We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Equity Special | LSE:EQS | London | Ordinary Share | GB00B02GPB12 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 237.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
RNS Number:9248D
Equity Special Situations Limited
17 September 2007
17 September 2007
Equity Special Situations Limited
("ESS" or the "Company")
Unaudited Interim Results for the Six Months Ended 30 June 2007
Equity Special Situations Limited, (AIM:EQS) the strategic investment company,
is pleased to announce its unaudited results for the six months ended 30 June
2007 and to provide a trading update for the period up to 31 August 2007.
Period end highlights:
* Net return for period of #2.3m (2006: loss #0.7m).
* EPS 16.36p (2006: 5.5p) - up 196%.
* NAV of 152 pence per share at 30 June 2007, up 12% from 1 January
2007.
* Successful AIM IPO of STM Group plc 28 March 2007, raising #7.5m
of new money. At 31 August 2007 the share price of STM had risen
21.5% since float.
* Establishment within ESS of a 'Momentum Trading Fund' to enable
the Company to take advantage of short term trading opportunities
amongst liquid large cap stocks. At period end, the Company held
investments in five stocks within the fund.
Post period highlights:
* Participation in #6 million fund raising in AIM traded Avarae
Global Coins plc - shareholding in company now at 14.6%.
* A new stake of 6.9% acquired in Daniel Stewart plc, the AIM-traded
investment banking services company.
* Net asset value per share of 196 pence per share as at 31 August
2007.
Peter Griffin, Director of ESS, commented:
"We have had an excellent start to 2007, reporting net returns in the first six
months of more than #2.3 million and, despite the current nervousness in the
market, we feel confident about the prospects for the remainder of the year. We
believe that there is scope for further improvement in the Company's NAV during
2007 and we continue to receive a healthy pipeline of potential opportunities
from which to choose further investments. We therefore remain optimistic about
the future."
--- ENDS ---
About Equity Special Situations Ltd
Equity Special Situations is a Guernsey registered investment company that was
admitted to AIM in August 2004. Its investment strategy is to purchase and hold
significant stakes in companies and investment funds and then to assist
management in company growth. Its current focus is on the EU financial services
sector. Significant holdings include Syndicate Asset Management plc, STM Group
plc, Noble Investments plc and Avarae Global Coins plc. For a complete set of
Interim Statements, or for further information on the Company, please go to
www.equityspecialsituations.com.
Further information:
Equity Special Situations Ltd
Peter Griffin +44 (0)1481 751000
Jonathan Freeman +44 (0)1600 750432
Noble & Company Limited
John Riddell +44 (0)20 7763 2200
GTH Communications
Toby Hall/Jade Mamarbachi +44 (0)20 7153 8035
Equity Special Situations Limited
Unaudited Interim Results for the Six Months Ended 30 June 2007
Introduction
We are delighted to present this interim report to shareholders showing the
financial performance of Equity Special Situations Limited (the "Company" or "
ESS") for the six month period to 30 June 2007. As in previous years, we have
also included additional information for the period up to 31 August 2007 in
order to ensure that shareholders are provided with as up to date information as
is practical.
Net Asset Value
As at 30 June 2007, the Company's unaudited Net Asset Value per share ("NAV")
was 152.0 pence, an uplift of some 12 per cent. from 1 January 2007. Since 30
June 2007, the unaudited NAV increased to 209.6 pence on 31 July 2007 (as
announced on 2 August 2007) on the back of some strong share price performance
by some of the portfolio companies during July. However, along with the
majority of UK quoted investment companies, and particularly those
largely exposed to small and mid-cap companies such as ESS, the uncertainty in
the market place over recent weeks has meant that ESS's unaudited NAV did fall
back from this level, but I am pleased to report only marginally so. Indeed,
a good proportion of our underlying investments remained resolutely steadfast
during August, as compared to the AIM All Share Index, which fell almost 14 per
cent. in a four week period during July and August. As at 31 August 2007, ESS's
unaudited NAV stood at 196.9 pence.
