Integrated Asset Man: Preliminary Results | Company Announcements

Monday 26 April, 2010

Integrated Asset Man

Preliminary Results

RNS Number : 7422K

Integrated Asset Management PLC

26 April 2010

Integrated Asset Management Plc

Unaudited preliminary results for the year ended 31 December 2009

London, 26 April 2009 - Integrated Asset Management Plc ("Integrated" or the "Company"), the AIM-listed alternative investment group and owner of one of Italy's leading institutional brokerage firms, today announces its unaudited preliminary results for the year ended 31 December 2009.

Financial Overview

		2009	2008	Change

Profit/(loss) after tax from Total Operations		£2.7m	£(17.9)m	N/A
Cash on hand and marketable securities**		£9.6m	£11.0m	-13%
Assets under Management		$0.30bn	$1.21bn	-75%
Net Management Fee Income from Continuing Operations		£1.2m	£2.2m	-45%
Net Performance Fee Income from Continuing Operations		£0.1m	£0.1m	0%
Net Brokerage Income from Continuing Operations		£3.7m	£3.8m	-3%
Loss before Tax from Continuing Operations *		£(0.9)m	£(3.2)m	+72%
Adjusted Earnings per Share ***		(2.25)p	(7.62)p	+70%

* Stated before amortisation and impairment of intangible assets arising on consolidation and share-based payment expense.
** Excluding cash held by the Employee Benefit Trust.
*** Calculated on earnings from continuing operations before amortisation and impairment of intangible assets arising on consolidation and share-based payment expense on a diluted basis.


Operational Overview

·	Completion of sale of a substantial part of the hedge fund business

·	Conditional agreement to invest in JRJ Limited Partnership

·	Cash and financial assets in excess of 100% of net current assets, no borrowings

·	Strong position to evaluate and pursue further business opportunities

For further details please contact:

Integrated Asset Management plc

Emanuel Arbib, Chief Executive Officer

Tel: +44 20 7514 9200

e.arbib@integratedam.com

Execution Noble & Company Limited

John Riddell

Harry Stockdale

Tel: +44 (0)207 456 9191

The full Financial Statements will be posted to shareholders and made available on the website as soon as practicable.

Chairman's Statement

During 2009 the economic crisis continued to have significant influence generally and in particular on the financial sector, despite governments generally sustaining their support to the banking sector and maintaining loose economic policy to prevent a more severe recession. In respect of the two sub-sectors in which we are active, pressures on hedge funds continued for much of the year, despite generally good performance, while broking volumes started recovering during the second half of the year.

On 17 September 2009 we completed the sale of the majority of our fund of funds business to Sal Oppenheim Jr & Cie S.C.A. ("Sal Oppenheim") which involved the transfer of around US$500 million of assets under management ("AUM"). The total consideration was approximately £5.1 million net of legal costs, of which €3.5 million was received in cash and the balance effected by way of the cancellation of the 11.5 million IAM ordinary shares owned by Sal Oppenheim.

This significant change in our business means that a comparison of 2009 and the previous year is rather complex.

The Group's turnover from continuing operations fell from £9.4 million in 2008 to £7.5 million in 2009. This fall is primarily due to the decline in fund management fees as a result of the decline in AUM. Our operating loss for continuing operations before taxation declined from £3.7 million in 2008 to £0.9 million in 2009 mainly through a significant reduction in operating costs. As a result loss per share, which is adjusted for the reduction in the number of shares in issue part way through the year, was (2.43p) versus a loss per share of (8.59p) in 2008. However, taking into account discontinued operations the Group reported a profit after tax for the year of £2.7 million versus a loss of £17.9 million in 2008. This represents earnings per share of 7.07p (2008: loss of 43.42p per share).

The Group's net asset position was reduced by £2.3 million by the cancellation of the Sal Oppenheim shares and by a £2.6 million foreign exchange reserve movement but increased by the £2.7 million net profit attributable to parent company equity shareholders, resulting in a net reduction. of approximately £2.2 million. The net assets of £11.0 million include £4 million of cash and £5.6 million of financial assets comprising holdings of our own managed funds, and a portfolio of corporate bonds.

The Group's AUM started the year at approximately $1.2 billion and had declined to approximately $813 million prior to the closing of the sale to Sal Oppenheim. Following the sale AUM were substantially reduced ending the year at $299 million.

With the sale of the fund of funds business to Sal Oppenheim and the closing of the Lugano branch office, operating costs have been significantly reduced, central staffing has also been reduced as have other central costs.

Following these changes, we have actively sought new opportunities for growth and have identified several that we are pursuing. The first to come to fruition is the investment, alongside the JRJ Group, into Marex Group Ltd, the commodities, metals and futures traders based in London. In this transaction the Company has conditionally committed US $4 million as part of a total investment by a Company-organised consortium of US $26 million. Certain directors are also participating in the consortium having also conditionally committed US $2 million.

In addition, partners in JRJ Group have conditionally agreed to subscribe by 31 December 2010 for 3,636,362 new ordinary shares at 33p, giving them approximately a 10% stake in our Company. We are very pleased with this significant show of support.

