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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Global Spec.Inc | LSE:USPI | London | Ordinary Share | GB0030313315 | INC SHS 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 33.625 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMUSPI Global Special Opportunities Trust PLC Half-yearly financial report for the six months ended 30 November 2010 Company highlights for the six months ended 30 November 2010 NAV returns and share prices 30 November 31 May % change 2010 2010 pence pence Zero Dividend Preference NAV 182.61p 182.61p n/a share Mid n/a n/a n/a price Income share NAV 39.62p 47.34p (16.31) Mid 32.25p 50.00p (35.50) price Capital share NAV 0.00p 0.00p - Mid 0.26p 0.51p (49.02) price Unit (1 Capital and 1 Income NAV 39.62p 47.34p (16.31) share) Mid 32.00p 50.00p (36.00) price Revenue Six months Six months % to to change 30 November 30 November 2010 2009 Revenue return per Income (0.55p) (0.09) (511.11) share Net dividends declared per nil nil - Income share Data as at 30 November 2010, all performance figures for the period ended 30 November 2010 unless otherwise stated. Past performance and dividends paid are not a guarantee of future returns. Figures sourced from Premier Fund Managers Ltd and Bloomberg. Company summary Launch date 12 April 2001 Wind-up date 31 May 2011 Domiciled United Kingdom Shareholders funds GBP10.29 million at 30 November 2010 Market capitalisation GBP8.20 million at 30 November 2010 Revolving credit $0.5 million facility facility Zero Dividend 206,037*: Redeeming at 182.608201p on Preference shares 31 May 2011 Income shares 25,035,008: Aiming to redeem at 120.82p on 31 May 2011 should growth in value of underlying portfolio allow Capital shares 50,000,000 Total voting rights 50,070,016** Units One Income share and one Capital share may be held together and traded as a Unit Dividends Paid on Income shares and Units Dividend history In respect of year Total dividends declared ended 31 May: 2010 None 2009 None 2008 3.40p 2007 3.20p 2006 2.80p 2005 2.10p 2004 1.40p 2003 2.09p 2002 7.05p*** Investment Managers Premier Asset Management (Guernsey) Limited Premier Fund Managers Limited Investment Adviser RENN Capital Group, Inc. Management fee With effect from 1 June 2008, 0.75% per annum, plus performance fee. This is charged 70% to capital and 30% to revenue. AIC Global Special Opportunities Trust PLC is a member of the Association of Investment Companies. * The number of ZDP shares in issue as at 30 November 2010 and at the date of this report is 206,037. ZDP shares were delisted on 31 July 2008. ** Each Income share has a voting right on a poll equal to one vote per share. Under the Constitutional Documents each Capital share has a voting right equal to the number of Income shares in issue divided by the number of Capital shares in issue. *** Included one initial dividend and four interim dividends. Financial calendar Year end 31 May General Meeting 31 May 2011 Half-year end 30 November Half-year results January announced Interim Management April, October Statements Investment objective and policy Investment Objective The investment objective is for the portfolio to be managed to provide the Shareholders with capital growth, for the Income Shareholders to be repaid their final adjusted capital entitlement on 31 May 2011 of 120.82p per Income Share and to provide the Capital Shareholders with a cash return on or shortly after 31 May 2011. The Directors will seek to distribute substantially all of the net revenue to Income Shareholders by way of dividend, although this is not expected to be a material amount. Investment Policy Asset allocation The investment policy of the Company is to achieve the investment objective through investment in equity and equity-related instruments which are predominantly securities domiciled, listed, quoted or traded in North America (some of these securities may however have an underlying business that is not in North America), but with the ability to invest up to 25% of the gross assets of the Company (at the time of investment) opportunistically in listed or unlisted equity or debt securities issued by issuers situated anywhere in the world. The portfolio is managed on the basis that the Company is fully invested in equity and equity-related instruments to the extent practicable for the remainder of its life (subject to the recommendation of the Investment Managers and the Investment Adviser who may wish to increase the cash holding due to market conditions). Liquidity is managed so that the costs of realising the portfolio (including market impact costs) are reduced to the extent practicable as the end of the life of the Company approaches. It is expected that liquidation of investments will take place in the last three months of the life of the Company, so that a mixture of liquid securities and cash are handed to the liquidator. Up to 40% of the gross assets of the Company (measured at the time of investment) may be invested in unquoted securities. "Unquoted securities" for these purposes means those investments which are not listed or quoted or traded on a recognised stock exchange or another exchange available and used by professional investors, nor convertible into securities listed, quoted or traded on such exchanges. The Company may invest in bonds, warrants, contracts