TIDMARCL
RNS Number : 7248Y
Altus Resource Capital Limited
26 February 2013
Altus Resource Capital Limited
Half-Yearly
Financial Report
from 1 July 2012 to 31 December 2012 (Unaudited)
SUMMARY INFORMATION
Company Overview
Overview
Altus Resource Capital Limited ("ARC" or the "Company") is a
Guernsey authorised, closed-ended investment company incorporated
on 30 April 2009, which listed on the Specialist Fund Market (the
"SFM") of the London Stock Exchange on 30 June 2009 and the Channel
Islands Stock Exchange (the "CISX") on 22 December 2009.
The Company's objective is to realise capital growth from a
concentrated portfolio of Junior Resource Equities and to generate
a significant capital return to shareholders.
The Company's investment activities are managed by Altus Capital
Limited (the "Investment Manager") who report to the Board. The
Investment Manager is a FSA authorised and regulated wholly-owned
subsidiary of Altus Strategies Limited.
The Company issued 26,000,000 ordinary shares at GBP1.00 per
share on 30 June 2009 and a further 10,997,233 ordinary shares at
GBP1.33 per share on 22 December 2009. On 2 August 2010 a further
2,722,336 ordinary shares were issued at GBP1.40 per share.
The group comprises the Company and its subsidiary Altus Global
Gold Limited (together the "Group") as detailed in note 7 to the
Consolidated Financial Statements.
Altus Global Gold Limited is an authorised open-ended investment
company incorporated under the laws of Guernsey on 10 October 2011
with registered number 54069. It listed on the CISX on 1 November
2011.
Altus Global Gold Limited was established to realise capital
growth from a portfolio of gold and precious metals equities, with
the aim of generating a significant capital return to shareholders.
It invests in mid-tier and major gold and precious metals companies
with a focus on mid-tier producers.
The Company invested GBP5,000,000 in its subsidiary company
Altus Global Gold Limited in October 2011.
The financial year end of Altus Global Gold Limited is 30 June,
which is co-terminus with the financial year end of the Company
Investment Objectives and Policy
The Company's objective is to realise capital growth from a
concentrated portfolio of Junior Resource Equities and to generate
a significant capital return to shareholders.
The Company invests in companies engaged in the exploration,
development and mining of metals and minerals with a focus on
companies that operate in the gold sector. Portfolio companies will
be predominantly, but not exclusively, listed or quoted on either
UK markets or other recognised stock exchanges including the
Canadian and Australian markets. They will typically be capitalised
at less than GBP500 million at the time of investment by the
Company.
CHAIRMAN'S STATEMENT AND INTERIM MANAGEMENT REPORT
I hereby present the Half-Yearly Financial Report of the Company
for the period between 1 July 2012 and 31 December 2012 (the
"Period"). The Company's unaudited Net Asset Value ("NAV") lost
5.2% to end the Period at GBP57.5 million or GBP1.45 per ordinary
share.
The global economic outlook was generally more benign at the end
of the Period than it was at the start although significant
uncertainty still prevails. During the Period, the US launched QE3,
re-elected President Obama and avoided going over the "fiscal
cliff", at least for now. In Europe, the European Stability
Mechanism (ESM) and banking union have been established and the
collapse of the single currency has been averted for now, but the
anti-austerity protest is gaining traction and economic recovery is
still proving elusive. China, which has been a major engine for
global growth over the last decade, has seen its GDP growth shrink
to more sustainable but still impressive levels and the ushering in
of a new leadership. Political instability continues to dominate in
North Africa and the Middle East with the civil war in Syria seeing
no sign of resolution, the recent Islamic uprising in Mali and
continued violence in Egypt and Libya. Israel's recent election has
seen the country move further to the right.
The gold price remains fairly range bound ending the Period up
4.9% at US$1,675 per ounce against a weakening US dollar which fell
2.3%. Other metals also generally performed well during the Period
with CRB US Spot Metals Index rising 12.1%, the lead price rising
25.4% and palladium rising 20.9%.
Gold equities under-performed the gold price although by less
than in previous periods with the FTSE Gold Mines Index and the
S&P/ TSX Gold Index rising 1.4% and 1.8% respectively. The FTSE
350 Mining Index gained 12.3% over the Period but junior resource
companies comprising the FTSE AIM Basic Resources Index ended the
Period down 5.0%.
Following the last few years of underperformance, the mining
sector has been re-focusing on delivering shareholder returns. CEOs
of poor-performing companies have been replaced and capital is
being increasingly allocated to deliver economic returns rather
than simply resource or production growth. The Company remains
well-positioned to benefit from the out-performance of well managed
junior resource equities with robust projects.
The Company remains invested in Altus Global Gold Limited, a
Guernsey registered open-ended investment company established and
managed by Altus Capital Limited, seed-financed by the Company and
admitted to the Official List of the ClSX (Mnemonic: AGGL) in
November 2011. The investment provides exposure to a concentrated
portfolio of primarily mid-tier gold equities and reflects the
Investment Manager's conviction that the fundamentals for the gold
price remain robust and that, following the significant divergence
of gold equities from the gold price, substantial returns can be
delivered from investing in quality gold producers.
A description of the important events that have occurred during
the Period and their impact on the condensed set of financial
statements is included in the Investment Manager's Report, and
includes a description of the principal risks and uncertainties,
along with Note 15 in the financial statements. Details of all
related party transactions are given in Note 16. Other than the
information set out in this report, the Board is not aware of any
events during the Period, which would have had a material impact on
the financial position of the Company.
On behalf of the Board of Directors, I thank all shareholders
for their support.
Nick Falla
Chairman
INVESTMENT MANAGER'S REPORT
The gold price gained 4.9% to US$1,675 per ounce over the Period
benefitting from the US Federal Reserve's introduction of QE3 and a
weakening of the US dollar. Other metals generally rebounded after
a weak first half of 2012 with the CRB US Spot Metals Index rising
12.1% over the Period.
Gold equities continued to underperform the gold price although
rose during the Period with the FTSE Gold Mines Index and the
S&P/ TSX Gold Index rising 1.4% and 1.8% respectively. This
prolonged period of underperformance has seen major gold mining
indices trading at the similar levels to those at the beginning of
2006 when the gold price was US$540 per ounce, a third of its
current price. Non-gold miners have also underperformed over the
longer-term although not by the same margin as gold equities. Over
the Period the FTSE 350 Mining Index, comprising major diversified
miners, performed in line with the CRB US Spot Metals Index rising
12.1% but the FTSE AIM Basic Resource Index comprised of junior
resource equities fell 5.0%.
This underperformance of equities may be attributed to a number
of factors including investor apathy to the equity markets, the
rise to prominence of commodity ETFs and the failure of mining
companies to deliver shareholder returns. Shareholders are
beginning to hold management teams to account for misallocation of
capital and under-delivery with the CEOs of a number of companies
being replaced including majors Anglo American, Rio Tinto, Barrick
Gold and Newmont Mining.
