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