We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| North American | LSE:NAM | London | Ordinary Share | GB00B15MQH61 | ORD USD0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 154.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
TIDMNAM
RNS Number : 8339N
North American Banks Fund Ltd
18 June 2010
North American Banks Fund Limited
Annual Results for the year ended 31 December 2009
Chairman's Statement
The year under review saw five of the Companies' eight investee banks achieving
profitability. This is encouraging when set against the unprecedented events of
the past two years in financial markets and in particular in the US housing
market, which historically has been the lifeblood of community bank lending.
Essentially the profits we are seeing from these five banks results from their
adopting prudent lending practices during extremely uncertain times. Of these
five banks, three have not made residential construction loans of any real
significance. The two banks that have made residential loans have only done so
on a moderate scale in comparatively resilient local housing markets.
The three banks that are currently loss-making are unfortunate in that their
lending markets, Jacksonville in Florida and Atlanta in Georgia, were amongst
the hardest hit by the fall in both house prices and demand. At the end of the
year under review, it has been necessary for the Company to make provisions
against the value of these three investments in NHB Holdings Inc, Bank of
Atlanta and Florida Capital Group totalling US$3,750,000. These provisions are
a direct consequence of the write offs necessary in the banks residential
construction loan portfolios.
Subsequent to the year end, the Company announced on 16 June 2010, that it would
make a further provision of US$1.2 million against the value of its investment
in TrustAtlantic Financial, this was following a recent capital raising by
TrustAtlantic Financial at a price per share, which was 30 per cent. below the
Fund's last valuation of this investment.
At the end of the year under review, the Net Asset Value ("NAV") of the Company
was US$5.49 per share compared with US$6.67 per share at the end of 2008. This
diminution in NAV is a reflection of the ongoing cost of the running of the
Company and also the need to fairly reflect the deterioration in some of the
Companies' investments as per the above. The running cost is an inescapable
fixed cost, but one that we do everything in our power to mitigate against.
We are hopeful that with the U.S economy now stabilising our banks will be able
to start to show modest loan growth and will also be able to take the
opportunity to purchase troubled banks and branches at attractive prices.
Whilst the outlook is not rosy it is incomparably better than it was 12 months
ago and it is our expectation that a number of our banks, if not all, will be
able to consolidate on the gains that they are making to deliver sustainable
growth for the future.
Robin Monro-Davies
Chairman
17 June 2010
Investment Manager's Report
Investing policy
The investing policy of the Company is to invest in such a way as to achieve a
superior capital appreciation over the long term to that available in markets as
a whole. The Company intends to achieve this through investment in unquoted
start-up banks, which intend to offer banking services to small and medium sized
enterprises. The banks will be based in certain regions of the United States,
for example Georgia, Florida, Texas, California and the South Carolina coast,
where favourable economic, demographic and market factors are expected to
contribute to the growth of the banks. The Investment Manager may also use its
discretion to hold cash or cash equivalent investments from time to time.
Up to 100 per cent. of the Net Asset Value of the Company may be invested in
securities which are not quoted on a recognised stock exchange. These
investments are expected to include the provision of start-up capital and
secondary financing.
The Company may, from time to time, use borrowings for short-term liquidity
purposes and, if the Directors deem prudent, for longer term purposes. The
Directors intend to restrict borrowing on a longer term basis to an amount equal
to 20 per cent. of the issued share capital of the Company from time to time.
There will be one investment cycle and the Directors intend to return realised
capital from investments to Shareholders, with returns denominated in US$,
shortly after the Company has exited its investments. The Company is likely to
return this capital through share buy-backs, special dividends or liquidation.
Interim Management Report
North Atlantic Value LLP acts as the Investment Manager to the Company and has
overall responsibility for the Company's day to day activities and investment
decisions.
Portfolio Overview
+----------------------------------------+-------------+------------+
| | Cost | Valuation |
| | US$ | 31 Dec |
| Investment portfolio | | 2009 |
| | | US$ |
+----------------------------------------+-------------+------------+
| Bank of Atlanta | 4,000,003 | 1,000,000 |
+----------------------------------------+-------------+------------+
| DirecTex | 150,000 | - |
+----------------------------------------+-------------+------------+
| First American Financial Holdings, | 3,882,500 | 4,000,000 |
| Inc. - Avenue Bank | | |
+----------------------------------------+-------------+------------+
| FirstAtlantic Bank of Florida | 3,500,000 | 4,000,000 |
+----------------------------------------+-------------+------------+
| Florida Capital Group | 3,420,000 | 300,000 |
+----------------------------------------+-------------+------------+
| MagnetBank | 3,948,000 | - |
+----------------------------------------+-------------+------------+
| Metropolitan Bank | 3,500,000 | 4,000,000 |
+----------------------------------------+-------------+------------+
| Midwest Financial Holdings | 1,510,500 | - |
+----------------------------------------+-------------+------------+
| Mountain Commerce Bank (1) | 2,300,000 | 2,300,000 |
+----------------------------------------+-------------+------------+
| NHB Holdings Inc. | 4,000,000 | 1,000,000 |
+----------------------------------------+-------------+------------+
| TrustAtlantic Financial Corporation | 4,000,000 | 4,000,000 |
| (2) | | |
+----------------------------------------+-------------+------------+
| Investments | 34,211,003 | 20,600,000 |
+----------------------------------------+-------------+------------+
| Cash | 736,733 | 736,733 |
+----------------------------------------+-------------+------------+
| Total | 34,947,736 | 21,336,733 |
+----------------------------------------+-------------+------------+
(1)The Company holds 68,833 US$10 warrants in this investment which is valued at
nil.
(2)The Company holds 150,000 US$10 warrants in this investment which is valued
at nil.
As at 31 December 2009 the portfolio was comprised of eight unquoted start-up
banks in the US, with an aggregate value of US$20,600,000. At the year-end
US$643,324 was invested in high interest cash deposits. The Company is now
fully invested and, in accordance with the business plan, US$736,733 of cash is
available for the administration of the Company.
As referred to by your Chairman, the period under review saw a degree of
stabilisation in the performance of a majority of the investee banks as new
provisions started to level off. Provisions remain heavily concentrated in
residential real estate sector and whilst the economic outlook remains
uncertain, we are nevertheless starting to see some evidence of a recovery.
The majority of the time spent liaising with the investee banks has been focused
on both insisting that very little, if any, residential construction lending is
undertaken and also on encouraging them to rigorously investigate the viability
of any historic lending of this nature.
The issue that faces the majority of these banks now is how they go forward
given that the traditional lifeblood of community bank lending has all but
evaporated with the retrenchment of the American housing market and the chronic
oversupply of stock. We have focussed on encouraging the banks' management
teams to concentrate on steadying their existing portfolio without rushing into
new lending areas.
