TIDMRRF
RNS Number : 4266O
Rapid Realisations Fund Limited
19 September 2011
19 September 2010
Rapid Realisations Fund Limited
Interim Results for the six months ended 30 June 2011
Rapid Realisations Fund Limited (the "Company" or "Rapid") today
announces its unaudited interim results for the six months ended 30
June 2011.
Chairman's Statement, Rhys Davies:
"I am pleased to report on the performance of Rapid Realisations
Fund Limited (the "Company" or "RRF") for the 6 months period ended
30 June 2011.
In line with the investment objective and policy adopted
following the acquisition of a 17.33% stake by Damille Investments
Limited in May 2010 the Company continues to manage the orderly
realisation of its investment portfolio with the objective of
maximising the return of invested capital to shareholders during
the period ending on 30 September 2013.
In the period to 30 June 2011, the Company has continued to make
good progress against this investment objective having fully exited
3 investments and partially exiting 4 others. The proceeds from
these realisations have been used to fund the continued return of
capital to shareholders; during the period under review a further
circa GBP4.6 million was returned to shareholders, equivalent to 8p
per Ordinary Share, with an additional circa GBP3.8 million,
equivalent to 6.5p per Ordinary Share being returned since the
period end.
To date, in excess of GBP31 million has been returned to
shareholders and the Board of Directors continues to work closely
with Cenkos Fund Managers ("CFM") to maximise further realisations.
CFM are currently in discussions in relation to a number of
additional realisations and we look forward to returning further
funds to shareholders in due course.
The NAV per Ordinary Share as at 30 June 2011 was 40.8p."
Enquiries:
Grant Thornton Corporate Finance
Philip Secrett
+44 (0)20 7383 5100
Rapid Realisations Fund Limited
Rhys Davies
+41796200215
Unaudited Statement of Financial Position
As at 30 June 2011
30 June Audited 30 June
Notes 2011 31 December 2010 2010
---------------------------- ----- ---------- ----------------- ----------
GBP GBP GBP
Investments 2 & 6
Fair value through profit or
loss 5,530,222 9,203,219 17,612,115
Loans and receivables 12,202,100 13,007,472 17,219,066
---------- ----------------- ----------
Total investments 17,732,322 22,210,691 34,831,181
---------- ----------------- ----------
Current assets
Current Investments:
Loans and receivables 6 2,414,174 3,120,841 4,095,000
Other receivables 7 1,292,861 1,192,033 886,509
Cash and cash equivalents 8 2,113,503 2,698,579 14,913,726
5,820,538 7,011,453 19,895,235
---------- ----------------- ----------
Current liabilities
Other payables 9 19,061 86,117 475,764
19,061 86,117 475,764
---------- ----------------- ----------
Net current assets 5,801,477 6,925,336 19,419,471
---------- ----------------- ----------
Total net assets 23,533,799 29,136,027 54,250,652
========== ================= ==========
Equity attributable to
Ordinary Shareholders
Reserves 23,533,799 29,136,027 54,250,652
Total Equity 23,533,799 29,136,027 54,250,652
========== ================= ==========
Net asset value per Ordinary
Share 11 0.4079 0.5049 0.9402
The accompanying notes form an integral part of these financial
statements.
Unaudited Statement of Total Comprehensive Income
For the period ended 30 June 2011
1 January 2011 1 January 2010
to to
Notes 30 June 2011 30 June 2010
--------------------------------------- ----- -------------- --------------
GBP GBP
Income 2
Finance income 4,085 36,130
Commission income - 17,000
Loan note interest 809,672 1,220,635
Dividend income 12,612 28,136
Other investment income - 116,710
Net realised gains on fair value
through profit or loss investments 6 (355,055) (508,241)
Net realised losses on loan
sales 6 42,708 -
Movement in net unrealised losses
on fair value through profit
or loss investments 6 (1,368,732) (3,891,782)
Movement in impairment charge
on loans 6 (200,000) (1,240,000)
Movement in net unrealised foreign
exchange gains/(losses) on loan
investments 6 506,790 (1,142,444)
Movement on net unrealised (loss)/gain
on open forward foreign currency
contracts 12(d) - (90,480)
Foreign exchange (losses)/gains (1,675) 126,401
-------------- --------------
Total income (549,595) (5,327,935)
Expenses
Investment management fee 3 248,509 567,174
Administration fee 3 30,868 52,240
Custodian fee 3 10,369 8,467
Loan note interest written off 13 21,472 80,743
Transaction expenses 33,035 51,494
Directors' fees and expenses 4 33,414 54,332
Auditor's remuneration 19,135 20,267
Legal and professional fees 12,500 33,336
Other expenses 27,215 13,777
Total expenses 436,517 881,830
Net deficit from operations (986,112) (6,209,765)
-------------- --------------
Total comprehensive deficit
for the period (986,112) (6,209,765)
============== ==============
Deficit per Ordinary Share 5 (0.0171) (0.1076)
The results for the current and prior periods are derived from
continuing operations.
The accompanying notes form an integral part of these financial
statements.
Unaudited Statement of Changes in Equity
For the period ended 30 June 2011
1 January 2010 To 30 June 2010
Revenue Distributable Total
Notes Reserve Reserve Reserves
-------------------- -------- ----------- -------------------- -----------
GBP GBP GBP
Balance brought forward (3,530,406) 32,666,433 29,136,027
Total comprehensive deficit
for the period (986,112) - (986,112)
Capital
distributions 10 & 15 - (4,616,116) (4,616,116)
Balance carried forward (4,516,518) 28,050,317 23,533,799
=========== ==================== ===========
For the period ended 30 June 2010
1 January 2010 To 30 June 2010
Revenue
Notes Reserve Distributable Reserve Total
--------------------- ------ ----------- --------------------- -----------
GBP GBP GBP
Balance brought forward 4,713,406 55,747,011 60,460,417
Total comprehensive deficit
for the period (6,209,765) - (6,209,765)
Balance carried forward (1,496,359) 55,747,011 54,250,652
=========== ===================== ===========
The accompanying notes form an integral part of these financial
statements.
Unaudited Statement of Cash Flows
For the period ended 30 June 2011
1 January 2011 31 January 2010
to to
Notes 30 June 2011 30 June 2010
-------------------------------------- ----- -------------- ---------------
GBP GBP
Cash flows (used in)/from operating
activities
Commission received - 17,000
Loan note interest received
movement 397,206 1,289,639
Dividend income received 12,612 28,136
Other investment income 46,783 211,624
Operating expenses paid (483,069) (1,401,772)
Net cash (used in)/from operating
activities (26,4768) 144,627
-------------- ---------------
Cash flows from/(used in) investing
activities
Amounts paid for purchases of
investments (47,740) (4,963,463)
Amounts received from sales
of investments 4,102,838 1,197,450
Net cash from/(used in) investing
activities 4,303,430 (3,766,013)
-------------- ---------------
Cash flows (used in)/from financing
activities
Bank interest received 4,085 43,784
Capital distribution (4,616,116) -
Net cash (used in)/from financing
activities (4,612,031) 43,784
-------------- ---------------
Net decrease in cash and cash
equivalents (583,401) (3,577,602)
Cash and cash equivalents, start
of period 2,698,579 18,364,927
Effect of foreign exchange rate
changes on cash and cash equivalents (1,675) 126,401
Cash and cash equivalents, end
of period 8 2,113,503 14,913,726
============== ===============
Cash and cash equivalents comprise
the following amounts:
Bank deposits 2,113,503 14,913,726
--------- ----------
2,113,503 14,913,726
========= ==========
The accompanying notes form an integral part of these financial
statements.
