threshold for vesting.
2.13 Trade and other payables
Trade and other payables are stated at amortised cost.
2.14 Revenue
Revenue relates to investment management services provided by the Group and is
recognised in the statement of comprehensive income on an accrual basis.
Performance fees are also recognised in the statement of comprehensive income on
an accrual basis. They are based on the evolution of the net asset value of the
funds under management.
Certain performance fees which are recorded on an accrual basis only are
recovered upon the partial or full liquidation of the underlying investment. In
the event of a decrease in the net asset value of the fund before the
liquidation, performance fees could be significantly reduced or eliminated.
2.15 Income tax
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for:
* goodwill not deductible for tax purposes;
* the initial recognition of assets or liabilities that affect neither accounting
nor taxable profit; and;
* differences relating to investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
2.16 Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
Segment information is presented in respect of the Group's business segments.
Inter-segment pricing is determined on an arm's length basis. Segment results,
assets and liabilities include items directly attributable to a segment.
The Group comprises two main business segments: investment management and trust
and fund management.
3 Financial risk management
3.1 Financial risk factor
The Group's activities expose it to a variety of potential financial risks:
market risk (including currency risk, fair value interest rate risk, cash flow
interest rate risk and price risk), credit risk and liquidity risk. The Group's
overall risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the Group's
financial performance.
Risk management is carried out by the accounting and finance department under
policies approved by the Board of Directors. The Board provides written
principles for overall risk management, as well as written policies covering
specific areas, such as foreign exchange risk, interest rate risk, credit risk,
use of derivative financial instruments and nonderivative financial instruments,
and investment of excess liquidity.
a) Market risk
(i) Foreign exchange risk
The Group operates internationally but is exposed to limited foreign exchange
risks. The Group's investment management fees are received in GBP and business
expenses are predominantly GBP. Some expenses are incurred in Swiss francs but
an equal amount of fees are charged in Swiss francs to negate any currency risk.
Investments are, in the main, denominated in GBP.
(ii) Price risk
The Group is exposed to price risk because of listed equity and listed fund
investments held by the Group and classified on the consolidated statement of
financial position at fair value through profit or loss. Publicly quoted
companies can be subject to volatile share prices, depending on a number of
factors, some of which are general or market specific, others which are sector
specific and others which are specific to the Company.
The Group is not exposed to commodity price risk at year end. The Group invests
in listed equities of Funds managed by the Group. The investments are held for
the long term and price risk is managed through the Group's investment
procedures and policies.
(iii) Cash flow and fair value interest rate risk
The Group has no significant interest-bearing assets nor liabilities. The
Group's income, expenses, and operating cash flows are substantially independent
of changes in market interest rates.
(b) Credit risk
Transactions effected by Group members on behalf of the Group will not always be
limited to transactions on, or effected under the rules of major securities
exchanges and it is possible that some trades may be effected off-exchange,
directly with counterparties. The Group will take a credit risk on the parties
with which it trades and therefore the Group acting through Group members will
seek to transact only with major established counterparties. The Group will also
bear the risk of settlement default by clearing houses and exchanges. Any
default by a counterparty or on settlement could have a material adverse effect
on the Group. Management mitigates this risk through Know-Your-Client and other
investigative procedures performed on counterparties prior to the commencement
of business relationships.
(c) Liquidity risk
The Group's working capital requirements reflect day-to-day administrative and
other operating expenses of an investment management and fund/trust
administration concern. Cash requirements are met by fee income and if
necessary, equity during a Group entity's start up phase. The Group has no
significant borrowings in 2009 and 2008. Cash deposits are held for working
capital purposes and are deposited within secure financial institutions.
The ability to sell investments held by the Group may be adversely affected due
to insufficient trading activity or actual trading halts in the markets in which
the securities concerned are traded. In such circumstances it may take time to
liquidate the positions of the Group and the market prices obtained may be
substantially different from those indicated at the time when the decisions to
liquidate were taken. The Group may from time to time invest their money in
private entities where there is no market.
3.2 Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
3.3 Fair value estimation
The fair value of financial instruments traded in active markets (such as listed
equities, listed funds and derivatives at fair value through profit and loss) is
based on quoted market prices at the balance sheet date. The quoted market price
used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market
is determined by using valuation techniques using estimated discounted
cashflows.
The carrying value less impairment provision of trade receivables and payables
are assumed to approximate their fair values. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to
the Group for similar financial instruments.
4 Significant events
During the period, the Group reduced its investment in Proteus Property Partners
Ltd and Proteus Property Advisors Ltd from 59.8% to 52%.
The Group is not subject to significant seasonality impacts to its operations.
5 Remuneration of Directors
+----------------+---------------------------+-------------+--+--------------+
| | | Group | | Group |
+----------------+---------------------------+-------------+--+--------------+
| | | Period | | Period ended |
| | | ended 30 | | |
| | | June 2009 | | 30 June 2008 |
+----------------+---------------------------+-------------+--+--------------+
| | | (6 months) | | (6 months) |
+----------------+---------------------------+-------------+--+--------------+
| | | GBP | | GBP |
+----------------+---------------------------+-------------+--+--------------+
| | | | | |
+----------------+---------------------------+-------------+--+--------------+
| Directors' remuneration | 543,770 | | 532,763 |
+--------------------------------------------+-------------+--+--------------+
| | | | | |
+----------------+---------------------------+-------------+--+--------------+
The aggregate emoluments of the highest paid Director were GBP 235,000.