Rio Tinto announced the departure of their CEO on 17th January
2013 along with a US$14 billion impairment charge following two
poorly judged acquisitions. US$3 billion of the impairment charge
relates to the Mozambique coal assets Rio Tinto acquired through
the US$4 billion takeover of Riversdale Mining in 2010. The company
has therefore written-down over 75% of their initial investment in
two years. The US$11 billion balance of the impairment relates to
the Alcan aluminium assets acquired three years earlier for US$38
billion. Since then Rio Tinto has written-off a total of US$20
billion and sold other parts of the aluminium business. Other
companies have a similar track record of value destructive M&A
or huge capital expenditure increases.
Barrick Gold has seen the capital expenditure for its Pascua
Lama project on the border between Argentina and Chile rise from
US$1.2 billion in 2005 to the current estimate of US$8-8.5 billion
of which US$4 billion has already been spent. This project clearly
illustrates the old guard's desire for size at the expense of
economic returns and contributed to Barrick replacing their
CEO.
Under significant pressure from their investors, it has become
apparent in the last 12 months that companies are now focusing on
maximising shareholder returns and rejecting the "growth for
growth's sake" mentality.
The investment community has also become increasingly sensitive
to political risk. These risks may relate to wars and uprisings
such as the Islamic insurgency in Mali, terrorist activity such as
the hijacking of the Algerian gas operation, social and community
unrest or interference by governments including tax rises. While in
many cases, these risks can add significantly to the cost of doing
business in a country or make a country un-investable, in other
cases the perceived risks are greater than the reality creating
highly discounted investment opportunities.
The Company retains a concentrated portfolio of quality junior
resource equities. These companies have quality assets and
management teams that are capable of delivering superior
shareholder returns through managing political and operational
risks. The Investment Manager adopts an active approach to trading
the portfolio to take advantage of the volatile short-term price
moves and anomalous valuations.
At the end of the Period the Company held thirty one resource
equities, four precious metal backed ETFs and cash representing
6.2% of assets under management.
Outlook
Altus Capital Limited remains confident that the fundamentals
that have supported a decade of growth for the gold price remain
intact today and that the outlook for gold remains positive over
the medium term. These factors include the continued currency
debasement, low to negative real interest rates and on-going
quantitative easing measures by the major central banks, coupled
with the increasing demand for gold from the burgeoning middle
classes of China and other emerging economies. Gold's status as a
reserve currency has also become increasingly important with its
reinstatement as a tier 1 asset under the Basel III Accord, net
buying by many central banks and the recent move by the Bundesbank
to repatriate Germany's gold reserves held in Paris and New
York.
With an increased focus on delivering shareholder returns, gold
equities that meet their targets are expected to outperform the
gold price going forward. The Investment Manager intends to retain
the Company's weighting towards high quality gold equities with low
cost operations and strong growth profiles.
The fundamentals for many other commodities remain robust driven
by the continued industrialisation and urbanisation of China and
other BRIC economies. With growing demand, a number of commodities
also face increasing supply side constraints. The copper and zinc
industries both face significant mine closures or decreasing
production from a number of major mines over the coming years and
there are insufficient new projects under development to fill the
anticipated deficits. The diamond sector, which has seen diamond
prices under pressure in line with discretionary spending in the
West, has very limited new near term development potential. Any
increase in diamond demand will be difficult for the industry to
satisfy. Uranium is another sector that, following the end of the
HEU agreement at the end of 2013 and delays to a number of major
projects, may struggle to meet demand. Altus Capital Limited
continues to monitor companies operating across the full suite of
metals and minerals but are focused on equities that should benefit
from a strengthening commodity price as well as through delivering
operationally.
The Company is extremely well-positioned to benefit from an
anticipated upswing in the mining sector. Strong stock selection
based on detailed sector knowledge, a concentrated portfolio and an
active trading strategy should generate significant returns to
shareholders, even if the broader resource market remains subdued.
The focus of the portfolio remains on companies with quality assets
that offer resource and/or production growth and should realise
significant share price appreciation as the seasoned management
teams deliver on the ground.
Principal Risks and Uncertainties
The Company is focused on investing in junior resources
companies and is therefore subject to the risks associated with
concentrating its investments in this asset class. The performance
of the Company will be affected by the performance of the
securities of investee companies and is thus subject to the sharp
price volatility of shares of companies principally engaged in
activities related to metals and minerals. Historically the prices
of the commodities have fluctuated significantly and are affected
by numerous factors which the Company cannot predict or control.
Political and economic conditions in metal and mineral producing
countries may have a direct effect on the mining and production of
these metals and minerals, and consequently, on their prices. In
addition, the Company has invested, and will continue to invest in
companies with assets or operations in emerging or developing
markets and will consequently be exposed to various increased risks
associated with investing in such markets.
Investment allocation
At 31 December 2012, the Group's assets were allocated in the
following approximate proportions:
Asset Allocation by Development
Stage
Production 40.8%
Development 28.9%
Exploration 14.1%
Commodity Exposure 10.0%
Cash 6.2%
100.0%
-------
Asset Allocation by Geography
Africa 41.6%
Europe 2.5%
North America 20.3%
South America 2.4%
Asia - Other 5.3%
Australasia 4.5%
Other (including commodity
exposure) 17.2%
Cash 6.2%
100.0%
-------
Asset Allocation by Commodity
Gold 74.1%
Silver 3.1%
Bulk Minerals 6.9%
Base Metals 2.2%
Energy Minerals 3.9%
Platinum Group Metals 1.6%
Diamonds 1.5%
Other 0.5%
Cash 6.2%
100.0%
-------
Source: Altus Capital Limited
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Board of Directors jointly and severally confirm that, to
the best of their knowledge:
(a) The consolidated financial statements, prepared in
accordance with International Financial Reporting Standards, give a
true and fair view of the assets, liabilities, financial position
and profit or loss of the Company; and
(b) This Interim Management Report includes or incorporates by reference:
(i) an indication of important events that have occurred during
the first six months of the financial year and their impact on the
financial statements;
(ii) a description of the principal risks and uncertainties for
the remaining six months of the financial year;
(iii) confirmation that there were no related party transactions
in the first six months of the current financial year that have
materially affected the financial position or the performance of
the Company during that period; and
(iv) changes in the related parties transactions described in
the last annual report that could have a material effect on the
financial position or performance of the Company in the first six
months of the current financial year.
Signed on behalf of the Board of Directors on 26 February
2013.
Nick Falla Robert Milroy
Chairman Director
DIRECTORS
Nicholas J Falla: Chairman (non-executive)
Nicholas Falla has had thirty years of experience in the finance
industry including fourteen years of experience in the commodity
markets. He is currently the Managing Director of Xocoatl Limited a
private investment company taking strategic proprietary positions
in the commodities markets, Finance Director of Pharma E Limited, a
private pharmaceutical supplier, and non-executive director of
Close Assets Funds Limited a closed-ended investment company which
provides a structured investment in the equities markets. Nick was
senior non-executive director of MW Tops Limited, a closed-ended
investment company listed on the London Stock Exchange which
entered into voluntary liquidation in September 2010, whilst
transferring its assets into another investment vehicle. From
1993-2000 Nick worked as the financial controller for Bank of
Bermuda (Guernsey) Limited and from 2000 to 2002 he was their
regional controller for Europe. In addition he has acted as an
interim Financial Director for the Guernsey banking operation of
Credit Suisse Guernsey Limited and has worked on various finance
and accounting based projects with companies such as KPMG (Channel
Islands) and the Blenheim Group. Nick trained as an accountant with
Turquands Barton Mayhew & Co in Guernsey.