Notes to the Financial Statements
1. The Company:
The Company is a closed-ended investment company and was
registered with limited liability in Guernsey on 12 July 2007. The
Company commenced business on 2 August 2007 when the Ordinary
Shares of the Company were admitted to trading on AIM. The Company
is a Guernsey Authorised Closed-ended Investment Scheme and is
subject to the Authorised Closed-ended Investment Scheme Rules
2008.
The Company is currently focusing on realising the investments
that have been made to date. These investments were made in line
with the Company's stated investment policy.
2. Principal Accounting Policies:
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Company's interim financial statements (the "financial
statements"):
(a) Basis of Preparation:
(i) General
The financial statements of the Company have been prepared in
accordance with IAS 34 (as adopted by the EU) "Interim Financial
Reporting" and comply with the Companies (Guernsey) Law, 2008 and
the Listing Rules of the UK Listing Authority.
The financial statements of the Company have been prepared under
the historical cost convention modified by the revaluation of
investments and derivative financial instruments at fair value
through profit or loss.
The preparation of financial statements in conformity with IFRS
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 such
estimates.
(ii) Going concern:
Based on the consideration of assets and the business nature of
the Company the Directors, following enquiry, believe the Company
has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they consider it appropriate
to adopt the going concern basis of preparation for these financial
statements.
(b) Income:
Bank interest income is classified as finance income in the
Unaudited Statement of Total Comprehensive Income and is recognised
on an accruals basis at the gross amount receivable. Other
investment income, commission income, dividend income are included
in the financial statements on an accruals basis.
Interest on loans receivable is recognised in the Unaudited
Statement of Total Comprehensive Income based on coupon interest
rates which were determined to approximate market interest
rates.
(c) Foreign Currency:
(i) Functional and Presentation Currency
The Company's investors are mainly from the UK, with the
subscriptions and redemptions of the Ordinary Shares denominated in
sterling. The primary activity of the Company is to offer UK
investors an attractive return on their investment, primarily
through investing in companies which are likely to achieve an IPO
or a sale within a short term time horizon and through a small
number of investment companies that are already listed. The
performance of the Company is measured and reported to investors in
sterling. The Directors consider sterling as the currency that most
faithfully represents the economic effects of the underlying
transactions, events and conditions. The financial statements are
presented in sterling, which is the Company's functional and
presentation currency.
(c) Foreign Currency, continued:
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Unaudited
Statement of Total Comprehensive Income. Translation differences on
non-monetary financial assets and liabilities such as equities at
fair value through profit or loss are recognised in the Unaudited
Statement of Total Comprehensive Income. The Company holds
investments denominated in Euro at the reporting date, and may
enter into forward foreign currency contracts to hedge the exchange
rate risk arising from future cash flows on these investments. For
the period ended 30 June 2011 there were no outstanding forward
foreign currency contracts.
(d) Financial Instruments:
Financial assets and financial liabilities are recognised in the
Unaudited Statement of Financial Position when the Company becomes
a party to the contractual provisions of the instrument.
(i) Financial Assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics.
All financial assets are initially recognised at fair value. All
purchases of financial assets are recorded at trade date, being the
date on which the Company became party to the contractual
requirement of the financial asset.
The Company's financial assets are categorised as financial
assets at fair value through profit or loss. Unless otherwise
indicated the carrying amounts of the Company's financial assets
approximate to their fair values. Gains and losses arising from
changes in the fair value of financial assets classified as fair
value through profit or loss are recognised in the Unaudited
Statement of Total Comprehensive Income.
A financial asset (in whole or in part) is derecognised
either:
-- when the Company has transferred substantially all the risk
and rewards of ownership;
-- when it has not retained substantially all the risk and
rewards and when it no longer has control over the asset or a
portion of the asset; or
-- when the contractual right to receive cash flow has
expired.
(ii) Financial Liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All financial liabilities are initially recognised at fair value
net of transaction costs incurred. All purchases of financial
liabilities are recorded on trade date, being the date on which the
Company becomes party to the contractual requirements of the
financial liability. Unless otherwise indicated the carrying
amounts of the Company's financial liabilities approximate to their
fair values.
Financial liabilities measured at amortised cost include trade
payables and other short-term monetary liabilities, which are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method.
A financial liability (in whole or in part) is derecognised when
the Company has extinguished its contractual obligations, it
expires or is cancelled. Any gain or loss on derecognition is taken
to the Unaudited Statement of Total Comprehensive Income.
(e) Investments:
The Company's investments comprise loans, equities, warrants and
convertible loan notes.
(i) Classification
Equities have been designated as fair value through profit or
loss in accordance with IAS 39 (Revised) "Financial Instruments:
Recognition and Measurement".
Warrant investments meet the definition of "Derivatives" under
IAS 39 and have been designated as held for trading in accordance
with IAS 39 (Revised) "Financial Instruments: Recognition and
Measurement". They are accounted for as fair value through profit
or loss.
Investments in convertible loans have been designated as loans
and receivables and are carried at amortised cost. The
convertibility element of the loan is accounted for separately and
is measured at fair value through profit and loss in accordance
with IAS 39.
(ii) Measurement
Equities and warrants are initially recognised at fair value.
Transaction costs are expensed in the Unaudited Statement of Total
Comprehensive Income. Subsequent to initial recognition, equities
and warrants are measured at fair value. Realised gains and losses
on disposal of investments, where the disposal proceeds are
higher/lower than the book cost of the investment are presented in
the Unaudited Statement of Total Comprehensive Income in the period
in which they arise. Unrealised gains and losses arising on the
fair value of investments are presented in the Unaudited Statement
of Total Comprehensive Income in the period in which they arise.
Dividend income, if any, from equity investments is recognised in
the Unaudited Statement of Total Comprehensive Income within
dividend income when the Company's right to receive payments is
established.
Convertible loan notes are initially recognised at fair value
less any directly attributable transaction cost. Subsequent to
initial recognition, loans are measured at amortised cost using the
effective interest rate method.
(iii) Fair Value Estimation
Quoted investments at fair value through profit or loss are
valued at the bid price on the relevant stock exchange and
discounted, where necessary, to reflect any legal restrictions.
Unquoted investments are valued in accordance with the
International Private Equity and Venture Capital valuation
guidelines. Typically investments in unquoted companies are made by
way of a package of instruments, for example a convertible loan
note or outright purchase of shares which also has an attached
equity interest in the form of a warrant or option of shares. In
these circumstances the Directors are of the opinion that it is not
possible to attribute a fair value to each of the separate
components of the total investment in that company and therefore
the Directors fair value the investment package as a whole.
The determination of fair value for financial assets and
liabilities for which there is no observable market price requires
the use of valuation techniques as described above, other valuation
techniques include earning multiples, break up basis valuation,
analysis of recent fund raising and recent investment transactions
in the investee companies and comparison to similar instruments for
which observable prices exist. Assumptions and inputs used in
valuation techniques include estimating discount rates, bond and
equity prices and expected price volatilities. The objective of the
valuation techniques is to arrive at a fair value determination
that reflects the price of the financial instruments at the
reporting date that would have been determined by market
participants acting at arm's length. The valuation techniques
applied are consistent with accepted economic methodologies for
pricing financial instruments.
Loans are valued at amortised cost and reviewed for impairment
in accordance with IAS 39.
(e) Investments, continued:
(iv) Recognition/derecognition
All regular way purchases and sales of investments are
recognised on trade date - the date on which the Company commits to
purchase or sell the investment. Investments are derecognised when
the rights to receive cash flows from the investments have expired
or the Company has transferred substantially all risks and rewards
of ownership.
(f) Impairment of Financial Assets:
Financial assets are assessed at each reporting date to
determine whether there is any objective evidence that they are
impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that
asset.
An impaired loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial assets
are assessed collectively in groups that share similar credit risk
characteristics.