We believe this transaction will build value for the Company's shareholders and that our association with the principals of JRJ Group should bring further interesting opportunities.

As with most financial businesses, we have been through a challenging period in 2008 and 2009, but have rapidly adjusted both our cost base and business model to give us now the resources to take advantage of the array of attractively valued opportunities that are emerging in both broking and fund management. Approaches have been received from a number of businesses looking for new investors or partners and we are carefully exploring a number of these currently.

J D S Booth

Chairman

April, 2010

Chief Executive Officer's Review

Overview of 2009

During the year we significantly reconfigured our fund management business by completing the sale of the greater part of our managed funds to Sal Oppenheim. We also radically reduced our cost base which had been built up to manage a significantly larger asset base. In broking we maintained our levels of business and achieved profitability.

These steps left the Group in a strong position to pursue new opportunities. Towards the end of the third quarter we started evaluating transactions that could either fit our existing platform, or to which we could add value by virtue of our relationships and expertise.

Fund Management

After agreeing the sale of the greater part of our managed funds to Sal Oppenheim we worked with our clients to restructure the remaining funds into two main vehicles, allowing us, following overwhelming investor approval, to manage the remaining assets more efficiently and to return capital to investors who required it on a defined timescale

The funds that we managed throughout the year have generally provided positive performance despite the fact that they had to maintain high cash balances until July 2009 when the restructuring became effective.

Trading and profit comparisons with prior year for the fund management division are made complex by the fact that the sale of the majority of our managed funds to Sal. Oppenheim took place towards the end of the third quarter.

Brokerage

The brokerage environment, which had suffered greatly at the peak of the crisis when mutual trust among financial institutions was in short supply, picked up in the second half of 2009, albeit with lower volumes and greater risk aversion when compared to pre-crisis levels.

In order to navigate this environment, we decided to execute a further reduction to our broking cost base which entailed both finding efficiencies in Milan and, crucially, closing our Lugano branch. These steps enabled us to recapture profitability from the third quarter of the year onwards. At the beginning of Q4, seeing that the trend was becoming more favourable, we took the opportunity to hire a seasoned broking team to bolster our existing Milan based bond desk.

The combination of these actions has enabled our brokerage business, excluding Lugano, to increase turnover and achieve a profit before tax of £232,000 for the year (2008: Loss of £117,000).

Cost structure and Balance Sheet

The Group's cost structure is driven by four different factors:

The need to maintain a robust compliance and risk management system;

The need to have good people to manage and transact business in both fund management and broking;

The desire to grow the business which requires hiring sales people in advance of achieving organic growth; and

The costs of being listed on AIM.

The first is not something that the Board considers should be compromised by excessive cost cutting and, accordingly, throughout 2009 we have maintained what we consider to be the necessary internal and external controls. The reduction in AUM has meant that certain cost reductions have been possible but these have been modest.

In 2008 we took the decision to cut back on recruitment of fund managers and brokers. This continued in 2009 and with the sale of the funds the relevant fund managers transferred to Sal Oppenheim, enabling us to reduce our costs further.

Despite the changes and difficulties in the market in the last two years, we have maintained and actually improved the quality of our balance sheet and have cash resources to deploy as and when suitable opportunities arise.

During the second part of the year we also started investing the cash in the balance sheet in investment grade fixed income securities and in our own managed funds which we purchased on the secondary market at an attractive price. As of the year end, we had unrealised capital gains of about £180,000 on these positions, net of a small mark to market foreign exchange loss.

Events after the Reporting Period

We have recently announced the transaction with JRJ Group involving Marex Group Ltd where we have found a confluence of a good business, good management and, importantly for Integrated, the capability to increase value by leveraging our existing platform and bringing to bear our contacts and expertise in the broking space.

The Market: 2010 and Beyond

During 2010 we intend to continue pursuing opportunities similar in quality to the JRJ Marex transaction, both in fund management and broking. We are working on several of these currently, both for investment and co-investment, and all in transactions where we can add value. These opportunities enable us to leverage the Company's investments with other investors sourced by us and, therefore, allow us to enhance our returns through management fees and consulting income. We are committed to bringing the Group to sustainable profitability through a combination of good quality investments and acquisitions and the continuing growth of our existing investment and broking platforms.

I would like to thank all our staff who have been through a transition year again for their continuing support and commitment.

E M Arbib

Chief Executive Officer

April, 2010

Business Review

The Group consists of two businesses - asset management, more specifically fund of hedge fund management and institutional brokerage.

Asset Management
Assets under Management ("AUM")
AUM is analysed between the following products and mandates:
				31 December	31 December
				2009	2008
				US$ millions	US$ millions

Total discretionary portfolios				195	1,095
Non-discretionary portfolios				14	33
Other assets under advice				90	87
Total AUM				299	1,215

The components of, and movements in, Discretionary Portfolios are described below.