for difference, other forms of derivative investment (for the purpose of efficient portfolio management), bank debt or other debt securities, although this will not amount to more than 20% of the gross assets of the Company at the time of investment. Risk diversification The investment policy provides the Company with a global mandate, albeit with a particular emphasis on North America. The Company is managed with a view to maintaining an adequate spread of investment risk in terms of the concentration and in terms of size of its investments. Except in the case of cash deposits awaiting investment or pending any winding-up of the Company, the Company will not lend to any one company or group, or invest in the securities of any one company or group, more than 20% of the value of its gross assets (at the time the loan or investment is made). The Company will not invest more than 10% in aggregate of the value of its gross assets at the time of a new investment, in other investment companies or investment trusts which are listed on the Official List (except to the extent that those investment companies or investment trusts have stated policies to invest no more than 15% of their gross assets in other investment companies or investment trusts which are listed on the Official List). Borrowings The Company may use gearing and the Directors reserve the right to borrow up to a maximum of 25% of the gross assets (at the time of drawdown). Interim management report Listed companies are required by the FSA's Disclosure and Transparency Rules to include an interim management report within their half-yearly financial report. The Company's interim management report is comprised of the information contained in the Chairman's statement and the Investment Adviser's report. The interim management report and the financial statements have not been reviewed or audited by the Company's Auditor. Chairman's statement for the six months ended 30 November 2010 Market background. Over the six months to 30 November 2010 the US stock market continued its recovery with the benchmark Russell 2000 (Total Return ) index of smaller US companies rising 10.6% . Sterling however strengthened against the dollar over the period reducing the sterling return to 3.1%. The more broadly based S&P 500 index (Total Return) rose 9.5% in dollars and 2.1% in sterling. Portfolio Changes and performance. During the period the focus was on reducing exposure to the more illiquid investments in the portfolio. As realisations were made re-investment was directed towards exchange traded funds (ETFs) so as to maintain market exposure, in accordance with the Company's investment policy, but at the same time ensure that any new investments had good liquidity given the Company's planned wind-up at the end of May 2011. At the start of the period, with 12 months to wind-up, the Manager was instructed to realise the illiquid investments and at the same time the Board reviewed the valuation of these investments. A number of listed stocks with very low turnover were written down to reflect the difficulty experienced in selling these stocks at the market price. A block of illiquid stocks was sold to another investment trust advised by RENN capital. The Board were closely involved in setting the terms on which the transaction was completed. This transaction, together with other sales made through the market or privately negotiated, meant that by the half year end the assets which the Board consider to constitute less liquid investments were approximately 6% of Shareholder Funds. Over the period the NAV of the income shares fell from 47.34p to 39.62p, a decrease of 16.31%. The share price of the income shares fell from 50.00p to 32.25p over the six months. Portfolio composition at 30 November 2010. The only unlisted securities in the portfolio at the period end were AnchorFree, Business Process Outsourcing and the unlisted convertible debenture in iLinc Communications, Inc.(which has subsequently been sold at approximately half its carrying value) representing 3.4% of Shareholders' Funds. Of the listed securities AuraSound and Hemobiotech, Inc. are highly illiquid and have been written down to zero value. Global Axcess is also included in the less liquid category although steady progress is being made in reducing this holding through the market. At the period end it represented 2.6% of Shareholders' Funds. At 30 November 2010, 39.5% of Shareholders' Funds were invested in ETFs linked to US small company indices but providing good secondary market liquidity. The balance of the portfolio (54.5% of Shareholders Funds) was invested in listed securities that the Board considered to have sufficient liquidity so as not to impede liquidation of the portfolio by 31 May 2011. Dividends. Earnings per income share were -0.55p (30 November 2009: -0.09p) and no dividends were paid during the period. The Company's objective is one of capital growth. Bank facility. The Company's bank facility of $500,000 was repaid during the period. Share buy back. No shares were bought back during the period. Outlook. With only a few months before the Company is scheduled to wind up on 31 May 2011 any view taken on outlook is necessarily short term. Equities generally do not appear overvalued by most conventional valuation metrics and it is the Board's intention to maintain the