All impairment losses, if any, are recognised in the Unaudited
Statement of Total Comprehensive Income.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. The reversal is recognised in the Unaudited Statement
of Total Comprehensive Income.
(g) Expenses:
Expenses are accounted for on an accruals basis.
(h) Cash and Cash Equivalents:
Cash and cash equivalents are defined as cash in hand, demand
deposits and highly liquid investments readily convertible to known
amounts of cash and subject to insignificant risk of changes in
value. For the purposes of the Unaudited Statement of Cash Flows,
cash and cash equivalents consist of bank deposits, overdrafts and
money market equivalents.
(i) Non-Consolidation of Investments:
IAS 27 "Consolidated and Separate Financial Statements" requires
a company to prepare and present a set of consolidated financial
statements for a group of entities under the control of a parent.
Ordinarily control is the legal power to govern the financial and
operating policies of an underlying investment company so as to
obtain benefits from its activities.
In assessing control, the Company has taken into consideration
the following:
-- potential voting rights that currently are exercisable;
-- whether the remaining voting rights are spread across
numerous other shareholdings/few significant shareholdings;
-- ability of the Company to exercise significant influence over
an underlying investment company; and
-- whether or not the Company and an underlying investment
company have common key management personnel.
(j) Non-Consolidation of Investments, continued:
The Company has two investments where the Company has
significant equity holdings (circa 49%), however the shareholder
base of these investments are made up of very few other
shareholders. In the Directors opinion the Company does not have
legal control of the underlying investment companies and therefore
has not consolidated the results of these investments into the
results of the Company.
(k) Determination and Presentation of Operating Segments:
The Company has adopted IFRS 8 as of 1 January 2009, which
requires a "management approach", under which segment information
is presented on the same basis as that used for internal reporting
purposes.
The Board has considered the requirements of IFRS8. The Board,
as a whole, has been determined as constituting the chief operating
decision maker ("CODM") of the Company.
The Board is charged with setting the Company's investment
strategy in accordance with the Prospectus. They have delegated the
day to day Investment Management of the Company to the Investment
Manager, under the terms set out in the Investment Management
Agreement, but the Board retains the responsibility to ensure that
adequate resources of the Company are directed in accordance with
their decisions. All investment recommendations made by the
Investment Manager are reviewed by the Board for compliance with
the policies and legal responsibilities of the Directors and the
provisions of the Prospectus. Only after such reviews have been
satisfactorily conducted will the Board approve the investment
recommendations. The Board therefore retains full responsibility
for the allocation decisions made on an ongoing basis. Pursuant to
the terms of the Investment Management Agreement the Investment
Manager is obliged to comply with the investment strategy detailed
in the Prospectus. This strategy sets out guidelines for proposed
investments and the procedures that the Investment Manager is
required to follow in dealing with the Company's assets. These
guidelines and procedures are regularly reviewed and can be altered
by the Board if it considers it appropriate to do so.
The key measure of performance used by the Board in its capacity
as CODM, is to assess the Company's performance and to allocate
resources based on the total return of each individual investment
within the Company's portfolio, as opposed to geographic regions.
As a result, the Board is of the view that the Company is engaged
in a single segment of business, being investment in companies in
"pre-IPO" and other late stage situations with a view to
arbitraging differences in public and private company valuations.
Therefore, no reconciliation is required between the measure of
gains or losses used by the Board and that contained in these
financial statements.
Information on realised gains and losses derived from sales of
investments are disclosed in note 6.
The Company is domiciled in Guernsey. All of the Company's
income from investments is from underlying companies that are
incorporated in the United Kingdom, Ireland and Switzerland.
The Company has no assets classified as non-current assets and
has a highly diversified portfolio of investments.
The Company also has a highly diversified shareholder population
however three individual investors own more than 10% of the issued
capital of the Company.
3. Related Parties & Material Agreements:
The Company is responsible for the continuing fees of the
Investment Manager, Administrator, Registrar and the Custodian in
accordance with the Investment Management, Administration,
Registrar and Custodian Agreements.
Investment Management Agreement
Pursuant to the provisions of the Investment Management
Agreement, the Investment Manager is entitled to receive an
advisory fee during the period at 1.0% per annum of the net asset
value ("NAV") of the Company, increasing to 2.0% per annum when 50%
of the net proceeds of the Placing have been invested (this
threshold was reached on 23 September 2008). This fee is paid
quarterly in advance based on the prior quarter end NAV, with a top
up payment payable in arrears once the current quarter end NAV is
finalised. For the period ended 30 June 2011 the investment
management fee expense was GBP248,509 (period ended 30 June 2010:
GBP567,174). As at 30 June 2011 the investment management fee
prepayment was GBP9,478 (31 December 2010: GBPnil & 30 June
2010: GBP25,252).
The Investment Manager is also entitled to a performance fee for
a relevant accounting period when the following two tests are
met:
-- If the adjusted closing NAV per Ordinary Share (where the
adjusted NAV is the NAV of the Company excluding any liability for
accrued management and performance fees and after adding back any
dividends declared or paid during the performance period) exceeds
the opening NAV per Ordinary Share by a hurdle rate equivalent to
7.5% per annum (the "Hurdle NAV per Ordinary Share"); and
-- If the adjusted closing NAV per Ordinary Share is higher than
the highest previously recorded opening NAV per Ordinary Share as
reduced by the sum of all dividends and distributions per Ordinary
Share (including distributions of capital) since the date such
highest opening NAV per Ordinary Share was established (the "High
Watermark").
Once entitled to a performance fee for a relevant accounting
period the fee is payable, in arrears, by reference to the amount
the adjusted closing NAV per Ordinary Share exceeds either (i) the
opening NAV per Ordinary Share, (where the adjusted NAV is the NAV
of the Company excluding any liability for accrued performance fees
and after adding back any dividends declared or paid during the
performance period), or (ii) where the High Watermark exceeds the
Hurdle NAV per Ordinary Share for the relevant accounting
period.
The performance fee is calculated by taking an amount equal to
20% of the NAV increase per Ordinary Share in that relevant
accounting period, multiplied by the time weighted average of the
total number of Ordinary Shares in issue for the relevant
accounting period. The first performance period began on Admission
and ended on 31 December 2007. Each subsequent performance period
is a period of one financial year. For the period ended 30 June
2011 the performance fee expense was GBPnil (period ended 30 June
2010: GBPnil). As at 30 June 2011 the performance fee creditor was
GBPnil (31 December 2010: GBPnil & 30 June 2010: GBPnil).
Administration Agreement
Pursuant to the provisions of the Administration Agreement,
Praxis Fund Services Limited is entitled to receive an
administration fee during the period of 0.15% per annum of the net
asset value of the Company, subject to an annual minimum of
GBP60,000 applied on a quarterly basis, calculated and paid
quarterly in arrears. For the period ended 30 June 2011 the
administration fee expense was GBP30,868 (period ended 30 June
2010: GBP52,240). As at 30 June 2011 the administration fee
creditor was GBPnil (31 December 2010: GBP27,720 & 30 June
2010: GBPnil).
Registrar Agreement
Pursuant to the provisions of the Registrar Agreement, Capita
Registrars (Guernsey) Limited is entitled to a fee of GBP5,000 per
annum together with a per deal fee per shareholder transaction. For
the period ended 30 June 2011 the registrar fee expense was
GBP17,739 (period ended 30 June 2010: GBP3,957). As at 30 June 2011
the registrar fee creditor was GBP1,995 (31 December 2010: GBP2,017
& 30 June 2010: GBP1,995).
