At the reporting date cash and or cash equivalents comprise cash
at bank. As detailed in Note 1(b), all expenses of the Company are
borne by BNP, with income being received from BNP for the payment
of Company expenses. Any excess of income received from BNP for
payment of expenses is accounted for as cash and cash equivalents
attributable to the holders of Management Shares. This includes a
balance of GBP250,000 which is held in trust for use by the Board
as set out in 1(b) above.
(h) Income recognition
Dividend income is recognised in the Statement of Comprehensive
Income when the relevant cell's right to receive the dividend has
been established, normally being the ex-dividend date. Dividend
income is recognised on a gross basis, including withholding tax,
if any.
Income received from BNP is recognised in the Statement of
Comprehensive Income on an accruals basis.
(i) Financial assets at fair value through profit or loss
All investments and derivative financial instruments are
classified as "at fair value through profit or loss". Investments
are initially recognised at cost, being the fair value of the
consideration given. After initial recognition, investments are
measured at fair value, with unrealised gains and losses on
investments and changes in fair value of investments being
recognised in the Statement of Comprehensive Income.
The Company seeks to achieve the investment objective of each
cell by entering into a contract with BNP Paribas (referred to
herein as the "Counterparty").
Each contract is substantially in the form of an ISDA Master
Agreement as supplemented by a transaction confirmation. In respect
of each contract, within BNP Paribas Group (the "Group"), the Risk
department is responsible for the day-to-day risk monitoring and
contributes to the control of the economic fair value of the
Group's trading books. This risk function department is separate
and independent from the Trading and Sales departments.
This department is also responsible for the validation and
control of any valuation models.
(j) Gain / (loss) per share
The gain / (loss) per share is based on the increase /
(decrease) in net assets attributable to Preference shareholders
from operations of the Company for the year of GBP965,008 (2012:
GBP20,857,817 net loss) and on 320,347,665 (2012: 581,836,358)
shares, being the weighted average number of shares in issue during
the year. There were no dilutive instruments in issue during the
year.
(k) Trade date accounting
All "regular way" purchases and sales of financial assets are
recognised on the "trade date" i.e. the date that the entity
commits to purchase or sell the asset. Regular way purchases or
sales are purchases or sales of financial assets that require
delivery of the asset within the time frame generally established
by the regulation or convention in the market place.
(l) Distributions payable to holders of redeemable shares
Proposed distributions to holders of redeemable shares are
recognised in the Statement of Comprehensive Income when they are
declared by the Board of directors. The distribution on these
redeemable shares is recognised in the Statement of Comprehensive
Income as a finance cost.
(m) Going concern
The directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. The directors believe the Company is well
placed to manage its business risks successfully despite the
current economic climate. Accordingly, the directors have adopted
the going concern basis in preparing the financial statements.
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Management make critical accounting estimates and judgements
concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the financial year are outlined below:
(a) Fair value of derivative financial instruments
The Company holds derivatives which are tailored to meet the
Company's respective needs for each cell. As the investments are
not traded in an active market, the fair value of such instruments
is determined by using valuation techniques. The fair value is
calculated weekly and as at each month end by the Counterparty. At
each interim and year end date, an independent check of the
valuations of the investments is performed by Future Value
Consultants Limited (the "Calculation Agent"), an independent third
party. The Calculation Agent uses a variety of methods and makes
assumptions that are based on market conditions existing at the
reporting date. Valuation techniques used include the use of
comparable recent arm's length transactions (where available),
discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants. These
techniques are periodically reviewed by experienced personnel at
the Calculation Agent.
Models use observable data, to the extent practicable. However,
areas such as credit risk (both own and counterparty),
volatilities, capital risk and correlations require management to
make estimates. Changes in assumptions about these factors could
materially affect the reported fair value of financial
instruments.
3 NET ASSETS ATTRIBUTABLE TO HOLDERS OF PREFERENCE SHARES
Year to Year to
31 Oct 2013 31 Oct 2012
Total Total
GBP GBP
Opening portfolio cost 447,141,821 725,661,033
Opening unrealised loss on valuation (100,502,668) (125,369,115)
Opening exchange gains on currency
balances 6,299,484 6,572,445
-------------- --------------
Opening valuation 352,938,637 606,864,363
Proceeds from sales of financial
assets (110,684,599) (232,797,531)
Unrealised gain for the year 95,126,437 24,866,447
Realised losses on investments for
the year (88,011,078) (45,721,681)
Unrealised foreign exchange losses (6,150,351) (270,378)
Realised exchange loss on currency
balances - (2,583)
-------------- --------------
Closing valuation 243,219,046 352,938,637
============== ==============
Closing portfolio cost 248,446,144 447,141,821
Closing unrealised loss (5,376,231) (100,502,668)
Closing exchange gains on currency
balances 149,133 6,299,484
-------------- --------------
Closing valuation 243,219,046 352,938,637
============== ==============
IFRS 7 requires fair value measurements to be disclosed by the
source of inputs, using the following three-level hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
-- Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (Level 2)
-- Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3)
The financial assets held by the Company have been classified as
Level 2. This is in accordance with the fair value hierarchy.
There have been no transfers between Level 2 and Level 3 of the
fair value hierarchy during the year under review.
4 SHARE CAPITAL
Authorised SHARES GBP
Preference shares of no par value
each Unlimited -
Management Shares of no par value 2 -
---------- ----
2 -
========== ====
Shares issued
Allotted, called-up as at 1 Shares issued
and fully paid November Shares Redeemed Shares Issued as at 31 October
Preference Shares 2012 2013
UK HI Cell - - - -
EBM2 Cell - - - -
ES Cell - - - -
Abs Pro Cell - - - -
US HI A Cell 92,469,987 (92,469,987) * - -
US HI B Cell 58,337,229 (58,337,229) * - -
Agrinvest Cell 47,225,896 (47,225,896) * - -
EPR Cell 30,125,000 - - 30,125,000
EBM3 Cell 49,587,600 - - 49,587,600
EI Cell 39,999,346 - - 39,999,346
UK EI Cell 49,015,722 - - 49,015,722
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