We have selectively agreed to some of our banks raising new capital, especially
where they can make attractive acquisitions.
Portfolio (listed alphabetically):
Bank of Atlanta
Bank of Atlanta is an Atlanta-based bank offering a broad range of lending,
deposit and other traditional banking services to individuals and businesses
within the Atlanta metropolitan area. The bank opened for business in April
2007.
Whilst the bank was profitable in the first 3 quarters of the 2009, this
position was sharply reversed in the 4th quarter with the bank reporting a loss
for the year of US$3.2m following a default on a single residential construction
loan.
The bank continues to be concerned about the state of the Atlanta commercial
real estate market where there is a significant over supply of office space and
as a consequence the market is expected to show little recovery in the current
year.
First American Holdings Inc. - Avenue Bank
First American Financial Holdings Inc. is a community bank headquartered in
Nashville, Tennessee, focusing on real estate lending, middle market lending and
providing retail banking services to the entertainment industry. The bank
completed its follow-on financing and opened for business in February 2007.
In accordance with its stated business plan, the bank was loss-making throughout
the period under review. The first quarter of 2010 was profitable. The bank
has accorded with its stated policy of not undertaking any further residential
construction lending and has been decreasing their exposure to this sector.
Whilst total non-performing assets did rise to US$11.3m in the third quarter
(US$1.9m at the end of the previous year) as a consequence of 2 specific credits
defaulting, matters did however improve significantly in the fourth quarter with
these decreasing by some US$3.8m to US$7.5m. The bank is also confident that
its commercial real estate loan portfolio remains sound given that the vast
majority is owner occupied or purpose built for strong tenants.
The bank is budgeting for initial profitability of US$1m during the course
of 2010. This is based on new loan growth of US$60m, new deposit growth of
US$60m and an overall growth in total assets of some US$45m. The key to
sustaining this will lie in the bank avoiding any further emerging credit
quality issues.
FirstAtlantic Bank of Florida
FirstAtlantic Bank of Florida is a traditional community bank, headquartered in
Jacksonville, Florida. The bank, which opened for business in September 2007,
had planned to specialise in single family construction lending and Small
Business Administration lending but will now concentrate on achieving growth by
way of a merger or the acquisition of a troubled bank or its assets.
The bank reported its first quarterly pre-tax profit of US$135k in the 4th
quarter. This profitability has enabled the bank to recognise a deferred tax
asset of $3.1m which resulted in a profit of US$2.28m for the year under review.
Given the ongoing challenge in originating quality new loans in the State
of Florida, the bank is looking at new opportunities for future growth through
the acquisition of either a struggling or failed institution. To this end the
bank has employed a strategic consultant to advise them on FDIC assisted bids
and they have now identified 6 banks, all of which have below US$200m in total
assets, which they believe are likely to fail. The bank has received approval
from the Office for the Supervision of Thrifts ('OTS') to acquire a bank with up
to US$150m of assets. Any new acquisition would however require the bank to
raise further capital of circa US$20m.
Florida Capital Group
Florida Capital Group is a nationally chartered, state-wide bank serving the
business community of Florida. The bank opened for business in March 2005.
Although the bank remains 'well capitalised' with total capital to risk-weighted
assets being 11.03% and Tier 1 capital being 6.4%, the bank is nevertheless
continuing to market a further equity raising of US$15m at US$1 per share in
order to raise these levels to 8.5% and 13.9% respectively. If this issuance is
successful then current investors would be diluted by 73%. As the Company is
fully invested, it is not envisaged that we will participate in this offer.
Asset quality has shown signs of stabilising in the third and fourth
quarters of the year under review with non-performing assets remaining largely
unchanged at US$84.6m at the year end (US$85.4m in the prior quarter). Most
encouraging of all, additions to non-performing loans were only US$3.8m in the
4th quarter as compared to US$18.5m in the previous quarter. Loans past due
30-89 days remain largely stable.
The bank made losses of US$484k in the 4th quarter. This included a one-off
restructuring charge of US$325k and demonstrates that in the event that the bank
is able to bottom out its problem loan portfolio, it is essentially a break-even
or even profitable entity on an ongoing basis. The primary driver for this
continues to be the contribution added by the bank's wholesale mortgage
operation which contributed fee income of US$22.7m in 2009 as opposed to US$6.4m
in 2008.
Metropolitan Bank
Metropolitan Bank commenced operations on 28 February 2008 and operates under a
Tennessee banking charter. The strategy is to build a bank offering full service
banking facilities, to address the fragmented and underserved markets of
Memphis, Tennessee and Mississippi. To date, the bank is fully operational in
both Tennessee and Mississippi.
The bank achieved initial profitability in the 4th quarter, which is over 6
months ahead of budget and in so doing the bank has managed to preserve 94% of
its original capital which is exceptional. The bank continues to position
itself for the raising of further capital in order to be best placed to
participate in an FDIC acquisition of a failed or struggling institution. In
addition, if the bank were able to raise its Tier 1 capital ratio from its
current 10.35% to 12% it would enable it to increase its legal and internal
lending limits to allow for further growth of the balance sheet. Any
fundraising is expected to be around our current holding cost.
The bank has no residential construction lending and only lends on owner
occupied commercial real estate. It is looking to grow its loan book slowly as
favourable opportunities arise.
Mountain Commerce Bank
Mountain Commerce is a community bank serving individuals, professionals and
small to mid sized businesses in East Tennessee, Western North Carolina and
Virginia (Knoxville, Ashville and Bristol). The bank opened for business in
September 2006.
The bank made profits of US$585k during the course of the year under review.
This figure would have been closer to US$1m had the bank not incurred one-off
costs of US$400k in relation to their FDIC insurance commission. The Net
Interest Margin for the full year was 3.86% although for the 4th quarter alone,
the NIM was in fact 4.2%. The reason for this improvement is due to the
continuation of minimum rate loans (floors) and is also due to the shrinkage of
the bank's balance sheet which has driven down the cost of their deposits. The
bank's Tier 1 capital is 9.26% and its risk-based capital is 12.34% which leaves
them classified as being 'well-capitalised'.
The bank are of the opinion that East Carolina banks will increasingly see the
need for financial partners in order to survive and therefore they are eager to
position themselves to take advantage of this. As such, the bank will be
looking at the prospect of capital raising in the second half of the current
year.
NHB Holdings Inc.
Proficio Bank, a wholly owned subsidiary of NHB Holdings, Inc. is a nationally
focused specialty bank, offering commercial lending, specialised consumer
lending and specialised residential lending services to the corporate relocation
industry throughout the United States. The bank opened for business in January
2007.
