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Absolute Capital Man (ACMH)

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Wednesday 25 July, 2007

Absolute Capital Man

Interim Results - Correction

Absolute Capital Mgmt Holdings Ltd
25 July 2007



25 July 2007


 Correction - please note the reference to 'June 2007' in the Outlook paragraph
       within the Chairman's Statement, has been changed to 'June 2006'.


                  Absolute Capital Management Holdings Limited

                            ('ACMH' or the 'Group')

               Interim Results for the period ended 30 June 2007

ACMH, the fund management company focused on delivering investment returns
through the management of absolute return equity and debt funds, today announces
its interim results for the period ended 30 June 2007.


HIGHLIGHTS


Financial

   •Assets under management including acquisitions now $3.25bn, up 165% since
    30 June 2006, and 110% since 1 January 2007
   •Management and performance fees up by 139% and 148%, respectively
    (compared to 6 months to 30 June 2006)
   •Industry leading operating profit margin of 58% (before share-based
    payments)
   •Revenue up 149% to €61.7 million (2006: €24.8 million)
   •Pre-tax profit up 215% to €36.0 million (2006: €11.4 million)
   •Substantial progress in building a market leading portfolio of absolute
    return funds: ten of our 12 funds are now in excess of $100 million
   •Basic EPS* up 117% to €0.50 (compared to 6 months to 30 June 2006)
   •Proposed interim dividend of €0.133

* Excluding non-cash items


Operational

   •Successful integration of Argo Capital Management, acquired in January
    2007, adding significant product diversification and revenue from debt/
    finance opportunities in emerging markets
   •Creation of a new division, Absolute Capital Management Property Limited
    ('ACMPL') in order to develop a long/short equity presence in the global
    real estate market, through managing the AIM listed North Real Estate
    Opportunities Fund
   •Development of in-house client services team in Europe and North America
    to distribute the growing range of absolute return funds
   •To manage the increased size and continued growth of the business, we
    have appointed a Chief Operating Officer and separated the role of Chairman
    and Chief Executive
   •Strong investment performance during first half of 2007: event-driven and
    long/short funds averaged in excess of 18% annualised net return in H1 2007;
    the Argo emerging market debt, the Argo funds averaged 14% annualised net
    return in H1 2007
   •Three recent award nominations: AIM Company of the year 2007 (AIM);
    Alternative Investment News Leader of the Year (Alternative Investment
    News); and again nominated as HFR's European Hedge Fund Group of the Year
   •Significant institutional share placing to leading institutional
    investors, increasing the free float to over 40%



Assets Under Management   1 July 2007, $m  1 January 2007, $m  30 June 2006, $m
EQUITY
Absolute Return
Europe                               490                 478               447
Absolute European
Catalyst                             273                 185               218
Absolute Germany                     381                 218               199
Absolute East West                   222                 138                94
Absolute Octane                      342                 288               215
Absolute Large Cap                   137                 105                53
Absolute Activist
Value                                241                  42       July 2006
Absolute India                        18                  19       July 2006
                              ------------       -------------  --------------
Sub total Equity                   2,104               1,473             1,226
                              ------------       -------------    --------------
EMERGING MARKET DEBT
The Argo Fund                        484                 446     January 2007
Argo Global Special
Situations                           455                 380          ...
Argo Capital
Partners Fund                         73                  52          ...
                              ------------       -------------  --------------
Sub total Debt                     1,012                 878
                              ------------       -------------    --------------
REAL ESTATE
North Real Estate
Fund*                                140        July 2007
                              ------------    -------------       --------------
                  Total            3,256               2,351             1,226
                              ------------       -------------    --------------


*Acquired 9 July 2007


Sean Ewing, Chairman and Chief Executive Officer, said: 'We have increased
assets under management by 165% since 30 June 2006. Organic growth continues to
be strong, with demand from institutional investors for our expanding portfolio
of alternative investment products. We believe that the creation of ACMPL is
well timed to take advantage of long/short opportunities in the current global
real estate market.'


'The development of an internal distribution team will support organic growth
from a growing global customer base. As we continue to execute our business
strategy we are well positioned to exploit the significant and growing demand
from global investors for consistent, low volatility absolute returns.'


Enquiries:

ACMH
Sean Ewing, Jonathan Treacher, Darren Sisk T: +41 41 560 96 60

Panmure Gordon
Dominic Morley T: +44 (0)20 7614 8388

Cardew Group
Tim Robertson, Shan Shan Willenbrock, David Roach T: +44 (0)20 7930 0777



                              CHAIRMAN'S STATEMENT

Absolute Capital Management (AIM: ACMH), the fund management group focused on
delivering investment returns through the management of absolute return funds,
continued to make significant progress in the six month period ended June 2007,
with strong performance in all of the key indicators - management fee income,
performance fee income, assets under management and profitability, as well as
further development of the Group's strategy.


