CCAP.L Regulatory News (CCAP)

Tuesday 16 September 2014

Charlemagne Capital LimitedResults for the six months to 30 June 2014

Financial Summary

· Group AuM US$ 2.8 billion as at 30 June 2014, up 3.6% since 1 January 2014

· Net management fees up 4.8% on the prior year period

· Operating profit US$ 1.2 million compared with US$ 1.3 million in prior year period

· Interim dividend of 1.0 US cents per share declared and paid during the period in respect of the year ended 31 December 2013

· The Group has declared an interim dividend of 0.5 US cents per share (2013: 0.5 US cents) in respect of the half year to 30 June 2014

· Net assets attributable to shareholders of US$ 24.5 million (December 2013: US$ 25.8 million) includes cash and cash equivalents of US$ 19.3 million and current asset investments of US$ 10.4 million.

Jayne Sutcliffe, Chief Executive, commented:

"Over the first half of 2014, we continued to grow Assets under Management ("AuM") in challenging conditions. Despite the headwinds in Eastern Europe, AuM grew by 9.7% in the second quarter, reversing a 5.5% decline in the first, with continued inflows into our Magna funds. Subscriptions into the Emerging Market Income and Growth strategy and also into MENA and Frontier funds were particularly strong, increasing mutual fund assets by 22%. Encouragingly, over the eighteen month period from January 2013 to June 2014 net inflows into the Magna mutual fund range have been US$ 317 million and have contributed to a 98% growth in this product range over that time.

"Looking ahead, the prospects for emerging markets continue to improve with a sustained rally in August and an overall outperformance over developed markets since the start of the year. While the initial beneficiaries of this rally have included some larger, laggard stocks, we are confident that investors' attention will again switch to high quality, well-managed companies with good profit margins across the capitalisation spectrum - the type of businesses that we focus on at Charlemagne. However, notwithstanding the continuing improvements in the prospects for emerging markets, performance fees, which have been a significant contributing factor in previous years, are unlikely to be a material contributor in 2014."

Enquiries:

Charlemagne Capital

Jayne Sutcliffe, Chief Executive Tel. 020 7518 2100

Lloyd Jones, Finance Director

Smithfield Consultants

John Kiely Tel. 020 7360 4900

Ged Brumby

N+1 Singer (Nominated Adviser)

Jonny Franklin-Adams Tel. 020 7496 3000

Nick Donovan

Financial Summary

Summary Financial Information

The results and the assets and liabilities of the Group for the current and comparative interim periods along with the last full financial year (extracted from the audited financial statements) are set out below in summary:-

Assets under Management ("AuM")

The table below sets out the Group's AuM as at 30 June 2014 and the movements experienced in each product range in the period since 1 January 2014.

Note: Closing AuM is stated as including all subscription and redemption orders received for the relevant funds as at the close of the period but not processed until the first dealing date of the following period.

Chief Executive's Report

Over the first half of 2014, we continued to grow Assets under Management ("AuM") in challenging conditions. Emerging markets generally suffered losses in the first quarter and, while market recovery in most regions in the second quarter resulted in positive performance overall, Eastern European markets, affected by the crisis in Ukraine, were negative for the six month period. This impacted the investment performance of certain of the Group's assets which have a greater weighting in Eastern European strategies. With the industry reporting outflows from dedicated emerging markets funds over the period, asset raising continued to be difficult but against this backdrop we have generated positive net inflows particularly into the mutual fund business. Group AuM stood at US$ 2.83 billion at the end of June, up 3.6% since the start of the year.

Building on our strong investment performance to increase AuM and management fees in the core business has been our stated priority. A higher average AuM over the period has generated higher management fees, but performance fees, which have been a significant contributing factor in previous years, are unlikely to be a material contributor in 2014. While, as in previous years, some performance fees have been generated by the core long equity funds, the OCCO fund has not generated performance fees in the first half and it is unrealistic to expect that gains, if any, in the remainder of the year will be material.