Discretionary portfolios comprise the largest part of our AUM. The sale of the 51% stake in Altigefi to Sal Oppenheim, which closed in September 2009, resulted in the transfer of contracts for the management of primarily euro denominated funds which had, at completion, AUM of €210 million. These funds were mainly under the Altipro label. In addition, contracts for a further $137 million of euro denominated discretionary portfolios were transferred by Integrated Alternative Investments Limited. These suffered significant redemptions between 1 January 2009 and the completion of their sale.

Integrated Multi-Strategy Fund ("IMSF") and Integrated Strategic Funds - the single strategies

During 2009, the Integrated range of funds was restructured with the consent of their investors. The restructuring which became effective in July 2009 converted Integrated Strategic Funds Limited's umbrella structure with a number of sub-funds into effectively a single multi-strategy fund and a number of restricted liquidity side pockets.

Other portfolios

Other portfolios have a range of different mandates, both single and multi-strategy, for specific sets of customers.

The total of the above funds constitute Integrated's discretionary AUM. Movement in the AUM of the discretionary portfolios is analysed as follows:

				2009	2008
				US$ millions	US$ millions

Discretionary assets at 1st January				1,095	2,052

Disposals at 1 January NAV				800
Movement in disposed funds				(295)
Disposals at disposal date				505

Discretionary assets at 1st January after disposals				295	2,052

(Decrease) in net subscriptions/redemptions				(107)	(697)
Fund performance				5	(152)
Foreign exchange movements				2	(108)
Discretionary assets at 31st December				195	1,095

Fund performance
Fund performance of our core funds (excluding those sold to Sal Oppenheim) within the relative performance period for 2009 is detailed in the table below:

					2009
Fund Name / Benchmark			Currency	Share Class	Performance

Integrated Multi Strategy Fund Limited ("IMSF")			USD	* N	1.23%
HFRX Global Hedge Fund Index			USD		13.40%

Integrated Strategic Funds Limited ("ISF")			USD	* Z	4.50%
HFRX Global Hedge Fund Index			USD		13.40%

Integrated European Fund			EUR		4.28%
HFRX Global Hedge Fund Index			EUR		13.15%

Source: Integrated Asset Management, Bloomberg, HFR, HFN

*The track record of IMSF Class N and ISF Class Z is the performance of IMSF Class B (which no longer exists following its consolidation into Class N effective 1 July 2009) up to and including 31st May 09 and the performance of IMSF Class N and ISF Class Z respectively from 1st Jun 09 onwards. Save for hedging and funding costs, the performance of Class N is intended to mirror that of Class Z from their inception as Class N is a feeder of Class Z.

Management Fees & Distribution Costs

Management fees are normally charged at rates ranging from 1.0% to 2.25% per annum on the underlying AUM dependant on the investor type.

In common with much of the rest of our industry, Integrated raises its assets through a network of distributors, intermediaries and institutions buying the product on behalf of underlying customers. These third parties are remunerated by the retrocession or rebate of a portion of the management fees paid by the fund to Integrated.

In addition, where Integrated manages portfolios which have been established by third parties and Integrated is not involved in raising assets for that portfolio, Integrated is not the direct recipient of the management fee from the fund, but receives a share of such fee from the originator of the fund. However in these instances, the fee would not normally be subject to any retrocession or rebate.

As a consequence of these variations in rates of gross revenue, the management fee net of any retrocession or rebate, the net management fee, is considered a more reliable guide of the achievement of the Group.

Net yields on our portfolios are analysed as follows:


Asset type				Net margin in basis points
				2009*	2008

Discretionary assets				68	64
Non-discretionary assets				28	22
Other assets under advice				13	9
* Excluding portfolios disposed of in 2009

Our net margins have slightly increased primarily as a result of the disposal of funds to Sal Oppenheim in respect of which we were paying on average relatively larger retrocession fees.

Performance Fees

Performance fees may be generated by all discretionary and some non-discretionary portfolios subject to certain criteria being met. All funds have a high water mark whereby the fund price at the close of a given performance period must be higher than that at the close of the last performance period on which a performance fee was paid. In addition, certain funds have a hurdle rate whereby fund performance in the given period must exceed a pre-determined benchmark or hurdle rate and a performance fee is paid on the excess of the performance over this benchmark, subject to any high water mark. Performance periods usually range from three months to twelve months. Performance fees are normally calculated at the rate of 10% of the relevant performance and retrocession to distributors is only usually granted in exceptional circumstances from such performance fees

Net performance fees totalled £0.2 million (2008: £0.2 million), reflecting the continuing difficult conditions in the sector and the need to make realisations and hold relatively large amounts of cash to meet redemptions. While Integrated is not dependent on performance fees, representing 10.0% and 2.4% of net fund management income from continuing operations and net Group income from continuing operations, respectively, (2008: 2.6% and 1.5%) they represent a key element of our financial success from fund management in the future.

Brokerage
Products

In the wide range of products that are covered by the global inter-dealer/ institutional markets, Integrated Financial Products Ltd ("IFP") is focused on foreign exchange, interest rate derivatives, equities, bonds and up to 31 December 2009, the marketing and promotion of securities and derivatives for Sal. Oppenheim in Italy.