The bank made losses of US$2.84m during the period under review. Of this loss,
95% was attributed to the mortgage venture side of the bank's business and this
is clearly an area of major concern as the bank struggles to come to terms with
the rationalisation of that operation. Other problems include the real estate
lending which was discontinued in 2008.
The core business of lending to the relocation industry remains profitable
despite reduced demand due to the impact of weakened economic activity.
TrustAtlantic Financial
TrustAtlantic Financial Corporation is a North Carolina bank, established June
2007, offering full service banking facilities to middle market companies in
Raleigh-Durham, North Carolina.
Although the bank was profitable in the year under review (US$500k),
non-performing assets did increase by US$4.3m to US$6.1m. This increase does
not result from the failure of any one loan: rather it was caused by numerous
small defaults across the bank's residential construction portfolio. The bank is
comfortable that it does have sufficient levels of cover in relation to these
loans and is anticipating being profitable for the next financial year.
North Atlantic Value LLP
Investment Manager
17 June 2010
Directors' Report
The Directors present their Annual Report and the audited financial statements
for the year ended 31 December 2009.
Principal Activity
The principal activity of the Company is to carry on business as an investment
company. The Company is listed on AIM.
Investing policy
The investing policy of the Company is to invest in such a way as to achieve a
superior capital appreciation over the long term to that available in markets as
a whole. The Company intends to achieve this through investment in unquoted
start-up banks, which intend to offer banking services to small and medium sized
enterprises. The banks will be based in certain regions of the United States,
for example Georgia, Florida, Texas, California and the South Carolina coast,
where favourable economic, demographic and market factors are expected to
contribute to the growth of the banks. The Investment Manager may also use its
discretion to hold cash or cash equivalent investments from time to time.
Up to 100 per cent. of the Net Asset Value of the Company may be invested in
securities which are not quoted on a recognised stock exchange. These
investments are expected to include the provision of start-up capital and
secondary financing.
The Company may, from time to time, use borrowings for short-term liquidity
purposes and, if the Directors deem prudent, for longer term purposes. The
Directors intend to restrict borrowing on a longer term basis to an amount equal
to 20 per cent. of the issued share capital of the Company from time to time.
There will be one investment cycle and the Directors intend to return realised
capital from investments to Shareholders, with returns denominated in US$,
shortly after the Company has exited its investments. The Company is likely to
return this capital through share buy-backs, special dividends or liquidation.
The Directors do not currently intend to incur any borrowings within the
Company.
Review of Business
The results for the year are set out on page 14. No Dividend has been declared
for the year ended 31 December 2009.
Authorised Share Capital
At 31 December 2009 there were 3,800,000 Ordinary Shares in issue.
Authority to Buy Back Shares
At the Annual General Meeting on 5 August 2009, Shareholders authorised the
Company to repurchase its Ordinary Shares. The Directors wish to renew the
authority given by Shareholders at the previous Annual General Meeting.
The maximum price that may be paid on the exercise of this authority must not
exceed 105% of the average of the middle market quotations for an Ordinary Share
as derived from The London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which that Ordinary Share is
purchased. The minimum price which may be paid is US$0.01 per share.
The resolution will renew the authority to purchase through the market the
maximum aggregate of 14.99 per cent of the allotted Ordinary Share Capital of
the Company on the date of the notice convening the meeting at which the
resolution is proposed, amounting to 569,620 Ordinary Shares. The authority
will expire on the earlier of the date of the next Annual General Meeting or
after a period of 18 months from the date of passing the resolution.
No shares have been repurchased by the Company in the year.
Directors' Interests
The Directors of the Company are as stated on page 2.
The following Directors, including persons connected with them, held the
following number of shares at 31 December 2009:
+----------------------+-----------------------+-----------------------+
| Director | Number of Ordinary | Percentage (%) |
| | Shares | |
+----------------------+-----------------------+-----------------------+
| Robin Monro-Davies | 120,000 | 3.16% |
+----------------------+-----------------------+-----------------------+
| James Baxter | 50,000 | 1.32% |
+----------------------+-----------------------+-----------------------+
| George Hacker | 10,000 | 0.26% |
+----------------------+-----------------------+-----------------------+
The below table shows the acquisition of shares by Directors from 1 January 2009
to 31 December 2009:
+--------------+-----------+------------+---------+--------------+------------+
| Director | Date | Number of | Price | US Dollar | Percentage |
| | Purchased | Ordinary | paid | equivalent @ | (%) |
| | | Shares | per | indicative | |
| | | Purchased | Share | exchange | |
| | | | | rate | |
+--------------+-----------+------------+---------+--------------+------------+
| Robin | 15/09/09 | 70,000 | GBP1.15 | $1.857 | 1.84% |
| Monro-Davies | | | | | |
+--------------+-----------+------------+---------+--------------+------------+
| James Baxter | 15/09/09 | 30,000 | GBP1.15 | $1.857 | 0.79% |
+--------------+-----------+------------+---------+--------------+------------+
| George | 15/09/09 | 10,000 | GBP1.15 | $1.857 | 0.26% |
| Hacker | | | | | |
+--------------+-----------+------------+---------+--------------+------------+
There have been no changes in the above interests between 31 December 2009 and
the date of this report.
Each of the Directors has signed a letter of appointment with the Company
setting out the terms of their appointment. The Directors' remunerations are
paid in pounds sterling. The basic fee payable to each independent Non-Executive
Director is payable at a rate of GBP15,000 per annum (2008: GBP15,000 per
annum), except for the Chairman who receives GBP18,000 per annum (2008:
GBP18,000 per annum). The Directors are not eligible for bonuses, pension
benefits, share options, long term incentive schemes or other benefits.
None of the Directors had a service contract with the Company during the year.
Going concern
The Directors believe it is appropriate to adopt the going concern basis in
preparing the financial statements.
No material uncertainties that may cast significant doubt about the ability of
the Company to continue as a going concern have been identified by the
Directors.
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Financial
Statements for each financial year which give a true and fair view of the state
of affairs of the Company as at the end of the financial year and of the profit
or loss for that year and are in accordance with International Financial
Reporting Standards and applicable laws.
In preparing these financial statements the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable international accounting standards have
been followed, subject to any material departures disclosed and explained in the
financial statements; and
· prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records, which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the Financial Statements comply with
The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
In so far as the Directors are aware, there is no relevant audit information of
which the Company's auditors are unaware. The Directors have also taken all
steps they ought to have taken as Directors in order to make themselves aware of
any relevant information and to establish that the Company's auditors are aware
of that information.
Auditors
A resolution to reappoint Grant Thornton Limited, as auditors will be proposed
at the next annual general meeting.