AuM grew by 9.7% in the second quarter, reversing a 5.5% decline in the first. Continued inflows into the Magna mutual funds over the first half of the year, predominantly due to subscriptions into the Emerging Market Income and Growth strategy and also into MENA and Frontier funds, increased mutual fund assets by 22%. Over the eighteen month period from January 2013 to June 2014 net inflows into the Magna range have been US$ 317 million and have contributed to a 98% growth in this product range over that time. The first half also saw continued asset inflows into the Oaks UCITS fund, an Emerging Market/Frontier alternatives strategy which was incubated for more than three years before launch in late 2013. The institutional business was impacted by rebalancing of existing mandates, together with outflows from third party sub advisory business.

Market developments over the period included the announcement of the prospective opening of the Saudi Arabian stock market. We have been successfully investing, indirectly, for our clients in this US$ 600 billion market for several years, both in our Global Emerging Markets and regional MENA/EMEA strategies. We continue to be at the forefront of investing in markets as they emerge.

OCCO has a solid long term track record and has provided a compound annual growth rate of over 10% for the last 12 years. However, 2014 has so far been a challenging year for the OCCO Eastern European Fund which has delivered flat performance during the period, mainly driven by the geo-political backdrop in Russia. As the fund's philosophy is focused on generating alpha through its dedicated bottom up research process, the strategy sometimes struggles in markets which are primarily dominated by top down drivers (the MSCI Russia Index is down 15.8% to 1 September). The portfolio has a tightly hedged book in Russia and remains committed to generating alpha in its underlying markets. Elsewhere the rest of the book has been positive with some highlights, including Greece, which is now part of emerging markets and hence part of its investment universe. We are confident that the performance this year is a result of a particular set of circumstances and is in no way an indication of any underlying weakness in the strategy itself.

Average AuM in the period was US$ 2.7 billion compared with US$ 2.6 billion in the prior year period. Net management fees receivable were US$ 12.5 million compared with US$ 12.0 million for the previous six months and US$ 11.9 million for the comparable period of 2013, reflecting the increase in net margin from 89 to 93 basis points arising from higher average OCCO and Magna funds held during the period. Net crystallised performance fees in the period were US$ 0.3 million (2013: US$ 0.5 million) and accruing (non crystallised) performance fees for 2014 as at 31 August are US$ 1.2 million compared with US$ 10.0 million as at the same date in 2013. Operating profit for the six month period was US$ 1.2 million (2013: US$ 1.3 million) and profit attributable to shareholders was US$ 0.326 million (2013: US$ 0.372 million) which represents earnings per share of 0.11 US cents. The Directors consider it appropriate to utilise some of the Group's strong balance sheet and cash reserves to support the level of dividend, and have therefore declared an interim dividend of 0.5 US cents per share.

Since the end of June, there have been mixed fortunes in markets with positive performance for the MSCI Emerging Markets index as a whole but negative returns once again in Eastern Europe. This latter is due to the continuing conflict in the east of Ukraine. AuM as at the end of August stands at US$ 2.74 billion. The Group remains profitable overall in the year to date, but an increase in AuM is still required in order to ensure sustainable profits on a recurring management fee basis and the likely absence of performance fees will have a significant effect on year end results.

We continue to focus on raising additional assets for our key investment strategies, which will reduce the impact of performance fees from OCCO on our overall profitability. Distribution to US institutions is an increasingly important element in our future plans. Emerging markets continued to rally in August and have now outperformed developed markets since the start of the year, following three years of underperformance. This is based on optimism that policy risk is generally lower, with meaningful reforms in some key emerging economies, while many investors remain underweight in the asset class. The heavy outflows from emerging markets equity earlier this year have now, encouragingly, started to reverse. While the initial beneficiaries of this rally have included some larger, laggard stocks, we are confident that investors' attention will again switch to high quality, well-managed companies with good profit margins across the capitalisation spectrum - the type of businesses that we focus on at Charlemagne.