David Gelber: Director (non-executive)
David Gelber began his career in trading in 1976 when he joined
Citibank in London. David has since held a variety of senior
trading positions, in derivatives in particular, working for
Citibank, Chemical Bank and HSBC, where he was Chief Operating
Officer of HSBC Global Markets. In 1994 David joined ICAP, an
inter-dealer broker, as COO and assisted in implementing two
mergers, first with Exco plc and then with Garban. David currently
serves as a non-executive director on the boards of eSecLending LLC
in Boston, GlobeOp Financial Services SA in Luxembourg and Walker
Crips Group plc. David is also currently a non executive director
of DDCAP Limited, a leading arranger of Islamic banking
transactions and of Exotix Limited, an investment banking boutique
specialising in illiquid assets. David is also currently a
non-executive director of Intercapital Private Group Limited, a
holding company invested in ICAP plc and CityIndex Limited, a
spread-betting and contracts for difference provider. David has a
B.Sc in statistics and law from the University of Jerusalem and an
M.Sc in computer science from the University of London.
Robert Milroy: Director (non-executive)
Robert Milroy is Chairman of Milroy Capital Limited, a company
which invests in and manages various Mining and Energy related
projects. He is a director of Corazon Fund Management Limited, a
division of Collins Stewart Hawkpoint (CI) Limited, a Guernsey
regulated investment management and stock-broking company and was
previously the Managing Director and CIO of Corazon Fund Management
Limited (1996-2010), prior to its acquisition by Collins Stewart
Hawkpoint in 2010. He has over 40 years experience in the
investment, mining and petroleum industries having participated and
worked in various mining, oil exploration projects and financings
in Chile, Peru, Argentina, Ghana, Canada, USA, Mexico, Australia
and Greenland. In addition, he was the Managing Director of Eagle
Drilling Inc. for 13 years, a firm that specialised in hard rock
diamond core drilling in Central and Western Africa. Robert is also
a noted speaker and financial author of various publications
including the Standard & Poor's Guide to Offshore Investment
Funds. Robert graduated with a Bachelor of Commerce (Honours) from
the University of Manitoba and is a director on a number of Mining
and Energy related companies. Robert is also a director of Altus
Global Gold Limited.
David Netherway (non-independent non-executive)
David Netherway is a mining engineer with over 35 years of
experience in the mining industry and until the takeover by Gryphon
Minerals Limited, was the CEO of Shield Mining Limited, an
Australian listed exploration company. David has now joined the
Gryphon Board. David was involved in the construction and
development of the Iduapriem, Siguiri and Kiniero gold mines in
West Africa and has mining experience in Africa, Australia, China,
Canada, India and the Former Soviet Union. David served as the CEO
of Toronto listed Afcan Mining Corporation, a China focused gold
mining company that was sold to Eldorado Gold in 2005. David has
also held senior management positions in a number of gold mining
companies including Golden Shamrock Mines, Ashanti Goldfields and
Semafo Inc. He is currently the chairman of Aureus Mining Inc,
Afferro Mining Inc and Kilo Goldmines Limited and a non-executive
director of Crusader Resources Limited and Altus Global Gold
Limited. David is the current non-executive chairman of Altus
Strategies Limited and is thus not considered an Independent
Director of the Company.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period from 1 July 2012 to 31 December 2012
1 Jul 2012 to 1 Jul 2011 to
31 Dec 2012 31 Dec 2011
Notes GBP GBP
Net movement in unrealised
depreciation of investments 8 (1,591,952) (14,889,133)
Realised (losses) / gains
on investments 8 (1,254,673) 9,991,460
Operating income 3 188,946 105,448
Operating expenses 4 (834,627) (859,086)
Net loss for the period (3,492,306) (5,651,311)
Other comprehensive income - -
Total comprehensive income (3,492,306) (5,651,311)
================================ =============================
Attributable to:
Owners of the Company (3,353,460) (5,621,773)
Non-controlling interest 13 (138,846) (29,538)
(3,492,306) (5,651,311)
================================ =============================
Earnings per share for
the period
- Basic and Diluted 6 (0.08) (0.14)
-------------------------------- -----------------------------
There are no recognised gains or losses for the Period other
than those disclosed above.
In arriving at the results for the financial period, all amounts
above relate to continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2012
31 Dec 2012 30 Jun 2012
Notes GBP GBP
NON-CURRENT ASSETS
Financial assets designated
as at fair value through
profit and loss 8 57,327,306 47,525,971
CURRENT ASSETS
Cash and cash equivalents 4,036,802 13,893,566
Trade and other receivables 9 43,200 298,590
-------------------------- ----------------------
4,080,002 14,192,156
TOTAL ASSETS 61,407,308 61,718,127
-------------------------- ----------------------
CURRENT LIABILITIES
Trade and other payables 10 297,164 615,677
297,164 615,677
NET ASSETS 61,110,144 61,102,450
-------------------------- ----------------------
EQUITY
Share premium 12 42,602,254 42,602,254
Revenue reserve 14,709,010 18,062,470
Equity attributable to owners
of the Company 57,311,264 60,664,724
Non-controlling interest 13 3,798,880 437,726
TOTAL EQUITY 61,110,144 61,102,450
-------------------------- ----------------------
Net asset value per Ordinary
Share Pence Pence
based on 39,719,569 (30
Jun 2012: 39,719,569) Shares
in issue 144.28 153.83
-------------------------- ----------------------
The unaudited consolidated financial statements were approved
and authorised for issue by the Board on 26 February 2013.
