TIDMRSS
RNS Number : 0926W
RAB Special Situations Company Ltd
17 August 2015
17 August 2015
RAB SPECIAL SITUATIONS COMPANY LIMITED
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Key Points
* 9.36% increase in the net asset value ("NAV") of the
Sterling Class of RAB Special Situations (Master)
Fund Limited (the "Master Fund").
* Gain in the period-ended 30 June 2015 of GBP0.8
million (six months ended 30 June 2014: gain of
GBP0.3 million).
* NAV at 30 June 2015 of 12.61p per Ordinary Share (31
December 2014: 11.43p).
* The results were prepared on a non-going concern
basis. This reduced the NAV by GBP541,000 (0.85p per
share) (31 December 2014: reduced by GBP870,000,
1.36p per share).
For further information please visit www.rabspecialsituations.com
or contact:
Elysium Fund Management Limited RAB Capital Limited Panmure Gordon (UK)
PO Box 650 No. 1 Adam Street Limited
1(st) Floor London One New Change
Royal Chambers WC2N 6LE London
St Julian's Avenue EC4M 9AF
St Peter Port David Hince
Guernsey Tel: +44 207 389 7000 Richard Gray / Andrew
GY1 3JX Potts / Adam James
Tel: +44 207 886 2500
Tel: +44 1481 810 100
e-mail: elysium@elysiumfundman.com
Chairman's Statement
During the period, the Company sought to achieve its investment
objective (of maximising its total return primarily through the
capital appreciation of its investments) by continuing to invest
all of its assets directly in the shares of the Master Fund.
Future of the Company and going concern
As mentioned in the 2014 Annual Report, the Board of Directors of
the Company (the "Board") will put forward proposals to Shareholders
at the end of 2015 to enable Shareholders to vote on the future
of the Company.
The Shareholder vote shall be proposed as an ordinary resolution
and accordingly will require the approval of a simple majority of
the votes cast at the relevant Extraordinary General Meeting to
be passed. If a simple majority of Shareholders vote against the
continuance of the Company as an investment company, then RAB Capital
Limited and Philip Richards (who together hold shares representing
approximately 27.2% of the voting rights of the Company) have confirmed
that they would not vote against any resultant proposals put forward
by the Board to wind up the Company and/or liquidate its assets
that require a special resolution.
The Board believes that the Shareholders will resolve to voluntarily
wind up the Company at this point. Therefore, the results have been
prepared on a non-going concern basis. This reduced the 30 June
2015 net asset value ("NAV") by GBP541,000 (0.85p per share) (31
December 2014: reduced by GBP870,000, 1.36p per share), being the
estimated expenses from the period end date to the anticipated date
of wind up, including the costs of wind up itself.
Results and Share Price
During the first six months of the year, the NAV per Ordinary Share
of the Company increased from 11.43p at 31 December 2014 to 12.61p
at 30 June 2015. This 10.32% increase in the NAV in the period was
an outperformance of one of its benchmark indices (the FTSE AIM
All Share Index) and an underperformance of its other benchmark
index (the FTSE AIM Basic Resources Index), which increased by 7.65%
and 12.94% respectively, over the same period.
The main contributor to the increase in the NAV has been the performance
of the Sterling Guernsey Share Class of the Master Fund, which increased
in value by 9.36% per share in the period. Further details are given
in the Investment Manager's Report.
Since 30 June 2015, the basic NAV per Ordinary Share has decreased
to 11.37p and the share price has fallen to 9.00p at 31 July 2015,
giving a discount of the share price to NAV of 20.84%.
Share buy-backs
The Board closely monitors the discount of the share price to NAV.
The discount of the share price to NAV increased from 11.42% at
31 December 2014 to 20.70% at 30 June 2015. However, no Ordinary
Shares were purchased by the Company during the period.
At the Company's Annual General Meeting held on 16 July 2015, Shareholders
renewed the authority for the Company to buy-back its own shares.
The Board believes that this authority is beneficial for the Company
as it provides flexibility for its capital structure and enables
the Company to buy shares, when deemed necessary, at a significant
discount to NAV per Ordinary Share, thus increasing the NAV per
Ordinary Share.
Investment
The investment strategy of the Master Fund remains the same as at
31 December 2014. The Master Fund continues to invest in what the
Investment Manager deems to be assets of global significance and
the focus of investment has been on investing in natural resources.
There has been no new investment in unlisted equities and the Investment
Manager has confirmed its intention to only make new investments
into listed companies engaged in the natural resources sector and
will continue to reduce the unlisted component of the Master Fund's
portfolio through the sales of those positions, with only additional
investment in existing unlisted companies being permitted in order
to preserve or enhance the realisation value of such investments.
Quentin Spicer
14 August 2015
Investment Manager's Report
The Company's sole investment is in the Master Fund and the review
that follows refers to the portfolio of the Master Fund.