Performance is measured by both gross and net revenues, but more generally the latter, and returns on both of those streams. The following figures exclude the discontinued Lugano branch.
				2009	2008
				£ 000	£ 000

Net brokerage				2,936	3,050
Net marketing				760	754
Other				59	51
Total net brokerage revenue				3,755	3,855

The analysis of net brokerage by product is set out below.
				2009	2008

Equities				7.9%	19.2%
Foreign exchange				33.9%	36.8%
Interest rate derivatives				29.0%	24.5%
Bonds				29.2%	19.5%
				100%	100%

In 2009, in all areas income levels were maintained at approximately the same level as 2008. However, the balance of business within the net brokerage changed materially with the decline in equities continuing, reflecting the decline in volumes in the equity markets. Interest rate derivatives showed some increase driven by the increasing volatility in interest rates within the euro zone. Finally, trading in bonds made up for the decline in equities which was achieved by adding a new bond trading team which has continued to contribute.

For its marketing and promotional activities, IFP is remunerated by means of a fixed retainer and variable compensation dependent primarily upon the volume of products that are sold by Sal. Oppenheim, their profitability to the bank and the level of actual marketing activity. The volatility of the underlying markets and the appetite of investors for financial assets in general limited activity in 2009.

Results Summary

Excluding discontinued operations
		Fund		2009	2008
		Management	Brokerage	Total	Total
		£ 000	£ 000	£ 000	£ 000


Turnover		2,704	4,833	7,537	9,379
Cost of sales		(1,142)	(1,078)	(2,220)	(3,131)
Net Revenue		1,562	3,755	5,317	6,248
Operating costs		(2,723)	(3,556)	(6,279)	(9,633)
Operating (loss)/profit before amortisation of intangibles, share-based
	payment expenses and currency exchange differences	(1,161)	199	(962)	(3,385)
Amortisation of intangibles		(12)	-	(12)	(13)
Impairment of Intangibles		-	-	-	(380)
Share-based payments expense		(15)	(1)	(16)	(32)
Write down of investments		(5)	(31)	(36)	(67)
Currency exchange differences		(114)	33	(81)	(53)
Net gain/(loss) on financial products		184	(8)	176	-
Operating (loss)/profit		(1,123)	192	(931)	(3,930)
Net finance and other income		36	(5)	31	303
(Loss)/profit on continuing activities before tax		(1,087)	187	(900)	(3,627)

Operating margins

The group's operating costs have been significantly reduced in 2009 due to three factors:

.	The disposal of the greater part of the fund management business to Sal Oppenheim, which included a transfer of a number of employees and the resulting reduction in the need for extensive support systems and personnel;

.	The closing of the Lugano branch; and

.	The general reduction in central staff and services due to the reduced size of the Group's operations.

These costs reductions took place at various times throughout the year.

Group personnel numbers stabilised by the end of 2009. With the variety of opportunities now being pursued, including the transaction with JRJ, it is not possible to predict the operating costs for 2010. Management intend to maintain strict controls over the increase in costs necessary as a result of increased business, new activities (whether acquired or internally generated) or to meet regulatory needs.

In line with the guidance being given by regulators and institutional shareholders the Group seeks to align the interests of the business, its needs and risks, with the remuneration policy.

The most significant item of operating expenditure was staff compensation which represented 61% of operating costs (2008: 60%).

Included within operating costs are two significant charges arising from the strengthening of the euro against sterling as at 31 December 2008.

In 2008, a charge of £14.6 million was taken for the impairment of goodwill which had arisen on the acquisition of fund management businesses in 2006 and 2007. Upon the sale of the major part of the fund management business to Sal Oppenheim £1.2 million of this impairment charge was written back through the profit and loss on discontinued businesses.

In 2009, the Group invested some of its cash balances in two new classes of asset, fixed interest corporate bonds and own funds, to achieve a return on the cash balances accumulated without putting the funds at material risk. The value of the bonds and investments is calculated with reference to their market value and adjusted for any foreign exchange rate fluctuations. Any gains or losses are taken through profit or loss. In respect of the own funds, notice of redemption has been given and redemption will take place in May 2010.

The Group intends to realise corporate bond investments as considered appropriate from an investment point of view or to meet cash commitments for long term business development opportunities.


Capital and Cash Flow
				2009	2008
				£ 000	£ 000

Net assets				10,969	14,689
Net current assets				8,666	10,208
Cash at bank and financial assets*				9,418	10,997
*	Cash at bank excluding cash held under Trust by the EBT.

Net assets decreased primarily as a consequence of the cancellation of the ordinary shares held by Sal Oppenheim as part of the consideration for the sale of the fund management assets. Net current assets decreased by some 15% but cash and financial assets were maintained at 108% of net current assets whilst all bank and other Group borrowings were repaid.

While certain amounts of cash are held by subsidiaries for both working capital and regulatory requirements, there remains significant liquidity within the Group.

Employee Share Ownership

The policy of employee share ownership schemes to retain and reward staff is being continued. The reduction in the number of staff and the resulting termination of the share ownership benefits granted to them have resulted in a significant number of shares being held in the Integrated Asset Management Employee Share Ownership Trust. It is the intention that these will be conditionally awarded to employees in the future with performance conditions requiring continuing achievement over a multi-year time horizon.

