TIDMACPM
RNS Number : 5813P
ACP Mezzanine Ltd
27 March 2009
ACP Mezzanine Limited
Results for the year ended
31 December 2008
The Board of ACP Mezzanine Limited ("ACPM" or the "Company": AIM: ACPM) today
announces the results of the Company and its subsidiaries (together, the
"Group") for the 12 months ended 31 December 2008.
Key points:
* Significant board changes in August 2008 resulting in Mr. John Chapman being
co-opted to the board and Messrs Vago, Youngblood and Tanghe resigning. Stephen
Coe appointed to the Board in December 2008.
* No new investments since new Board elected; a loan commitment of circa EUR9.1
million provided to a company related to Leasecom SAS remains undrawn as at 31
December 2008.
* Confirmation of new strategy to pursue a realisation strategy through the sale
of assets and return cash to investors.
* Repayment and termination of banking facilities leaving the Company with no
leverage.
* Replacement of all major service providers, strengthening of internal controls
and the appointment of BDO Stoy Hayward LLP as auditors.
* Made a first distribution to shareholders of EUR0.1065 per share (EUR25.1 million in
total) in December 2008.
* Revaluation of investment and loan portfolio resulting in a consolidated
unrealised loss for year of EUR70.7 million (2007: profit of EUR10.2 million).
* Net asset value per share at 31 December 2008: EUR0.324 (31 December 2007:
EUR1.018).
* Loss per share for year ended 31 December 2008: 40.25 cents (31 December 2007:
diluted earnings per share 9.98 cents).
* Consolidated cash and cash equivalents at the balance sheet date of EUR11.8
million (31 December 2007: EUR15.2 million).
* Write down of EUR9 million loan investment in PFAFF Industrie Maschinen AG to zero
following the insolvency of this company in September 2008 but pursuing an
insolvency claim.
Commenting, John Chapman, Chairman said:
"The past year has been a difficult one for ACPM and its shareholders, with the
combination of a risky portfolio, a difficult market and internal turmoil
leading to a substantial diminution in the ACPM's value. I believe that we have
taken the necessary steps to provide a firm foundation to return capital to
shareholders. We are now a far less risky company than we were at the mid-year
when I joined. We have no leverage, our expenses have been cut significantly and
we now have in place internal controls we believe are appropriate. Since the
year end we have sold two assets and we are hopeful that we will complete
further asset sales as the year progresses and thus be able to return additional
capital to shareholders".
Contacts
* Hugh Field, Collins Stewart Europe, +44 (0) 207 523 8350 (Nominated Adviser)
* Tim McCall/James Longfield, Hogarth Partnership, +44 (0) 207 357 9477
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2008 or 2007. The
financial information for the year ended 31 December 2007 is derived from the
statutory accounts for that year.
The audit of the statutory accounts for the year ended 31 December 2008 is
complete. The auditors reported on those accounts; their report was unqualified
and did not include references to any matters to which the auditors drew
attention to by way of emphasis without qualifying their report.
The Company expects the full annual report and financial statements to be posted
to shareholders and published on its web site (www.acpcapital.com) on 30 March
2009.
CHAIRMAN'S STATEMENT
ACP Mezzanine Limited's ("ACPM") net asset value ("NAV") per share declined by
68 percent in 2008 to 32.4 eurocents per share (2007: 101.8 eurocents per
share). The reduction in the value of our portfolio and cash led to a loss of
EUR70.7 million. This is not surprising given how the crisis in the global
financial markets has magnified the risky nature of ACPM's portfolio. The
following table shows our portfolio as at year end:
+--------------------------+---------------+--------+---------------+--------+
| Asset | Value as at | % of | Value as at | % of |
| | 31.12.08 (EURm) | Total | 31.12.07 (EURm) | Total |
+--------------------------+---------------+--------+---------------+--------+
| | | | | |
+--------------------------+---------------+--------+---------------+--------+
| IFR Senior Facilities | 25.6 | 33.7% | 39.5 | 28.7% |
+--------------------------+---------------+--------+---------------+--------+
| IFR Preferred Equity | 16.2 | 21.3% | 24.2 | 17.6% |
+--------------------------+---------------+--------+---------------+--------+
| CLOs | 9.4 | 12.4% | 37.4 | 27.2% |
+--------------------------+---------------+--------+---------------+--------+
| Other Corporate Loans | 6.1 | 8.1% | 4.9 | 3.6% |
+--------------------------+---------------+--------+---------------+--------+
| Leasecom ABS Loan | 5.9 | 7.7% | N/a | N/a |
+--------------------------+---------------+--------+---------------+--------+
| CDOs | 0.8 | 1.0% | 9.5 | 6.9% |
+--------------------------+---------------+--------+---------------+--------+
| RMBS | 0.3 | 0.3% | 6.8 | 4.9% |
+--------------------------+---------------+--------+---------------+--------+
| Total Investments | 64.3 | 84.5% | 122.3 | 88.9% |
+--------------------------+---------------+--------+---------------+--------+
| | | | | |
+--------------------------+---------------+--------+---------------+--------+
| Cash | 11.8 | 15.5% | 15.2 | 11.1% |
+--------------------------+---------------+--------+---------------+--------+
| | | | | |
+--------------------------+---------------+--------+---------------+--------+
| Total | 76.1 | 100.0% | 137.5 | 100.0% |
+--------------------------+---------------+--------+---------------+--------+
Structured products are carried at the average of indicative bids because actual
trading data is generally unavailable. The IFR Capital plc ("IFR") preferred
shares are carried at the same price as the most junior IFR debt. Please bear in
mind that these carrying values are not necessarily the values that we would or
could achieve if we sold these assets in the market.
Progress has been made in selling some of our very illiquid assets, reducing
risk, and resolving some of the problems we inherited. Following the year-end,
we have sold our interests in GCI Automotive Holding GmbH ("GCI Automotive") and
Iceland Foods Group Limited ("Iceland") for EUR3.3 million and EUR3.9 million
respectively. We returned EUR0.015 per share (EUR3.5 million in total) to
shareholders in March 2009 from the proceeds of the GCI Automotive disposal and
we expect to return the proceeds of the Iceland disposal later on in the year.
In December 2008, we made a distribution of EUR0.1065 per share (EUR25.1 million in
total), which comprised the excess cash from the secondary capital raise in June
plus income from our investments. Earlier in the year a dividend for the second
half of 2007 of EUR0.05 per share was paid.
We have reduced risk by eliminating leverage and putting in place appropriate
internal controls. We no longer have any debt. In the face of an external
investigation related to the activities of former management and shareholder
complaints about ACPM's secondary offering in June 2008, we changed our Board of
Directors, beefed up our internal controls, and brought in new legal counsel, a
new NOMAD, a new accounting firm and a new administrator.
Our 2009 total operating expenses are budgeted at EUR3.6 million (2008: EUR5.8
million). Interest on the IFR debt, interest on the structured products and
interest from other loans comprise the expected income. In budgeting we do not
take into account future asset sales or income from our investment in the IFR
preference shares. Given the economic climate and nature of ACPM's portfolio, it
is impossible to be certain about the ability of our borrowers to meet their
obligations. This is especially true in regard to expected income from the
structured products we hold. Nonetheless, even given the highly unlikely
scenario that all of our structured products were to default over the next year,
we would still be able to meet our obligations.
The Year in Review
I would like now to review the most significant events of the past year,
including the unsuccessful secondary offering in June, the shareholder
requisition in August, changes to the Board, the Pfaff Industrie Maschinen AG
("PFAFF") insolvency, the elimination of leverage in September, and the
shareholder decision in December to change ACPM's investment strategy, commence
disposing of assets and commence returning capital to shareholders.
The Secondary Offering
In an RNS announcement dated 7 May, ACPM announced "its intention to raise
approximately EUR150 million via a secondary equity issue in order to support a
strong pipeline of investment opportunities. . . . [relating to] non-investment
grade financing of SME businesses." ACPM claimed that "[s] uch opportunities
reflect the excellent market conditions from both an origination and pricing
standpoint currently in the markets in which ACP Mezzanine is an active
participant." The "pipeline's" largest component was something called "ConPAIR"
or "Helios," a large structured transaction comprising 61 small loans to
continental European SME borrowers. The plan was that ACP Capital Limited
("ACP") would invest EUR15.0 million and ACPM would invest EUR57.0 million in
several classes of notes issued through a Lehman Brothers CDO with an eight year
maturity. ACPM further intended to lever this transaction through the Deutsche
Bank credit facility and thereby increase returns (and risk).
Subsequent to ACPM's announcement of its intent to raise capital to make further
investments but prior to the actual capital raise, ACP's largest shareholder,
owning close to 30 percent of ACP's shares, served a written demand on ACP that
ACP (and a fortiori ACPM) cease making new investments and forthwith return
capital to shareholders. ACP rejected the shareholder's demands, stated that it
would continue to make new investments and offered to assist the shareholder in
disposing of its investment in ACP through a "block trade."
In disregard of the shareholder dissatisfaction at ACP and its likely effect on
ACPM, ACP moved ahead with a June capital raise for ACPM. An RNS announcement
dated 4 June 2008 stated that "the management of the investment manager,
including the Executive Directors Derek Vago and Eric Youngblood, committed to a
combined minimum subscription of EUR1.25 million in the placing." The disclosed
minimum commitment of management does not appear to have been adequately
documented as of these 2,083,334 shares that were acquired by ACP "on behalf of
management," Mr Vago paid the consideration for none of his 1,750,000 allocation
while Mr. Youngblood paid the consideration for 71,000 of his 167,000
allocation. Not only did these Executive Directors apparently fail to
participate as represented, the offering was ultimately unsuccessful. The
shares were placed at EUR0.60 per share rather than at EUR0.80 per share as was
originally intended. Rather than raising EUR150 million, the offering raised only
EUR80 million. Of that EUR80 million, almost 60 percent or EUR47.5 million was a
subscription from ACP.
The Uses and Intended Uses of the Funds Raised
One use of the funds raised in the secondary offering was a EUR9 million
investment in the debt of PFAFF. GCI Management AG ("GCI"), one of ACP's
"strategic platforms," introduced this opportunity. A wholly-owned subsidiary of
GCI was the majority shareholder in PFAFF and the PFAFF loan was secured by a
pledge over these shares.
Less than 90 days after drawdown, PFAFF had voluntarily filed for insolvency.
According to a report issued by a "stakeholder conference" on the eve of
insolvency, PFAFF suffered from an unworkable capital structure including
liquidity constraints, high overheads, "over-aged" product lines, uncompetitive
product pricing and other issues. We do not expect any recovery, although we
have filed a claim with the insolvency court.