Custodian Agreement
Pursuant to the provisions of the Custodian Agreement, Cenkos
Channel Islands Limited is entitled to receive a custodian fee
during the period of 0.03% per annum of the net asset value of the
Company, subject to an annual minimum of GBP15,000 applied on a
quarterly basis. For the period ended 30 June 2011 the custodian
fee expense was GBP10,369 (30 June 2010: GBP8,467). As at 30 June
2011 the custodian fee creditor was GBPnil (31 December 2010:
GBP3,750 & 30 June 2010: GBP4,058).
Directors' Interest
None of the Directors, who held office during the period or
their families, hold any interest in the Company.
There were no changes in the interests of the Directors prior to
the date of this report.
No Director, other than those listed above, and no connected
person of any Director has any interest, the existence of which is
known to, or could with reasonable diligence be ascertained by that
Director, whether or not held through another party, in the share
capital of the Company.
Rhys Davies and Brett Miller are directors of Damille
Investments Limited which holds 10,000,000 ordinary shares,
representing 17.33% of the issued share capital of the Company.
4. Directors' Fees:
Each of the Directors has entered into an agreement with the
Company providing for them to act as a non-executive director of
the Company. Their annual fees, pro-rata for periods less than one
year, excluding all reasonable expenses incurred in the course of
their duties which will be reimbursed by the Company are as
follows:
31 31
30 June 30 June December December 30 June 30 June
2011 2011 2010 2010 2010 2010
Annual Actual Annual Actual Annual Actual
Fee Fees Fee Fees Fee Fees
-------- -------- --------- --------- --------- ---------
GBP GBP GBP GBP
Rhys
Davies 20,000 10,000 20,000 10,300 - -
Brett
Miller 15,000 7,500 15,000 7,800 - -
David
McHugh 15,000 7,500 15,000 7,331 - -
Rhys Davies and Brett Miller Director fees are paid to Damille
Investments Limited.
With effect from 6 August 2010, the Directors also became
entitled to a communication expense of GBP100 per month.
5. Deficit per Ordinary Share:
Deficit per Ordinary Share for the period ended 30 June 2011 was
1.71p (period ended 30 June 2010: deficit per Ordinary Share
10.76p). Deficit per Ordinary Share is based on the net deficit
from operations for the period of GBP986,112 (30 June 2010: deficit
of GBP6,209,765) and on a weighted average of 57,701,445 (30 June
2010: 57,701,445) Ordinary Shares in issue during the period.
6. Investments:
Fair Value Through 1 January 2011 1 January 2010 1 January 2010
Profit or Loss To To To
Investments: 30 June 2011 31 December 2010 30 June 2010
--------------- ------------------ ---------------
GBP GBP GBP
Investments
listed on
recognised
investment
exchanges 1,425,000 4,811,730 6,947,340
Unlisted
investments 4,105,222 4,391,489 10,664,775
--------------- ------------------ ---------------
5,530,222 9,203,219 17,612,115
=============== ================== ===============
Book cost brought
forward 15,708,192 22,238,901 22,238,901
Purchases - 83,990 60,606
Sales (1,949,209) (6,862,880) (547,575)
Net realised
(gains)/losses
on fair value
through profit
or loss
investments (355,055) 248,181 (508,241)
--------------- ------------------ ---------------
Book cost carried
forward 13,403,928 15,708,192 21,243,691
Net unrealised
(losses)/gains
on fair value
through profit
or loss
investments
brought forward (6,504,973) 260,206 260,206
Movement in net
unrealised
losses on fair
value through
profit or loss
investments (1,368,733) (6,765,179) (3,891,782)
--------------- ------------------ ---------------
Net unrealised
losses on fair
value through
profit or loss
investments
carried forward (7,873,706) (6,504,973) (3,631,576)
Fair value
carried forward 5,530,222 9,203,219 17,612,115
=============== ================== ===============
1 January 2011 1 January 2010 1 January 2010
Loans and To To To
Receivables: 30 June 2011 31 December 2010 30 June 2010
--------------- ------------------ ---------------
GBP GBP
Loans > 1 year 12,202,100 13,007,472 17,219,066
Loans < 1 year 2,414,174 3,120,841 4,095,000
--------------- ------------------ ---------------
14,616,274 16,128,313 21,314,066
=============== ================== ===============
Book cost brought
forward 18,147,254 18,326,833 18,326,833
Loan advanced 47,740 5,726,874 5,142,857
Loan repayments (1,909,277) (5,924,396) (755,000)
Net realised
foreign exchange
gains on loan
repayments 42,708 36,800 -
Net realised
losses on loan
sales** - (18,857) -
--------------- ------------------ ---------------
Book cost carried
forward 16,328,425 18,147,254 22,714,690
Net unrealised
(losses)/gains
on loans
investments
brought forward (2,018,941) 981,820 981,820
Movement in
impairment
charge on loans (200,000) (2,470,211) (1,240,000)
Movement in net
unrealised
foreign exchange
gains/(losses)
on loans
investments 506,790 (530,550) (1,142,444)
--------------- ------------------ ---------------
Net unrealised
losses on loans
investments
carried forward (1,712,151) (2,018,941) (1,400,624)
Amortised cost
carried forward 14,616,274 16,128,313 21,314,066
=============== ================== ===============
1 January 2011 1 January 2010 1 January 2010
To To To
Total Investments: 30 June 2011 31 December 2010 30 June 2010
--------------- ------------------ ---------------
GBP GBP
Investments
listed on
recognised
investment
exchanges* 1,425,000 4,881,730 6,947,340
Unlisted
investments 4,105,222 4,391,489 10,664,775
Loans 14,616,274 16,128,313 21,314,066
--------------- ------------------ ---------------
20,146,496 25,331,532 38,926,181
=============== ================== ===============
Book cost brought
forward 33,855,446 40,565,734 40,565,734
Purchases of
investment - 83,990 60,606
Loans advanced 47,740 5,726,874 5,142,857
Sales of
investments (1,949,209) (6,862,880) (547,575)
Loan repayments (1,909,277) (5,924,396) (755,000)
Net realised
gains on fair
value through
profit or loss
investments (355,055) 248,181 (508,241)
Net realised
foreign exchange
gains on loan
repayments 42,708 36,800 -
Net realised
losses on loan
sales** - (18,857) -
--------------- ------------------ ---------------
Book cost carried
forward 29,732,353 33,855,446 43,958,381
Net unrealised
gains on
investments
brought forward (8,523,914) 1,242,026 1,242,026
Movement in net
unrealised
losses on fair
value through
profit or loss
investments (1,368,733) (6,765,179) (3,891,782)
Movement in
impairment
charge on loans (200,000) (2,470,211) (1,240,000)
Movement in net
unrealised
foreign exchange
losses on loans
investments 506,790 (530,550) (1,142,444)
--------------- ------------------ ---------------
Net unrealised
(losses)/gains
on fair value
through profit
or loss
investments
carried forward (9,585,857) (8,523,914) (5,032,200)
Investments
carried forward 20,146,496 25,331,532 38,926,181
=============== ================== ===============
*representing 6.06% (31 December 2010: 16.75% & 30 June
2010: 12.81%) of Total Net Assets
**As a result of a loan sale to third party
7. Other Receivables:
30 June 2011 31 December 2010 30 June 2010
------------- ----------------- -------------
GBP GBP GBP
Loan note interest
receivable* 976,391 582,468 734,561
Investment sales
receivable 300,000 544,352 105,125
Prepayments 16,470 65,213 46,823
------------- ----------------- -------------
1,292,861 1,192,033 886,509
============= ================= =============
*Loan note interest receivable is shown net of Accrued loan
interest written off amounting to GBP21,472 (31 December 2010:
GBP80,743 & 30 June 2010:GBP559,053).
The Directors consider that the carrying amount of other
receivables approximates fair value.