Dividends

The Company does not recommend the payment of a dividend (2008: £nil).

Risk Management

Operating in the financial services industry, Integrated faces a number of risks which are inherent to its activities and require active management. The principal risks have been identified as investment risk, relating to our fund management business, operational risk and financial risks.

Investment risk

Poor investment performance in our underlying funds, either absolutely or relative to the particular fund's peer group, may result in a decrease in management and performance fees as well as redemptions in the funds by investors with similar effect. This fundamental risk is managed by:

.	The use and continued evolution of an institutional quality Investment Process which combines a top-down approach, guided by a Senior Advisory Board comprised of individuals from within and without the Group, and an in-depth bottom up analysis carried out by specialists within each core hedge fund strategy.

.	The operation of such a process by highly experienced, qualified and motivated staff who have clearly defined roles and responsibilities as required by the investment process.

.	An independent and well staffed Risk Management team which not only ensures that the Investment Process is adhered to but also monitors each portfolio continuously to ensure its compliance with pre-determined limits using sophisticated in-house developed software.

Operational Risk

Operational risk is the risk that the Group suffers a loss, either directly or indirectly, from inadequate or failed internal processes and systems or from external events. This risk manifests itself in slightly different ways across our two businesses, but in summary would include:

·	Broker error in negotiation of a deal.
·	Administrative error either in the settlement of a broking deal or in the instruction of a trade on behalf of a fund.
·	Loss of key members from a broking desk or key investment professionals.
·	Introduction of new products and related issues in the legal, fiscal, regulatory and accounting domains.

Given the nature of such risks, it is Group policy to review continually the controls in place to manage them, to ensure that such controls are appropriate and adequate for the risks involved and that the controls have evolved and developed to reflect the changes in our underlying businesses and how they are carried out.

Financial Risks

The Group operates in a number of different countries and is exposed to a number of financial risks and particularly currency risk. Details of these and the measures undertaken by the Group to manage them are given in note 21 of the financial statements.

Regulatory environment

Each of Integrated's principal operating subsidiaries is subject to regulation. In the United Kingdom, the two fund management companies, Integrated Alternative Advisors Limited and Integrated Alternative Investments Limited, which together trade as Integrated Alternative Investments, are regulated and authorised by the Financial Services Authority as is the broking subsidiary Integrated Financial Products Limited ("IFP").

IFP's Milan branch is responsible to the Italian regulator ("Consob") and the Bank of Italy for its conduct of business.

The Group seeks to ensure that it maintains full compliance with its regulatory obligations and in regard to regulatory capital to maintain a surplus over and above that required at both an operating company level and at a consolidated group level.

Consolidated Income Statement
for the year ended 31 December 2009
	Year ended		Year ended
	31 December		31 December
	2009		2008
	£000s		£000s
Continuing operations
Revenue	7,537		9,379
Cost of sales	(2,220)		(3,131)
Net revenue	5,317		6,248
Operating costs	(6,396)		(9,753)
Amortisation of intangibles	(12)		(13)
Share-based payments cost	(16)		(32)
Net gain on financial assets	176		-
Operating loss before impairment of goodwill and intangibles	(931)		(3,550)
Impairment of goodwill and intangibles	-		(380)
Operating loss	(931)		(3,930)
Finance income	82		385
Finance expense	(51)		(82)
Loss before taxation	(900)		(3,627)
Taxation	(42)		18
Loss from continuing operations	(942)		(3,609)
Discontinued operations
Profit/(Loss) from discontinued operations	3,619		(14,337)
Profit/(loss) for the year	2,677		(17,946)
Attributable to :
Continuing operations
Owners of the parent	(942)		(3,609)
Minority interests	-		-
	(942)		(3,609)
Total
Owners of the parent	2,746		(18,249)
Minority interests	(69)		303
	2,677		(17,946)
Earnings per share
Continuing operations
Basic	(2.43)p		(8.59)p
Diluted	(2.43)p		(8.59)p
Discontinued operations
Basic	9.50p		(34.83)p
Diluted	9.50p		(34.83)p
Total
Basic	7.07p		(43.42)p
Diluted	7.07p		(43.42)p

Consolidated Statement of Comprehensive Income
for the year ended 31 December 2009
	Year ended		Year ended
	31 December		31 December
	2009		2008
	£000s		£000s
Profit/loss for the year	2,677		(17,946)
Currency translation differences on overseas operations	(2,632)		2,523
Deferred tax on share options	-		(77)
Total comprehensive income for the year	45		(15,500)
Total comprehensive income attributable to :
Owners of the parent	114		(15,803)
Minority interests	(69)		303
	45		(15,500)
Consolidated Statement of Financial Position
as at 31 December 2009
	As at	As at
	31 December	31 December
	2009	2008
	£000s	£000s

Assets
Non-current assets
Intangible assets	1,684	4,300
Property, plant and equipment	404	739
Financial assets	215	139
	2,303	5,178
Current assets
Trade and other receivables	2,482	5,328
Cash and cash equivalents	4,033	11,062
Other financial assets	5,630	-
	12,145	16,390
Total assets	14,448	21,568

