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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Rab Spe | LSE:RSS | London | Ordinary Share | GB00B08HCH30 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 6.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMRSS
RNS Number : 4376Z
RAB Special Situations Company Ltd
27 May 2016
27 May 2016
RAB SPECIAL SITUATIONS COMPANY LIMITED
RESULTS FOR THE YEARED 31 DECEMBER 2015
KEY POINTS * Net asset value ("NAV") at 31 December 2015 of 7.35p per Ordinary Share (2014: 11.43p). * Loss in the year ended 31 December 2015 of GBP2.6 million (2014: loss of GBP3.5 million). * 41.21% fall in the NAV of the Sterling Class of RAB Special Situations (Master) Fund Limited (the "Master Fund"). * The results were prepared on a non-going concern basis. This reduced the NAV by GBP114,000 (2014: GBP870,000) (0.18p per share (2014: 1.36p per share)). For further information please visit www.rabspecialsituations.com or contact: Elysium Fund Management RAB Capital Panmure Gordon Limited Limited (UK) Limited PO Box 650 No. 1 Adam One New Change 1(st) Floor Street London Royal Chambers London EC4M 9AF St Julian's Avenue WC2N 6LE St Peter Port Richard Gray / Guernsey David Hince Andrew Potts / GY1 3JX Tel: +44 207 Adam James 389 7000 Tel: +44 207 886 Tel: +44 1481 810 2500 100 Fax: +44 1481 810 120 e-mail: elysium@elysiumfundman.com CHAIRMAN'S STATEMENT During the year, the Board of Directors of RAB Special Situations Company Limited (the "Company") (the "Board") put forward proposals to enable Shareholders to vote on the future of the Company at an Extraordinary General Meeting on 17 December 2015. The Shareholders voted against the continuance of the Company as an investment company and, as a result, to change the Investing Policy of the Company. The Company submitted a request to redeem its entire holding in the RAB Special Situations (Master) Fund Limited (the "Master Fund") and received the proceeds of the redemption in April 2016. The Company intends to put forward proposals to Shareholders to seek their approval to liquidate the Company and delist from AIM. Following careful consideration of the different methods of returning money to Shareholders, the Board agreed that the liquidator would distribute the proceeds of the redemption. RAB Capital Limited and Philip Richards (who together hold shares representing approximately 27.2% of the voting rights of the Company) have confirmed that they will not vote against this proposal. Therefore, these results have been prepared on a non-going concern basis. This reduced the 31 December 2015 net asset value ("NAV") by GBP114,000 (0.18p per share) (2014: GBP870,000, 1.36p per share), being the estimated expenses from the year end date to the anticipated date of wind up, including the costs of wind up itself. Results During the year ended 31 December 2015, the Company made a loss of GBP2.6 million (2014: loss of GBP3.5 million). The NAV per share of the Company decreased, from 11.43p to 7.35p in the year. This 35.70% decrease in NAV per share was a significant underperformance compared to its benchmark indices: the FTSE AIM All Share Index increased by 5.25%, and the FTSE AIM Basic Resources Index decreased by 16.27% in the year ended 31 December 2015. The main contributor to the decrease in the NAV was the 41.21% fall (2014: 22.84% fall) in the NAV of the Sterling Guernsey Share Class of the Master Fund. Additional details are given in the Investment Manager's Report. The Master Fund is managed by the Investment Manager. The Investment Manager does not receive a management or performance fee for its role as investment manager of the Master Fund in respect of the Company's shareholding in the Master Fund. At 31 December 2015, the Company held all of the shares of the Sterling Guernsey Share Class of the Master Fund accounting for 33.22% (2014: 31.66%) of the net assets of the Master Fund. Share buy-backs Over the course of the year, the Board monitored closely the discount of the share price to NAV, which changed from a discount of 11.42% at 31 December 2014 to a premium of 15.65% at 31 December 2015. During the year, the Company did not buy-back any Ordinary Shares, nor did it hold any shares in treasury. Ordinary Shares held in treasury will not be reissued at less than the latest published NAV, nor held in treasury for more than twelve months, at which point they will be cancelled. Since 31 December 2015, no Ordinary Shares have been bought back, and no Ordinary Shares, which were held in treasury at the year end, have been cancelled. As at 30 April 2016, the discount of the share price to the NAV was 26.87%. Investment The investment strategy of the Master Fund remains the same as at 31 December 2014. The Master Fund continues to invest in what the Investment Manager deems to be assets of global significance and the focus of investment has been on investing in natural resources. There has been no investment in new unlisted securities and the Investment Manager has confirmed its intention to make new investments only into listed companies engaged in the natural resources sector and will continue to reduce the unlisted component of the Master Fund's portfolio through the sales of those positions, with additional investment only in existing unlisted companies being permitted in order to preserve or enhance the realisation value of such investments. The 41.21% decrease in the Sterling Guernsey Share Class of the Master Fund was primarily as a result of the very poor performance of the commodities and natural resources sectors in 2015 along with the lack of major success in Falkland Oil and Gas Limited's (now merged with Rockhopper Exploration plc) drilling campaign. RAB Capital Limited's valuation committee for the Master Fund continues to meet monthly to ensure that the Investment Manager adheres to the valuation policy and procedures document adopted by the Master Fund and to review the rationale for any revaluations in the month. Quentin Spicer 26 May 2016 INVESTMENT MANAGER'S REPORT The Company's sole investment is in the RAB Special Situations (Master) Fund Limited (the "Master Fund") and the review that follows refers to the portfolio of the Master Fund. Commodities saw their worst losses in 2015 since the 2008 financial crisis, with the Bloomberg World Mining Index falling 35.3% over the period. Nearly a decade of overinvestment in production, supported by high prices and demand growth in Emerging Economies, gave way to a vicious cycle of price deterioration and cost deflation as global supplies soared and demand expectations were tempered on the back