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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Alternative Liq | LSE:ALSL | London | Ordinary Share | GG00B1WTM617 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 42.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMALSL
RNS Number : 9371K
Alternative Liquidity Solutions Ltd
29 August 2012
Alternative Liquidity Solutions Limited
(formerly Saltus European Debt Strategies Limited)
Interim Results for the six months ended 30 June 2012
ALS well positioned following overwhelming shareholder support for restructure
29 August 2012
Alternative Liquidity Solutions Limited (the "Company"), the investment company listed on the London Stock Exchange focused on acquiring and actively managing secondary hedge fund positions, today announces its unaudited interim results for the six months ended 30 June 2012.
Financial highlights
-- Net asset value ("NAV") at 30 June 2012 before adjustment for fair market and recovery values decreased by 2.3% to 56.47p per share compared to 57.80p per share as at 31 December 2011
-- As at 30 June 2012, the Company had net cash resources of GBP4.7 million and outstanding capital commitments to Long Lock Funds totalling GBP1.2 million
-- During the six month period 58,526 Ordinary Shares were bought back at an average discount of 12.8% and cancelled. In total since the Company was launched, the Directors have bought and cancelled 12.2 million shares representing over 25% of the total issued share capital.
Restructuring and Investment Strategy
-- ALS well positioned following unanimous approval from shareholders at AGM on 13 July 2012 for proposals to restructure the Company
-- This included changing the Company's name from 'Saltus European Debt Strategies Limited' to 'Alternative Liquidity Solutions Limited' and adopting a new investment objective and policy to generate a gross internal rate of return on investments of at least 20 per cent. per annum by acquiring and actively managing secondary hedge fund positions purchased at a discount to fair value.
-- Key elements of the restructuring:
o Change to the valuation methodology of the investment portfolio
o Amendment of the Company's investment objective and strategy
o Creation of a Run-off share class for those investors who want a return of capital
-- Implementation of the new investment strategy will be conditional upon an equity fund raising being completed by 31 December 2012 to give the Company sufficient critical mass.
Revised Valuation Policy
-- Revised Valuation Methodology implemented which assesses future expected recoveries and discounts these to reflect uncertainty over quantum and timing of such recoveries
-- Valuation performed by independent valuation experts, Time 2 Recover Limited
-- NAV after adjustment for fair market and recovery values decreased 22.4% to 44.84p reflecting 27 per cent reduction in value attributed to investment portfolio by comparison to values reported by underlying managers
George Baird, Chairman of ALS, said "We were delighted to receive such strong support from our shareholders at last month's AGM, and believe ALS is now well positioned following the restructuring to acquire and actively manage illiquid secondary hedge fund positions. We are also pleased to announce that ALS has adopted a Revised Valuation Methodology which the Board feel is more conservative than the industry norm and reflects better a risk-adjusted fair value."
For further information, please contact:
Jon Macintosh
Saltus Partners LLP
+ 44 20 7499 0200
Harry Stein
FTI Consulting
+44 20 7269 7141
ALTERNATIVE LIQUIDITY SOLUTIONS LIMITED
(formerly Saltus European Debt Strategies Limited)
INTERIM REPORT 2012
CHAIRMAN'S STATEMENT
I am pleased to present our shareholders with this set of interim condensed unaudited financial statements for Alternative Liquidity Solutions Limited covering the period from 1 January 2012 to 30 June 2012.
Proposals to restructure the Company were unanimously approved at the recent annual general meeting of the Company. The two key elements of the restructuring were firstly to amend the Company's investment objective and strategy and secondly to change the basis upon which its investment portfolio is valued.
The new investment objective is to generate a gross IRR on investments of at least 20 per cent per annum over the life of the Ordinary Shares through a revised investment strategy of investing in a diversified portfolio of illiquid secondary hedge fund positions purchased at a discount to fair value. The implementation of this investment strategy will be conditional upon the Company completing an equity fund raising by the end of this year to ensure the Company has sufficient critical mass.
The new basis of valuation ("the Revised Valuation Methodology") utilises a fair value approach using future expected recoveries discounted at an appropriate rate, reflecting the uncertainty over quantum and timeframe of such recoveries. This replaces the previous methodology which, in line with normal industry practice, simply reported the value of the Company's portfolio based upon valuations provided by underlying managers and their administrators. The Board believes that the Revised Valuation Methodology will be significantly more conservative and will cause the reported NAV of the Company to better reflect a risk-adjusted fair value. It will also serve as the basis on which management fees are charged henceforth.
The Board has engaged independent specialist valuation experts, Time 2 Recover Limited, to assist with the valuation. The net effect of the adoption of the Revised Valuation Methodology as at 30 June 2012 is a 27.0 per cent reduction in the value attributed to the portfolio by comparison to the values reported by the underlying managers and their administrators and an overall reduction of the net asset value of the Company of 20.6 per cent. This reflects an implied weighted average internal rate of return of 21 per cent on future recoveries. The Board believes the Revised Valuation Methodology compensates investors appropriately for the risk associated with the uncertainties surrounding the timing and quantum of those recoveries, as well as the fact that the investments in the portfolio are not readily realisable in the meantime. Further information about the Revised Valuation is provided in the accompanying Investment Manager's report.
As we have previously indicated, shareholders who wish to see their capital returned will have the option to elect for a new unlisted share-class (the "Run-Off Shares") and redemptions have been placed on all the Company's holdings not otherwise in liquidation or closed to redemption.
Prior to the application of the revised basis of valuing the investment portfolio, the net asset per share of the Company for the six months to 30 June 2012 declined 2.3% to 56.47p per share (31 December 2011: 57.80p).
Looking forward
The Board was delighted by the unanimous support shareholders gave at the AGM for its proposals for the future of the Company. We are preparing a Prospectus to raise new equity later in the Autumn. It is currently anticipated that this Prospectus will be available in September.
During and following the financial crisis which began in 2007, a number of global investment funds with exposure to illiquid assets received very significant requests for redemption from their investors. Some managers found it difficult to meet the liquidity desires of their investors as their assets couldn't be sold as rapidly as they expected or at prices considered reasonable.
This has led to the development of a secondary market in illiquid hedge fund interests where it is possible to buy such residual illiquid interests at a substantial discount to their expected recovery values.
The Board considers that there is likely to be a limited window of opportunity for generating the Company's targeted returns as the supply of illiquid assets created in the aftermath of the Credit Crunch diminishes and the secondary market matures. For this reason we have committed to hold a continuation vote of the Company at each annual general meeting, commencing in 2014 (allowing 50 per cent of shareholders to require the Company to enter a managed wind-down) and annually thereafter (in each case allowing 25 per cent of shareholders to require the Company to enter a managed wind-down).