Market fundamentals at the start of 2015 gave us reason for optimism
that natural resource equities would outperform the wider market,
especially given an unprecedented four years of underperformance
for the sector globally. As the year has unfolded however, the return
of macroeconomic risks that pose a threat to financial market stability
on the one hand (ongoing Greek debt crisis), and to commodity demand
(China's structural slowdown) on the other, have worsened the situation
for most commodities and has caused us to question this view. Initial
2015 outperformance has now indeed been largely eroded.
The first three months of the year were marred by the iron ore,
nickel and WTI oil prices tumbling a further 27.9%, 18.1% and 10.6%
respectively, amid investors worrying about excess supply against
the backdrop of a weakening Chinese economy. While the second quarter
saw a dramatic turnaround for a few selected commodities, it was
again a mixed bag for the asset class as a whole. With directional
movements somewhat contrary to fundamental expectations, the petroleum
complex rebounded strongly (crude oil was up 24.9%), despite peak
refinery turnarounds, and iron ore rallied (+15.6%), despite structurally
bearish issues in the medium term. At the other end of the spectrum
were precious and base metals along with most bulk commodities,
which were largely in the red for Q2.
While weak bulk commodity pricing was widely anticipated, it was
in the base metals - better balanced from a fundamental standpoint
- where prices were most disappointing. Aluminium - last year's
best performer - suffered from continued production growth and was
the worst performer during the second quarter, down 7.3% (down 9.5%
in H1). Copper displayed significant volatility in Q2 before ending
the quarter down 5.1% (down 9.6% in H1) after the high level of
mine disruptions in Q1 died away in a benign Q2.
In the precious metal complex, the main story in Q2 was the divergence
in price performance between gold and the Platinum Group Metals
("PGMs"). Gold was down a marginal 0.8% over the quarter (down 1.2%
in H1) as the prospect of a Federal Reserve interest rate rise continued
to trump other global concerns. The PGM complex, however, saw much
more dramatic price moves over the same period, with platinum falling
to a new six year low - ending the quarter down 5.2% (down 11.0%
in H1), and palladium tumbling a further 8.4% (down 15.4% in H1)
on surging South African mine output and a slump in global car sales
growth.
The Master Fund returned +9.4% (on the Sterling Guernsey Share Class)
during the first half of 2015. This compares favourably with the
performance of the Bloomberg World Mining and STOXX 600 Basic Resource
Indices (down 4.7% and 0.3% respectively in H1).
During H1 2015, the Master Fund remained almost fully invested but
has raised cash in advance of redemptions. As of 30 June 2015, the
Master Fund held 6.2% in net cash (including contracts for difference
borrowings), with publicly listed investments or positions where
the underlying security is listed (contracts for difference exposure)
representing 78.3% of the NAV of the Master Fund. Of these listed
investments, 9.5% are illiquid (i.e. they cannot be liquidated in
less than 180 calendar days using 25% of the year end 90 day average
daily traded volume of the stock). Unlisted investments at 30 June
2015 represented 15.5%.
There follows an update on the Master Fund's top 5 holdings by value,
and their prospects going forward.
Falkland Oil and Gas Ltd ("FOGL"): The biggest positive contributor
to the Master Fund performance during H1 was FOGL. The first half
of the year proved to be very strong for the company's share price
as excitement built in relation to its drilling campaign. FOGL announced
in May 2015 that oil had been recovered from the well drilled into
the Isobel prospect. This was a significant discovery for the company
and we now hope that the partnership group will choose to return
to drill this prospect again when the rig returns to the North Falklands
in Q3 2015. The rig has now been transferred to FOGL and its partners
in the South, Noble and Edison, to drill the only well in this basin
at the Humpback prospect. This well was spudded on 15 June 2015,
is expected to take 65 days and has the highest risk/potentially
highest return of the campaign. As such, it is clearly a very important
event for the Master Fund.
Royal Nickel Corporation ("Royal Nickel"): Royal Nickel was also
a positive contributor to the Master Fund performance in H1 following
a flurry of positive newsflow. The company announced it had received
the certificate of authorisation for its project, positioning it
to proceed to construction upon completion of financing. As such,
Royal Nickel's position as a possible near-term producer has become
even more compelling for the Master Fund.
Trevali Mining Corporation ("Trevali"): Trevali ended H1 weakly
on the back of a sharp fall in zinc prices (-7.9% in H1). With its
Santander mine performing very well and Caribou mine and mill commissioning
advancing in New Brunswick, the company should have two operating
zinc mines on line by the time positive zinc supply and demand fundamentals
take hold, which we estimate to occur in the second half of 2015.
