Final Results - Amendment
01 Agosto 2007 - 10:56AM
UK Regulatory
RNS Number:3565B
Chameleon Trust PLC
01 August 2007
CHAMELEON TRUST PLC
Unaudited annual results for the year ended 31 May 2007
The issuer advises that the following replaces the Preliminary Results
announcement released on 26 July 2007 at 09:31 under RNS Number 9029A.
The venue of the AGM stated in the original announcement was The Bonham, 35
Drumsheugh Gardens, Edinburgh EH3 7RN. However, this venue has changed to The
George Hotel, 19-21 George Street, Edinburgh EH2 2PB. The date and time remain
the same.
All other details remain the same and the full and corrected version is shown
below:
CHAIRMAN'S STATEMENT
Introduction
Last year I was pleased to report that in the eighteen months since our launch
that our net asset value ("NAV") had increased by 29.6%. It is therefore very
disappointing to report on a NAV per share which was little changed over this
year at 130.2p. This compares unfavourably against the generally healthy
returns seen elsewhere in the stockmarkets.
Your Board is acutely aware of the need to produce good returns for
shareholders. This is no academic exercise for us, for, as you will see in the
attached Financial Statements, the Directors hold 4,400,000 shares, ie. 34.96%
of the issued equity as at 26 July 2007. Investment performance is our number
one priority. To this end, we have carried out reviews with our Manager to
identify the underlying issues affecting our performance and to ensure that they
put in place the necessary changes to address these issues. We believe the
changes adopted by our Manager should give you confidence in the future growth
of the fund.
Chameleon Trust is an absolute return trust which aims to make money for its
shareholders during periods of stockmarket growth through a disciplined approach
to stockpicking and to preserve these gains in more turbulent times by employing
a unique traffic light system of risk control. We do not adopt a benchmark
based approach to investment and hence do not expect returns to correlate with
the main stockmarket indices. However, the disparity in our performance compared
to the FTSE All-Share Index (which rose by 17.9%) and the FTSE AIM Index (which
increased by 8.1%) requires explanation.
Notwithstanding a flat twelve months, our longer term returns have produced a
capital return of 32.3% for shareholders since launch.
Economic background
Economic growth both in the US and UK remained on track in spite of a series of
interest rate increases by both the Federal Reserve and the Bank of England. It
is clear that the primary focus of monetary policy is to curb any inflationary
pressures. In consequence, there is every chance that interest rates may
increase further. Higher interest rates do not usually provide the backdrop for
either strong corporate profit growth or rising stockmarkets. In the main,
corporate profitability was unaffected by tighter monetary policy. Despite
periodic blips generally occasioned by concerns over US sub prime borrowing or
Chinese stockmarket volatility, stockmarkets continued to make headway. In
addition, relatively high levels of institutional liquidity and cash bids from
private equity houses for leading UK companies supported markets and endorsed
equity valuations.
Performance Analysis
When evaluating the return over the year in more detail, attribution analysis
demonstrated that as a group the established and mature companies within the
portfolio performed well. However a number of our investments in emerging
companies encountered business execution issues and financing problems,
exacerbated by poor secondary market liquidity and this had a detrimental effect
on overall performance. The situations which were the most notable detractors
of value were i-mate, Celoxica, Servocell, and Quantica. The company specific
issues are covered in greater detail in the Manager's Review.
The Managers exited a number of their long-standing investments in established
and mature businesses at substantial profits. They closed out their bullish
stance on housebuilders and banked large gains. Cad/cam software provider Aveva
enjoyed a tremendous share price appreciation driven by growing demand from Far
Eastern customers. We sold on valuation concerns. Immunodiagnostics Systems, a
producer of diagnostic testing kits, has appreciated over five fold since we
made our original investment. Recent issue, Matchtech, a specialist engineering
recruitment consultancy, has performed well since listing on AiM.
In terms of overall portfolio exposure the Managers have reduced their
investment in the banking sector and built up new investments in oil stocks. The
proportion of cash and of short dated bonds has risen reflecting the Managers
view that while they have identified a number of attractive investment
opportunities, valuations are not yet at the right level.
Change of Emphasis
In light of the above, the Board, in conjunction with the Manager, has decided
to significantly increase the proportion of the portfolio invested in companies
with demonstrable track records. This change will necessitate a re-alignment of
the portfolio and the Board has instructed the Manager to effect this in as
timely and cost effective manner as possible. In addition the Manager has
revised its risk controls on individual stocks, paying particular attention to
new issues. The Board believes these changes should deliver enhanced returns for
shareholders in the medium term.