By order of the Board
James Baxter
Sidney Cabessa
17 June 2010 17
June 2010
Independent Auditors' Report to the Shareholders of North American Banks Fund
Limited
We have audited the financial statements of North American Banks Fund Limited
for the year ended 31 December 2009 which comprise of the Statement of
Comprehensive Income, the Statement of Changes in Equity, the Statement of
Financial Position, the Statement of Cash Flows and the related notes. The
financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance
with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditors' report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the Statement of Directors' Responsibilities on page 11 the
company's directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit the financial statements in accordance with
applicable legal and regulatory requirements and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs as at 31
December 2009 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
· have been properly prepared in accordance with The Companies (Guernsey) Law,
2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where The
Companies (Guernsey) Law, 2008 requires us to report to you, if in our opinion:
· the company has not kept proper accounting records; or
· the financial statements are not in agreement with the accounting records
and returns; or
· we have not received all the information and explanations, which to the best
of our knowledge and belief, are necessary for the purposes of our audit.
Grant Thornton Limited
Chartered Accountants
St Peter Port, Guernsey, Channel Islands
17 June 2010
Statement of Comprehensive Income
+----------------------------------------+-------+-------------+-------------+
| | | 2009 | 2008 |
+----------------------------------------+-------+-------------+-------------+
| |Notes | US$ | US$ |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Income | | | |
+----------------------------------------+-------+-------------+-------------+
| Interest income | 2 | - | 57,522 |
+----------------------------------------+-------+-------------+-------------+
| Net loss on investments designated at | | (3,750,000) | |
| fair value through profit or loss | | | (8,848,003) |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Total investment loss | | (3,750,000) | (8,790,481) |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Expenses | | | |
+----------------------------------------+-------+-------------+-------------+
| Administration fees | 3 | 95,216 | 108,670 |
+----------------------------------------+-------+-------------+-------------+
| Audit fees | | 33,634 | 39,329 |
+----------------------------------------+-------+-------------+-------------+
| Bank charges | | 2,295 | 3,532 |
+----------------------------------------+-------+-------------+-------------+
| Insurance | | 21,713 | 20,621 |
+----------------------------------------+-------+-------------+-------------+
| Custody fees | 3 | 8,026 | 9,927 |
+----------------------------------------+-------+-------------+-------------+
| Listing fees | | 9,339 | 13,049 |
+----------------------------------------+-------+-------------+-------------+
| FT Prices fees | | 5,157 | 4,715 |
+----------------------------------------+-------+-------------+-------------+
| Directors' fees | | 124,022 | 139,993 |
+----------------------------------------+-------+-------------+-------------+
| Disbursements | | 772 | 701 |
+----------------------------------------+-------+-------------+-------------+
| Investment manager fees | 3 | 324,809 | 405,312 |
+----------------------------------------+-------+-------------+-------------+
| Printing costs | | 3,513 | - |
+----------------------------------------+-------+-------------+-------------+
| Regulatory fees | | 5,662 | 6,472 |
+----------------------------------------+-------+-------------+-------------+
| Registrar fees | | 19,903 | 19,685 |
+----------------------------------------+-------+-------------+-------------+
| Travel costs | | 48,382 | 21,305 |
+----------------------------------------+-------+-------------+-------------+
| Broker fees | | 23,478 | 28,991 |
+----------------------------------------+-------+-------------+-------------+
| Legal fees | | 3,554 | 1,606 |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Total expenses | | 729,475 | 823,908 |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Loss and total comprehensive loss for | | (4,479,475) | |
| the year | | | (9,614,389) |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Basic and diluted loss per share | 4 | (US$1.179) | (US$2.530) |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
Loss and comprehensive loss for the year are attributable to the shareholders of
the Company.
Statement of Changes in Equity
For year ended 31 December 2009
+-------------------------------+---------+---------------+--------------+-------------+
| | Share | Distributable | Accumulated | |
| | Capital | Reserve | Deficit | Total |
+-------------------------------+---------+---------------+--------------+-------------+
| | US$ | US$ | US$ | US$ |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Equity at 1 January 2009 | 38,000 | 36,893,502 | (11,571,499) | 25,360,003 |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Loss for the year | | | | |
| attributable to equity | - | - | (4,479,475) | (4,479,475) |
| shareholders and total | | | | |
| comprehensive loss for the | | | | |
| year | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Equity at 31 December 2009 | 38,000 | 36,893,502 | (16,050,974) | 20,880,528 |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Statement of Changes in | | | | |
| Equity | | | | |
| For year ended 31 December | | | | |
| 2008 | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| | Share | Distributable | Accumulated | |
| | Capital | Reserve | Deficit | Total |
+-------------------------------+---------+---------------+--------------+-------------+
| | US$ | US$ | US$ | US$ |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Equity at 1 January 2008 | 38,000 | 36,893,502 | (1,957,110) | 34,974,392 |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Loss for the year | | | | |
| attributable to equity | - | - | (9,614,389) | (9,614,389) |
| shareholders and total | | | | |
| comprehensive loss for the | | | | |
| year | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| | | | | |
+-------------------------------+---------+---------------+--------------+-------------+
| Equity at 31 December 2008 | 38,000 | 36,893,502 | (11,571,499) | 25,360,003 |
+-------------------------------+---------+---------------+--------------+-------------+
Statement of Financial Position
+----------------------------------------+-------+--------------+--------------+
| | | 2009 | 2008 |
+----------------------------------------+-------+--------------+--------------+
| | Notes | US$ | US$ |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Non-current assets | | | |
+----------------------------------------+-------+--------------+--------------+
| Investments designated at fair value | 5 | 20,600,000 | 24,350,000 |
| through profit or loss | | | |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Current assets | | | |
+----------------------------------------+-------+--------------+--------------+
| Prepayments | | 13,453 | 11,006 |
+----------------------------------------+-------+--------------+--------------+
| Cash and cash equivalents | 6 | 736,733 | 1,140,084 |
+----------------------------------------+-------+--------------+--------------+
| | | 750,186 | 1,151,090 |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Total assets | | 21,350,186 | 25,501,090 |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Current liabilities | | | |
+----------------------------------------+-------+--------------+--------------+
| Creditors | 7 | 469,658 | 141,087 |
+----------------------------------------+-------+--------------+--------------+
| | | 469,658 | 141,087 |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Net assets | | 20,880,528 | 25,360,003 |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Shareholders equity | | | |
+----------------------------------------+-------+--------------+--------------+
| Share capital | 8 | 38,000 | 38,000 |
+----------------------------------------+-------+--------------+--------------+
| Distributable reserve | 9 | 36,893,502 | 36,893,502 |
+----------------------------------------+-------+--------------+--------------+
| Accumulated deficit | | (16,050,974) | (11,571,499) |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Total equity | | 20,880,528 | 25,360,003 |
+----------------------------------------+-------+--------------+--------------+
| | | | |
+----------------------------------------+-------+--------------+--------------+
| Net Asset Value per Share | 10 | US$5.49 | US$6.67 |
+----------------------------------------+-------+--------------+--------------+
The financial statements on pages 14 to 27 were approved by the Board of
Directors on 17 June 2010 and are signed on its behalf by:
James Baxter Sidney Cabessa
Director Director
Statement of Cash Flows
+----------------------------------------+-------+-------------+-------------+