Victoria Gold Corp. ("Victoria Gold"): Victoria Gold is a stock
that is highly leveraged to the gold price, with significant scale
and method of mining (open pit, heap leach operation) conducive
to the low operating cost theme sought by investors. Since completing
the feasibility study for its flagship Eagle Gold project in Yukon
in 2012, the company has been focusing on project financing and
aims to have this completed in 2015. The permitting of the project
is now complete and the final piece of financing would render the
project ready to produce towards its theoretical value.
Madagascar Oil Ltd ("MOIL"): MOIL had a strong H1, with the announcement
in April 2015 of the award of the Development Mining Title to its
Tsimiroro block following on from the approval of the field development
plan. As management highlighted, this represented "a significant
and major step forward for the Group following 11 years of exploration
activity in Madagascar and the drilling of 138 wells on Block 3104".
In June 2015, the company went on to update the market on the economics
of the field and also announced that it had retained Jefferies to
advise it in its discussions with a potential strategic partner.
In terms of a timeline, it stated that it was confident of a successful
conclusion to this process before the year end. In support of this,
a major shareholder has provided MOIL with a US$5million working
capital facility.
We appreciate that investing in natural resource special situations
has been very difficult for several years. Nevertheless, this year-to-date,
the Company's performance is positive in both absolute (+10.3%)
and relative terms (+15.0% against the Bloomberg World Mining Index).
We believe that this is some evidence that our chosen stocks are
genuinely deep value situations which we hope will deliver further
performance to the Company's investors in the future.
We believe that the third and fourth quarters of 2015 will both
be important for the Company because of the prospect of further
drilling results from FOGL.
Philip Richards and Team
14 August 2015
Data sources: Centaur Fund Services Limited, RAB Capital Limited,
Bloomberg L.P.
Issued by RAB Capital Limited ("RAB"), which is authorised and regulated
by the Financial Conduct Authority of the United Kingdom ("FCA").
This publication includes returns for various indices. These indices
are not intended to be direct benchmarks for the Company, nor are
they intended to be indicative of the type of assets in which the
Company may invest. The assets in which the Company invests may
be materially different from the assets underlying these indices,
and may have a significantly different risk profile. Any projections
or analysis provided to assist the recipient of this publication
in evaluating the matters described herein may be based on subjective
assessments and assumptions and may use one among alternative methodologies
that produce different results. Accordingly, any projections or
analysis should not be viewed as factual and should not be relied
upon as an accurate prediction of future results.
This publication does not constitute a recommendation to buy or
sell any of the securities mentioned herein. The value of investments
and the income therefore can go down as well as up. Past performance
is not a guide to future returns. You should note that, if you choose
to invest in any product described or referred to in this publication,
your capital will be at risk and you may therefore lose some or
all of any amount that you choose to invest. Returns, or any performance,
cannot be guaranteed. Performance is shown net of all fees and expenses.
This publication constitutes a financial promotion for the purposes
of the Financial Services and Markets Act 2000 and the FCA's Handbook
of Rules and Guidance (the "FCA Rules"). This publication is not
intended to constitute, and should not be construed as, investment
advice. Potential investors in the products described in this publication
should seek their own independent financial advice. RAB Capital
Limited neither provides investment advice to, nor receives and
transmits orders from, investors in those products nor does it carry
on any other activities with or for such investors that constitute
"MiFID or equivalent third country business" for the purposes of
the FCA Rules.
This publication does not constitute an offer or solicitation in
any country in which such an offer or solicitation is not authorised
or to any person to whom it is unlawful to make such an offer or
solicitation. Those persons interested in acquiring shares in the
Company should inform themselves as to the applicable law within
the countries of their nationality, residence, ordinary residence
or domicile for such acquisition. There may be restrictions in certain
countries as to whom may acquire shares in the Company. A general
outline of restrictions can be found in the Admission Document of
the Company, which can be obtained by contacting info@rabcap.com.
Please note that RAB Capital Limited does not give, or purport to
give, legal advice. Potential investors should seek their own legal
advice.
Except as required by law or the FCA Rules, RAB Capital Limited
makes no representation or warranty (express or implied) regarding
the accuracy, completeness or adequacy of the information or opinions
in this publication. Furthermore, to the extent permitted by law
and the FCA Rules, neither RAB Capital Limited, nor the Master Fund,
nor any of their respective directors, officers, employees, agents,
service providers or professional advisers, assumes any liability
or responsibility nor owes any duty of care for any consequences
of any person acting or refraining to act in reliance on the information
or opinions contained in this publication or for any decision based
on it. RAB Capital Limited takes very seriously the issue of Market
Abuse and maintains robust controls around its prevention.