There were no pension contributions paid to Directors during the period.
6 Share incentives and bonus plan
The Group has established the Principle Capital Holdings S.A. Discretionary
Share Option Plan ("DSOP") and the Principle Capital Holdings S.A. Discretionary
Bonus Plan.
Under the DSOP, the Company may grant options to eligible employees, Directors
and Senior Management of the Group to acquire Principle Capital Holdings S.A.
shares. The maximum number of the Company shares which may be put under option
under the DSOP is 3 per cent of the issued share capital of the Company from
time to time. The exercise price of the Company share under each option granted
after admission will be the market value of the Company share determined by the
Board of Directors.
On 22 December 2008, the Board of Directors proposed to make various amendments
to the DSOP to increase the limit of the number of new shares over which options
may be granted from 3% of the issued share capital of the Company to 5%.
Under separate agreement, the Company may grant options to non-employee
Directors up to 5 per cent of the issued share capital. The exercise price for
each Company share under these options will be the placing price and the other
terms of these options will be as similar as practicable to the terms of the
options granted under the DSOP.
+------------------------------------------------------------------------+
| As at 30 June 2009, stock options outstanding amounted to 1,002,488 |
| (31 December 2008: 802,488), with the following maturity dates: |
| |
+------------------------------------------------------------------------+
| * 449,990 became exercisable on 3 November 2006 at GBP2 and will |
| lapse to the extent not exercised on 2 November 2014 |
+------------------------------------------------------------------------+
| * 36,000 became exercisable on 8 April 2007 at GBP 2.225 and will |
| lapse to the extent not exercised on 7 April 2015. |
+------------------------------------------------------------------------+
| * 53,998 become exercisable on 18 June 2009 at GBP 3.25 and will |
| lapse to the extent not exercised on 17 June 2017. |
+------------------------------------------------------------------------+
| * 138,942 become exercisable on 22 October 2009 at GBP 3.3833 and |
| will lapse to the extent not exercised on 22 October 2017. |
+------------------------------------------------------------------------+
| * 73,558 become exercisable on 15 January 2010 at GBP 3.25 and will |
| lapse to the extent not exercised on 15 January 2018. |
+------------------------------------------------------------------------+
| * 28,250 become exercisable on 15 August 2010 at GBP 1.65 and will |
| lapse to the extent not exercised on 15 August 2018. |
+------------------------------------------------------------------------+
| * 21,750 become exercisable on 9 December 2010 at GBP 1.20 and will |
| lapse to the extent not exercised on 9 December 2018. |
+------------------------------------------------------------------------+
| * 200,000 become exercisable on 2 January 2011 at GBP 0.725 and will |
| lapse to the extent not exercised on 2 January 2019. |
+------------------------------------------------------------------------+
Under the Bonus Plan and under separate arrangements in the case of Directors
and Senior Management who are not employees of the Group, 5 per cent of the
profit (if any) of the Company before tax, depreciation, amortisation,
exceptional items and bonuses will be allocated at the end of each financial
year to a bonus pool.
The following assumptions were used by the Company in calculating the fair value
of share options:
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| Date |3 Nov |8 Apr | 18 | 22 | 15 |15 Aug |9 Dec |2 Jan |
| | 2004 | 2005 | Jun | Oct | Jan | 2008 | 2008 | 2009 |
| | | | 2007 | 2007 | 2008 | | | |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| | | | | | | | | |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| Stock Price |200.0 |222.5 |325.0 |340.0 |325.0 | 166.0 |120.0 | 72.5 |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| Exercise Price |200.0 |222.5 |325.0 |338.3 |325.0 | 165.0 |120.0 | 72.5 |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| Maturity in | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 |
| years | | | | | | | | |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| Interest Rate |4.59% |4.60% |5.64% |4.94% |4.20% | 4.48% |3.11% |2.42% |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
| Annualised |29.3% |25.0% |23.8% |11.4% | | |15.4% |20.8% |
| Volatility | | | | |11.3% | 15.0% | | |
+------------------+-------+-------+-------+-------+-------+--------+-------+-------+
The fair value of the liability is remeasured at each reporting date and at
settlement date. Expected volatility is estimated by considering the volatility
of two similar listed companies comparable to the Company.
Total charge to the profit and loss for the period was GBP 67,062 (2008:
GBP54,925).
7 Business segments
The Group comprises the following main business segments:
* Fund Management
The investment management of a number of listed and private investment vehicles.
* Trust and Fund Administration
The administration of a number of listed and private funds and Trusts.
* Geographical segments
Operations are centered in Europe for both businesses.
