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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Cazenove AB. | LSE:CAEL | London | Ordinary Share | GG00B1FQF604 | RED PART PREF SHS 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 128.875 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMCAEL
RNS Number : 8193F
Cazenove Absolute Equity Limited
20 June 2012
CAZENOVE ABSOLUTE EQUITY LIMITED
INTERIM RESULTS ANNOUNCEMENT
The financial information set out in this announcement does not constitute the Company's statutory financial statements for the period end 30 April 2012. All amounts are based on the 30 April 2012 unaudited financial statements, approved by the Board of Directors on 19 June 2012.
The announcement is prepared on the same basis as will be set out in the interim report and financial statements.
Summary Information
Structure
Cazenove Absolute Equity Limited ("the Company") was incorporated in Guernsey on 22 September 2006 under the Companies (Guernsey) Laws 1994 to 1996 (as amended), as a limited liability closed-ended investment company.
History of the Company
The Company's shares were listed on the Alternative Investment Market ("AIM") of the London Stock Exchange on 25 October 2006 and on the Channel Islands Stock Exchange ("CISX") on 27 October 2006. The Company commenced business on 20 October 2006.
The Board of Directors implemented a 'C' share offer on 11 September 2007.
The Company's shares were delisted from AIM and were subsequently listed on the official list of the main market of the London Stock Exchange on 29 November 2007.
The Company's convertible 'C' participating redeemable preference shares were listed on the official list of the main market of the London Stock Exchange on 29 November 2007.
The existing convertible 'C' participating redeemable preference shares were converted to redeemable participating preference shares and were listed on the main market of the London Stock Exchange on 12 December 2007.
The Company made a new issue of redeemable participating preference shares on 29 February 2008.
On 16 December 2008, the Company joined The Association of Investment Companies ("AIC").
During the annual general meeting on 24 June 2011 a continuation vote was held as a result of the discount floor provision being triggered at the end of the Company's 31 October 2010 financial year end. It was resolved that the Company would continue as an investment company. Also during this annual general meeting, the authority granted to the Directors to use the Company's Share Buyback Facility to attempt to close the discount and improve liquidity in the Company's issued share capital by purchasing in the market up to 14.99% of shares in issue was renewed.
The Directors had also resolved to introduce a further discount mechanism where if in any 3 month period the average weekly discount to NAV at which the shares trade exceeds 5%, the Directors may in their absolute discretion, propose a tender allowing those Shareholders at the start of the 3 month period to redeem in aggregate up to 25% of the issued share capital of the Company at a tender price equivalent to NAV as at the date of tender less the costs of the tender offer less 2%. However, if as a result of the tender offers, share buybacks or otherwise, the Company's aggregate NAV is below GBP20 million for 3 consecutive calendar months, it is the Directors intention to draw up proposals for the voluntary liquidation of the Company. The tender offer facility was approved by Shareholders during the annual general meeting on 24 June 2011.
Significant share repurchases could take Cazenove Capital's aggregate ownership over the Takeover Code's Mandatory Offer trigger level of 30%; the Board applied for and received a waiver of Rule 9 under Rule 37 of the Takeover Code, which was approved by the Shareholders.
The Company announced on 14 May 2012 that in accordance with the articles the Board is required to put forward to the forthcoming AGM an ordinary resolution that the Company should continue as an investment company. It is currently the Board's intention to recommend that Shareholders vote against continuation and, subject to such resolution being defeated, to vote in favour of managed winding up proposals which will be put to the same meeting.
The winding up proposals will remove all existing obligations to propose continuation votes and tender offers which will instead be replaced with an objective of making cash or in specie distributions to Shareholders based on the end July and end October net asset values (less applicable costs and liquidation retention) following which the Company will be placed into liquidation.
During the year ended 31 October 2010, under the Company's Share Buyback Facility, the Company re-purchased 5,164,804 shares at a value of GBP5,565,682. During the year ended 31 October 2011, the Company re-purchased 2,920,000 shares at a value of GBP3,216,832 and cancelled 2,350,000 shares at a value of GBP2,594,934. The Company also cancelled 1,450,000 shares which were held in Treasury. During the period ended 30 April 2012 the Company cancelled 1,000,000 shares which were held in Treasury. At 30 April 2012, the Company had 32,424,573 participating shares in issue including 3,284,804 shares held in Treasury. For additional information refer to note 7.
In accordance with the Tender Offer Facility, on 16 April 2012 and 17 October 2011, the Company purchased and cancelled 9,713,256 and 12,951,004 participating shares at a value of GBP12,405,217 and GBP16,159,615 respectively. For additional information refer to note 7.
Investment Objective and Policy
The investment objective of the Company has been to seek to achieve consistent absolute returns.
The Company has sought to achieve its investment objective through a policy of investing in a portfolio of long/short equity funds ("the Underlying Funds"), seeking to achieve consistent returns with low levels of volatility.
The Company is currently invested in two Underlying Funds, each managed by Cazenove Capital Management Limited. The Underlying Funds represent long/short equity strategies, with the flexibility to exploit a wide range of long/short equity investment opportunities and are:
-- Cazenove UK Dynamic Absolute Return Fund Limited; and -- Cazenove Absolute UK Dynamic Fund. Financial Highlights 30 April 2012 31 October 2011 Net assets GBP38,197,129 GBP50,022,262 Net assets per participating share 131.08p 128.75p
Management and Administration
Hot Features
Premium
Directors Registered Office
John Hallam (Chairman) Trafalgar Court
Paul Le Page Les Banques
Geoffrey Marson St. Peter Port
Andrew Ross Guernsey GY1 3QL
Investment Manager Independent Auditor
Cazenove Capital Management Limited Ernst & Young LLP
12 Moorgate PO Box 9
London EC2R 6DA Royal Chambers
St Julian's Avenue
Corporate Broker St. Peter Port Numis Securities Limited Guernsey GY1 4AF
The London Stock Exchange Building
10 Paternoster Square CISX Listing Sponsor
London Northern Trust International Fund
EC4M 7LT Administration Services (Guernsey) Limited
Trafalgar Court
J.P. Morgan Securities Ltd Les Banques 125 London Wall St. Peter Port London EC2Y 5AJ Guernsey GY1 3QL Legal Adviser (Guernsey) Legal Adviser (UK) Ogiers Dechert LLP Ogier House 160 Queen Victoria Street St. Julian's Avenue London EC4V 4QQ
St. Peter Port
Guernsey GY1 1WA CREST Agent
Computershare Investor Services
Administrator, Secretary and Registrar (Jersey) Limited Northern Trust International Fund Queensway House Administration Services (Guernsey) Limited Hilgrove Street Trafalgar Court St. Helier Les Banques Jersey JE1 1ES
St. Peter Port
Guernsey GY1 3QL Receiving Agent
Computershare Investor Services PLC Custodian and Principal Bankers The Pavilions
Northern Trust (Guernsey) Limited Bridgewater Road PO Box 859 Bristol BS99 1XZ
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1 3DA
Chairman's Statement and Interim Management Report
Cazenove Absolute Equity Limited (CAEL) produced a positive performance during the six months to end-April 2012. CAEL's share price increased by 4.16% to 125.25p from 120.25p at the end of October, while the Net Asset Value (NAV) increased by 1.81% to 131.08p from 128.75p. As at 31 May the NAV stood at 132.13p and the share price at 128.00p, a discount of 3.13%.