Condensed Statement of Comprehensive Income
for the six months ended 30 June 2015 (unaudited)
Six months Year ended
ended 30
Six months ended June 2014
(unaudited) 31 December
30 June 2015 2014
(unaudited) (audited)
Notes Revenue Capital Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment gains and losses
Movement in unrealised loss
on investment in the period/year 11 - 659 659 537 (2,084)
---------- ---------- ---------- ---------- ----------
Total investment gains and losses - 659 659 537 (2,084)
---------- ---------- ---------- ---------- ----------
Income
Interest income 1 - 1 1 3
---------- ---------- ---------- ---------- ----------
1 - 1 1 3
---------- ---------- ---------- ---------- ----------
Expenses
Investment management fee 5 - (75) (75) (108) (200)
Directors' remuneration 6 (53) - (53) (53) (105)
Administration fee 7 (45) - (45) (45) (90)
Other expenses 8 (62) - (62) (60) (124)
---------- ---------- ---------- ---------- ----------
(160) (75) (235) (266) (519)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Movement in provision for operating
loss to wind up 3 150 179 329 - (870)
---------- ---------- ---------- ---------- ----------
Total comprehensive (loss)/income
for the period/year (9) 763 754 272 (3,470)
---------- ---------- ---------- ---------- ----------
(Loss)/earnings per Ordinary
Share: basic and diluted 9 (0.01)p 1.19p 1.18p 0.42p (5.41)p
The "total" column of this statement represents the Condensed Statement
of Comprehensive Income of the Company. The supplementary revenue
and capital columns are presented for information purposes, in accordance
with guidance published by the Association of Investment Companies.
All the items in the above statement derive from continuing operations.
There was no other comprehensive income in the period/year.
The accompanying notes form an integral part of this announcement.
Condensed Statement of Changes in Equity
for the six months ended 30 June 2015 (unaudited)
Special
Share distributable Revenue Capital
capital reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended 30 June 2015 (unaudited)
At 1 January 2015 641 81,044 (3,887) (70,482) 7,316
Total comprehensive (loss)/income
for the period - - (9) 763 754
---------- ---------- ---------- ---------- ----------
At 30 June 2015 641 81,044 (3,896) (69,719) 8,070
---------- ---------- ---------- ---------- ----------
For the six months ended 30 June 2014 (unaudited)
At 1 January 2014 646 81,048 (3,035) (67,864) 10,795
Total comprehensive loss for
the period - - (157) 429 272
Transactions with Owners
Cancellation of shares held
in treasury (5) 5 - - -
---------- ---------- ---------- ---------- ----------
At 30 June 2014 641 81,053 (3,192) (67,435) 11,067
---------- ---------- ---------- ---------- ----------
For the year ended 31 December 2014 (audited)
At 1 January 2014 646 81,048 (3,035) (67,864) 10,795
Total comprehensive loss for
the year - - (852) (2,618) (3,470)
Transactions with Owners
Buy-back of Ordinary Shares - (9) - - (9)
Cancellation of shares held
in treasury (5) 5 - - -
---------- ---------- ---------- ---------- ----------
At 31 December 2014 641 81,044 (3,887) (70,482) 7,316
---------- ---------- ---------- ---------- ----------
The accompanying notes form an integral part of this announcement.
Condensed Statement of Financial Position
as at 30 June 2015 (unaudited)
30 June 30 June 31 December
2015 2014 2014
Notes (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Investment designated at fair value through
profit or loss 11 - 9,664 -
Current assets
Investment designated at fair value through
profit or loss 11 7,702 - 7,043
Receivables and prepayments 23 23 16
Cash and cash equivalents 12 919 1,418 1,173
---------- ---------- ----------
8,644 1,441 8,232
---------- ---------- ----------
Total assets 8,644 11,105 8,232
---------- ---------- ----------
Current liabilities
Payables and accruals (33) (38) (46)
Provision for operating loss to wind up 3 (541) - (870)
---------- ---------- ----------
Total liabilities (574) (38) (916)
---------- ---------- ----------
Net assets 8,070 11,067 7,316
---------- ---------- ----------
Share capital and reserves
Called-up share capital 13 641 641 641
Special distributable reserve 81,044 81,053 81,044
Revenue reserve (3,896) (3,192) (3,887)
Capital reserve (69,719) (67,435) (70,482)
---------- ---------- ----------
Total equity holders' funds 8,070 11,067 7,316
---------- ---------- ----------
Net asset value per Ordinary Share: basic
and diluted 14 12.61p 17.25p 11.43p
The accompanying notes form an integral part of this announcement.
Condensed Statement of Cash Flows
for the six months ended 30 June 2015 (unaudited)
Six months Six months
ended ended
Year ended
30 June 30 June 31 December
2015 2014 2014
Notes (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net cash outflow from operating activities 15 (254) (287) (523)
Financing activities
Purchase of own shares - - (9)
---------- ---------- ----------
Net cash outflow from financing activities - - (9)
---------- ---------- ----------
Decrease in cash and cash equivalents (254) (287) (532)
---------- ---------- ----------
Cash and cash equivalents brought forward 1,173 1,705 1,705
Decrease in cash and cash equivalents (254) (287) (532)
---------- ---------- ----------
Cash and cash equivalents carried forward 12 919 1,418 1,173
---------- ---------- ----------
The accompanying notes form an integral part of this announcement.
