TIDMDCL
RNS Number : 7833A
Dexion Commodities Limited
07 February 2011
Dexion Commodities Limited (the "Company")
December Net Asset Values
Ordinary Shares
The net asset values of the Company's Ordinary Shares as of 31
December 2010 are as follows:-
Share Class NAV MTD Performance YTD Performance
------------- ------------ ---------------- ----------------
GBP Shares 98.32 pence +3.08% +0.81%
------------- ------------ ---------------- ----------------
EUR Shares EUR 1.1861 +2.98% +0.65%
------------- ------------ ---------------- ----------------
US$ Shares US$ 1.6802 +3.11% +1.11%
------------- ------------ ---------------- ----------------
Redeemed Shares
The net asset value of the Company's Redemption Portfolio was
US$0.82M. This was attributed between Redeemed Share classes as
follows:-
Share Class NAV per Redeemed
Share
------------ -----------------
GBP Shares US$ 0.0218
------------ -----------------
EUR Shares US$ 0.0225
------------ -----------------
US$ Shares US$ 0.0223
------------ -----------------
These valuations, which have been prepared in good faith by the
Company's administrator, are for information purposes only and are
based on the unaudited estimated valuations supplied to the
Company's investment adviser by the administrators or managers of
the Company's underlying investments and such valuations may not be
considered independent or may be subject to potential conflicts of
interest. Both weekly manager estimates and monthly valuations may
be produced as at valuation dates which do not co-incide with
valuation dates for the Company, may be based on valuations
provided as of a significantly earlier date, may differ materially
from the actual value of the Company's portfolio and are unaudited
or may be subject to little verification or other due diligence and
may not comply with generally accepted accounting practices or
other generally accepted valuation principles. The Company's
investment adviser, investment manager and administrator may not
have sufficient information to confirm or review the completeness
or accuracy of information provided by those managers or
administrators of the Company's investments. In addition, those
entities may not provide estimates of the value of the underlying
funds in which the Company invests on a regular or timely basis or
at all with the result that the values of such investments may be
estimated by the investment manager. In the case of 2 of the
Company's 33 investments, where no such formal valuation has been
received by today's date, an estimated valuation prepared by the
Company's investment adviser or by the manager or administrator of
the underlying funds has been used. Certain other risk factors
which may be relevant to these valuations are set out in the
Company's prospectus dated 10 March 2006.
Net asset values for Redeemed Shares include only those costs
and expenses attributable to Redeemed Shares which have been
accrued as at the relevant NAV date.
Illiquid Investments
Illiquid Investments are defined as those Investments where a
manager can no longer meet the redemption terms set out in their
Operating Memorandum or are currently gated, suspended, in
liquidation or subject to other Settlement Obstructions, except for
partial settlements in which a small proportion is held back
pending the next annual audit.
Directors Fair Valuation Information As At Year Ended 31
December 2009
Investments in underlying funds which are not quoted on a
recognised stock exchange or other trading facility will be valued
at the NAVs provided by such entities or their administrators.
These values may be unaudited or may themselves be estimates. In
addition, these entities or their administrators may not provide
values at all or in a timely manner and, to the extent that values
are not available, those investments will be valued by the
Investment Adviser using valuation techniques appropriate to those
investments. In determining fair value, the Investment Adviser
takes into consideration, where applicable, the impact of
suspensions, of redemptions, liquidation proceedings, investments
in side pockets and other significant factors. Actual results may
differ from such estimates.
The Company's financial instruments were carried at fair value
in the annual Financial Statements of the Company for the year
ended 31 December 2009. Usually the fair value of the financial
instruments can be reliably determined with a reasonable range of
estimates. For certain other financial instruments including sales
amounts due from/to brokers, accounts payable and accrued expenses,
the carrying amounts approximate the fair value due to the
intermediate or short-term nature of these financial
instruments.
At 31 December 2009 the carrying value of hedge funds were
valued at the NAVs provided by underlying managers or their
administrators. The carrying amounts of derivative financial assets
and derivative financial liabilities were fair valued using
valuation techniques.