A second obligation that ACPM entered into with funds raised in the offering was
a commitment to Leasecom Group SAS ("Leasecom"), a French leasing company, to
provide financing to one of their related companies of up to EUR15 million for the
acquisition of leases, primarily for computer equipment. As of the date of this
release, that obligation is 60 percent drawn down.
The third transaction that was planned was "ConPair," described above. On the
part of ACPM, this would have been an investment in excess of EUR57 million with
an eight year life. This transaction was scheduled to close on 27 July.
Following the requisition at ACP, ACPM renegotiated its financing arrangements
with Deutsche Bank. Under the terms of this restructuring Deutsche Bank was
entitled to an increase in fees payable through 2012 regardless of whether the
facility remained in place. Moreover, the facility contained a "key man"
provision that would be triggered if several of the former managers left ACP.
This agreement was signed on 8 July, nine days prior to the ACP EGM, when it
should have been quite apparent that little more than a week later two "key men"
might no longer be with ACP.
On 17 July, an EGM of shareholders removed the majority of ACP's board. The new
board immediately demanded that the Board of ACPM step down and that ACPM cease
any further investments. ACP, which was to be a co-investor in ConPair, informed
the other investors, including ACPM, that it would not go ahead with that
transaction. This effectively blocked ConPair since ACPM did not have sufficient
capital to fulfil ACP's part of the transaction. ACPM's Board did not
voluntarily step down forcing ACP to serve a requisition calling for the removal
of three of the Directors. Thereafter, these Directors resigned. Following the
requisition and subsequent changes, ACPM's Board comprised three new Directors
and one Director from the previous board.
Besides me, our current board comprises Stephen Coe, George Baird and Rupert
Walker. Steve is a UK qualified Chartered Accountant, former Investec Trust
(Guernsey) Limited Managing Director, with extensive experience in the
management and administration of investment companies. Steve chairs our Audit
Committee. Steve has been instrumental in introducing appropriate internal
controls, appointing a new auditor and a new administrator, and outsourcing our
accounting. Rupert is an English solicitor. He is a former partner at a major
international law firm and is the Managing Director of Saltgate Limited, our new
administrator. I believe we are lucky to have them on board.
Reduction of Risk
Upon taking office it was quite apparent that we had much work to do, with a
legacy of unpaid liabilities. Creditors were hounding us, and some creditors
even threatened legal action unless paid forthwith. There were certain external
investigations with regards to matters which had occurred prior to our taking
office. ACPM's new leverage facility was an economic drain on ACPM. Given the
precipitous drop in the value of ACPM's portfolio of structured products
beginning in June, ACPM was forced to meet repeated margin calls by posting cash
for collateral. As a consequence, the facility was a drain on cash, no longer
provided significant leverage and no longer served any economic purpose. We
therefore informed Deutsche Bank that we intended to terminate the leverage
facility and paid breakage costs of about EUR3.9 million. This represented a
discount of 15 percent to the amount contractually required under the agreement
that former management had signed on 8 July.
As a result of criticisms arising from external investigations into matters
which had occurred prior to our taking office, we have strengthened our internal
controls, replaced our service providers, and put in place systems to ensure
regulatory compliance. We believe that these steps, costly and time consuming as
they may have been in the short-term, provide a firmer foundation for ACPM and
reduce our risk profile.
Finally, at an EGM held on 9 December 2008, our shareholders authorised ACPM to:
(i) cease pursuing ACPM's investment strategy; (ii) commence disposing of
assets; (iii) commence returning the proceeds to shareholders; and, (iv) make
distributions out of capital. Immediately following the EGM, the Board of
Directors of ACPM approved a distribution of EUR0.1065 per share, which was made
on 19 December 2008. Following the year end, we have sold two more assets.
Our Portfolio
Omitting the two assets we sold following year end - the GCI Automotive and
Iceland loans - our portfolio at year end looked as follows:
IFR Capital plc
IFR is a Cyprus domiciled company, also traded on the AIM market and
headquartered in Dusseldorf. At year end 2008, its shares traded at EUR0.10 per
share, down 90 percent from flotation little more than two years earlier, and
had a market capitalisation of around EUR23 million. ACPM owns four classes of
debt and a class of preferred equity. The debt does not trade and is carried at
an indicative price. The preferred equity is carried at 55.5 percent of par,
which represents a reduction in value of 44.5 percent since our semi-annual
report. The reasoning behind this write down has nothing to do with what we
expect to ultimately realise, but, rather, IFR's preferred equity, in our view,
cannot be marked above IFR's most junior debt, which was indicatively priced at
55.5 percent of par at year end.
IFR comprises three major operating subsidiaries: Nordsee GmbH, Europe's largest
fish restaurant chain and number one non-burger fast food chain in Germany and
Austria; Homann Chilled Food GmbH, a German - based manufacturer of chilled food
and convenience products; and Hamker Lebensmittel Beteiligungs GmbH and Co. AG,
a German manufacturer of sauces and dressings. The concept behind IFR was to
"roll up" the German food industry and generate profits by creating synergies
and eliminating inefficiencies. IFR went public in November 2006 with an
offering that raised EUR135 million before costs. ACP was one of the two sponsors
in the offering and invested EUR17.34 million. ACP received a further 20.8 million
shares from assets contributed in kind to IFR. According to the IFR offering
document and the advisory services agreement, ACP was to have assisted IFR in
its "acquisition strategy" and contracted with IFR to provide "advisory
services," which included two IFR board seats. By the end of 2007, ACP and ACPM
had a total investment in aggregate in IFR of about EUR186 million. This comprised
four classes of debt, a class of preferred equity shares and the ordinary
equity.
By February 2008, the relationship between ACP / ACPM and IFR had disintegrated
amidst accusations and litigation. ACP management resigned from its two IFR
board seats and commenced a lawsuit against both IFR and ING Bank, as lender,
alleging the breach of a technical aspect of one tranche of the IFR debt. In
response, IFR disavowed the advisory services agreement and counterclaimed
against ACP for breach of fiduciary duty. By the time of the ACP EGM in July, a
UK court had denied ACP summary judgment, the IFR claim had been dismissed on
forum non conveniens grounds, the ING claim had been stayed, and about GBP1
million in legal fees had been incurred.
IFR is a public company and shareholders can access its website at
www.ifrcapital.eu for a reasonable amount of information. IFR's primary
challenge is cleaning up its capital structure. At year end, IFR had EUR164
million of debt and about EUR117 million of preferred equity. The debt comprises
three classes of senior secured debt, a class of subordinated, second lien debt
and two classes of preference shares. ACPM is an investor in all four classes of
the debt as well as one class of the preference shares. One class of the debt is
amortizing while the other three are interest only with bullet payments of
principle between 2015 and 2017. To date there have been no interest or
repayment defaults.
ACPM owns EUR24.1 million of IFR's Class A preference shares. For 2008, they
accrued a coupon of 20 percent per annum resulting in accruals of EUR4.8 million.
For 2009, the coupon increases to 27.5 percent per annum and for 2010 it steps
up further to 37.5 percent per annum. The preference shares are redeemable at
the option of IFR at par plus accrued interest.
CDO, RMBS, and CLO Structured Assets
ACPM holds one CDO investment, two RMBS investments and nine CLO investments,
all of which were made during 2006 and 2007.
Each CLO is essentially a form of securitisation where payments from multiple
middle-sized and large business loans are pooled together and investors acquire
different tranches. CDOs have a similar structure and comprise, typically, real
estate asset-backed loan portfolios, including other CDOs. RMBS structured
assets comprise portfolios of residential mortgage backed securities in the UK.
We believe that one of the problems with all three of these instruments is that
they are difficult to analyse in detail because they comprise a large and varied
collection of assets, the value of which is not always readily calculable. A
second layer of complexity has to do with the structure of the investments and
how ratings downgrades and defaults affect the entitlement of different tranches
to payment. ACPM holds the lower-ranked tranches with only the equity tranche as
a default cushion. Most CLOs limit the amount of lower-rated debt that can be
held in the portfolio - so-called ratings concentration tests - which means that
as credits are downgraded the portfolio becomes over concentrated in lower rated
debt. This may cause the suspension or termination of interest payments to the
lower rated tranches.
For a company the size of ACPM it would have been virtually impossible to
comprehensively analyse all of the credits in any of these instruments. Rather,
we believe the investment theory supporting these investments was relatively
simple. The rating agencies rated the CDO, CLO, and RMBS tranches. Historical
default rates for the different ratings were known. Pricing obtained was
somewhat better than historical default rates would have implied. The
instruments carried internal leverage and could be levered again using a
facility such as that ACPM had with Deutsche Bank. So for some, these appeared
to be attractive investments that after being levered could yield in the double
digits. Subsequent to the financial crisis, markets have viewed such instruments
with suspicion, which is reflected in the current pricing reflected at the year
end and further falls since 31 December 2008.
At present there is almost no trading market for these products. We obtain
indicative pricing from five different bank sources. ACPM's original nominal
value of investments in CLOs was EUR37.7 million and at year end, the indicative
value was EUR9.4 million. Its original nominal value of CDO investments was EUR9.5
million and at year end, the indicative value was EUR0.8 million. The original
nominal value of RMBS assets was GBP5.0 million and at year end, the indicative
value was GBP0.3 million.
Given this pricing, it does not seem appropriate to be selling these assets now
since even the payment of one or two more coupons would often exceed the bids
that we see. A recent example involves one of our CLOs with a bi-annual coupon.
The market maker bid 4 percent of par. ACPM holds a EUR7 million face value
investment in this instrument. So the market maker was effectively offering ACPM
EUR280,000 for this investment. This bid was 73 percent of a single coupon or
about 4.4 months' worth of coupon. Looked at another way, if ACPM receives one
more coupon that coupon will be 1.4x the indicative bid. With these, we believe
it is better to continue to hold.
Leasecom Group SAS
Leasecom is a private French leasing company headquartered in Paris with the
website www.leasecom.fr. Leasecom's business model is primarily originating
computer equipment leasing contracts with SME companies and brokering these
contracts to refinancing banks. Leasecom, as a broker, traditionally does not
bear credit risk, but is itself dependent on bank financing.