Finally, I would like to offer my thanks to shareholders for their continued support.
G Baird
Chairman
28 August 2012
SUB-MANAGER'S REPORT
Prior to the application of the revised basis of valuing the investment portfolio, the net asset per share of the Company for the six months to 30 June 2012 declined 2.3 per cent to 56.47p per share (31 December 2011 57.80p), comprising a negative 1.7 per cent foreign exchange translation effect and a negative return of 0.6 per cent in local currency terms.
By comparison, during what proved to be a volatile trading period equities ended up relatively flat (MSCI Europe: 1.8 per cent ), whilst continued low levels of defaults provided strong returns for high yield credit (Bank of America Merrill Lynch Euro High Yield Master: 4.7 per cent ) but fewer opportunities for event-driven distressed managers (HFR Distressed Index: 0.7 per cent).
After taking account of adjustments to manager valuations to reflect the Revised Valuation Methodology, the net asset value per share as at 30 June 2012 has been restated to 44.83p per share, a further reduction of 20.1 per cent.
The table below summarises the performance of the Company for the past six months and illustrates the impact of the Revised Valuation Methodology:
Hot Features
Premium
30 June 31 December
2012 2011
(unaudited) (audited) Change
GBP GBP %
Investments held at manager valuations 15,427,272 16,151,180 -4.48%
Adjustment for fair market values (4,169,300) -
----------- -----------
Investments held at fair value
through profit or loss 11,257,972 16,151,180 -30.30%
----------- -----------
Net current assets 4,795,383 4,581,022 4.68%
----------- -----------
Net assets 16,053,355 20,732,202 -22.57%
=========== ===========
Number of shares 35,812,882 35,871,408
Net asset value
Before adjustment for fair market
and recovery values 56.47p 57.80p -2.30%
After adjustment for fair market
and recovery values 44.83p 57.80p -22.44%
Analysis of revised portfolio valuation
The Company's investment portfolio broadly comprises three categories of funds. Funds which have known redemption dates of varying length and frequency which are being honoured at the managers' stated net asset values ("Redeemable Funds"); funds which were established as closed ended entities with capital returned when the underlying investments of those funds are realised ("Long Lock Funds"); and funds which were originally open-ended but have subsequently closed to redemption and have gone into run-off, again with capital returned when the underlying investments are realised and capital distributed ("Liquidation Share Classes").
The table on the following page provides an analysis of the adjusted valuation of the investment portfolio broken down by these three categories of fund, including the discount rates that have been applied to future anticipated recoveries to arrive at present values:
Weighted
Investments Expected average estimated
at managers' future recovery recovery Discount Present
valuations period rate value
(unaudited)
GBP GBP (years) GBP
Redeemable Funds 7,881,392 7,868,387 0.4 20% 7,234,799
Long Lock Funds 6,051,153 6,043,129 3.5 20% 3,122,355
Liquidation
Share
Classes 1,494,727 1,440,955 1.8 30% 900,818
--------------- ------------------ --------------
Total 15,427,272 15,352,471 11,257,972
=============== ================== ==============
Company Liquidity
As at 30 June 2012 the Company had net cash resources of GBP4.7 million and outstanding capital commitments to Long Lock Funds totalling GBP1.2m.
Regardless of whether investors elect to continue or to convert to Run-Off Shares, in both cases the investment strategy will no longer involve investing Redeemable Funds. Therefore, we have placed redemptions with all the Redeemable Funds. Based on the liquidity terms of these Redeemable Funds; reserving cash to meet the Company's outstanding capital commitments; assuming no cash is received from any of the Long Lock Funds or Liquidation Share Classes prior to 30 September 2013; and on values ascribed under the Revised Valuation Methodology as at 30 June 2012, the timeframe for the cumulative realisation of the Company's assets is likely to be as follows:
By 30 September 2012 27.9% By 31 December 2012 42.8% By 31 March 2013 47.2% By 30 June 2013 50.6% By 30 September 2013 56.9% Longer 100.0%
The above analysis takes into account all information available at 24 August 2012 (the latest practicable date before the publication of these interim results) relating to the redemption terms applicable to the Company's assets including notice periods, gate events, redemption restrictions and anticipated settlement periods, so that the figures shown reflect anticipated distributable cash at each date. Shareholders should note that it is not based on formal valuations and is therefore subject to change.
As previously indicated, the Board intends to make the first distribution in respect of Run Off Shares in November 2012 and thereafter to distribute to the Run-Off Shares as much of the available cash attributable to the Run-Off Shares as quickly as reasonably practicable having regard to cost efficiency and working capital requirements. Redemption proceeds attributable to the Ordinary Shares will be reinvested subject to the proposed equity fund raising being completed before 31 December 2012.
Investment Review for the six months ended 30 June 2012
The return for the period, prior to foreign exchange gains and the adjustments made to fair value, was made up as follows (based on the old valuation methodology):
% Return Jan Feb Mar Apr May Jun 6 Months Local currency 0.4% -0.2% -0.2% -0.2% -0.2% -0.1% -1.3% Foreign exchange -0.5% 0.4% -0.3% -1.4% -0.2% 0.2% -1.7% GBP return -0.1% 0.2% -0.5% -1.6% -0.4% 0.1% -3.0%
Performance was generally muted, reflecting reduced levels of risk on the part of many managers, and illiquid portfolios not reacting to movements in global capital markets. Trafalgar Kahala Jet was written down by 27% during the period, which contributed approximately -0.7%.
The general weak tone of the Euro was the largest negative contributor to returns.
Review of Investment Activity
During the period investments were made totalling GBP0.9m to meet outstanding capital commitments respectively to Oaktree European Principal Opportunities Fund, Apollo European Principal Finance and Ffenics I Fund. Redemption proceeds of GBP1.4m were received from Strategic Value Restructuring Fund, Capeview Discovery and Apollo. Since the period end a further GBP0.5m has been received from Trafalgar Kahala Jet (GBP0.1m) and Fortelus (GBP0.4m).