Continuing Portfolio Fair Value Adjustments For The Year Ended
31 December 2010
Following the Company's announcement on 23 December 2010
regarding liquidation proposals and a review of the Illiquid
Investments within the Continuing Portfolio the directors have
established a Fair Valuation Adjustment Policy to be applied to the
carrying value of each Illiquid Investment as at 31 December 2010
and thereafter.
Approximately 1.09 per cent. of the Continuing Portfolio (using
the final net asset values at 31 December 2010 prior to fair
valuation adjustments) comprises the Illiquid Investments, being
those Investments which are currently gated, suspended, in
liquidation or subject to other Settlement Obstructions.
By applying the fair value adjustments the aggregate value of
the Illiquid Investments has been reduced from US$839,321 to
US$260,287 as at 31 December 2010, a reduction of approximately 69
per cent. (a reduction of 0.75p per share). In the absence of
readily available information from third party sources on the
status of certain of those Illiquid Investments the directors have
consulted with the Investment Manager to establish a fair value of
these investments that reflect an estimate of the current value of
these investments. This should not be relied upon for any purpose.
It is unknown when a substantial part of those Illiquid Investments
can be realised or what amounts will be received upon such
realisation. Any change in circumstances or subsequent recovery of
amounts previously written off will be written back into the
valuation by the board after consultation with the Investment
Manager.
Redemption Portfolio
The directors of the Company have applied the same fair value
adjustment policy to those few holdings remaining within the
Redemption Portfolio.
Approximately 75 per cent. of the Redemption Portfolio (using
the final net asset values at 31 December 2010 prior to fair
valuation adjustments) comprises Illiquid Investments (as described
above).
By applying the fair value adjustments the aggregate value of
the Illiquid investments in the Redemption Portfolio has been
reduced from US$1,371,013 to US$,394,748 as at 31 December 2010, a
reduction of approximately 71%. The basis and associated risks of
the estimated current value is as described for the Continuing
Portfolio.
Subsequent to the application of this fair value adjustment
policy, the Redemption Portfolio is valued at GBP525,036 as at 31
December 2010 (broken down as follows: Investments GBP252,832, Cash
GBP193,087, Receivables GBP84,682 and Creditor Accruals
GBP5,565).
Fair Value Adjustment Policy
-- Cash - no adjustment
-- Illiquid Investments - written down by 50%
-- Investments in funds or vehicles in liquidation - written
down by 75%
Monthly Portfolio Review
Investment Adviser Portfolio Outlook
Commodity managers held bullish positions in December which
proved beneficial given commodity prices rallying significantly
into year end. Returns were fuelled either by fundamentals, as was
the case in the agricultural sector, or by a demand for holding
real assets resulting from the second round of quantitative easing.
Across the portfolio, each of the core sub-strategies contributed
strongly to performance. Looking into 2011, focus continues to be
on China and their measures to curb inflation and limit food
prices, as well as possible restrictions on speculators within
agricultural markets. In the US, the recent rally in natural gas
due to poor weather towards year end disguised the underlying
weakness caused by extensive supply side fundamentals.
Market Overview
Commodity Strategies:
Base Metals: +3.62%
Multi-strategy: +6.46%
Energy & Transportation: +1.85%
Agriculture & Livestock: +6.30%
Multi-strategy managers contributed to over half of the
portfolio's monthly return. One manager did well across all
commodity sub-strategies. Profits were generated in corn, soybeans
and cotton as well as cocoa, coffee and sugar. Precious metals
performed well with strong returns posted across the board. Returns
were also generated through positions in crude oil and within the
energy sector, and European power also did well. Other
multi-strategy managers also finished the year strongly, with
returns coming from a range of sub-strategies but with a bias to
outright long positions or call options. Despite price volatility,
agricultural markets trended higher as poor growing conditions and
increasing demand from developing countries served to further
reduce expected inventory levels in the coming crop year. The
latest forecast from the International Grains Council shows the
grain stocks of the main exporting countries at their lowest levels
since 2003-2004. Managers with significant grains exposure on their
books profited heavily from the upward moves. Base metals soared on
the back of rising demand and constrained supply. One manager took
advantage of this rally and the
positive sentiment towards equities to post strong returns for
the month. Two other managers also performed well through their
holdings in copper, which saw a strong rally throughout December.