Overall, we are pleased with the performance of the Company's NAV during the
period to 30 June 2007. The efforts that we have been made over the last 12
months to diversify our investments in order to reduce the Company's exposure
to, and the dependency on, a small number of investments appears to have been
worthwhile.
Investment Strategy
Our investment strategy remains that of trying to achieve long term capital
growth for shareholders through the purchase, holding and sale of significant
minority stakes in companies and investment funds. We aim to exploit special
situations and seek out ideas and companies which we believe will provide a
material uplift in valuation to the investment price of ESS. We often combine an
initial investment into a company with the provision of management and
infrastructure, particularly when we are helping in the creation of a new
company that is pursuing, for example, a consolidation strategy.
Investee Companies
As at 30 June 2007, ESS held investments in seventeen companies, fourteen of
which were in publicly quoted companies and three of which were in unquoted
companies. Significant changes during the period under review include the
formation and subsequent successful flotation of STM Group plc ("STM") in March
2007, which raised #7.5 million of new money and to date has made three
acquisitions in the corporate and trustee service provider sector. ESS currently
holds 18.7 per cent. of STM.
Within the Company, ESS set up a "Momentum Trading Fund" to enable the Company
to take advantage of short term trading opportunities amongst liquid large cap
stocks in order to improve the cash flow of the Company and to improve the
balance of the portfolio. As at the period end, ESS held investments in five
stocks within this fund.
Other notable changes since the period end include ESS's participation in one of
its founding companies, Avarae Global Coins plc ("Avarae") which, in July,
successfully raised #6.0 million through the issue of new equity to fund further
investments in rare and antique coins. As a result of this fundraising, ESS's
shareholding in Avarae is now 14.6 per cent.
ESS has also build up a stake of approximately 6.9 per cent. in Daniel Stewart
Securities plc ("DSS"). We believe that DSS's strategy, to strengthen its teams
across all departments, but particularly research, sales and execution
departments, is the right one, especially given the fact that we believe there
is currently no dominant player operating in the market today offering high
quality brokerage services to both small corporates and institutions alike.
Financial Review
As previously commented upon, 2006 was a year principally used to consolidate
the investments made during the previous year and to research and review new
sectors - and particularly new subsectors within the financial services arena -
with a view to more consolidation opportunities. We spent the majority of 2006
investing in the infrastructure of the Company, raising its profile, broadening
its network of contact and business referrals to ensure that we have the
necessary consultancy teams in place to call upon to provide us with the
appropriate information in order that we are able to make informed investment
decisions.
Some of the benefits of this investment have been felt during the first half of
2007 resulting in aggregate gains on investments for the six months of #3.5
million (corresponding period in 2006: loss of #0.5 million). These gains were
split as to #3.3 million of unrealised gains - uplifts in valuations of the
underlying assets held at the period end compared to their carrying value at 31
December 2006, and #0.2 million of realised gains made on disposals of
investments. Total expenditure for the year was significantly up on the
corresponding period last year at #1.2 million (2006: #0.2 million), primarily
driven by higher borrowing charges (#0.7 million) and increased professional and
consultancy fees (#0.4 million). The net return for the period was therefore
#2.3 million (2006: loss #0.7 million) resulting in an EPS of 16.4p (2006:
5.5p).
Funding
We have concluded in previous annual and interim reports that the nature of the
Company's business could sustain a meaningful amount of debt, provided the debt
was managed carefully, in order to reduce dilution to existing shareholders.
The net debt position of the Company as at 30 June 2007 was #19.2 million, an
increase of some #13.3 million since 31 December 2006, the majority of which was
secured against the Company's investments valued at more than #40.0 million at
the Balance Sheet date. The Board now believes that ESS has put in place the
necessary debt facilities to provide it with the flexibility to
take advantage of short term investment opportunities which arise.