Unsurprisingly during a period of rising markets, the main contribution to performance has come from the long books. As at 30 April 2012 the Company structure was 62.35% in the offshore Cazenove UK Dynamic Absolute Return Fund Limited and 38.10% in the daily dealing UCITS fund, the Cazenove Absolute UK Dynamic Fund.
Since its formation in 2006, the Company's objective has been to provide consistent absolute returns with low levels of volatility. CAEL has achieved its aims during that period, with the NAV per share increasing by 34% compared to a total return from the FTSE All Share Index of 15%. This performance has been achieved with volatility of 10.6%, less than half the index's volatility of 22.6%. Despite this return and the actions taken by your Board described below, the shares have continued to trade at an unacceptable discount to NAV. We believe this reflects a combination of investor disillusionment with closed ended fund of hedge fund structures together with the development of UCITS legislation. This has meant that investors are able to access Cazenove Capital's long short equity expertise via two UCITS product funds, Cazenove UK Absolute Target Fund and Cazenove Absolute UK Dynamic Fund. These provide the liquidity and tax effective structure which was previously only available from CAEL. The Board therefore believes that a managed winding up of CAEL is in the best interest of Shareholders.
Last year the Board set out within the notice of the 2011 Annual General Meeting ('2011 AGM') proposals which included an amendment to the investment policy and the introduction of future discretionary tender offers with the overall objective of improving the marketability of the Company thereby reducing the discount at which the Company's shares trade relative to the NAV. At the 2011 AGM Shareholders approved the adoption of these proposals together with the continuation of the Company.
However, despite these actions and two tender offers, the Company has continued to trade at a discount persistently wider than that which the Board believes to be acceptable. It is in this context that the Board intends to bring forward proposals at the 2012 AGM regarding the continuation of the Company.
In accordance with the Articles the Board is required to put forward an ordinary resolution that the Company should continue as an investment company. It is currently the Board's intention to recommend that Shareholders vote against continuation and, subject to such resolution being defeated, to vote in favour of managed winding up proposals which will be put to the same meeting.
The winding up proposals will remove all existing obligations to propose continuation votes and tender offers which will instead be replaced with an objective of making cash or in specie distributions to Shareholders (less applicable costs and liquidation retention) following which the Company will be placed into liquidation. The Board is currently exploring, with its advisers, the ability to offer as an alternative to cash distributions the ability for Shareholders to elect to receive value through a tax-efficient rollover into one of the underlying investments held by the Company.
It is currently envisaged that a circular to Shareholders setting out the notice of the 2012 AGM and including the continuation vote and the winding up proposals will be sent out shortly. A full announcement setting out details of the proposals noted above will be made at that time.
John Hallam
Chairman
June 2012
Investment Manager's Report
Against the backdrop of the continuing financial and political uncertainties that have dominated newspaper headlines, the majority of risk assets experienced high volatilities during the six months to the end of April. Conversely, safe-havens, such as 10 year US treasuries, bunds and gilts, have seen yields remain close to their historic low levels. Having said that, the first quarter of 2012 was the best opening quarter for many equity markets since 1998, consequent largely on an improvement in optimism over steps toward fiscal consolidation and the Longer-Term Refinancing Operations (LTROs) in the Eurozone and the emergence of better signs from the US economy. However, the boost from the LTROs proved short-lived, and markets started to sell-off during the second half of March and remained volatile during April. While much of the deterioration in sentiment was still attributable to lingering Eurozone concerns, an apparent softening in the pace of job creation in the US and a deceleration in the Chinese economy raised doubt with regard to whether the world's two largest economies could counteract the seemingly inevitable recession in the Eurozone.
Focusing on real economic output, growth rates in most western European economies turned negative in Q4 2011 and many probably continued in that vein in Q1 2012. While the US and China continued to expand, growth over the period came in slightly below expectations. In Germany, it was reported that Q4 GDP contracted by 0.2%, quarter-on-quarter, driven by a falling contribution from net trade and consumption. However, confidence surveys, trade figures and industrial production data in the first quarter of 2012 made for more positive reading, and a return to growth was reported for that period. While France narrowly escaped a contraction in both Q4 of 2011 and Q1 2012, Italy saw GDP drop sharply during both periods. Over the remainder of 2012, there will most likely be a continuing north-south split within the Eurozone due to austerity and the loss of competitiveness in the south. Thus, while growth forecasts for Germany are likely to be raised, the debt crisis and fiscal problems will continue to weigh heavily on Italy and Spain - not to mention Portugal and Greece.
