Final Results

Titanium Asset Management Corp 29 February 2008 TITANIUM ASSET MANAGEMENT CORP FINAL RESULTS FOR THE PERIOD ENDED 31 DECEMEBR 2007 Chairman's Statement I am delighted to present this statement as Chairman of Titanium Asset Management Corp. We successfully raised US$120mn and were admitted to trading AIM, a market operated by the London Stock Exchange, in June 2007. This was a reflection of the skills of our placing agent, Sunrise Securities Corp, and we are very grateful for the support of our new shareholders. As a special purpose acquisition company our strategy has been to acquire a number of specialist asset managers and we have, I believe, made an encouraging start in implementing this strategy through the purchase of two high quality asset management firms, Wood Asset Management, Inc and Sovereign Holdings, LLC, respectively a US equity and a US fixed income manager. We have had a number of exploratory discussions with other firms and on January 8th 2008 announced the signing of a non-binding Letter of Intent to acquire another asset management business. . I am pleased to report that the Company is today announcing the proposed acquisition of National Investment Services, Inc, an institutional asset management firm with offices in Milwaukee and Chicago. Two events that we did not foresee were, first, the sudden illness and then death of Gary Wood shortly after we bought his firm. We were deeply saddened to lose Gary after such a short period working together but it is a tribute to the team that he assembled at Wood Asset Management that the firm has continued to generate good investment performance and service its clients, now under the direct management of my colleague and the Company's Chief Executive, John Sauickie. The second event has been the extreme dislocation in financial markets that has occurred since last August. In addition to impacting directly on asset prices, this has clearly increased risk aversion amongst investors and has in some cases made it harder for us to implement business decisions with certain counterparties. While we should expect this volatility to continue for some months, we believe that the recent actions of the US Federal Reserve will begin to restore a degree of investor confidence as the year progresses. We do not expect recent market events to prevent us from continuing to implement our business strategy. We are looking to acquire high quality firms; to the extent that recent volatility has 'stress tested' asset managers it will, in our view, help us to identify truly excellent businesses. John Kuzan Chairman For further information: Titanium Asset Management Corp. John Sauickie, Chief Executive Officer +1 941 361 2191 Nigel Wightman, Executive Director + 44 7789 277849 Seymour Pierce Ltd Jonathan Wright +44 20 7107 8000 Penrose Financial Gay Collins +44(0) 20 7786 4888 Kay Larsen titanium@penrose.co.uk CONSOLIDATED STATEMENT OF INCOME For the period of February 2, 2007 (inception) to December 31, 2007 (in thousands except per share amounts) Revenue $2,437 Operating expenses 3,905 -------- Operating loss (1,468) Interest income 2,191 -------- Income before taxes 723 Income tax expense 280 -------- Net income $443 -------- Basic earnings per share 0.03 Diluted earnings per share 0.03 CONSOLIDATED BALANCE SHEET at December 31, 2007 ASSETS Current assets Cash and cash equivalents $19,338 Restricted cash 55,587 Other current assets 500 ---------- Total current assets 75,475 Other assets Goodwill 21 ,987 Intangible assets, net 15,340 Property and equipment 3 Deferred tax benefit 377 ---------- 37,707 ---------- Total Assets $113,182 ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accruals $1,258 Commitments Temporary equity 55,587 Stockholders' equity Common stock 2 Additional paid in capital 55,892 Retained earnings 443 ----------- Total stockholders' equity 56,337 ---------- Total Liabilities and Stockholders' equity $113,182 ----------- CONSOLIDATED CASH FLOW STATEMENT For the period of February 2, 2007 (inception) to December 31,2007 Net income $443 Adjustments to reconcile net income to net cash and 1,654 cash equivalents provided by operating activities: Depreciation and amortization charges Changes in assets and liabilities: Decrease (increase) in: Fees receivable (388) Deferred tax asset (377) Other receivables (22) Prepaid expenses and other assets (90) Increase (decrease) in: Accounts payable 149 Income taxes payable 657 Accrued expenses and other current liabilities 452 --------- Net cash provided by operating activities 2,478 --------- Cash flows from investing activities Purchases of property and equipment (19) Cash paid for acquisition of subsidiaries (33,965) Restricted cash investments (55,875) ---------- Net cash used in investing activities (89,571) Cash flows from financing activities