Outlook
We have had a very good start to 2007, reporting net returns in the first six
months of more than #2.3 million and, despite the current nervousness in the
market, we feel confident about the prospects for the remainder of the year. We
believe that there is scope for further improvement in the Company's NAV during
2007 and we continue to receive a healthy pipeline of potential opportunities
from which to choose further investments and we therefore remain optimistic
about the future.
Peter Griffin
Director
14 September 2007
EQUITY SPECIAL SITUATIONS LIMITED
STATEMENT OF TOTAL RETURN
FOR THE SIX MONTHS ENDED 30 JUNE 2007
For the six month period For the six month period For the year ended
Ended 30 June 2007 Ended 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
# # # # # # # # #
GAINS ON
INVESTMENTS
Net realised
gains - 231,861 231,861 - 365,543 365,543 - 376,059 376,059
Net unrealised
(losses)/gains - 3,254,047 3,254,047 - (862,311) (862,311) - (364,661) (364,661)
- 3,485,908 3,485,908 - (496,768) (496,768) - 11,398 11,398
INCOME
Loan interest
receivable - - - 296 - 296 7,336 - 7,336
Dividends
receivable - - - - - - 10,000 - 10,000
Bank interest 41,771 - 41,771 - - - 11,815 - 11,815
41,771 - 41,771 296 - 296 29,151 - 29,151
EXPENDITURE
Administration
fees 60,176 - 60,176 26,640 - 26,640 75,876 - 75,876
Professional
fees 146,953 - 146,953 27,949 22,500 50,449 37,044 27,750 64,794
Consultancy
fees - 294,515 294,515 - 102,064 102,064 - 469,588 469,588
Audit fee 3,750 - 3,750 1,000 - 1,000 11,740 - 11,740
Bank charges
and interest 259,341 - 259,341 3,700 - 3,700 28,956 - 28,956
Loan interest
payable 103,708 - 103,708 875 - 875 55,533 - 55,533
Interest on
other
borrowings 305,501 - 305,501 - - - 110,957 - 110,957
Commissions 19,894 - 19,894 - - - 35,316 - 35,316
Loss on
exchange 4,755 - 4,755 - - - 43 - 43
Registration
and regulatory
expenses 6,935 - 6,935 12,023 - 12,023 38,698 - 38,698
Safe custody
charges 2,229 - 2,229 4,666 - 4,666 4,666 - 4,666
Sundry
expenses 1,727 - 1,727 1,350 - 1,350 1,382 - 1,382
914,969 294,515 1,209,484 78,203 124,564 202,767 400,211 497,338 897,549
NET RETURN
ON ORDINARY
ACTIVITIES
FOR THE
FINANCIAL
PERIOD/YEAR AFTER
TAXATION (873,198) 3,191,393 2,318,195 (77,907) (621,332) (699,239) (371,060) (485,940) (857,000)
Earnings per
share - basic
(pence per share) 5 (6.16) 22.54 16.36 (0.62) (4.94) (5.53) (2.76) (3.60) (6.36)
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the period.
A reconciliation of movements in shareholders' funds is set out in note 12 to
the financial statements.