Liabilities
Non-current liabilities
Borrowings	-	-
Deferred tax liabilities	-	(697)
	-	(697)
Current liabilities
Borrowings	-	(1,309)
Trade and other payables	(3,439)	(4,849)
Tax payable	(40)	(24)
	(3,479)	(6,182)
Total liabilities	(3,479)	(6,879)
Net assets	10,969	14,689

Capital and Reserves
Called up share capital	1,533	2,107
Share premium account	-	27,025
Share options reserve	202	313
Exchange difference reserve	314	2,946
Investment in own shares	(2,519)	(2,519)
Retained earnings	11,452	(16,667)
Equity attributable to equity holders of the parent	10,982	13,205
Equity attributable to Minority interests	(13)	1,484
Total equity	10,969	14,689

Consolidated Statement of Changes in Shareholders' Equity
for the year ended 31 December 2009
	Share	Share	Retained	Other	Minority
	capital	premium	earnings	reserves	interests	Total
	£000s	£000s	£000s	£000s	£000s	£000s

Balance at 1 January 2009	2,107	27,025	(16,667)	740	1,484	14,689

Currency translation adjustments	-	-	-	(2,632)	-	(2,632)
Deferred tax on share options	-	-	-	-	-	-
Total other comprehensive income	-	-	-	(2,632)	-	(2,632)
Profit/(loss) for the year	-	-	2,746	-	(69)	2,677
Total comprehensive income for the year	-	-	2,746	(2,632)	(69)	45

Reduction to the share premium account	-	(27,017)	27,017	-	-	-
Cancellation of shares on disposal	(574)	(8)	(1,774)	-	-	(2,356)
Conversion of loan notes	-	-	-	-	-	-
Shares issued on acquisition	-	-	-	-	-	-
Deferred consideration	-	-	-	-	-	-
Share-based payments	-	-	-	16	-	16
Exercise of share options	-	-	-	-	-	-
Cancelled/forfeited share options	-	-	127	(127)	-	-
Purchase of own shares by EBT/ESOT	-	-	-	-	-	-
Dividend paid to minority interests	-	-	-	-	-	-
Movement in minority interests	-	-	3	-	(1,428)	(1,425)
Balance 31 December 2009	1,533	-	11,452	(2,003)	(13)	10,969


	Share	Share	Retained	Other	Minority
	capital	premium	earnings	reserves	interests	Total
	£000s	£000s	£000s	£000s	£000s	£000s

Balance at 1 January 2008	2,083	26,527	1,472	(1,378)	1,203	29,907

Currency translation adjustments	-	-	-	2,523	-	2,523
Deferred tax on share options	-	-	(77)	-	-	(77)
Total other comprehensive income	-	-	(77)	2,523	-	2,446
(Loss)/profit for the year	-	-	(18,249)	-	303	(17,946)
Total comprehensive income for the year	-	-	(18,326)	2,523	303	(15,500)

Cancellation of shares on disposal	-	-	-	-	-	-
Conversion of loan notes	16	295	-	-	-	311
Shares issued on acquisition	1	21	-	(22)	-	-
Deferred consideration	7	182	-	(229)	-	(40)
Share-based payments	-	-	-	33	-	33
Exercise of share options	-	-	-	-	-	-
Cancelled/forfeited share options	-	-	187	(187)	-	-
Purchase of own shares by EBT/ESOT	-	-	-	-	-	-
Dividend paid to minority interests	-	-	-	-	(338)	(338)
Movement in minority interests	-	-	-	-	316	316
Balance 31 December 2008	2,107	27,025	(16,667)	740	1,484	14,689

Consolidated Cash Flow Statement
for the year ended 31 December 2009	Year ended	Year ended
	31 December	31 December
	2009	2008
	£000s	£000s
Cash flows from operating activities - continuing operations
Cash (used) from operations	(111)	(1,364)
Income tax paid	124	(157)
	13	(1,521)
Cash flows from operating activities - discontinued operations	(187)	55
Cash flows from operating activities - total Group	(174)	(1,466)
Cash flows from investing activities - continuing operations
Purchase of property, plant and equipment	(23)	(154)
Sale of property, plant and equipment	-	-
Purchase of non-current financial assets	(211)	-
Purchase of other financial assets	(5,453)	(55)
Sale of current financial assets	104	113
Purchase of intangible assets	-	-
Minority interests/subsidiaries acquired	-	(48)
Net cash disposed of with subsidiary	(2,686)	-
Shares purchased by ESOT	-	-
Deferred consideration paid	-	-
Sale proceeds of subsidiary and funds business	2,663	-
Interest received	83	385
	(5,523)	241
Cash flows from investing activities - discontinued operations	44	72
Cash flows from investing activities - total Group	(5,479)	313
Cash flows from financing activities - continuing operations
Issue of ordinary share capital	-	-
Redemption of unsecured loan notes	-	(783)
Repayment of Bank Loan	(1,309)	-
Dividend paid to Minority interests	-	(338)
Interest paid	(50)	(82)
	(1,359)	(1,203)
Cash flows from financing activities - discontinued operations	(17)	-
Cash flows from financing activities - total Group	(1,376)	(1,203)