Analysis of significant investments
At 30 June 2012 the Company's investment portfolio comprised the following principal holdings:
Market Value % of
Name of investment Strategy GBP Portfolio
Value
-------------------------------------- ---------------- ------------- -----------
Multi-strategy
King Street Europe Fund credit 1,663,120 14.77%
RAB European Credit Opportunities Multi-strategy
Fund credit 1,542,848 13.70%
Apollo European Principal
Finance LP Distressed 1,521,979 13.52%
Strategic Value Restructuring
Fund Distressed 1,461,924 12.99%
Fortelus Special Situations Distressed 1,385,488 12.31%
Capeview Recovery Fund Distressed 988,192 8.78%
OCM European Principal Opportunities
Fund Distressed 797,780 7.09%
Multi-strategy
Ffenics I Fund LP credit 776,856 6.90%
Ironshield Special Situations
Fund Distressed 717,665 6.37%
Asset backed
Trafalgar Kahala Jet Fund lending 261,101 2.32%
Sub Total 11,116,953 98.75%
-------------------------------------------------------- ------------- -----------
Other (individually less than
1% of portfolio value) 141,019 1.25%
-------------------------------------------------------- ------------- -----------
Total 11,257,972 100.00%
-------------------------------------------------------- ------------- -----------
Share buybacks
During the six month period 58,526 Ordinary Shares were bought back at an average discount of 12.8% and cancelled. In total since the Company was launched, the Directors have bought and cancelled 12.2 million shares representing over 25 per cent of the Company's original issued share capital.
A resolution to grant the authority to Directors to buyback a further 15 per cent of the shares in issue was rejected by shareholders at the annual general meeting in July and therefore no further buybacks are now being conducted.
Saltus Partners LLP
28 August 2012
RESPONSIBILITY STATEMENT
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim condensed financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the interim management report of the Company includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal opportunities and risks associated with the expected development of the Company for the remaining months of the fiscal year.
C Sherwell R Dorey Director Director
28 August 2012
INDEPENDENT REVIEW REPORT
FOR THE PERIOD ENDED 30 JUNE 2012
Introduction
We have been engaged by the Company to review the condensed unaudited set of financial statements in the interim report for the six months ended 30 June 2012 which comprises the Statement of Comprehensive Income, the Statement of Changes in Shareholders' Equity, Statement of Financial Position, Statement of Cash Flows and related notes 1 to 24. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' Responsibilities
The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 3, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
BDO Limited
Chartered Accountants
Place du Pre, Rue du Pre, St Peter Port, Guernsey
Date: 28 August 2012
STATEMENT OF COMPREHENSIVE INCOME (unaudited)
For the six month period ended 30 June 2012
1 January 1 January 1 January
2012 to 2011 to 2011 to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
Notes GBP GBP GBP
Net (losses)/gains on fair
value through profit or loss
investments 12 (4,342,769) (1,600,377) 49,289
Other gains and losses 6 (70,947) 144,846 74,669
----------- ---------------------- -----------
(4,413,716) (1,455,531) 123,958
----------- ---------------------- -----------
Income
Other operating income 7 2,644 8,618 531,027
Expenses
Management and performance
fees 9 (98,892) (234,127) (124,702)
Other expenses 9 (139,577) (287,683) (157,194)
----------- ---------------------- -----------
(238,469) (521,810) (281,896)
----------- ---------------------- -----------
Net (expenses)/income (235,825) (513,192) 249,131
----------- ---------------------- -----------
Finance costs 8 - (2,208) (2,208)
----------- ---------------------- -----------
(Loss)/profit for the financial
period/year (4,649,541) (1,970,931) 370,881
Other comprehensive income - - -
----------- ---------------------- -----------
Total comprehensive (expense)/income (4,649,541) (1,970,931) 370,881
=========== ====================== ===========
Basic and Diluted (Loss)/Earnings
per Ordinary Share 11 (12.94)p (5.16)p 0.94p
Weighted Average Number of
Ordinary Shares outstanding 11 35,925,094 38,208,119 39,373,778
All items in the above statement derive from continuing operations.
All income is attributable to the Ordinary Shares of the Company.
The accompanying notes on pages 12 to 24 form an integral part of the condensed unaudited Financial Statements.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Share Distributable Accumulated
Premium Reserve Profits/(losses) Total
Notes GBP GBP GBP GBP
For the six month period
ended 30 June 2012 (unaudited)
At 31 December 2011 - 39,547,492 (18,815,290) 20,732,202
Total comprehensive expense
for the financial period - - (4,649,541) (4,649,541)
Ordinary shares cancelled
during the period 17(b) - (29,306) - (29,306)
At 30 June 2012 - 39,518,186 (23,464,831) 16,053,355
======= ============= ================ ===========
Share Distributable Accumulated
Premium Reserve Profits/(losses) Total
Notes GBP GBP GBP GBP
For the year ended 31 December
2011 (audited)
At 31 December 2010 - 41,821,632 (16,844,359) 24,977,273
Total comprehensive expense
for the year - - (1,970,931) (1,970,931)
Ordinary shares cancelled
during the year 17(b) - (2,274,140) - (2,274,140)
At 31 December 2011 - 39,547,492 (18,815,290) 20,732,202
======= ============= ================ ===========
Share Distributable Accumulated
Premium Reserve Profits/(losses) Total
Notes GBP GBP GBP GBP
For the six month period
ended 30 June 2011 (unaudited)
At 31 December 2010 - 41,821,632 (16,844,359) 24,977,273
Total comprehensive income
for the financial period - - 370,881 370,881
Ordinary shares cancelled
during the period 17(b) - (1,123,181) - (1,123,181)
At 30 June 2011 - 40,698,451 (16,473,478) 24,224,973
======= ============= ================ ===========
The accompanying notes on pages 12 to 24 form an integral part of the condensed unaudited Financial Statements.
STATEMENT OF FINANCIAL POSITION (unaudited)
At 30 June 2012
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
Notes GBP GBP GBP
Non-current assets
Investments at fair value
through profit or loss 12 11,257,972 16,151,180 21,103,614
------------ ------------ ------------
Current assets
Prepayments 6,099 9,845 8,392
Due from broker 12 151,097 - -
Other receivables 2,012 - -
Cash and cash equivalents 13 4,699,632 4,650,571 3,285,011
------------ ------------ ------------
Total current assets 4,858,840 4,660,416 3,293,403
------------ ------------ ------------
Current liabilities
Accrued expenses 15 (63,457) (79,394) (65,444)
Other payables 17 - - (106,600)
Total current liabilities (63,457) (79,394) (172,044)
------------ ------------ ------------
Net current assets 4,795,383 4,581,022 3,121,359
------------ ------------ ------------
Net assets 16,053,355 20,732,202 24,224,973
============ ============ ============
Equity attributable to equity
holders
Share capital 16 - - -
Share premium 17 (a) - - -
Other distributable reserve 17 (b) 39,518,186 39,547,492 40,698,451
Accumulated losses (23,464,831) (18,815,290) (16,473,478)
------------ ------------ ------------
Total shareholders' equity 16,053,355 20,732,202 24,224,973
============ ============ ============
Net asset value per Ordinary
Share 18 44.83p 57.80p 63.30p
The condensed unaudited Financial Statements on pages 8 to 24 were approved by the Board of Directors and authorised for issue on 28 August 2012. They were signed on its behalf by:-
C Sherwell R Dorey Director Director
The accompanying notes on pages 12 to 24 form an integral part of the condensed unaudited Financial Statements.