Disappointingly, aside from the over-indebted peripheral economies, the UK has also entered into a technical recession. A fall in GDP of 0.3% in the final quarter of last year was followed by a further unexpected contraction of 0.2% in Q1 2012, largely caused by a slump in construction activity. Slightly more positively, household consumption in Q4 2011 rose for the first time since Q3 2010, and was the biggest contributor to growth during the period. As the gap narrows between inflation and income growth, leading to an improvement in consumer confidence, we expect to see further progress in household consumption during the current year. Across the Atlantic, US GDP grew an annualised 2.2% in Q1. Although this was less than expected, the expenditure components showed consumption rising 2.9%, which was the strongest gain since the start of 2011. The improvement in job creation has been a crucial supporting factor over the past six months, albeit there has been some slowdown in the most recent rounds of data. Aside from that, purchasing manager surveys, business optimism indices and consumer confidence are on track to reach new local highs, and there remains a reasonable likelihood that the US economy will gain more momentum in 2012 than predicted at the start of the year.
Uncertainty over prevailing and prospective growth trends has maintained pressure on central banks to keep interest rates low and, where appropriate, to continue to inject liquidity. The most anticipated and closely watched event was the second round of LTROs by the European Central Bank (ECB). The result was greeted with not a little relief, as 800 banks tapped into a total of EUR530bn of liquidity. Closer to home, the Bank of England extended Quantitative Easing (QE) by adding GBP50bn to gilt purchases in February 2012, on top of the GBP75bn added in October 2011, making a total asset purchase programme of GBP325bn. Consensus forecasts still suggest there will be an additional GBP50bn or so of gilt purchases before the end of this year, necessitated by stalling economic growth. In Asia, the People's Bank of China (PBOC) cut its reserve requirement ratio (RRR) by 0.5% in February 2012, after a cut of the same magnitude in November 2011; the total liquidity added is estimated to be $120bn. More recently, there has been a further RRR reduction as well as an unexpected interest rate cut which is the first time since 2008. The Bank of Japan, which has also been under a spotlight due to flagging GDP growth, increased the size of its asset purchases by Yen10trn ($120bn) to Yen65trn in an effort to curb the appreciation in the yen, which had done so much damage to exports. For the US, the resulting improvement in economic conditions has increasingly rendered QE3 unnecessary.
Given the outlook for growth outlined above, we are maintaining a modestly overweight stance toward northern European and US equities, albeit there may be a pause in the near term. As outlined earlier in this review, we see the potential for positive growth surprises in both areas in 2012. As a result, we favour companies geared to the US and Western growth which are still on relatively attractive valuations.
The Company has seen a positive six months. Looking at the Underlying Funds, the main contribution to performance has come from strong returns from the long books. CAEL's share price increased by 4.16% to 125.25p from 120.25p at the end of October, while the NAV increased by 1.81% to 131.08p from 128.75p. As at 30 April 2012 the Company structure was 62.35% in the offshore Cazenove UK Dynamic Absolute Return Fund Limited and 38.10% in the daily dealing UCITS fund, the Cazenove Absolute UK Dynamic Fund.
Allocation NAV/Share
Fund at 30.04.12 30.04.12
% GBP
Cazenove Absolute UK Dynamic
Fund 38.10 49.94p
Cazenove UK Dynamic Absolute
Return Fund Limited 62.35 81.73p
Net current liabilities -0.45 -0.59p
Total 100.00 131.08p
The Cazenove Absolute UK Dynamic Fund ran with a net long position averaging +35.2% (beta-adjusted +3.0%) in the six months to end-April. This was off a gross investment of 115.6%, a modestly higher percentage compared to that averaged last year. For the Cazenove UK Dynamic Absolute Return Fund Limited, it ran with a net long position averaging +36.0% (beta-adjusted +2.9%), off a gross investment of 119.2% in the same period.
Despite the more uncertain market conditions that emerged from mid-March, the constituent funds proved relatively resilient. The long book saw strong performance over the six month period. The short book was a negative contributor, with the funds' index short positions having one of the larger negative impacts. The funds' two largest positive contributions were from Scapa and Perform on the long book, which added +1.1% each. Perform was upgraded by several brokers on the back of strong financial results, whereas Scapa rebounded following a period of dull performance. The funds' position in Barclays, taken to provide a greater exposure to the strong beta-led large-cap rally at the start of 2012, contributed +0.5% during the early part of the year. In terms of sectors, the strongest performances on the long book were from support services and chemicals, which added a combined 4.6%. Ironically, damage on the short book was also largely from support services, which cost 1.2%. Against the macro backdrop of heightened risk in Europe and growth concern in China, it has been important to remain alert and maintain a fully populated short book for capital protection in down markets. Should the opposite happen, and risk markets begin to rebound, the rally will probably broaden beyond the less cyclical areas, favouring value stocks over high growth names.
Cazenove Capital Management Limited
22 May 2012
Board Members
Directors of the Company
The Directors are responsible for the determination of the Company's investment objectives and policy and have overall responsibility for the Company's activities. The Directors bring a range of expertise in the hedge fund and other financial sectors and have considerable experience of supervising funds with similar corporate structures to that of the Company.
The Directors of the Company, all of whom are non-executive, are listed below:
John Hallam, aged 63 (Chairman), resident in Guernsey, is a Fellow of the Institute of Chartered Accountants in England and Wales and qualified as an accountant in 1971. He is a former partner of PricewaterhouseCoopers having retired in 1999 after 27 years with the firm both in Guernsey and in other countries. He is currently also chairman of Dexion Absolute Limited and Partners Group Global Opportunities Ltd as well as being a director of a number of other financial services companies, some of which are listed on the London Stock Exchange. He served for many years as a member of the Guernsey Financial Services Commission from which he retired in 2006 having been its Chairman for the previous three years.
Paul Le Page, aged 46,is a Director of Financial Risk Management ("FRM") and is a director of a number of FRM Hedge Fund products. FRM is in the process of being acquired by the Man Group. He has extensive knowledge of, and experience in the fund management and hedge fund industry. Prior to joining FRM he was an Associate Director at Collins Stewart Asset Management from January 1999 to July 2005, where he was responsible for managing the firm's fund research team, reviewing hedge fund managers and managing hedge fund portfolios. He joined Collins Stewart in January 1999 after a 12 year career in industrial research and development, latterly as the Research and Development Director for Dynex Technologies (Guernsey) Limited until 1998, where the development of a world leading instrumentation family led to the award of a grant which he used to fund an MBA from Heriot-Watt University in 1999. He graduated in Electrical & Electronic Engineering from University College London in 1987.