After underperforming for much of the year, it was pleasing to see
energy focused managers contribute positively to performance.
Profits accrued from equity focused managers in shipping and
service stocks and also from dedicated natural gas traders. The
portfolio's best performer not only profited from strong equity
markets, but also from selected short positions and corporate
actions.
Environmental Strategies: +3.43%. The allocation to
environmental strategies provided a modest contribution over the
month. Within equity strategies, a global water long/short fund
posted strong gains whilst maintaining a well balanced portfolio of
long and short positions. Short positions were detrimental to
returns given the strength in equity markets, however good
performance from long positions in water infrastructure companies
helped the manager deliver a positive return. Additional gains were
generated from exposure to a carbon manager. Despite challenging
trading conditions within the carbon sector, the manager benefited
from upward re-valuations in the project book for post 2012
credits, which were initially marked at zero.
Other Strategies*: -65.85%
Asian Opportunities: -95.00%
Healthcare Opportunities: -74.77%
Special Situations: -0.71%
Emerging Markets Macro: -47.93%
*Remaining strategies that are being wound down following the
decision to re-profile the Company in July 2009.
Negative performance in Other Strategies was due to automatic
reductions in the values of illiquid assets and assets in
liquidation (as at 31 December 2010) in accordance with the
directors' Fair Valuation Adjustment Policy, which was set in light
of liquidation proposals highlighted in the Company's 23 December
2010 announcement.
Number of
% Allocation as Funds as Performance by Strategy
Strategy of 1 January of 1 January %
---------------- ---------------- -------------- --------------------------
December YTD
---------------- ---------------- -------------- -------------- ----------
Base Metals 15.5 3 3.62 19.21
---------------- ---------------- -------------- -------------- ----------
Multi-strategy 32.6 6 6.46 6.17
---------------- ---------------- -------------- -------------- ----------
Energy &
Transportation 32.2 10 1.85 -2.09
---------------- ---------------- -------------- -------------- ----------
Agriculture &
Livestock 13.3 2 6.30 18.35
---------------- ---------------- -------------- -------------- ----------
Environmental
Strategies 6.0 2 3.43 0.36
---------------- ---------------- -------------- -------------- ----------
Other
Strategies* 0.4 6 -65.85 -65.93
---------------- ---------------- -------------- -------------- ----------
Short-Term
Managed
Futures - - - -0.58
---------------- ---------------- -------------- -------------- ----------
Total 100 29
---------------- ---------------- -------------- -------------- ----------
Strategy returns are in US$ (except where annotated) and net of
underlying manager fees only, and not inclusive of Dexion
Commodities' fees and expenses.
* Remaining strategies that are being wound down following the
decision to re-profile the Company in July 2009.
Negative performance in Other Strategies was due to automatic
reductions in the values of illiquid assets and assets in
liquidation (as at 31 December 2010) in accordance with the
directors' Fair Valuation Adjustment Policy, which was set in light
of liquidation proposals highlighted in the Company's 23 December
2010 announcement.
Voting Rights and Capital
The Company's share capital consists of 41,233,649 GBP shares
(excluding treasury shares) with voting rights, 5,537,087 EUR
Shares (excluding treasury shares) and 2,719,786 US$ Shares
(excluding treasury shares) with voting rights. All Shareholders
have equal voting rights based on the number of Shares held.
Accordingly, the total number of voting rights in the Company is
49,490,522 and this figure may be used by shareholders as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in the Company under the FSA's Disclosure and Transparency
Rules.
Supplementary Information
Click on, or paste the following link into your web browser, to
view a full review of the Dexion Commodities Limited portfolio.
http://www.rns-pdf.londonstockexchange.com/rns/7833A_-2011-2-7.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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