TIDMCMIP
Capital Management and Investment Plc
("CMI" or the "Company")
Final Results for the Year Ended 31 January 2014
The Company announces its final results for the year ended 31 January
2014.
Extracts of the audited final results appear below and the Company's
Annual Report and Notice of AGM will be posted to shareholders and made
available on the Company's website, www.cmi-plc.co.uk, shortly.
For further information, please contact:
Capital Management and Investment plc
Tim Woodcock +44 20 7725 0800
N+1 Singer (Nominated Adviser and Broker)
Jonny Franklin-Adams
Alex Wright +44 20 7496 3000
Chairman's Statement
Final results for year ended 31 January 2014
Introduction
The Company has 2 investments: a 2.8% (2013 - 2.8%) shareholding in
Algeco Scotsman Holdings ("ASH") and a 7% (2013 - 7%) shareholding in
Magticom. The fair value of the Company's investment in ASH has been
increased to reflect recent performance and also recognises the receipt
of the distribution from the share capital reduction paid by ASH on 2
October 2013. The fair value of the Company's investment in Magticom
remains unchanged.
Results for the year
The Consolidated Income Statement shows a profit before tax of GBP2.977m
(2013 - GBP13.784m). This is primarily due to the fair value adjustment
in the carrying value of the Company's shareholding in ASH of GBP3.486m.
The overall carrying value of the investment in ASH has declined from
GBP23.765m to GBP19.905m. This reflects a modest increase in the
performance based valuation, of GBP3.486m, which was off-set by a
substantial cash distribution, of GBP6.351m, as a result of ASH's
capital reduction and subsequent receipt of cash by shareholders during
the year.
Other income of GBP0.244m (2013 - GBP0.348m) predominantly comprises
GBP0.120m (2013 - GBP0.043m) fees paid by Algeco Scotsman in relation to
the monitoring of our investment and GBP0.124m (2013 - GBP0.295m) from
Yola Investments SARL in relation to monitoring fees of our investment
in Magticom.
Administrative expenses of GBP0.744m (2013 - GBP0.638m) include GBP0.25m
(2013 - GBP0.25m) payable for office services and foreign exchange
losses of GBP0.130m arising from the retranslation of Euro cash balances
at the year end. Your board continues to take steps to minimise
administrative expenses where possible.
Net asset value ("NAV") per share is GBP3.76 (2013 - GBP3.46) and the
Company had net cash balances of GBP7.1m (2013 - GBP1.1m) at the year
end.
Investment in Algeco Scotsman Holdings ("ASH")
On 14 May 2013 ASH announced a $400m 5 year PIK loan placement. The
proceeds of the issue were used to return funds to shareholders via
capital reduction of ordinary shares. CMI received GBP6.351m on 2
October 2013.
EBITDA of ASH was EUR390m for the year to December 2013 (year to
December 2012 - EUR372m). The directors have valued the shareholding
using peer group EBITDA multiples (discounted to reflect the lack of
marketability of the shareholding) and adjusted for debt (including the
$400m PIK loan referred to above) in line with International Private
Equity Valuation Guidelines. Adopting these principles, the board has
reduced the total carrying value of its 2.8% equity holding to
GBP19.905m (2013 - GBP23.765m).
Investment in Yola Investments Sarl ("Yola")
The Company holds an indirect investment of 7% in Magticom, the largest
mobile telephone operator in The Republic of Georgia via its 33%
shareholding in Yola Investments Sarl. Yola owns 43% of Metromedia
International Group ("MIG") which in turn owns 46% of Magticom.
Trading at Magticom during 2013 was difficult in a challenging economic
and competitive environment, as a result EBITDA for the year to December
2013 fell from $87m to $74m.
The board believes that the 46% shareholding that MIG holds in Magticom
is worth less than the value of the loan notes to third parties,
outstanding in MIG, as the value of the outstanding loan notes of c$252m
is higher than a likely exit value based on a multiple of EBITDA.
Consequently the Board continues to show the carrying value of its
shareholding in Yola in the Financial Statements at GBPNil.
Strategy going forward
CMI continues to actively monitor its investments in Yola and ASH
through regular meetings with the management teams of ASH and Magticom,
receipt of monthly financial reports, and attendance at board meetings.
The board takes the view that the market capitalisation of CMI should
move broadly in line with the value of the underlying investments in ASH
and Yola. The market price of CMI shares is a significant discount to
NAV at the balance sheet date. The board believes that part of the
reason is both the illiquidity of the shares and the current illiquidity
of the investments that it holds. However, your board believes that if
its investment in Algeco Scotsman were to become more liquid then there
would be a significant rerating of your Company.