Nick Falla Robert Milroy
Chairman Director
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period from 1 July 2012 to 31 December 2012
1 Jul 2012 1 Jul 2011
to to
31 Dec 2012 31 Dec 2011
Notes GBP GBP
OPERATING ACTIVITIES
Net loss for the period attributable
to shareholders (3,492,306) (5,651,311)
Net movement in unrealised
depreciation on investments 8 1,591,952 14,889,133
Interest received (188,946) (105,448)
Decrease in payables (399,892) (5,987,058)
Decrease in receivables 255,390 114,893
Realised losses / (gains)
on investments 8 1,254,673 (9,991,460)
NET CASH FLOW FROM OPERATING
ACTIVITIES (897,750) (6,731,251)
----------------------- ----------------------
INVESTING ACTIVITIES
Interest received 188,946 105,448
Purchase of investments 8 (50,466,006) (35,637,479)
Sale of investments 8 37,899,425 35,630,777
NET CASH FLOW FROM INVESTING
ACTIVITIES (12,377,635) 98,746
----------------------- ----------------------
FINANCING ACTIVITIES
Proceeds from issues of shares
in subsidiary 3,500,000 500,000
NET CASH FLOW FROM FINANCING
ACTIVITIES 3,500,000 500,000
----------------------- ----------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 13,893,566 23,083,865
Decrease in cash and cash
equivalents (9,856,764) (6,132,505)
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 4,036,802 16,951,360
----------------------- ----------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period from 1 July 2012 to 31 December 2012
Share Share Premium Accumulated Non-controlling Total
Capital Profits interest
GBP GBP GBP GBP GBP
Balance as at 30
June 2012 - 42,602,254 18,062,470 437,726 61,102,450
Adjustment
arising
from change in
non-controlling
interest - - - 3,500,000 3,500,000
Net loss for the
period - - (3,353,460) (138,846) (3,492,306)
Balance as at 31
December 2012 - 42,602,254 14,709,010 3,798,880 61,110,144
------------------ ---------------------- ------------------------ -------------------- ----------------
Share Share Premium Accumulated Non-controlling Total
Capital Profits interest
GBP GBP GBP GBP GBP
Balance as at 1
July 2011 - 42,602,254 33,999,329 - 76,601,583
Adjustment
arising
from change in
non-controlling
interest - - - 530,000 530,000
Net loss for the
year - - (15,936,859) (92,274) (16,029,133)
Balance as at 30
June 2012 - 42,602,254 18,062,470 437,726 61,102,450
------------------ ---------------------- ------------------------ -------------------- ----------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the period from 1 July 2012 to 31 December 2012
1 GENERAL INFORMATION
The consolidated financial statements incorporate the financial
statements of Altus Resource Capital Limited (the "Company")
and Altus Global Gold Limited (the "Subsidiary") together
known as (the "Group").
The Company is a closed-ended investment company incorporated
in Guernsey on 30 April 2009, which listed on the Specialist
Fund Market ("SFM") of the London Stock Exchange on 30
June 2009 and on the Channel Islands Stock Exchange ("CISX")
on 22 December 2009.
The principal activity of the Group is to realise capital
growth from a concentrated portfolio of junior resource
equities and to generate a significant capital return to
shareholders.
2 ACCOUNTING POLICIES
The significant accounting policies have been applied consistently
in dealing with the items which are considered material
in relation to the Group's Consolidated Financial Statements:
(a) Basis of Preparation
The consolidated financial statements have been prepared
in conformity with International Financial Reporting Standards
("IFRS") as adopted in the European Union which comprise
standards and interpretations approved by the International
Accounting Standards Board ("IASB") and International Financial
Reporting Interpretations Committee ("IFRIC"), together
with applicable Guernsey law. The consolidated financial
statements have been prepared on a historical cost basis
except for the measurement at fair value of certain financial
instruments.
The following Standards or Interpretations that are expected
to affect the Group have been issued but not yet adopted
by the Group as shown below. Other standards or Interpretations
issued by the IASB and the IFRIC are not expected to affect
the Group.
IFRS 7 Financial Instruments: Disclosures - Amendments
relating to the offsetting of assets and liabilities effective
for annual periods beginning on or after 1 January 2013
and interim periods within those periods.
IFRS 9 Financial Instruments - Deferral of mandatory effective
date of IFRS 9 and amendments to transition disclosures
effective for annual periods beginning on or after 1 January
2015.
IFRS 10 Consolidated Financial Statements - Amendments
for investment entities for annual periods beginning on
or after 1 January 2014.
IFRS 13 Fair value measurement - Original issue effective
for annual periods beginning on or after 1 January 2013.
IAS 1 Presentation of Financial Statements - Amendments
to revise the way other comprehensive income is presented
effective for annual periods beginning on or after 1 July
2012.
IAS 1 Presentation of Financial Statements - Amendments
resulting from Annual Improvements 2009-2011 Cycle (comparative
information) for annual periods beginning on or after
1 January 2013.
IAS 32 Financial Instruments: Presentation - Amendments
relating to the offsetting of assets and liabilities
effective for annual periods beginning on or after 1
January 2014.
The Directors have considered the above and are of the
opinion that the above Standards and Interpretations
are not expected to have a material impact on the Company's
consolidated financial statements except for the presentation
of additional disclosures and changes to the presentation
of components of the consolidated financial statements.
These items will be applied in the first financial period
for which they are required.
(b) Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and its Subsidiary.
At the period end the Company owns 53.28% of the shares
in the Subsidiary and has the power to govern the financial
and operating policies of the Subsidiary so as to obtain
benefits from their activities.
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions
are eliminated in preparing the consolidated financial
statements.
Non-controlling interests in the Subsidiary are identified
separately from the Group's equity therein. The interests
of non-controlling shareholders are initially measured
at the non-controlling interest's proportionate share
of the fair value of the acquiree's identifiable net
assets. Subsequent to acquisition, the carrying amount
of non-controlling interest is the share of subsequent
changes in equity. Total comprehensive income is attributed
to non-controlling interest even if this results in the
non-controlling interest having a deficit balance.
(c) Judgements and estimates
The preparation of financial statements in accordance
with IFRS requires management to make judgements, 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. The estimates and associated assumptions
are based on historical experience and other factors
that are considered to be relevant. Actual results could
differ from such estimates.
The estimates and underlying assumptions are reviewed
on an on-going basis. Revisions to accounting estimates
are recognised in the period in which the estimate was
revised if the revision affects only that period or in
the period of the revision and future periods if the
revision affects both current and future periods.
The most critical judgements, apart from those involving
estimates, that management has made in the process of applying
the Company's accounting policies and that have the most
significant effect on the amounts recognised in the consolidated
financial statements are the functional currency of the
Company (see note 2(d)(i)) and the fair value of investments
designated to be at fair value through profit or loss (see
note 2(e)(i)). The valuation methods/techniques used by
the Company in valuing financial instruments involve critical
judgements to be made and therefore the actual value of
financial instruments could differ significantly from the
value disclosed in these consolidated financial statements.
(d) 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
realise capital growth from a portfolio of gold and precious
metals equities with the aim of generating a significant
capital return to shareholders.
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 consolidated financial statements are presented in
sterling, which is the Company's functional and presentation
currency.
(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 Consolidated Statement of 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 Consolidated Statement
of Comprehensive Income. The Company holds investments
denominated in Australian, Canadian and US Dollars 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. As at 31 December
2012 no forward foreign currency contracts were taken out.
(e) Financial Instruments
Financial assets and financial liabilities are recognised
in the Consolidated 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 Consolidated Statement of 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
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 Consolidated Statement of Comprehensive
Income.
(f) Going Concern
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. The
Directors believe the Group 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 information.
(g) Taxation
The Company and its Subsidiary have been granted exemption
under the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989 from Guernsey Income Tax, and each entity is charged
an annual fee of GBP600.
(h) Expenses
All expenses are accounted for on an accruals basis.
(i) Interest Income
Interest income is accounted for on an accruals basis.