EQUITY SPECIAL SITUATIONS LIMITED
BALANCE SHEET
30 JUNE 2007
Note 30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
FIXED ASSETS
Quoted investments 3 38,456,239 20,181,979 24,294,931
Unquoted investments 4 1,866,750 537,703 511,794
40,322,990 20,719,682 24,806,725
CURRENT ASSETS
Cash at bank and broker 6,940,685 42,312 6,099,053
Loans receivable 455,645 - 331,874
Sundry debtors - - 20,000
7,396,330 42,312 6,450,927
CREDITORS - AMOUNTS
FALLING
DUE WITHIN ONE YEAR
Bank overdrafts 421,233 - 992,645
Liabilities under 24,870,502 - 9,780,962
investment contracts
Sundry creditors 44,090 74,394 88,223
Loan payable 849,685 1,223,809 1,200,000
26,185,510 1,298,203 12,061,830
NET CURRENT (LIABILITIES) (18,789,181) (1,255,891) (5,610,903)
/ASSETS
TOTAL ASSETS LESS CURRENT 21,533,809 19,463,791 19,195,822
LIABILITIES
CREDITORS - AMOUNTS
FALLING
DUE AFTER ONE YEAR
Loans payable - (130,000) -
TOTAL ASSETS LESS TOTAL # 21,533,809 # 19,333,791 # 19,195,822
LIABILITIES
CAPITAL AND RESERVES
CALLED UP SHARE CAPITAL 10 141,676 141,676 141,676
SHARE PREMIUM ACCOUNT 8,145,464 8,145,464 8,145,464
CAPITAL RESERVE
REALISED 11 (497,285) (125,467) (454,423)
UNREALISED 11 15,357,376 11,638,981 12,103,329
SHARE OPTION RESERVE 39,584 - 19,792
REVENUE RESERVE 11 (1,653,006) (466,863) (760,016)
SHAREHOLDERS' FUNDS 12 # 21,533,809 # 19,333,791 # 19,195,822
Net asset value per share
(pence per
share) 6 151.99 136.46 135.49
APPROVED BY THE BOARD OF
DIRECTORS
P F Griffin M T Cahill
14 September 2007
EQUITY SPECIAL SITUATIONS LIMITED
CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Six month Six month
period ended period ended Year ended
30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
Notes
Net cash outflow from operating 8 (1,172,054) (160,663) (812,094)
activities
Investing activities:
Purchase of listed securities (11,891,017) (1,499,669) (6,081,286)
Purchase of unlisted securities (1,578,859) - -
Proceeds from disposals of listed 1,789,835 549,316 1,279,667
securities
Loans receivable repaid - - 287,200
Loans receivable advanced (123,771) (174,668) (619,074)
Net cash outflow from financial (11,803,812) (1,125,021) (5,133,493)
investment
Financing:
Loans payable received 984,441 130,000 10,980,962
Loans payable repaid (1,334,756) - -
Issue of own shares - - 26,846
Net cash (outflow)/inflow from (350,315) 130,000 11,007,808
financing
(Decrease)/increase in cash resources for the year/ # (13,326,181) # (1,155,684) # 5,062,221
period
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
(Decrease)/increase in cash resources for the year/ (13,326,181) (1,155,684) 5,062,221
period
Cash inflow/(outflow) from increase in debt - - (10,980,962)
financing
Change in net debt resulting from (13,326,181) (1,155,684) (5,918,741)
cash flows
Loan payable set against consideration for new - - 70,000
shares issued
Movement in net debt in the year (13,326,181) (1,155,684) (5,848,741)
Net debt at 1 January 2007 (5,874,554) (25,813) (25,813)
Net debt at 30 June 2007 8 # (19,200,735) # (1,181,497) # (5,874,554)
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2007
1. ACCOUNTING POLICIES
a) CONVENTION
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments and in accordance
with applicable accounting standards and with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies" issued by The
Association of Investment Trust Companies in January 2005. The principal
accounting policies which the directors have adopted within that convention are
set out below.
(b) INCOME
Dividends receivable from quoted equity investments are recognised on the
ex-dividend date. Dividends receivable from equity investments where no
ex-dividend date is quoted are recognised when the company's right to receive
payment is established. Interest receivable on cash deposits is accounted for on
an accruals basis.
(c) FOREIGN CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies other than sterling
have been translated into sterling at the rates of exchange ruling at the
balance sheet date. Transactions during the period have been translated at the
rates of exchange ruling at the date of the transaction.
(d) VALUATION OF INVESTMENTS
Quoted investments are valued at bid price.
