TIDMARCL
RNS Number : 7246B
Altus Resource Capital Limited
23 February 2011
Altus Resource Capital Limited
Half-Yearly Financial Report
from 1 July 2010 to 31 December 2010 (Unaudited)
Altus Resource Capital Limited
SUMMARY INFORMATION
Company Overview
Altus Resource Capital Limited ("ARCL" or the "Company") is a
Guernsey authorised, closed-ended investment company incorporated
on 30 April 2009, which listed on the Specialist Fund Market of the
London Stock Exchange on 30 June 2009 and the Channel Islands Stock
Exchange on 22 December 2009.
The Company is managed by Altus Capital Limited (the "Investment
Manager") an FSA authorised and regulated wholly-owned subsidiary
of Altus Strategies Limited.
The Company issued 26,000,000 ordinary shares at GBP1.00 per
share on 30 June 2009 and a further 10,997,233 ordinary shares at
GBP1.33 per share on 22 December 2009. On 2 August 2010 a further
2,722,336 ordinary shares were issued at GBP1.40 per share.
Investment Objectives and Policy
The Company's objective is to realise capital growth from a
concentrated portfolio of junior resource equities and to generate
a significant capital return to shareholders.
The Company invests in companies engaged in the exploration,
development and/or mining of metals and minerals with a focus on
companies that operate in the gold sector. Portfolio companies will
be predominantly, but not exclusively, listed or quoted on either
UK markets or other recognised stock exchanges including the
Canadian and Australian markets. They will typically be capitalised
at less than GBP100 million at the time of the Company's IPO on 30
June 2009, or less than GBP250 million at the time of investment by
the Company.
Altus Resource Capital Limited
CHAIRMAN'S STATEMENT AND INTERIM MANAGEMENT REPORT
I have pleasure in presenting the Half-Yearly Financial Report
of the Company for the period between 1 July 2010 and 31 December
2010 (the "Period").
The Company has seen strong growth in its unaudited Net Asset
Value ("NAV") over the Period gaining 71.9% to GBP91.7 million
which equates to GBP2.31 per share and outperforming the gold price
and the major indices. Gold reached all-time highs during the
Period and closed up 14.3% and the FTSE Gold Mines Index and the
FTSE 350 Mining Index gained 16.3% and 46.2% respectively.
With the continued strength of gold and other commodity prices,
the outlook for the Company remains positive.
A description of the important events that have occurred during
the Period and their impact on the condensed set of financial
statements is included in the Investment Manager's Report on pages
4 to 8, and includes a description of the principal risks and
uncertainties, along with Note 14 in the financial statements.
Details of all related party transactions are given in Note 15.
Other than the information set out in this report, the Board is not
aware of any events during the period to 31 December 2010, which
would have had a material impact on the financial position of the
Company.
On behalf of the Board of Directors, I thank all shareholders
for their support.
Nick Falla
Chairman
Altus Resource Capital Limited
INVESTMENT MANAGER'S REPORT
The Company enjoyed a particularly strong second-half to 2010
delivering a return of 71.9% over the six month period and 143% in
the eighteen months since the Company's launch on 30 June 2009. The
Company's unaudited NAV on the 31st December 2010 was GBP91.7
million or GBP2.31 per share.
The Company continued to benefit from its strategy of making
selective investment in the junior resources sector. In general the
mining sector enjoyed a buoyant six months on the back of rising
commodity prices. The gold price hit an all-time intraday high of
US$1,431 on 7 December 2010 and closed the Period up 14.3% to
US$1,419 per ounce. Other commodities performed even more strongly
with copper also breaking new highs and closing the Period up 48.8%
at US$9,650 per tonne and zinc also closing up 38.9% to US$2,444
per tonne. The major indices tracked these commodities with the
FTSE Gold Mines Index returning 16.3% and the FTSE 350 Mining Index
closing up 46.2%.
At the end of the Period the Company held 29 resource equities,
a single commodity backed ETF and cash representing 3.4% of assets
under management.
Outlook
Despite the Company's strong performance, the Investment Manager
anticipates further significant growth over the next 12 to 24
months driven by:
1. continued strength of gold and other commodity prices;
2. active portfolio management ensuring new growth opportunities
are identified;
3. selected investments delivering growth through operational
success;
4. profit taking from, and reinvesting in, portfolio
companies;
5. further closing of the "value gap" that opened during the
08/09 financial crisis; and
6. increasing M&A activity in the sector as larger cap
companies seek to replenish their reserves and resources.