In June 2008, ACPM committed to provide financing to a subsidiary of Leasecom of
up to EUR15 million to enable it to retain loans on its own balance sheet rather
than to sell them to banks. The term of the loan is essentially seven years and
the repayment is insured, which results in a current long-term credit rating of
A+/Aa3/AA (Standard & Poor's / Moody's / Fitch Ratings). ACPM's facility was
EUR5.85 million drawn as at 31 December 2008 with EUR9.15 million of the committed
facility remaining to be drawn down. ACPM and Leasecom now enjoy a good
relationship and are in continuing discussions concerning the future.
* * * *
The past year has been a difficult one for ACPM and its shareholders. ACPM has
suffered from internal turmoil and difficult market conditions. We know quite
well that most of our shareholders have seen a substantial diminution in the
value of their investment. That said, I believe we have taken the necessary
steps to provide a firm foundation for future returns of capital. We are a far
less risky company than we were at mid-year; we have no leverage; we now have in
place internal controls we believe are appropriate; we are making no further
investments; and, following year end, we have sold two assets. We have returned
EUR3.5 million to shareholders from the proceeds of the first disposal and will
announce shortly the distribution of proceeds from the second disposal. We are
hopeful that we will complete further asset sales as the year progresses and
thus be able to return additional capital to shareholders.
I look forward to reporting to you again following our half-year results.
Respectfully yours,
John D. Chapman
Chairman
ACP Mezzanine Limited
26 March 2009
FINANCIAL STATEMENTS
Consolidated Income Statement
For the year ended 31 December 2008
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | 2008 | | 2007 |
+------------------------------------------+--------+----+---------------+--+-------------+
| | Notes | | EUR | | EUR |
+------------------------------------------+--------+----+---------------+--+-------------+
| Investment income | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| Losses on investments at fair value | | | (24,057,920) | | - |
| through profit or loss | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| Dividend and interest income | | | 14,765,307 | | 13,031,674 |
+------------------------------------------+--------+----+---------------+--+-------------+
| Loss on disposal of loans and | | | - | | (6,250) |
| receivables | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| Fees and other income | | | 615,000 | | 2,596,892 |
+------------------------------------------+--------+----+---------------+--+-------------+
| Total investment income | | | (8,677,613) | | 15,622,316 |
+------------------------------------------+--------+----+---------------+--+-------------+
| Exchange movements | | | (236,591) | | (809,032) |
+------------------------------------------+--------+----+---------------+--+-------------+
| Impairment of loans and receivables | | | (21,435,114) | | - |
+------------------------------------------+--------+----+---------------+--+-------------+
| Impairment of Available-for-sale | | | (30,813,934) | | - |
| investments | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| Equity-settled share-based payments | 20 | | - | | (64,569) |
+------------------------------------------+--------+----+---------------+--+-------------+
| Investment manager's fees | 21 | | (2,511,379) | | (1,942,767) |
+------------------------------------------+--------+----+---------------+--+-------------+
| Other operating expenses | 7 | | (3,021,305) | | (252,109) |
+------------------------------------------+--------+----+---------------+--+-------------+
| Operating (loss) profit | | | (66,695,936) | | 12,553,839 |
+------------------------------------------+--------+----+---------------+--+-------------+
| Finance expense | 8 | | (5,784,601) | | (2,798,202) |
+------------------------------------------+--------+----+---------------+--+-------------+
| Finance income | 8 | | 1,745,272 | | 458,234 |
+------------------------------------------+--------+----+---------------+--+-------------+
| (Loss) profit before tax | | | (70,735,265) | | 10,213,871 |
+------------------------------------------+--------+----+---------------+--+-------------+
| Income taxes | 9 | | - | | - |
+------------------------------------------+--------+----+---------------+--+-------------+
| (Loss) profit for the period | | | (70,735,265) | | 10,213,871 |
| attributable to the equity shareholders | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| (Loss) / earnings per share | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| Basic | 19 | | (40.25) | | 10.07 |
| | | | cents | | cents |
+------------------------------------------+--------+----+---------------+--+-------------+
| Diluted | 19 | | (40.25) | | 9.98 |
| | | | cents | | cents |
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
| | | | | | |
+------------------------------------------+--------+----+---------------+--+-------------+
Consolidated Balance Sheet
As at 31 December 2008
+---+------------------+----+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | 2008 | | 2007 |
+---+------------------+-----------+-------+------+--------+----+--------------+--+---------------+
| Assets | | | | Notes | | EUR | | EUR |
+----------------------+-----------+-------+------+--------+----+--------------+--+---------------+
| Non-current assets | | | | | | | | |
+----------------------+-----------+-------+------+--------+----+--------------+--+---------------+
| Investments measured at fair value through | 10 | | 41,022,886 | | 63,019,114 |
| profit or loss | | | | | |
+-------------------------------------------------+--------+----+--------------+--+---------------+
| Investment classified as loans and | | 11 | | - | | 58,728,562 |
| receivables | | | | | | |
+------------------------------------------+------+--------+----+--------------+--+---------------+
| Available-for-sale investments | | 12 | | 22,488,110 | | - |
+------------------------------------------+------+--------+----+--------------+--+---------------+
| | | | | | | | 63,510,996 | | 121,747,676 |
+---+------------------+-----------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | | |
+---+------------------+-----------+-------+------+--------+----+--------------+--+---------------+
| Current assets | | | | | | | | |
+----------------------+-----------+-------+------+--------+----+--------------+--+---------------+
| Investments measured at fair value through | 10 | | 756,474 | | 538,460 |
| profit or loss | | | | | |
+-------------------------------------------------+--------+----+--------------+--+---------------+
| Trade and other | | | | 14 | | 1,072,292 | | 9,024,895 |
| receivables | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Cash and cash equivalents | | | | | | 11,781,538 | | 15,157,208 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Total current assets | | | | | | 13,610,304 | | 24,720,563 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | | |
+---+-----------------------+------+-------+------+--------+----+--------------+--+---------------+
| Total assets | | | | | | 77,121,300 | | 146,468,239 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | | |
+---+-----------------------+------+-------+------+--------+----+--------------+--+---------------+
| Liabilities | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Non-current liabilities | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Loans and borrowings | | | | 15 | | - | | 34,854,559 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Total non-current | | | | | | - | | 34,854,559 |
| liabilities | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Current liabilities | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Trade and other payables | | | | 16 | | 724,701 | | 8,324,655 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Total current liabilities | | | | | | 724,701 | | 8,324,655 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Total liabilities | | | | | | 724,701 | | 43,179,214 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Net assets | | | | | | 76,396,559 | | 103,289,025 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Equity & Reserves | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Issued capital | | | | 17 | | - | | - |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Share premium | | | | 18 | | 148,499,969 | | 95,783,580 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Retained earnings | | | | | | (72,103,370) | | 7,505,445 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Total equity and reserves | | | | | | 76,396,559 | | 103,289,025 |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| Net asset value per share | | | | | | 32.4 | | 101.8 |
| (eurocents) | | | | | | | | |
+---------------------------+------+-------+------+--------+----+--------------+--+---------------+
| | | | | | | | | |
+---+------------------+----+------+-------+------+--------+----+--------------+--+---------------+
Consolidated Cash Flow Statement
For the year ended 31 December 2008
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | 2008 | | 2007 |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | EUR | | EUR |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Cash flow from operating | | | | | | | |
| activities: | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| (Loss) / profit for the | | | | | (70,735,265) | | 10,213,871 |
| financial period | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Movement in fair value of investments and | | | 24,057,920 | | - |
| loans | | | | | |
+-------------------------------------------+-----+----------+--------------+--+---------------+
| Finance expense | | | | | 5,784,601 | | 2,798,202 |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Finance income | | | | | (1,745,272) | | (458,234) |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Exchange rate differences | | | | | 236,591 | | 809,032 |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Impairment of investments classified as loans | | 21,435,114 | | - |
| and receivables | | | | |
+-------------------------------------------------+----------+--------------+--+---------------+
| Impairment of | | | | | 30,813,934 | | - |
| Available-for-sale investments | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Changes in working capital: | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Decrease / (increase) in trade and other | | | 7,952,603 | | (505,183) |
| receivables | | | | | |
+-------------------------------------------+-----+----------+--------------+--+---------------+
| (Decrease) / increase in trade and other | | | (7,130,883) | | 535,807 |
| payables | | | | | |
+-------------------------------------------+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| New lending / investments | | | | | (20,644,194) | | (132,820,420) |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Sale / repayment of investments | | | | | 1,536,057 | | 103,981,379 |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Net cash flow from operations | | | | | (8,438,794) | | (15,445,546) |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Cash flow from financing | | | | | | | |
| activities | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Proceeds from issues of share | | | | | 80,000,000 | | - |
| capital | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Costs of issues of share | | | | | (3,176,733) | | - |
| capital | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Share options exercised | | | | | 1,000,000 | | - |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Repayment of financing | | | | | (47,764,656) | | (21,024,486) |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Interest paid and other related financing | | | (6,247,383) | | (2,476,676) |
| costs | | | | | |
+-------------------------------------------+-----+----------+--------------+--+---------------+
| Drawdown of financing | | | | | 13,729,933 | | 44,664,837 |
| facilities | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Bank interest received | | | | | 1,745,272 | | 458,234 |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Capital distribution | | | | | (25,106,878) | | - |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Dividends paid | | | | | (8,873,550) | | (6,591,780) |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Net cash flow from financing | | | | | 5,306,005 | | 15,030,129 |
| activities | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Effects of exchange rate changes on cash and | | (242,881) | | (225,602) |
| cash equivalents | | | | |
+-------------------------------------------------+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Net decrease in cash and cash | | | | | (3,375,670) | | (641,019) |
| equivalents | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Opening cash and cash | | | | | 15,157,208 | | 15,798,227 |
| equivalents | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| Closing cash and cash | | | | | 11,781,538 | | 15,157,208 |
| equivalents | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
| | | | | | | | |
+---------------------------------+----+----+-----+----------+--------------+--+---------------+
Consolidated Statement of Changes in Equity
For the year ended 31 December 2008
+---+------+------+----+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | Share | | Share | | Retained | | Total |
| | | | | | | | capital | | premium | | earnings | | |
+---+------+------+----+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | EUR | | EUR | | EUR | | EUR |
+---+------+------+----+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| At 31 December 2006 | | | | - | | 95,783,580 | | 3,818,785 | | 99,602,365 |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | | | | |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Profit for the year | | | | - | | - | | 10,213,871 | | 10,213,871 |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Dividends paid | | | | - | | - | | (6,591,780) | | (6,591,780) |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Equity settled share based | | - | | - | | 64,569 | | 64,569 |
| payments | | | | | | | | |
+------------------------------------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | | | | |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| At 31 December 2007 | | | | - | | 95,783,580 | | 7,505,445 | | 103,289,025 |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | | | | |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Loss for the year | | | | - | | - | | (70,735,265) | | (70,735,265) |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Dividends paid | | | | - | | - | | (8,873,550) | | (8,873,550) |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Capital distribution | | | | - | | (25,106,878) | | - | | (25,106,878) |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Shares issued | | | | - | | 76,823,267 | | - | | 76,823,267 |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| Share options | | | | - | | 1,000,000 | | - | | 1,000,000 |
| exercised | | | | | | | | | | |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | | | | | |
+---+------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| At 31 December 2008 | | | | - | | 148,499,969 | | (72,103,370) | | 76,396,599 |
+----------------------+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
| | | | | | | | | | | | | | |
+---+------+------+----+--+----------+--+----------+--+--------------+--+---------------+--+--------------+
NOTES TO THE FINANCIAL STATEMENTS
1 General Information
ACP Mezzanine Limited ("ACPM" or the "Company"), while in investment mode,
provided sub-investment grade finance to European small and mid-sized
enterprises - with a primary focus on the United Kingdom, France, Germany and
Italy. The financial statements for the year ended 31 December 2008 were
authorised for issue by the Board of Directors on 26 March 2009.