Dividends
The board is not recommending payment of a dividend for the year under
review (2013 - GBPNil).
Giles Davies
Chairman
6 June 2014
Consolidated Income Statement
and Consolidated Statement of Comprehensive Income
for the year ended 31 January 2014
Consolidated Income Statement
2014 2013
GBP'000 GBP'000
Fair value gain on investments 3,486 14,078
Other income 244 348
_______ _______
Total income 3,730 14,426
Administrative expenses (744) (638)
_______ _______
Operating profit 2,986 13,788
Finance income - 1
_______ _______
Profit before tax 2,986 13,789
Taxation (9) (5)
_______ _______
Profit for the year attributable to the owners of
the parent 2,977 13,784
_______ _______
Basic profit per share 2 GBP0.42 GBP1.92
_______ _______
Diluted profit per share 2 GBP0.41 GBP1.89
_______ _______
Consolidated Statement of Comprehensive Income
2014 2013
GBP'000 GBP'000
Profit for the year 2,977 13,784
Exchange differences arising on translation of foreign
operations (863) 321
_______ _______
Total comprehensive income for the year net of taxation 2,114 14,105
_______ _______
Consolidated Statement of Changes in Equity
at 31 January 2014
Foreign
currency
Share Share Merger translation Retained Total
capital premium reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 January 2012 7,162 40,305 1,693 37,415 (75,960) 10,615
Exchange differences arising on translation of foreign
operations - - - 321 - 321
Profit for the year - - - - 13,784 13,784
_______ _______ _______ _______ _______ _______
Total comprehensive income for the year net of tax - - - 321 13,784 14,105
Share options charge - - - - 56 56
_______ _______ _______ _______ _______ _______
Balance at 31 January 2013 7,162 40,305 1,693 37,736 (62,120) 24,776
Exchange differences arising on translation of foreign
operations - - - (863) - (863)
Profit for the year - - - - 2,977 2,977
_______ _______ _______ _______ _______ _______
Total comprehensive income for the year net of tax - - - (863) 2,977 2,114
Share options charge - - - - 14 14
_______ _______ _______ _______ _______ _______
Balance at 31 January 2014 7,162 40,305 1,693 36,873 (59,129) 26,904
_______ _______ _______ _______ _______ _______
Consolidated Balance Sheet
at 31 January 2014
Company number 3214950 2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment - -
Investments 19,905 23,765
_______ _______
Total non-current assets 19,905 23,765
Current assets
Other receivables 127 187
Cash and cash equivalents 7,088 1,111
_______ _______
Total current assets 7,215 1,298
_______ _______
Total assets 27,120 25,063
Liabilities
Current liabilities
Trade and other payables (181) (282)
Corporation tax (35) (5)
_______ _______
Total current liabilities (216) (287)
_______ _______
Total net assets 26,904 24,776
_______ _______
Capital and reserves attributable to owners of the
parent
Share capital 7,162 7,162
Merger reserve 1,693 1,693
Share premium account 40,305 40,305
Foreign currency translation reserve 36,873 37,736
Retained earnings (59,129) (62,120)
_______ _______
Total equity 26,904 24,776
_______ _______
The financial statements were approved by the Board of Directors and
authorised for issue on 6 June 2014.
A G P Davies )
) Directors
T D Woodcock )
Consolidated Cash Flow Statement
for the year ended 31 January 2014
2014 2013
GBP'000 GBP'000
Cash flow from operating activities
Profit for the year 2,977 13,784
Adjustments for:
Fair value gain on investment (3,486) (14,078)
Finance income - (1)
Foreign exchange loss/(gain) 23 (7)
Equity settled share based payment expense 14 56
Income tax 9 5
_______ _______
Cash flows from operating activities
before changes in working capital (463) (241)
(Decrease)/increase in trade and other payables (101) 24
Decrease in other receivables 60 280
_______ _______
(41) 304
_______ _______
Cash (outflow)/inflow from operations (504) 63
Income taxes paid - (15)
_______ _______
Net cash (outflows)/inflows from operating activities (504) 48
Investing activities
Share capital redemption by ASH 6,351 -
Interest received - 1
_______ _______
Net cash generated in investing activities 6,351 -
Net increase in cash and cash equivalents 5,847 49
Cash and cash equivalents at beginning of year 1,111 1,058
Exchange differences on cash and cash equivalents 130 4
Cash and cash equivalents at end of the year 7,088 1,111
_______ _______
Notes forming part of the Consolidated Financial Statements
for the year ended 31 January 2014
1 Accounting policies
Basis of preparation
The financial information set out in these preliminary results does not
constitute the company's statutory accounts for the periods ended 31
January 2014 or 31 January 2013.