Geoffrey Marson, aged 50,is Managing Director of Odey Wealth Management (C.I.) Limited. Prior to that, he was Director, Head of Investment at Credit Suisse (Guernsey) Limited, where he was in charge of Portfolio Management with responsibility for asset allocation and investment strategy. Mr Marson started his banking career in Frankfurt working for Deutsche Bank. In 1984, he joined Midland Bank International (subsequently Midland Montagu) where he spent seven years working mainly in London with periods of secondment in Sydney and Paris. After leaving Midland, he joined Nikko Securities and subsequently, Union Discount, where he worked in the financial futures market in London. In 1993, he moved to Guernsey to work in private banking with Credit Suisse (Guernsey) Limited. Mr Marson is an Associate of the Chartered Institute of Bankers and in 1995, qualified as a Fellow of the Securities Institute. He graduated in Economics with Honours from the University of York in 1984.
Andrew Ross, aged 52,joined Cazenove in 2001 and is Chief Executive of Cazenove Capital Management Limited, the Investment Manager. He was previously Chief Executive of HSBC Asset Management (Europe) Limited between 1998 and 2001. Prior to that Mr Ross was Managing Director of James Capel Investment Management between 1997 and 1998 and was an investment manager at James Capel Investment Management between 1985 and 1997. He is a member of the FSA Practitioners Panel and Deputy Chairman of APCIMS.
Save for Mr Ross, all Directors are independent of the Investment Manager.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34 - Interim Financial Reporting;
(b) the Chairman's Statement and Interim Management Report, Investment Manager's Report and Notes to the Financial Statements include:
-- a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
-- a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board,
John Hallam Paul Le Page
19 June 2012
Independent Review Report to Cazenove Absolute Equity Limited
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2012 which comprises the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and related notes 1 to 12. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and on a break up basis.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
Guernsey
19 June 2012
Notes: The maintenance and integrity of the Cazenove Absolute Equity Limited web site is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the web site.
Legislation in Guernsey governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
Portfolio Statement
As at 30 April 2012
30.04.12 31.10.11
Fair value % of net % of net
Holding GBP assets assets
Unlisted
Cazenove UK Dynamic Absolute
Return Fund Limited 10,863 23,818,192 62.35 46.57
Cazenove Absolute UK Dynamic
Fund 12,102,690 14,549,854 38.10 47.22
Total investments 38,368,046 100.45 93.79
Net current (liabilities)/assets (170,917) (0.45) 6.21
----------- --------- ---------
Net assets 38,197,129 100.00 100.00
=========== ========= =========
Significant Portfolio Movements
For the period from 1 November 2011 to 30 April 2012
Cost
Holding Purchases GBP
Cazenove
Absolute
UK
Dynamic
4,417,637 Fund 2,600,000
Total
purchase
costs 2,600,000
===========
Proceeds
Holding Sales GBP
Cazenove
Absolute
UK
Dynamic
12,433,392 Fund 12,225,000
Total
sale
proceeds 12,225,000
===========
Statement of Comprehensive Income
For the period from 1 November 2011 to 30 April 2012
(unaudited) (unaudited)
01.11.11 to 01.11.10 to
30.04.12 30.04.11
Notes GBP GBP
Investment income
Net gains on financial assets
at fair value
through profit or loss 4 1,077,426 513,135
Total investment income 1,077,426 513,135
------------ ------------
Expenses
Directors' fees 5(a) (29,091) (29,009)
Administration fees 5(c) (17,902) (17,852)
Investment management fees 5(b) (12,432) (12,397)
Custodian fees 5(d) (7,611) (6,941)
Brokerage fees 5(e) (15,642) (12,414)
Audit fees (6,067) (7,016)
Share costs 7 (55,000) (10,903)
Liquidation costs (328,000) -
Marketing expenses - (22,000)
Other expenses (25,597) (87,566)
Total operating expenses (497,342) (206,098)
------------ ------------
Net profit 580,084 307,037
============ ============
Basic and diluted earnings
per participating share 6 1.52p 0.58p
============ ============
Earnings per founder share 0.00p 0.00p
============ ============
The Company does not have any income or expenses which are
not included in the profit for the period. Accordingly, the
profit for the period is also the "total comprehensive income"
for the period, as determined by IAS1 (revised).
All items in the above statement derive from wind down operations.