STATEMENT OF CASH FLOWS (unaudited)
For the six month period ended 30 June 2012
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
Notes GBP GBP GBP
Cash flows from operating
activities
(Loss)/profit for the period/year (4,649,541) (1,970,931) 370,881
Decrease in prepayments and
other receivables 1,734 1,362 2,815
(Decrease)/increase in accrued
expenses (15,937) 23,076 9,126
----------- -------------- -----------
(4,663,744) (1,946,493) 382,822
12 &
Purchase of investments 19 (879,154) (2,767,307) (1,845,789)
12 &
Sales of investments 19 1,278,496 5,770,167 1,545,881
----------- -------------- -----------
(4,264,402) 1,056,367 82,914
Adjustment for:
Movement in unrealised losses
on investments 12 4,574,023 954,176 694,129
Realised (gains)/losses on
investments 12 (231,254) 646,201 (743,418)
Net cash inflow from operating
activities 78,367 2,656,744 33,625
----------- -------------- -----------
Cash flows from financing
activities
Buy back of shares for cancellation 17 (b) (29,306) (2,274,140) (1,016,581)
Net cash outflow from financing
activities (29,306) (2,274,140) (1,016,581)
----------- -------------- -----------
Net increase/(decrease) in
cash and cash equivalents 49,061 382,604 (982,956)
Cash and cash equivalents
at beginning of period/year 4,650,571 4,267,967 4,267,967
----------- -------------- -----------
Cash and cash equivalents 13 &
at end of period/year 19 4,699,632 4,650,571 3,285,011
=========== ============== ===========
The accompanying notes on pages 12 to 24 form an integral part of the condensed unaudited Financial Statements.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
For the six month period ended 30 June 2012
1. GENERAL INFORMATION
Alternative Liquidity Solutions Limited (formerly Saltus European Debt Strategies Limited) is an authorised closed-ended investment scheme domiciled in Guernsey. The Company's Share Capital consists of Ordinary Shares. The Ordinary Shares are listed on the London Stock Exchange. On 2nd August 2012 the Company changed its name from Saltus European Debt Strategies Limited to Alternative Liquidity Solutions Limited.
The financial information for the year to 31 December 2011 is derived from the financial statements delivered to the UK Listing Authority. The Auditors reported on these financial statements, their report was unqualified and did not contain a statement under Section 263 (2) of the Companies (Guernsey) Law, 2008.
These condensed interim financial statements have been reviewed, not audited.
2. GOING CONCERN
At the Annual General Meeting of the Company held on 13 July 2012 proposals to restructure the Company were unanimously approved. These proposals included the intention to amend the Company's investment objective and policy conditional, inter alia, upon an equity fund raising being completed by 31 December 2012 to give the Company sufficient critical mass going forward. The restructuring also included proposals to allow shareholders who do not want to participate in the reconstituted company to elect to have their shares reclassified as run off shares with the objective of achieving a managed wind-down of the assets attributable to that class. If the equity fundraise is not completed on or before 31 December 2012 all of the Company's ordinary shares will be redesignated as run off shares and the Company wound down. In such circumstances it is anticipated that it will take longer than 12 months to wind down the Company owing to the liquidity profile of the Company's underlying investments and outstanding capital commitments.
The Company has considerable financial resources and after making enquiries the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly the Directors continue to adopt the going concern basis in preparing the Annual Report and Financial Statements.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The condensed unaudited financial statements of the Company have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting and should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.
Accounting Convention
The interim condensed unaudited financial statements have been prepared under the historical cost or amortised cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below. The preparation of interim condensed unaudited 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 interim condensed unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The interim condensed unaudited financial statements are presented in Sterling because that is the currency of the primary economic environment in which the Company operates and the currency in which capital is raised. The functional currency of the Company is also considered to be Sterling.
Standards and Interpretations in issue but not yet effective
At the date of authorisation of these interim condensed unaudited Financial Statements, the following Standards and interpretations, which have not been applied in these interim condensed unaudited Financial Statements but will be relevant in future periods, were in issue but not yet effective:
IAS 1 (amended) - Presentation of Financial Statements - for accounting periods beginning on or after 1 July 2012.
IAS 27 (amended) - Consolidated and Separate Financial Statements - for accounting periods beginning on or after 1 January 2013.
IFRS 11 - Joint Arrangements - for accounting periods beginning on or after 1 January 2013.
IFRS 9 - Financial Instruments - Classification and Measurement - for accounting periods beginning on or after 1 January 2013.
IFRS 12 - Disclosures of interests in other entities - for accounting periods beginning on or after 1 January 2013.
IFRS 13 - Fair Value Measurement - for accounting periods beginning on or after 1 January 2013.
IFRS 10 - Consolidated Financial Statements - for accounting periods beginning on or after 1 January 2013.
The directors believe that other pronouncements, which are in issue but not yet operative or adopted by the Company, will not have a material impact on the interim condensed unaudited Financial Statements of the Company.
The directors believe that the interim condensed unaudited Financial Statements contain all of the information required to enable Shareholders and potential investors to make an informed appraisal of the investment activities and profits and losses of the Company for the period to which it relates and does not omit any matter or development of significance.
Investments
Investments are classified as fair value through profit or loss. As the Company's business is investing in financial assets with a view to profiting from their total return in the form of interest, dividends or increases in fair value, listed equities and fixed income securities are designated as fair value through profit or loss on initial recognition. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the Company is provided internally on this basis to the Company's key management personnel.
Quoted investments are measured at either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Investments in units of unit trusts or shares in Open Ended Investment Companies ("OEICs") are valued based on the net asset value of that fund as at the relevant valuation date as determined in accordance with the terms of the funds and as notified to the Company by the relevant fund manager or the relevant administrator less any adjustments deemed necessary by the Directors taking into account all relevant facts and circumstances. The valuation date of each fund may not always be coterminous with the valuation date of the Company and in such cases the valuation of the fund at the last valuation date is used in conjunction with other related financial information.