Altus Resource Capital Limited
INVESTMENT MANAGER'S REPORT (continued)
The key factors affecting the majority of commodities are, on
the one hand, continued strength of demand (particularly from China
and other emerging economies for industrial commodities but also
increasingly for gold) and, on the other hand, the paucity of
world-class discoveries over the last decade to satisfy this
growing demand. Despite the rebound in prices which occurred after
the financial crisis, on the basis that demand will remain robust
in 2011, steady or increasing prices are expected across the
majority of metals and minerals.
The Investment Manager recognises the potential risk that rising
inflation in China and other emerging economies will result in a
dampening of growth and demand for industrial metals (conversely
this would likely be a positive for the gold price). While
inflation is anticipated to remain at elevated levels, the Chinese
authorities have, through the use of interest rate and exchange
controls, successfully managed inflation in recent years. While
there are likely to be inflationary hikes going forward that dampen
demand for industrial metals, it is anticipated that these will be
relatively short-lived when considered against the longer-term
growth profile of the Chinese and other emerging economies.
Gold
The gold price has remained above the US$1,150 per ounce since
June 2010 and above US$1,000 per ounce since October 2009. The
Investment Manager anticipates continued strength in the gold price
over the next 18 to 24 months driven by the following factors:
-- 'Safe haven' investment demand driven by weakening
currencies, inflationary pressures and continued economic
uncertainty including the risks and implications of sovereign
defaults;
-- Central banks and institutional investors becoming net buyers
of gold;
-- Retail investment and jewellery demand increasingly driven
from Asia and the Middle East (in China, in particular, retail
investors are turning to gold as a hedge against inflation);
-- Supply-side pressures with too few, high-quality discoveries;
and
-- Continued political unrest in North Africa and the Middle
East.
Altus Resource Capital Limited
INVESTMENT MANAGER'S REPORT (continued)
The gold price is therefore expected to remain robust over the
next two years. While short term profit taking will create
volatility, continued investment demand and the lack of new
world-class discoveries is expected to push the gold price to new
highs over the longer term.
Base Metals
The weighting within the portfolio towards base metals, and in
particular copper and zinc, has been increased in recent months
reflecting the Investment Manager's view that the metal prices will
remain strong during 2011. This view is supported by the continued
demand for the metals from China (which accounts for close to 40%
of global demand) and other emerging economies and the anticipated
shortfall in supply as major mines forecast decreasing production
and with limited new production coming on stream within the next
two to three years.
Energy Minerals
The price of coal (both thermal and coking) have risen strongly
during 2010 and seen further gains following the devastating floods
in Australia which accounts for approximately two-thirds of global
exports of coking coal and is also the second largest global
exporter of thermal coal. The Investment Manager's expectation is
that the impact of the floods will be longer and more severe than
has currently been anticipated by the market and therefore we
expect coal (and particularly coking coal) prices to remain at
elevated levels throughout much of 2011.
The price of uranium also continues to climb (both spot and
long-term contract prices) ahead of the anticipated 2012/ 2013
deficit of supply. The Investment Manager is cautiously optimistic
that this strength in the uranium price will continue through 2011
and into 2012 driven by this deficit, increasing demand for clean
energy and against the backdrop of rising energy prices
generally.
Altus Resource Capital Limited
INVESTMENT MANAGER'S REPORT (continued)
Bulk Minerals
The Company's exposure to bulk minerals is dominated by its
holding in Kenmare Resources, the London-listed mineral sands
producer. Kenmare's main product is ilmenite which is primarily
used in pigments with zircon as a secondary product which is used
primarily in ceramics and refractory materials. Both ilmenite and
zircon have seen significant price rises with the industry
commentators calling for further 50% gains in both over the next
two to three years as prices are only now reaching levels
sufficient to justify the development of new mines.
Platinum Group Metals (PGMs)
With increasing demand for PGMs driven by auto-catalysts and
production dominated by South Africa, which accounts for
approximately 70% of global supply but which is facing dramatically
increasing energy costs and labour issues, the Investment Manager
anticipates continued strength in PGM prices. The current
difficulties faced by miners in South Africa that are creating the
supply-side risk make selecting the best investment situation
problematic. The Company has exposure through Eastern Platinum, a
growing junior producer with a very significant resource base and
directly to the commodity through an ETF.