At an EGM held on 9 December 2008, ACPM's shareholders approved a resolution
authorising the Company to dispose of assets in an orderly basis and return the
proceeds to shareholders by way of distributions.
2 Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively "IFRSs") issued by the International Accounting
Standards Board ("IASB") as adopted by the European Union and with those parts
of Companies (Jersey) Law 1991 applicable to companies preparing their financial
statements under IFRSs.
The financial statements are presented in Euro, the functional and
presentational currency of the Company.
They are prepared under the historical cost convention modified to include
investments measured at fair value through profit or loss. The preparation of
financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based on the experience of the Directors and
other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The most significant techniques for estimation are described in the accounting
policies or notes to the financial statements.
Note 3 sets out a description of the significant accounting policies of the
Company. The accounting policies are consistent with those applied in the year
ended 31 December 2008, and amended to reflect the adoption of the new
standards, amendments to standards or interpretations which are mandatory for
the first time for the financial year ended 31 December 2008.
Standards, amendments and interpretations to published standards not yet
effective
Certain new standards, amendments and interpretations to existing standards have
been published that are mandatory for the Company's accounting periods beginning
after 1 January 2009 or later periods and which the Company has decided not to
adopt early.
These are listed below and not expected to have a significant impact on the
Company's financial statements:
Amendments to IFRIC 9 and IAS 39 - Embedded Derivatives (effective for
accounting period beginning on after 30 June 2009 - still to be endorsed)
Amendments to IFRS 7 - Improving disclosures about Financial Instruments
(effective for accounting period beginning on after 1 January 2009 - still to be
endorsed)
Amendments to IAS 1 - Presentation of Financial Statements : A Revised
Presentation (effective for accounting period beginning on after 1 January 2009)
IAS 27 - Consolidated and Separate Financial Statements (effective for
accounting periods beginning on or after 1 July 2009)
IAS 32 & IAS1 - Puttable Financial Instruments and Obligations Arising on
Acquisition (effective for accounting periods beginning on or after 1 January
2009)
IFRS1 & IAS 27 - Cost of an Investment in a Subsidiary, Jointly-Controlled
Entity or Associate (effective for accounting periods beginning on or after 1
January 2009)
IAS 39 - Financial Instruments: recognition and Measurement:Eligible Hedged
Items (effective for accounting periods beginning on or after 1 July 2009)
IFRIC 13 - Customer Loyalty Programmes (effective for accounting periods
beginning on or after 1 July 2008)
IFRIC 15 - Agreements for the Construction of Real Estate (effective for
accounting periods beginning on or after 1 January 2009)
IFRIC 16 - Hedges of a Net Investment in a Foreign Operation (effective for
accounting periods beginning on or after 1 October 2008)
IFRIC 17 - Distributions of Non-Cash Assets to Owners (effective for accounting
periods beginning on or after 1 July 2009)
IFRIC 18 - Transfer of Assets from Customers (effective for accounting periods
beginning on or after 1 July 2009)
Amendment to IFRS2 - Share Based payments: Vesting Conditions and Cancellations
(effective for accounting periods beginning on or after 1 January 2009)
IFRS 3 - Business Combinations and Complementary Amendments to IAS 27
Consolidated and Separate Financial Statements (both effective for accounting
periods beginning on or after 1 July 2009)
IFRS 8 - Operating Segments (effective for accounting periods beginning on or
after 1 January 2009)
3 Significant accounting policies
The accounting policies have been consistently applied for the purpose of
producing these financial statements. The significant accounting policies
applied are as follows:
a) Basis of consolidation
The financial information in the Group's Financial Statements for the year ended
31 December 2008 incorporates the Financial Statements of the Company and its
subsidiaries. Subsidiaries are entities controlled by the Group. 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 are currently
exercisable or convertible are taken into account. The financial statements of
the subsidiaries are included in the consolidated financial statements from the
date that the control commences until the date control ceases.
Intra-group balances and any unrealised gains and losses arising from
intra-group transactions are eliminated in preparing the Financial Statements of
the Group.
As the subsidiaries of the group were dormant during the year, the Group and
Company accounts are the same.
b) Investments measured at fair value through profit and loss
Investments are recognised and derecognised at trade date. All listed and
unlisted equity investments are designated as at fair value through profit or
loss and subsequently carried in the balance sheet at fair value.
The valuation technique used for each class of investment is as follows:
Preference equity- valued as a percentage to par using the same percentage to
par of indicative bids of junior debt in the company in which the preference
equity is held.
Syndicated loans - valued based on indicative bids from market makers.
c) Loans and receivables
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are initially recognised
at fair value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default or
significant delay in payment) that the Company will be unable to collect all of
the amounts due under the terms receivable, the amount of such provision being
the difference between the net carrying amount and the present value of the
future expected cash flows associated with the impaired receivable.
d) Available-for-sale investments
Non-derivative financial assets not included in the above categories are
classified as available-for-sale and comprise principally the Company's CDOs,
CLOs and SME loans. They are carried at fair value and valued based indicative
bids from market makers. Where there is a significant or prolonged decline in
fair value of an Available-for-sale financial asset (which constitutes objective
evidence of impairment), the full amount of the impairment, including any amount
previously charged to equity is recognised in the income statement. Purchases
and sales of Available-for-sale financial assets are recognised on trade date
with any change in fair value between trade date and settlement date being
recognised in retained earnings. On sale, the amount held in the
Available-for-sale reserve associated with that asset is removed from equity and
recognised in the income statement.
e) Trade and other receivables
Trade and other receivables are recognised initially at fair value. A provision
for impairment is established where there is objective evidence that the Company
will not be able to collect all amounts due according to the original terms of
the receivables concerned.
f) Cash & cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less.
g) Loans
All loans and borrowings are initially recognised at the fair value of the
consideration received net of issue costs associated with the borrowings. After
initial recognition, these are subsequently measured at amortised cost using the
effective interest method, which is the rate that exactly discounts the
estimated future cash flows through the expected life of the liabilities.
Amortised cost is calculated by taking into account any issue costs and any
discount or premium on settlement.
h) Trade and other payables
Trade and other payables are stated at amortised cost.
i) Equity instruments
Equity instruments issued by the Company are recognised at the proceeds or fair
value received. As share capital has nil par value proceeds are credited to the
share premium account. Direct issue costs are deducted from share premium.
j) Revenue
Income from loans and receivables is recognised as it accrues by reference to
the principal outstanding and the effective interest rate applicable, which is
the rate that exactly discounts the estimated future cash flows through the
expected life of the financial asset to that asset's carrying value.
Fee income earned on financing arrangements that relate to investments measured
at fair value through profit or loss are recognised when that investment is
made. Fees earned from financing arrangements that relate to investments
classified as loans and receivables are recognised over the life of the assets.
Fees in respect of any ongoing services are recognised as that service is
provided.
Dividends from equity investments are recognised in the income statement when
the shareholders rights to receive payment have been established.
k) Dividends
Dividends are recognised when they become legally payable. In the case of
interim dividends to equity shareholders, this is when declared by the
Directors. In the case of final dividends, this is when approved by the
shareholders at the AGM.
l) Share-based payments
Where equity settled share options are awarded to Directors, the fair value of
the options at the date of grant is charged to the income statement over the
vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each balance
sheet date so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually vest. Market
vesting conditions are factored into the fair value of the options granted. As
long as all other vesting conditions are satisfied a charge is made irrespective
of whether the market vesting conditions are satisfied. The cumulative expense
is not adjusted for failure to achieve a market vesting condition.
When the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and after
the modification, is also charged to the income statement over the remaining
vesting period.
m) Finance expense
Interest expense is calculated using the effective interest rate method. Finance
costs are recognised in the income statement over the period of the loans and
borrowings related to those costs.
n) Foreign currency translation
Transactions entered into in a currency other the Euro are recorded at the rates
ruling when the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet date.
Exchange differences arising on the retranslation of unsettled monetary assets
and liabilities are translated at the rates ruling at the balance sheet date.
Exchange differences arising on the retranslation of unsettled monetary assets
and liabilities are recognised immediately in the income statement.
4 Significant judgments, key assumptions and estimates
The Company's significant accounting policies are stated in note 3 above. Not
all of these significant accounting policies required management to make
difficult, subjective or complex judgements or estimates. The following is
intended to provide an understanding of the policies that management consider
critical because of the level of complexity, judgment or estimation involved in
their application and their impact on the financial statements. These judgments
involve assumptions or estimates in respect of future events. Actual results may
differ from these estimates.
a) Fair value of financial instruments
The Company determines the fair value of financial instruments that are not
quoted by using either indicative prices' or valuation techniques. These
indicative prices and valuation techniques are significantly affected by the
assumptions used, including discount rates and estimates of future cash flows.
In that regard, the derived fair value estimation cannot always be substantiated
by comparison with independent markets and in many cases may not be capable of
being realised immediately. Note 6 states the financial risk management policies
for the Company.
b) Trade receivables and interest receivables on investments
The Company is required to judge when there is sufficient objective evidence to
require the impairment of individual trade receivables or interest receivable on
its investments. It does this on the basis of the age of the relevant
receivables, external evidence of the credit status of the debtor entity and the
status of any disputed amounts.
c) Legal proceedings
The Company reviews outstanding legal cases at each balance sheet date in order
to assess the need for provisions and disclosures in the financial statements.