| | | 2009 | 2008 |
+----------------------------------------+-------+-------------+-------------+
| | Notes | US$ | US$ |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Operating Activities | | | |
+----------------------------------------+-------+-------------+-------------+
| Loss for the year attributable to | | (4,479,475) | (9,614,389) |
| equity shareholders | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Unrealised losses on investments | | 3,750,000 | 8,848,003 |
+----------------------------------------+-------+-------------+-------------+
| (Increase) / decrease in receivables | | (2,447) | 19,578 |
+----------------------------------------+-------+-------------+-------------+
| Increase in payables | | 328,571 | 9,688 |
+----------------------------------------+-------+-------------+-------------+
| Net cash flow from operating | | (403,351) | (737,120) |
| activities | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Investing Activities | | | |
+----------------------------------------+-------+-------------+-------------+
| Purchases of investments | 5 | - | (3,000,000) |
+----------------------------------------+-------+-------------+-------------+
| Cash flow from investing activities | | - | (3,000,000) |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Net decrease in cash and cash | | (403,351) | (3,737,120) |
| equivalents | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Cash and cash equivalents, at | | 1,140,084 | 4,877,204 |
| beginning of the year | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
| Cash and cash equivalents, at end of | 6 | 736,733 | 1,140,084 |
| the year | | | |
+----------------------------------------+-------+-------------+-------------+
| | | | |
+----------------------------------------+-------+-------------+-------------+
Notes to the Financial Statements
1. Significant Accounting Policies
North American Banks Fund Limited is a closed-ended investment company
registered and incorporated in Guernsey. The Company has been established to
invest predominantly in start-up banks based in the US.
The functional currency of the Company is US dollars because that is the
currency of the primary economic environment in which the Company operates.
These financial statements are presented in US Dollars.
Going concern
The Directors believe it is appropriate to adopt the going concern basis in
preparing the financial statements. No material uncertainties that may cast
significant doubt about the ability of the Company to continue as a going
concern have been identified by the Directors. The Directors are of the opinion
that the company has adequate financial resources to meet its day to day
operations for the foreseeable future. In addition the Investment manager fee
which is due for repayment on 31 October 2010, however the Directors have
received assurances from the Investment Manager that the Investment Manager will
not demand repayment of its fees at the repayment date and will rollover its fee
for an indefinite period.
Basis of Accounting
The financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the European
Union and International Accounting Standards and Standing Interpretations
Committee interpretations approved by the International Accounting Standards
Committee ("IASC") that remain in effect, together with applicable legal and
regulatory requirements of Guernsey Law.
The financial statements have been prepared on the historical cost basis except
for the inclusion at fair value of certain financial instruments. The principal
accounting policies are set out below. The preparation of financial statements
in conformity with International Financial Reporting Standards requires the
Company to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting year. It also requires the
Board of Directors to exercise its judgement in the process of applying the
Company's accounting policies.
Adoption of new and revised standards
In the current financial year, the Company has adopted International Financial
Reporting Standard 8 "Operating Segments" and International Accounting Standard
1 "Presentation of Financial Statements" (revised 2007).
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Company that are regularly reviewed by the
Directors to allocate resources to the segments and to assess their performance.
In contrast, the predecessor Standard IAS 14 "Segmental Reporting" required the
Company to identify two sets of segments (business and geographical), using a
risks and rewards approach, with the Company's system of internal financial
reporting to Directors serving only as the starting point for the identification
of such segments. However, as the Company is engaged in a single segment of
business and no such segmental reporting is undertaken, this has not resulted in
any changes to the financial information provided.
IAS 1 (revised) requires the presentation of a Statement of Changes in Equity as
primary statement, separate from the Income Statement and Statement of
Comprehensive Income. As a result, a Statement of Comprehensive Income has been
included in the primary statements, showing changes in each component of equity
for each period presented.
The following amendments and interpretations are mandatory for the Company's
accounting periods on or after 1 July 2009 but are not relevant for the
Company's operations:
+--------------+-+------------------------------------------------------+
| IFRS 1 | First-Time Adoption of International Financial |
| (revised) | Reporting Standards |
+----------------+------------------------------------------------------+
| IFRS 2 | Share Based Payment - Amendments resulting from |
| (revised) | April 2009 annual improvements to IFRS |
+----------------+------------------------------------------------------+
| IFRS 3 | Business combinations - Comprehensive revision on |
| (revised) | applying the acquisition method |
+----------------+------------------------------------------------------+
| IFRS 5 | Non-Current Assets Held for Sale and Discontinued |
| (revised) | Operations - Amendments resulting from May 2008 |
| | annual improvements to IFRSs |
+----------------+------------------------------------------------------+
| IAS 27 | Consolidated and Separate Financial Statements - |
| (revised) | Consequential amendments arising from amendments to |
| | IFRS3 |
+--------------+--------------------------------------------------------+
| IAS 28 | Investments in Associates - Consequential amendments |
| (revised) | arising from amendments to IFRS3 |
+--------------+--------------------------------------------------------+
| IAS 31 | Interest in Joint Ventures - Consequential amendments |
| (revised) | arising from amendments to IFRS3 |
+--------------+--------------------------------------------------------+
| IAS 38 | Intangible Assets - Amendments resulting from April |
| (revised) | 2009 annual improvements to IFRSs |
+--------------+--------------------------------------------------------+
| IAS 39 | Financial instruments: recognition and measurement - |
| (amendment) | Amendments for eligible hedged items |
+--------------+--------------------------------------------------------+
| IFRIC 17 | Distributions of non-cash assets to owners |
+--------------+--------------------------------------------------------+
| IFRIC 18 | Transfers of assets from owners |
+--------------+--------------------------------------------------------+
| | | |
+--------------+-+------------------------------------------------------+
Fair Values of Financial Instruments
The Company's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. This
portfolio of financial assets is managed and its performance evaluated on a fair
value basis, in accordance with a documented investment strategy, and
information about the portfolio is provided internally on that basis to the
Company's Board of Directors. Accordingly, upon initial recognition,
investments are designated by the Company as 'at a fair value through profit or
loss'. They are included initially at fair value, which is taken to be their
cost (excluding expenses incidental to the acquisition which are written off in
the Statement of Comprehensive Income). Subsequently, the investments are valued
at 'fair value', which for the unlisted investments where there is not an active
market, is established by using recognised valuation methodologies:
· Price of recent investment - This represents the cost of the investment or
the price at which a significant amount of new investment has been made by an
independent third party, but is only considered relevant for a limited period
following the date of the relevant transaction. During this limited period, the
value of the investment is assessed for changes or events that would imply
decline or appreciation in fair value. In addition, the valuation technique also
represents certain situations where although the limited period has expired, an
alternative valuation technique is not followed because an additional investment
has been made by the Company at the same price as the previous investment and an
alternative valuation technique would not result in a better estimate of fair
value.