Statement of Financial Position
As at 30 April 2012
(unaudited) (audited)
30.04.12 31.10.11
Notes GBP GBP
ASSETS
Non-current assets
Financial assets at fair
value through profit or loss 4 38,368,046 46,915,620
Current assets
Cash and cash equivalents 4 216,869 3,127,644
Prepayments - 18,997
Total assets 38,584,915 50,062,261
============ ============
LIABILITIES
Current liabilities
Payables 4 387,786 39,999
Total liabilities 387,786 39,999
------------ ------------
EQUITY
Share capital account 6,414,613 6,511,746
Treasury shares (6,187,580) (6,187,580)
Reserves 37,970,096 49,698,096
Total equity 38,197,129 50,022,262
------------ ------------
Total equity and liabilities 38,584,915 50,062,261
============ ============
Number of participating shares
in issue 7 29,139,769 38,853,025
============ ============
Net assets attributable to
holders of participating
shares (per share) 131.08p 128.75p
============ ============
Founder share capital (per share) 100.00p 100.00p
============ ============
The financial statements were approved on 19 June 2012 and signed on behalf of the Board of Directors by:
John Hallam Paul Le Page
Statement of Changes in Equity
For the period from 1 November 2011 to 30 April 2012 (unaudited)
Founder
share Share capital Treasury
capital account Reserves shares Total equity
GBP GBP GBP GBP GBP
Balance as
at
1 November
2011 2 6,511,744 49,698,096 (6,187,580) 50,022,262
Tender offer - (97,133) (12,308,084) - (12,405,217)
Net profit - - 580,084 - 580,084
--------- ------------------ --------------- -------------- ---------------
Balance as at
30 April 2012 2 6,414,611 37,970,096 (6,187,580) 38,197,129
========= ================== =============== ============== ===============
For the period from 1 November 2010 to 30 April 2011 (unaudited)
Founder
share Share capital Treasury
capital account Reserves shares Total equity
GBP GBP GBP GBP GBP
Balance as
at
1 November
2010 2 6,664,754 67,061,143 (5,565,682) 68,160,217
Cancellation
of shares - (23,500) (2,571,434) 2,594,934 -
Treasury shares - - - (3,216,832) (3,216,832)
Net profit - - 307,037 - 307,037
--------- -------------- ------------ ------------- -------------
Balance as at
30 April 2011 2 6,641,254 64,796,746 (6,187,580) 65,250,422
========= ============== ============ ============= =============
Statement of Cash Flows
For the period from 1 November 2011 to 30 April 2012
(unaudited) (unaudited)
01.11.11 to 01.11.10 to
30.04.12 30.04.11
GBP GBP
Operating activities
Operating expenses paid (130,558) (131,886)
------------
Cash outflows from operating activities (130,558) (131,886)
------------- ------------
Investing activities
Purchase of financial assets at
fair value through profit and loss (2,600,000) -
Sale of financial assets at fair
value through profit and loss 12,225,000 2,465,293
Cash inflows from investing activities 9,625,000 2,465,293
------------- ------------
Financing activities
Tender offer (12,405,217) -
Repurchase of shares into treasury - (3,216,832)
Cash outflows from financing activities (12,405,217) (3,216,832)
------------- ------------
Decrease in net cash and cash equivalents (2,910,775) (883,425)
Net cash and cash equivalents at
beginning of the period 3,127,644 1,758,886
Net cash and cash equivalents at
end of the period 216,869 875,461
============= ============
Notes to the Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting", as adopted by the European Union, the Listing Rules of the London Stock Exchange and applicable legal and regulatory requirements of the Guernsey Law. The financial statements have been prepared on the break up basis, and the accounting policies, presentation and methods of computation are consistent with this basis, as disclosed in the going concern paragraph below.
The condensed set of financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual report and financial statements for the year ended 31 October 2011.
Going concern
As a listed closed-ended Company, there is always the possibility that the Company's issued shares may trade at a discount to their net asset values. In order to manage this discount risk, the Company's Articles incorporate discount management provisions which require a continuation vote to be proposed if, in the 12 months preceding the Company's financial year end, the participating shares of the Company have traded on average at a discount in excess of 5% of the net asset value. If the resolution for the continuation of the Company is not passed, the Directors are required to formulate proposals to be put to Shareholders within three months of such resolution being defeated to wind-up, reorganise or reconstruct the Company.
Last year the Board set out within the notice of the 2011 Annual General Meeting ('2011 AGM') proposals which included an amendment to the investment policy and the introduction of future discretionary tender offers with the overall objective of improving the marketability of the Company thereby reducing the discount at which the Company's shares trade relative to the NAV. At the 2011 AGM Shareholders approved the adoption of these proposals together with the continuation of the Company.
However, despite these actions and two tender offers, the Company has continued to trade at a discount persistently wider than that which the Board believes to be acceptable.
In accordance with the Articles of the Company, the Board is required to put forward an ordinary resolution at the 2012 AGM that the Company should continue as an investment company. It is currently the Board's intention to recommend that Shareholders vote against continuation and, subject to such resolution being defeated, to vote in favour of managed winding up proposals which will be put to the same meeting.
The winding up proposals will remove all existing obligations to propose continuation votes and tender offers which will instead be replaced with an objective of making cash or in specie distributions to Shareholders (less applicable costs and liquidation retention) following which the Company will be placed into liquidation.
The condensed set of financial statements included in this interim report has been prepared on a break up basis reflecting the intention to wind down the Company. Accordingly, the going concern basis of accounting is no longer considered appropriate. All assets have been written down to net realisable values. The investments are expected to be realised at fair values without significant liquidity discounts. A provision for winding up costs has been included in these financial statements. Future operating profits and losses expected to be incurred up to the date the Company ceases to exist were not included as these are estimated to be insignificant.
2. TAXATION
The Company is exempt from taxation in Guernsey under the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and has paid an annual exemption fee of GBP600.
3. DISTRIBUTIONS TO PARTICIPATING SHAREHOLDERS
The Directors do not expect income (net of expenses) to be significant and do not currently expect to declare any dividends. In the event that net income is significant, the Directors may consider the distribution of net income in the form of dividends. To the extent that any dividends are paid, they will be paid in accordance with any applicable Guernsey laws and the regulations of the UK listing authority.
The Company was established with a feature which, subject to a Shareholder making an election and at the Directors' discretion, might allow a Shareholder to benefit from an annual capital distribution representing, as closely as possible, one-third of the increase in the net asset value per share during the relevant financial year. If it was considered to be in the interests of Shareholders, distributions would be made by way of a partial redemption of each Shareholder's holding of shares. No such capital distribution is proposed for the current period.
4. FINANCIAL INSTRUMENTS
The following table analyses the carrying amounts of the financial assets and financial liabilities by category as defined in IAS 39 and by Statement of Financial Position heading.
Designated
as fair value
through profit Other financial
or loss instruments Total
GBP GBP GBP
30 April 2012
Financial assets
Financial assets at
fair value
through profit or
loss 38,368,046 - 38,368,046
Cash and cash equivalents - 216,869 216,869
38,368,046 216,869 38,584,915
---------------- ---------------- -----------
Financial liabilities
Payables - 387,786 387,786
- 387,786 387,786
---------------- ---------------- -----------
31 October 2011
Financial assets
Financial assets at
fair value
through profit or
loss 46,915,620 - 46,915,620
Cash and cash equivalents - 3,127,644 3,127,644
46,915,620 3,127,644 50,043,264
---------------- ---------------- -----------
Financial liabilities
Payables - 39,999 39,999
---------------- ---------------- -----------
- 39,999 39,999
---------------- ---------------- -----------
The movement in cost and fair value of financial assets at fair value through profit or loss is shown below:
01.11.11 01.11.10
to to
30.04.12 31.10.11
GBP GBP
Cost of investments
Balance at 1 November 38,547,670 55,617,414
Purchases at cost 2,600,000 24,000,000
Sales proceeds (12,225,000) (45,171,631)
Realised gain on sales 56,897 4,101,887
Balance at 30 April/31 October 28,979,567 38,547,670
------------- -------------
Unrealised gain on revaluation
Balance at 1 November 8,367,950 10,813,497
Movement in unrealised gains for the period/year 1,020,529 (2,445,547)
Balance at 30 April/31 October 9,388,479 8,367,950
------------- -------------
Fair value 38,368,046 46,915,620
5. RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operating decisions.
(a) Directors
The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for the Company's activities.