of a China-led Emerging Markets slow-down. Precipitous price declines in the petroleum complex acted as a catalyst, but the sell-off was broad based with every sector from metals, to bulks, to agriculture seeing sharp losses in 2015. Compared with the previous year, base metal prices were down 24.4% on average (London Metal Exchange Index) in 2015 with molybdenum (-42.8%) and nickel (-41.8%, at a 12-year low) demonstrating the most significant declines. Copper, the primary revenue driver for the base metal sector, was down 26.1% as moderating global GDP growth and the continued slowdown of the Chinese economy continued to weigh on all commodities throughout the year. Even gold languished at multi-year lows, down 10.6%, unable to attract buyers despite bouts of intense stock market volatility, geopolitical shocks, counterintuitive bond market behaviour, unusually fluid and unpredictable asset class correlations and changing views about central bank policies. Steep appreciation in the US dollar further weighed on dollar-denominated commodity prices amidst the bearish fundamental environment. Many commodity markets were beginning to tighten in the latter half of the year though as the impact of lower prices started to filter through in the production side. For oil and gas, sharp declines in US rig counts should begin to make meaningful impacts on production growth in 2016. Meanwhile, mining supply cuts could support a rebound for some metals. A slower pace of US dollar appreciation should also give the complex some breathing room in 2016. On the back of this poor sector performance and one legal ruling (Oxus Gold), the Master Fund suffered, falling 41.7% (on the Sterling Share Class) in 2015. During 2015 the Master Fund remained almost fully invested and continued to pursue the sale of private positions in line with the aim of reducing the portfolio's exposure to private asset classes. As of 31 December 2015 the Master Fund had 16% in net cash (including contracts for difference borrowings), with publicly listed investments or positions where the underlying security is listed (including contracts for difference exposure) representing 70% of the net asset value of the Master Fund. Of these listed investments 17% were illiquid (i.e. they cannot be liquidated in less than 180 days using 25% of the year end 90 day average daily traded volume of the stock). Unlisted investments at the year end represented 14% of the net asset value of the Master Fund. There follows an update on the top 5 holdings
by value, and their prospects going forward. Falkland Oil and Gas Ltd: After the disappointment of the Humpback well in October 2015, the result of the Isobel well and the approval of the merger with Rockhopper Exploration plc ("Rockhopper") have been two positive events to start 2016. Looking forward, the rig will move to drill the Chatham prospect in which Rockhopper holds 40% and estimate a Pmean resource of 51 million barrels. In addition, with their partners Premier, they will look to move forward with the FEED process on their Sea Lion field. In terms of risks, clearly the oil price will affect general sentiment towards this space as well as directly impacting the economics of their projects. Royal Nickel Corporation ("Royal Nickel"): Royal Nickel is a stock that is highly leveraged to the nickel price and requires the economies of scale (i.e. high initial capital expenditure) to maximise economic return. The company announced in 2015 that it had received the certificate of authorisation for its Dumont project, positioning it to proceed to construction upon completion of financing. This is arguably a long term holding for the Master Fund given the project is uneconomic at the current nickel price (US$8,780 per tonne). Victoria Gold Corporation ("Victoria Gold"): Victoria Gold is a stock that is highly leveraged to the gold price, with significant scale and method of mining (open pit, heap leach operation) conducive to the low operating cost theme sought by investors. Since completing the feasibility study for its flagship Eagle Gold project in Yukon in 2012, the company has been focusing on project financing and aims to have this completed in 2016. The permitting of the project is now complete and the final piece of financing would render the project ready to progress towards its theoretical value. Trevali Mining Corporation ("Trevali"): Trevali performed poorly in 2015 on the back of a sharp fall in zinc prices (-26.5%). With its Santander mine performing very well and Caribou mine and mill commissioning advancing in New Brunswick, the company should have two operating zinc mines on line by the time positive zinc supply and demand fundamentals take hold, which may yet occur in 2016. With the demonstrated strong support of its lenders and its strategic partner Glencore plc, we believe Trevali remains in good condition to take advantage of improving zinc fundamentals. Brasoil do Brasil: The Manati gas field offshore of Brazil, in which the company holds a 10% interest (Petrobras act as operator), continues to produce well after compression equipment was installed. Looking forward, clearly the macro economic situation in Brazil and the prevailing market for oil will be particular points of risk for this company. 2015 witnessed a much sharper slowdown in China's commodity demand than was generally expected. Combined with ongoing supply growth - the result of a 30-year high in capital investment over 2009 to 2013 - this has led to commodity prices falling materially in 2015, and the mining sector underperforming for an unprecedented fifth consecutive year, making it the worst period for the sector since at least 1966. We do think 2016 will see a steady acceleration of the supply cuts in the commodities sector. However, we do not expect to see any material impact of these cuts in the short term. In past cycles we would have seen more producers going out of business completely, but the availability of cheap capital in the current financial environment has buffered against this. Supply cuts in themselves are generally a reaction to current market conditions, and it is rare to see "too much" supply cut - they may stabilise cycles, but they rarely lead sustained recoveries if demand does not play ball. Unfortunately, the prospect for an upside demand-shock looks limited with the Purchasing Managers Indices in China and the US in contraction territory. Aside from the structural transition away from fixed asset investment intensive growth in China, we worry about deteriorating demographics and a multi-year slowdown in property investment. While the above