· Net Assets - The value of the business is derived by using appropriate
measures to value the assets and liabilities of the investee company.
· Earnings Multiple - A multiple that is appropriate and reasonable, given
the risk profile and earnings growth prospects of the underlying company, is
applied to the maintainable earnings of that company.
Applying the above valuation methodologies as at 31 December 2009 produced a
valuation for the portfolio of US$20.600 million (2008: US$24.350 million) and
net loss on investments designated at fair value through profit or loss
recognised in the Statement of Comprehensive Income of US$3.750 million (2008:
loss of US$8.848 million).
Gains and losses arising from the changes in the fair value of investments are
included in the Statement of Comprehensive Income in the year in which they
arise.
For certain of the Company's financial instruments, including cash and cash
equivalents, interest and other receivables and accrued expenses, the carrying
amounts approximate fair value due to their immediate or short-term maturity.
Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realised gains on the sale
of investments are included in the Statement of Comprehensive Income in the year
they arise.
Other Accruals and Payables
Other accruals and payables are not interest-bearing and are stated at their
nominal value.
Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short term
highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Income
Interest income derived from cash monies is held in current and deposit accounts
throughout the year and is accounted for on an effective interest method.
Expenses
All expenses are accounted for on an accruals basis. The Company's investment
management fee, administration fees and all other expenses are charged through
the Statement of Comprehensive Income. The Company has no employees.
Operating Segments
A segment is a distinguishable component of the Company using the measures
reported to the chief operating decision maker.
The Directors are of the opinion that the Company is engaged in a single segment
of business of investing in equity investments, issued by companies operating
and generating revenue in the United States. As such the chief operating
decision maker feels that no segmental analysis is required.
Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Company's accounting policies (described within
note 1 above), the Company has determined that the following judgements and
estimates have the most significant effect on the amounts recognised in the
financial statements:
Fair values of financial instruments
The fair value of financial instruments not traded in active markets is
determined using generally accepted valuation techniques. The Company uses a
variety of methods and assumptions that are based on market conditions existing
at the Statement of Financial Position date. Valuation techniques used are
outlined in Fair Values of Financial Instruments above.
Critical accounting judgements and key sources of estimation
uncertainty (continued)
Notwithstanding the above, the variety of valuation bases adopted and quality of
management information provided by the underlying investee companies means there
are inherent difficulties in determining the value of those investments. Amounts
realised on the sale of those investments will inevitably differ from the values
reflected in these financial statements and the difference may be significant.
Fair value and impairment estimates are made at a specific point in time based
on market conditions and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgement.
Taxation
The Company has obtained exempt company status in Guernsey under the terms of
the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 so that it is exempt
from Guernsey taxation on income arising outside Guernsey and on bank interest
receivable in Guernsey. The Company is, therefore, only liable to a fixed fee of
GBP600 per annum. The Directors intend to conduct the Company's affairs such
that it continues to remain eligible for exemption.
2. Interest Income
+--------------------------------------------+------------+------------+
| | | |
| | 2009 | 2008 |
+--------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------+------------+------------+
| Interest income on fixed deposits | - | 54,476 |
+--------------------------------------------+------------+------------+
| Interest on bank deposits | - | 3,046 |
+--------------------------------------------+------------+------------+
| | - | 57,522 |
+--------------------------------------------+------------+------------+
3.Investment Management, Accounting and Administration, and Custodian Fee
North Atlantic Value LLP serves as the Investment Manager to the Company.
Pursuant to the terms of the Investment Management Agreement, the Investment
Manager is paid periodic fees, monthly in arrears, at a rate equivalent to 1.25%
per annum of the Net Asset Value of the Company.
BNP Paribas Fund Services (Guernsey) Limited serves as the Company's custodian
and is paid an annual custodian fee of 0.03% of the Net Assets of the Company
payable monthly in arrears (plus transaction charges).
BNP Paribas Fund Services (Guernsey) Limited also serves as the Company's
administrator. The Administrator is entitled to a fee calculated on the basis of
0.125% of the Net Assets of the Company payable monthly in arrears, subject to
an overall minimum fee of GBP60,000 per annum.
4. Basic and Diluted Earnings per Share
The basic and diluted earnings per share is based on the net loss for the year
of US$4,479,475 (2008: loss of US$9,614,389) and a weighted
average number of Ordinary Shares in issue during the year of 3,800,000 (2008:
3,800,000).
5. Investments designated at fair value through profit or loss
+---------------------------------------------+-------------+-------------+
| | | |
| | 2009 | 2008 |
+---------------------------------------------+-------------+-------------+
| | US$ | US$ |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Fair values at 1 January | 24,350,000 | 30,198,003 |
+---------------------------------------------+-------------+-------------+
| Additions during the year | - | 3,000,000 |
+---------------------------------------------+-------------+-------------+
| Unrealised gains on investments | - | 500,000 |
+---------------------------------------------+-------------+-------------+
| Unrealised losses on investments | (3,750,000) | (9,348,003) |
+---------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------+-------------+-------------+
| Fair values at 31 December | 20,600,000 | 24,350,000 |
+---------------------------------------------+-------------+-------------+
6. Cash and Cash Equivalents
+---------------------------------------------+------------+------------+
| | 2009 | 2008 |
+---------------------------------------------+------------+------------+
| | US$ | US$ |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| Cash at bank | 736,733 | 1,140,084 |
+---------------------------------------------+------------+------------+
7. Creditors
+---------------------------------------------+------------+------------+
| | 2009 | 2008 |
+---------------------------------------------+------------+------------+
| | US$ | US$ |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| Administration fee accrual | 8,229 | 7,306 |
+---------------------------------------------+------------+------------+
| Audit accrual | 32,298 | 28,756 |
+---------------------------------------------+------------+------------+
| Custody fee accrual | 629 | 737 |
+---------------------------------------------+------------+------------+
| Directors' fee accrual | 31,749 | 28,190 |
+---------------------------------------------+------------+------------+
| Investment manager fee accrual | 385,292 | 60,484 |
+---------------------------------------------+------------+------------+
| Other payables | 11,461 | 15,614 |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| | 469,658 | 141,087 |
+---------------------------------------------+------------+------------+
8. Share Capital
2009 2008
+----------------------------+-------------+-----------+-------------+-----------+
| | No. of | US$ | No. of | US$ |
| | Shares | | Shares | |
+----------------------------+-------------+-----------+-------------+-----------+
| Authorised: | | | | |
+----------------------------+-------------+-----------+-------------+-----------+
| Ordinary shares of US$0.01 | 100,000,000 | 1,000,000 | 100,000,000 | 1,000,000 |
| each | | | | |
+----------------------------+-------------+-----------+-------------+-----------+
| | | | | |
+----------------------------+-------------+-----------+-------------+-----------+
| Issued and fully paid: | | | | |
+----------------------------+-------------+-----------+-------------+-----------+
| Ordinary shares of US$0.01 | 3,800,000 | 38,000 | 3,800,000 | 38,000 |
| each | | | | |
+----------------------------+-------------+-----------+-------------+-----------+
The share capital of the Company comprises one class of Ordinary shares which
carry the right to vote at a general meeting. The ordinary shares carry no
rights to fixed income.