The Directors, other than the Chairman, are entitled to remuneration for their services of GBP17,500 per annum, Mr Ross has waived his right to a fee. The Chairman is entitled to receive GBP23,500 per annum.
During the period ended 30 April 2012, Directors' fees of GBP29,091 (30 April 2011: GBP29,009) were charged to the Company and GBP4,716 (31 October 2011: GBP4,875) was payable at the period/year end.
All Directors are non-executive. Mr Ross is a Director and the Chief Executive of Cazenove Capital Management Limited, the Investment Manager.
As at 30 April 2012, the Directors held the following interests either directly or beneficially:
Mr Hallam - 20,000 (31 October 2011: 20,000) redeemable participating preference shares.
Mr Ross - 66,000 (31 October 2011: 66,000) redeemable participating preference shares.
(b) Investment Management
The Company's Investment Manager is Cazenove Capital Management Limited ("the Investment Manager"). The Investment Manager is entitled to an annual management fee, payable monthly in arrears, of GBP25,000 (30 April 2011: GBP25,000). The Investment Manager is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. During the period ended 30 April 2012 investment management fees of GBP12,432 (30 April 2011: GBP12,397) were charged to the Company and GBP10,376 (31 October 2011: GBP4,177) was payable at the period/year end.
The Underlying Funds pay the Investment Manager a periodic management fee in arrears at rates ranging from 1.25% to 1.75% per annum of the net asset value. Total management fees charged and payable by the Underlying Funds to Cazenove Capital Management Limited were as follows:
01.11.11 to 01.11.10 to
Charged during the period 30.04.12 30.04.11
European Equity Fund - EUR1,282,707
Absolute UK Dynamic Fund GBP1,156,856 -
UK Dynamic Fund GBP822,782 GBP614,457
UK Equity Fund - GBP237,253
Leveraged UK Fund - GBP213,428
European Alpha Fund - EUR639,405
% of Underlying % of Underlying
Payable at period Fund held Fund held
end 30.04.12 as at 30.04.12 31.10.11 as at 31.10.11
Absolute UK Dynamic
Fund GBP202,209 5.78% GBP415,136 11.38%
UK Dynamic Fund GBP284,613 20.90% GBP243,792 23.43%
A performance fee equal to 20% of the increase in the net asset value per share (after adding back any distributions made) outstanding in respect of each performance period less any loss carried forward per share, is also payable by the Underlying Funds to Cazenove Capital Management Limited annually.
As at 30 April 2012 the Investment Manager held 7,240,134 shares in the Company as a discretionary Fund Manager, through Chase Nominees Limited (31 October 2011: 10,868,821 shares), representing 24.85% (31 October 2011: 27.96%) of the issued capital. No other related parties held a notifiable interest in the Company under the UK Takeover Code.
(c)Administrator
The Company's Administrator is Northern Trust International Fund Administration Services (Guernsey) Limited ("the Administrator"). In consideration for the services provided by the Administrator under the Administration, Secretarial and Registrar Agreement the Administrator is entitled to receive from the Company a fee of GBP36,000 per annum (30 April 2011: GBP36,000). The Administrator is also entitled to be paid or reimbursed for all reasonable out of pocket expenses incurred by it in providing administrative services to the Company as set out in the Administration, Secretarial and Registrar Agreement. During the period ended 30 April 2012 administration fees of GBP17,902 (30 April 2011: GBP17,852) were charged to the Company and GBP11,885 (31 October 2011: GBP2,983) was payable at the period/year end.
(d) Custody
The Company's Custodian is Northern Trust (Guernsey) Limited ("the Custodian"). In consideration for the services provided by the Custodian under the Custodian Agreement, the Custodian is entitled to receive such fees as agreed with the Company from time to time. Initially the Custodian will be entitled to a fee of GBP14,000 per annum (30 April 2011: GBP14,000). The Custodian is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. During the period ended 30 April 2012 custodian fees of GBP7,611 (30 April 2011: GBP6,941) were charged to the Company and GBP1,148 (31 October 2011: GBP11,114) was payable at the period/year end.
(e) Corporate Brokers
Numis Securities Limited ("the Broker"), will act on behalf of the Company in relation to the provision of advisory and corporate broking services ("Broking Services"), including the purchase of ordinary shares in the Company on a principal to principal basis ("Buyback Services"). For the Broking Services, the Broker is entitled to receive an annual retainer of GBP25,000. The Broker is also entitled to the reimbursement of certain expenses incurred by it, in connection with its duties. For the Buyback Services, the Broker is entitled to receive the amount equal to the aggregate purchase price of any shares purchased at a fee of 0.5%, including any stamp duties or other relevant transfer taxes arising from the transaction. During the period ended 30 April 2012, semi annual fees of GBP15,642 (30 April 2011: GBP12,414) were charged to the Company and GBPnil (31 October 2011: GBP3,142) was prepaid at period/year end. Fees related to Buyback Services amounted to GBPnil (30 April 2011: GBP6,446). Corporate Advisory Fees payable in connection with the liquidation total GBP100,000.
The Company entered into a repurchase agreement with the Broker, wherein the Broker acts on behalf of the Company in relation to the tender offer. The fees charged during the period, in connection with the tender offer, amounted to GBP20,000 (30 April 2011: GBPnil) which were effectively absorbed by those existing Shareholders tendering shares as a consequence of the discount at which shares were repurchased. In addition, the Broker is also entitled to reimbursement of certain expenses incurred by it in connection with its duties up to a maximum of GBP5,000.
