TIDMAVR
RNS Number : 8161J
Avarae Global Coins PLC
13 August 2012
For immediate release: 13 August 2012
AVARAE GLOBAL COINS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2012
Avarae Global Coins plc ("Avarae" or the "Company"), the UK's
only publicly traded specialist company dedicated to purchasing,
holding and selling rare and high quality coins, is pleased to
announce its final audited results for the year ended 31 March
2012.
Highlights for the year:
-- Profit on ordinary activities up more than 12% to GBP0.51 million (2011: GBP0.45 million);
-- Earnings per share up by 20% to 0.63p (2011: 0.52p);
-- NAV per share increased to 14.2p at the year-end (2011: 13.5p);
-- Carrying value of portfolio of rare and high quality coins of
GBP10.11 million (2011: GBP10.07 million); and
-- Net cash of GBP1.30 million at year end (2011: GBP0.44 million).
Commenting on the results, Diane Clarke, Director of Avarae,
said:
"Despite the continued economic difficulties throughout the
financial markets and the Eurozone, Avarae has again successfully
demonstrated that it is a genuine alternative asset play, as
evidenced by it reporting material increases in profit and NAV for
the year, together with some significant realisations of its
investment portfolio. The Company has a strong balance sheet,
including a coin portfolio with a carrying value, as reported on by
industry experts, of more than GBP10.1 million and net cash of
GBP1.3 million. The Directors, therefore, remain optimistic about
the Company's future prospects."
The Company's audited report and accounts, together with the
notice of the AGM, have today been posted to shareholders. An
electronic copy of the audited report and accounts will also
shortly be available on the Company's website: www.avarae.com.
For further information on Avarae Global Coins plc, please
contact:
Diane Clarke/Matt Wood +44 (0)16 2461 5614
Avarae Global Coins plc
Tom Price/Paul Gillam +44 (0)20 7601 6100
Westhouse Securities Limited
Toby Hall/Suzanne Johnson-Walsh +44 (0)20 3103 3900
GTH Communications Limited
Directors' Report
Introduction
We are pleased to present the annual report for the year ended
31 March 2012 to our shareholders. The following pages show the
financial position of the Company for the year ended 31 March 2012.
During the year under review, the Company continued to manage its
portfolio of rare and high quality coins.
Avarae Global Coins plc ("Avarae") provides access for
institutions and individuals wanting to diversify their investment
portfolios away from the traditional asset classes such as
equities, property and bonds without the need to be an expert in
the coin-collecting sector. The principal objective of the Company,
as set out in its AIM admission document, is to achieve capital
growth for its shareholders through the purchase, holding and sale
of the rarest and highest quality segment of the coin-collecting
sector in various countries around the world.
Investing policy
We are currently building up an impressive portfolio of
extremely high quality, rare coins which we intend to hold both for
the long-term (i.e. 3 to 5 years), in order to achieve long-term
capital growth for our shareholders, and also the short-term, in
order to take advantage of short-term trading opportunities, as the
market for rare coins continues to grow. The value of each
investment is expected to range from a few hundred pounds up to
many hundreds of thousands of pounds. The most expensive coin
acquired by Avarae to date is the Edward III Double Florin which
was acquired for GBP0.4 million in 2006. The Double Florin is on
display at the Fitzwilliam Museum in Cambridge.
The Board's decision on whether to acquire or dispose of a coin
or coin collection is made on the recommendation of its industry
expert independent Advisory Panel ("Panel") that assesses and
approves all coin trading related activities. The Panel members are
Sir John Wheeler and Clement Chambers, both of whom have
significant expertise in the field of numismatics.
A principal objective of the Company is to achieve long-term
capital growth through the appreciation in the value of the coins
acquired. Compound annual returns potentially achievable over the
medium to long-term for the highest quality and rarest coins are
expected to be around 10 per cent., in line with historical
averages. As at the date of this report, and since its formation in
2006, the Company has no borrowings and has no present intention of
securing any borrowings.
The coin-dealing sector
The market for trading coins is international in nature and
significant in size. For a number of years now, there has been an
increasing interest in the coin sector and its prominence as an
alternative investment class is illustrated by continued increases
in activity around the world, where record prices have been paid
for certain rare pieces. The number of interested parties in coins
and coin collections appears to be continuing to grow, with auction
houses reporting significant growth in the numbers of interested
bidders compared to the corresponding auctions in previous
years.