9. Net Asset Value per Share
The net asset value per ordinary share is based on net assets at the year end
and on 3,800,000 ordinary shares, being the number of ordinary shares in issue
at the year end.
10. Financial Instruments and Risk Profile
The Company's financial instruments comprise its investment portfolio (see page
4), cash balances, trade receivables and trade payables that arise directly from
its operations. Note 1 sets out the accounting policies, including criteria for
recognition and the basis for measurement, applied to significant financial
instruments excluding cash and cash equivalents which are carried at fair value.
Note 1 also includes the basis on which income and expenses arising from
financial assets and liabilities are recognised.
The main risks arising from the Company's financial instruments are:
(i) market risk, including currency risk, interest rate risk and other
price risk;
(ii) liquidity risk; and
(iii) credit risk
The Company Secretary, in close cooperation with the Board of Directors and the
Investment Manager, coordinates the Company's risk management. The policies for
managing each of these risks are summarised below and have been applied
throughout the year.
(i) Market risk
The Company invests in unquoted equity securities. However, the fair value or
future cash flows of a financial instrument held by the Company may fluctuate
because of changes in market prices. This market risk comprises currency risk,
interest rate risk and other price risk. The Board of Directors reviews and
agrees policies for managing these risks, which policies have remained
substantially unchanged from those applying in the year ended 31 December 2008.
The Investment Manager assesses the exposure to market risk when making each
investment decision and monitors the overall level of market risk on the whole
of the investment portfolio on an ongoing basis.
Currency risk
The functional and presentational currency of the Company is US Dollars ("US$").
Foreign currency risk is the risk that a financial instrument will fluctuate
because of changes in foreign exchange rates. The Company's foreign currency
risk in 2009 and 2008 is minimal as all of the Company's material assets and
liabilities are denominated in US$.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will
fluctuate because of changes in market interest rates. The Company's interest
rate sensitive assets comprise cash at bank which is subject to floating rates.
As such the Board does not believe the Company suffers any material interest
rate risk.
Other price risk
Other price risks (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of the unquoted
investments.
The Company's exposure to price risk comprises mainly movements in the value of
the Company's investments. As at the year-end, the spread of the Company's
investment portfolio is analysed on page 4.
The Board of Directors manages the market price risks inherent in the investment
portfolios by ensuring full and timely access to relevant investment information
from the Investment Manager. The Board meets regularly to review investment
performance. The Board monitors the Investment Manager's compliance with the
Company's objectives and is directly responsible for investment strategy and
asset allocation.
The Company's exposure to other changes in market prices at 31 December 2009 on
its investments was as follows:
+------------------------------------------+-------------+------------+
| | 2009 | 2008 |
+------------------------------------------+-------------+------------+
| | US$ | US$ |
+------------------------------------------+-------------+------------+
| Financial assets at fair value through | | |
| profit or loss | | |
+------------------------------------------+-------------+------------+
| - Non current investments at fair value | 20,600,000 | 24,350,000 |
| through profit or loss | | |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
The following table illustrates the sensitivity of the profit and net assets to
an increase or decrease of 10% in the fair values of the Company's equities. 10%
is the sensitivity rate used when reporting risk internally to key investment
management personnel. The sensitivity analysis is based on the Company's
equities at each Statement of Financial Position date, with all other variables
held constant. A positive number indicates an increase in net assets
attributable to holders of equity shares where the market price of the relevant
financial instrument increases and a negative number indicates a decrease where
the market price of the relevant financial instrument decreases.
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
| | | | 2009 | 2008 |
+--------------------------+----------+----------+-------------------------+-------------------------+
| | | | Increase | Decrease | Increase | Decrease |
| | | | in fair | in fair | in fair | in fair |
| | | | value | value | value | value |
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
| | | | US$ | US$ | US$ | US$ |
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
| Statement of | | | | | | |
| Comprehensive Income | | | | | | |
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
| Loss for the year | | | 2,034,250 | (2,034,250) | 2,404,500 | (2,404,500) |
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
| Net assets | | | 2,034,250 | (2,034,250) | 2,404,500 | (2,404,500) |
+--------------------------+----------+----------+-----------+-------------+-----------+-------------+
(ii) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.
A maturity analysis of the Company's contractual undiscounted liabilities is
included in the table below:
+----------------------------+--------------+-----------+-----------+
| | | | 2008 |
| | Maturity | 2009 | |
+----------------------------+--------------+-----------+-----------+
| | | US $'000 | US $'000 |
+----------------------------+--------------+-----------+-----------+
| Accrued investment | October 2010 | 385,292 | - |
| managers fee payable | | | |
+----------------------------+--------------+-----------+-----------+
| Other accrued expenses | < 1 month | 84,366 | 141,087 |
| payable | | | |
+----------------------------+--------------+-----------+-----------+
| | | 469,658 | 141,087 |
+----------------------------+--------------+-----------+-----------+
The Company monitors rolling forecasts of its liquidity requirements in order to
ensure that it has sufficient cash to meet its obligations as they fall due.
(iii) Credit risk
Credit risk is the risk that an issuer or counterparty may be unable or
unwilling to meet a commitment that it has entered into with the Company.
The Company's principal financial assets are cash and cash equivalents, other
receivables and investments as set out in the Statement of Financial Position
which, excluding investments, represents the Company's maximum exposure to
credit risk in relation to the financial assets.