This requires the Company's management to make determinations about various
factual and legal matters beyond its control. Among the factors considered in
making decisions on provisions are the nature of litigation, claim or
assessment, the legal process and potential level of damages in the jurisdiction
in which the litigation, claim or assessment has been brought, the progress of
the case the opinions or views of legal advisers, experience on similar cases
and any decision of the Company's management as to how it will respond to the
litigation, claim or assessment.
5 Segment reporting
The Directors consider that there is only one business segment being specialist
integrated finance and asset management and only one geographic area being
Europe.
6 Financial risk management
The Company's activities expose it to a variety of financial risks:
concentration risk, market price risk, interest rate risk, currency risk, credit
risk, liquidity risk, and capital risk. The Company's overall risk management
programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Company's financial performance.
a) Concentration risk
Concentration risk arises from individual investments to which the Group has
significant exposure. The Group defines significant exposure as at least 20
percent of gross portfolio value. Concentration risk is managed through regular
review of public information and from review of reports from debt agents and
similar, where appropriate. The Group seeks to communicate regularly with
managers of these investments. ACPIM reports quarterly to the Board on the
relevant investments.
The concentration risk at year end was:
IFR Capital plc - the Group's exposure totaled EUR41.8 million of the net asset
value total of EUR76.6 million at 31 December 2008 (2007: EUR63.7 million of the net
asset value total of EUR103.3 million.)
b) Market price risk
Market price risk arises from uncertainty in the future value of financial
instruments. No new investments are being made. Existing investments are managed
by the investment advisor who reports regularly to the board to review past and
expected future performance. The nature of investments is diverse. Monitoring
includes reviewing monthly and quarterly financial management reports and
monthly portfolio managers' reports. Regular contact is maintained with
borrowers, agent banks and portfolio managers. Board meetings are also attended.
Where available, prices are monitored daily as are companies on watch lists.
Investments are not actively traded but opportunistic sales of investments have
occurred. All pricing is indicative only as there is little, if any, actual
trading in other instruments.
The Company's investments are exposed to market price fluctuation. If the
valuation of the Company's investment had been 20 percent lower at 31 December
2008 the Company's loss would have been higher and the Company's net assets
lower by EUR12.9 million (2007: EUR24.5 million). A 20 percent increase in value
would, on the same basis, have decreased the loss and increased net assets by
the same amount.
c) Interest rate risk
As the Company has no borrowings, interest rate risk arises solely from interest
received in respect of the Company's investments and loans and cash balances.
Investments and loans issued at floating interest rates expose the Company to
cash flow interest rate risk.
The table below details the Company's exposure to interest rates at 31 December
2008 by reference to the earlier of the contractual re-pricing or maturity date:
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+--+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | 2008 | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | Within | | 1 - 2 | | 3 - 5 | | Over | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | 1 year | | years | | years | | 5 years | | Total |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | EUR | | EUR | | EUR | | EUR | | EUR |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Fixed rate: | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Investments | - | | - | | - | | 13,375,500 | | 13,375,500 | |
| | measured at | | | | | | | | | | |
| | fair value | | | | | | | | | | |
| | through profit | | | | | | | | | | |
| | or loss | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+--+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Floating rate: | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Investments | - | | - | | 215,520 | | 22,272,590 | | 22,488,110 |
| | available- | | | | | | | | | |
| | for-sale | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Investments | 756,474 | | 3,144,893 | | 3,611,587 | | 20,890,906 | | 28,403,860 |
| | measured at | | | | | | | | | |
| | fair value | | | | | | | | | |
| | through profit | | | | | | | | | |
| | or loss | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Cash and cash | 11,781,538 | | - | | - | | - | | 11,781,538 |
| | equivalents | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | 12,538,012 | | 3,144,893 | | 3,827,107 | | 56,538,996 | | 76,049,008 |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | 2007 | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | Within | | 1 - 2 | | 3 - 5 | | Over | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | 1 year | | years | | years | | 5 years | | Total |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | EUR | | EUR | | EUR | | EUR | | EUR |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Fixed rate: | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Investments | - | | - | | - | | 24,100,000 | | 13,375,500 |
| | measured at | | | | | | | | | |
| | fair value | | | | | | | | | |
| | through profit | | | | | | | | | |
| | or loss | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Floating rate: | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Loans and | - | | - | | - | | 58,728,562 | | 58,728,562 |
| | receivables | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Investments | 538,315 | | 2,173,678 | | 5,747,352 | | 30,998,084 | | 39,457,429 |
| | measured at | | | | | | | | | |
| | fair value | | | | | | | | | |
| | through profit | | | | | | | | | |
| | or loss | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Cash and cash | 15,157,208 | | - | | - | | - | | 15,157,208 |
| | equivalents | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | Loans and | - | | - | | (34,854,559) | | - | | (34,854,559) |
| | borrowings | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | 15,659,523 | | 2,173,678 | | (29,107,207) | | 113,826,646 | | 102,588,640 |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+
| | | | | | | | | | | |
+---+----------------+-------------+--+------------+--+--------------+--+--------------+--+--------------+--+
d) Foreign exchange risk
The Company invests in assets denominated in currencies other than the Euro. The
Company has no foreign exchange hedging in place as the Directors do not
consider that the reduction in foreign currency exposure warrants the cash flow
risk created from such hedging techniques. Therefore the movements in the
exchange rate between the Euro and any currencies in which the Company transact
expose the Company to currency risk resulting in gains or losses on
retranslation into the Euro. These movements in the exchange rate may be
influenced by factors such as trade imbalances, levels of short term interest
rates, differences in relative values of similar assets in different currencies,
long term opportunities for investment and capital appreciation and political
developments.
The table below details the Company's exposure to foreign currencies at 31
December 2008:
+---+-------------+--+--+--------------+--+--+--+--+------------+--+--+--+-----------+--+--+--+--------+--+--+---+----------+
| | |
+---+-----------------------------------------------------------------------------------------------------------------------+
| | 2008 | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | Euro | | Sterling | | US | | Swiss | | Total |
| | | | | | | | | Dollar | | Franc | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | EUR | | EUR | | EUR | | EUR | | EUR |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | Total | | | 72,075,157 | | 4,056,118 | | 984,012 | | 6,013 | | 77,121,300 |
| | Assets | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | Total | | | (723,822) | | (879) | | - | | - | | (724,701) |
| | Liabilities | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | Net assets | | | 71,351,335 | | 4,055,239 | | 984,012 | | 6,013 | | 76,396,599 |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | 2007 | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | Euro | | Sterling | | US | | Swiss | | Total |
| | | | | | | | | Dollar | | Franc | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | EUR | | EUR | | EUR | | EUR | | EUR |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | Total | | | 129,916,208 | | 14,103,229 | | 2,443,447 | | 5,355 | | 146,468,239 |
| | Assets | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | Total | | | (37,270,007) | | (4,576,734) | | (1,332,473) | | - | | (43,179,214) |
| | Liabilities | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | Net assets | | | 92,646,201 | | 9,526,495 | | 1,110,974 | | 5,355 | | 103,289,025 |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+--------+------------------+-----+--------------+-----+--------+-----+--------------+
| | |
+---+-----------------------------------------------------------------------------------------------------------------------+
| | The table below shows the effect on the Net assets of the Company at the balance sheet date if |
| | Sterling had strengthened or weakened by various percentages against the Euro with all other |
| | variables held constant. |
+---+-----------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+-----+---------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | | | | | |
+---+-------------+--+--+--------------+-----+---------------------+-----+--------------+-----+--------+-----+--------------+
| | | 2008 | | 2007 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | % change in Sterling against | EUR | | EUR | | | | |
| | Euro | | | | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | 20% weakened | 75,720,726 | | 101,701,276 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | 10% weakened | 76,027,941 | | 102,422,980 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | 5% weakened | 76,203,492 | | 102,835,382 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | Year end closing rate | 76,396,599 | | 103,289,025 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | 5% strengthened | 76,610,033 | | 103,790,419 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | 10% strengthened | 76,847,181 | | 104,347,524 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | 20% strengthened | 77,410,409 | | 105,670,649 | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | | | | | | | | |
+---+-------------------------------------+------------------------+-----+--------------+-----+--------+-----+--------------+
| | e) Credit risk |
| | Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument |
| | fails to meet their interest payment and capital repayment obligations. |
| | The Company is exposed to credit risk from deposits with banks and financial institutions. The |
| | credit risk on cash and cash equivalents is limited due to the high proportion of funds being held |
| | with high rated banking institutions. The table below shows the balance of cash and cash equivalents |
| | held with various financial institutions at the end of the reporting period. |
| | |
+---+-----------------------------------------------------------------------------------------------------------------------+
| | Bank & rating at 31 December 2008 | | | 2008 | | 2007 | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | EUR | | EUR | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Deutsche Bank AG - rated AA- | | | 11,340,965 | | 11,340,965 | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | The Bank of New York Mellon Corp. - rated AA- | | 440,573 | | - | | |
+---+-----------------------------------------------------------+-----+--------------+-----+--------------+------+----------+
| | | | | 11,781,538 | | 11,340,965 | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | The Company is exposed to a loss in investment value, loss in income and increase in costs, such as |
| | legal fees, if counterparties of their investments fail to meet their interest payment obligations. |
| | The table below shows the fair value of the Company's investments at the end of each of reporting |
| | periods and the rating of those investments (where applicable). |
+---+-----------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | 2008 | | 2007 |
+---+----------------------------------------------+---------------------------------+-----+--------------------------------+
| | | EUR | | % | | EUR | | % |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Syndicated loans: | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BB | 15,920,993 | | 25% | | 22,000,145 | | 18% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - B | 9,688,873 | | 15% | | - | | - |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - B- | - | | - | | 17,457,429 | | 14% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | 25,609,866 | | 40% | | 39,457,574 | | 32% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Preference shares (not rated) | 16,169,494 | | 25% | | 24,100,000 | | 20% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | SME loans (not rated) | 12,032,900 | | 19% | | 4,762,100 | | 4% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | CLO1: | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BB | 7,785,128 | | 12% | | 12,690,674 | | 10% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BB- | - | | - | | 18,000,000 | | 14% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - B | 1,634,150 | | 3% | | 7,000,000 | | 6% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | 9,419,278 | | 15% | | 37,690,674 | | 30% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | CDO 2: | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BB | 760,000 | | 1% | | - | | - |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BB- | - | | - | | 9,500,000 | | 8% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | 760,000 | | 1% | | 9,500,000 | | 8% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | RMBS 3: | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BBB | - | | - | | 5,714,520 | | 5% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - BB | - | | - | | 1,061,268 | | 1% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - B | 263,693 | | 0% | | - | | - |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | Rating - CCC | 12,239 | | 0% | | - | | - |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | 275,932 | | 0% | | 6,775,788 | | 6% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | 64,267,470 | | 100% | | 122,286,136 | | 100% |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | | | | | | | | |
+---+----------------------------------------------+------------+-----+--------------+-----+--------------+------+----------+
| | 1Structured portfolio of leveraged loan assets ("CLO") |
| | 2Structured portfolio of debt assets ("CDO") |
| | 3Structured portfolio of residential mortgage assets ("RMBS") |
+---+-----------------------------------------------------------------------------------------------------------------------+
| | |
+---+-------------+--+--+--------------+--+--+--+--+------------+--+--+--+-----------+--+--+--+--------+--+--+---+----------+
In all cases the lowest ranking debt tranches are held for CLO and CDO
investments. As such, the Directors consider these investments pose a credit
risk, particularly as there is no active market for these assets and underlying
portfolio asset defaults are increasing and expected to continue.