Net (decrease) in cash and cash equivalents	(7,029)	(2,356)
Cash and cash equivalents at beginning of year	11,062	13,418
Cash and cash equivalents at end of year	4,033	11,062

Reconciliation of Operating (Loss) to Net Cash (Outflow)/Inflow from Operating Activities
for the year ended 31 December 2009	Year ended	Year ended
	31 December	31 December
	2009	2008
Group	£000s	£000s
Operating (loss) on ordinary activities from continuing operations	(931)	(3,930)
Share options cost	16	33
Loss on sale of property, plant and equipment	-	-
Depreciation	237	245
Amortisation of intangible assets	12	12
Impairment of goodwill and intangibles	-	379
Write down of current financial assets	(176)	72
Write down of other financial assets	39	64
Foreign currency translation	82	980
Decrease in trade and other receivables	1,310	21,164
(Decrease) in trade and other payables	(700)	(20,383)
Net cash (outflow) from operating activities from continuing operations	(111)	(1,364)

Notes to the Financial Statements

Principal accounting policies

The Group prepares it financial statements in accordance with IFRS as adopted by the European Union and applicable law.

The figures in the preliminary results are unaudited. The preliminary results for the year ended 31 December 2009 do not constitute statutory accounts within the meaning of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2008 were prepared under IFRS and have been delivered to the Registrar of Companies. The audit report on these statutory accounts was unqualified and did not contain a statement either under section (2) or 237 (3) of the Companies Act 1985.

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2008, as described in those statements, with the exception of the adoption of IAS 1 - "Presentation of Financial Statements" (Revised)",IFRS 7 - "Improving Disclosures about Financial Statements, an amendment to IFRS 7 and IFRS 8 - "Operating Segments". The adoption of these policies has had no impact on the results or the net assets of the Group.

Segmental reporting
Business segments

The Group is organised into two business segments Hedge Fund and Brokerage. The segmental results are as follows:-

Business Type	Discontinued	Continuing	Discontinued	Continuing	Inter-segment	Continuing
	Hedge Fund	Hedge Fund	Brokerage	Brokerage	elimination	Group
31 December 2009	£000s	£000s	£000s	£000s	£000s	£000s
Revenue from external customers	2,443	2,704	151	4,833		7,537
Cost of sales	(944)	(1,142)	(2)	(1,078)		(2,220)
Net Revenue	1,499	1,562	149	3,755	-	5,317
Operating costs	(1,483)	(2,723)	(657)	(3,556)		(6,279)
Amortisation of intangibles	1,212	(12)	-	-		(12)
Impairment of Intangibles	-	-	-	-		-
Share-based payments cost	-	(15)	-	(1)		(16)
Write down of investments	-	(5)	-	(31)		(36)
Currency exchange differences	-	(114)	-	33		(81)
Net gain/(loss) on financial assets	-	184	-	(8)		176
Operating profit/(loss)	1,228	(1,123)	(508)	192	-	(931)
External interest receivable and similar income	44	37	-	45		82
Inter-segment interest receivable	-	-	-	45	(45)	-
External interest payable and similar charges	(17)	(1)	-	(50)		(51)
Inter-segment interest payable	-	(45)	-	-	45	-
Profit/(loss) before taxation	1,255	(1,132)	(508)	232	-	(900)

Operating costs include the following non-cash expenses:
Depreciation	(17)	(131)	(2)	(106)	-	(237)

	Discontinued	Continuing	Discontinued	Continuing	Inter-segment	Continuing
	Hedge Fund	Hedge Fund	Brokerage	Brokerage	elimination	Group
31 December 2008	£000s	£000s	£000s	£000s	£000s	£000s
Revenue from external customers	6,670	4,684	1,009	4,695		9,379
Cost of sales	(2,734)	(2,291)	(12)	(840)		(3,131)
Net Revenue	3,936	2,393	997	3,855	-	6,248
Operating costs	(2,873)	(5,736)	(1,252)	(3,897)		(9,633)
Amortisation of intangibles	(1,036)	(13)	-	-		(13)
Impairment of Intangibles	(14,253)	(380)	-	-		(380)
Share-based payments cost	-	(16)	-	(16)		(32)
Write down of investments	-	-	-	(67)		(67)
Currency exchange differences	-	101	-	(154)		(53)
Net gain/(loss) on financial assets	-	-	-	-		-
Operating loss	(14,226)	(3,651)	(255)	(279)	-	(3,930)
External interest receivable and similar income	100	224	-	161		385
Inter-segment interest receivable	-	-	-	73	(73)	-
External interest payable and similar charges	-	(10)	-	(72)		(82)
Inter-segment interest payable	-	(73)	-	-	73	-
Loss before taxation	(14,126)	(3,510)	(255)	(117)	-	(3,627)

Operating costs include the following non-cash expenses:
Depreciation	(34)	(87)	(2)	(155)	-	(242)

Discontinued operations
On 17 September 2009 the Group completed the sale of the majority of its fund of hedge funds business, including its 51% stake in Altigefi, to Sal. Oppenheim (France), the Paris based wholly-owned subsidiary of Sal. Oppenheim jr & Cie S.C.A. ("Sal. Oppenheim"). The operations included in this sale have been treated as discontinued operations for the year ended 31st December 2009.