Company's investment policy and remain exposed to the market through exchange traded funds as individual stock positions are sold. The Directors monitor the dollar sterling exchange rate but currently have taken no action to hedge the Company's dollar exposure. Duncan Abbot Chairman 31 January 2011 Investment Adviser's report for the six months ended 30 November 2010 Top Five Holdings At 30 November 2010, the following top five holdings made up 51.0% of Shareholders' Funds. A description of each of the top five holdings is below: Company Symbol Industry Value USD % of Shareholders' Funds iShares Russell IWM Stock Index 2,437,125 15.2 2000 Index Fund Vanguard VB Stock Index 2,384,550 14.9 Small-Cap ETF PowerShares QQQ QQQQ Stock Index 1,510,465 9.4 Trust SinoHub, Inc. SIHI Electronics 938,597 5.9 Hollysys HOLI Electronic equipment 905,065 5.6 Automation Technologies, Ltd (previously HLS Systems International) iShares Russell 2000 Index Fund (ARCA:IWM) is an exchange traded equity index fund that seeks to replicate the performance of the Russell 2000 Index. The fund invests in stocks of companies listed on the Russell 2000 Index in proportion to their weighting in the index. Vanguard Small-Cap ETF (ARCA:VB) is an exchange traded equity index fund that seeks to track the performance of the MSCI US Small Cap 1750 index, which measures the investment return of small capitalisation stocks. PowerShares QQQ Trust (NASDAQ:QQQQ) is an exchange traded fund that seeks to track the NASDAQ-100 Index. The NASDAQ-100 index consists of the 100 largest non-financial companies that trade on the NASDAQ stock market. SinoHub, Inc. (AMEX: SIHI) is a rapidly growing electronics company in the People's Republic of China (PRC) currently operating in three business units: electronic component sales, electronics product manufacturing and sales, and electronic component supply chain management (SCM) services. The Company's electronic component sales unit includes procurement-fulfillment and spot electronic component sales to manufacturers and design houses. The Company's product manufacturing and sales unit is currently focused on providing custom, private label mobile phones to developing countries. SinoHub's SCM business includes warehousing, delivery and import/export services incorporating the Company's proprietary web-based SCM software platform that gives its customers total transparency in their supply chains. For the three months ended September revenues were up 54% to $55.8 million and net income was up 55% to $5.5 million against the same period last year. The outlook remains strong demonstrated by the company increasing its prior calendar year revenue guidance from $180 million to $192 million. Hollysys Automation Technologies, Ltd (NASDAQ: HOLI) provides automation and control technology and applications in the People's Republic of China. The company offers Distributed Control Systems, which are networks of controllers, sensors, actuators and other devices that can be programmed. It sells its products and services to various industries, including power generating, computer controlled manufacturing, chemical, petrochemical, pharmaceutical, and railway transportation industries. For the three months ended September revenues were up 59% and net income was up 57% against the same period last year. The outlook is favourable demonstrated by a record-breaking 36% increase in backlog of $255M against $187M for the same period last year. Disposals, adjustments & new investments Since the end of May 2010, we made complete sales of Access Plans, China Greenscape, CMSF Corporation, Cover-All Technologies, Inc., Duoyuan Printing, Geos Communications, Inc., Integrated Security Systems, Inc., Merriman Curhan Ford Group, and Pipeline Data, Inc. Partial sales were made in PetroHunter Energy Corporation, Global Axcess Corporation, Hollysys Automation Technologies, Ltd, SinoHub, Inc., and YAYI International, Inc. In preparation for the wind-up, the only new purchases were in three index funds, iShares Russell 2000 Index Fund, Vanguard Small-Cap ETF, and PowerShares QQQ Trust. These are highly liquid ETF funds that can be sold on early notice. Liquidity progress At 30 November 2010 your Company holds two unquoted companies, AnchorFree, Inc. and Business Process Outsourcing, and the convertible debenture, iLinc Communications, Inc. Together these three holdings represented 3.4% of Shareholders' Funds at 30 November 2010, post period end iLinc Communications Inc. was sold. We continue to work towards liquidating these companies in a timely manner. The portfolio also holds two companies (representing 3.7% of Shareholders' Funds), Global Axcess Corporation and YAYI International, Inc. which would require 17 days and 13 days respectively of average daily volume to liquidate. Subsequent to the November month end, we have begun selling both of these positions. We expect that the balance of the portfolio can be liquidated within a short time. RENN Capital Group, Inc. 31 January 2011 Responsibility statement for the six months ended 30 November 2010 The Directors confirm that to the best of their knowledge: (a) the condensed set of financial statements, which has been prepared in accordance with applicable accounting standards in the United Kingdom, gives a true and fair view of the assets, liabilities, financial position and loss of the