The net asset values reported by the relevant fund managers and/or fund administrators and used by the Directors as at 30 June 2012 may be unaudited as at that date and may differ from the amounts which would have been realised from a redemption of the investment in the relevant fund as at 30 June 2012.
Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.
Gains and losses arising from changes in the fair value of investments classified as fair value through profit or loss are recognised in the Statement of Comprehensive Income.
Foreign Exchange
Foreign currency assets and liabilities are translated into Sterling at the rate of exchange ruling at the reporting date (30 June 2012: GBP1: US$ 1.5706 and GBP1: EUR 1.2405; 31 December 2011: GBP1: US$ 1.5541 and GBP1: EUR 1.1972; 30 June 2011: GBP1: US$ 1.6054 and GBP1: EUR 1.1073). Transactions in foreign currencies are translated at the rate of exchange ruling on the transaction date. Differences thus arising are dealt with in the Statement of Comprehensive Income.
The Board of Directors considers Sterling the currency that most faithfully represents the economic environment in which the Company operates. Sterling is the currency in which the Company measures its performance and reports its results, as well as the currency in which capital is raised.
Income
Dividend income from investments is recognised when the Shareholders' rights to receive payment has been established, normally the ex-dividend date.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the asset's net carrying amount.
Expenses
All expenses are accounted for on an accruals basis and are presented as revenue items except for expenses that are incidental to the disposal of an investment which are deducted from the disposal proceeds.
Finance Costs
Finance costs are accounted for on an accruals basis and relate to bank interest resulting from the Company drawing down on the facility with Bank Julius Baer & Co Limited. All finance costs are expensed through the Statement of Comprehensive Income as incurred.
Financial Instruments
Financial assets and financial liabilities are recognised on the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. The Company shall offset financial assets and financial liabilities if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
A financial asset (in whole or in part) is derecognised either:
- when the Company has transferred substantially all the risk and rewards of ownership;
- when it has not retained substantially all the risk and rewards and when it no longer has control over the asset or a portion of the asset; or
- when the contractual right to receive cash flow has expired.
Other Receivables
Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
Cash and Cash Equivalents
Cash includes amounts held in interest bearing overnight accounts and debt balances. Cash and cash equivalents comprise bank balances and cash held by the Company including short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates their fair value.
Financial Liabilities and Equity
Financial liabilities and equity are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Financial liabilities and equity are recorded at the proceeds received, net of issue costs.
A financial liability (in whole or in part) is derecognised when the Company has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the Statement of Comprehensive Income.
Other Accruals and Payables
Other accruals and payables are not interest-bearing and are stated at their nominal value.
Derivative Financial Instruments
The Company's activities expose it primarily to the financial risks of changes in foreign exchange rates. The Company uses forward foreign exchange contracts to hedge these exposures. The Company does not use derivative financial instruments for speculative purposes.
The use of financial derivatives is governed by the Company's policies approved by the Board of Directors, which provide written principles on the use of financial derivatives. The Company does not use hedge accounting and all gains or losses on forward foreign exchange contracts are taken to the Statement of Comprehensive Income.
Interest-bearing Loans and Borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Statement of Comprehensive Income over the period of the borrowings on an effective interest basis.
Operating Segments
The Directors are of the opinion that the Company is engaged in a single segment of business of investing in a portfolio consisting primarily of absolute return funds, which is expected to comprise mostly debt-oriented hedge funds, but which may also include long-only debt funds and closed-ended limited partnerships with longer lock-ups.
4. OTHER CRITICAL ACCOUNTING JUDGEMENTS
The Board assessment of the Company's position as at 30 June 2012 and the factors impacting the forthcoming period are set out in the Chairman's Statement on pages 2 to 3. The financial position of the Company, its cash flows, and its liquidity position is set out on pages 8 to 11 of the condensed unaudited Financial Statements.
In the application of the Company's accounting policies, which are described in note 3 to the condensed unaudited Financial Statements, management is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from their sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate was revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying accounting policies
The most critical judgement, apart from those involving estimates (see below), that management has made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the Financial Statements, is in respect of functional currency.
Functional currency and presentation currency
The Board of Directors considers Sterling the currency that most faithfully represents the economic environment in which the Company operates. Sterling is the currency in which the Company measures its performance and reports its results, as well as the currency in which capital is raised.
Key sources of estimation uncertainty
The following key assumption and source of estimation uncertainty at the reporting date has a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:
Fair value of Investments at fair value through profit or loss
The net asset values of unlisted funds are based on valuations as notified to the Company by the relevant fund manager or the relevant administrator less any adjustments deemed necessary by the Directors taking into account all relevant facts and circumstances. Following the change in investment strategy and external market factors, for the preparation of the interim accounts for the six months ended 30 June 2012 and henceforth, the Directors have deemed it appropriate to apply adjustments to reflect the uncertainty over quantum and timeframe of such recoveries.
The table in note 12 outlines in more detail the inputs, anticipated future recoveries, time period for such recoveries and discount rates applied to arrive at the fair value of the Company's investment portfolio. Prior to 30 June 2012 the Directors did not deem it appropriate to apply any such adjustments.
The net asset values reported by the relevant fund managers and/or fund administrators that form the basis for the Directors' valuation of investments may not always be coterminous with the valuation date of the Company and in such case the valuation of the fund at the last valuation date is used in conjunction with other related financial information. Furthermore such reported net asset values may be unaudited as at that date and may differ from the amounts which would have been realised from any redemptions of the investment in the relevant fund as at 30 June 2012.
5. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the Company.
For management purposes, the Company is organised into one main operating segment, which focuses on long term growth from investments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Company as a whole.
In terms of the funds in which the Company invests, these are predominantly incorporated in the United States and Europe. The underlying investments in the funds however, may be in other countries.