Other Commodities
Other commodities that continued to capture the headlines during
the second half of 2010 include rare earth elements (REEs). REEs,
which are essential for many emerging technologies including the
permanent magnets used in electric and hybrid cars, have seen very
significant price gains during 2010. This price gain has again been
influenced by China which controls over 90% of supply of REEs and
has been reducing export quotas. The Chinese have also been
investing directly in the more advanced rare earth projects
globally and look set to maintain their monopoly on this
increasingly important mineral group.
Altus Resource Capital Limited
INVESTMENT MANAGER'S REPORT (continued)
ARC reduced its exposure to diamonds during 2010 although this
is an increasingly interesting segment of the market. Diamonds are
the ultimate consumer luxury good and therefore offer excellent
leverage to a global economic recovery. Further, it is a segment of
the market with perhaps the most marked shortage of new projects of
sufficient scale to meet any increase in demand.
Merger and Acquisition Activity
M&A activity, particularly between mid-caps and majors,
continues to drive significant value throughout the sector. In the
gold sector during the Period, Goldcorp paid US$3.6 billion for the
resource definition stage company, Andean Resources, valuing it at
over US$1,000 per ounce and Kinross acquired Redback Mining for
US$7.1 billion. Other significant transactions included the
acquisition of Citadel Resources by copper producer Equinox
Minerals for US$1.2 billion and Russian nuclear holding company,
Rosatom's US$1.2 billion bid for Mantra Resources.
M&A activity is expected to continue and spread to the
junior market as mid-tiers and majors seek to replenish their
depleting reserves.
Principal Risks and Uncertainties
The Company is focused on investing in junior resources
companies and is therefore subject to the risks associated with
concentrating its investments in this asset class. The performance
of the Company will be affected by the performance of the
securities of investee companies and is thus subject to the sharp
price volatility of shares of companies principally engaged in
activities related to metals and minerals. Historically the prices
of the commodities have fluctuated significantly and are affected
by numerous factors which the Company cannot predict or control.
Political and economic conditions in metal and mineral producing
countries may have a direct effect on the mining and production of
these metals and minerals, and consequently, on their prices. In
addition, the Company has invested, and will continue to invest in
companies with assets or operations in emerging or developing
markets and will consequently be exposed to various increased risks
associated with investing in such markets.
Altus Resource Capital Limited
INVESTMENT MANAGER'S REPORT (continued)
Investment allocation
At 31 December 2010, the Company's assets were allocated in the
following approximate proportions:
Top Ten Holdings % AUM
Adamus Resources Ltd 8.2%
Perseus Mining Ltd 6.6%
Minera Andes Inc 5.0%
Kenmare Resources Plc 4.8%
Griffin Mining Limited 4.7%
European Goldfields Ltd 4.5%
Minera IRL Ltd 4.4%
Eastern Platinum Ltd 4.0%
Baja Mining Corp 3.9%
Teranga Gold Corp 3.8%
Asset Allocation by Development Stage % AUM
Production 33.8%
Development 39.4%
Exploration 21.7%
ETF 1.7%
Cash 3.4%
Asset Allocation by Geography % AUM
Africa 47.2%
Europe 10.3%
North America 7.6%
South America 14.8%
Central Asia & Russia 3.6%
South East Asia 5.6%
Australasia 5.7%
Other (ETFs) 1.7%
Cash 3.4%
Asset Allocation by Commodity % AUM
Gold (& Silver) 63.3%
Bulk Minerals 5.9%
Base Metals 12.1%
Energy Minerals 6.2%
Platinum Group Metals 5.6%
Diamonds 0.3%
Other 3.1%
Cash 3.4%
Source: Altus Capital Limited
Altus Resource Capital Limited
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Board of Directors jointly and severally confirm that, to
the best of their knowledge:
(a) The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company; and
(b) This Interim Management Report includes or incorporates by
reference:
(i) an indication of important events that have occurred during
the first six months of the financial year and their impact on the
financial statements;
(ii) a description of the principal risks and uncertainties for
the remaining six months of the financial year;
(iii) confirmation that there were no related party transactions
in the first six months of the current financial year that have
materially affected the financial position or the performance of
the Company during that period; and
(iv) changes in the related parties transactions described in
the last annual report that could have a material effect on the
financial position or performance of the Company in the first six
months of the current financial year.