The Company's unique traffic light system of risk control will remain in place
as it is entirely consistent with the Company's objective of preserving capital
during more turbulent times.
Change of Lead Manager
I am also pleased to announce the appointment of Stephen Grant on 25 June 2007
as the lead individual responsible for the Company's investment portfolio.
Stephen joined Revera Asset Management Limited ("Revera") in October 2006 and
after a period of familiarisation with the Company, its portfolio and its
objectives, Revera decided that this was an appropriate time for Stephen to take
full responsibility for the Company's investment portfolio.
Before joining Revera, Stephen had a very successful nine year period running
the award-winning ISIS Smaller Companies Trust plc.
Earnings and Dividends
For the year ended 31 May 2007, the Company generated earnings per share of
0.25p. The Board's policy is to distribute all available income at the year end
and consequently proposes a dividend payment of 0.33p per ordinary share for the
year ended 31 May 2007, to be paid on 27 September 2007 to all members on the
Register at close of business on 3 August 2007. Shareholders will be asked to
approve this dividend payment at the Company's Annual General Meeting ("AGM") to
be held on Thursday, 20 September 2007 at 4.00pm.
The Board encourages as many shareholders as possible to attend the Company's
AGM to hear a formal review from the Manager covering the past year and future
investment prospects.
Share Issues
The Board recognises that return to shareholders comprises both the change in
NAV and the change in the premium or discount at which the shares trade in
relation to the NAV. During the year the Company's shares moved from trading at
a premium to trading at a discount. The Board reaffirms its commitment to
ensuring that the shares trade at a minimal discount to NAV and bought back
1.12million shares for cancellation, amounting to approximately 8% of the issued
share capital. The Board also acknowledges the importance of good long term
investment performance in determining the relationship between the share price
and NAV.
Outlook
Our economic outlook remains positive. Legitimate concerns over rising interest
rates, levels of personal borrowing and possibly tighter lines of credit may
result in markets suffering periodic bouts of nervousness. However, the
corporate sector remains in good health. Strong earnings growth, healthy
dividend increases driven by robust underlying cashflow all point to a business
environment which is conducive to further progress in stockmarkets. Those
companies with strong business propositions will still prosper. The Board
believes that there are still sufficient profitable opportunities for the
Company to exploit.
Despite a difficult year in performance terms, the Board views the future with
increased confidence. The Board believes that the Company's remit and absolute
return objective should appeal to a broad range of investors. Further, it
believes that the honing of the Managers' approach and the application of
tighter risk parameters should generate higher returns for shareholders. We
also welcome Stephen Grant's introduction as our Lead Manager.
I look forward to presenting you with a healthier set of results in next year's
Annual Report and Financial Statements.
Martin Ritchie OBE
Chairman
26 July 2007
INCOME STATEMENT (unaudited)
For the year ended 31 May 2007
For the year ended 31 May 2007 For the year ended 31 May 2006
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Gains on investments held at fair
value through profit or loss - 115 115 - 3,116 3,116
Income from investments held at
fair value through profit or loss 284 - 284 270 - 270
Other income 27 - 27 36 - 36
Investment management fees (68) (139) (207) (68) (137) (205)
Other expenses (211) - (211) (209) - (209)
---------- ----------- ----------- ---------- ---------- -----------
Net return before finance costs
and taxation 32 (24) 8 29 2,979 3,008
---------- ----------- ----------- ---------- ---------- -----------
Finance charges 26 - 26 (46) - (46)
---------- ----------- ----------- ---------- ---------- -----------
Return on ordinary activities
before taxation 58 (24) 34 (17) 2,979 2,962
---------- ----------- ----------- ---------- ---------- -----------
Taxation on ordinary activities - - - - - -
---------- ----------- ----------- ---------- ---------- -----------
Net return on ordinary activities
after taxation 58 (24) 34 (17) 2,979 2,962
---------- ----------- ----------- ---------- ---------- -----------
Return per ordinary share (pence) 0.42 (0.17) 0.25 (0.12) 21.89 21.77
---------- ----------- ----------- ---------- ---------- ----------
The total column of this statement represents the profit and loss of the
Company.
