Tatton Asset Management Regulatory News (TAM)

5 Nov 2007 07:00

Titanium Asset Management Corp05 November 2007 Titanium Asset Management Corp. Interim report and unaudited accounts for the period from July 1, 2007 to September 30, 2007 Chairman's Statement I am happy to report that on September 27th 2007 our shareholders approved by anoverwhelming majority the purchase of 100% of the outstanding capital ofSovereign Holdings LLC and of Wood Asset Management Inc, as well as theacquisition of certain client mandates of Siesta Key Capital LLC. The purchaseswere completed on October 1st 2007 and represent the first step in the executionof our business strategy. We are saddened by the subsequent illness of Gary Woodbut believe that we have the management team in place to develop the Wood AssetManagement business alongside Sovereign Advisers. We are also actively pursuinga number of other opportunities to purchase attractive investment managementbusinesses. John Kuzan, Chairman CEO Statement With the purchase of Sovereign Holdings LLC and Wood Asset Management Inc wehave passed an important milestone in the development of Titanium AssetManagement Corp. On October 1st 2007 we were joined by the 33 employees of thesetwo businesses and Titanium is now managing well in excess of $3bn of clients'assets. Sovereign Advisers, based in Charlotte, North Carolina, manages risk controlledfixed income portfolios. Based on unaudited figures for the nine months toSeptember 30th 2007 fee revenues were approximately in line with the same periodin 2006; assets under management were US$1.82bn compared to US$1.74bn at yearend. Wood Asset Management, based in Sarasota, Florida has built an excellent longterm track record in the management of equity portfolios based on a relativevalue style. Based on unaudited figures for the nine months to September 30th2007 the company's revenues were running approximately 10% ahead of thecomparable figure in the previous year, on assets under management of US$1.45billion. Investment returns before fees were approximately 3.3% ahead of theRussell 1000 Value Index. We have been saddened by the recent illness of Gary Wood, President of WoodAsset Management. However, the firm is fortunate to have a strong leadershipteam under the direction of Harold Hvideberg, Robert Stovall and PatriciaWoodruff. Our strategy is to work with the executives at Sovereign and Wood to buildfurther on the sales and marketing momentum in each organisation through thedevelopment of a common distribution program. We are also developing a commonapproach to compliance, financial control and other organisational issues. At the same time we are in active discussions with a number of parties onacquisition opportunities. We are encouraged by the positive response that weare finding to the Titanium business proposition. John Sauickie, Chief Executive Officer Titanium Asset Management Corp.Interim report and unaudited accounts for the period from July 1, 2007 toSeptember 30, 2007 BALANCE SHEET as at September 30, 2007 (Unaudited) Note Sept 30, 2007 $000sASSETSCurrent AssetsDebtors - amounts due from brokers 8 - - prepaid acquisition costs 32,352 - prepayments and accrued income 21Cash at bank and in hand 4 80,186 Total Current Assets 112,559 Total Assets 112,559 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent LiabilitiesAccrued expenses 15Accounts payable 1,087Amounts repayable to shareholders 3,892Notes payable related parties - Total Current Liabilities 4,994 Non - current liabilities - amounts due to brokers 2,091 COMMITMENTSTemporary Equity 27,506 Stockholders' EquityShare capital 5 2Additional paid in capital 6 76,904Profit and loss account 6 1,062 Total Stockholders' Equity 77,968 Total Liabilities and Stockholders' Equity 112,559 The accompanying notes are an integral part of these financial statements. STATEMENT OF OPERATIONS For the period from July 1,2007 to September 30, 2007 July 1, 2007 to Sept. Inception (2 Feb 30, 2007 $000s 2007) to date $000sOperating Costs 107 370Operating Loss (107) (370)Interest receivable 1,229 1,432 --------Net Profit for the Period 1,122 1,062 ========= ======== Net Profit Per Share, Basic 4.9 cents 9.8 centsNet Profit Per Share, Fully Diluted 4.2 cents 8.6 cents ========= ======== Weighted Average Shares 22.88 mn 10.87 mnOutstanding, BasicWeighted Average Shares 26.88 mn 12.37 mnOutstanding, Fully Diluted There were no recognized gains and losses other than those shown in thestatement of operations. All of the operating costs related to existing activities. STATEMENT OF CASH FLOWS For the period from July 1, 2007 to September 30, 2007 July 1, Inception 2007 to (February September 2, 2007) 30, 2007 to Sep 30, $000s 2007 $000sCash Flows from Operating ActivitiesOperating loss (107) (370)Changes in operating assets and liabilities:(Increase) in prepaid operating expenses (21) (21)(Decrease)/inc rease in accrued expenses (198) 15(Decrease) in Notes payable related party (50) - Net Cash Used in Operating Activities (376) (376) Returns on investment and servicing of financeInterest received 1,432 1,432 Acquisitions and disposalsPrepaid costs of acquisition (32,352) (32,352) Cash Flows from Financing ActivitiesProceeds from issuance of share capital 10,989 120,025Costs paid in relation to share issue (855) (8,543) Net Cash Provided by Financing Activities 10,134 111,482 Net (Decrease)/ Increase in Cash (21,162) 80,186 Cash, Beginning of Period 101,348 Nil Cash, End of Period 80,186 80,186 NOTES TO FINANCIAL STATEMENTS NOTE 1 - Organization, business and operations Titanium Asset Management Corp. (the "Company") was incorporated in Delaware onFebruary 2, 2007 as a blank check company, the objective of which is to acquireone or more operating companies engaged in the asset management industry.The Company was successfully listed on the London Alternative Investment Marketon 21 June 2007. The listing raised net proceeds of $110.4 million. The Companyhas completed two acquisitions immediately after the