Unquoted investments are valued by the Board according to the valuation
principles of the European Private Equity and Venture Capital Association as set
out in the International Private Equity and Venture Capital Valuation Guidelines
(published June 2005, amended October 2006) and accordingly are stated at the
value of the latest third party funding. Where no third party funding has taken
place, they are valued at cost, less a provision for impairment when necessary.
Realised gains or losses on the disposal of investments are taken to the capital
reserve - realised. Unrealised gains or losses on revaluation of investments
are taken to the capital reserve - unrealised.
Investments which may be classified as associate undertakings are carried at
fair value as determined by the Directors, in accordance with the Company's
normal policy. The Directors consider that, as these investments are held as
part of the Company's investment portfolio with a view to the realisation of
capital gains, carrying them at fair value gives a true and fair view of the
company's interest in these investments. Carrying investments at fair value is
permitted under Financial Reporting Standard No 9 "Associates and Joint
Ventures", where a venture capital or similar entity holds investments as part
of a portfolio.
(e) EXPENDITURE
All expenses are accounted for on an accruals basis. Expenses are charged
through the Statement of Total Return except where the expense is incidental to
the disposal of an investment in which case the expense is deducted from the
sales proceeds to arrive at the gain or loss on disposal.
Expenses that are directly attributable to the management of investments are
allocated directly to capital in the Statement of Total Return. With the
Directors' long term target for returns on investments being entirely capital
gains there is no requirement to apportion these expenses between revenue and
capital.
(f) SHARE-BASED PAYMENTS
The Company has applied the requirements of FRS 20 Share-based Payments.
The Company makes equity-settled share-based payments to certain consultants.
Equity-settled, share-based payments are measured at fair value as at the date
of grant. The fair value determined at grant date is expensed on a straight line
basis over the vesting period, based on the Company's estimate of the number of
instruments that will eventually vest. Further details of how the fair value is
determined are shown in note 14.
2. TAXATION
The company has been granted exempt status under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance 1989, and is therefore subject to the payment of an annual
fee which is currently #600.
3. QUOTED INVESTMENTS
30 June 2007 30 June 2006 31 December 2006
At cost # 25,050,859 # 8,542,998 # 12,165,693
At market value # 38,456,239 # 20,181,979 # 24,294,931
4. UNQUOTED INVESTMENTS
30 June 2007 30 June 2006 31 December 2006
At cost # 1,616,562 # 537,703 # 537,703
At market value # 1,866,750 # 537,703 # 511,794
5. EARNINGS PER SHARE
The calculation of basic earnings per share is based on the net return on
ordinary activities after tax for the year and on 14,167,604 shares (2006:
13,481,136 shares) being the weighted average number of shares in issue during
the year. There is no difference between basic earnings per share and diluted
earnings per share as the 480,000 share options in issue were antidilutive for
the period.
6. NET ASSET VALUE PER SHARE
The calculation of net asset value is based on the net assets of
#21,533,809 and on the ordinary shares in issue of 14,167,604 at the balance
sheet date.
7. BANK OVERDRAFTS
30 June 2007 30 June 2006 31 December 2006
Bank accounts:
Hollandsche Bank Unie N.V. - - 188
Kaupthing Singer & Friedlander 41 - -
Penson Financial Services 421,192 - 992,457
# 421,233 # - # 992,645
The bank overdrafts are unsecured and repayable on demand.
8. LOAN PAYABLE
30 June 2007 30 June 2006 31 December 2006
Loan # 849,685 # 1,223,809 # 1,200,000
The loan payable is unsecured, repayable on demand and bears interest at 12.5% per annum.
9. LIABILITIES UNDER INVESTMENT CONTRACTS
At 30 June 2007 the Company had liabilities under Contracts for Difference (CFD)
amounting to #20,878,726 (December 2006: #9,780,962) secured against quoted
investments valued at #22,518,651 and cash balances of #6,386,468. Financing
charges, commissions and other associated costs vary from contract to contract.