Company as required by Disclosure and Transparency Rule ("DTR") 4.2.4R, (b) the interim management report includes a fair review of the information required by DTR 4.2.7R, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year, (c) the notes to the half-yearly financial report include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position and performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so. This half-yearly financial report was approved by the Board of Directors on 31 January 2011 and the above responsibility statement was signed on its behalf by the Chairman. Financial summary Capital 30 November 31 May Change 2010 2010 % Shareholders Funds (GBP'000) 10,294 12,228 (15.82) Gross assets (GBP'000)* 10,294 12,572 (18.12) Net asset value per Zero Dividend 182.61p 182.61p n/a Preference share** Mid-market price per Zero Dividend n/a n/a n/a Preference share Net asset value per Income share** 39.62p 47.34p (16.31) Mid-market price per Income share 32.25p 50.00p (35.50) (Discount)/premium to mid-market (18.60%) 5.62% (24.22) price per Income share Net asset value per Capital share* 0.00p 0.00p - * Mid-market price per Capital share 0.26p 0.51p (49.02) Net asset value per Unit** (1 39.62p 47.34p (16.31) Capital share and 1 Income share) Mid-market price per Unit 32.00p 50.00p (36.00) (Discount)/premium to mid-market (19.23%) 5.62% (24.85) price per Unit Six months Six months to to 30 November 30 November 2010 2009 Change pence pence % Revenue Return per Income share (0.55) (0.09) (511.11) Net dividend paid per Income share nil nil - * Total assets less current liabilities (excluding bank loan and net assets attributable to shareholders). ** Net asset values calculated in accordance with the Articles of Association and including current period revenue. Principal investments as at 30 November 2010 Fair % of Value Shareholders Funds GBP'000 Company Classification Industrial classification iShares Russell 2000 Stock Index Stock Index 1,565 15.2 Index Fund funds Vanguard Small Cap ETF Stock Index Stock Index 1,531 14.9 funds PowerShares QQQ Trust Stock Index Stock Index 970 9.4 funds SinoHub, Inc. Common stock/ Electronics 603 5.9 Warrants Hollysys Automation Common stock Electronic 581 5.6 Technologies Ltd equipment Bovie Medical Common stock Healthcare 550 5.3 Corporation services Skystar Common stock Pharmaceuticals & 548 5.3 Bio-Pharmaceutical Biotechnology Wonder Auto Technology Common stock Financial services 535 5.2 Bio-star Pharmaceuticals Common stock Pharmaceuticals & 435 4.2 Biotechnology American Lorain Common stock Food manufacturers 397 3.9 Corporation ZST Digital Networks Common stock Network equipment 302 2.9 manufacturers Global Axcess Common stock Consumer finance 266 2.6 Corporation iLinc Communications, Convertible Technology 225 2.2 Inc. Debenture services Search Media Holdings Common stock Media 224 2.2 Points International Common stock Internet software 211 2.0 Silverleaf Resorts Common stock Travel & Leisure 141 1.4 YAYI International, Inc. Common stock Food manufacturers 114 1.1 AnchorFree, Inc. Convertible Wireless 71 0.7 Preference communications Business Process Common stock Business services 51 0.5 Outsourcing PetroHunter Energy Warrants Oil & gas 49 0.5 Corporation exploration Douyuan Printing Warrants Industrial 28 0.3 machinery BPO Management Services Series B Pharmaceuticals & - - Preferred Biotechnology Hemobiotech, Inc Common stock Biotechnology - - AuraSound Common stock Technology - - 9,397 91.3 As at 30 November 2010, the portfolio consisted of 28 holdings in 24 companies with a total market value of GBP9,397,000 excluding cash and warrants at nil value, being 91.3% of Shareholders' Funds. Income statement (unaudited) for the six months ended 30 November 2010 Period 1 June to Period 1 June to Year ended 31 May 30 November 2010 30 November 2009 2010 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (Losses)/gains - (1,706) (1,706) - 2,426 2,426 - (523) (523) on investments at fair value through profit or loss Income 15 - 15 148 - 148 216 - 216 Investment (12) (27) (39) (17) (40) (57) (35) (80) (115) management fee VAT recovered - - - - - - 2 5 7 on Investment Management fee Other expenses (135) - (135) (152) - (152) (315) - (315) Liquidation (2) (3) (5) - - - (25) (25) (50) costs Exchange - (56) (56) - (33) (33) - 31 31 (losses)/ gains on capital items Net return (134) (1,792) (1,926) (21) 2,353 2,332 (157) (592) (749) before finance costs and taxation Finance costs Interest (1) (4) (5) (1) (4) (5) (3) (8) (11) payable and similar charges Appropriations in respect of: Income shares 138 1,796 1,934 22 (2,349) (2,327) 160 600 760 Return on 3 - 3 - - - - - - ordinary activities before taxation Taxation on (3) - (3) - - - - - - ordinary activities - - - - - - - - - Return per pence pence pence pence pence pence pence pence pence share Capital share - - - - - - - - - Income share (0.55) (7.17) (7.72) (0.09) 9.33 9.24 (0.64) (2.39) (3.03) Zero Dividend - - - - - - - - - Preference share Unit (1 (0.55) (7.17) (7.72) (0.09) 9.33 9.24 (0.64) (2.39) (3.03) Capital, 1 Income) The total column of this statement is the profit and loss account of the Company. The supplementary revenue return and capital return columns have been prepared in accordance with the AIC's SORP. Revenue and capital return per share figures shown are also supplementary information. All