During the year there was a further write down on the final amounts that were received on the sale of GAIM Paragon Inc., which was sold by Integrated in 2006. Gaim Paragon Inc. operated in the Hedge Fund division of the business.

During the year the Lugano Office which was part of Integrated Financial Products Limited broking operations, was closed. The operations included in this closure have been treated as discontinued operations for the year ended 31st December, 2009.

The table below provides further detail of the amount shown in the income statement. The income statements for the prior year have been restated to conform to this style of presentation.

Discontinued operations	2009	2008
	£000s	£000s
Revenue	2,594	7,679
Cost of sales	(946)	(2,746)
Net revenue	1,648	4,933
Operating costs	(2,140)	(4,125)
Amortisation of intangibles	1,212	(1,036)
Share-based payments cost	-	-
Operating profit/(loss) before impairment of goodwill and intangibles	720	(228)
Impairment of goodwill and intangibles	-	(14,253)
Write down of sale proceeds	(50)	-
Profit on sale of subsidiary/business	990	-
Exchange difference reserve realisation	2,292	-
Operating profit/(loss) before finance income and expenses	3,952	(14,481)
Finance income	44	100
Finance expense	(17)	-
Profit/(loss) before taxation	3,979	(14,381)
Taxation	(360)	44
Profit/(loss) from discontinued operations	3,619	(14,337)

The net cash flows after tax of discontinued operations are as follows:
	2009	2008
	£000s	£000s
Operating	(187)	55
Investing	44	72
Financing	(17)	-
Net cash inflow	(160)	127

Earnings per share
The calculation of Earnings per Share ("EPS") is based on profit that is attributable to equity holders of the parent Company only.
Potential ordinary shares have only been included in the diluted EPS calculation where their effect has been dilutive to basic EPS.
Details of the figures used in calculating basic and diluted EPS are shown below:
	2009	2008
	£000s	£000s
(Loss) from continuing operations	(942)	(3,609)
Minority interests	-	-
(Loss) from continuing operations used in calculating basic and diluted EPS	(942)	(3,609)
Total profit/(loss) for the year	2,677	(17,946)
Minority interests	69	(303)
Total profit/(loss) used in calculating basic and diluted EPS	2,746	(18,249)

	No. '000s	No. '000s
Weighted average number of ordinary shares used in calculating basic EPS	38,840	42,030
Effect of dilutive potential ordinary shares:
- share options	-	-
- shares to be issued	-	-
- contingently issuable shares	-	-
Weighted average number of ordinary shares used in calculating diluted EPS	38,840	42,030

Basic EPS from continuing operations has been calculated using the loss from continuing operations £942,000 (excluding minority interests) divided by the weighted average number of ordinary shares 38,840,000.
Diluted EPS from continuing operations has been calculated using the loss from continuing operations £942,000 (excluding minority interests) divided by the weighted average number of ordinary shares 38,840,000.
Potentially dilutive instruments that have not been included in the calculation of diluted EPS, because they were antidilutive, comprise share options over 853,000 (2008; 1,093,000) ordinary shares.

Share capital	2009	2009	2008	2008
		Number of		Number of
		ordinary		ordinary
		5p shares		5p shares
	£000s	000s	£000s	000s
Authorised:
At 1st January	10,000	200,000	10,000	200,000
Reduction by special resolution in the year	(575)	(11,496)	-	-
At 31st December	9,425	188,504	10,000	200,000
Allotted and fully paid:
At 1st January	2,107	42,147	2,083	41,662
Cancellation of shares on disposal	(574)	(11,496)	-	-
Conversion of loan notes	-	-	16	328
Deferred consideration	-	-	7	138
Altigefi acquisition	-	-	1	19
Movement during the year	(574)	(11,496)	24	485
At 31st December	1,533	30,651	2,107	42,147

The authorised share capital of the Company was, by virtue of a special resolution and with the sanction of an order of the High Court of Justice dated 16 September 2009, reduced from £10,000,000 divided into 200,000,000 Ordinary shares of 5 pence each to £9,425,194 divided into 188,503,889 Ordinary shares of 5 pence each.
The Company announced on 17th September 2009, that it had completed the sale of its 51% stake in Altigefi together with certain transferred fund contracts to Sal Oppenheim (France). Part of the total consideration of the sale was the cancellation of 11,496,111 shares in the Company that were held by Sal. Oppenheim (France). This cancellation was sanctioned by an order of the High Court of Justice dated 16 September 2009.
The loan notes were converted at a price of 95p on 27th January, 2008, the consideration totalling £ 311,750. The shares issued in 2008 relating to deferred consideration and Altigefi acquisition were previously shown as shares to be issued.

This information is provided by RNS

The company news service from the London Stock Exchange

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