To mitigate against potential interest default and loss in value, investments
are managed on an ongoing basis as follows:
* Review of monthly reports.
* Daily monitoring of watch- listed companies in CLO portfolios.
* Monthly contact with CLO and CDO managers in particular to determine steps to
remedy defaults on covenants and performance of portfolio assets.
* Review of quarterly financial covenant compliance certificates.
* Regular contact with agent banks or in some instances the borrower directly, to
determine covenant compliance, trading status and performance.
However, there is no guarantee that these credit risk management procedures will
be able to limit potential loss in investment value or loss of income from
counterparties who default on their obligations. If any or the Company's
counterparties default on interest payments, the Company's revenues and
profitability will be adversely affected.
f) Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its financial
commitments.
During the year the Company repaid its borrowings and at 31 December 2008 the
Company had working capital of EUR12.1 million represented by EUR11.8 million of
cash, EUR1.1 million of short-term receivables and EUR0.8 million of short-term
liabilities.
The Company's policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due and to budget for a high
multiple of operating costs to revenue such that ongoing operating costs are
fully covered by the income currently generated by the Company's assets.
To monitor liquidity risk, the Board receives rolling 12 month cash flow
projections on a quarterly basis as well as information regarding cash balances
and indications of any potential defaults on income from its investments.
g) Capital risk management policies and objectives
Following the EGM of the parent company ACP Capital Limited on 17 July 2008, the
Company's capital management policy and objective is to return capital to
shareholders by way of distributions.
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| 7 | Operating expenses | | | | |
+----+-------------------------------------------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Operating expenses include the following amounts: | | | |
+----+------------------------------------------------------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Services provided by the | | | | | |
| | Company's auditor | | | | | |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | During the year the Company obtained the following services from the Company's |
| | auditors, Kingston Smith LLP and BDO Stoy Hayward LLP: |
+----+------------------------------------------------------------------------------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Audit | | | | | | 2008 | | 2007 |
| | services | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | | | | | | EUR | | EUR |
+----+--------------+----------+--------+--------+----------+-------------+--+------------+
| | Audit services | | | | | | |
+----+-------------------------+--------+--------+----------+-------------+--+------------+
| | Statutory audit | | | | 58,633 | | 36,665 |
+----+-------------------------+--------+--------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Non audit services | | | | | | |
+----+-------------------------+--------+--------+----------+-------------+--+------------+
| | Taxation and other | | | | 17,471 | | 13,959 |
| | services | | | | | | |
+----+-------------------------+--------+--------+----------+-------------+--+------------+
| | | | | | | | 76,104 | | 50,624 |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Director emoluments | 2008 | | 2007 |
+----+------------------------------------------------------+-------------+--+------------+
| | | | | | | | EUR | | EUR |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Director's emoluments | | 38,310 | | 82,654 |
+----+-------------------------------------------+----------+-------------+--+------------+
| | | | | | |
+----+-------------------------------------------+----------+-------------+--+------------+
| | The Company does not employ staff. | | | | |
+----+-------------------------------------------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Bad debts | | | | | | 2008 | | 2007 |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | | | | | | | EUR | | EUR |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Bad debt expense | | | 2,075,527 | | - |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| 8 | Net finance costs | | 2008 | | 2007 |
+----+-------------------------------------------+----------+-------------+--+------------+
| | | | | | | | EUR | | EUR |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Finance income | | | | | | |
+----+-------------------------+--------+--------+----------+-------------+--+------------+
| | Interest received on bank | | | (1,745,272) | | (458,234) |
| | deposits | | | | | |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Finance expense | | | | | |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | Interest payable on bank | | | 3,574,649 | | 2,285,360 |
| | borrowings | | | | | |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | Amortised cost of financing | | | - | | 512,842 |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | Break costs | | | 2,209,952 | | - |
+----+----------------------------------+--------+----------+-------------+--+------------+
| | | | | | | | 5,784,601 | | 2,798,202 |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | | | | | | | | | |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
| | Net finance cost | | | 4,039,329 | | 2,339,968 |
+----+-----------+--+----------+--------+--------+----------+-------------+--+------------+
9 Income taxes
The Company is registered in Jersey as an exempt company and is therefore, not
liable to Jersey income tax on profits derived outside Jersey. Confirmation has
been obtained from the Controller of Income Tax in Jersey that, by concession,
the companies will be liable to tax in Jersey only in respect of income, other
than bank interest income, arising in Jersey. During the year no income, other
than bank interest income, arose in Jersey.
With effect from the 2009 year of assessment Jersey abolished the exempt company
regime for existing companies. Profits arising in the Company for the 2009 year
of assessment and future periods will be subject to tax at the rate of 0
percent. In the prior year the Company was exempt from taxation under the
provisions of Article 123A of the Income Tax (Jersey) Law 1961 as amended.
10 Investments measured at fair value through profit or loss
+---+---------------+--+--------+--------+----------------+--------------+--+--------------+
| | | | | |
+---+-----------------------------------------------------+--------------+--+--------------+
| | | | | |
+---+-----------------------------------------------------+--------------+--+--------------+
| | | | | | 2008 | | 2007 |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | | | | | EUR | | EUR |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | | | | | | | |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | Opening balance | | | | 63,557,429 | | - |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | Additions | | | | | - | | 138,557,429 |
+---+---------------+--+--------+--------+----------------+--------------+--+--------------+
| | Interest income receivable after more than one year | 2,793,994 | | - |
+---+-----------------------------------------------------+--------------+--+--------------+
| | Disposals | | | | | (1,536,057) | | (75,000,000) |
+---+---------------+--+--------+--------+----------------+--------------+--+--------------+
| | Movement in fair value of | | | (23,036,006) | | - |
| | investments | | | | | |
+---+---------------------------+--------+----------------+--------------+--+--------------+
| | Closing balance | | | | 41,779,360 | | 63,557,429 |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | | | | | | | |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | Disclosed in current assets | | 756,474 | | 538,315 |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Disclosed in non-current assets | | 41,022,886 | | 63,019,114 |
+---+------------------------------------+----------------+--------------+--+--------------+
| | | | | | 41,779,360 | | 63,557,429 |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | | | | | | | |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | The fair value of listed investments is based on quoted market price at the |
| | balance sheet date. The fair value of unlisted investments is determined by |
| | using indicative prices or valuation techniques. |
+---+--------------------------------------------------------------------------------------+
| | | | | | | | |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| 11 Loans and receivables | | | | | |
+-------------------------------+--------+----------------+--------------+--+--------------+
| | | | | | 2008 | | 2007 |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | | | | | EUR | | EUR |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | | | | | | | |
+---+------------------+--------+--------+----------------+--------------+--+--------------+
| | Opening balance | | 58,728,562 | | 107,522,875 |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Additions | | 16,361,052 | | 23,815,607 |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Repayments | | - | | (72,025,541) |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Exchange rate movements | | (966,180) | | - |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Interest income receivable after | | - | | (837,853) |
| | more than one year | | | | |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Impairment of loans and | | (22,254,950) | | 253,474 |
| | receivables | | | | |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Transfer to Available-for-sale | | (51,868,484) | | - |
| | investments | | | | |
+---+------------------------------------+----------------+--------------+--+--------------+
| | Closing balance | | - | | 58,728,562 |
+---+---------------+--+--------+--------+----------------+--------------+--+--------------+
Loans and receivables comprise collateralised debt obligations, collateralised
loan obligations, SME loans and RMBS assets and are carried at amortised cost
using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default or
significant delay in payment) that the Company will be unable to collect all of
the amounts due under the terms receivable, the amount of such provision being
the difference between the net carrying amount and the present value of the
future expected cash flows associated with the impaired receivable.
12 Available-for-sale investments
+---+---------------------------------------------------+--------------+--+----------+
| | | | | |
+---+---------------------------------------------------+--------------+--+----------+
| | | 2008 | | 2007 |
+---+---------------------------------------------------+--------------+--+----------+
| | | EUR | | EUR |
+---+---------------------------------------------------+--------------+--+----------+
| | Transfer from loans and receivables | (51,868,484) | | - |
+---+---------------------------------------------------+--------------+--+----------+
| | Additions | 1,489,294 | | - |
+---+---------------------------------------------------+--------------+--+----------+
| | Exchange rate movements | (55,734) | | - |
+---+---------------------------------------------------+--------------+--+----------+
| | Impairment of Available-for-sale investments | (30,813,934) | | - |
+---+---------------------------------------------------+--------------+--+----------+
| | Closing balance | 22,488,110 | | - |
+---+---------------------------------------------------+--------------+--+----------+
Following the EGM in December 2008, the Company announced that it would seek to
dispose of its assets and distribute proceeds to its shareholders by way of
capital distributions. Accordingly assets previously disclosed as Loans and
receivables have been reclassified to Available-for-sale investments.
Available-for-sale investments are carried at fair value which is determined by
using indicative prices.
Where the valuation of an asset was based on an average of indicative prices, if
the lowest price had been used then the value of the Group's Available-for-sale
investments at 31 December 2008 would have been EUR1.71 million lower (EUR1.71
million greater if highest price used).