Signed on behalf of the Board of Directors on 22 February
2011
Nick Falla Robert Milroy
Chairman Director
Altus Resource Capital Limited
DIRECTORS
Nicholas J Falla: Chairman (non-executive)
Nicholas Falla has had thirty years of experience in the finance
industry including fourteen years of experience in the commodity
markets. He is currently the Managing Director of Xocoatl Limited a
private investment company taking strategic proprietary positions
in the commodities markets, Finance Director of Pharma E Limited, a
private pharmaceutical supplier, and non-executive director of
Close Assets Funds Limited a closed ended investment company which
provides a structured investment in the equities markets. Nick was
senior non-executive director of MW Tops Limited, a closed ended
investment company listed on the London Stock Exchange which
entered into voluntary liquidation in September 2010, whilst
transferring its assets into another investment vehicle. From
1993-2000 Nick worked as the financial controller for Bank of
Bermuda (Guernsey) Limited and from 2000 to 2002 he was their
regional controller for Europe. In addition he has acted as an
interim financial director for the Guernsey banking operation of
Credit Suisse Guernsey Limited and has worked on various finance
and accounting based projects with companies such as KPMG (Channel
Islands) and the Blenheim Group. Nick trained as an accountant with
Turquands Barton Mayhew & Co in Guernsey.
David Gelber: Director (non-executive)
David Gelber began his career in trading in 1976 when he joined
Citibank in London. He has since held a variety of senior trading
positions, in derivatives in particular, working for Citibank,
Chemical Bank and HSBC, where he was Chief Operating Officer of
HSBC Global Markets. In 1994 he joined ICAP, an inter-dealer
broker, as COO and assisted in implementing two mergers, first with
Exco Plc and then with Garban Plc. Furthermore, David currently
serves as a non-executive director on the board of eSecLending,
GlobeOp Financial Services SA, MF Global Holdings in New York and
Walker Crips Group PLC. David is also currently a non executive
director of DDCAP Limited, a leading arranger of Islamic banking
transactions and of Exotix Limited, an investment banking boutique
specialising in illiquid bonds, loans, equities, structured
finance, capital raising and asset management. He is also currently
a non-executive director of Intercapital Private Group Limited, a
holding company invested in ICAP plc and CityIndex Limited, a
spread-betting and contracts for difference provider; David has a
B.Sc in statistics and law from the University of Jerusalem and an
M.Sc in computer science from the University of London.
Altus Resource Capital Limited
DIRECTORS (continued)
Robert Milroy: Director (non-executive)
Robert Milroy is a director of a number of public and private
companies. He has over 35 years experience in the investment and
mining and petroleum industries having participated in various
mining, oil exploration projects and financings in Chile, Peru,
Argentina, Ghana, Canada, USA, Mexico, Australia and Greenland. In
addition he was the Managing Director of Eagle Drilling Inc., a
firm that specialised in hard rock core drilling in Central and
Western Africa. Robert is also a noted speaker and financial
author, having written various editions of the Standard &
Poor's Guide to Offshore Investment Funds. Robert graduated with a
Bachelor of Commerce (Honours) from the University of Manitoba.
David Netherway (non-independent non-executive)
David Netherway is a mining engineer with over 30 years of
experience in the mining industry and was most recently the CEO of
Shield Mining Ltd., an Australian listed exploration company, which
has recently been taken over by Gryphon Minerals Ltd. David has
joined the Gryphon Board as part of the takeover. David was
involved in the construction and development of the Iduapriem,
Siguiri and Kiniero gold mines in West Africa and has mining
experience in Africa, Australia, China, Canada, India and the
Former Soviet Union. David served as the CEO of Toronto listed
Afcan Mining Corporation; a China focused gold mining company that
was sold to Eldorado Gold in 2005. David has also held senior
management positions in a number of gold mining companies,
including Golden Shamrock Mines, Ashanti Goldfields and Semafo Inc.
He is currently the Chairman of GMA Resources plc and also the
Chairman of African Aura Mining Inc. David is the current
non-executive Chairman of Altus Strategies and is thus not
considered an independent director of the Company.