Issue of share capital 120,025 Costs associated with share issue (9,652) Share capital redeemed (3,892) ---------- Net cash from financing activities 106,481 ---------- Net increase in cash and cash equivalents $19,388 Cash and cash equivalents Beginning - ---------- Ending $19,388 ---------- NOTES ON CONSOLIDATED FINANCIAL STATEMENTS For the period of February 2, 2007 (inception) to December 31, 2007 1 Summary of business and significant accounting policies Nature of business Titanium Asset Management, Corp. (the 'Company') is a special purpose acquisition company which seeks to acquire privately owned asset management businesses. To date the Company has acquired two asset management businesses and their results are consolidated with those of the company from October 1, 2007. The Company, through its wholly owned subsidiaries provides equity, fixed income and balanced investment management services to corporate and individual clients throughout the United States. The Company does not take title to, or custody of, client securities. Cash equivalents and concentration of credit risk For the purposes of reporting cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company periodically maintains cash balances with a financial institution, which at times throughout the year exceeds the federally insured limits. Management believes that the use of a credit quality financial institution minimizes the risk of loss associated with cash and cash equivalents. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions have been eliminated in consolidation. Revenue recognition Revenue represents fees receivable for investment management and advisory services provided during the period. Management fees are recognised in accordance with the contractual arrangement and as the services are provided. Property and equipment Property and equipment are stated at cost. Cost includes expenditures for major improvements and replacements with significant capital additions. Maintenance, repairs and minor renewals, which do not materially extend the life of assets, are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: furniture and fixtures - 2 years Impairment of long-lived assets The Company complies with the provisions of Statement of Financial Accounting Standards ('SFAS') No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement requires that long-lived assets be reviewed for impairment when events or circumstances indicate that their carrying amount may not be recoverable. In management's opinion, no such events or changes in circumstances have occurred in the current year. Goodwill and intangibles Goodwill is the excess of the amount paid to acquire a business over the fair value of the net assets acquired. Pursuant to SFAS No. 142, Goodwill and Other Intangible Assets, the carrying amount of goodwill is reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. If the fair value of the operations to which the goodwill relates is less than the carrying amount of the unamortized goodwill, the carrying amount will be reduced with a corresponding charge to expense. We will test goodwill for impairment at least annually (first day of our fourth quarter), or more often if deemed necessary based on certain circumstances. Our goodwill impairment test will be a two-step process: Step 1 - test for potential impairment by comparing the fair value of each reporting unit with its carrying amount; if the fair value of the reporting unit is greater than its carrying amount (including recorded goodwill), then no impairment exists and Step 2 is not performed; Step 2 - if the carrying amount of the reporting unit (including recorded goodwill) is greater than its fair value, then the amount of the impairment, if any, is measured and recorded as needed. Intangible assets with definite lives are amortized over their estimated useful life and reviewed for impairment in accordance with SFAS 144. Intangible assets with definite lives are amortized using the straight-line method over their estimated useful lives. The value of the non-compete agreement signed in connection to the Wood Asset Management, Inc. acquisition (see note 14) has been charged to expense ($829,000) in operating expenses, as of December 31, 2007, due to the untimely death of the previous owner with whom the agreement was with. Leases Rentals paid under operating leases are charged to the profit and loss account in the period when they become payable. Earnings per share Earnings per share is computed by dividing net income by the weighted average number of shares of common stock and restricted stock outstanding during the period. Warrants have been treated as dilutive to the extent that they are exercisable below the average share price for the period. Temporary equity The proceeds from the issue of common shares bearing the right to require repayment as explained in Note 13 have been classed as temporary equity to reflect the potential for stockholders to require repurchase of their shares. Option granted in relation to share issue The fair value of the option granted to Sunrise Securities Corp. has been credited to non-current liabilities. The cost of the option has been netted off against reserves along with the other costs of admission. Income Taxes The Company accounts for income taxes in accordance with SFAS No. 109, 'Accounting for Income Taxes.' Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 2 Cash and cash equivalents 2007 Cash held by Group companies $19,388 Cash held in trust for the Company 55,587 ---------- $74,975 ---------- 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 trust fund will not be released except upon a number of events as set forth in the document published by the Company in connection with its admission to AIM. 3 Stockholders' equity The company has authorized 54,000,000 shares of Common Stock, 720,000 shares of Restricted stock and 1,000,000 shares of Preferred Stock, all with a par value of $0.0001 per share. As of December 31, 2007 the Company had issued and outstanding Common Stock shares and Restricted Stock shares of 22,993,731 and 696,160 respectively. As of December 31, 2007, no Preferred Stock shares have been issued and accordinfgly the associated rights have not been established. During the period the Company executed various Private Placement offerings of Common Stock and Restricted Stock as follows: Date Class Number Price Proceeds Purpose (in $ thousands) 02/02/07 Common stock 2,880,000 0.7c 20 Start up capital 02/02/07 Restricted 720,000 0.7c 5 Start up capital shares 06/21/07 Units1 20,000,000 $6.00 120,000 Finance acquisitions 10/01/07 Common stock 727,273 $5.50 - Wood acquisition 10/01/07 Common stock 181,818 $5.50 - Sovereign acquisition 1 Each unit comprised 1 common share and 1 warrrant to subscribe for common shares at $4. The warrants expire on June 20, 2011. The holders of Common Stock arising from the issue of units on June 21, 2007 are entitled to require the Company to repurchase their shares if at the time the Company seeks approval for a business combination and the stockholders vote against the proposal. The holders of Common Stock are also entitled to require the Company to repurchase their shares if the Company seeks approval to extend the deadline for a qualifying business combination and the shareholders vote against the proposal. The repurchase price will be a per share price equal to a pro-rata share of the trust fund, including interest earned and net of expenses and taxes thereon. As part of the AIM listing the Company granted an option to Sunrise Securities Corp to acquire 2 million units at a price of $6.60. This option has been valued at $2,091,000 and is recorded as a non-current liability on the balance sheet of the Company. 4 Acquisitions The financial statements include the results for Wood Asset Management Inc and Sovereign Holdings LLC from October 1, 2007, the date of acquisition. As at December 31, 2007 Titanium Asset Management Corp held 100% of the issued share capital of Wood Asset Management Inc and a 100% economic interest in Sovereign Holdings LLC. Wood Asset Management Inc Details Consideration Fair value Goodwill Cash $29,164 $- Shares issued 4,000 - Existing customers - 12,026 Non-compete agreement - 829 Brands - 444 --------- --------- --------- $33,164 $13,299 $19,865 --------- --------- --------- Sovereign Holdings LLC Details Consideration Fair value Goodwill Cash $4,801 $- Shares issued 1,000 - Existing customers - 2,665 Non-compete agreement - 833 Brands - 181 -------- -------- -------- $5,801 $3,679 $2,122 -------- -------- -------- 5 Earnings per common share The calculation of basic earnings per ordinary share is based on the profit for the year of $442,210 and on 14,312,262 common shares, being the weighted average number of common shares in issue during the year. The diluted earnings per share is based on profit for the year before extraordinary items of $442,210 and on 17,489,985 common shares, calculated as follows: 2007 Basic weighted average number of shares 14,312,262 Dilutive effect of warrants 3,177,723 ------------- 6 Report and Accounts The report and accounts of the Company for the period from inception to 31 December 2007 and being despatched to stockholders shortly. Copies of the report and accounts will be available to the public free of charge from the offices of Seymour Pierce, 20 Old Bailey, London EC4M 7EN for at least one month and will be available to be downloaded from the Company's website at www.ti-am.com. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Tatton Asset Management (TAM)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today