13 Financial instruments by category
The accounting policies for financial instruments have been applied to line
items as follows:
+-----+-----------------+--------+----+--------+----+--+--------------------+--+----+--------+----+--+--------------+
| | 2008 | | | | | |
+-----+------------------------------------------------+--------------------+-------+-------------+--+--------------+
| | | Assets | |Available-for-sale | | Loans | | Total |
| | | at fair | | assets | | and | | |
| | | value | | | |receivables | | |
| | | through | | | | | | |
| | | profit | | | | | | |
| | | or loss | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | | EUR | | EUR | | EUR | | EUR |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | Assets as per balance sheet | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | Preference share investments | 16,169,494 | | - | | - | | 16,169,494 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | Syndicated loans | 25,609,866 | | - | | - | | 25,609,866 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | CDOs | - | | 760,000 | | - | | 760,000 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | CLOs | - | | 9,419,278 | | - | | 9,419,278 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | SME loans | - | | 12,032,900 | | - | | 12,032,900 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | RMBS | - | | 275,932 | | - | | 275,932 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | Trade and other receivables | - | | - | | 1,072,292 | | 1,072,292 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | Cash and cash equivalents | - | | - | | 11,781,538 | | 11,781,538 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | | 41,779,360 | | 22,488,110 | | 12,853,830 | | 77,121,300 |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+-------+-------------+--+--------------+
| | | | | | |Liabilities | | Total |
| | | | | | | held at | | |
| | | | | | | amortised | | |
| | | | | | | cost | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | EUR | | EUR |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Liabilities as per balance | | | | | | | |
| | sheet | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Trade and other payables | | | | | 235,158 | | 235,158 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Amounts owed to parent company and subsidiaries of | | 490 | | 490 |
| | parent | | | | |
+-----+---------------------------------------------------------------------+--+-------------+-------+--------------+
| | Borrowings | | | | | - | | - |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | 724,701 | | 724,701 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | 2007 | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | Assets | |Available-for-sale | | Loans | | Total |
| | | at fair | | assets | | and | | |
| | | value | | | |receivables | | |
| | | through | | | | | | |
| | | profit | | | | | | |
| | | or loss | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | EUR | | EUR | | EUR | | EUR |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Assets as per balance sheet | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Preference share investments | 24,100,000 | | - | | - | | 24,100,000 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Syndicated loans | 39,457,574 | | - | | - | | 39,457,574 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | CDOs | - | | - | | 9,500,000 | | 9,500,000 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | CLOs | - | | - | | 37,690,674 | | 37,690,674 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | SME loans | - | | - | | 4,762,100 | | 4,762,100 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | RMBS | - | | - | | 6,775,788 | | 6,775,788 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Trade and other receivables | - | | - | | 9,024,895 | | 9,024,895 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Cash and cash equivalents | - | | - | | 15,157,208 | | 15,157,208 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | 63,557,574 | | - | | 82,910,665 | | 146,468,239 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | |Liabilities | | Total |
| | | | | | | held at | | |
| | | | | | | amortised | | |
| | | | | | | cost | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | EUR | | EUR |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Liabilities as per balance | | | | | | | |
| | sheet | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Trade and other payables | | | | | 8,324,655 | | 8,324,655 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | Borrowings | | | | | 34,854,559 | | 34,854,559 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | 43,179,214 | | 43,179,214 |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| | | | | | | | | |
+-----+-------------------------------+-------------+--+--------------------+--+-------------+-------+--------------+
| 14 | Trade and other | | | | | |
| | receivables | | | | | |
+-----+--------------------------+-------------+-------------------------------+-------------+-------+--------------+
| | | | | 2008 | | 2007 |
+-----+--------------------------+-------------+-------------------------------+-------------+-------+--------------+
| | | | | EUR | | EUR |
+-----+--------------------------+-------------+-------------------------------+-------------+-------+--------------+
| | | | | | | |
+-----+--------------------------+-------------+-------------------------------+-------------+-------+--------------+
| | Accrued interest receivable | | 1,054,785 | | 964,582 |
+-----+----------------------------------------+-------------------------------+-------------+-------+--------------+
| | Other | | | | 17,507 | | 8,060,313 |
| | receivables | | | | | | |
+-----+-----------------+--------+-------------+-------------------------------+-------------+-------+--------------+
| | | | | | 1,072,292 | | 9,024,895 |
+-----+-----------------+--------+----+--------+----+--+--------------------+--+----+--------+----+--+--------------+
The maximum exposure to credit risk at the reporting date is the fair value of
each class of receivable mentioned above. The Company does not hold any
collateral as security. At 31 December 2008, and 31 December 2007, there were no
trade and other receivables that were past due or impaired.
15 Loans and borrowings
+-----+--+-+------+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+--+-+-+-+-+-+--+-+-+-+-----+---+-+-+--------+--+-+-+-+---------+
| | | | | | | | | |
+-----+-------------------+-------------+-------+--------------+------------+-------------+---------------+-------------+
| | | | | | | | 2008 | | 2007 |
+-----+--+------------------+-------------+---------+------------+------------------+----------------+------+-----------+
| | | | | | | | EUR | | EUR |
+-----+--+------------------+-------------+---------+------------+------------------+----------------+------+-----------+
| | Bank loans | | | | | - | | 34,854,559 |
+-----+-----------------+---------+---------+----------------+----------------------+----------------+--+---------------+
| | | | | | | | - | | 34,854,559 |
+-----+--+------------------+---------+-------+------------------+------------------+----------------+--+---------------+
| | | | | | | | | | | | |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | The maturity profile of borrowings is as follows: |
| | |
+-----+-----------------------------------------------------------------------------------------------------------------+
| | In the fifth year | | | | | - | | 34,854,559 |
+-----+---------------------+---------+-------+------------------+------------------+----------------+--+---------------+
| | |
+-----+-----------------------------------------------------------------------------------------------------------------+
| | The currency profile of borrowings is as follows: |
| | |
+-----+-----------------------------------------------------------------------------------------------------------------+
| | Euro | | | | | | | | - | | 29,182,848 |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | US Dollar | | | | | | | | - | | 1,323,165 |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | Sterling | | | | | | | | - | | 4,348,546 |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | | | | | | | | | - | | 34,854,559 |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | | | | | | | | | | | |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| 16 | Trade and other | | | | | | | | | | |
| | payables | | | | | | | | | | |
+-----+-----------------------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | | | | | | | | | | 2008 | | 2007 |
+-----+-------------+---------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | | | | | | | | | | EUR | | EUR |
+-----+-------------+---------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | Trade | | | | | | | | | 10,139 | | 7,861,873 |
| | payables | | | | | | | | | | | |
+-----+-------------+---------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | Amounts owed to parent company and subsidiaries of parent | | 489,543 | | - |
+-----+-----------------------------------------------------------------------+-----+----------------+--+---------------+
| | Accruals | | | | | | | | | 225,019 | | 462,782 |
+-----+-------------+---------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | | | | | | | | | | 724,701 | | 8,324,655 |
+-----+-------------+---------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| | | | | | | | | | | | | |
+-----+-------------+---------+-----+-------------------+--+-------+------+---+-----+----------------+--+---------------+
| 17 | Share capital | | | | | | | | | | |
+-----+---------------+---------+-----------------+---+--------------+--+---------------+---+-------------+---+---------+
| | | | | | | | 2008 | | 2008 | | 2007 | | 2007 |
+-----+----+------+---+---------+-----------------+---+--------------+--+---------------+---+-------------+---+---------+
| | Authorised, called up and fully paid. | | No. | | EUR | | No. | | EUR |
+-----+-------------------------------------------+---+--------------+--+---------------+---+-------------+---+---------+
| | | | | | | | | | | | | | |
+-----+----+------+---+---------+-----------------+---+--------------+--+---------------+---+-------------+---+---------+
| | Opening balance | | 101,412,000 | | - | | 101,412,000 | | - |
+-----+-------------------------------------------+---+--------------+--+---------------+---+-------------+---+---------+
| | Ordinary shares issued in secondary | | 133,333,333 | | - | | - | | - |
| | placing | | | | | | | | |
+-----+-------------------------------------------+---+--------------+--+---------------+---+-------------+---+---------+
| | Share options exercised | | 1,000,000 | | - | | - | | - |
+-----+-------------------------------------------+---+--------------+--+---------------+---+-------------+---+---------+
| | Closing balance | | 235,745,333 | | - | | 101,412,000 | | - |
+-----+--+-+------+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+--+-+-+-+-+-+--+-+-+-+-----+---+-+-+--------+--+-+-+-+---------+
In June 2008 a secondary placing of 133,333,333 shares was made at EUR0.60 cents
per share, which provided proceeds of EUR76,823,267 after costs. Also in the
period, ACP Capital Limited exercised options as part of an Option Deed to
acquire 1,000,000 shares at EUR1.00 per share which provided net proceeds of
EUR1,000,000.