(j) Cash and Cash equivalents
Cash at bank and short term deposits which are held to
maturity are carried at cost. Cash and cash equivalents
are defined as call deposits, short term 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 Consolidated Statement of
Cash Flows, cash and cash equivalents consist of cash and
deposits at bank.
(k) Share issue costs
The Share issue costs borne by the Company are recognised
in the Consolidated Statement of Changes in Equity, as
the Company's ordinary shares have no fixed redemption
date.
(l) Investments
All investments and derivative financial instruments have
been designated as financial assets "at fair value through
profit or loss". Investments are initially recognised on
the date of purchase at cost, being the fair value of the
consideration given, excluding transaction costs associated
with the investment. After initial recognition, investments
are measured at fair value, with unrealised gains and losses
on investments and impairment of investments recognised
in the Consolidated Statement of Comprehensive Income.
Commissions paid on the sale or purchase of investments
is recognised in the Consolidated Statement of Comprehensive
Income as incurred.
Fair value is the amount for which the financial instruments
could be exchanged, or a liability settled, between knowledgeable
willing parties in an arms length transaction. Fair value
also reflects the credit quality of the issuers of the
financial instruments.
For investments actively traded in organised financial
markets, fair value is determined by reference to Stock
Exchange quoted market bid prices as at the close of business
on the reporting date. If no quoted market bid price is
available at the close of business on the reporting date,
the last available market bid price is used.
Valuations of unquoted trade investments and warrants
are based on valuations provided to the Group by Altus
Capital Limited (the "Investment Manager"). These valuations
are intended to be an indication of the fair value of
those investments, using valuation techniques designed
to reflect the best estimation of the price at which they
could be sold, even though there is no guarantee that
a willing buyer might be found if the Group chose to sell
the relevant investment. The indicative fair values of
the investments are based on an approximation of the market
level of the investments. As the investments are not traded
in an active market, the indicative fair value is determined
by using valuation techniques. The Investment Manager
uses a variety of methods and makes assumptions that are
based on market conditions existing at the reporting date.
Different assumptions regarding these factors, combined
with different valuation techniques and models used, could
lead to different valuations of the financial instruments
by different parties.
(m) 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 regulations or convention
in the market place.
(n) Segmental Reporting
The Directors are of the opinion that the Group is engaged
in a single segment of business, being the investment
business and operates solely from Guernsey, therefore
no segmental reporting is provided.
3 OPERATING INCOME
1 Jul 2012 1 Jul 2011
to to
31 Dec 2012 31 Dec 2011
GBP GBP
Bank interest 26,485 75,156
Dividend income 74,414 30,292
Bond income 88,046 -
Sundry income 1 -
188,946 105,448
--------------------------------------- -------------------------------
4 OPERATING EXPENSES
1 Jul 2011
1 Jul 2012 to to
31 Dec 2012 31 Dec 2011
GBP GBP
Investment Manager's fee 281,028 298,486
Accountancy fees 4,533 3,008
Administrator's fee 37,795 29,923
Registrar's fee 3,801 3,750
Directors' fees 76,533 54,333
Custody fees 20,536 15,514
Audit fee 16,780 14,754
Directors' and Officers'
insurance 2,405 3,427
Annual fees 8,995 12,098
Printing and stationery 1,774 3,640
Bank interest and charges 6,485 4,525
Commissions paid 164,246 126,637
Corporate and Shareholder
Adviser fees 46,852 52,674
Legal and professional fees - 13,212
Travel expenses 34,603 39,622
Sundry costs 16,344 6,302
(Profit) / loss on foreign
exchange 111,917 177,181
834,627 859,086
-------------------------------- --------------------------
5 DIRECTORS' REMUNERATION
The Directors of the Company are paid GBP20,000 per annum.
In addition to GBP20,000 per annum, Nick Falla receives
an additional fee of GBP5,000 (Dec 2011: GBP3,750) as Chairman
and Robert Milroy receives an additional fee of GBP3,000
as Chairman of the audit committee.
The Chairman of the Subsidiary receives a fee of GBP18,000
per annum. Each other Director of the Subsidiary receives
a fee of GBP15,000 per annum.
6 EARNINGS PER SHARE
Earnings per ordinary share is calculated by dividing the
net loss for the period attributable to holders of ordinary
shares of the Company ('Shareholders') of GBP3,492,306 (31
Dec 2011: loss GBP5,651,311) by the weighted average number
of ordinary shares in issue during the period (39,719,569
(31 Dec 2011: 39,719,569). There are no dilutive instruments
and therefore basic and diluted earnings per ordinary share
are identical.
7 SUBSIDIARIES
On 27 October 2011 the Company acquired 90.41% of the voting
equity of Altus Global Gold Limited (the "Subsidiary") for
a consideration of GBP5,000,000. During the current period,
due to further shares in the Subsidiary being issued to non-controlling
interests, the Company's holding has reduced to 53.28%. The
Subsidiary is a Guernsey authorised open-ended investment
company with registered number 54069. The Subsidiary was
incorporated on 10 October 2011 and listed on the Channel
Island Stock Exchange ("CISX") on 1 November 2011. The Administrator
of the Subsidiary is Praxis Group and the Custodian is the
Royal Bank of Canada. At the time of the acquisition, the
Subsidiary had no assets or liabilities and had not commenced
trading. Included in the Total Comprehensive Income for the
period attributable to the owners of the Company is a loss
of GBP138,846 (Dec 2011: loss GBP29,538) representing the
Company's share of the Subsidiary's loss for the year.
The Subsidiary was established to realise capital growth
from a portfolio of gold and precious metals equities, with
the aim of generating a significant capital return to shareholders.
The Subsidiary invests in mid-tier and major gold and precious
metals companies with a focus on mid-tier products.
The financial year end of the Subsidiary is 30 June, which
is co-terminus with the financial year end of the Company.
8 INVESTMENTS
TOTAL TOTAL
30 Jun
31 Dec 2012 2012
GBP GBP
Opening portfolio cost 58,593,473 49,337,815
Additions - cost 50,547,385 61,172,546
Sales (37,899,425) (58,345,334)
Realised (loss) / gain on
investments (1,254,673) 6,428,446
Unrealised (depreciation)
/ appreciation on valuation
brought forward (11,067,502) 10,267,240
Unrealised depreciation on
valuation for the period (1,591,952) (21,334,742)
Closing valuation 57,327,306 47,525,971
------------------------ --------------------
Unrealised depreciation on
valuation carried forward (12,659,454) (11,067,502)
------------------------ --------------------
IFRS 7 requires the fair value of investments to be disclosed
by the source of inputs, using a three-level hierarchy as
detailed below:
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).
Investments held by the Group have been classified as Level
1, for those investments that are quoted and are valued using
quoted market bid prices and Level 2, for those unquoted
investments that are valued using standard modelling techniques
by the Investment Manager using observable inputs and Level
3 for the private equity investments that are valued at purchase
price, after taking account of foreign exchange movements.
This is in accordance with the fair value hierarchy.