The Board is pleased to announce that the strong financial performance achieved
through 2006 has continued into 2007. For the six months ended 30 June 2007,
revenue was €61.7 million (2006: €24.8 million) and profit before tax was €36.0
million (2006: €11.4 million). On an IFRS basis, in the first half, Group
operating profit was up 155% to €35.6 million before non-cash related charges of
€0.34 million in respect of share-based payments, generating basic earnings per
share of €0.50, an increase of 117% on the same period last year. Diluted
earnings per share was €0.47, an increase of 135% on the same period last year.


We are pleased to announce an interim dividend of €0.133 (8.9p) per share
payable on 24 August 2007 to shareholders on the register as at close of
business on 3 August 2007.


Assets under management stood at $3.1 billion as at 1 July 2007. Since then, the
addition of the North Real Estate Fund has increased assets under management to
$3.25 billion in twelve funds across equity and emerging market-fixed income,
with ten funds being over $100m and five over $300m. The successful integration
of Argo Capital Management, acquired in January 2007 added significant product
diversification and revenue from fixed income opportunities in emerging markets.


We have announced the creation of a new division, Absolute Capital Management
Property Limited ('ACMPL') in order to develop our long/short equity presence in
the global real estate market. ACMPL acquired the management contract of the
North Real Estate Opportunities Fund (NREOF), an AIM listed property investment
and development company, which raised €100m at IPO in August 2006. NREOF has
substantially committed its IPO proceeds to what we believe to be attractive
property investments in Romania, Ukraine and Moldova, and is providing us with
substantial expertise and scope for growth.


In the spring of 2007 we appointed an in-house distribution team in Europe and
North America to distribute the growing range of absolute return funds, and
initial progress in broadening and deepening our client reach has been
encouraging.


The Group's development was recognised by the industry when it was awarded joint
winner of Best Hedge Fund Group at the industry's Hedge Fund Review's 2006
European Award Ceremony. In 2007, the Group was again nominated as the European
Hedge Fund Group of the Year, and as Global Leader of the Year by Alternative
Investment News, the only non-US group in this category.


Management

ACMH has grown very rapidly, with assets under management of US$3.25 billion,
operating from 11 offices worldwide and employing some 80 people. In order to
more effectively manage the increased size and continued growth of the business,
it has been decided to split the roles of Chairman and Chief Executive.


The Board is therefore pleased to announce that Jonathan Treacher, previously a
non-executive director of ACMH who has been actively assisting management over
recent months, will be appointed as Chief Executive and Sean Ewing will fulfil
the role of non-executive Chairman. This reflects Sean's desire to spend more
time with his young family after a very successful but highly time intensive 20
years in fund management. It is intended that Sean Ewing will remain as
non-executive Chairman while the Board seeks to appoint a new non-executive
Chairman. Following this, Sean Ewing will then move onto a more flexible
consultancy role for the Group.


The Board is pleased to announce that following a number of senior investment
appointments, and senior operational appointments, made over the last 12 months
(including legal counsel, fund accounting and investment staff) the newly
created position of Chief Operating Officer will be filled by Rob van Oostveen.
Rob has for the last ten years filled a number of senior roles at ABN Amro
including Head of Fund Accounting, Head of Portfolio Management, and more
recently Chief Operating Officer of Equities. He holds MBA and CFA
qualifications.


As part of the above the group is implementing an internal reorganisation to
ensure continued accountability and responsibility on the executive boards of
its operating subsidiaries in line with appropriate reporting and governance of
an ever larger and growing group. In this regard Florian Homm and Andreas Rialas
will continue to have overall responsibility in their capacities as Co-Chief
Investment Officers for the Absolute Capital and Argo divisions of the group's
business, respectively. In addition, Florian Homm has been appointed a director
of Absolute Capital Management Equity Limited, a wholly owned subsidiary of ACMH
recently formed to assume the management of the Absolute-branded long/short
equity funds from ACMH, while Andreas Rialas will serve as a director of, and
will have overall responsibility for ACMPL. Following the implementation of the
internal reorganisation, ACMH itself will assume the role of a holding company
for the group's equity, debt and real estate fund management businesses.