revenue and capital items in the above statement derive from continuing operations. There are no recognised gains or losses other than those passing though the Income statement. Statement of movements in net assets attributable to shareholders (unaudited) for the six months ended 30 November 2010 Period Period Year 1 June to 1 June to ended 30 November 30 November 31 May 2010 2009 2010 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Net assets attributable to 12,228 13,065 13,065 Shareholders at the start of the period Appropriations to Shareholders Income shares (1,934) 2,327 (760) (1,934) 2,327 (760) Repurchase of shares (including - (77) (77) related costs) Net assets attributable to 10,294 15,315 12,228 Shareholders at the end of the period (Shareholders' Funds) Balance sheet (unaudited) as at 30 November 2010 30 November 30 November 31 May 2010 2009 2010 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Fixed assets Investments at fair value through 9,397 14,206 11,801 profit or loss 9,397 14,206 11,801 Current assets Debtors 91 391 36 Cash at bank 912 1,108 876 1,003 1,499 912 Creditors - amounts falling due within one year Creditors 106 85 141 Bank loan - 305 344 Net assets attributable to 10,294 - 12,228 Shareholders 10,400 390 12,713 Net current (liabilities)/assets (9,397) 1,109 (11,801) Total assets less current - 15,315 - liabilities Creditors - amount falling due after more than one year Net assets attributable to - 15,315 - Shareholders - 15,315 - - - - Net asset values per share pence pence pence Capital share - - - Income share 39.62 59.67 47.34 Zero Dividend Preference share 182.61 182.61 182.61 Unit 39.62 59.67 47.34 Statement of cashflows (unaudited) for the six months ended 30 November 2010 Period Period Year 1 June to 1 June to ended 30 November 30 November 31 May 2010 2009 2010 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Operating activities Investment income received 16 139 256 Deposit interest received 1 2 4 VAT refunded in respect of - - 7 Investment Managers' fees Investment management fees paid (28) (46) (115) Secretarial fees paid (61) (58) (115) Other cash payments (139) (150) (224) Net cash outflow from operating (211) (113) (187) activities Servicing of finance Interest paid (4) (10) (15) Net cash outflow from servicing (4) (10) (15) of finance Capital expenditure and financial investment Purchases of investments (4,649) (2,128) (4,275) Sales of investments 5,300 2,488 4,379 Net cash inflow from capital expenditure and financial investment 651 360 104 Net cash inflow/(outflow) before 436 237 (98) financing Financing Repayment of credit facility (317) - - drawdown Buyback of shares for - (77) (77) cancellation Net cash outflow from financing (317) (77) (77) Net cash inflow/(outflow) after 119 160 (175) financing Increase/(decrease) in cash 119 160 (175) Notes to the half yearly financial report for the six months ended 30 November 2010 1. Basis of Preparation This financial information has been prepared under the historical cost convention as modified by the revaluation of certain investments and in accordance with the Accounting Standards Board's ("ASB") Statement on Half-Yearly Financial Reports, applicable law and Accounting Standards in the United Kingdom ("UK GAAP") and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by the Association of Investment Companies ("AIC") in January 2009 and in accordance with accounting policies set out in the statutory accounts for the year ended 31 May 2010. The Company is due to wind-up on 31 May 2011 and as a result the accounts have been prepared on a wind-up (break-up) basis rather than on a going concern basis as it is certain that the wind-up will occur and there is no option for the Company to continue after this date. The comparatives for the period to 30 November 2009 are prepared on a going concern basis. 2. Return per Share Period 1 June to Period 1 June to Year ended 30 November 2010 30 November 2009 31 May 2010 Revenue Capital Total Revenue Capital Total Revenue Capital Total pence pence pence pence pence pence pence pence pence Return per share Capital share - - - - - - - - - Income share (0.55) (7.17) (7.72) (0.09) 9.33 9.24 (0.64) (2.39) (3.03) Zero Dividend - - - - - - - - - Preference share Unit (1 Capital, (0.55) (7.17) (7.72) (0.09) 9.33 9.24 (0.64) (2.39) (3.03) 1 Income) Capital shares The return per Capital share is based on appropriations for the period of GBPnil; (period 1 June 2009 to 30 November 2009: GBPnil; year ended 31 May 2010: GBPnil) and on 50,000,000 (period 1 June 2009 to 30 November 2009: 50,000,000; year ended 31 May 2010: 50,000,000) Capital shares. Income shares The revenue return per Income share is based on revenue losses of GBP138,000 (period 1 June 2009 to 30 November 2009: losses GBP22,000; year ended 31 May 2010: losses GBP160,000) and on 25,035,008 (period 1 June 2009 to 30 November 2009: 25,176,538; year ended 31 May 2010: 25,105,967) Income shares being the weighted average number of shares in issue during the period. The capital return per Income share is based on capital appropriations of (GBP 1,796,000) (period 1 June 2009 to 30 November 2009: GBP2,349,000; year ended 31 May 2010: (GBP600,000)) and on 25,035,008 (period 1 June 2009 to 30 November 2009: 25,176,538; year ended 31 May 2010: 25,105,967) Income shares being the weighted average number of shares in issue during the period. Zero Dividend Preference shares The return per Zero Dividend Preference share is based on an annualised redemption yield from 12 April 2001 to 31 May 2008, (at which point no further appropriations will be made) and on 206,037 (period 1 June 2009 to 30 November 2009: 206,037; year ended 31 May 2010: 206,037) Zero Dividend Preference shares being the weighted average number in issue during the period. The redemption yield is contingent on the Company having sufficient assets at the time of redemption. 