Details of the value of each classification are listed in
the table below. Values are based on the market value of
the investment as at the reporting date:
Fair Value Fair Value
30 Jun
31 Dec 2012 2012
GBP GBP
Level 1 54,722,292 38,549,814
Level 2 1,861,347 6,322,083
Level 3 743,667 2,654,074
Total 57,327,306 47,525,971
-------------------------------- -----------------------------
The following table shows a reconciliation of all movements
in the fair value of financial instruments categorised within
Level 3 between the beginning and the end of the reporting
period:
30 Jun
31 Dec 2012 2012
GBP GBP
Opening portfolio cost 3,391,077 3,105,976
Additions - cost - 322,373
Sales - (44,701)
Realised gain on investments - 7,429
Unrealised (appreciation) /
depreciation on valuation
brought
forward (737,003) 8,707
Movement in unrealised
depreciation
on valuation for the period (1,910,407) (745,710)
Closing valuation 743,667 2,654,074
-------------------------------- -----------------------------
There have been no transfers between Level 1 and Level 2
of the fair value hierarchy during the period under review.
9 TRADE AND OTHER RECEIVABLES
31 Dec 2012 30 Jun 2012
GBP GBP
Accrued income 32,373 138,854
Prepayments 10,827 14,647
Broker debtors - 145,089
43,200 298,590
-------------------------------- -----------------------------
The above carrying value of receivables is equivalent to
its fair value.
10 TRADE AND OTHER PAYABLES
(amounts falling due
within
one year) 31 Dec 2012 30 Jun 2012
GBP GBP
Trade creditors 46,885 136,161
Accrued expenses 168,900 60,396
Broker creditors 81,379 419,120
297,164 615,677
-------------------------------- -----------------------------
The above carrying value of payables is equivalent to its
fair value.
11 SHARE CAPITAL
Authorised SHARES GBP
Unlimited number of ordinary
shares of no par value Unlimited -
================================ =============================
Issued
Date of issue SHARES GBP
29 June 2009 26,000,000 -
21 December 2009 10,997,233 -
3 August 2010 2,722,336 -
Ordinary shares in issue as
at 30 June 2012 and 31 December
2012 39,719,569 -
================================ =============================
Holders of ordinary shares are entitled to receive, and
participate in, any dividends out of income; other distributions
of the Company available for such purposes and resolved
to be distributed in respect of any accounting period; or
other income or right to participate therein.
On a winding up, ordinary shareholders are entitled to the
surplus assets remaining after payment of all the creditors
of the Company.
Ordinary shareholders also have the right to receive notice
of and to attend, speak and vote at general meetings of
the Company and each Member being present in person or by
proxy or by a duly authorised representative at a meeting
shall upon a show of hands have one vote and upon a poll
each such holder present in person or by proxy or by a duly
authorised representative shall have one vote in respect
of every ordinary share held by him.
12 SHARE PREMIUM GBP
Premium on shares issued 29
June 2009 26,000,000
Premium on shares issued 21
December 2009 14,667,020
Premium on shares issued 3
August 2010 3,818,894
Issue costs (1,883,660)
Share premium as at 30 June
2012 and 31 December 2012 42,602,254
=============================
Under IAS 32 'Financial Instruments: Presentation', transaction
costs of any equity transaction are accounted for as a deduction
from equity to the extent they are incremental costs directly
attributable to the equity transaction that otherwise would
have been avoided.
13 NON-CONTROLLING INTEREST
As detailed in note 1(b) above, the Subsidiary has a
46.72% non-controlling interest.
GBP
Balance as at 1 July 2012 437,726
Share of loss for the period (138,846)
Balance as at 31 December 2012 298,880
==============================
14 FINANCIAL INSTRUMENTS
The Group's main financial instruments comprise:
Cash and cash equivalents that arise directly from the
(a) Group's operations; and
(b) Quoted and unquoted investment securities.
15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Group's financial instruments
are market price risk, credit risk, liquidity risk, interest
rate risk, foreign exchange risk and capital management
risk. The Board regularly reviews and agrees policies
for managing each of these risks and these are summarised
below:
(a) Market Price Risk
Market price risk arises mainly from uncertainty about
future prices of financial instruments held. It represents
the potential loss the Group might suffer through holding
market positions in the face of price movements. The
Investment Manager actively monitors market prices and
reports to the Board as to the appropriateness of the
prices used for valuation purposes. A list of the top
10 investments held by the Group at the period end is
shown in the Schedule of Top 10 Investments as contained
within this report.
If the value of the Group's investment portfolio were
to increase by 30%, it would represent a gain of GBP17,198,192
(30 Jun 2012: GBP14,257,791). This would cause the net
asset value of the Group to rise by 28.14%. (30 Jun 2012:
23.33%).
If the value of the Group's investment portfolio were
to decrease by 30%, it would represent a decrease of
GBP17,198,192 (30 Jun 2012: GBP14,257,791). This would
cause the net asset value of the Group to fall by 28.14%.
(30 Jun 2012: 23.33%).
Some of the market price risk is mitigated by the Investment
Manager's use of various put and call options and ETFs.
(b) 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 Group. The Directors receive financial
information on a regular basis which is used to identify
and monitor risk.
It is Group policy not to invest more than 20% of the gross
assets of the Group in the securities of any one company
or group at the time the investment is made.
The Group has no significant concentration of credit risk,
with exposure spread over a large number of investments.
At 31 December 2012 the Group's largest exposure to a single
investment was GBP6,574,139 (30 Jun 2012: GBP5,079,424),
which represents 11.47% (30 Jun 2012: 10.69%) of the total
market value of investments.
Investors should be aware that the prospective returns to
shareholders mirror the returns under the investments held
or entered into by the Group and that any default by an
issuer of any such investment held by the Group would have
a consequential adverse effect on the ability of the Group
to pay some or all of the entitlement to shareholders. Such
a default might, for example, arise on the insolvency of
an issuer of an investment.
The Group's financial assets exposed to credit risk are
as follows:
31 Dec 2012 30 Jun 2012
GBP GBP
Investments in equities/warrants 57,327,306 47,525,971
Cash and cash equivalents 4,036,802 13,893,566
Trade and other receivables 43,200 298,590
61,407,308 61,718,127
--------------------------------- ----------------------
The Group is exposed to credit risk in respect of its cash
and cash equivalents, arising from possible default of the
relevant counterparty, with a maximum exposure equal to
the carrying value of those assets. The credit risk on liquid
funds is limited because the counterparties are banks with
high credit ratings assigned by international credit-rating
agencies. The Group monitors the placement of cash balances
on an on going basis.
The Group invests its cash and cash equivalents with Royal
Bank of Canada (Channel Islands) Limited and Barclays Private
Clients International Limited, which had a S&P rating of
AA- and A+ as at the date of signing.
The investments of the Group are held in custody by Anson
Custody Limited or Royal Bank of Canada (Channel Islands)
Limited ("RBCCI"). Bankruptcy or insolvency of the Custodians
may cause the Group's rights with respect to investments
held by the Custodians to be delayed. Investments held with
Anson Custody Limited are held in a Crest account maintained
by Anson Registrars Limited in a sub-account designated
exclusively for the Group. This ensures that the investments
are ring fenced and will be protected should Anson Custody
Limited become bankrupt or insolvent.