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| | Investment | Trust & Fund | Consolidated |
| | Management | Management | |
+---------------+---------------------------+-----------------------+---------------------------+
| | June | June | June | June | June | June |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| | GBP | GBP | GBP | GBP | GBP | GBP |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| External | 4,053,322 | 1,498,136 | 1,259,864 | 931,836 | 5,313,186 | 2,429,972 |
| Income | | | | | | |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| Inter-segment | - | - | 245,031 | 181,462 | 245,031 | 181,462 |
| Income | | | | | | |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| (Loss)/Profit | 91,689 | (1,164,866) | 615,977 | 434,773 | 707,666 | (730,093) |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| Assets | 40,348,206 | 33,181,804 | 1,395,062 | 1,097,254 | 41,743,268 | 34,279,058 |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| Liabilities | (4,083,282) | (807,591) | (187,755) | (372,197) | (4,271,037) | (1,179,788) |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
| Net | 36,264,924 | 32,374,213 | 1,207,307 | 725,057 | 37,472,231 | 33,099,270 |
| assets | | | | | | |
+---------------+-------------+-------------+-----------+-----------+-------------+-------------+
Total income of GBP 5,558,217 (June 2008: GBP 2,611,434) includes turnover,
other income, interest income and income from associates.
8 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the company by the weighted average number of ordinary shares
in issue during the year.
+--------------------------------------------+-------------+--+-------------+
| | Group | | Group |
+--------------------------------------------+-------------+--+-------------+
| | Period | | Period |
| | ended 30 | | ended 30 |
| | June 2009 | | June 2008 |
+--------------------------------------------+-------------+--+-------------+
| | GBP | | GBP |
+--------------------------------------------+-------------+--+-------------+
| | | | |
+--------------------------------------------+-------------+--+-------------+
| - Profit/(loss)/ attributable to equity | 259,707 | | (847,984) |
| holders of the Company | | | |
+--------------------------------------------+-------------+--+-------------+
| - Weighted average number of ordinary | 17,747,751 | | 16,249,806 |
| shares in issue | | | |
+--------------------------------------------+-------------+--+-------------+
| Basic earnings/(loss) per share (pence) | 1.46p | | (5.2p) |
+--------------------------------------------+-------------+--+-------------+
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The company has one category of dilutive potential
ordinary shares: share options. A calculation is done to determine the number of
shares that could have been acquired at fair value (determined as the average
annual market share price of the company's shares) based on the monetary value
of the subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would have
been issued assuming the exercise of the share options.
+----------------------------------------------------------+-----------------+---+----------------+
| | Group | | Group |
+----------------------------------------------------------+-----------------+---+----------------+
| | Period ended 30 | | Period ended |
| | June 2009 | | 30 June 2008 |
+----------------------------------------------------------+-----------------+---+----------------+
| | GBP | | GBP |
+----------------------------------------------------------+-----------------+---+----------------+
| - Profit/(loss) attributable to equity holders of the | 259,707 | | (847,984) |
| Company | | | |
+----------------------------------------------------------+-----------------+---+----------------+
| - Profit/(loss) used to determine diluted earnings per | 259,707 | | (847,984) |
| share | | | |
+----------------------------------------------------------+-----------------+---+----------------+
| - Weighted average number of ordinary shares in issue | 17,747,751 | | 16,249,806 |
+----------------------------------------------------------+-----------------+---+----------------+
| - Adjustments for: | | | |
+----------------------------------------------------------+-----------------+---+----------------+
| - Share options | - | | - |
+----------------------------------------------------------+-----------------+---+----------------+
| - Weighted average number of ordinary shares for diluted | 17,747,751 | | 16,249,806 |
| earnings per share | | | |
+----------------------------------------------------------+-----------------+---+----------------+
| | | | |
+----------------------------------------------------------+-----------------+---+----------------+
| Diluted (loss)/earnings per share | 1.46p | | (5.2p) |
+----------------------------------------------------------+-----------------+---+----------------+
Potential ordinary shares are considered as anti-dilutive as their conversion to
ordinary shares would increase earnings/decrease loss per share from operating
activities. Therefore, diluted earnings per share for the period ended 30 June
2009 is equal to basic earnings per share.
9 Related parties
As at 30 June 2009 the Group has an outstanding loan of GBP 569,868 (31 December
2008: GBP 558,488) to Principle Energy Limited, an entity in which the Group has
a 8.5% holding and an outstanding loan of GBP 104,763 (31 December 2008: Nil) to
Principle Oil Limited, an entity in which the Group has a 49% holding.
During the period the Group received service charges of GBP 49,065 under a
service agreement with PME Infrastructure Advisors Ltd. and administration fees
of GBP 77,476 from PME Infrastructure Managers Ltd.
Turnover includes performance fees of GBP 844,569 (30 June 2008: GBP 721,051).
The performance fees in 2007 were due from Bulldog Financial Limited and the
performance fees in 2008 are due from South African Property Opportunities Plc
("SAPRO").
There are no other material related party transactions other than those
disclosed in these financial statements.
10 Subsequent events
There were no significant events after 30 June 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QVLFLKKBLBBV
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