+-----+---------------+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+-----+--+--+--+--+--+----+-------------+
| 18 | Share premium | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----------+--------+-----------------+-----+------------------+
| | | | | | | | | 2008 | | 2007 |
+-----+------------------------+--------+--------+-----------+-----+-----------+--------+-----------------+-----+------------------+
| | | | | | | | | EUR | | EUR |
+-----+------------------------+--------+--------+-----------+-----+-----------+--------+-----------------+-----+------------------+
| | Brought forward | | | | 95,783,580 | | 95,783,580 |
+-----+------------------------------------------------------+-----+-----------+--------+-----------------+-----+------------------+
| | Issued on placing | | | | 80,000,000 | | - |
+-----+------------------------------------------------------+-----+-----------+--------+-----------------+-----+------------------+
| | Cost of share issue | | | | (3,176,733) | | - |
+-----+------------------------------------------------------+-----+-----------+--------+-----------------+-----+------------------+
| | Share options exercised | | | | 1,000,000 | | - |
+-----+------------------------------------------------------+-----+-----------+--------+-----------------+-----+------------------+
| | Capital distribution - December 2008 - EUR0.1065 per | | | | (25,106,878) | | - |
| | share | | | | | | |
+-----+------------------------------------------------------+-----+-----------+--------+-----------------+-----+------------------+
| | Carried forward | | | | 148,499,969 | | 95,783,580 |
+-----+------------------------------------------------------+-----+-----------+--------+-----------------+-----+------------------+
| | | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----------+--------+-----------------+-----+------------------+
| 19 | (Loss) / earnings per | | | | | | | | | |
| | share | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----------+--------+-----------------+-----+------------------+
| | | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----------+--------+-----------------+-----+------------------+
| | The calculation of the basic earnings and diluted earnings per share attributable to the equity shareholders of |
| | the Company is based on the following data: |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | | | | | | | | 2008 | | 2007 |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | (Loss) / earnings | | | | | | | EUR | | EUR |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | (Loss) / earnings for the purposes of basic earnings per share | | (70,735,265) | | 10,213,871 |
| | being profit attributable to equity shareholders of the Company | | | | |
+-----+------------------------------------------------------------------+-----------------+--------------+-----+------------------+
| | | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | Number of shares | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | Weighted average number of ordinary shares for the purposes of | | 175,755,379 | | 101,412,000 |
| | basic earnings per share | | | | |
+-----+------------------------------------------------------------------+-----------------+--------------+-----+------------------+
| | Effect of dilutive potential ordinary shares: Share options | | - | | 1,058,884 |
+-----+------------------------------------------------------------------+-----------------+--------------+-----+------------------+
| | Weighted average number of ordinary shares for the purposes of | | 175,755,379 | | 102,470,884 |
| | diluted earnings per share | | | | |
+-----+------------------------------------------------------------------+-----------------+--------------+-----+------------------+
| | | | | | | | | | | |
+-----+------------------------+--------+--------+-----------+-----+-----+-----------------+--------------+-----+------------------+
| | Share options with an exercise price exceeding the weighted average quoted price of the issued shares in the |
| | period have been excluded from the calculation of diluted earnings per share as they are not deemed dilutive. |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------+--------+-----------+----+-------------+
| 20 | Share -based | | | | | | | | | |
| | payments | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------+--------+-----------+----+-------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------+--------+-----------+----+-------------+
| | The Company has options in issue to purchase ordinary shares of the Company. |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | | | | 2008 | | 2008 | | 2007 | | 2007 |
+-----+---------------------+--------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | | | | EUR | | No. | | EUR | | No. |
+-----+---------------------+--------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | | | | Weighted | | | | Weighted | | |
| | | | | average | | | | average | | |
| | | | | exercise | | | | exercise | | |
| | | | | price | | | | price | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | Outstanding at beginning of | | | | 11,032,080 | | | | 11,140,080 |
| | year | | | | | | | | |
+-----+------------------------------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | Granted during the year (exercise | | | - | | | | 375,000 |
| | price EUR0.75) | | | | | | | |
+-----+---------------------------------------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | Exercised during the year | | | | (1,000,000) | | | | - |
+-----+------------------------------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | Lapsed during the year | | | | (375,000) | | | | (483,000) |
+-----+------------------------------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | Outstanding at end of year | | 1.00 | | 9,657,080 | | 0.99 | | 11,032,080 |
+-----+------------------------------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+--------------------------------+--+-----------+----+-------------+
| | No share options were granted in the year. The total fair value of options granted during 2007 was EUR76,674. All |
| | of the options granted in 2007 vested in that year. The following information is relevant in the determination of |
| | the fair value of options granted during 2007 under the equity share option scheme operated by the Company. |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | 2007 |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | | | EUR |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Option pricing model used | | Black |
| | | | Scholes |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Exercise price | | 0.75 |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Expected Life of Option (years) | | 5 |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | | | |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Expected dividend yield | | 2% |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Expected volatility | | 3% |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Dividend yield | | 0% |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | Discount for newly listed companies | | 20% |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | | | |
+-----+---------------------------------------------------------------------------------------------------+-----+------------------+
| | The Company recognised the following total expenses and costs in respect of equity settled share payments in the |
| | period. |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+-----------+--------------+--------------+-----+------------------+
| | | | | | | | | 2008 | | 2007 |
+-----+---------------------+--------+--------+-----------+-----+-----------+--------------+--------------+-----+------------------+
| | | | | | | | | EUR | | EUR |
+-----+---------------------+--------+--------+-----------+-----+-----------+--------------+--------------+-----+------------------+
| | Recognised as an expense and charged to Income Statement | | - | | 64,569 |
+-----+---------------------------------------------------------------------+--------------+--------------+-----+------------------+
| | | | | | | | | - | | 64,569 |
+-----+---------------------+--------+--------+-----------+-----+-----------+--------------+--------------+-----+------------------+
| | | | | | | | | | | |
+-----+---------------------+--------+--------+-----------+-----+-----------+--------------+--------------+-----+------------------+
| 21 | Related | | | | | | | | | | | |
| | parties | | | | | | | | | | | |
+-----+---------------+--+--------+--------+--------+--+--------------+--+--------+--------------------+-----+---------------------+
| | | | | | | | | | | | | |
+-----+---------------+--+--------+--------+--------+--+--------------+--+--------+--------------------+-----+---------------------+
| | Related party transactions between the Company, its parent company ACP Capital Limited and fellow subsidiaries of |
| | the parent were as follows: |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | | | |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | | | |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | Balance due from/owed to related entities at the balance sheet date: | | | | |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | 2008 | | 2007 |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | EUR | | EUR |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | Owed to: | | | | |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Capital Limited (parent company) | | 295,897 | | - |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Capital UK LLP (subsidiary of parent) | | 879 | | - |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Investment Management Limited (subsidiary of parent) | | 192,767 | | - |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | 489,543 | | - |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | | | |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | Expense transactions with related entities during the year were as follows: |
+-----+----------------------------------------------------------------------------------------------------------------------------+
| | | | 2008 | | 2007 |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | EUR | | EUR |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | Expense | | | | |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Capital Limited - loss on transfer of loans and receivables | | - | | 6,250 |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Capital UK LLP - recharged expenses | | 879 | | - |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Investment Management Limited - investment management fee | | 2,511,379 | | 1,942,767 |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | ACP Investment Management Limited - performance fee | | 192,767 | | 192,767 |
+-----+------------------------------------------------------------------------------+-----+-----------+-----+---------------------+
| | | | 2,705,025 | | 2,141,784 |
+-----+---------------+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+--+-----+--+--+--+--+--+----+-------------+
ACP Capital Limited
ACP Capital Limited holds 127,699,798 ordinary shares in the Company,
representing 54.17 percent of the Company at 31 December 2008.
ACP Capital Limited holds 9,141,200 options to acquire ordinary shares in the
Company at an exercise price of EUR1.00 per share.
During the year, loans and receivables with an amortised cost of EURnil (2007:
EUR7,978,284) were transferred to ACP Capital Limited giving rise to a loss of
EURnil (2007: EUR6,250).
ACP Investment Management Limited
In 2006, the Company entered into an Investment Management Agreement with ACPIM,
a wholly owned subsidiary of ACP Capital Limited. Under the Agreement, ACPIM was
appointed investment manager for an initial period of 3 years and given
discretion to deal with the Company's assets subject to certain guidelines. The
period of appointment was extended to 7 years starting in December 2007. The
annual management fee chargeable by ACPIM is currently based on 1.75 percent of
gross shareholders' equity as reduced by returns of capital to shareholders.
Additionally, ACPIM is entitled to a performance fee equivalent to 25 percent
above a benchmark return.
+-----+------+-------+-------+---------+------+--------+---+--+---+---+---+----+--+----+---+---+--+----+
| 22 | Subsidiary companies | | | | | | | | | |
+-----+----------------------+---------+------+------------+--+----------------+--+------------+--+----+
| | Name | | | | | Country of | |Percentage | | |
| | | | | | | incorporation and | | owned | | |
| | | | | | | registration | | | | |
+-----+--------------+-------+---------+------+--------+-----------------------+--+------------+--+----+
| | ACP Mezzanine (UK) Limited | | | England and | | 100% | | |
| | | | | Wales | | | | |
+-----+---------------------------------------+------------+--+----------------+--+------------+--+----+
| | ACP Mezzanine Asset Holdings 1 | | | Jersey | | 100% | | |
| | Limited | | | | | | | |
+-----+---------------------------------------+------------+--+----------------+--+------------+--+----+
| | ACP Mezzanine Asset Holdings 2 | | | Jersey | | 100% | | |
| | Limited | | | | | | | |
+-----+---------------------------------------+------------+--+----------------+--+------------+--+----+
| | | | | | | | | |
+-----+---------------------------------------+------------+--+----------------+--+------------+--+----+
| | | | | | | | | | | | | |
+-----+------+-------+-------+---------+------+------------+--+----------------+--+------------+--+----+
| | The principal activity of ACP Mezzanine (UK) Limited is investments holdings. ACP | | |
| | Mezzanine Asset Holdings 1 Limited and ACP Mezzanine Asset Holdings 2 Limited are | | |
| | dormant. | | |
+-----+----------------------------------------------------------------------------------------+--+----+
| | | | | | | | | | | | | |
+-----+------+-------+-------+---------+------+------------+--+----------------+--+------------+--+----+
| 23 | Dividends | | | | | | | | |
+-----+--------------------------------+------+------------+--+-------+-----------+--------+------+----+
| | | | 2008 | | 2007 |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | | | EUR | | EUR |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | Interim dividends paid: | | | | |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | Year ended 31 December 2006 - paid February 2007 | | - | | 2,028,240 |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | Year ended 31 December 2007 - paid August 2007 | | - | | 4,563,540 |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | Year ended 31 December 2007 - paid March 2008 | | 5,070,600 | | - |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | Year ended 31 December 2008 - paid July 2008 | | 3,802,950 | | - |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | | | 8,873,550 | | 6,591,780 |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | Capital distribution - paid December 2008 | | 25,106,878 | | - |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | | | 33,980,428 | | 6,591,780 |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| | | | | | |
+-----+-----------------------------------------------------------+-------+------------+---+-----------+
| 24 | Post balance sheet events |
+-----+------------------------------------------------------------------------------------------------+
| | |
+-----+------------------------------------------------------------------------------------------------+
| | On 9 January 2009, the Company sold its EUR3.0 million subordinated debt investment in GCI |
| | Automotive Holding GmbH with a successful 17.5 percent IRR on gained interest. |
| | On 4 February 2009, a subsidiary of the Company sold its participation in the Iceland Foods |
| | Group Limited mezzanine loan for EUR3.9 million. |
+-----+------------------------------------------------------------------------------------------------+
| | On 3 March 2009, ACPM made a distribution to shareholders of 1.5 eurocents per share (EUR3.5 |
| | million in total). |
| | |
+-----+------------------------------------------------------------------------------------------------+
| 25 | Commitments |
+-----+------------------------------------------------------------------------------------------------+
| | |
+-----+------------------------------------------------------------------------------------------------+
| | On 11 June 2008, the Company made a commitment to a subsidiary of Leasecom Group SAS to |
| | provide financing of up to EUR15 million. As at 31 December 2008, ACPM had acquired notes |
| | totalling EUR5.85 million under this commitment. |
| | The loans notes are issued at market rate and the maximum exposure to credit risk on |
| | commitments at the reporting date is EUR9.15 million. |
| | |
+-----+------+-------+-------+---------+------+--------+---+--+---+---+---+----+--+----+---+---+--+----+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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