Segments of the coin market have proved relatively buoyant over
the last 12 months, with certain sectors continuing to show healthy
demand, such as English, Roman and Islamic coins. Other sectors,
such as Chinese coins, have stayed flat at best and, in the case of
the European examples (excluding British coins), some have
marginally contracted. The weakening Euro exchange rate, general
downturn and financial difficulties across the EU have dampened
demand for German, Italian and French coins. That said, a number of
auction houses have continued to achieve record prices,
particularly for the highest quality, very rarest pieces.
Avarae's investments
Purchases
In the year to 31 March 2012, the Company acquired GBP0.81
million worth of coins (2011: GBP1.1 million), resulting in the
value of the coin portfolio as at 31 March 2012 being GBP10.11
million (2011: GBP10.07 million). In line with its investment
strategy, the Company has focused on the purchase of only the
highest quality and rarest coins. In particular, during the year,
the Company increased its exposure to Roman gold, English,
Scottish, Anglo-Gallic and Islamic coins.
Examples of coins acquired during the year include a number of
Charles I Triple Unites. These coins are of particular rarity as
the Triple Unite is the largest denomination hammered gold coin
ever struck in England. Made between 1642 and 1644 at King Charles
I's mint at Oxford during the English Civil War, only around 200
examples are known, many of which are owned by museums. They show
the King holding both an olive branch and a sword, signifying a
wish for peace.
In addition to the Triple Unites, we were delighted to acquire a
Charles I Gold Half Unit or Double Crown, first issued between 1625
and 1634. This coin is the earliest gold issue by King Charles I in
Scotland and carries the bust of his Father King James VI of
Scotland who was the first to unite the Kingdoms of England and
Scotland as he was also King James I of England from 1603-25. A
particularly fine example of one of the rarest Scottish issues of
King Charles I.
Our growing portfolio of Roman gold coins was enhanced by the
addition of a Gold Aureus struck at Rome around AD200. This
important dynastic gold Aureus shows the portraits of Geta and
Caracalla, the sons of Septimius Severus. After the death of their
father in York in A.D. 211, the control of the Roman Empire fell
into the hands of the two brothers, until Caracalla arranged for
Geta's assassination in A.D. 212 leaving him as sole ruler.
Sales
The sales highlight during the year for Avarae, as announced in
October 2011, was the consignment of Chinese coins sold at auction
in Hong Kong. Avarae had acquired the majority of these coins
between 2007 and 2008 and had been revaluing each coin at the end
of the subsequent financial year ends. Whilst the directors and
numismatic advisory panel were cautiously optimistic of a strong
showing, there remained some concerns that the then recent strong
market for Chinese coins had overheated and was on the verge of
declining. The directors were delighted that all but a handful of
coins were sold at prices significantly ahead of their revalued
amounts. As mentioned above, the market for high-end Chinese coins
has tailed off over the last 6-9 months and the board is pleased to
have realised the majority of its holding of Chinese coins during
the year under review. Notwithstanding this, the Company continues
to review the Chinese market with interest with a view to
re-entering at some point in the future.
During the year, the Company also continued its efforts to
rebalance the portfolio, liquidating some of the lower value items
and inferior duplicates previously acquired as part of important
collections. This process is ongoing and we expect to generate
several hundred thousand pounds of sales during the current
financial year as a result of this exercise.
English milled and hammered coins, as in previous years,
represent the largest segment of the Company's portfolio, with
holdings of Ancient Roman, Islamic, Indian and Italian coins
also representing significant proportions of the stock. Other
sectors where Avarae holds coins of notable value includes USA,
German, Chilean and Chinese coins.
Avarae's current intention is to hold the vast majority of its
current portfolio for the foreseeable future and only make
disposals of coins or collections when the Board believes it to be
in the best interests of the Company and its shareholders.
Financial results
Revenue from the sale of coins or coin collections for the year
ended 31 March 2012 was GBP1.7 million, down on the previous year's
figures of GBP2.2 million.