RBCCI mitigate risk by using a sub custodian network comprising
top-rated and well respected counterparties. The custodian
network is monitored on an on-going basis to ensure that
each one continues to meet RBCCI's stringent criteria.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will encounter
difficulty in realising assets or otherwise raising funds
to meet financial commitments. The Group's main financial
commitment is its on-going operating expenses.
The Investment Manager ensures that the Group has sufficient
liquid resources available to fulfil its operational plans
and to meet its financial obligations as they fall due.
The table below details the residual contractual maturities
of financial liabilities:
As at 31 December 2012 Over 1
1-3 months year
GBP GBP
Trade creditors 46,885 -
Accrued expenses 168,900 -
Broker creditors 81,379
297,164 -
--------------------------- -----------------------------
As at 30 June 2012 Over 1
1-3 months year
GBP GBP
Trade creditors 136,161 -
Accrued expenses 60,396 -
Broker creditors 419,120 -
615,677 -
--------------------------- -----------------------------
(d) Interest Rate Risk
The Group holds cash in several bank accounts, the return
on which is subject to fluctuations in market interest
rates.
Other than cash and cash equivalents, none of the assets
or liabilities of the Group attract or incur interest.
The following table details the Group's exposure to interest
rate risks:
As at 31 December 2012:
Floating
less than Non-interest
1 month bearing Fixed Total
GBP GBP GBP GBP
Assets
Designated as
at fair value
through profit
or loss on
initial
recognition:
Investments - 56,691,407 635,899 57,327,306
Loans and
receivables: -
Accrued income - 32,373 - 32,373
Prepayments - 10,827 - 10,827
Broker debtors - - - -
Cash and cash
equivalents 4,036,802 - - 4,036,802
----------------------- -------------------------- ------------------------ ------------------------
Total Assets 4,036,802 56,734,607 635,899 61,407,308
----------------------- -------------------------- ------------------------ ------------------------
Liabilities
Financial
liabilities
measured at
amortised
cost:
Trade creditors - 46,885 - 46,885
Accrued expenses - 168,900 - 168,900
Broker creditors - 81,379 - 81,379
Total Liabilities - 297,164 - 297,164
----------------------- -------------------------- ------------------------ ------------------------
Total interest
sensitivity gap 4,036,802
-----------------------
As at 30 June 2012:
Floating
less than Non-interest
1 month bearing Fixed Total
GBP GBP GBP GBP
Assets
Designated as at
fair value through
profit or loss
on initial recognition:
Investments - 44,226,964 3,299,007 47,525,971
Loans and receivables: -
Accrued income - 138,854 - 138,854
Prepayments - 14,647 - 14,647
Broker debtors - 145,089 - 145,089
Cash and cash
equivalents 13,893,566 - - 13,893,566
----------------------- -------------------------- -------------------- -----------------
Total Assets 13,893,566 44,525,554 3,299,007 61,718,127
----------------------- -------------------------- -------------------- -----------------
Liabilities
Financial liabilities
measured at amortised
cost:
Trade creditors - 136,161 - 136,161
Accrued expenses - 60,396 - 60,396
Broker creditors - 419,120 - 419,120
Total Liabilities - 615,677 - 615,677
----------------------- -------------------------- -------------------- -----------------
Total interest
sensitivity gap 13,893,566
-----------------------
Interest rate sensitivity
If interest rates had been 25 basis points higher and all
other variables were held constant, the Group's net loss
attributable to Shareholders for the period ended 31 December
2012 would have decreased by approximately GBP5,046 (30
Jun 2012: GBP34,734 increase in net gain) or 0.01%(30 Jun
2012: 0.06%) of Net Assets due an increase in the amount
of interest receivable on the bank balances.
If interest rates had been 25 basis points lower and all
other variables were held constant, the Group's net loss
attributable to Shareholders for the period ended 31 December
2012 would have decreased by approximately GBP5,046 (30
Jun 2012: GBP34,734 decrease in net gain) or 0.01%(30 Jun
2012: 0.06%) of Net Assets due a decrease in the amount
of interest receivable on the bank balances.
(e) Foreign Exchange Risk
A substantial proportion of the Group's portfolio is invested
in overseas securities and movements in exchange rates can
significantly affect their Sterling value. The Group does
not normally hedge against foreign currency movements affecting
the value of the investment portfolio, but takes account
of this risk when making investment decisions.
The Group undertakes certain transactions denominated in
foreign currencies. Hence, exposures to exchange rate fluctuations
arise. Exchange rate exposures are managed by minimising
the amount of foreign currency held at any one time.
The carrying amounts of the Group's foreign currency denominated
monetary assets at the reporting date are as follows:
31 Dec 2012 30 Jun 2012
GBP GBP
Australian Dollar 14,306,647 16,667,388
Canadian Dollar 33,241,109 18,235,685
US Dollar 10,276,957 11,178,251
Norwegian Krone 324 2,367,125
57,825,037 48,448,449
----------------------------- --------------------
(f) Capital Management
The investment objective of the Group is to provide shareholders
with attractive long term returns, expected to be in the
form of capital, through a diversified portfolio.
As the Company's ordinary shares are traded on the SFM,
the ordinary shares may trade at a discount to their Net
Asset Value per Share on occasion. However, in structuring
the Group, the Directors have given detailed consideration
to the discount risk and how this may be managed.
The Group monitors capital on the basis of the carrying
amount of equity as presented on the face of the Consolidated
Statement of Financial Position.
16 RELATED PARTY TRANSACTIONS AND DIRECTORS BENEFICIAL INTERESTS
The Group is managed by the Investment Manager, a wholly-owned
FSA authorised and regulated subsidiary of Altus Strategies
Limited ("ASL"). ASL owns 150,000 ordinary shares (0.38%)
in the Company and 500,000 ordinary shares (5.33%) in the
Subsidiary.
The Director David Netherway is a Non-Executive Chairman
of ASL, which as mentioned above, owns 150,000 shares (0.38%)
in the Company. David Netherway is also Non-Executive Chairman
of Kilo Goldmines Limited, whose equities and warrants are
invested in by the Group. The total investment in Kilo Goldmines
Limited represents 2.34% of the market value of the Group's
investments. David Netherway is a Director of Gryphon Minerals
Limited, whose equity was invested in by the Group. The
total investment in Gryphon Minerals Limited represents
4.02% of the market value of the Group's investments.
The Director Nick Falla holds 20,000 shares (0.05%) in the
Company. This is held as part of a nominee trust holding
in the Company.
The Director David Gelber holds 50,000 shares (0.13%) in
the Company. This is held as part of a nominee trust holding
in the Company.
The Director Robert Milroy holds 20,000 shares (0.05%) in
the Company. This is held as part of a nominee trust holding
in the Company.
Under the Investment Management Agreement between the Investment
Manager and the Company, the Investment Manager is entitled
to receive fees of the greater of 0.85% per annum of the
Company's Net Asset Value or GBP150,000 per annum.