points to further short term difficulties, for those with longer term horizons, we are starting to see the capital raises, dividend cuts and, crucially, capacity withdrawals, which are a necessary prerequisite for a cyclical turning point, as is an increase in merger and acquisitions activity. Unfortunately they do not in themselves signify a bottoming of the market which may well be yet to come. Philip Richards and Team 28 January 2016 Data Sources: Centaur Fund Services Limited, RAB Capital Limited, Bloomberg L.P. Disclaimer Issued by RAB Capital Limited ("RAB"), which is authorised and regulated by the Financial Conduct Authority of the United Kingdom ("FCA"). This publication does not constitute a recommendation to buy or sell any of the securities mentioned herein. The value of investments and the income therefrom can go down as well as up. Past performance is not a guide to future returns. You should note that, if you choose to invest in any product described or referred to in this publication, your capital will be at risk and you may therefore lose some or all of any amounts that you choose to invest. Returns, or any performance, cannot be guaranteed. Performance is shown net of all fees and expenses. This publication is not intended to constitute, and should not be construed as, investment advice. Potential investors in the products described in this publication should seek their own independent financial advice. RAB neither provides investment advice to, nor receives and transmits orders from, investors in those products nor does it carry on any other activities with or for such investors that constitute "MiFID or equivalent third country business" for the purposes of the FCA Rules. This publication does not constitute an offer or solicitation in any country in which such an offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. This publication includes returns for various indices. These indices are not intended to be direct benchmarks for the Master Fund nor are they intended to be indicative of the type of assets in which the Master Fund may invest. The assets in which the Master Fund invests may be materially different from the assets underlying these indices, and may have a significantly different risk profile. Any projections or analysis provided to assist the recipient of this publication in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly any projections or analysis should not be viewed as factual and should not be relied upon as an accurate prediction of future results. Except as required by law or the FCA Rules RAB makes no representation or warranty (express or implied) regarding the accuracy, completeness or adequacy of the information or opinions in this publication. Furthermore, to the extent permitted by law and the FCA Rules, RAB, nor, nor any of its directors, officers, agents, service providers or professional advisers, assumes any liability or responsibility or owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information or opinions contained in this publication or for any decision based on it. RAB takes very seriously the issue of Market Abuse and maintains robust controls around its prevention. STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2015 Revenue Capital Total Revenue Capital Total Notes 2015 2015 2015 2014 2014 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Investment gains and losses Movement in unrealised loss on investment 11 - (2,902) (2,902) - (2,084) (2,084) -------- -------- -------- -------- -------- -------- Total investment losses - (2,902) (2,902) - (2,084) (2,084) -------- -------- -------- -------- -------- -------- Income Bank interest receivable 2 - 2 3 - 3 -------- -------- -------- -------- -------- -------- 2 - 2 3 - 3 -------- -------- -------- -------- -------- -------- Expenses Investment management fee 5 - (131) (131) - (200) (200) Directors' remuneration 7 (105) - (105) (105) - (105) Administration fee 5 (90) - (90) (90) - (90) Other expenses 6 (145) - (145) (124) - (124) -------- -------- -------- -------- -------- -------- (340) (131) (471) (319) (200) (519) -------- -------- -------- -------- -------- -------- Movement in provision for operating loss to wind up 3 302 454 756 (536) (334) (870)
-------- -------- -------- -------- -------- -------- Net loss and total comprehensive loss for the year (36) (2,579) (2,615) (852) (2,618) (3,470) -------- -------- -------- -------- -------- -------- Loss per Ordinary Share: basic and diluted 10 (0.06)p (4.03)p (4.09)p (1.33)p (4.08)p (5.41)p The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with IFRS as adopted by the European Union on a non-going concern basis. The supplementary revenue and capital columns are presented for information purposes, in accordance with guidance published by the Association of Investment Companies. There was no other comprehensive income in the year. The accompanying notes form an integral part of this announcement. STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2015 Special Share distributable Revenue Capital capital reserve reserve reserve Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 January 2014 646 81,048 (3,035) (67,864) 10,795 Net loss and total comprehensive loss for the year - - (852) (2,618) (3,470) Transactions with Owners Buy-back of Ordinary Shares (note 15) - (9) - - (9) Cancellation of Ordinary Shares held in treasury (note 15) (5) 5 - - - ---------- ---------- ---------- ---------- ---------- At 31 December 2014 641 81,044 (3,887) (70,482) 7,316 Net loss and total comprehensive loss for the year - - (36) (2,579) (2,615) Transactions with Owners Cancellation of Ordinary Shares held in treasury (note 15) (1) 1 - - - ---------- ---------- ---------- ---------- ---------- At 31 December 2015 640 81,045 (3,923) (73,061) 4,701 ---------- ---------- ---------- ---------- ---------- The accompanying notes form an integral part of this announcement. STATEMENT OF FINANCIAL POSITION as at 31 December 2015 2015 2014 Notes GBP'000 GBP'000 Current assets Investment designated at fair value through profit or loss 11, 12 4,141 7,043 Receivables and prepayments 9 16 Cash and cash equivalents 13 708 1,173 ---------- ---------- Total assets 4,858 8,232 ---------- ---------- Current liabilities Payables and accruals 14 (43) (46) Provision for operating loss to wind up 3 (114) (870) ---------- ---------- Total liabilities (157) (916) ---------- ---------- Net assets 4,701 7,316 ---------- ---------- Share capital and reserves Called-up share capital 15 640 641 Special distributable reserve 16 81,045 81,044 Revenue reserve (3,923) (3,887) Capital reserve (73,061) (70,482) ---------- ---------- Total Shareholders' funds 4,701 7,316 ---------- ---------- Net asset value per Ordinary Share: basic and diluted 17 7.35p 11.43p The accompanying notes form an integral part of this announcement. STATEMENT OF CASH FLOWS for the year ended 31 December 2015 2015 2014 Note GBP'000 GBP'000 Net cash outflow from operating activities 18 (465) (523) Financing activities Purchase of own shares 15 - (9) ---------- ---------- Net cash outflow from financing activities - (9) ---------- ---------- Decrease in cash and cash equivalents (465) (532) ---------- ---------- Cash and cash equivalents at 1 January 1,173 1,705 Decrease in cash and cash equivalents (465) (532) ---------- ---------- Cash and cash equivalents at 31 December 13 708 1,173 ---------- ---------- The accompanying notes form an integral part of this announcement. NOTES TO THE RESULTS for the year ended 31 December 2015 1. General Information The Company is an authorised closed-ended, non-cellular investment company domiciled and incorporated as a limited liability company under the laws of Guernsey. The registered office of the Company is PO Box 650, 1(st) Floor, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey, GY1 3JX. As approved by Shareholders on 17 December 2015, the Company's investment objective is to realise its Existing Investment in a reasonable timeframe. The Company's investment activities are managed by RAB Capital Limited, with the administration delegated to Elysium Fund Management Limited ("Elysium"). The Company's Ordinary Shares are traded on AIM, a market operated by the London Stock Exchange. 2. Basis of preparation a) Statement of compliance The results have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and adopted by the European Union on a non-going concern basis, interpretations issued by the IFRS Interpretations Committee and applicable legal and regulatory requirements of Guernsey Law and reflect the significant accounting policies stated in note 25, which have been adopted and applied consistently. The results were authorised for issuance by the Board of Directors on 26 May 2016. As the results have been prepared on a non-going concern basis (note 2c), provision for the estimated future expenses from the year end date to the anticipated date of wind up, including the costs of wind up itself, have been included in the results. b) Basis of measurement The results have been prepared on a historical cost basis except for the measurement of investment designated at fair value through profit or loss. c) Going concern The Shareholders were given the opportunity to vote on the future of the Company at an Extraordinary General Meeting on 17 December 2015. The Shareholders voted against the continuance of the Company as an investment company and, as a result, to change the Investing Policy of the Company. Following the completion of the redemption from the Master Fund the Board will put forward proposals to Shareholders to seek their approval to liquidate the Company and delist from AIM. Following careful consideration of the different methods of returning money to Shareholders, the Board agreed that the liquidator would distribute the proceeds of the redemption. Therefore, the results have been prepared on a non-going concern basis. The effect of this is explained in note 3. d) Functional and presentation currency The functional currency of the Company is Sterling as this is the currency of the primary economic environment within which the Company operates, the equity was generated in Sterling and all receipts from operating activities are received in Sterling. The presentational currency of the Company is also Sterling. The results have been rounded to the nearest thousand. 3. Judgements and estimates The preparation of the results in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of revision and future periods, if the revision affects both current and future periods. Judgements In the process of applying the Company's accounting policies, management has made the following judgements, which have had the most significant effects in the amounts recognised in the results: Going concern The Board put forward proposals to enable Shareholders to vote on the future of the Company at an Extraordinary General Meeting on 17 December 2015. The Shareholders voted against the continuance of the Company as an investment company and, as a result, to change the Investing Policy of the Company. The Company submitted a request to redeem its entire holding in the Master Fund and received the proceeds of the redemption in April 2016. The Company intends to put forward proposals to Shareholders to liquidate the Company. RAB Capital Limited and Philip Richards (who together hold shares representing approximately 27.3% of the voting rights of the Company) have confirmed that they will not vote against this proposal. Therefore, these results have been prepared on a non-going concern basis. This reduced the 31 December 2015 net asset value ("NAV") by GBP114,000 (0.18p per share) (2014: GBP870,000, 1.36p per share), being the estimated expenses from the year end date to the anticipated date of wind up, including the costs of wind up itself. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities to the anticipated date of winding up, are discussed below. The Company based its assumptions and estimates on parameters available when the results were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur. The significant judgements made in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to the results for the year ended 31 December 2014. Fair value of financial instruments At 31 December 2015, the valuation of the investment at fair value was based on the NAV of the Master Fund as: * Dealing in the Sterling Guernsey Share Class of the Master Fund takes place at a value established by the independent administrator of the Master Fund; and * The NAV of the Master Fund is calculated at each month end and communicated to shareholders shortly thereafter. Provision for operating loss to wind up The provision for the operating loss to wind up comprises estimated expenses from the year end date to the anticipated date of wind up, including the costs of wind up itself. These estimated expenses are based on historical expenses, as an estimate of what future costs will be, in accordance with expected timeline to wind up. A gain on investment of GBP161,000 has been included in the provision for operating loss to wind up due to the difference between the year end estimated investment value and the actual redemption amount received. 