Outlook

We are broadly positive as regards the outlook for the rest of year. Our assets
under management have increased by 165% since June 2006. Our organic growth is
materially ahead of both our peer group and the market in general. Assuming that
fund performance remains in line with target returns, the Board believe that the
business is well positioned and structured to make further significant progress.


Sean Ewing
Chairman and Chief Executive Officer
25 July 2007



                        Fund Performance to 30 June 2007



                                                 Performance
                            --------------------------------------------------------------------------------------
                             Size June     Year to Date Since Inception Annualised Open / Closed Positive months %
                            --------------------------------------------------------------------------------------
Strategy      Launch date   $ m        %            %               %          %
EQUITY
Absolute
Return Europe Mar-02        490     1.20         5.33          118.81      15.81            Open              97%
European      
Catalyst Fund Oct-03        273     2.31         9.29          101.43      20.53            Open              91%
Absolute      
Germany Fund  Jan-04        381     0.82        13.79           98.88      21.71            Open              95%
Absolute East
West Fund     Jul-05        222     2.05        10.38           53.60      23.93            Open              96%
Absolute
Octane Fund   Jul-05        342     1.44         7.26           91.97      38.55          Closed              96%
Absolute
Large         Feb-06        137    -0.37         6.35           28.39      19.29            Open              88%
Cap Fund
Absolute
Activist Fund Jul-05        241     0.53         8.94           16.46      29.37            Open             100%
Absolute
India         Feb-06         18     0.46         7.90           29.37      16.46            Open             100%
Fund
DEBT
Argo Fund     Mar-02        484     1.76         6.74          192.51      17.77            Open              96%
Argo Global
Special
Situations
Fund          Oct-03        455     2.28         8.15           48.86      15.64            Open              91%
Argo Capital
Partners Fund Aug-06         73
REAL ESTATE
North Real
Estate
Opportunities
fund          acquired      
              July-07       140





Absolute Capital Management Holdings Limited
CONDENSED CONSOLIDATED STATEMENT OF INCOME

                                   6 months to      6 months to          Year to
                                       30 June          30 June      31 December
                                        2007             2006             2006
                          Note             €                €                €

Subscription fees                    621,192          262,935          964,059
Management fees                   20,633,233        8,633,926       19,728,911
Incentive fees                    38,494,020       15,546,641       29,715,218
Redemption fees                      834,992          313,828          589,963
Other income                       1,096,379           22,606        1,483,259
                                      --------         --------         --------
Revenue                           61,679,816       24,779,936       52,481,410

Legal and professional
expenses                            (355,490)        (204,340)        (524,533)
Management and incentive
fees payable                      (8,119,692)      (5,674,418)      (9,956,388)
Operational expenses              (1,768,546)        (748,957)      (2,322,429)
Employee costs                   (15,732,441)      (4,145,261)      (9,554,765)
Foreign exchange gain /
(loss)                               (97,586)         (19,417)         (80,954)
Excess of acquirer's
interest in net value of
identifiable net assets               39,588                -                -
Depreciation                         (67,948)         (12,909)         (47,645)
                                      --------         --------         --------
Operating profit
excluding
share-based payments and          35,577,701       13,974,634       29,994,696
AIM listing costs

Share-based payments        2       (338,102)      (2,114,940)      (2,703,584)
AIM listing costs                          -         (565,413)        (566,204)
                                      --------         --------         --------
Operating profit                  35,239,599       11,294,281       26,724,908

Financial revenue                    473,439          123,943          436,856
Unrealised gain on
investments                          287,238                -          400,208
                                      --------         --------         --------
Profit on ordinary
activities before                 36,000,276       11,418,224       27,561,972
taxation

Taxation                    3     (3,643,120)         (35,207)        (502,756)
                                      --------         --------         --------
Profit for the period
after
taxation attributable to          32,357,156       11,383,017       27,059,216
members of the company                ========         ========         ========

Earnings per share          4           € 0.50           € 0.23           € 0.52
(basic)                               ========         ========         ========

Earnings per share
(diluted)                   4           € 0.47           € 0.20           € 0.46
                                      ========         ========         ========



Absolute Capital Management Holdings Limited

CONDENSED CONSOLIDATED BALANCE SHEET

                                     30 June           30 June       31 December
                                        2007              2006              2006
                        Note             €                 €                 €