Geographical information:
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Net (losses)/gains on fair value
through profit or loss investments
by location of assets
United States (357,427) (580,095) 110,049
Europe (3,985,342) (1,020,282) (60,760)
----------- -------------- -----------
(4,342,769) (1,600,377) 49,289
=========== ============== ===========
Non-current assets by location
of assets
United States 1,747,268 3,111,891 3,803,650
Europe 9,510,704 13,039,289 17,299,964
----------- -------------- -----------
11,257,972 16,151,180 21,103,614
=========== ============== ===========
6. OTHER GAINS AND LOSSES
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Held for trading: Derivative
financial instruments:
Net (losses)/gains on currency
translations (70,947) 144,846 74,669
(70,947) 144,846 74,669
=========== ============== ===========
7. OTHER OPERATING INCOME
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Other operating income arising
on financial assets at fair
value through profit or loss:
Bank interest 2,644 8,618 3,897
Investment income - - 527,130
2,644 8,618 531,027
=========== ============== ===========
8. FINANCE COSTS
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Finance costs arising on financial
liabilities not at fair value
through profit or loss:
Bank debt interest - 2,208 2,208
=========== ============== ===========
The bank interest resulted from the Company's debt facility with Bank Julius Baer & Co Limited entered in to on 5 April 2011. See note 22 for further detail.
9. EXPENSES
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Management fees 98,892 234,127 124,702
----------- -------------- -----------
Other expenses:
Directors' remuneration 34,865 70,500 34,960
Accounting, secretarial and
administration fees 23,029 27,378 10,477
Trading commissions 19,529 4,917 2,106
Auditors' remuneration for
audit services 15,655 23,150 10,910
Advisers fees 9,891 20,816 10,734
Registrar fees 7,214 18,222 10,193
Custodian fees 6,614 18,831 6,551
Listing fees 6,588 20,767 11,406
Directors' & Officers' Insurance 6,009 12,885 6,731
Miscellaneous expenses 5,225 20,041 8,824
Legal and professional fees 2,880 44,976 41,219
Statutory fees 2,078 4,200 2,083
Bank facility fees - 1,000 1,000
139,577 287,683 157,194
----------- -------------- -----------
Total expenses 238,469 521,810 281,896
=========== ============== ===========
The Company has no employees. The Directors are the only key management personnel of the Company. Their remuneration disclosed above is all in respect of short-term employee benefits.
No amounts were paid to the auditors during the period in respect of non-audit services.
Management and Performance fees
The Company is responsible for the fees of the Investment Manager in accordance with the Investment Management Agreement between the Company and the Investment Manager dated 6 June 2007.
For the services performed under the Investment Management Agreement, the Company pays the Investment Manager a management fee equal to 1% per annum of total assets, calculated and payable monthly in arrears.
The Investment Manager compensates the Sub-Manager for its services to the Company under the terms of the Sub-Management Agreement.
In addition to the management fee, subject to a high water mark and a hurdle rate of the mean monthly LIBOR plus 2 per cent, the Manager will be entitled to a performance fee equivalent to 10% of the amount by which the net asset value attributable to the shares at the end of each accounting period exceeds the greater of the initial net asset value and the greatest period end net asset value for any previous calculation period. The fee is calculated in respect of each period of 12 months ending on 31 December. No performance fee was payable in respect of this period (31 December 2011 and 30 June 2011: GBPnil). The high water mark of the Company is currently 98.5p per Share.
The Investment Management Agreement may be terminated by either party giving to the other not less than twelve months' written notice.
Administration fees
The Company is responsible for the fees of the Administrator (Butterfield Fulcrum Group (Guernsey) Limited) in accordance with the Administration Agreement made between the Company and the Administrator dated 6 June 2007.
In respect of the services provided under the Administration Agreement, from 1 October 2011 the Company pays the Administrator a fee as below, subject to a monthly minimum of GBP1,750.
- 0.125% per annum of the net asset value of the Company up to GBP50 million
- 0.10% per annum of the net asset value of the Company exceeding GBP50 million
Prior to 1 October 2011 the Company paid the Administrator a fee which did not exceed 0.085% per annum of the net asset value of the Company, subject to a minimum annual payment of GBP10,000.
In addition, the Administrator is entitled to receive fees for any extraordinary duties performed to be charged on a time spent basis. The Administration Agreement is terminable by either side on three months' notice.
Custodian fees
The Company is responsible for the fees of the Custodian (Butterfield Bank (Guernsey) Limited) in accordance with the Custody Agreement made between the Company and the Custodian dated 16 August 2011. The Custodian is entitled to receive an annual fee of the higher of 0.05% of the net asset value of the Company or GBP9,500, payable quarterly in arrears. The agreement may be terminated on 90 days notice.
The Custodian does not have any decision making discretion relating to the investment of the assets of the Company.
10. TAX STATUS
The Company is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual exemption fee of GBP600.
11. BASIC AND DILUTED EARNINGS/(LOSS) PER ORDINARY SHARE
Basic and diluted (loss)/earnings per Ordinary Share are calculated by dividing net (expense)/income available by the weighted average number of Ordinary Shares outstanding during the period.
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
Number of Number of
Ordinary Number of Ordinary Ordinary
Shares Shares Shares
(unaudited) (audited) (unaudited)
Weighted average number of
Ordinary Shares 35,925,094 38,208,119 39,373,778
=========== ================== ===========
Total comprehensive (expense)/income (4,649,541) (1,970,931) 370,881
=========== ================== ===========
Basic and diluted (loss)/earnings
per Ordinary Share (12.94)p (5.16)p 0.94p
=========== ================== ===========
12. INVESTMENTS
As described in note 3, the basis of estimating the value of the Company's investments as at 30 June 2012 utilises a fair value approach using future expected recoveries derived from the relevant fund manager or administrator valuations, discounted at an appropriate rate for the anticipated period to recovery, reflecting the uncertainty over quantum and timeframe of such recoveries, whereas for prior periods the value ascribed to the Company's investments was in accordance with the terms of the funds and as notified to the Company by the relevant fund manager or the relevant administrator. The table below shows the movement of fair value through profit or loss for the period and indicates the impact of the adoption of the revised valuation methodology.
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Fair value through profit or
loss investments
Opening fair value as at beginning
of period/year 16,151,180 20,747,754 20,747,754
Purchases at cost 879,154 2,767,307 1,845,789
Sales - proceeds (1,429,593) (5,763,504) (1,539,218)
- realised gains/(losses)
on sales 231,254 (646,201) 743,418
Movement in unrealised losses
on investments for the period/year (4,574,023) (954,176) (694,129)
(4,342,769) (1,600,377) 49,289
----------- -------------- -----------
Closing fair value at end of
period/year 11,257,972 16,151,180 21,103,614
=========== ============== ===========
Closing cost 17,237,957 17,557,142 22,249,529
Unrealised losses on investments (5,979,985) (1,405,962) (1,145,915)
----------- -------------- -----------
Closing fair value at end of
period/year 11,257,972 16,151,180 21,103,614
=========== ============== ===========
Movement in unrealised losses
attributable to movement in
manager valuations (404,723) (954,176) (694,129)
Movement in unrealised losses
attributable to fair value
assessment (4,169,300) - -
Movement in unrealised losses
in investments for the period
/ year (4,574,023) (954,176) (694,129)
=========== ============== ===========
As at 30 June 2012 GBP151,097 (31 December 2011: GBPnil; 30 June 2011: GBPnil) of investments sales proceeds were receivable.