Statutory accounts for the period ended 31 January 2013 have been filed
with the Registrar of Companies and those for the period ended 31
January 2014 will be delivered to the Registrar in due course; both have
been reported on by the Independent Auditors. The independent auditors'
reports on the Report and Financial Statements for the periods ended 31
January 2014 and 31 January 2013 were unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The financial information in these preliminary results has been prepared
using the recognition and measurement principles of International
Accounting Standards, International Financial Reporting Standards and
Interpretations adopted for use in the European Union (collectively
Adopted IFRSs). The accounting policies adopted in these preliminary
results have been consistently applied to all the years presented and
are consistent with the policies used in the preparation of the
statutory accounts for the period ended 31 January 2013.
2 Profit per share
The basic profit per share GBP0.42 (2013 - GBP1.92 per share) is
calculated by reference to the profit after taxation of GBP2,977,000
(2013 - GBP13,784,000) and the weighted average number of ordinary
shares in issue during the year of 7,162,133 (2013 - 7,162,133).
The diluted profit per share GBP0.41 (2013 - GBP1.89 per share) is
calculated by reference to the profit after taxation of GBP2,977,000
(2013 - GBP13,784,000) and the fully diluted weighted average number of
ordinary shares in issue during the year of 7,312,134 (2013 -
7,312,134).
2014 2013
Number Number
Basic number of shares 7,162,133 7,162,133
Unexercised options 150,001 150,001
__________ __________
The number of options outstanding at 31 January 2014 was 150,001.
3 Investments
Algeco Scotsman Yola Investments Total
GBP'000 GBP'000 GBP'000
Opening value 23,765 - 23,765
Fair value adjustment 3,486 - 3,486
Foreign exchange gain (995) - (995)
Equity repayment (6,351) - (6,351)
_______ _______ _______
At 31 January 2014 19,905 - 19,905
_______ _______ _______
The fair value of the investments in Algeco Scotsman SARL and Yola
Management SARL have been assessed by the directors in line with the
accounting policies adopted by the company.
Investment in Algeco Scotsman
Algeco Scotsman Holding SARL ("ASH") was formed in October 2007
following the merger of Algeco, Europe's leading modular construction
and mobile storage business, with Williams Scotsman, the dominant
modular storage rental business in North America.
In December 2009 ASH successfully completed a financial restructuring
that resulted in a significant reduction in debt held by third parties
and an agreement by the shareholders to invest an additional EUR125
million into the capital of the company.
Following the restructuring, CMI's existing equity shareholding in ASH
reduced from approximately 28% to around 1% which was the position as at
31 January 2010.
CMI entered into an option agreement with the principal shareholder of
ASH, TDR Capital, to invest up to EUR10 million of new equity into ASH
on broadly the same terms as the TDR investment on or before 30 April
2010.
Following the Placing and Open Offer of Ordinary shares, CMI exercised
this option on 23 April 2010 and paid the first instalment of EUR6.227m
(GBP5.331m) on 30 April 2010. The balance of EUR4.08m (GBP3.470m) was
paid on 21 September 2010. Following this, CMI owned 6.58% of the
ordinary share capital of ASH.
On 12 October 2013 ASH completed the acquisition of Ausco Modular
Holdings Ltd and a refinancing that involved the repayment or
capitalisation of all existing bank lending facilities and issue of
EUR2,195m of new secured and unsecured bonds.
The Ausco acquisition gives ASH a significant market presence in the
Asia-Pacific region, substantial exposure to high growth markets, and
expansion of the company's current geographic footprint.
ASH also completed a refinancing of its debt facilities. ASH issued
$1,075 million principal amount of 8.50% Senior Secured Notes due for
repayment in 2018 and EUR275 million aggregate principal amount of 9.00%
Senior Secured Notes due for repayment in 2018 (collectively, the
"Senior Secured Notes") and $745 million aggregate principal amount of
10.75% Senior Unsecured Notes due for repayment in 2019 (the "Senior
Unsecured Notes" and, together with the Senior Secured Notes, the
"Notes"), and secured an additional asset backed facility of up to $1.2
billion. All existing debt facilities were either capitalised or repaid.
As a result of this acquisition and restructuring, the CMI's
shareholding in the enlarged group decreased from 6.57% to 2.78%.