Assets
Non current assets
Intangible
assets                    5     89,340,957        15,721,917        14,913,094
Property,
plant and
machinery                          482,105           269,246           406,662
                                    --------          --------          --------
                                89,823,062        15,991,163        15,319,756
Current assets
Trade and
other
receivables                     18,498,474         4,107,952         6,973,633
Cash and cash
equivalents                     27,801,557        16,932,139        33,205,949
                                    --------          --------          --------
                                46,300,031        21,040,091        40,179,582
Financial assets
Investments at
fair value
through profit
and loss                         3,688,245         4,018,373         3,401,008
Loans and
advances
receivable                         221,981            13,528            71,854
                                    --------          --------          --------
                                 3,910,226         4,031,901         3,472,862
                                    --------          --------          --------
Total assets                   140,033,319        41,063,155        58,972,200
                                    ========          ========          ========

Equity and liabilities

Equity
Issued share
capital                   6        688,625           535,625           541,250
Shares to be
issued                           9,250,000        10,058,823         9,250,000
Share premium                   96,958,568        29,394,051        30,287,146
Revenue reserve                 32,372,979        14,247,068        29,923,267
Other reserves            2        344,837         1,604,057         1,428,982
Merger reserve                 (22,950,745)      (22,950,745)      (22,950,745)
                                    --------          --------          --------
                               116,664,264        32,888,879        48,479,900
                                    --------          --------          --------

Current liabilities
Trade and
other payables                  19,341,359         8,100,219         9,989,949
Taxation
payable                          4,027,696            74,057           502,351
                                    --------          --------          --------
Total current
liabilities                     23,369,055         8,174,276        10,492,300
                                    --------          --------          --------
                                    --------          --------          --------
Total equity
and
liabilities                    140,033,319        41,063,155        58,972,200
                                    ========          ========          ========





Absolute Capital Management Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                  Share    Shares to         Share        Revenue         Other         Merger        Total
                Capital    be Issued       Premium        Reserve      Reserves        Reserve
                    €            €             €              €             €              €              €

As at 31
December     
2006          541,250    9,250,000    30,287,146     29,923,267     1,428,982    (22,950,745)    48,479,900

Profit for
the period          -            -             -     32,357,156             -              -     32,357,156
Distribution
on 5 April
2007 (€0.447
per share)          -            -             -    (29,907,444)            -              -    (29,907,444)
Issue of
12,300,000
shares
(€0.01
each at       
€5.194)       123,000            -    63,758,550              -             -              -     63,881,550
Share-based
payments            -            -             -              -       338,102              -        338,102
Exercise of
share      
options        24,375            -     2,912,872              -    (1,422,247)             -      1,515,000
               --------     --------      --------       --------      --------       --------       --------
As at 30
June 2007      688,625    9,250,000    96,958,568     32,372,979       344,837    (22,950,745)   116,664,264
               ========     ========      ========       ========      ========       ========       ========





Absolute Capital Management Holdings Limited
CONDENSED CONSOLIDATED CASH FLOW STATEMENT

                                                       6 months to      6 months to          Year to
                                                           30 June          30 June      31 December
                                                            2007             2006             2006
                                               Note            €                €                €

Net cash inflow from
operating activities                                  31,161,056       18,091,414       33,687,834

Cash flows from investing activities

Interest income received                                 473,439          123,943          436,856
Purchase of subsidiaries                        5    (11,489,798)         (39,789)         (39,789)
Purchase of property, plant
and equipment                                           (124,088)        (235,602)        (407,754)
Cash acquired on purchase
of subsidiaries                                 5      3,085,218                -                -
Repayment of loans                                             -          173,677          115,351
Financial investments                                          -       (3,000,200)      (3,000,200)
Flotation costs                                                -         (565,413)        (566,204)
Taxation paid                                           (117,775)               -          (39,255)
                                                          --------         --------         --------
Net cash inflow / (outflow)
from investing activities                             (8,173,004)      (3,543,384)      (3,500,995)
                                                          --------         --------         --------

Cash flows from financing activities

Issue of share capital                          6      1,515,000          255,000          390,000
Dividends paid                                  7    (29,907,444)        (897,500)        (897,500)
Option exercise proceeds
received                                                       -                -          500,000
                                                          --------         --------         --------
Net cash outflow from
financing                                            (28,392,444)        (642,500)          (7,500)
                                                          --------         --------         --------
                                                          --------         --------         --------
Net cash inflow / (outflow)                           (5,404,392)      13,905,530       30,179,339
                                                          ========         ========         ========

ANALYSIS OF CHANGES IN CASH DURING THE PERIOD
                                                               €

Cash and cash equivalents
as at 31 December 2006                                33,205,949

Net cash inflow during the period                     (5,404,392)
                                                          --------
Cash and cash equivalents
as at 30 June 2007                                    27,801,557
                                                          ========



NOTES TO THE FINANCIAL STATEMENTS

for the period ended 30 June 2007



1. BASIS OF PREPARATION


The condensed financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting.