6. BASIC AND DILUTED EARNINGS PER PARTICIPATING SHARE
The earnings per participating share for the period has been calculated on a weighted average basis and is arrived at by dividing the net profit for the period by the weighted average number of participating shares in issue. The weighted average number of participating shares is 38,101,724 (30 April 2011: 52,804,527).
7. SHARE BUYBACK AND TENDER OFFER
In accordance with the Share Buyback Facility, the Company has purchased its own participating shares in the market to attempt to close the discount to net asset value at which the participating shares are trading and improve the liquidity of its issued share capital.
During the period, the Company has not purchased any of its own participating shares. However, the Company has cancelled 1,000,000 (31 October 2011: 1,450,000) shares held in treasury.
During the year to 31 October 2011 under the Share Buyback Facility, the Company purchased its own shares as follows:
Date Price per Percentage of
Shares share Total issued
GBP GBP share capital
5 November 2010 570,000 1.09 621,898 0.95%
======== ======== ==============
Bought back and cancelled
shares:
Date Price per Percentage of
Shares share Total issued
GBP GBP share capital
10 November
2010 400,000 1.09 434,869 0.67%
18 November
2010 350,000 1.09 382,264 0.58%
7 December
2010 100,000 1.09 109,470 0.17%
24 December
2010 500,000 1.07 536,071 0.83%
29 March 2011 1,000,000 1.13 1,132,260 1.67%
2,350,000 2,594,934 3.92%
========== ========== ================
Total 2,920,000 3,216,832 4.87%
========== ========== ================
Tender offer
In accordance with the Tender Offer Facility which was approved by the Shareholders at the annual general meeting held on 24 June 2011, the Company purchased its own participating shares in the market to attempt to close the discount to net asset value at which the participating shares are trading and improve the liquidity of its issued share capital.
During the period under the Tender Offer Facility, the Company purchased and cancelled its own shares as follows:
Date Price per
Shares share Total
GBP GBP
16 April 2012 9,713,256 1.28 12,405,217
During the year to 31 October 2011 under the Tender Offer Facility, the Company purchased and cancelled its own shares as follows:
Date Price per
Shares share Total
GBP GBP
17 October 2011 12,951,004 1.25 16,159,615
Shares in Shares
Issued share capital issue in Total
(3(rd) party) Treasury shares
30 April 2012
Founder shares 2 - 2
-------------- ------------ ------------
Equity shares
Participating shares
Balances at 1 November 2011 38,853,025 4,284,804 43,137,829
Cancellation of shares - (1,000,000) (1,000,000)
Tender offer (9,713,256) - (9,713,256)
-------------- ------------ ------------
Balances at 30 April 2012 29,139,769 3,284,804 32,424,573
-------------- ------------ ------------
Issued share capital Shares in issue Shares in Total
(3(rd) party) Treasury shares
31 October 2011
Founder shares 2 - 2
---------------- ------------ -------------
Equity shares
Participating shares
Balances at 1 November 2010 54,724,029 5,164,804 59,888,833
Share buybacks held in Treasury (570,000) 570,000 -
Cancellation of shares (2,350,000) (1,450,000) (3,800,000)
Tender offer (12,951,004) - (12,951,004)
---------------- ------------ -------------
Balances at 31 October 2011 38,853,025 4,284,804 43,137,829
---------------- ------------ -------------
Where the Company purchases its own shares, the consideration paid, which includes any directly attributable costs, is recognised as a deduction from equity shareholders' funds through the share capital account. When such shares are subsequently sold or reissued to the market, any consideration received, net of any directly attributable incremental transaction costs, is recognised as an increase in equity shareholders' funds through the share capital account. Where the Company cancels treasury shares, no further adjustment is required to the share capital at the time of cancellation. Shares held in treasury are excluded from calculations when determining NAV per share.
Because significant share repurchases could take the Investment Manager's aggregate ownership over the Takeover Code's Mandatory Offer trigger level of 30 percent, the Board applied for and received a waiver of Rule 9 under Rule 37 of the Takeover Code. As at 18 May 2012 Cazenove Capital Management held 7,213,134 shares in the Company as a discretionary Fund Manager, through Chase Nominees Limited, representing 24.75% of the issued capital.
Share costs of GBP55,000 (30 April 2011: GBP10,903) were incurred for the continuation vote, Whitewash and Tender Offer and represent expenses for legal, advisory and other professional fees. Fees paid to Numis and Herbert Smith in relation to the tender offer amounted to GBP20,000 and GBP10,000 respectively. Included in other expenses are non audit fees of GBP8,861 (30 April 2011: GBP7,558) also paid to Ernst & Young LLP which relate to the interim review.
8. FINANCIAL INSTRUMENTS AND RISK PROFILE
The investment objective of the Company is to seek to achieve consistent absolute returns by investing in two Underlying Funds.
The Company's financial instruments comprise financial assets at fair value through profit or loss, cash and cash equivalents, receivables and payables.
The main risks arising from the Company's financial instruments are market risk (market price risk, foreign currency risk and interest rate risk), credit risk and liquidity risk.
Market risk
The Company's investments are subject to market fluctuations and the risk inherent in the purchase, holding or selling of securities and there can be no assurance that appreciation or maintenance in the value of those investments will occur.
Investments in unlisted securities are more illiquid than listed securities and there may be no ready market for such securities at an appropriate price or even at all. Furthermore, the net asset values for such unlisted securities tend to be published on a less frequent basis than for listed securities.
The Investment Manager of the Underlying Funds continues to monitor and oversee the profile of the portfolio on a regular basis to ensure risks are managed.
Strategies of the Underlying Funds
The Company's Investment Manager currently classifies the strategies of the Cazenove UK Dynamic Absolute Return Fund Limited and Cazenove Absolute UK Dynamic Fund as alpha enhancing and more directional. These Underlying Fund's managers aim to deliver consistent, absolute returns irrespective of market conditions with lower market volatility in the medium to long term. The approach will consider the macro and business cycle factors. However, the key strategy will be a bottom up approach in identifying undervalued stocks with an investment angle. Each stock held will have a valuation target.
Market price risk
Market price risk arises mainly from the uncertainty about future prices of the financial instruments held by the Company. It represents the potential loss the Company may suffer through holding market positions in the face of price movements.