4. Segmental analysis The Company only has one investment, being redeemable shares in the Sterling Guernsey Share Class of the Master Fund which is registered in the Cayman Islands. The Company generates 100% of its investment gains and losses from this investment. Hence, the information provided internally to the Board for decision-making purposes relates to this single economic segment. Therefore, the Board is of the opinion that the Company is engaged in a single economic segment of business. The total investment loss for the year ended 31 December 2015 was GBP2,902,000 (2014: GBP2,084,000) and constitutes the entire investment gains and losses of the Company during the year. The only other revenue for the Company during the year was bank deposit interest of GBP2,000 (2014: GBP3,000). 5. Investment Management and Administration Investment Management RAB Capital Limited (the "Investment Manager") is entitled to an investment management fee, payable by the Company monthly in arrears, of up to 1/12(th) of 2.0% per month calculated on the NAV of the Company, and from which it may, at its discretion, pay to any person to which it has delegated any of the functions it is permitted to delegate. Elysium (the "Administrator") calculates the investment management fee. The Investment Manager is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. With effect from 1 January 2014, the Investment Manager agreed to reduce its fees by GBP10,000 per annum. The investment manager has stopped charging investment management fees with effect from 1 April 2016. The Investment Manager may also be entitled to a performance fee calculated on an aggregate NAV basis in respect of any financial year if the closing NAV for that financial year exceeds the opening NAV for the financial year or the high water mark NAV (if higher). In such circumstances, the performance fee equates to 20.0% of the excess of the closing NAV for that financial year over the opening NAV for that financial year or the high water mark NAV (as appropriate), less the proceeds of any issues since the beginning of the financial year or the date on which the high water mark NAV occurred (as appropriate), plus the cost of any repurchases since the beginning of the financial year or the date on which the high water mark NAV occurred (as appropriate). The high water mark at 31 December 2015 was GBP120,779,000 (2014: GBP120,779,000). The Administrator calculates the performance fee, which is due to the Investment Manager within ten business days of the end of the financial year. No performance fees were paid during the year (2014: GBPnil). The Investment Manager does not receive a management or performance fee for its role as investment manager of the Master Fund in respect of the Company's shareholding in the Master Fund. The Investment Management Agreement is terminable on 90 days' notice by either party. Administration Elysium acts as Administrator and Company Secretary to the Company. The Administrator is responsible for providing administration and secretarial services to the Company, including the calculation of the monthly NAV per Ordinary Share of the Company. The Administrator also serves as the Company's agent for the issue and repurchase of Ordinary Shares. The Administrator was paid an annual fee of 0.1% of the NAV of the Company, subject to a minimum annual fee of GBP100,000. With effect from 1 January 2014, the Administrator agreed to reduce its fees by GBP10,000 per annum. The Administration Agreement is terminable on 90 days' notice by either party. 6. Other expenses 2015 2014 GBP'000 GBP'000 Nominated Adviser and Broker's fees ([1]) 50 35 Registrar fees 23 16 Directors' and officers' liability insurance 16 16 Directors' travel expenses 16 15 AIM / GFSC fees 15 15 Auditor's remuneration 8 7 Legal fees 2 7 Other expenses 15 13 ---------- ---------- 145 124 ---------- ---------- ([1]) With effect from 1 January 2014, the Nominated Adviser and Broker agreed to reduce its fees by GBP5,000 per annum. In the year ended 31 December 2015, the Nominated Advisor and Broker charged an additional GBP15,000 for work undertaken in the preparation of the Extraordinary General Meeting circular. 7. Directors' remuneration
2015 2014 GBP'000 GBP'000 Quentin Spicer 30 30 Peter Hodson 25 25 Christopher Wetherhill 25 25 Nicholas Wilson 25 25 ---------- ---------- 105 105 ---------- ---------- No bonus or pension contributions were paid or were payable on behalf of the Directors. The Board continues to monitor the Company's expenses and, with effect from 1 January 2014, the Chairman agreed to waive GBP12,500 per annum of his fees and each of the other Directors have agreed to waive GBP10,000 per annum of their respective fees. 8. Taxation The Company has been granted exemption from Guernsey taxation under the terms of the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989, and was charged an annual exemption fee of GBP1,200 for the year ended 31 December 2015. The Directors intend to conduct the Company's affairs such that it continues to remain eligible for exemption from Guernsey taxation. 9. Dividends in respect of Ordinary Shares No interim dividends were paid in respect of the year (2014: nil). The Directors do not propose the payment of a final dividend (2014: nil). 10. Loss per Ordinary Share Basic and diluted The loss per Ordinary Share is based on a loss of GBP2,615,000 (2014: loss of GBP3,470,000) and on a weighted average number of 63,987,761 (2014: 64,132,419) Ordinary Shares in issue throughout the year. The revenue loss per Ordinary Share is based on a net loss of GBP36,000 (2014: loss of GBP852,000) and on a weighted average number of 63,987,761 (2014: 64,132,419) Ordinary Shares in issue throughout the year. The capital loss per Ordinary Share is based on a loss of GBP2,579,000 (2014: loss of GBP2,618,000) and on a weighted average number of 63,987,761 (2014: 64,132,419) Ordinary Shares in issue throughout the year. 11. Investment designated at fair value through profit or loss 2015 2014 GBP'000 GBP'000 Opening valuation 7,043 9,127 Movement in unrealised loss on investment (2,902) (2,084) ---------- ---------- Closing valuation 4,141 7,043 ---------- ---------- At the year end: Closing cost 48,687 48,687 Closing unrealised loss on investment (44,546) (41,644) ---------- ---------- Closing valuation 4,141 7,043 ---------- ---------- The Company's only investment has been in the Sterling Guernsey Share Class of the Master Fund. At 31 December 2014 and 2015, and throughout the period, the Company held all of the shares of the Sterling Guernsey Share Class of the Master Fund accounting for 