Notes to the Results
for the six months ended 30 June 2015 (unaudited)
1. General Information
The Company is an authorised closed-ended, non-cellular investment
company domiciled and incorporated as a limited liability company
under the laws of Guernsey. The registered office of the Company
is PO Box 650, 1(st) Floor, Royal Chambers, St Julian's Avenue,
St Peter Port, Guernsey, GY1 3JX.
The Company's objective is to maximise its total return primarily
through the capital appreciation of its investments. The Company's
investment activities are managed by RAB Capital Limited, with the
administration delegated to Elysium Fund Management Limited ("Elysium").
The Company's Ordinary Shares are traded on AIM, a market operated
by the London Stock Exchange.
2. Statement of compliance
The results have been prepared in accordance with International
Accounting Standard 34: Interim Financial Reporting. They do not
include all of the required information for full financial statements
and should be read in conjunction with the Company's financial statements
for the year ended 31 December 2014.
The results were authorised for issuance by the Board of Directors
on 14 August 2015.
3. Estimates
The preparation of the results in conformity with International
Financial Reporting Standards ("IFRS") requires management to make
judgements, estimates and assumptions that affect the application
of policies and the reported amounts of assets and liabilities,
income and expense. The estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying values
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period
in which the estimate is 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 significant judgements made by the Directors in applying the
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the financial statements
for the year ended 31 December 2014.
Going concern
As announced in September 2013, the Board will put forward proposals
to Shareholders at the end of 2015 to enable Shareholders to vote
on the future of the Company.
The Shareholder vote shall be proposed as an ordinary resolution
and accordingly will require the approval of a simple majority of
the votes cast at the relevant extraordinary general meeting to
be passed. If a simple majority of Shareholders vote against the
continuance of the Company as an investment company, then RAB Capital
Limited and Philip Richards (who together hold shares representing
approximately 27.2% of the voting rights of the Company) have confirmed
that they would not vote against any resultant proposals put forward
by the Board to wind up the Company and/or liquidate its assets
that require a special resolution.
The Board believes that the Shareholders will resolve to voluntarily
wind up the Company at this point. Therefore, the results have been
prepared on a non-going concern basis. This reduced the 30 June
2015 NAV by GBP541,000 (0.85p per share) (31 December 2014: reduced
by GBP870,000, 1.36p per share).
Provision for operating loss to wind up
The provision for the operating loss to wind up comprises estimated
expenses from the period end date to the anticipated date of wind
up, including the costs of wind up itself. These estimated expenses
are based on historical expenses, as an estimate of what future
costs will be, in accordance with the expected timeline to wind
up.
No gain or loss on the investment has been included in the provision
for operating loss to wind up as, although the Board hopes that
the value of the Company's holding in the Master Fund will increase
from its 30 June 2015 value, particularly given that the 30 June
2015 valuation had been affected by the poor performance of oil
and resource companies, the Board has deemed that the period end
value was a reasonable estimate of the realisable value of the investment.
Although there is uncertainty as to the realisable amounts of the
assets and liabilities, the Board believes that the value at which
the assets and liabilities are carried in the Statement of Financial
Position is a reasonable approximation to their realisation amounts.
4. Segmental reporting
The Company generated 100% of its investment gains and losses in
the period from its investment in one source, being the Master Fund,
which is registered in the Cayman Islands. The total investment
gain for the period ended
30 June 2015 was GBP659,000 (30 June 2014: gain of GBP537,000,
31 December 2014 loss of GBP2,084,000) and constitutes the entire
investment gains and losses of the Company during the period.
The only other revenue for the Company during the period was bank
interest of GBP1,000 (30 June 2014: GBP1,000, 31 December 2014:
GBP3,000).
5. Investment management
RAB Capital Limited (the "Investment Manager") is entitled to an
investment management fee, payable by the Company in arrears, of
up to 1/12th of 2.0% per month calculated on the NAV of the Company
and from which it may, at its discretion, pay to any person to which
it has delegated any of the functions it is permitted to delegate.
Elysium (the "Administrator") calculates the investment management
fee. The Investment Manager is also entitled to reimbursement of
certain expenses incurred by it in connection with its duties.
With effect from 1 January 2014, the Investment Manager reduced
its fees by GBP10,000 per annum.
The Investment Manager may also be entitled to a performance fee
calculated on an aggregate NAV basis in respect of any financial
year if the closing NAV for that financial year exceeds the opening
NAV for the financial year or the high water mark NAV (if higher).
In such circumstances, the performance fee equates to 20.0% of the
excess of the closing NAV for that financial year over the opening
NAV for that financial year or the high water mark NAV (as appropriate),
less the proceeds of any issues since the beginning of the financial
year or the date on which the high water mark NAV occurred (as appropriate),
plus the cost of any repurchases since the beginning of the financial
year or the date on which the high water mark NAV occurred (as appropriate).