8. Cash and Cash Equivalents:
30 June 2011 31 December 2010 30 June 2010
------------- ----------------- -------------
GBP GBP GBP
Cash at bank 2,113,503 2,698,579 14,913,726
============= ================= =============
9. Other Payables:
30 June 2011 31 December 2010 30 June 2010
------------- ----------------- -------------
GBP GBP GBP
Fees received in
advance - - 373,202
Administration fee - 27,720 20,288
Custodian fee - 3,750 4,058
Legal and professional - 13,290 17,231
NOMAD fee - - 10,000
Audit fee 16,663 36,750 18,224
Directors' fees - 2,090 24,519
Registrar's fee 1,995 2,017 1,995
Other payables 403 500 6,247
------------- ----------------- -------------
19,061 86,117 475,764
============= ================= =============
The Directors consider that the carrying amount of other
payables approximates fair value.
10. Share Capital:
30 June 2011
31 December 2010
&
30 June 2010
-----------------
Authorised Share Capital GBP
Unlimited Shares of no par value that may be -
issued as Ordinary Shares
-----------------
-
=================
No allotted, issued and fully paid shares were issued or paid
for during the period ended 30 June 2011 (period ended 30 June
2010: GBPnil).
On 18 July 2007 the holders of the Subscriber Shares, Praxis
Nominees Limited and Praxis Fund Services Limited, passed a written
resolution approving the cancellation of the entire amount which
stood to the credit of the share premium account immediately after
the Placing, conditionally upon the issue of the Ordinary Shares
and the payment in full thereof and with respect to any further
issue of Ordinary Shares. The cancellation was confirmed by the
Royal Court on 23 November 2007. The cancelled share premium of
GBP57,677,695 was transferred to the distributable reserve.
By a resolution dated 18 July 2007 the holders of the Subscriber
Shares in the Company granted the Company the authority to make
market purchases of up to 14.99% of its own issued Ordinary Shares
following the conclusion of the Placing. This authority expired at
the earlier of the date 18 months following the passing of such
resolution and the conclusion of the first annual general meeting
of the Company. A renewal of the authority to make purchases of
Ordinary Shares was passed at the last annual general meeting, held
on 14 July 2009, and will be sought from Shareholders at each
subsequent annual general meeting of the Company. As at 30 June
2011 the Company held none (31 December 2010: none & 30 June
2010: none) of its own Ordinary Shares in treasury with all
57,701,445 Ordinary Shares remaining in the market (31 December
2010: 57,701,445 & 30 June 2010: 57,701,445).
On 28 September 2010, in accordance with the Company's Capital
Return Scheme authorised at the Annual General Meeting on 14
September 2010, the Company returned to Ordinary Shareholders 23p
per Share by the way of a bonus issues of B Shares to Ordinary
Shareholders on the Company's register on the record date of 14
September 2010. Following their issues the B Shares were
immediately redeemed by the Company on a pro rata basis and paid to
the Ordinary Shareholders of B Shares, the aggregate amount
returned being GBP13.8 million.
On 26 November 2010, in accordance with the Company's Capital
Return Scheme, the Company paid to Ordinary Shareholders a return
of capital of 11p per B Share, amounting to GBP6.3 million in
aggregate.
On 17 December 2010, in accordance with the Company's Capital
Return Scheme, the Company paid to Ordinary Shareholders a return
of capital of 5p per B share, amounting to GBP2.9 million.
On 9 February 2011, in accordance with the Company's Capital
Return Scheme, the Company paid to Ordinary Shareholders a return
of capital of 5p per B share, amounting to GBP2.9 million.
On 5 May 2011, in accordance with the Company's Capital Return
Scheme, the Company paid to Ordinary Shareholders a return of
capital of 3p per B share, amounting to GBP1.7 million.
11. Net Asset Value per Ordinary Share:
The net asset value per Ordinary Share as at 30 June 2011 is
40.79p (31 December 2010: 50.49p & 30 June 2010: 94.02p). The
net asset value per Ordinary Share is based on the net assets
attributable to equity ordinary shareholders of GBP23,533,799 (31
December 2010: GBP29,136,027 & 30 June 2010: GBP54,250,652) and
on the period end number of Ordinary Shares in issue of 57,701,445
(31 December 2010: 57,701,445 & 30 June 2010: 57,701,445).
12. Financial Instruments:
(a) Significant accounting policies:
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of its financial assets, including
convertible loan notes, and financial liabilities are disclosed in
note 2 to these financial statements.
(b) Categories of financial instruments:
Financial instruments comprise equities, warrants, convertible
loan notes and cash and cash equivalents. The warrants are
derivative instruments and have been classified as held for trading
and are accounted for as fair value through profit or loss.
Investments in convertible loan notes have been classified as loans
and receivables. All other financial instruments have been
classified as fair value through profit or loss. As at 30 June
2011, the fair value of the Company's financial assets was
GBP22,259,999 (31 December 2010: GBP28,030,111 & 30 June 2010:
GBP53,839,906). This was 94.59% (31 December 2010: 96.20% & 30
June 2010: 99.33%) of net assets attributable to ordinary
shareholders.
(b) Categories of financial instruments, continued:
Percentage of net
assets attributable
to holders of Ordinary
At 30 June 2011: Fair Value Shares
--------------------------------------- ----------- ------------------------
Assets GBP %
Financial assets at fair
value through profit or
loss:
Listed equity securities 1,425,000 6.06
Unlisted equity securities 4,105,222 17.44
----------- ------------------------
5,530,222 23.50
Loans and receivables*:
Loans 14,616,274 62.11
Cash and cash equivalents 2,113,503 8.98
----------- ------------------------
22,259,999 94.59
=========== ========================
Percentage of net
assets attributable
to holders of Ordinary
At 31 December 2010: Fair Value Shares
--------------------------------------- ----------- ------------------------
Assets GBP %
Financial assets at fair
value through profit or
loss:
Listed equity securities 4,811,730 16.51
Unlisted equity securities 4,391,489 15.07
----------- ------------------------
9,203,219 31.58
Loans and receivables*:
Loans 16,128,313 55.36
Cash and cash equivalents 2,698,579 9.26
----------- ------------------------
28,030,111 96.20
=========== ========================
Percentage of net
assets attributable
to holders of Ordinary
At 30 June 2010: Fair Value Shares
--------------------------------------- ----------- ------------------------
Assets GBP %
Financial assets at fair
value through profit or
loss:
Listed equity securities 6,947,340 12.81
Unlisted equity securities 10,664,775 19.66
----------- ------------------------
17,612,115 32.47
Loans and receivables*:
Loans 21,314,066 39.29
Cash and cash equivalents 14,913,726 27.48
----------- ------------------------
53,839,907 99.24
=========== ========================
* Amortised cost is not considered to be materially different
from fair value
There are no financial liabilities.
Fair values versus carrying amounts
The Directors consider that the carrying amount of financial
instruments is equal to fair value.