33.22% (2014: 31.66%) of the net assets of the Master Fund. As the investment in the Master Fund is carried at fair value through profit or loss and the Company is an investment company, the Company is exempt from applying IAS 28 in accounting for its investment in the Master Fund. The Master Fund is managed by the Investment Manager. As stated in note 5, the Investment Manager does not receive a management or performance fee for its role as investment manager of the Master Fund in respect of the Company's shareholding in the Master Fund. 12. Fair value of financial instruments The following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on: * Quoted prices in active markets for identical assets or liabilities (Level 1); * Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and * Those with inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Financial assets designated at fair value through profit or loss Level Level 2 Level 3 Total 1 GBP'000 GBP'000 GBP'000 GBP'000 31 December 2015 Redeemable shares in the Master Fund - 4,141 - 4,141 ---------- ---------- ---------- ---------- 31 December 2014 Redeemable shares in the Master Fund - 7,043 - 7,043 ---------- ---------- ---------- ---------- The investment in the Master Fund, does not meet the criteria of Level 1 because the Company is the sole investor in the Sterling Guernsey Share Class of the Master Fund (see note 11). The shares of the Sterling Guernsey Share Class are not quoted or traded in an active market. Based on the following facts, the Company has classified its investment in the Master Fund as Level 2 within the hierarchy: * Dealing in the Sterling Guernsey Share Class takes place at a value established by RAB Capital Limited and the administrator of the Master Fund; * The NAV of the Master Fund is calculated at each month end and communicated to shareholders shortly thereafter; and * There are no significant unobservable adjustments to the observable inputs to the fair value measurement. There have been no transfers between Levels during the year ended 31 December 2015 (2014: none). 13. Cash and cash equivalents 2015 2014 GBP'000 GBP'000 Deposits with banks 700 1,100 Cash balances with banks 8 73 ---------- ---------- Total cash and cash equivalents with banks 708 1,173 ---------- ---------- The Company did not have any cash equivalents at the financial reporting date. Cash balances held on deposit with banks earn interest at prevailing bank interest rates. During the year, the Company received GBP2,000 interest on the deposit held with HSBC Bank plc (2014: GBP3,000). 14. Payables and accruals 2015 2014 GBP'000 GBP'000 Administration fee 8 8 Audit fee 8 8 Investment management fee (notes 5 and 20) 7 11 Other payables 20 10 Share buyback - 9 ---------- ---------- 43 46 ---------- ---------- 15. Share capital 2015 2014 GBP'000 GBP'000 Authorised: 300,000,000 Ordinary Shares of 1p each 3,000 3,000 ---------- ---------- Allotted, called up and fully paid: 63,987,761 (2014: 63,987,761) Ordinary
Shares of 1p each 640 640 Nil (2014: 150,000) Treasury Shares of 1p each - 1 ---------- ---------- 640 641 ---------- ---------- Reconciliation of movements in share capital: Nominal Treasury GBP'000 At 1 January 2014 64,137,761 498,239 646 Cancellation of Ordinary Shares held in treasury - (498,239) (5) Bought back and held in treasury (150,000) 150,000 - ---------------- ------------- ---------- At 31 December 2014 63,987,761 150,000 641 Cancellation of Ordinary Shares held in treasury - (150,000) (1) ---------------- ------------- ---------- At 31 December 2015 63,987,761 - 640 ---------------- ------------- ---------- The Ordinary Shares held in treasury did not have the right to vote at general meetings nor did they have an entitlement to receive any dividends and surplus assets of the Company on a winding-up. Ordinary Shares held in treasury will not be reissued at a price less than the latest published NAV per share. Ordinary Shares held in treasury will not be held in treasury for more than 12 months, at which point they will be cancelled. At the Annual General Meeting on 16 July 2015 the Shareholders renewed the Company's authority to purchase its own shares. During the year, the Company did not buy back any Ordinary Shares (2014: 150,000 Ordinary Shares at 6.00p). During the year, the Company cancelled 150,000 Ordinary Shares which were held in treasury at 31 December 2014 (2014: 498,239). At 31 December 2015, no Ordinary Shares were held in treasury (2014: 150,000). At 31 December 2014, the fair value of the shares held in treasury was GBP12,000. 16. Reserves Pursuant to the Companies (Guernsey) Law, 2008, all reserves (including share capital) can be designated as distributable. However, in accordance with the Admission Document, the investment gains and losses, management fees and performance fees are charged or credited (as appropriate) to the capital reserve. The Company's Articles of Incorporation preclude it from distributing capital profits as a dividend. 17. Net asset value per Ordinary Share Basic and diluted The NAV per Ordinary Share is based on the net assets attributable to equity Shareholders of GBP4,701,000 (2014: GBP7,316,000) and on 63,987,761 (2014: 63,987,761) Ordinary Shares in issue at the end of the year. 18. Reconciliation of total comprehensive loss to net cash outflow from operating activities 2015 2014 GBP'000 GBP'000 Total comprehensive loss for the year (2,615) (3,470) Losses on investment 2,902 2,084 (Decrease)/increase in provision for operating loss to wind up (756) 870 Decrease/(increase) in other receivables 7 (4) Decrease in other payables (3) (3) ---------- ---------- Net cash outflow from operating activities (465) (523) ---------- ---------- 19. Capital commitments There were no capital commitments as at 31 December 2015 (2014: nil). 20. Related parties Details of the relationship between the Company and RAB Capital Limited are disclosed in note 5. During the year, GBP131,000 (2014: GBP200,000) was payable to RAB Capital Limited in respect of investment management fees and nil (2014: nil) in respect of performance fees. As at 31 December 2015, the Company owed RAB Capital Limited GBP7,000 (2014: GBP11,000) in respect of investment management fees and nil (2014: nil) in respect of performance fees. At 31 December 2015, RAB Capital Limited held 15,457,276 (2014: 15,457,276) Ordinary Shares in the Company. Mr Richards (a Director of RAB Capital Limited) also held 2,000,000 (2014: 2,000,000) Ordinary Shares in the Company. Mr Wetherhill is a non-executive director of RAB Partners Limited, a wholly-owned subsidiary of RAB Capital Limited, and three other entities managed by RAB Capital Limited (RAB Special Situations Fund Limited, RAB Special Situations (Master) Fund Limited and Redstream Fund Limited). Mr Wetherhill is also the Chairman of the RAB Capital Limited valuation committee, which continues to meet monthly to ensure that the Investment Manager adheres to the valuation policy and procedures document adopted by the Master Fund and to review the rationale for any revaluations in the month. The Directors are not aware of any ultimate controlling party. 