The adjusted high water mark at 30 June 2015 was GBP120,779,000.
The Administrator calculates the performance fee, which is due to
the Investment Manager within ten business days of the end of the
financial year.
The performance fee is calculated based on the estimated NAV at
the year-end, not the actual NAV stated in the Condensed Statement
of Financial Position in the financial statements. This is due to
the performance fee being payable within ten business days of the
year-end (as per the Investment Management Agreement), before the
final basic year-end NAV becomes available. Whilst this may result
in a higher performance fee in certain periods, it is equally likely
that the performance fee may be underpaid. The performance fee will
not be amended for any overpayment or underpayment in a period due
to the use of the estimated NAV, instead of the actual NAV. The
opening NAV/high water mark of the subsequent period will be based
on the estimated year-end NAV as applied in the performance fee
calculation at the previous year-end.
The Investment Manager has discretion to waive and rebate all or
part of the performance fee payable in relation to the Company.
The Investment Manager does not receive a management or performance
fee for its role as investment manager of the Master Fund in respect
of the Company's shareholding in the Master Fund. The Investment
Management Agreement is terminable on 90 days' notice by either
party.
6. Directors' remuneration
No bonus or pension contributions were paid or were payable on behalf
of the Directors. As part of the Board's internal review of costs,
each of the Directors had agreed to waive GBP5,000 of their respective
fees for 2011, 2012 and 2013, a total saving of GBP20,000 per annum
for the Company. With effect from 1 January 2014, the Chairman agreed
to waive GBP12,500 per annum of his fees and each of the other Directors
agreed to waive GBP10,000 per annum of their respective fees, a
total saving of GBP42,500 per annum for the Company.
7. Administration
Elysium acts as Administrator and Company Secretary to the Company.
The Administrator is responsible for providing administration and
secretarial services to the Company, including the calculation of
the monthly NAV per Ordinary Share of the Company. The Administrator
also serves as the Company's agent for the issue and repurchase
of Ordinary Shares. The Administrator was paid an annual fee of
0.1% of the NAV of the Company, subject to a minimum annual fee
of GBP100,000. However, with effect from 1 January 2014, the Administrator
reduced its fees by GBP10,000 per annum. The Administration Agreement
is terminable on 90 days' notice by either party.
8. Other expenses
Six months Six months Year ended
ended 30 ended 30
June 2015 June 2014
(unaudited)
(unaudited) 31 December
2014
(audited)
Total Total Total
GBP'000 GBP'000 GBP'000
Nominated Adviser and Broker's fees([1]) 18 18 35
Registrar fees 9 7 16
Directors' and officers' liability insurance 8 8 16
Directors' travel expenses 8 7 15
Auditor's remuneration 4 3 7
Legal fees - 3 7
Other expenses 15 14 28
--------- --------- ----------
62 60 124
--------- --------- ----------
All of the above expenses are charged through the revenue account.
([1]) With effect from 1 January 2014, the Nominated Adviser and Broker
has agreed to reduce its fees by GBP5,000 per annum.
9. Earnings per Ordinary Share
Basic and diluted
The earnings per Ordinary Share is based on a net profit of GBP754,000
(30 June 2014: profit of GBP272,000; 31 December 2014: loss of GBP3,470,000)
and on a weighted average number of 63,987,761 (30 June 2014: 64,137,761;
31 December 2014: 64,132,419) Ordinary Shares in issue throughout
the period.
The revenue loss per Ordinary Share is based on a net loss of GBP9,000
(30 June 2014: loss of GBP157,000; 31 December 2014: loss of GBP852,000)
and on a weighted average number of 63,987,761 (30 June 2014: 64,137,761;
31 December 2014: 64,132,419) Ordinary Shares in issue throughout
the period.
The capital earnings per Ordinary Share is based on a capital gain
of GBP763,000 (30 June 2014: gain of GBP429,000; 31 December 2014:
loss of GBP2,618,000) and on a weighted average number of 63,987,761
(30 June 2014: 64,137,761; 31 December 2014: 64,132,419) Ordinary
Shares in issue throughout the period.
10. Dividends
No dividends were paid in the period (30 June 2014 and 31 December
2014: nil).
11. Investment designated at fair value through profit or loss
Year ended
31 December
Six months Six months
ended ended 2014
30 June 30 June
2015 (unaudited) 2014 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Opening valuation 7,043 9,127 9,127
Unrealised gain/(loss) in the period/year 659 537 (2,084)
---------- ---------- ----------
Closing valuation 7,702 9,664 7,043
---------- ---------- ----------
Closing book cost 48,687 48,687 48,687
Closing unrealised loss on investment (40,985) (39,023) (41,644)
---------- ---------- ----------
Closing valuation 7,702 9,664 7,043
---------- ---------- ----------
The Company's only investment has been in the Sterling Guernsey
Share Class of the Master Fund.