period end on October 1,2007. The Company is pursuing a number of other investment opportunities. NOTE 2 - Basis of Preparation These report and accounts have been prepared in accordance with accountingprinciples generally accepted in the United States of America.The following accounting policies have been applied consistently in dealing withitems which are material in realation to the financial information of TitaniumAsset Management Corp. set out in this report. NOTE 3 - Summary of Significant Accounting Policies Use of EstimatesThe preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates.The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognized in the period in which theestimate is revised if the revision affects only that period, or in the periodof the revision and future periods if the revision affects both current andfuture periods. Profit per common share Profit per common share is computed by dividing the netprofit by the weighted average number of shares of common stock and restrictedstock outstanding during the period. Warrants have been treated as dilutive tothe extent that they are exercisable below the average share price for theperiod. Common shares subject to repayment rights The proceeds from the issue of commonshares bearing the right to require repayment as explained in Note 5 have beensplit as to 50% temporary shares and 50% stockholders equity to reflect thepotential for stockholders to require repurchase of their shares. Following theshareholders agreement to the acquisition of Wood Asset Management and SovereignAdvisers the cost of acquisition has been deducted from the trust account andadded to shareholders equity. The cost of shares to be repurchased has beencredited to short term liabilities with a commensurate reduction in shareholdersequity. Option granted in relation to share issueThe fair value of the option granted to Sunrise Securities Corp. has beencredited to non-current liabilities. The cost of the option has been netted offagainst reserves along with the other costs of admission. Allocation of consideration for issue of units in the placingThe proceeds from the issue of shares in the placing on 21 June 2007, net of allrelated costs, were allocated first to share capital in an amount equal to thenominal value of shares issued, secondly to temporary equity in an amount equalto 50% of the value of the trust fund and the remainder to additional paid incapital. NOTE 4 - Cash at bank and in hand Sept 30,2007 $000s Cash held by the Company 25,176Cash held in trust for the Company 55,010Cash at bank and in hand 80,186 The trust amount is held in a trust fund at a branch of J.P. Morgan Chase Bank,N.A. maintained by Continental Stock Transfer and Trust Company, as trustee,pursuant to an investment management agreement. The proceeds held in the trustfund will not be released except upon a number of events as set out in thedocument published by the Company in connection with its admission to AIM. NOTE 5 - Share Capital Authorized Called up and fully paid Number $ Number $Common Stock $0.0001 54,000,000 5,400 22,880,000 2,288Restricted Shares $0.0001 720,000 72 720,000 72Preferred Stock $0.0001 1,000,000 100 0 -------- ------- 5,572 2,360 -------- ------- The holders of Common Stock arising from the issue of units on 21 June 2007 areentitled to require the Company to repurchase their shares if at the time theCompany seeks approval for a business combination the stockholder votes againstthe proposal. The holders of Common Stock are also entitled to require therCompany to repurchase their shares if the Company seeks approval to extend thedeadline for a qualifying business combination and the shareholder votes againstthe proposal. The repurchase price will be a per share price equal to a pro-ratashare of the trust fund, including interest earned and net of expenses and taxesthereon (see Note 4). As at the balance sheet date 700,000 common sharesrepresenting 3.05% of the issued share capital were due to be repurchased for atotal consideration of $3.9 million. The Restricted Shares carry no rights to dividends except in the case of awinding up of the Company. They convert on a one for one basis to Common Stockif at any time within five years of their issue, and subsequent to a BusinessCombination, the ten day average share price of the Common Stock exceeds $6.90.No Preferred Stock had been issued at the balance sheet date and accordingly therights attaching to the Preferred Stock have not been set. There were 20 million warrants in issue at the balance sheet date. Each warrantentitles the holder to subscribe for Common Stock at $4.00 per share subsequentto a Qualifying Business Combination. There were 20 million warrants in issue atthe balance sheet date. The Company issued an option over 2 million Units to the placing agent. Theoption is exercisable at $6.60 following a Qualifying Business Combination. NOTE 6 - Reserves Profit & Loss Additional Total Paid in Capital $000s $000s $000s Brought forward at 1 July 2007 (60) 53,289 53,229Retained profit for the period 1,122 - 1,122Reallocation of temporary equity 27,494 27,494Shares to be repurchased - (3,892) (3,892)Overaccrual of issue expenses 13 13 1,062 76,904 77,966 NOTE 7 - Related parties The Company paid $25,000 to Siesta Key Capital, LLC (an affiliate of Mr.Sauickie) during the period for accounting and administrative services. NOTE 8 - Post Balance Sheet Event On October 1, 2007 the Company acquired Wood Asset Management and SovereignAdvisers for an initial consideration of $32 million in cash and $5 million incommon shares. The deals provide for additional consideration of up to $11million to be paid contingent on the acquired companies attaining someperformance targets. The Company also agreed to acquire certain investmentmandates of Siesta Key Capital, LLC estimated at $100mn, for a considerationestimated at $0.5mn and payable in cash. This information is provided by RNS The company news service from the London Stock Exchange