The Company's investment portfolio is exposed to market price fluctuations which are monitored by the Manager in pursuance of the investment objectives and policies.
Foreign currency risk
Foreign currency risk arises from fluctuations in the value of foreign currency. It represents the potential loss the Company may suffer through holding foreign currency assets in the face of foreign exchange movements.
The Underlying Fund portfolio investment in equity funds which in turn invest in equities denominated in currencies other than Sterling. The Underlying Funds use forward foreign exchange contracts to manage but not eliminate the risk associated with holding assets in foreign currency.
Interest rate risk
Interest rate risk represents the uncertainty of investment return due to changes in the market rates of interest. Interest receivable on bank deposits or payable on bank overdraft will be affected by fluctuations in interest rates. All cash balances are at variable rates. Increases in interest rates will also increase the borrowing costs of the Company should the borrowing facility be used.
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 within the Company.
The Company is exposed to material credit risk in respect of cash and cash equivalents and debtors. All cash is placed with Northern Trust (Guernsey) Limited ("NTGL"). The Company is subject to credit risk to the extent that this institution may be unable to return this cash. NTGL is a wholly owned subsidiary of The Northern Trust Corporation ("TNTC"). TNTC is publicly traded and a constituent of S&P 500. TNTC has a credit rating of AA- from Standard & Poor's and Aa3 from Moody's.
The credit risk associated with debtors is limited to interest on bank balances. Credit risk is mitigated by the Company's policy to transact only with leading commercial and investment banks. It is the opinion of the Directors that the carrying amounts of these financial assets represent the maximum credit risk exposure at the statement of financial position date.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments.
Dealings in the Cazenove UK Dynamic Absolute Return Fund Limited are done on a monthly basis. Requests for redemption must be received not less than thirty days prior to the relevant dealing day. Settlement period is usually two weeks after the dealings. The Directors of this Underlying Fund may at their absolute discretion refuse to accept a redemption request in respect of shares of a class held for a period of less than three months. They may also refuse a redemption request for shares in a particular class where the relevant request is in excess of 10% of the total net asset value of such class of shares on any dealing day. Furthermore, the Company has a borrowing facility to meet financial commitments. Dealings in the Cazenove Absolute UK Dynamic Fund are done on a daily basis. There is no gate provision on this Underlying Fund.
Fair Value
The Company's investments in the Underlying Funds are classified under Level 2. The level within which the financial assets are classified is determined based on the lowest level of significant input to the fair value measurement. The Underlying Funds are not quoted in active markets and are fair-valued using the official month-end net asset value of each Underlying Fund as supplied by each fund's managers or administrators.
9. CAPITAL MANAGEMENT
The fair value of the Company's financial assets and financial liabilities approximates their carrying amounts as at the statement of financial position date. Redeemable participating preference shares are considered to be part of capital.
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for Shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Company does not have any structural gearing. The Company is indirectly exposed to gearing to the extent that investee funds are themselves geared. Cash (if any) will be held in G8 currency-denominated accounts.
At the Directors' discretion and subject to the Shareholders' approval, the Company can make an annual capital distribution of one third of the increase in its net asset value by way of partial redemption. Any such distribution will only be made if the Directors, in their discretion, consider prior to any distribution being made it to be in the interest of Shareholders and only to holders of participating shares who have made the relevant election, having given consideration to the prevailing price of the participating shares, the net asset value per participating share and the response of the holders of participating shares. Shareholders should have no expectation that a distribution will be made and there can be no guarantee that the Directors will determine to make distribution in respect of any year.
The Company has a Share Buyback Facility whereby, at the discretion of the Directors and subject to the Shareholders' approval, it can purchase its own participating shares in the market with a view to addressing any imbalance between the supply of and demand for shares in the market and to assist in narrowing any discount to net asset value at which the participating shares maybe trading. Purchases will be made in accordance with the Listing Rules, the CISX Rules and the Companies (Guernsey) Law 2008. Any such purchases would only be made at prices which represent a discount to the last available net asset value per participating share so as to enhance the net asset value per participating share for the remaining Shareholders. The Share Buyback Facility was renewed on 24 June 2011, as part of the Company's capital management. Purchases made by the Company are shown in note 7.
The Directors had also resolved to introduce a further discount mechanism where if in any 3 month period the average weekly discount to NAV at which the shares trade exceeds 5%, the Directors might in their absolute discretion, propose a tender allowing those Shareholders at the start of the 3 month period to redeem in aggregate up to 25% of the issued share capital of the Company at a tender price equivalent to NAV as at the date of tender less the costs of the tender offer less 2%. The Tender Offer Facility was approved by Shareholders during the annual general meeting on 24 June 2011.
Despite the two tender offers and use of Share Buybacks, the Company has continued to trade at a discount persistently wider than that which the Board believes to be acceptable, and therefore the Board intends to recommend that Shareholders vote against continuation of the Company at the 2012 AGM, as discussed under going concern in note 1 to these financial statements.
10. RECONCILIATION OF NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS
The adjustments below have been made to reflect the potential liquidation costs of the Company and the adjustment of investments from the market value as at 30 April 2012 to the realisable value as at 31 May 2012, given that the Directors have recommended that the Shareholders vote against continuation of the Company at the forthcoming AGM.
NAV per
participating
NAV share
GBP GBP
Net asset value reported to London Stock
Exchange 38,539,024 1.3226
Adjustment of investments to realisable value (13,895) (0.0159)
Adjustment for liquidation costs (328,000) (0.0113)
Net assets attributable to Shareholders per
financial statements 38,197,129 1.2954
----------- --------------
11. LIQUIDATION COSTS
The Directors estimate that the liquidation costs are as follows:-
GBP
Legal advice 160,000
Financial advice and sponsor 100,000
Liquidator 50,000
Other 18,000
Total costs 328,000
========
12. SUBSEQUENT EVENTS
There were no subsequent events.
The Company has today, in accordance with DTR 6.3.5, released its Interim Financial Report for the period ended 30 April 2012. The Report will shortly be available on the Company's website http://www.cazenovecapital.com/Microsites/cael/Literature/
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFIRREIIFIF
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