3. Net Asset Values Total net asset values attributable to Shareholders calculated in accordance with FRS 25 are as follows: 30 November 31 May 30 November 2010 2010 2009 GBP'000 GBP'000 GBP'000 For the purposes of calculating net asset values: Total net assets attributable to: - Capital Shareholders - - - - Income Shareholders 9,918 11,852 14,939 - Zero Dividend Preference 376 376 376 Shareholders 10,294 12,228 15,315 - Unit holders 9,918 11,852 14,939 pence pence pence Net asset value per:* - Capital share - - - - Income share 39.62 47.34 59.67 - Zero Dividend Preference 182.61 182.61 182.61 share - Unit 39.62 47.34 59.67 They are represented by: 30 November 31 May 30 November 2010 2010 2009 GBP'000 GBP'000 GBP'000 Share capital 75 75 75 Special reserve 11,376 11,376 11,376 Capital redemption reserve 40 40 40 Capital reserve (5,993) (4,197) (1,248) Redemption reserve 4,906 4,906 4,906 Revenue reserve (110) 28 166 Assets attributable to 10,294 12,228 15,315 Shareholders * Net asset values per share calculated on the number of shares in issue of: 30 November 31 May 30 November 2010 2010 2009 - Capital share 50,000,000 50,000,000 50,000,000 - Income share 25,035,008 25,035,008 25,035,008 - Zero Dividend Preference 206,037 206,037 206,037 share The net asset values calculated include unaudited current period revenue net of dividends paid as at 30 November 2010 and 2009. 4. Movement in Assets Attributable to Shareholders Capital redemption Special Capital Redemption Revenue reserve reserve reserve reserve reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance brought forward at 1 June 2010 40 11,376 (4,197) 4,906 28 Losses on realisation of investments - - (8,968) - - Exchange losses on capital items - - (56) - - Movement in investment holding losses - - 7,262 - - Costs charged to - - (34) - - capital Net revenue - - - - (138) At 30 November 2010 40 11,376 (5,993) 4,906 (110) 5. EFFECTIVE TAX RATE The tax charge for the six months ended 30 November 2010 is GBPnil (period 1 June 2009 to 30 November 2009: GBPnil; year ended 31 May 2010: GBPnil). The Company has an effective tax rate of 0% for the year ending 31 May 2011. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the company status as an Investment Trust and there is expected to be an excess of management expenses over taxable income. 6. Reconciliation of Net Return Before Finance Cost and Taxation to Net Cash Outflow From Operating Activities 30 November 30 November 31 May 2010 2009 2010 GBP'000 GBP'000 GBP'000 Net return before finance (1,926) 2,332 (749) costs and taxation Losses/(gains) on 1,706 (2,426) 523 investment Exchange losses/(gains) on 56 33 (31) capital items (Decrease)/increase in (35) (30) 26 creditors (Increase)/decrease in (11) 20 89 debtors Reinvested dividends - (42) (45) Tax deducted on investment (1) - - income Net cash outflow from (211) (113) (187) operating activities 7. Reconciliation of Net Cash Flow to Movement in Net Funds 30 November 30 November 31 May 2010 2009 2010 GBP'000 GBP'000 GBP'000 Increase/(decrease) in cash 119 160 (175) in period Revolving credit repayments 317 - - Foreign exchange (losses)/ (56) (33) 31 gains Movement in funds 380 127 (144) Net funds at start of 532 676 676 period Net funds at end of period 912 803 532 8. Analysis of Changes in Net Funds 30 November 30 November 31 May 2010 2009 2010 GBP'000 GBP'000 GBP'000 Cash at bank 912 1,108 876 Bank loan due within one - (305) (344) year 912 803 532 9. Related Party Transactions The Investment Managers, Premier Asset Management (Guernsey) Limited and Premier Fund Managers Limited, are regarded as related parties to the Company. The amount paid to the Managers for Investment Management fees for the period ended 30 November 2010 was GBP39,000 (31 May 2010: GBP115,000; 30 November 2009: GBP 57,000). At 30 November 2010 there were amounts outstanding of GBP18,000 (31 May 2010: GBP8,000; 30 November 2009: GBP19,000). The Investment Management fee is based on the Company's gross assets less current liabilities which are reduced by the value of investments held in the companies where Premier are the Investment Manager. At 30 November 2010 the market value of these holdings was GBPnil (31 May 2010: GBPnil; 30 November 2009: GBPnil). Mr Cleveland of RENN Capital Group, Inc., the Investment Adviser is a director of Access Plans, Cover-All Technologies, Integrated Securities Systems, BPO Management Services and CaminoSoft, being companies held within the portfolio during the period under review. Of these companies, Mr Cleveland received fees of US$43,000 per annum in respect of Cover-All Technologies. Other officers of RENN Capital Group Inc. also sit on the boards of certain companies held as investments within the portfolio. The total directors' remuneration received by RENN Capital Group Inc. for representation of the Company and its other clients and affiliates, and attendance at meetings of the boards of companies in which the Company had a interest in the year to date and during the year ended 31 May 2010 was US$12,375 per annum. During the period the Company sold their interests in CaminoSoft, Integrated Security Systems and Cover-All Technologies to another investment trust advised by RENN Capital on which Mr Cleveland is a director, the Board of Global Special Opportunities Trust PLC were closely involved in the setting of the terms on which the transaction was completed. 