All items in the above statement derive from continuing operations.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
BALANCE SHEET (unaudited)
As at 31 May 2007
31 May 2007 31 May 2006
#'000 #'000
Fixed assets
Investments designated as held at fair value through profit or
loss 16,851 16,652
Current assets
Debtors 160 43
Cash at bank and short term deposits 749 1,997
------------- -------------
909 2,040
Creditors
Amounts falling due within one year (722) (282)
------------- -------------
Net current assets 181 1,758
------------- -------------
Total assets less total liabilities 17,038 18,410
------------- -------------
Capital and reserves
Called-up share capital 131 142
Share premium 3,936 3,930
Distributable reserve 9,025 10,437
Capital reserves 3,893 3,917
Capital redemption reserve 11 -
Revenue reserve 42 (16)
------------- -------------
Equity shareholders' funds 17,038 18,410
======= =======
Net asset value per ordinary share
(pence) 130.2 129.6
======= =======
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 May 2007
Capital
Share Share Distributable Capital redemption Revenue
premium reserve reserves reserve reserve
capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
---------- ----------- ----------- ----------- ----------- ----------- ----------
Shareholders' funds at 31 May 2006 142 3,930 10,437 3,917 - (16) 18,410
---------- ----------- ----------- ----------- ----------- ----------- ----------
Repurchase of shares (11) - (1,405) - 11 - (1,405)
Expenses of repurchases - - (7) - - - (7)
Net return from ordinary activities - - - (24) - 58 34
Reversal of initial costs provision - 6 - - - - 6
Dividends paid in respect of year
ended 31 May 2006 - - - - - - -
--------- ----------- ----------- ----------- ----------- ----------- ----------
Balance at 31 May 2007 131 3,936 9,025 3,893 11 42 17,038
===== ====== ====== ====== ====== ====== ======
For the year ended 31 May 2006
Capital
Share Share Distributable Capital redemption Revenue
premium reserve reserves reserve reserve
capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
----------- ----------- ----------- ----------- ----------- ----------- ----------
Shareholders' funds at 31 May 2005 128 2,245 10,437 938 - 33 13,781
---------- ----------- ----------- ----------- ----------- ----------- ----------
Issue of shares 14 1,783 - - - - 1,797
Expense of share issues - (98) - - - - (98)
Net return from ordinary activities - - - 2,979 - (17) 2,962
Dividends paid in respect of year
ended 31 May 2005 - - - - - (32) (32)
----------- ----------- ----------- ----------- ----------- ----------- ----------
Balance at 31 May 2006 142 3,930 10,437 3,917 - (16) 18,410
====== ====== ====== ====== ====== ====== ======
CASH FLOW STATEMENT (unaudited)
For the year ended 31 May 2007
For the year ended For the year ended
31 May 2007 31 May 2006
#'000 #'000 #'000 #'000
Investment income received 209 299
Interest received 27 36
Investment management fees paid (176) (214)
Other cash payments (241) (221)
----------- -----------
Net cash outflow from operating
activities (181) (100)
Servicing of finance
Overdraft interest refunded/(paid) 26 (46)
----------- -----------
Net cash inflow/(outflow) from servicing of
finance 26 (46)
Financial investment
Purchase of investments (14,047) (16,283)
Sale of investments 14,366 16,099
----------- -----------
Net cash inflow/(outflow) from financial
investment 319 (184)
----------- -----------
Equity dividends paid - (32)
Net cash inflow/(outflow) before financing 164 (362)
Financing
(Repurchase)/issue of ordinary shares (1,405) 1,797
Expenses of share issue (7) (98)
----------- ----------- ----------- -----------
Net cash (outflow)/ inflow from financing (1,412) 1,699
----------- -----------
(Decrease)/increase in cash (1,248) 1,337
====== ======
NOTES TO THE FINANCIAL STATEMENTS (unaudited)
1. Accounting policies
(a) Basis of preparation
For the accounting period beginning on 21 June 2004, the Company had the option
to prepare its Financial Statements in accordance with International Financial
Reporting Standards ("IFRS"), as adopted by the International Accounting
Standards Board ("IASB"). The Board has elected to continue to adopt UK
Generally Accepted Accounting Principles ("UK GAAP") and therefore adopt the new
Financial Reporting Standards issued as part of the programme to converge UK
GAAP with IFRS.
The Financial Statements have been prepared under the historical cost
convention, as modified to include the revaluation of investments in accordance
with the Companies Act 1985, applicable UK Accounting Standards and with the
Statement of Recommended Practice for "Financial Statements of Investment Trust
Companies" issued by the Association of Investment Companies revised December
2005 ("The revised SORP").