On 14 May 2013 ASH announced a $400m 5 year PIK loan placement. The
proceeds of the issue were used to return funds to shareholders via
capital redemption of ordinary shares. CMI received GBP6.351m on 2
October 2013.
EBITDA of ASH group was EUR390m for the year to December 2013. The
directors have valued the shareholding using a peer group EBITDA
multiple of 8.8 (stated net of a 20% discount to reflect the lack of
marketability of the shareholding) and adjusted for debt, of EUR2,582m
(including the $400m PIK loan referred to above), in line with
International Private Equity Valuation Guidelines. Adopting these
principles, when taking into account the distribution from the share
capital reduction, your board has reduced the carrying value of its 2.8%
equity holding to EUR24.250m (GBP19.905m).
The company records the carrying value of its shareholding in ASH in the
Financial Statements at fair value. The directors are of the view that
the fair value of the investment should be calculated using
International Private Equity Guidelines. These are based on the business
continuing to perform in line with historical and budgeted levels and
that the business can be assumed to have an ultimate exit multiple at or
around the equivalent for businesses of a similar size and scope.
The key sensitivities to valuation are the underlying performance of ASH,
the EBITDA multiple applied to those earnings and the marketability
discount. Based on the valuation methodology in Note 17, with all other
inputs remaining constant, applying a marketability discount of 10%, 20%
and 30% to the EBITDA multiple and to 2013 combined EBITDA of EUR390m
gives a valuation range of CMI's shareholding of EUR12.247m, EUR24.250m
and EUR36.254m respectively.
Applying a multiple of 8, 9 and 10 times to 2013 combined EBITDA of
EUR390m, with a constant marketability discount gives a valuation range
of CMI's shareholding of EUR14.734m, EUR25.558m and EUR36.362m
respectively.
Given the current profitability levels of ASH and the PE ratios seen in
the market, a change in EBITDA levels of 5% would not cause the fair
value attributable to this investment to move outside of this valuation
range.
Investment in Yola Investments Sarl ("Yola")
CMI holds an indirect investment of 7% in Magticom, the largest mobile
telephone operator in The Republic of Georgia via its 33% shareholding
in Yola Investments Sarl, which in turn owns 43% of Metromedia
International Group Inc ("MIG") which owns 46% of Magticom.
CMI reported in the Interim Statement issued on 28 October 2010 that MIG
had filed for chapter 11 protection from creditors and that it was in
dispute with the holders of the Preference Shares in connection with the
value attributable to the Preference Shares.
MIG emerged from Chapter 11 protection from creditors on 31 December
2010 following the agreement of a payment schedule with Preference
Shareholders following the determination by the US court of the total
amount owing to the holders of the Preference Shares by MIG at $225m.
As at the year end the value of the outstanding loan notes was $252m.
Trading at Magticom during 2013 has worsened as a result of competitive
pressure and the difficult economic situation in Georgia. Reported
EBITDA for 2013 is likely to be $74m (2012 - $87m). The directors
believe that an EBITDA multiple of 5 represents their best estimate.
In view of the amount owed to creditors, the likely multiple on exit,
the continued uncertainty of the economic situation in Georgia, and
continued competitive pressure the Board continue to show the carrying
value of its shareholding in Yola in the Financial statements at GBPnil.
These uncertainties also represent the major sensitivities in the
valuation.
4 Financial instruments
Equity Investments
These investments are carried at fair value and any adjustments to this
fair value are recognised in the income statement, giving rise to fair
value risk.
Where investments are held in unquoted equity instruments the fair value
of these investments is determined:
- initially at cost (which is the fair value of the consideration
given), less any required provision; and
- subsequently using an earnings multiple model.
Generally, the process of estimating the Fair Value of an investment
involves selecting one of the above methodologies and using that to
derive an Enterprise Value for the investee company. The process is then
to:
-- deduct from the Enterprise Value all financial instruments ranking ahead
of CMI
-- apply an appropriate marketability discount
-- apportion the remaining value over the equity shares.
The Marketability Discount will generally be between 10% - 30% with the
level set to reflect CMI's influence over the exit prospects and timing
for the investee company.
When using the earnings multiple methodology, earnings before interest,
tax, depreciation, and amortisation ("EBITDA") are used - generally from
the last full year historical statutory or management accounts. An
appropriate multiple is applied to these earnings to derive an
Enterprise Value.
In the current year a fair value adjustment of GBP3.49m (2013 -
GBP14.1m) was recognised within the income statement. Both investments
are classified under the fair value measurement hierarchy as level 3
financial assets.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Capital Management & Investment Plc via Globenewswire
HUG#1791082
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