Altus Resource Capital Limited
STATEMENT OF COMPREHENSIVE INCOME
for the period from 1 July 2010 to 31 December 2010
30 Apr
1 Jul 2010 2009 to
to 31 Dec 31 Dec
2010 2009
Notes GBP GBP
Net movement in unrealised appreciation
on investments 7 36,482,672 8,446,711
Realised gain on investments 7 10,605,682 1,506,766
Operating income 3 169,345 20,872
Operating expenses 4 (8,955,327) (1,128,006)
------------ ------------
Net gain for the period attributable
to shareholders 38,302,372 8,846,343
------------ ------------
Earnings per ordinary share for
the period
- Basic and Diluted 6 0.98 0.33
------------ ------------
In arriving at the results for the financial Period, all amounts
above relate to continuing operations.
There is no other comprehensive income for the Period.
Altus Resource Capital Limited
STATEMENT OF FINANCIAL POSITION
as at 31 December 2010
31 Dec
2010 30 Jun 2010
Notes GBP GBP
NON-CURRENT ASSETS
Financial assets designated as
at fair value through profit or
loss 7 97,846,608 47,389,549
CURRENT ASSETS
Cash and cash equivalents 3,932,934 3,716,991
Trade and other receivables 8 737,174 30,376
------------ ------------
4,670,108 3,747,367
TOTAL ASSETS 102,516,716 51,136,916
------------ ------------
CURRENT LIABILITIES
Trade and other payables 9 1,213,933 247,599
------------ ------------
1,213,933 247,599
NON-CURRENT LIABILITIES
Payables - due after one year 10 9,615,098 1,206,471
TOTAL LIABILITIES 10,829,031 1,454,069
------------ ------------
NET ASSETS 91,687,685 49,682,847
------------ ------------
EQUITY
Share premium 12 42,602,254 38,899,788
Revenue reserve 49,085,431 10,783,059
------------ ------------
TOTAL EQUITY 91,687,685 49,682,847
------------ ------------
Pence Pence
Net asset value per ordinary share
based on 39,719,569 (30 Jun 2010:
36,997,233) shares in issue 230.83 134.28
------------ ------------
The unaudited financial statements were approved by the Board on
22 February 2011.
Nick Falla Robert Milroy
Chairman Director
Altus Resource Capital Limited
STATEMENT OF CASH FLOWS
For the period from 1 July 2010 to 31 December 2010
1 Jul 2010 30 Apr 2009
to 31 Dec to 31 Dec
2010 2009
Notes GBP GBP
OPERATING ACTIVITIES
Net gain for the Period attributable
to shareholders 38,302,372 8,846,343
Unrealised appreciation on investments 7 (36,482,672) (8,446,711)
Interest received (169,345) (20,872)
Increase in payables 9,374,962 1,878,905
Increase in receivables (706,798) (8,786)
Realised gains on investments 7 (10,605,682) (1,506,766)
------------- -------------
NET CASH (OUTFLOW) / INFLOW FROM
OPERATING ACTIVITIES (287,163) 742,113
------------- -------------
INVESTING ACTIVITIES
Interest received 169,345 20,872
Purchase of investments 7 (36,946,176) (30,185,090)
Sale of investments 7 33,577,471 5,265,966
------------- -------------
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (3,199,360) (24,898,252)
------------- -------------
FINANCING ACTIVITIES
Proceeds from issue of shares 3,818,894 40,667,020
Issue costs 12 (116,428) (1,767,232)
------------- -------------
NET CASH INFLOW FROM FINANCING
ACTIVITIES 3,702,466 38,899,788
------------- -------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,716,991 -
Increase in cash and cash equivalents 215,943 14,743,649
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD 3,932,934 14,743,649
------------- -------------
Altus Resource Capital Limited
STATEMENT OF CHANGES IN EQUITY
For the period from 1 July 2010 to 31 December 2010
Share Accumulated
Capital Share Premium Profits Total
GBP GBP GBP GBP
Balance as at 1 July
2010 - 38,899,788 10,783,059 49,682,847
Net gain for the
Period - - 38,302,372 38,302,372
Share issue proceeds - 3,818,894 - 3,818,894
Issue costs - (116,428) - (116,428)
---------- -------------- ------------ -----------
Balance as at 31
December 2010 - 42,602,254 49,085,431 91,687,685
---------- -------------- ------------ -----------
Share Accumulated
Capital Share Premium Profits Total
GBP GBP GBP GBP
Balance as at 30
April 2009 - - - -
Net gain for the
Period - - 10,783,059 10,783,059
Share issue proceeds - 40,667,020 - 40,667,020
Issue costs - (1,767,232) - (1,767,232)
---------- -------------- ------------ ------------
Balance as at 30 June
2010 - 38,899,788 10,783,059 49,682,847
---------- -------------- ------------ ------------
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS
for the period from 1 July 2010 to 31 December 2010
1 GENERAL INFORMATION
Altus Resource Capital Limited (the "Company") is a closed-ended
investment company incorporated in Guernsey on 30 April 2009, which
listed on the Specialist Fund Market of the London Stock Exchange
on 30 June 2009 and on the Channel Islands Stock Exchange on 22
December 2009.