As at 31 March 2012, in line with the strategy outlined in our
AIM admission document and in previous reports, the Company
instructed industry experts to undertake a detailed revaluation of
its coin portfolio. This exercise is intended to apportion changes
in the value of coins over the period of their ownership by Avarae
rather than allocating profits (or losses) in the year of sale
only. The Company's gross profit is calculated as the difference
between the sale price of each coin less its carrying value brought
forward, which will either be cost or the revalued amount. The
industry experts considered the open market resale value of only
those coins that had been held within the Company's portfolio for
more than 12 months, i.e. only those coins acquired and held by
Avarae on or before 31 March 2011 and excluded those purchased
during the financial year under review, which were held at cost. In
each of the years since the Company's inception, the Company has
recorded a gross profit, thereby demonstrating the validity of the
revaluation exercise.
The result of the extensive revaluation exercise carried out on
the coins as described in the accounting policies, which the
Directors believe to have been particularly conservative this year,
was that the overall carrying value of the portfolio as at 31 March
2012 has increased to GBP10.11 million (2011: GBP10.07 million).
The Directors consider this uplift in value to be particularly
conservative and would expect coins from the portfolio to achieve
appreciably higher returns if sold at auction. The effect of the 31
March 2012 revaluation exercise is that, as at 31 March 2012, the
Company's coin portfolio comprised of coins purchased at cost for
an aggregate GBP8.33 million (2011: GBP8.26 million) and a
revaluation amount of GBP1.78 million (net of VAT payable on sale)
(2011: GBP1.81 million).
The effect of the revaluation, together with the profits from
the coin sales, resulted in the Company achieving an almost 10%
increase in gross profit on the previous year to GBP0.89 million
(2011: GBP0.81 million). The Directors continually strive to keep
the Company's cost base to a minimum. As a result, administrative
expenses during the year were in line with the previous year at
GBP0.39 million (2011: GBP0.37 million), representing 3.4 per cent.
of the Company's net assets (2011: 3.4 per cent.). Net profit for
the year rose 12.5 per cent. to GBP0.51 million (2011: GBP0.45
million), resulting in an increase in EPS of almost 20% to 0.63p
(2011: 0.52p).
The Company ended the year with a strong net cash balance of
approximately GBP1.30 million, materially up on GBP0.44 million
reported at the end of March 2011. The Company's cash is prudently
managed across a spread of accounts, thereby reducing the risks of
the creditworthiness of any one financial institution. During the
year, investments of GBP0.81 million (2011: GBP1.1 million) were
made in coins and coin collections. As at the year end, the Company
had net assets of GBP11.43 million (2011: GBP10.92 million) and no
borrowings. Net asset value per share ("NAV") as at 31 March 2012
increased by almost 5 per cent. to 14.2 pence (2011: 13.5 pence).
Since 31 March 2007, being the date of the Company's first audited
accounts, the Company's audited NAV has increased by 50% per
cent.
Dividend
Reflecting the Company's continued increase in its NAV
year-on-year, the Company's strong cash position, the increase in
profits for the year ended 31 March 2012 and the board's cautiously
optimistic outlook, the board is pleased to propose Avarae's maiden
dividend, subject to shareholder approval to be sought at the
Company's annual general meeting to be held on 11 September 2012.
The dividend will be paid on or around 28 September 2012 to
shareholders on the register on 14 September 2012.
The dividend policy adopted by the board is intended to be a
progressive one and is expected to be declared on an annual basis.
The level of the dividend will reflect the Company's reported
profits over a three year period, thereby smoothing out any years
of one off profits (or losses). The policy will be to pay out
approximately 1/3 of the average net profits reported over the most
recent three year period. For the year ended 31 March 2012, the
level of the dividend will be approximately GBP0.15 million or
0.185 pence per share.
Purchases of own shares for cancellation
During the year ended 31 March 2012, the Company did not acquire
any Ordinary Shares for cancellation (2011: 7,350,000).
Outlook
Despite the continued economic difficulties throughout the
financial markets and the Eurozone, Avarae has again successfully
demonstrated that it is a genuine alternative asset play, as
evidenced by it reporting material increases in profit and NAV for
the year, together with some significant realisations of its
investment portfolio. The Company has a strong balance sheet,
including a coin portfolio with a carrying value, as reported on by
industry experts, of more than GBP10.1 million and net cash of
GBP1.3 million. The Directors, therefore, remain optimistic about
the Company's future prospects.