As stated in note 4, for the purposes of establishing fair value of the Company's investment portfolio as at 30 June 2012, based upon the valuations provided by the underlying fund managers and/or administrators, the Directors have made an assessment of the expected future recovery from each fund and the estimated recovery period and applied an appropriate discount rate reflecting the uncertainty over quantum and timeframe of such recoveries. Funds have been categorised as between Redeemable Funds, being funds which have known redemption dates of varying length and frequency which are being honoured at the managers' stated net asset values; Long Lock Funds, being funds which were established as closed ended entities with capital returned when the underlying investments of those funds are realised; and Liquidation Share Classes, being funds which were originally open-ended but have subsequently closed to redemption and have gone into run-off, again with capital returned when the underlying investments are realised and capital distributed.
Weighted
Investments Expected average estimated
at managers' future recovery recovery Discount Present
valuations period rate value
GBP GBP (years) GBP
Redeemable
Funds 7,881,392 7,868,387 0.4 20% 7,234,799
Long Lock
Funds 6,051,153 6,043,129 3.5 20% 3,122,355
Liquidation
Share Classes 1,494,727 1,440,955 1.8 30% 900,818
--------------- ------------------ ------------
Total 15,427,272 15,352,471 11,257,972
=============== ================== ============
13. CASH AND CASH EQUIVALENTS
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Opening cash and cash equivalents 4,650, 571 4,267,967 4,267,967
Net movement in the period/year 49,061 382,604 (982,956)
----------- -------------- -----------
Closing cash and cash equivalents 4,699,632 4,650,571 3,285,011
=========== ============== ===========
Cash and cash equivalents comprise bank balances and cash held by the Company including short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates to their fair value.
14. CURRENT ASSETS AND LIABILITIES
The Directors consider that the carrying amount of other receivables and other payables approximates to their fair value.
15. ACCRUED EXPENSES
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Directors' remuneration 17,240 17,625 17,335
Management fee 13,390 17,297 20,207
Auditor's remuneration 13,080 17,175 10,335
Sundry expenses 4,897 4,230 3,967
Printing costs 3,957 5,447 3,701
Administration fee 3,454 4,029 1,694
Advisers' fee 3,315 3,425 3,342
Registrar fee 3,064 3,428 3,779
Custodian fee 1,060 6,738 1,084
63,457 79,394 65,444
=========== =========== ===========
16. SHARE CAPITAL
Authorised Capital
The Company has the power to issue an unlimited number of shares of no par value which may be issued as Ordinary Shares or C Shares or otherwise and which may be denominated in Sterling, Euros, US Dollars or any other currency. The redeemable shares are redeemable at the option of the Company, not shareholders.
Issued Capital Treasury Ordinary Shares Total
30 June 2012 (unaudited)
At 1 January 2012 - 35,871,408 35,871,408
Shares cancelled during the
period - (58,526) (58,526)
-------- --------------- ---------------
At 30 June 2012 - 35,812,882 35,812,882
======== =============== ===============
31 December 2011 (audited)
At 1 January 2011 - 40,429,912 40,429,912
Shares cancelled during the
year - (4,558,504) (4,558,504)
-------- --------------- ---------------
At 31 December 2011 - 35,871,408 35,871,408
======== =============== ===============
30 June 2011 (unaudited)
At 1 January 2011 - 40,429,912 40,429,912
Shares cancelled during the
period - (2,158,210) (2,158,210)
-------- --------------- ---------------
At 30 June 2011 - 38,271,702 38,271,702
======== =============== ===============
The rights attaching to the Ordinary Shares are as follows:
Ordinary shareholders have one vote at a meeting of the Company for each share held. The Ordinary shareholders are entitled to receive all dividends declared out of the assets attributable to their respective share class. Upon winding up, the holders of Ordinary shares are entitled to receive a pro rata portion of the capital attributable to their respective share class according to their holdings of shares.
Upon incorporation, 2 Ordinary Shares of no par value each were issued. Following the launch of the Company on the London Stock Exchange the Company had issued a total of 48,000,000 Ordinary Shares of no par value.
Further Issues of Shares
The Company's Articles of Association provide the Directors with wide powers to issue further shares (of one or more currency classes and whether as C shares or ordinary shares) on a non-pre-emptive basis and without seeking further shareholder approval. The Board would only issue shares at or at a premium to the net asset value per share.
17. RESERVES
a) Share Premium Account
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Share Premium Account as at
beginning and end of the period/year - - -
=========== =========== ===========
b) Other Distributable Reserve
1 January 1 January
2012 1 January 2011 2011
to to to
30 June 31 December 30 June
2012 2011 2011
(unaudited) (audited) (unaudited)
GBP GBP GBP
Other Distributable Reserve
as at beginning of period/year 39,547,492 41,821,632 41,821,632
Ordinary Shares cancelled (29,306) (2,274,140) (1,123,181)
----------- -------------- -----------
Other Distributable Reserve
as at end of period/year 39,518,186 39,547,492 40,698,451
=========== ============== ===========
As at 30 June 2012 GBPnil (31 December 2011: GBPnil, 30 June 2011: GBP106,600) of share transactions were unsettled.
With confirmation of the Royal Court in Guernsey on 6 July 2007 the amount standing to the credit of the Share Premium Account of the Company was cancelled and credited to a Distributable Reserve which is able to be applied in any manner in which the Company's profits available for distribution are able to be applied, including the purchase of the Company's own shares and the payment of dividends.
18. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per Ordinary Share of 44.83p (31 December 2011: 57.80p, 30 June 2011: 63.30p) is based on the net assets at the period end of GBP16,053,355 (31 December 2011: GBP20,732,202, 30 June 2011: GBP24,224,973) and on 35,812,882 (31 December 2011: 35,871,408, 30 June 2011: 38,271,702) Ordinary Shares, being the number of Ordinary Shares in issue at the period end.
19. NOTES TO THE CASH FLOW STATEMENT
Purchases and sales of investments are considered to be operating activities of the Company, given its purpose, rather than investing activities. The cash flows arising from these activities are shown in the Cash Flow Statement.