The interim results for the six-month periods ended 30 June 2007 and 30 June
2006 are unaudited. Results for the year ended 31 December 2006 are audited.

The accounting policies adopted are consistent with those followed in the
preparation of the group's annual financial statements for the year ended 31
December 2006.

Subsidiaries are consolidated from the date control is transferred to the group
and cease to be consolidated from the date control is transferred from the
group.


2. SHARE-BASED PAYMENTS


2.06 million options to acquire ordinary shares were outstanding at the end of
the period. The fair value of options granted is recognised as an expense with a
corresponding increase in equity. The fair value is calculated at grant date
using an options pricing model with this cost then being recognised over the
option period. A non-cash charge of €0.34m has been recognised in the six-month
period ending 30 June 2007.


3. TAXATION


Taxation has been calculated using the applicable corporation tax rates of each
group company.


4. EARNINGS PER SHARE


The calculations of earnings per share are based on the following numbers of
ordinary shares (in millions):

                                                   30 June   30 June    31 Dec
                                                    2007      2006      2006
Weighted average for basic earnings per share      64.94     50.29     52.14
Effect of potentially dilutive shares               4.12      7.40      6.07
                                                   -------   -------   -------
Weighted average for diluted earnings per share    69.06     57.69     58.21
                                                   =======   =======   =======

5. ACQUISITION OF ARGO CAPITAL MANAGEMENT


The group acquired 100% of the issued share capital of each of Argo Capital
Management Limited, Argonaftis Capital Management (Overseas) Limited and Argo
Capital Management (Asia) Pte. Limited (collectively, the 'Argo Division') on 18
January 2007. The purchase consideration included the issue to the vendors of
12.3 million fully-paid ordinary shares of €0.01. The market value of one
ordinary share of the company immediately prior to the announcement of the
transaction was €5.19 and this is the amount that has been used to value the
acquisition.

At the date of this report and in the opinion of the Directors, the assets
purchased through the acquisition of the Argo Division have fair values as set
out below.
                          Argo Capital            Argonaftis        Argo Capital
                            Management               Capital          Management
                                                  Management         (Asia) Pte.
                                                  (Overseas)             Limited
                                                     Limited
                                   €                     €                   €

Assets                         9,414                29,882               8,472
Debtors                    1,668,129               269,497             136,777
Cash at bank
and in hand                2,583,424               501,794                   -
Creditors
within one
year                      (3,623,007)             (467,185)           (105,659)

Net assets
acquired                     637,960               333,988              39,590

Goodwill                  37,343,891            37,055,507                   -
Excess of
acquirer's
interest in
net value of
identifiable
net assets                         -                     -             (39,588)
                            ----------            ----------          ----------
             Total        37,981,851            37,389,495                   2
                            ----------            ----------          ----------

Satisfied by:

Payment in cash            5,623,096             5,261,120                   2
Shares issued             31,940,775            31,940,775                   -

                          37,563,871            37,201,895                   2

Costs of
acquisition                  417,980               187,600                   -
                            ----------            ----------          ----------
             Total        37,981,851            37,389,495                   2
                            ----------            ----------          ----------


Where the consideration exceeds the fair value of the assets acquired, this has
been classified as an intangible asset in the group accounts. The excess of the
value of the fair assets acquired over the purchase consideration has been
recognised in full in the consolidated statement of income.


6. SHARE CAPITAL


During the period the company issued 14.74 million fully paid ordinary shares of
€0.01 each:
                                                                       Number of
                                                                 shares millions

Share options exercised at €0.24                                          1.63
Share options exercised at €1.00                                          0.50
Share options issued at €2.00                                             0.31
Issue of shares as consideration on
the acquisition of the Argo Division                                     12.30
                                                                        --------
                                                                         14.74
                                                                        --------


7. DIVIDENDS


A dividend of €0.447 (comprising an ordinary dividend of €0.165 plus a special
dividend of €0.282) per ordinary share was declared on 12 March 2007. Qualifying
shareholders were deemed to be those on the register as at close of business on
23 March 2007. This dividend was paid on 5 April 2007.

An interim dividend of €0.133 (GBP 0.089) has been proposed by the directors and
will be paid to qualifying shareholders in sterling on 24 August 2007.
Qualifying shareholders will be deemed to be those on the register as at close
of business on 3 August 2007.







                      This information is provided by RNS
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