(b) Income
Income from equity shares is brought into the Revenue Return of the Income
Statement on the ex-dividend date. Where no ex-dividend date is available,
dividends receivable on or before the year end are treated as revenue for the
year. Provision is made for any dividends not expected to be received. The
fixed returns on debt securities and non-equity shares are recognisd on a time
apportionment basis so as to reflect the effective yield on the debt securities
and shares. Provision is made for any fixed income not expected to be received.
Interest receivable from cash and deposits and interest payable are accrued to
the end of the year.
(c) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to
the Revenue Return of the Income Statement except as follows:
* expenses which are incidental to the acquisition of an investment are
included within the cost of the investment.
* expenses which are incidental to the disposal of an investment are
deducted from the disposal proceed of the investment.
* expenses are charged to realised capital reserves where a connection
with the maintenance or enhancement of the value of the investments can be
demonstrated. In this the management fee has been allocated 1/3 to
revenue and 2/3 to realised capital reserves to reflect the Company's
investment policy and prospective income and capital growth.
(d) Taxation
Deferred taxation is provided on all timing differences that have originated but
not reversed at the Balance Sheet date, where transactions or events that result
in an obligation to pay more tax in the future or right to pay less tax in the
future have occurred at the Balance Sheet date. Deferred tax is not provided on
permanent differences. Deferred tax assets are only recognised to the extent
that it is considered more likely than not that there will be future taxable
profits from which the future reversal of underlying timing differences can be
deducted. Timing differences are differences arising between the Company's
taxable profits and its results as stated in the Financial Statements which are
capable of reversal in one or more subsequent periods.
Deferred tax is measured on a non-discounted basis at the tax rates that are
expected to apply in the periods in which timing differences are expected to
reverse, based on tax rates and laws enacted or substantively enacted at the
Balance Sheet date.
(e) Valuation of investments
Listed investments have been designated by the Board as held at fair value
through profit or loss and accordingly are valued at fair value deemed to be bid
market prices for quoted investments.
Changes in the fair value of investments held at fair value through profit or
loss and gains and losses on disposal are recognised in the Income Statement as
"Gains or losses on investments held at fair value through profit or loss". Also
included within this caption are transaction costs in relation to the purchase
or sale of investments, including the difference between the purchase price of
an investment and the bid price at the date of purchase. All purchases and sales
are accounted for on a trade date basis.
2. Income
For the year ended For the year ended
31 May 2007 31 May 2006
#'000 #'000
---------------- ----------------
Income from investments held at fair value through profit or
loss 284 270
Other income 27 36
---------------- ----------------
Total income 311 306
========= =========
3. Investment management fees
For the year ended 31 May 2007 For the year ended 31 May 2006
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
--------------- --------------- --------------- --------------- --------------- ---------------
Investment management fees 58 118 176 58 117 175
Irrecoverable VAT 10 21 31 10 20 30
--------------- --------------- --------------- --------------- --------------- ---------------
Total 68 139 207 68 137 205
========= ========= ========= ========= ========= =========
4. Return per ordinary share
For the year ended 31 May 2007 For the year ended 31 May 2006
--------------- --------------- --------------- ---------------
The returns per ordinary share have been based on Number Number
the following figures:
Weighted average number of ordinary shares 13,824,898 13,608,699
#'000 Pence #'000 Pence
--------------- --------------- --------------- ---------------
Revenue return 58 0.42 (17) (0.12)
Capital return (24) (0.17) 2,979 21.89
--------------- --------------- --------------- ---------------
5. The above financial information for the year ended 31 May 2007 does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The statutory accounts for the year ended 31 May 2007 will be finalised on
the basis of information included within this announcement. The audit report on
the full Financial Statements for the year ended 31 May 2007 has yet to be
signed. Statutory accounts for the year ended 31 May 2007 will be delivered to
the Registrar of Companies in due course.
The Annual General Meeting will be held on Thursday, 20 September 2007 at 4.00pm
at The George Hotel, 19-21 George Street, Edinburgh, EH2 2PB.
Copies of the annual report will be sent to shareholders in August 2007 and will
be available from the Company Secretary at the registered office.
For further information, contact:
Stephen Grant
Revera Asset Management Limited
Tel: 0131 524 6155
Glen Nimmo
Revera Asset Management Limited
Tel: 0131 524 6151
Susan Venables
BNP Paribas Secretarial Services Limited
Tel: 020 7410 5971
26 JULY 2007
This information is provided by RNS
The company news service from the London Stock Exchange
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