10. Financial Information The financial information contained in this half-yearly financial report does not constitute full statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the six months ended 30 November 2010 and 30 November 2009 has not been audited. The information for the year ended 31 May 2010 has been extracted from the latest published audited accounts. Those accounts have been filed with the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006. RISK FACTORS Principal risks associated with the Company General The market price of the shares may not fully reflect their underlying net asset values. If stock market prices fall the potential returns available to Shareholders may decline. There can be no guarantee that the Company's investment objectives will be achieved. Zero Dividend Preference shares Although the Zero Dividend Preference shares rank ahead of the Income shares and the Capital shares for participation in a distribution of assets on the winding-up of the Company, they rank behind the Company's liabilities. The Zero Dividend Preference Shares were delisted on 31 July 2008. There is no secondary market in which these shares can be traded. Income shares The Income shares rank for repayment after the Zero Dividend Preference shares. Capital shares The Capital shares rank for repayment after the other two classes of shares. Due to the substantial gearing provided by the prior capital entitlements of the Income shares, the Zero Dividend Preference shares and by any debt financing, the market value of the Capital shares can be expected to be volatile and particularly sensitive to changes in the value of the Company's gross assets. The Capital shares' NAV remained zero throughout the period. Accordingly, the Capital shares should be considered to be a high risk investment. Smaller companies The Company invests directly in smaller companies. As smaller companies do not generally have the financial strength, diversity and resources of large companies they may find it more difficult to overcome periods of economic slowdown or recession. In addition, the relatively small market capitalisation of such companies may make the market in their shares less liquid, therefore impacting on the Company's ability to realise value before its liquidation date. In the event that smaller companies under perform, this may affect the performance of US smaller companies in which the Company is invested. Unlisted securities The Company may invest in unlisted securities, or other securities, in which there is no active market. In such cases it may be difficult to determine the value of such securities and/or to realise the investment or to do so on acceptable terms. There may be no certainty that a listing or trading facility will be obtained for such securities. Holders of such securities may not have the benefit of market rules designed for the protection of holders of listed or public traded securities. This may include the absence of publicly available information on such securities or their issuers. Derivative risk The Company's investment policy allows it to enter into derivative transactions where the Investment Managers consider that it is prudent to do so in order to protect the value of the Company's portfolio and is in the best interests of the Company. Markets in derivatives can be highly volatile and such investments carry a high risk of loss. In the case of certain derivatives a relatively small adverse market movement may result not only in the loss of the original investment but also in unquantifiable further loss exceeding any margin deposited. Any such loss suffered by the Company may adversely affect the Company's ability to meet the capital and income returns to Shareholders. Dividend levels Dividends paid on the Company's Income shares rely on receipt of interest payments and dividends from the securities in which the Company invests and therefore dividend levels are likely to vary. The Board expects dividend levels, if any, to be negligible. Currency risk The portfolio invests in US securities and its assets are therefore subject to fluctuations in the US dollar/ sterling exchange rate and the sterling value of its assets, plus declines in US equity markets as a whole. Bearing in mind that the final redemption payment will be a sterling payment made to the holders of Income shares 31 May 2011, the Board may look at taking advantage of any future dollar strength versus sterling by hedging some or all of the dollar exposure into sterling. Liquidity risk A significant proportion of the portfolio is held in smaller and unlisted companies. Such companies are inherently higher in risk and lower in liquidity than, for example, blue-chip equities. Unlisted companies have the additional risk of not benefiting from