At the period-end, the Company held all of the shares of the Sterling
Guernsey Share Class of the Master Fund. At 30 June 2015, this Sterling
Guernsey Share Class accounted for 32.57% (30 June 2014: 30.41%;
31 December 2014: 31.66%) of the net assets of the Master Fund.
As the investment in the Master Fund is carried at fair value through
profit or loss and the Company is an investment company, the Company
is exempt from applying IAS 28 in accounting for its investment
in the Master Fund.
The Master Fund is managed by the Investment Manager. As stated
in note 5, the Investment Manager does not receive a management
or performance fee for its role as investment manager of the Master
Fund in respect of the Company's shareholding in the Master Fund.
12. Cash and cash equivalents
31 December
2014
30 June 30 June
2015 (unaudited) 2014 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Deposit with banks 875 1,375 1,100
Cash balances with banks 44 43 73
---------- ---------- ----------
Total cash and cash equivalents with
banks 919 1,418 1,173
---------- ---------- ----------
13. Share capital
30 June 30 June 31 December
2015 2014 2014
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Authorised:
300,000,000 Ordinary Shares of 1p 3,000 3,000 3,000
---------- ---------- ----------
Allotted, called up and fully paid:
Ordinary Shares of 1p each: 63,987,761
(30 June 2014: 64,137,761; 31 December
2014: 63,987,761) 640 641 640
Treasury Shares of 1p each: 150,000
(30 June 2014: nil; 31 December 2014:
150,000) 1 - 1
---------- ---------- ----------
641 641 641
---------- ---------- ----------
At 30 June 2015, the Company had 64,137,761 Ordinary Shares in issue,
of which 150,000 were held in treasury. Shares held in treasury
will not be reissued at less than the latest published NAV, nor
held in treasury for more than twelve months, at which point they
will be cancelled.
14. Net asset value per Ordinary Share
Basic and diluted
The NAV per Ordinary Share is based on the net assets attributable
to equity Shareholders of GBP8,070,000
(30 June 2014: GBP11,067,000; 31 December 2014: GBP7,316,000) and
on 63,987,761 (30 June 2014: 64,137,761; 31 December 2014: 63,987,761)
Ordinary Shares in issue at the end of the period.
15. Reconciliation of net comprehensive profit/(loss) to net cash
outflow from operating activities
Year ended
Six months Six months 31 December
ended ended 2014
30 June 2015 30 June
(unaudited) 2014 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net comprehensive profit/(loss) on
ordinary activities for the period/year 754 272 (3,470)
(Profit)/loss on investment (659) (537) 2,084
(Decrease)/increase in provision (329) - 870
Increase in receivables and prepayments (7) (11) (4)
Decrease in payables and accruals (13) (11) (3)
---------- ---------- ----------
Net cash outflow from operating activities (254) (287) (523)
---------- ---------- ----------
16. Capital commitments
There were no capital commitments as at 30 June 2015 (30 June 2014
and 31 December 2014: nil).
17. Events after the financial reporting date
There were no material events after 30 June 2015 that required disclosure
as at 14 August 2015.
18. Related parties
Details of the relationship between the Company and RAB Capital
Limited are disclosed in note 5.
During the period, GBP75,000 (30 June 2014: GBP108,000; 31 December
2014: GBP200,000) was payable to RAB Capital Limited in respect
of investment management fees and nil (30 June 2014 and 31 December
2014: nil) in respect of performance fees.
At 30 June 2015 the Company owed RAB Capital Limited GBP13,000 (30
June 2014: GBP18,000; 31 December 2014: GBP11,000) in respect of
investment management fees and nil (30 June 2014 and 31 December
2014: nil) in respect of performance fees.
Mr Wetherhill is a non-executive director of RAB Partners Limited,
a wholly-owned subsidiary of RAB Capital Limited, and three other
entities managed by RAB Capital Limited (RAB Special Situations
Fund Limited, RAB Special Situations (Master) Fund Limited and Redstream
Fund Limited). Mr Wetherhill is also the Chairman of the RAB Capital
Limited valuation committee, which continues to meet monthly to
ensure that the Investment Manager adheres to the valuation policy
and procedures document adopted by the Master Fund and to review
the rationale for any revaluations in the month.
At 30 June 2015, RAB Capital Limited held 15,457,276 (30 June 2014
and 31 December 2014: 15,457,276) Ordinary Shares in the Company.
In addition, a director of RAB Capital Limited, Philip Richards,
held 2,000,000 Ordinary Shares in the Company at 30 June 2015 (30
June 2014 and 31 December 2014: 2,000,000).
The Directors are not aware of any ultimate controlling party.