10. CALLED UP SHARE CAPITAL
30 June 2007 30 June 2006 31 December 2006
Authorised
50,000,000 ordinary shares of
#0.01 each # 500,000 # 500,000 # 500,000
Allotted and fully
paid
14,167,604 ordinary shares of
#0.01 each # 141,676 # 141,676 # 141,676
11. RESERVES
Capital Capital Share Revenue
Reserve Reserve Option Reserve Total
- Realised - Unrealised Reserve
Balance at 1 January 2007 (454,423) 12,103,329 19,792 (760,016) 10,908,682
Net return for the financial period - - - (892,990) (892,990)
Net realised gains (42,862) - - - (42,862)
Net unrealised gains - 3,254,047 - - 3,254,047
Value of options granted in the period - - 19,792 - 19,792
Balance at 30 June 2007 (497,285) 15,357,376 39,584 (1,653,006) 13,246,669
12. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
30 June 2007 30 June 2006 31 December 2006
Net return for the financial
period/period 2,318,195 (1,265,309) (1,423,070)
New share capital subscribed (net of
commissions) - 5,000,000 5,000,000
Effect of share based payments in period 19,792 - 19,792
Net addition to shareholders' funds 2,337,987 3,734,691 3,596,722
Opening shareholders' funds 19,195,822 15,599,100 15,599,100
Closing shareholders' funds # 21,533,809 # 19,333,791 # 19,195,822
13. CASH FLOW NOTES
(a) RECONCILIATION OF NET RETURN BEFORE TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
30 June 2007 30 June 2006 31 December 2006
Net revenue loss on ordinary activities
for the financial year
before tax (873,198) (77,907) (371,060)
Expenses charged to capital (294,515) (124,564) (497,338)
Increase/(decrease) in creditors (44,133) 41,808 55,637
(Decrease)/increase in debtors 20,000 - (20,000)
Share based payments 19,792 - 19,792
Loan interest payable set against
consideration for new shares issued - - 875
Net cash outflow from operating
activities # (1,172,054) # (160,663) # (812,094)
(b) ANALYSIS OF NET DEBT
At Non- At
01 January Cash flow Cash 30 June
2007 Transactions 2007
Cash at bank and 6,099,053 841,632 - 6,940,685
broker
Bank overdraft (992,645) 571,412 - (421,233)
5,106,408 1,413,044 - 6,519,452
-
Loans payable (1,200,000) 350,315 - (849,685)
Liabilities under investment (9,780,962) (15,089,540) - (24,870,502)
contracts
# (5,874,554) (13,326,181) - (19,200,735)
14. SHARE BASED PAYMENTS
(a) TERMS
As consideration for the services provided by consultants to the Company,
options were granted to these consultants on 19 October 2006 pursuant to which
they have the right to subscribe for 480,000 ordinary shares at #1.75 per share,
such options to be exercised at any time during the period commencing six months
after the date of grant and terminating on the tenth anniversary of the date of
grant.
30 June 2007 30 June 2006 31 December 2006
Outstanding at beginning of period 480,000 - -
Granted during the period - - 480,000
Outstanding at the end of the period 480,000 - 480,000
(b) CALCULATION OF THE FAIR VALUE OF EQUITY SETTLED SHARE BASED PAYMENTS RELATING TO 2006 AWARD
All share based payments have been valued using a binomial model. The key inputs to this model are:
Share price at grant 145p
Option exercise price 175p
Expected volatility * 12.47%
Risk free rate ** 4.92%
Weighted average expected dividend yield 0.00%
Expected life of options 3.5 years
* Expected volatility is based on 30 day volatility of the Company's shares as
adjusted for forecast market conditions. ** The risk free rate is based on the
yield on a zero government security at grant date.
The company recognised a share based expense of #19,792 in the period, being the
2007 expense element associated with the 2006 award, recognised in full in the
period, (2006: 19,792) which is included in consultancy fees within the
statement of total return.