Statement of Comprehensive Income for the year ended 31 March
2012
Year ended Year ended
31-Mar-12 31-Mar-11
Note GBP'000 GBP'000
Revenue
Sales 1 1,660 2,188
Cost of Sales (966) (2,037)
Coin revaluation 5 196 664
---- ----
Gross profit 890 815
---- ----
Administrative expenses (387) (369)
---- ----
Profit on ordinary activities
before: 503 446
Finance income 2 4
---- ----
Profit on ordinary activities
before tax 505 450
Tax on profit on ordinary activities 3 - -
---- ----
Profit on ordinary activities
after taxation 505 450
---- ----
Earnings per share (basic and
diluted) 4 0.63p 0.52p
Statement of Financial Position as at 31 March 2012
As at As at
31-Mar-12 31-Mar-11
Note GBP'000 GBP'000
Assets
Current Assets
Coin inventory 5 10,112 10,067
Trade and other receivables 6 247 461
Cash at bank 1,299 435
---- ----
Total assets 11,658 10,963
---- ----
Liabilities and equity
Creditors: amounts
falling due within
one year 7 230 40
---- ----
Total Liabilities 230 40
---- ----
Equity
Called up equity share
capital 8 808 808
Share premium 8,880 8,880
Profit and loss account 1,740 1,235
---- ----
Total Equity Shareholders'
Funds 11,428 10,923
---- ----
Total Liabilities
and equity 11,658 10,963
---- ----
Cash Flow Statement for the year ended 31 March 2012
Year ended Year ended
31-Mar-12 31-Mar-11
GBP'000 GBP'000
Cash flows from operating
activities:
Profit on ordinary activities
for the year 503 446
Adjustments for:
Increase/(decrease) in payables 190 (39)
Decrease/(increase) in receivables 214 (440)
(Increase)/decrease in inventory (45) 273
---- ----
Net cash flow from operations 862 240
---- ----
Interest received 2 4
---- ----
Net cash from investing
activities 2 4
---- ----
Purchase of own shares for
cancellation - (631)
---- ----
Net cash from financing
activities - (631)
---- ----
Net increase/(decrease)
in cash and cash equivalents 864 (387)
Opening cash position 435 822
---- ----
Cash and cash equivalents
at 31 March 1,299 435
---- ----
Statement of Changes in Equity for the year ended 31 March
2012
Retained
Company Share capital Share premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2010 881 9,438 785 11,104
Share capital reduction (73) (558) - (631)
Profit for the year - - 450 450
--- --- --- ---
At 31 March 2011 808 8,880 1,235 10,923
--- --- --- ---
Profit for year - - 505 505
--- --- --- ---
At 31 March 2012 808 8,880 1,740 11,428
--- --- --- ---
Notes to the Financial Statements for the year ended 31 March
2012
(1) Accounting policies
Basis of accounting
The financial statements have been prepared under the historical
cost convention and in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union ("EU").
This is the fifth year that the Company has prepared its financial
statements in accordance with IFRSs, having previously prepared its
financial statements in accordance with previous accounting
standards. The functional currency is GBP-Sterling.
Adoption of new and revised International Financial Reporting
Standards ("IFRS"):
In the current year, the company has adopted the following new
and revised standards and interpretations issued by the
International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee
("IFRIC") of the IASB that are relevant to its operations during
the year. The adoption of these new and revised standards and
interpretations has not resulted in any changes to the company's
accounting policies that would affect the amounts reported for the
current or prior years.
IFRS 1 First-time Adoption of International Financial Reporting Standards:
Introduces a limited exemption from comparative IFRS 7
Disclosures for First-time
adopters.
Effective for periods commencing on or after 1 July 2010.
IAS 24 Related Party Disclosures:
The disclosure requirements for government-related entities have
been simplified by
clarifying the definition of a related party and providing a
partial exemption for
government-related entities.
Effective for periods commencing on or after 1 January 2011
The following standards, amendments and interpretations have
been issued but are not effective for the period commencing 1 April
2011 and have not been early adopted by the company.