19. Capital management policy and procedures
The Company's capital management objectives are:
* to ensure that it will be able to meet its
liabilities as they fall due; and
* to maximise its total return primarily through the
capital appreciation of its investments.
Pursuant to the Company's Articles of Incorporation, the Company
may borrow money in any manner. However, the Board has determined
that the Company should borrow no more than 20% of direct investments.
The Board, with the assistance of the Investment Manager, monitors
and reviews the structure of the Company's capital on an ad hoc basis.
This review includes:
* how funds could be returned to Shareholders;
* the current and future levels of gearing;
* the need to buy-back equity shares for cancellation
or to be held in treasury, which takes account of the
difference between the NAV per share and the share
price; and
* the current and future dividend policy.
Ordinary Shares held in treasury will not be reissued at a price
less than the latest published NAV and will not be held in treasury
for more than twelve months, at which point they will be cancelled.
Although the Company's financial statements are no longer prepared
on a going concern basis, the Company's objectives, policies and
processes for managing capital remain unchanged from the previous
period, as no change should be made until after Shareholders have
actually voted for the Company to wind up.
As at 30 June 2015 the Company had no debt (30 June 2014 and 31 December
2014: nil). As disclosed in the Condensed Statement of Financial
Position, at 30 June 2015, the total equity holders' funds were GBP8,070,000
(30 June 2014: GBP11,067,000; 31 December 2014: GBP7,316,000).
20. Significant accounting policies
Except for the adoption of the new accounting standards noted below,
the results have adopted the same accounting policies as the last
audited financial statements, which were prepared in accordance
with IFRS, issued by the International Accounting Standards Board
("IASB"), interpretations issued by the IFRS Interpretations Committee
("IFRIC") of the IASB and applicable legal and regulatory requirements
of Guernsey Law and reflect those policies, which have been adopted
and applied consistently.
The new accounting standards which were adopted during the period
were:
IFRS 7 Financial Instruments: Disclosures - Deferral of mandatory
effective date of IFRS 9 and amendments to transition disclosures
IFRS 8 Operating Segments - Aggregation of segments, reconciliation
of segment assets
IFRS 13 Fair Value Measurement - Scope of the portfolio exception
IAS 24 Related Party Disclosures - Management entities
Adoption of the above standards, amendments and interpretations
had no impact on the financial position or performance of the Company.
19. Related parties
Details of the relationship between the Company and RAB Capital
Limited are disclosed in note 6.
During the period, GBP108,000 (30 June 2013: GBP140,000; 31 December
2013: GBP255,000) was payable to RAB Capital Limited in respect
of investment management fees and nil (30 June 2013 and 31 December
2013: nil) in respect of performance fees.
At 30 June 2014 the Company owed RAB Capital Limited GBP18,000 (30
June 2013: GBP20,000; 31 December 2013: GBP18,000) in respect of
investment management fees and nil (30 June 2013 and 31 December
2013: nil) in respect of performance fees.
Mr Wetherhill is a non-executive director of RAB Partners Limited,
a wholly owned subsidiary of RAB Capital Limited, and two other
entities managed by RAB Capital Limited; Redstream Fund Limited
and RAB Special Situations (Master) Fund Limited. Mr Wetherhill
is also the Chairman of the valuation committee for certain RAB
Capital Limited managed funds, including the Master Fund.
At 30 June 2014, RAB Capital Limited held 15,457,276 (30 June 2013
and 31 December 2013: 15,457,276) Ordinary Shares in the Company.
In addition, a director of RAB Capital Limited, Philip Richards,
held 2,000,000 Ordinary Shares in the Company at 30 June 2014 (30
June 2013 and 31 December 2013: 2,000,000).
The Directors are not aware of any ultimate controlling party.
20. Capital management policy and procedures
The Company's capital management objectives are:
* to ensure that it will be able to continue as a going
concern; and
* to maximise its total return primarily through the
capital appreciation of its investments.
Pursuant to the Company's Articles of Incorporation, the Company
may borrow money in any manner. However, the Board has determined
that the Company should borrow no more than 20% of direct investments.
The Board, with the assistance of the Investment Manager, monitors
and reviews the structure of the Company's capital on an ad hoc basis.
This review includes:
* the current and future levels of gearing;
* the need to buy-back equity shares for cancellation
or to be held in treasury, which takes account of the
difference between the NAV per share and the share
price; and
* the current and future dividend policy.
The Company's objectives, policies and processes for managing capital
remain unchanged from the previous year.
As at 30 June 2014 the Company had no debt (30 June 2013 and 31 December
2013: nil). As disclosed in the Condensed Statement of Financial
Position, at 30 June 2014, the total equity holders' funds were GBP11,067,000
(30 June 2013: GBP11,744,000; 31 December 2013: GBP10,795,000).
-- ENDS --
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMGMRLDZGKZG
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