(b) Categories of financial instruments, continued:
Classification of Fair Value Measurements
The Company adopted the amendment to IFRS 7, effective 1 January
2009. This requires the Company to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
has the following levels:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1);
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2); and
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, the measurement is a level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes "observable" requires
significant judgement by the Company. The Company considers
observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
The following table analyses within the fair value hierarchy the
Company's financial assets (by class) measured at fair value at 30
June 2011:
Fair Value as at 30 June 2011
Level Level
1 2 Level 3 Total
-------------------- ---------------- --------------------- ---------------------
GBP GBP GBP GBP
Fair value
through
profit or
loss 1,425,000 - 4,105,222 5,530,222
Loans and
receivables - - 14,616,274 14,616,274
-------------------- ---------------- --------------------- ---------------------
1,425,000 - 18,721,496 20,146,496
==================== ================ ===================== =====================
Fair Value as at 31 December 2010
Level Level
1 2 Level 3 Total
-------------------- ---------------- --------------------- ---------------------
GBP GBP GBP GBP
Fair value
through
profit or
loss 4,811,730 - 4,391,489 9,203,219
Loans and
receivables - - 16,128,313 16,128,313
-------------------- ---------------- --------------------- ---------------------
4,811,730 - 20,519,802 25,331,532
==================== ================ ===================== =====================
Fair Value as at 30 June 2010
Level Level
1 2 Level 3 Total
-------------------- ----------------- --------------------- ---------------------
GBP GBP GBP GBP
Fair value
through
profit or
loss 6,928,340 19,000 10,664,775 17,612,115
Loans and
receivables - - 21,314,066 21,314,066
-------------------- ----------------- --------------------- ---------------------
6,928,340 19,000 31,978,841 38,926,181
==================== ================= ===================== =====================
(b) Categories of financial instruments, continued:
Investments whose values are based on quoted market prices in
active markets, and therefore classified within level 1, include
active listed equities. No adjustments are made to the quoted price
for these instruments.
Financial instruments that trade in markets that are not
considered to be active but are valued based on quoted market
prices, dealer quotations or alternative pricing sources supported
by observable inputs are classified within level 2. As level 2
investments may include positions that are not traded in active
markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability,
which are generally based on available market information. None of
the Company's current investments are level 2 investments.
Investments classified within level 3 have significant
unobservable inputs, as they trade infrequently. Level 3
instruments include corporate compound debt instruments and
unquoted equity instruments which the Company values in accordance
with the International Private Equity and Venture Capital valuation
guidelines. The Company considers liquidity, credit and other
market risk factors.
The table below provides a reconciliation from brought forward
to carried forward balances of financial instruments categorised
under level 3:
1 January 2011 to 30 June 2011
Assets at Fair Value Equity Loan
based on Level 3: investments investments Total
--------------- ------------- ------------
GBP GBP GBP
Fair value brought
forward 4,391,489 16,128,313 20,519,802
Loans advanced - 47,740 47,740
Sales (300,000) - (300,000)
Loan repayments - (1,909,277) (1,909,277)
Net realised gains on
fair value through
profit or loss
investments 50,000 - 50,000
Net realised gains on
loan
repayments/disposals - 42,708 42,708
Movement in
impairment charge on
loans - (200,000) (200,000)
Movement in net
unrealised foreign
exchange gains on
loans investments - 506,790 506,790
Movement in net
unrealised gains on
fair value through
profit or loss
investments (36,267) - (36,267)
--------------- ------------- ------------
Fair value carried
forward 4,105,222 14,616,274 18,721,496
=============== ============= ============
(b) Categories of financial instruments, continued:
1 January 2011 to 31 December 2010
Assets at Fair Value Equity Loan
based on Level 3: investments investments Total
--------------- ------------- ------------
GBP GBP GBP
Fair value brought
forward 15,406,886 19,308,653 34,715,539
Purchases 83,990 - 83,990
Loans advanced - 5,726,874 5,726,874
Sales (3,857,476) - (3,857,476)
Loan repayments - (5,924,396) (5,924,396)
Net realised gains on
fair value through
profit or loss
investments 2,716,774 - 2,716,774
Net realised gains on
loan
repayments/disposals - 17,943 17,943
Movement in
impairment charge on
loans - (2,470,211) (2,470,211)
Movement in net
unrealised foreign
exchange losses on
loans investments - (530,550) (530,550)
Movement in net
unrealised gains on
fair value through
profit or loss
investments (9,958,685) - (9,958,685)
--------------- ------------- ------------
Fair value carried
forward 4,391,489 16,128,313 20,519,802
=============== ============= ============
1 January 2011 to 30 June 2010
Assets at Fair
Value based on Loan
Level 3: Equity investments investments Total
------------------- ------------- ------------
GBP GBP GBP
Fair value
brought forward 15,406,886 19,308,653 34,715,539
Purchases 60,606 - 60,606
Loans advanced - 5,142,857 5,142,857
Loan repayments - (755,000) (755,000)
Movement in net
unrealised
foreign exchange
losses on loans
investments - (2,382,444) (2,382,444)
Movement in net
unrealised gains
on fair value
through profit
or loss
investments (4,802,717) - (4,802,717)
------------------- ------------- ------------
Fair value
carried forward 10,664,775 21,314,066 31,978,841
=================== ============= ============
(c) Net gains and losses on financial assets:
Movement in Movement in net Net realised
Period ended net unrealised unrealised gains/(losses)
30 June 2011 gains/(losses) impairment on disposals
------------------------- --------------- ---------------- ----------------
GBP GBP GBP
Financial
assets at
fair value
through
profit or
loss:
Listed equity
securities (1,332,465) - (405,055)
Unlisted
equity
securities (36,267) - 50,000
--------------- ---------------- ----------------
(1,368,732) - (355,055)
Loans and
receivables:
Loans 506,790 (200,000) 42,708
--------------- ---------------- ----------------
(861,942) (200,000) (312,347)
=============== ================ ================
(b) Categories of financial instruments, continued:
Year ended 31 Movement in Movement in net Net realised
December net unrealised unrealised gains/(losses)
2010 gains/(losses) impairment on disposals
------------------------- --------------- ---------------- ----------------
GBP GBP GBP
Financial
assets at
fair value
through
profit or
loss:
Listed equity
securities 3,193,506 - (2,399,360)
Unlisted
equity
securities (9,958,685) - 2,647,541
--------------- ---------------- ----------------
(6,765,179) - 248,181
Loans and
receivables:
Loans (530,550) (2,470,211) 17,943
--------------- ---------------- ----------------
(7,295,729) (2,470,211) 266,124
=============== ================ ================
Period ended 30 Movement in net Net realised losses
June 2010 unrealised gains/(losses) on disposals
--------------------------- --------------------------- --------------------
GBP GBP
Financial
assets at fair
value through
profit or
loss:
Listed equity
securities 910,935 (508,241)
Unlisted equity
securities (4,802,718) -
--------------------------- --------------------
(3,891,783) (508,241)
Loans and
receivables:
Loans (2,382,444) -
--------------------------- --------------------
(6,324,227) (508,241)
=========================== ====================
(d) Derivatives:
In accordance with the Company's scheme particulars the Company
may invest in derivatives or forward foreign exchange contracts for
the purpose of efficient portfolio management.
No derivatives were held at the period end (31 December 2010
& 30 June 2010: nil).
13. Financial Risk Management:
Strategy in Using Financial Instruments:
The Company's activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk), credit
risk and liquidity risk. The Company's overall risk management
program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Company's
financial performance.
The Company is currently focusing on realising the investments
that have been made to date. These investments were made in line
with the Company's stated investment policy.
Market Price Risk:
Market price risk results mainly from the uncertainty about
future prices of financial instruments held. It represents the
potential loss the Company may suffer through holding market
positions in the face of price movements and changes in interest
rates or foreign exchange rates, with the maximum risk resulting
from financial instruments being determined by the fair value of
the financial instruments.
All securities investments present a risk of loss of capital.
The Investment Adviser moderates this risk through a careful
selection of securities and other financial instruments within
specified limits. The maximum risk resulting from financial
instruments is determined by the fair value of the financial
instruments. The Company's portfolio and investment strategy is
reviewed continuously by the Investment Adviser and the Investment
Manager and on a quarterly basis by the Board.
Market Price Risk, continued:
The Company's exposure to market price risk arises from
uncertainties about future prices of its investments. This risk is
managed through diversification of the investment portfolio.