15. FINANCIAL INSTRUMENTS
(i) Management of risk
The Company's financial assets and liabilities comprise:
- Equity shares that are held in accordance with the Company's investment
objective as set out in the Director's Report.
- Cash and short term debtors and creditors that arise directly from the
Company's operations.
- Short term credit facilities from banks and brokers.
- Liabilities under contracts for difference.
The main risks arising from the Company's financial instruments are due to
fluctuations in market prices, foreign exchange rates and interest rates. The
Board regularly reviews and agrees policies for managing each of these risks and
they are summarised below. These policies have remained constant throughout the
period under review.
Market price risk
Market price risk arises mainly from uncertainty about the future prices of
financial instruments used in the Company's operations. It represents the
potential loss the Company might suffer through holding market positions in the
face of price movements and movements in exchange rates. It is the Board's
policy to hold an appropriate spread of investments in the portfolio in order to
reduce risk arising from factors specific to a particular country or sector. The
allocation of assets to international markets and stock selection are other
factors which act to reduce market price risk. The Investment Advisory Panel
monitor market prices throughout the year and report to the Board, which meets
regularly to consider investment strategy.
Foreign currency risk
The Company's total return and net assets can be significantly affected by
fluctuations in foreign currency exchange rates because a portion of the
Company's assets and revenue are denominated in currencies other than sterling.
The Board carefully monitors the Company's exposure to exchange risk and if it
feels it necessary will utilise appropriate hedging strategies.
Liquidity risk
The Company's assets comprise mainly readily realisable securities which can be
sold at meet funding commitments of necessary.
Credit risk
The Company places funds with authorised deposit takers from time to time and is
therefore potentially at risk from the failure of any such institution of which
it is a creditor. The company expects to place any deposits on a short term
basis and where possible with more than one institution to reduce its credit
risk.
(ii) Interest rate risk of financial assets and liabilities
The majority of the Company's financial assets are equity shares and other
investments which neither pay interest nor have a stated maturity date.
As disclosed in note 9 the Company's liability under contracts for difference
amounted to #20,878,726. Finance charges vary from contract to contract but are
typically in the order of LIBOR + 2.25%.
The level of the Company's borrowings from a third party is #849,685 and the
level of overdraft at Penson Financial Services Limited (Penson) is #421,192. As
disclosed in note 8, the third party loan bears interest at 12.5% and the
overdraft with Penson bears interest at 6% above the base rate of the Bank of
England.
During the financial period, the Company obtained a loan facility from
Landsbanki Islands h.f. This is a multicurrency revolving facility of up to
#5,000,000. Interest is payable at LIBOR + 3%. The facility is available for a
period of twelve months from inception and is secured against certain of the
Company's quoted investments.
(iii) Currency exposure
A portion of the financial assets of the company are denominated in currencies
other than sterling with the effect that the net assets and total return can be
significantly affected by currency movements.
Currency Quoted Cash at bank Total
investments
USD # 240,203 40 # 240,243
Euro # 2,419,761 27,709 # 2,447,470
(iv) Fair values of financial assets
All of the financial assets of the Company are held at fair value, as shown in
notes 3 and 4.
16. REPORTED NET ASSET VALUE (NAV)
The NAV reported to the market shortly after 30 June 2007 was 152.29p. These
financial statements are based on the company's unaudited records, and reflect
all known debtors and creditors as accrued at the balance sheet date. Net assets
at the balance sheet date have also been valued at bid price, in accordance with
FRS 26, the NAV reported to the market shortly after 30 June 2007 also reflected
bid values. Accordingly, these accruals and the difference in accounting
procedures are the reason for the difference in the estimated NAV previously
reported, and the NAV stated in these unaudited financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPNLFLNXEFE
1 Year Equity Special Situations Chart |
1 Month Equity Special Situations Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