Under the Investment Management Agreement between the Investment
Manager and the Subsidiary, the Investment Manager is entitled
to receive fees of 1.5% per annum of the Subsidiary's Net
Asset Value, subject to the Total Expense Ratio not exceeding
2%.
During the period the Group incurred GBP281,028 (Dec 2011:
GBP298,486) of fees, of which GBP125,501 (Jun 2012: GBP128,215)
was outstanding at the period end as shown in trade and
other payables.
The Investment Manager agreed to rebate the Company in
full for any management fees paid by the Subsidiary. During
the year no such fees had been received by the Investment
Manager from the Subsidiary.
During the period, the Company was charged travel expenses
totalling GBP34,603 (Dec 2011: GBP39,622) by the Investment
Manager.
The Investment Manager is also entitled to receive a performance
fee (the "Performance Fee") from both the Company and
the Subsidiary. The first component of the Performance
Fee is calculated for the first time in respect of the
financial accounting period first ending following the
second anniversary of the date of Admission. The fee is
equal to 20% of the excess of the NAV per Share as at
the end of the financial accounting period (adjusted to
account for dividends and returns of capital paid out
during the period and in respect of which the Manager
has been paid or is to be paid the second component of
the Performance Fee) over the basic performance hurdle,
this being an amount equal to the Issue Price increased
by 10% of the Issue Price per annum up to the end of the
relevant performance period.
Thereafter this fee shall be paid on an annual basis in
respect of each financial period subject to the basic
performance hurdle and a high watermark having been exceeded.
The high watermark is the NAV at the end of the financial
period in respect of which the last Performance Fee was
paid. If, however, the high watermark is not exceeded
for any consecutive period of three years it shall be
re-based to a value equal to the NAV as at the end of
the third financial period. The basic performance hurdle,
as described above, must however still be exceeded in
order for this component of the performance fee to be
payable.
The first component of the Performance Fee will be paid
on a per share basis, multiplied by the time weighted
average of the number of ordinary shares in issue in the
relevant performance period (or since Admission in the
first performance period) (together, if applicable, with
an amount equal to the VAT thereon). In the event that
there is a further issue of ordinary shares, a redemption
of ordinary shares or other capital reorganisation of
the Company or Subsidiary, the calculation of the performance
fee will be adjusted appropriately.
The second component of the Performance Fee is an amount
equal to 20% of the sum of all dividends, distributions
and other returns of capital paid out to shareholders
of the Company and Subsidiary during the relevant performance
period (but excluding redemptions and share buy backs
that are deemed distributions under the Companies Law),
subject to the performance hurdle having been satisfied.
The performance hurdle is the requirement that the NAV
on the relevant calculation date must exceed an amount
equal to the Issue Price increased by 10% of the Issue
Price per annum up to the end of the relevant performance
period.
No Performance Fee provision has been made for the Company
for the period as the performance hurdle has not been
met. No Performance Fee provision has been made for the
Subsidiary for the period as the performance hurdle has
not been met.
Nimrod Capital LLP is the Company's Corporate and Shareholder
Adviser and is entitled to receive fees of 0.15% of the
Company's Net Asset Value per annum. During the period
the Company incurred GBP46,852 (Dec 2011: GBP52,674) of
costs, of which GBP21,945 (Jun 2012: GBP22,626) was outstanding
at the period end as shown in trade and other payables.
TOP 10 INVESTMENTS IN SECURITIES AS AT 31 DECEMBER 2012
31 Dec 2012
Investment* Cost Market Unrealised
profit /
Value (loss)
GBP GBP GBP
Endeavour Mining Corporation 7,470,761 6,574,139 (896,622)
Detour Gold Corporation 6,736,433 6,056,685 (679,748)
Perseus Mining Limited 4,951,221 4,475,230 (475,991)
Eldorado Gold Corporation 3,212,281 2,947,629 (264,652)
SPDR Gold Trust 2,811,620 2,838,943 27,324
Base Resources Limited 3,782,489 2,500,986 (1,281,503)
PMI Gold Corporation 2,168,275 2,059,995 (108,280)
Sabina Gold & Silver Corporation 2,476,765 1,837,069 (639,696)
Atna Resources Limited 1,752,277 1,808,225 55,948
Nevsun Resources Com Npv 1,523,668 1,589,744 66,076
36,885,789 32,688,644 (4,197,145)
--------------- ----------------------- -----------------------
* Each line represents the amalgamated holdings in an entity
if the Group has holdings in more than one share class
in the same company.
TOP 10 INVESTMENTS IN SECURITIES AS AT 30 JUNE 2012
30 June
2012
Investment* Cost Market Unrealised
profit /
Value (loss)
GBP GBP GBP
Detour Gold Corporation 6,397,967 5,079,424 (1,318,543)
Northland Resources SA 3,000,000 4,952,829 1,952,829
Endeavour Mining Corporation
** 4,657,503 4,804,642 147,139
Perseus Mining Limited 3,672,117 4,432,457 760,340
Beadell Resources Limited 5,018,843 3,936,477 (1,082,366)
Cuco Resources Limited 3,068,704 2,654,075 (414,629)
Kilo Goldmines Limited 3,156,064 2,452,185 (703,879)
Eldorado Gold Corporation 765,617 2,173,780 1,408,163
SPDR Gold Trust 1,659,468 1,816,454 156,986
Eastcoal Inc 2,557,387 1,681,698 (875,689)
33,953,670 33,984,022 30,352
----------------- ----------------------- -----------------------
* Each line represents the amalgamated holdings in an entity
if the Group has holdings in more than one share class
in the same company.
** Note that during the year a share exchange took place
and the Group received 2,871,985 shares in Endeavour Mining
Corporation in exchange for 10,077,142 shares in Adamus
Resources Limited. The exchange took place at the fair
value of the shares in Adamus Resources Limited on the
date of the transaction and the fair value has been used
as the initial cost of the Endeavour Mining Corporation
shares.
ADVISORS & CONTACT INFORMATION
Key Information
Exchange
Ticker
Listing Date
Fiscal Year End
Base Currency
ISIN
SEDOL
Country of Incorporation
Management and Administration
Registered Office
Altus Resource Capital Limited
Anson Place
Mill Court
La Charroterie
St Peter Port
Guernsey GY1 1EJ
Investment Manager
Altus Capital Limited
14 Station Road
Didcot
Oxfordshire OX11 7LL
Placing and Corporate and Shareholder Advisory Agent
Nimrod Capital LLP
3 St Helen's Place
London EC3A 6AB
Specialist Fund Market of the LSE/ CISX
ARCL/ ARC
30 June 2009/22 December 2009
30 June
GBP
GG00B54BPN15
B54BPN1
Guernsey - Registration number 50318
Secretary and Administrator
Anson Fund Managers Limited
P.O. Box 405, Anson Place
Mill Court
La Charroterie
St Peter Port
Guernsey GY1 3GF
Registrar
Anson Registrars Limited
P.O. Box 426, Anson Place
Mill Court, La Charroterie
St Peter Port
Guernsey GY1 3WX
Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QQLFLXLFLBBX
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