The credit risk on bank balances is limited because the counterparties are banks
with high credit ratings of A-1+ assigned by international credit-rating
agencies.
Fair value of financial assets and financial liabilities
The fair value for each class of financial assets and liabilities, compared with
the corresponding amount in the Statement of Financial Position sheet were as
follows (trade receivables and trade payables, are excluded from the comparison,
as their carrying amounts are a reasonable approximation of their fair value).
+--------------------------+------------+------------+------------+------------+
| | 2009 | 2009 | 2008 | 2008 |
+--------------------------+------------+------------+------------+------------+
| | Fair | Statement | Fair | Statement |
| | value | of | value | of |
| | | Financial | | Financial |
| | | Position | | Position |
| | | value | | value |
+--------------------------+------------+------------+------------+------------+
| Financial assets | US$ | US$ | US$ | US$ |
+--------------------------+------------+------------+------------+------------+
| Financial assets at fair | | | | |
| value through profit or | | | | |
| loss | | | | |
+--------------------------+------------+------------+------------+------------+
| - Non current assets | 20,600,000 | 20,600,000 | 24,350,000 | 24,350,000 |
+--------------------------+------------+------------+------------+------------+
| | | | | |
+--------------------------+------------+------------+------------+------------+
| - Cash and cash | 736,733 | 736,733 | 1,140,084 | 1,140,084 |
| equivalents | | | | |
+--------------------------+------------+------------+------------+------------+
| | | | | |
+--------------------------+------------+------------+------------+------------+
fair values are derived as follows:
- Financial assets - as set out in the accounting policies on pages 18 to 21.
- Cash and cash equivalents- at face value of the account.
Fair value of financial assets and financial liabilities (continued)
The table below sets out fair value measurements using the IFRS 7 fair value
hierarchy:
+------------------------------+------------+--------+--------+------------+
| Financial assets at fair value through profit or loss |
| At 31 December 2009 |
+--------------------------------------------------------------------------+
| | Total | Level | Level | Level |
| | | 1 | 2 | 3 |
+------------------------------+------------+--------+--------+------------+
| | US$ | US$ | US$ | US$ |
+------------------------------+------------+--------+--------+------------+
| Equity Investments | 20,600,000 | - | - | 20,600,000 |
+------------------------------+------------+--------+--------+------------+
| Total | 20,600,000 | - | - | 20,600,000 |
+------------------------------+------------+--------+--------+------------+
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows:
Level 1 - valued using quoted prices in active markets for identical assets
Level 2 - valued by reference to observable inputs other than quoted prices
included within Level 1
Level 3 - valued by reference to valuation techniques using inputs that are not
based on observable market
data
A reconciliation of fair value measurements in Level 3 is set-out below:
+---------------------------------------+------------------+------------+
| Level 3 financial assets at fair value through profit or loss |
| At 31 December 2009 |
+-----------------------------------------------------------------------+
| | Equity | Total |
| | investments | |
+---------------------------------------+------------------+------------+
| | US$ | US$ |
+---------------------------------------+------------------+------------+
| Opening Balance | 20,600,000 | 20,600,000 |
+---------------------------------------+------------------+------------+
| Purchases | - | - |
+---------------------------------------+------------------+------------+
| Sales | - | - |
+---------------------------------------+------------------+------------+
| Total gains or losses included in | | |
| gains on investments in the Statement | | |
| of Comprehensive Income: | | |
+---------------------------------------+------------------+------------+
| On assets sold | - | - |
+---------------------------------------+------------------+------------+
| On assets held at the end of the year | - | - |
+---------------------------------------+------------------+------------+
| Closing Balance | 20,600,000 | 20,600,000 |
+---------------------------------------+------------------+------------+
There were no transfers in or out of level 3 during the year.
The above illustrations re IFRS 7 fair value hierarchy do not include
comparative information as comparatives are not required in the first year of
application.
The valuation techniques used by the Company are explained in the significant
accounting policies note on pages 18 to 21.
Capital Management Policies and Procedures
The Company's capital management objectives are:
- to ensure that the Company will be able to continue as a going concern, and
- to maximise the income and capital return to its equity shareholders through
an appropriate balance of equity capital and debt.
The Company's capital at 31 December comprises:
+------------------------------------------+-------------+------------+
| | 2009 | 2008 |
+------------------------------------------+-------------+------------+
| | US$ | US$ |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
| Equity | | |
+------------------------------------------+-------------+------------+
| Equity share capital | 38,000 | 38,000 |
+------------------------------------------+-------------+------------+
| Accumulated deficit and other reserves | 20,842,528 | 25,322,003 |
+------------------------------------------+-------------+------------+
| | 20,880,528 | 25,360,003 |
+------------------------------------------+-------------+------------+
| | | |
+------------------------------------------+-------------+------------+
The Board, with the assistance of the Investment Manager monitors and reviews
the broad structure of the Company's capital on an ongoing basis. This review
includes:
- the planned level of gearing, which takes account of the Investment Manager's
views on the market;
- the need to buy back equity shares for cancellation, which takes account of
the difference between the net asset value per share and the share price (i.e.
the level of share price discount or premium);
- the need for new issues of equity shares; and
- the extent to which revenue in excess of that which is required to be
distributed should be retained.
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period.
The Company is not subject to externally imposed capital requirement.
11. Related Party Transactions
The Directors' interests in the shares of the Company are disclosed on page 11.
In the Directors' opinion there are no other related party transactions to
disclose in accordance with the requirements of IAS 24.
12. Ultimate Controlling Party
The Directors are not aware of any ultimate controlling party.
13. Subsequent Events
Subsequent to the year end, the Company announced on 17 June 2010, that it would
make a further provision of US$1.2 million against the value of its investment
in TrustAtlantic Financial, this was following a recent capital raising by
TrustAtlantic Financial at a price per share, which was 30 per cent. below the
Fund's last valuation of this investment.
14. Approval of the Financial Statements
The financial statements were approved by the Board of Directors on 16 June
2010.
The above results comprise an abridged version of the Company's full accounts
for the year ended 31 December 2009. Copies of the accounts will be sent to
shareholders by 30 June 2010 and will be available on the Company's website
www.northamericanbanksfund.co.uk and from the Company's registered office at BNP
Paribas House, 1 St Julian's Avenue, St Peter Port, Guernsey GY1 1WA.
Enquiries:
Sara Bourne
BNP Paribas Fund Services (Guernsey) Limited Tel: 01481 750858
Alastair Moreton
Arbuthnot Securities Limited Tel: 020 7012 2000
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFAFMWFSSEIM
1 Year North American Banks Fund Chart |
1 Month North American Banks Fund Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