Jayne Sutcliffe

Chief Executive

16 September 2014

CondensedConsolidated Statement of Comprehensive Income

CondensedConsolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

Notes to the Condensed Consolidated Interim Financial Statements

1. Basis of Preparation and Significant Accounting Policies

The condensed consolidated interim financial statements have been prepared on a condensed basis, in accordance with the requirements of International Accounting Standard 34 "Interim Financial Reporting". They do not include all of the information required in annual financial statements in accordance with IFRS and where appropriate should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2013.

The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2013.

The condensed consolidated interim financial statements are prepared on the historical cost basis except that the following are stated at their fair value: financial instruments at fair value through profit or loss including derivative financial instruments. Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.

2. Segment Reporting

Notes to the Condensed Consolidated Interim Financial Statements (continued)

3. Taxation

Income tax expense is recognised in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Amounts accrued for income tax expense in one interim period may be adjusted in a subsequent period of that financial year if the estimate of the effective rate of income tax changes.

4. Dividends

An interim dividend of 1.0 US cents (GB 0.6014p) (2013: 1.0 US cents, GB 0.6583p) per ordinary share in respect of the year ended 31 December 2013 was paid on 25 April 2014 to those shareholders on the register on 28 March 2014 and was charged to the income statement in 2014.

The Group has declared an interim dividend of 0.5US cents (GB 0.3074p) in respect of the half year to 30 June 2014.

5. Receivables

6. Accounts Payable, Accruals and Other Payables

Notes to the Condensed Consolidated Interim Financial Statements (continued)

7. Issued Share Capital

The company issued 10,500,000 shares (2013: nil) at par during the six months to 30 June 2014.

As at the date of issuing the financial statements there were 290,885,616 ordinary shares of US$0.01 each issued and fully paid.

Included within share capital at 30 June 2014 are 1,581,974 shares (December 2013:  nil) which are held on behalf of a subsidiary of the Company. These are accounted for as treasury shares and are included as a debit reserve within equity.

8. Earnings per Share

The calculation of basic earnings per share of the Group is based on the net profit attributable to shareholders for the six months to 30 June 2014 of US$0.326m (2013: profit of US$0.372m) and the weighted average number of shares of 290,073,461 (2013: 279,446,541) in issue during the period.

The calculation of diluted earnings per share of the Group includes the effect of those outstanding share options where specified performance conditions have been satisfied but which have not yet vested. The calculation of diluted earnings per share of the Group is based on the net profit attributable to shareholders for the six months to 30 June 2014 of US$0.326m (2013: profit of US$0.372m) and the weighted average number of shares of 299,115,967 (2013: 290,792,326) in issue during the period.

9. Share Based Incentive Plans

During the period the Group did not issue any new share based incentive programmes to its employees. A number of previously granted options vested and some expired due to failure to meet their performance or service conditions.

Equity Settled

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

Notes to the Condensed Consolidated Interim Financial Statements (continued)

9. Share Based Incentive Plans (continued)

Cash Settled

There were no cash settled awards in existence during the period.

Expenses in respect of share based incentive plans

The following amounts have been charged as an expense within these financial statements:

As at 30 June 2014, total liabilities in respect of cash-settled share-based incentive plans were US$nil (31 December 2013: US$nil).

Notes to the Condensed Consolidated Interim Financial Statements (continued)

10. Financial Instruments - Fair Values

a) Accounting Classification and Fair Values

The following table shows the carrying amounts and fair values of financial assets and financial assets and financial liabilities, including their levels in the fair value hierarchy.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

10. Financial Instruments - Fair Values (continued)

b) Measurement of Values

i) Valuation techniques

The valuation technique applied to level 2 financial instruments is based on the net asset value per share of the relevant investments which are published by their appointed custodian.

Level 3 financial assets consist solely of investments in a private company. The fair value of this investment is determined based on the most recent net assets of the company.

There have been no changes to the valuation techniques used during the period.

ii) Level 3 fair values

Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

The Group holds an investment in equity shares of a private company, which had previously been classified within trade and other receivables as it was only intended to be held temporarily on behalf of one of the funds it manages. The fair value of this investment was US$206k at 31 December 2013. The Group reclassified the holding as an equity investment available for sale in the year ended 31 December 2013 as the Group is now retaining the investment.