21. Risk profile of financial assets and liabilities Financial Summary As approved by Shareholders on 17 December 2015, the Company's investment objective is to realise its Existing Investment in a reasonable timeframe. The Company's only investment is shares in the Sterling Guernsey Share Class of the Master Fund. In addition, the Company holds cash and liquid resources as well as having receivables and payables that arise directly from its operations. As the Company invests the majority of its assets into the Master Fund, the Company is indirectly exposed to the risks of the Master Fund. The main risks that the Master Fund is exposed to are market risk (which includes price risk, currency risk and interest rate risk), liquidity risk and credit risk. The main risks arising from the Company's financial instruments are as follows: Market risk Price risk The Company's exposure to price risk consists mainly of movements in the value of the Company's investment. The Company's investment portfolio complies with the investment parameters as disclosed in the Admission Document. The Board manages the price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. On the assumption that all things remain constant, other than the movement in investments designated at fair value through profit or loss, an increase/decrease in the market price of the Sterling Guernsey Share Class of the Master Fund would affect the NAV per Ordinary Share as at the financial reporting date and the loss of the Company for the year due to the change in unrealised loss, as follows: % Change in Sterling Guernsey Share Class % change in net of the Master Fund assets % change in loss 2015 2014 2015 2014 10% 8.81 9.63 15.83 20.30 25% 22.02 24.07 39.58 50.74 50% 44.05 48.13 79.16 101.48 75% 66.07 72.20 118.74 152.23 Details of the nature of the Company's investment at the financial reporting date are disclosed in note 11. Currency risk The Company has no direct exposure to currency risk. However, the Company is indirectly exposed to currency risk as its sole investment is in the Sterling Guernsey Share Class of the Master Fund. The Company does not hedge against the currency risk to which it is exposed within the Master Fund. Interest rate risk The Company finances its operations through a mixture of Shareholders' capital and reserves. During the year the Company received interest of GBP2,000 on its cash and cash equivalents (2014: GBP3,000). All other assets and liabilities of the Company are non-interest bearing. At 31 December 2015, cash and cash equivalents of GBP708,000 (2014: GBP1,173,000) are potentially exposed to movements in interest rates. However, only GBP700,000 (2014: GBP1,100,000) is exposed to potential movements in interest rates as the remaining GBP8,000 (2014: GBP73,000) does not generate interest. A movement in interest rates would not have a material financial
impact on the Company. Therefore, the Company does not hedge against the interest rate risk to which it is exposed. Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amounts of financial assets best represent the maximum credit risk exposure at the financial reporting date. At the financial reporting date, the Company's financial assets exposed to credit risk amounted to the following: 2015 2014 GBP'000 GBP'000 Cash and cash equivalents 708 1,173 ---------- ---------- All of the cash and cash equivalents held by the Company are with HSBC Bank plc. Insolvency of HSBC Bank plc may cause the Company's rights with respect to the cash and cash equivalents held by HSBC Bank plc to be delayed or limited. The Company monitors its risk by reviewing the credit rating of HSBC Bank plc at the time of setting up accounts and on an ad hoc basis. Moody's financial strength rating for HSBC Bank plc is Aa2. The Board considers that the risk of holding cash and cash equivalents with HSBC Bank plc is acceptable. Liquidity risk In accordance with the Investing Policy, the Company invests in a single holding, being the Sterling Guernsey Share Class of the Master Fund, an open-ended investment company. Following the results of the Extraordinary General Meeting, for the Company not to continue as an investment company, the Company gave the Master Fund notice to redeem its entire holding and received the proceeds of the redemption in April 2016. The contractual, undiscounted cash flows of the Company's financial liabilities, which were payable within one month, amounted to GBP30,000 at 31 December 2015 (2014: GBP35,000). The Company's cash flow requirements are monitored on a monthly basis by the Administrator to ensure all liabilities are met. 22. Capital management policy and procedures The Company's capital management objectives are: * to ensure that it will be able to meet its liabilities as they fall due; and * to realise its Existing Investment in a reasonable timeframe. Pursuant to the Company's Articles of Incorporation, the Company may borrow money in any manner. The Board, with the assistance of the Investment Manager, monitors and reviews the structure of the Company's capital on an ad hoc basis. This review includes: * how funds could be returned to Shareholders; * the current and future levels of gearing; * the need to buy-back Ordinary Shares for cancellation or to be held in treasury, which takes account of the difference between the NAV per share and the share price; and * the current and future dividend policy. Ordinary Shares held in treasury will not be reissued at a price less than the latest published NAV and will not be held in treasury for more than twelve months, at which point they will be cancelled. Although the Company's results are no longer prepared on a going concern basis, the Company's objectives, policies and processes for managing capital remain unchanged from the previous year. As at 31 December 2015 the Company had no debt (2014: nil). As disclosed in the Statement of Financial Position, the total equity holders' funds at 31 December 2015 were GBP4,701,000 (2014: GBP7,316,000). 23. Contingent liabilities At 31 December 2015, there were no contingent liabilities (2014: nil). 