Cash and cash equivalents (which are presented separately on the face of the Statement of Financial Position) comprise cash at bank.
20. COMMITMENTS AND CONTINGENT LIABILITIES
At 30 June 2012, 31 December 2011 and 30 June 2011 there were no commitments in respect of forward foreign exchange contracts with the Custodian.
At 30 June 2012 the Company had the following outstanding capital commitments:
- Apollo, EUR1,276,472 (31 December 2011: EUR2,022,592, 30 June 2011: EUR2,166,997); and
- Oaktree, EUR62,500 (31 December 2011: EUR250,000, 30 June 2011: EUR375,000); and
- Ffenics I Fund, EUR61,873 and USD93,735 (31 December 2011: EUR110,066 and USD120,810, 30 June 2011: EUR102,339 and USD157,000).
Using month end exchange rates the total outstanding commitment was GBP1,188,939 (31 December 2011: GBP2,067,928, 30 June 2011: GBP2,485,893).
The Company has no other financial commitments as at 30 June 2012, 31 December 2011 or 30 June 2011.
The Company has no contingent liabilities at the reporting date.
21. RELATED PARTY TRANSACTIONS
Saltus (Channel Islands) Limited (the "Investment Manager"), Saltus Partners LLP (the "Sub-Manager") and the Directors are regarded as related parties. The only related party transactions are described below:
The fees and expenses payable to the Investment Manager are explained in Note 9. The management fee balance due at the end of the period was GBP13,390 (31 December 2011: GBP17,297, 30 June 2011: GBP20,207). There was no performance fee balance due at the period end (31 December 2011 and 30 June 2011: GBPnil).
There were no direct transactions with the Sub-Manager during the period.
The fees payable to each independent non-executive director are: Mr G Baird, Chairman, who receives GBP29,000 per annum; Mr R Dorey who receives GBP20,000 per annum; and Mr C Sherwell who receives GBP19,000 per annum plus an additional GBP2,500 per annum for being Chairman of the Audit Committee.
Mr J Macintosh is a director of the Manager and a partner in the Sub-Manager and as such he has waived his right to remuneration as a director of the Company.
22. BANK FACILITIES
During the period the Company had a GBP250,000 overdraft facility with Bank Julius Baer & Co Limited. Since the level of cash held has been considerably in excess of the Company's outstanding commitments (see note 20) and working capital commitments, this facility was cancelled on 14 February 2012. The Board is confident that the Company has sufficient available resources from its existing cash balances and redeemable investments to meet its working capital commitments and outstanding uncalled capital commitments as they fall due.
23. RECONCILIATION OF ACCOUNTING NAV AND PUBLISHED NAV PER SHARE
Net Asset NAV per NAV per
Value Share Net Asset Value share
30 June 31 December
30 June 2012 2012 31 December 2011 2011
(unaudited) (unaudited) (audited) (audited)
GBP GBP GBP GBP
Published Net Asset Value 16,052,254 0.4482 20,736,439 0.5781
Adjustments to expense
accruals 1,101 0.0001 (4,237) (0.0001)
------------ ----------- ---------------- -----------
Net Asset Value 16,053,355 0.4483 20,732,202 0.5780
============ =========== ================ ===========
Net Asset NAV per
Value Share
30 June
30 June 2011 2011
(unaudited) (unaudited)
GBP GBP
Published Net Asset
Value 24,224,973 0.6330
Adjustments to expense
accruals - -
------------ -----------
Net Asset Value 24,224,973 0.6330
============ ===========
24. EVENTS AFTER THE REPORTING PERIOD
At the Annual General Meeting of the Company held on 13 July 2012 restructuring proposals were approved. Implementation of the restructuring proposals is conditional upon the Company completing an equity fund raising by 31 December 2012 to give the Company adequate critical mass. Key aspects of the restructuring comprised:
-- amendments to the investment objective of the existing ordinary share class (the "Ordinary Shares"), conditionally upon the completion of the equity fundraise to focus on acquiring and actively managing a diversified portfolio of assets purchased at a discount to their fair value both in the credit and distressed securities arena and illiquid and unquoted equity positions;
-- an opportunity for Shareholders to elect whether to continue to hold Ordinary Shares or have their Ordinary Shares redesignated as Run-Off Shares at the time of the Equity Fundraise with the objective of achieving a managed wind-down of the assets attributable to that class; and
-- the change of the Company's name from Saltus European Debt Strategies Limited to Alternative Liquidity Solutions Limited.
If the Equity Fundraise is not completed in accordance with its terms on or before 31 December 2012 all of the Ordinary Shares will (subject to applicable law and regulation) be automatically redesignated as Run-Off Shares and the Ordinary Shares' listing will be cancelled.
A proposal to grant the Directors authority to make share buybacks for up to 15 per cent of the issued share capital was rejected by shareholders.
MANAGEMENT AND ADMINISTRATION
Directors
G Baird (Chairman)
R Dorey
J Macintosh +
C Sherwell
+ Representative of the Manager and Sub-Manager
Registered Office and Directors' Address Administrator and Secretary
2nd Floor Butterfield Fulcrum Group (Guernsey) Limited
Regency Court 2nd Floor
Glategny Esplanade Regency Court
St Peter Port Glategny Esplanade
Guernsey St Peter Port
GY1 3NQ Guernsey GY1 3NQ
Investment Manager Registrar
Saltus (Channel Islands) Limited Capita IRG Registrars (Guernsey) Limited
2nd Floor 2nd Floor
Regency Court 1 Le Truchot
Glategny Esplanade St Peter Port
St Peter Port Guernsey GY1 4AE
Guernsey GY1 3NQ
Sub-Manager Legal Advisers in Guernsey
Saltus Partners LLP Carey Olsen
72 New Bond Street Carey House
London W1S 1RR Les Banques
St Peter Port
Guernsey GY1 4BZ
Custodian Legal Advisers In United Kingdom
Butterfield Bank (Guernsey) Limited Macfarlanes LLP
P.O. Box 25 20 Cursitor Street
Regency Court London
Glategny Esplanade EC4A 1LT
St Peter Port
Guernsey GY1 3AP
Independent Auditors Financial Adviser/Corporate Broker
BDO Limited Cenkos Securities Plc
P O Box 180 6.7.8 Tokenhouse Yard
Place du Pre London
Rue du Pre EC2R 7AS
St Peter Port
Guernsey GY1 3LL
This information is provided by RNS
The company news service from the London Stock Exchange
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