IFRS 1 First-time Adoption of International Financial Reporting Standards
Replacement of 'fixed dates' for certain exceptions with 'the
date of transition to
IFRSs and an additional exemption for entities ceasing to suffer
from severe
hyperinflation.
Effective for periods commencing on or after 1 July 2011.
IFRS 7 Financial Instruments: Disclosures
Amendments enhancing disclosures about transfers of financial
assets.
Effective for periods commencing on or after 1 July 2011.
IFRS 9 Financial Instruments
Deferral of mandatory effective date and amendments to
transition disclosures.
Effective for periods commencing on or after 1 January 2015.
IFRS 13 Fair Value of Measurement
Effective for periods commencing on or after 1 January 2013.
IFRS 9 Presentation of Financial Statements
Amendments to revise the way other comprehensive income is
presented.
Effective for periods commencing on or after 1 January 2013.
Adoption of new and revised International Financial Reporting
Standards ("IFRS") (Continued):
IAS 27 Separate Financial Statements
Effective for periods commencing on or after 1 January 2013.
IAS 32 Financial Instruments: Presentation
Amendments relating to the offsetting of assets and
liabilities.
Effective for periods commencing on or after 1 January 2013.
Revenue recognition
The Company's sales consist of sales of individual coins or
collections of coins and are accounted for on an accruals
basis.
Finance income is accounted for on a received basis.
(2) Segmental information
The Company has one class of business, that of the sale of
antiquarian and collectable coins. All sales have been through
dealers based in the single geographic segment of the United
Kingdom. Accordingly no further segmental information is
presented.
(3) Taxation
The Company is resident for tax purposes in the Isle of Man.
The Company is chargeable to Isle of Man corporate income tax at
the standard rate of 0%, which took effect from 6 April 2006.
Year ended Year ended
31-Mar-12 31-Mar-11
GBP'000 GBP'000
Profit before tax 505 450
---- ----
Isle of Man tax at 0% - -
---- ----
Tax expense for the - -
year
---- ----
(4) Earnings per share
The earnings per share (basic and diluted) for the year ended 31
March 2012 was 0.63p (2011: 0.52p). The calculation of earnings per
share is based on the profit of GBP505,000 (2011: GBP450,000) for
the year and the weighted average number of shares in issue being
80,783,334 (2011: 85,506,348).
(5) Coin inventory
As at
31-Mar-12
Coins GBP'000
At Cost
At 01 April 2011 8,259
Additions 814
Disposal of coins (740)
----------
At 31 March 2012 8,333
----------
Revaluation
At 01 April 2011 1,808
Revaluation for the year 196
Disposal of coins (225)
At 31 March 2012 1,779
----------
Net Book Values
At 31 March 2012 10,112
==========
At 31 March 2011 10,067
==========
At the year end, only those coins that had been acquired by the
Company before 31 March 2011 were revalued by industry experts to
their expected current market value less the VAT payable on sale.
Inventory purchased during the year ended 31 March 2012 has been
carried at cost. This is considered by the directors to give a fair
value for the inventory. Inventory of GBP10,112,000 (2011:
GBP10,067,000) is carried as 'Inventory carried at fair value less
costs to sell'. The purchase cost of inventory held at 31 March
2012 was GBP8,332,905 (2011: GBP8,259,165).
(6) Trade and other receivables
As at As at
31-Mar-12 31-Mar-11
GBP'000 GBP'000
Trade debtors 202 439
Other debtors 29 -
Prepaid expenses 16 22
---- ----
Total 247 461
---- ----
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
(7) Payables
As at As at
31-Mar-12 31-Mar-11
GBP'000 GBP'000
Trade creditors 172 17
Accrued expenses 58 19
Other creditors - 4
---- ----
230 40
---- ----
All creditors are due within one year.
(8) Share capital and premium
As at As at
31-Mar-12 31-Mar-11
GBP'000 GBP'000
Authorised
200,000,000 ordinary shares of GBP0.01
each 2,000 2,000
---- ----
Allotted, called up and fully paid
80,783,334 ordinary shares of GBP0.01
each (2011: 80,783,334) 808 808
---- ----
This information is provided by RNS
The company news service from the London Stock Exchange
END
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