24. Events after the financial reporting date In April 2016, the Company received GBP4,301,000 as the proceeds of the redemption of its entire holding in the Master Fund. It is now the Board's intention to put forward proposals to Shareholders to seek their approval to appoint a liquidator, wind up the Company and delist from AIM. There were no other material events after the financial reporting date that required disclosure as at 26 May 2016. 25. Significant accounting policies a) Income recognition Bank deposit interest is accounted for on an accruals basis. b) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the Statement of Comprehensive Income to the revenue reserve except as follows: (i) transaction costs incurred on the acquisition of investments designated as fair value through profit or loss are charged through the Statement of Comprehensive Income to the capital reserve; (ii) 100% of the Company's management fee is charged through the Statement of Comprehensive Income to the capital reserve in line with the Board's expected long-term split of returns between income and capital gains from the investment portfolio; and (iii) 100% of any performance fee is charged through the Statement of Comprehensive Income to the capital reserve. c) Capital reserve The following are credited/charged through the Statement of Comprehensive Income to the capital reserve: (i) realised gains and losses on the realisation of investments; (ii) unrealised gains and losses on investments; and (iii) expenses charged through the Statement of Comprehensive Income to the capital reserve in accordance with the above accounting policies. The Company's Articles of Incorporation preclude it from distributing capital profits. d) Investments Designation The Company invests in financial assets with a view to profiting from their total return primarily in the form of capital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy. Information about the portfolio is provided internally to the Board. Accordingly, upon initial recognition the investments are designated by the Company as "at fair value through profit or loss". Recognition The Company recognises financial assets held as fair value through profit or loss on the date it commits to purchase the instruments. From this date, any gains and losses arising from the changes in fair value of the assets are recognised. Measurement Fair value through profit or loss assets are initially recognised at the fair value of the consideration given, excluding transaction costs associated with the investment. Subsequent to initial recognition, all fair value through profit or loss assets are measured at fair value with changes in value being recognised through the Statement of Comprehensive Income and taken to the capital reserve. In accordance with the principles set out in the prospectus of the Master Fund, shares in the Master Fund are valued at the latest relevant valuation provided by the administrator of the Master Fund. Derecognition A fair value through profit or loss asset is derecognised when the Company loses control over the contractual rights that comprise that asset. This occurs when rights are realised, expire or are surrendered. Realised gains and losses on fair value through profit or loss assets sold are calculated as the difference between the sales proceeds and costs. Fair value through profit or loss assets that are sold are derecognised and corresponding receivables from the buyer for the payment are recognised as of the date the Company commits to sell the assets. The Company uses the weighted average method to determine realised gains and losses on derecognition. The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expires. e) Cash and cash equivalents Cash comprises cash balances with banks. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of change in value, and are held to manage short-term cash requirements or (if deemed appropriate) to return funds to Shareholders. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash on hand and free bank deposits with original maturities of three months or less. f) Net asset value per share and loss per share The NAV per share disclosed on the face of the Statement of Financial Position is calculated by dividing the net assets by the number of Ordinary Shares in issue at the year end. Loss per share is calculated by dividing the net loss for the year by the weighted average number of Ordinary Shares in issue during the year. g) Provision for operating loss to wind up The provision for operating-loss to wind up is calculated by estimating the income and expenses from the year end date to the estimated date of wind up of the Company. h) Relevant standards effective for 2015 but which had no impact on the financial performance of the Company The Company has adopted the following revisions and amendments to IFRS issued by the IASB and adopted by the European Union, which are relevant to and effective for the Company's results for the annual period beginning 1 January 2015: IFRS Financial Instruments: Disclosures 7
IFRS Operating Segments 8 IFRS Fair Value Measurement 13 The above standards, amendments and interpretations had no impact on the financial position or performance of the Company. i) Standards issued but not yet effective The following relevant standards, which have been issued by the IASB and adopted by the European Union, have an effective date after the date of these results: International Accounting Standards Effective (IAS/IFRS) date IFRS Non-Current Assets Held for 1 January 5 Sale and Discontinued Operations 2016 - Changes in methods of disposal IFRS Financial Instruments: Disclosures 1 January 7 - Additional guidance regarding 2016 servicing contracts IFRS Financial Instruments 1 January 9 2018 IAS Presentation of Financial Statements 1 January 1 - Amendments resulting from 2016 the disclosure initiative No relevant interpretations have been issued by the IASB and adopted by the European Union with an effective date after the date of these results. The Directors have chosen not to early adopt the above standards and they do not anticipate that they, with the exception of IFRS 9, would have a material impact on the Company's results in the period of initial application. A full assessment of the impact of IFRS 9 has not yet been performed. The financial information set out in this announcement does not constitute the Company's statutory financial statements for the year ended 31 December 2015.
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May 27, 2016 02:00 ET (06:00 GMT)
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