market rules designed to protect investors. Some of the investments are in unlisted convertible bonds or preference shares, which may at any time be converted into a listed common stock, giving an effective level of liquidity equal to the liquidity in the common stock. Other unlisted investments do not have the option of converting into a listed stock. This issue is particularly relevant regarding the 31 May 2011 wind-up date of the Company. Credit risk The portfolio may contain some fixed income securities. However, many of these are convertible into common stock (equity). The benefit of a convertible debenture is that, if a portfolio company becomes troubled, the Company is protected through its position as a creditor. If the underlying portfolio company performs well, the Company can participate in the upside by converting into common stock. However, it is possible that such investee companies might default on these debentures or wind-up prior to their repayment. Market price risk Since the Company invests in financial instruments, market price risk is inherent in these investments. Discount volatility The Company's shares may trade at a discount to its net asset value being a closed end fund. The magnitude of this discount fluctuates daily and can vary significantly. Thus, for a given period of time, it is possible that the market price could decrease despite an increase in the Company's net asset value. The Company obtained the authority to purchase Income and Capital shares for cancellation from Shareholders at its last AGM. The Directors will consider using share buybacks to control the Company's discount levels when in the interest of all Shareholders and the Company as a whole. Regulatory risk If the Company did not comply with the provisions of Section 1158 and 1159 of the Corporation Taxes Act 2010 (formerly contained in Section s842 of the Income and Corporation Taxes Act 1988), it would lose its investment trust status and could be liable to pay taxes on investment gains. A breach of the Listing Rules may result in censure by the Financial Services Authority ("FSA") and/or the Company's suspension from Listing. In order to minimise this risk, the Directors, the Investment Managers, the Investment Adviser and the Company Secretary monitor the Company's compliance with the key criteria of Sections 1158 and 1159 on a monthly basis and an ongoing review of compliance with the FSA Listing Rules. On a quarterly basis, compliance with these provisions is discussed in detail between the Board, the Company Secretary, the Investment Managers and the Investment Adviser. Risks associated with the engagement of third parties There are a number of potential operational risks associated with the fact that third parties undertake the Company's administration and custody of assets. Most seriously, there is the risk that third parties could fail to ensure that statutory requirements, such as the Companies Act and the FSA's Listing Rules, are complied with. There is also the risk associated with the directorships held by the Investment Advisors employees on investee companies, which may prohibit them from dealing in those company's shares during prohibited period throughout the year, this could result in the inability to wholly liquidate the Company's portfolio by 31 May 2011. Details of how these risks are managed are detailed in the 2010 Annual Report and Accounts under `Internal control process.' During the period there were no qualifying third party indemnity provisions in force. Risk diversification The Company's investment policy provides it with a global mandate, albeit with a particular emphasis to invest primarily in equities and equity related instruments issued by companies domiciled, listed, quoted or traded in North America. The Company is managed with a view to maintaining an adequate spread of investment risk in terms of the concentration and size of its investments. There is the risk that the Company's portfolio may become more concentrated as investments are realised in the three months leading up to the Company's liquidation. The Company will continue to re-invest in liquid assets that are easily realisable before 31 May 2011. COMPANY INFORMATION Directors Investment Adviser Duncan Abbot (Chairman) RENN Capital Group, Inc. Andrew Pegge Suite 210 LB59 Rory Macleod 8080 North Central Expressway Stephen White Dallas, Texas 75206-1857 USA Tel: 001 214 891 8294 Secretary and Registered Office Fax: 001 214 891 8291 Capita Sinclair Henderson Limited (trading as Capita Financial Group - Specialist Fund Services) Beaufort House 51 New North Road Bankers Exeter EX4 4EP Lloyds TSB Bank plc Tel: 01392 412122 71 Lombard Street Fax: 01392 253282 London EC3P 3BS Website Allied Irish Banks plc Bankcentre www.premierassetmanagement.co.uk Ballbridge Dublin 4 Investment Managers Ireland Premier Asset Management (Guernsey) Limited PO Box 405 Stockbrokers Anson Place Cenkos Securities Plc Mill Court 6.7.8 Tokenhouse Yard La Charroterie London EC2R 7AS St Peter Port Guernsey GY1 3GF Premier Fund Managers Limited Registrars Eastgate Court Equiniti Limited High Street Aspect House Guildford Spencer Road Surrey GU1 3DE Lancing Tel: 01483 306090 West Sussex BN99 6DA Tel: 0871 384 2030 Auditors Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU END
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