Generally the Company will seek not to invest (or commit to invest)
more than 15% of the Company's net assets in any single investment
at the time of investment (or commitment), or more than 15% of the
Company's net assets in special situations (such as investments in
companies already listed) at the time of investment (or
commitment), although such limit may be increased to 30% in certain
cases where the Board deems appropriate on the advice of the
Investment Manager.
At 30 June 2011, the Company's market risk is affected by three
main components: changes in actual market prices, interest rate and
foreign currency movements. Interest rate and foreign currency
movements are shown below. A 10% increase in the value of
investments, with all other variables held constant, would bring
about a 8.56% (31 December 2010: 8.69% & 30 June 2010: 7.18%)
increase in net assets attributable to ordinary shareholders. If
the value of investments had been 10% lower, with all other
variables held constant, net assets attributable to ordinary
shareholders would have fallen by 8.56% (31 December 2010: 8.69%
& 30 June 2010: 7.18%).
Interest Rate Risk:
The Company is exposed to risks associated with the effects of
fluctuations in the prevailing levels of market interest rates on
its financial instruments and future cash flows. The Company is
exposed to interest rate risk as its cash and cash equivalents are
invested at short term rates. All the Company's loan instruments
have fixed rate coupons and therefore are not exposed to risks
associated with the effects of fluctuations in the prevailing
levels of market interest rates. The Investment Manager manages the
Company's exposure to interest rate risk daily in accordance with
the Company's investment objectives and policies. The Company's
overall exposure to interest rate risk is monitored on a quarterly
basis by the Board of Directors.
The table below summarises the Company's exposure to interest
rate risks:
30 June 2011 31 December 2010 30 June 2010
WAEIR* Total WAEIR* Total WAEIR* Total
-------------------- ------- ----------- ------- ----------- ------- -----------
GBP GBP GBP
Assets
Fixed
interest
rate
unquoted
debt
securities 10.47% 14,616,274 10.46% 16,128,313 11.94% 19,308,653
Cash at bank 0.37% 2,113,503 0.38% 2,698,579 0.40% 18,364,927
Non-interest
bearing - 6,823,083 - 10,395,252 - 23,486,331
----------- ----------- -----------
Total assets 23,552,860 29,222,144 61,159,911
=========== =========== ===========
Liabilities
Non-interest
bearing - 19,061 - 86,117 - 699,494
----------- ----------- -----------
Total
liabilities 19,061 86,117 699,494
=========== =========== ===========
* - weighted average effective interest rate
The sensitivity analyses below have been determined based on the
Company's exposure to interest rates for interest bearing assets
and liabilities (included in the interest rate exposure table
above) at the period end date and the stipulated change taking
place at the beginning of the financial period and held constant
through the reporting period in the case of instruments that have
floating rates.
A 50 basis point increase or decrease is used when reporting
interest rate risk internally to key management personnel and
represents management's assessment of the possible change in
interest rates.
If interest rates had been 50 basis points higher and all other
variables were held constant, the Company's net assets attributable
to ordinary shareholders for the period ended 30 June 2011 would
have increased by GBP5,240 (31 December 2010: GBP13,493 & 30
June 2010: GBP37,284) due to the increase in the interest earned on
the Company's cash balances.
Interest Rate Risk, continued:
If interest rates had been 50 basis points lower and all other
variables were held constant, the Company's net assets attributable
to Ordinary shareholders for the period ended 30 June 2011 would
have decreased by GBP3,910 (31 December 2010: GBP10,255 & 30
June 2010: GBP29,827) due to the decrease in the interest earned on
the Company's cash balances.
The Company's sensitivity to interest rates has decreased during
the current period as the Company has continued its Capital Return
Scheme thereby reducing its cash balances that are interest
bearing.
Foreign Currency Risk:
Foreign currency risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
Accordingly, without foreign currency hedging in place, the
Company is at high risk that the value of an investment portfolio
may be significantly affected favourably or unfavourably by
fluctuations in exchange rates. The Company has the ability to
manage this risk through forward foreign exchange contracts to
hedge its exposure back to sterling (see note 12(d) for details of
currency hedging in place as at 30 June 2011).
Currency Exposure:
Some of the net assets of the Company are denominated in
currencies other than Sterling. The carrying amounts of these
assets and liabilities are as follows (these assets and liabilities
do not include amounts receivable/payable on open forward foreign
currency contracts and are pre currency hedging exposures):
30 June 2011
Assets Liabilities Net
GBP GBP GBP
Australian Dollar 735,222 - 735,222
British Pound 12,016,551 (19,061) 11,997,490
Euro 10,801,087 - 10,801,087
---------- ----------- ----------
23,552,860 (19,061) 23,533,799
========== =========== ==========
31 December 2010
Assets Liabilities Net
GBP GBP GBP
Australian Dollar 721,489 - 721,489
British Pound 17,174,266 (86,117) 17,088,149
Euro 11,326,389 - 11,326,389
---------- ----------- ----------
29,222,144 (86,117) 29,136,027
========== =========== ==========
30 June 2010
Assets Liabilities Net
GBP GBP GBP
Australian Dollar 618,812 - 618,812
British Pound 36,313,018 (102,563) 36,210,455
Euro 17,794,586 (373,202) 17,421,384
---------- ----------- ----------
54,726,416 (475,765) 54,250,651
========== =========== ==========
Currency Exposure, continued:
The Company is exposed to Euro and Australian Dollar currency
risk. The Company has the ability to manage this risk through
forward foreign exchange contracts to minimise the impact of any
currency movements.
The sensitivity analysis below has been determined based on the
sensitivity of the Company's outstanding foreign currency
denominated financial assets and liabilities to a 20% increase /
decrease in the Sterling against Australian Dollar and Euro,
translated at the period end date.
The following details the Company's sensitivity to a 20%
increase / decrease in foreign currency rates. 20% is the
sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents management's
assessment of the possible change in foreign exchange rates.
As at 30 June 2011 if sterling had weakened by 20% against the
Australian Dollar and Euro, with all other variables held constant,
the increase in net assets attributable to Ordinary Shares would
have been 9.80% (31 December 2010: 8.27% & 30 June 2010: 6.65%)
lower. Conversely, if Sterling had strengthened by 20% against the
Australian Dollar and Euro, with all other variables held constant,
the decrease in net assets attributable to ordinary shareholders
would have been 9.80% (31 December 2010: 8.27% & 30 June 2010:
6.65%) higher.
Liquidity Risk:
Liquidity risk is the risk that the Company will encounter in
realising assets or otherwise raising funds to meet financial
commitments.
It is the aim of the Company to invest in companies which are
likely to achieve a listing or realisation within six to thirty-six
months.
Maturity Analysis:
The table below shows the maturity analysis of the Company's
assets and liabilities as at 30 June 2011:
At 30 June Less than 1-12 No fixed
2011 1 month months 1-3 years 3-5 years maturity Total
-------------------- ---------- ---------- ---------- ---------- ---------- -----------
GBP GBP GBP GBP GBP
Assets
Fixed
interest
rate
unquoted
debt
securities - 2,414,174 7,903,746 4,298,354 - 14,616,274
Cash at bank 2,113,503 - - - - 2,113,503
Non-interest
bearing 812,085 480,776 - - 5,530,222 6,823,083
---------- ---------- ---------- ---------- ---------- -----------
Total assets 2,925,588 2,894,950 7,903,746 4,298,354 5,530,222 23,552,860
========== ========== ========== ========== ========== ===========
Liabilities
Non-interest
bearing - - - - 19,061 19,061
---------- ---------- ---------- ---------- ---------- -----------
Total
liabilities - - - - 19,061 19,061
========== ========== ========== ========== ========== ===========
Liquidity Risk, continued:
At 31
December Less than 1-12 No fixed
2010 1 month months 1-3 years 3-5 years maturity Total
-------------------- ---------- ---------- ---------- ---------- ---------- -----------
GBP GBP GBP GBP GBP
Assets
Fixed
interest
rate
unquoted
debt
securities - 3,120,841 7,568,268 5,439,204 - 16,128,313
Cash at bank 2,698,579 - - - - 2,698,579
Non-interest
bearing 1,077,564 114,469 - - 9,203,219 10,395,252
---------- ---------- ---------- ---------- ---------- -----------
Total assets 3,776,143 3,235,310 7,568,268 5,439,204 9,203,219 29,222,144
========== ========== ========== ========== ========== ===========
Liabilities
Non-interest
bearing - - - - 86,117 86,117
---------- ---------- ---------- ---------- ---------- -----------
Total
liabilities - - - - 86,117 86,117
========== ========== ========== ========== ========== ===========
At 30 June Less than 1-12 No fixed
2010 1 month months 1-3 years 3-5 years maturity Total
-------------------- ----------- ---------- ---------- ----------- ----------- -----------
GBP GBP GBP GBP GBP
Assets
Fixed
interest
rate
unquoted
debt
securities - 4,095,000 5,639,460 11,579,606 - 21,314,066
Cash at bank 14,913,726 - - - - 14,913,726
Non-interest
bearing 706,318 180,191 - - 17,612,115 18,498,624
----------- ---------- ---------- ----------- ----------- -----------
Total assets 15,620,044 4,275,191 5,639,460 11,579,606 17,612,115 54,726,416
=========== ========== ========== =========== =========== ===========
Liabilities
Non-interest
bearing - - - - 475,765 475,765
----------- ---------- ---------- ----------- ----------- -----------
Total
liabilities - - - - 475,765 475,765
=========== ========== ========== =========== =========== ===========
Credit Risk:
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company.
To the extent that the Company invests in customised financial
instruments or non-UK securities, the Company takes the risk of
non-performance by the other party to the contract. This risk may
include credit risk of the counterparty and the risk of settlement
default. This risk may differ materially from those entailed in UK
exchange-traded transactions which generally are supported by
guarantees of clearing organisations, daily marking-to-market and
settlement, and segregation and minimum capital requirements
applicable to intermediaries. Transactions entered directly between
two counterparties generally do not benefit from such protections
and expose the parties to the risk of counterparty default. In
addition, there are risks involved in dealing with the custodians
or brokers who settle trades particularly with respect to non-UK
investments.
At the reporting date financial assets exposed to credit risk
include loan instruments and derivatives disclosed in note 12 to
these financial statements. It is the opinion of the Board of
Directors that the maximum exposure to credit risk that the Company
faces is equal to the carrying value of these financial instruments
held by the Company.
Credit Risk continued:
The loan instruments are private loans with the underlying
counterparties and as such do not have associated agency credit
ratings. To mitigate the credit risk on these loan instruments the
Directors consider impairment on an ongoing basis also taking into
consideration the results of any reviews performed by the
Investment Manager. As at 30 June 2011, GBP200,000 impairment
charges (31 December 2010: GBP2,470,211 & 30 June 2010:
GBP1,240,000) have been recognised in the Unaudited Statement of
Total Comprehensive Income (see note 2(f)).
The credit risk on cash transactions and transactions involving
derivative financial instruments is mitigated by transacting with
counterparties that are regulated entities subject to prudential
supervision, or with high credit-ratings assigned by international
credit-rating agencies.
In accordance with the investment restrictions as described in
its Placing Document, the Company will generally not invest more
than 15% of its total net assets in any one underlying company
(calculated at the time of any relevant investment being made).
As at 30 June 2011, the following amounts on debt instruments
were past due:
30 June 2011 31 December 2010 30 June 2010
------------- ----------------- -------------
GBP GBP GBP
Principal default - - -
Interest default* 21,472 80,743 80,743
*As at 30 June 2011, 31 December 2010 and 30 June 2010 the
interest owed on debt instruments that was either past due or not
considered recoverable and had been written off as "loan interest
receivable written off" in the Statement of Total Comprehensive
Income.
Concentration Risk
Concentration risk may arise if the Company's investments are
concentrated in a low number of investments each representing a
relatively large percentage of the Company's net assets. At times
the Company may hold a relatively small number of investments each
representing a relatively large portion of the Company's net
assets. Losses incurred in such investments could have a materially
adverse effect on the Company's overall financial condition. Whilst
the Company's portfolio is diversified in terms of the companies in
which it invests, the investment portfolio of the Company may be
subject to more rapid change in value than would be the case if the
Company were required to maintain a wider diversification among
types of securities, countries and industry groups.
14. Dividend:
The Directors do not recommend the payment of a dividend for the
period ended 30 June 2011 (period ended 30 June 2010: GBPnil).
15. Return of Capital:
At the annual general meeting of the Company held 14 September
2010, the Company passed a resolution approving a scheme for
returning capital to shareholders by way of a bonus issue of new B
Shares (the "Capital Return Scheme"). A resolution was also passed
for the adoption of amended and restated articles of incorporation
which allow the Board to capitalise, by the issue of B Shares,
amounts standing to the credit of the Company's Distributable
Reserve and which represent the capital returns from the
realisation of investments by the Company.
Capital returns to Ordinary Shareholders entail the Company
making a bonus issue of new B Shares which are immediately redeemed
by the Company on a pro-rata basis.
On 28 September 2010, in accordance with the Company's Capital
Return Scheme authorised at the Annual General Meeting on 14
September 2010, the Company returned to Ordinary Shareholders 23p
per Share by the way of a bonus issues of B Shares to Ordinary
Shareholders on the Company's register on the record date of 14
September 2010. Following their issues the B Shares were On 26
November 2010, in accordance with the Company's Capital Return
Scheme, the Company paid to Ordinary Shareholders a return of
capital of 11p per B Share, amounting to GBP6.3 million in
aggregate.
On 17 December 2010, in accordance with the Company's Capital
Return Scheme, the Company paid to Ordinary Shareholders a return
of capital of 5p per B share, amounting to GBP2.9 million.
On 9 February 2011, in accordance with the Company's Capital
Return Scheme, the Company paid to Ordinary Shareholders a return
of capital of 5p per B share, amounting to GBP2.9 million.
On 5 May 2011, in accordance with the Company's Capital Return
Scheme, the Company paid to Ordinary Shareholders a return of
capital of 3p per B share, amounting to GBP1.7 million.
16. Taxation:
The Income Tax Authority of Guernsey has granted the Company
exemption from Guernsey income tax under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989 and the income of the Company
may be distributed or accumulated without deduction of Guernsey
income tax. Exemption under the above mentioned Ordinance entails
payment by the Company of an annual fee of GBP600 each. It should
be noted, however, that interest and dividend income accruing from
the Company's investments may be subject to withholding tax in the
country of origin.
The Company has not suffered any withholding tax during the
period (period ended 30 June 2010: GBPnil).
17. Capital Management:
The Directors may exercise the powers of the Company to borrow
money and to give security over its assets. The Company may borrow
funds secured on its investments if the Board (with the advice of
Cenkos Fund Managers Limited) considers that satisfactory
opportunities for investment arise, however in view of the new
investment objective policy there are no plans to borrow any such
funds. In any event, borrowing will be limited to 25 per cent. of
the Company's last announced NAV at the time of draw down. The
Company may also be indirectly exposed to the effects of gearing to
the extent that investee companies have outstanding borrowings.
18. Post Period End Events:
On 15 July 2011, in accordance with the Company's Capital Return
Scheme, the Company paid to Ordinary Shareholders a return of
capital of 6.5p per B share, amounting to GBP3.8 million.
There are no other significant post period end events that
require disclosure in these financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFFFIMFFSEDU
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