The principal activity of the Company is to realise capital
growth from a concentrated portfolio of junior resource equities
and to generate a significant capital return to shareholders.
2 ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are
as follows:
(a) Basis of Preparation
The financial statements have been prepared in conformity with
International Financial Reporting Standards ("IFRS") as adopted by
the EU which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC"), together
with applicable Guernsey law. The financial statements have been
prepared on a historical cost basis except for the measurement at
fair value of certain financial instruments.
The following Standards or Interpretations that are expected to
affect the Company have been issued but not yet adopted by the
Company as shown below. Other Standards or Interpretations issued
by the IASB and the IFRIC are not expected to affect the
Company:
IFRS 7 Financial Instruments: Disclosures - Amendments enhancing
disclosures about transfer of financial assets effective for annual
periods beginning on or after 1 July 2011.
IFRS 9 Financial Instruments - Classification and Measurement
(revised November 2009) effective for annual periods beginning on
or after 1 January 2013.
IAS 24 Related Party Disclosures - Revised definition of related
parties (revised November 2009) effective for annual periods
beginning on or after 1 January 2011.
The Directors have considered the above and are of the opinion
that these Standards and Interpretations are not expected to have
an impact on the Company's financial statements except for the
presentation of additional disclosures and changes to the
presentation of components of the financial statements. These items
will be applied in the first financial period for which they are
required.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
2 ACCOUNTING POLICIES (continued)
(b) Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Directors
believe the Company is well placed to manage its business risks
successfully despite the current economic climate. Accordingly, the
Directors have adopted the going concern basis in preparing the
financial information.
(c) Taxation
The Company has been granted exemption under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989 from Guernsey Income
Tax, and is charged an annual fee of GBP600.
(d) Expenses
All expenses are accounted for on an accruals basis.
(e) Interest income
Interest income is accounted for on an accruals basis.
(f) Cash and cash equivalents
Cash at bank and short term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits and highly liquid investments readily
convertible to known amounts of cash and subject to insignificant
risk of changes in value. For the purposes of the Statement of Cash
Flows, cash and cash equivalents consist of cash and deposits at
bank.
(g) Share issue costs
The Share issue costs borne by the Company are recognised in the
Statement of Changes in Equity, as the Company's Ordinary Shares
have no fixed redemption date.
(h) Investments
All investments and derivative financial instruments have been
designated as financial assets "at fair value through profit and
loss". Investments are initially recognised on the date of purchase
at cost, being the fair value of the consideration given, excluding
transaction costs associated with the investment. After initial
recognition, investments are measured at fair value, with
unrealised gains and losses on investments and impairment of
investments recognised in the Statement of Comprehensive Income.
Commissions paid on the sale or purchases of investments are
recognised in the Statement of Comprehensive Income as
incurred.
Fair value is the amount for which the financial instruments
could be exchanged, or a liability settled, between knowledgeable
willing parties in an arms length transaction. Fair value also
reflects the credit quality of the issuers of the financial
instruments.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
2 ACCOUNTING POLICIES (continued)
(h) Investments (continued)
For investments actively traded in organised financial markets,
fair value is determined by reference to Stock Exchange quoted
market bid prices as at the close of business on the reporting
date. If no quoted market bid price is available as at the close of
business on the reporting date, the last available market bid price
is used.
Valuations of unquoted trade investments are based on valuations
provided to the Company by Altus Capital Limited (the "Investment
Manager"). These valuations are intended to be an indication of the
fair value of those investments, using valuation techniques
designed to reflect the best estimation of the price at which they
could be sold, even though there is no guarantee that a willing
buyer might be found if the Company chose to sell the relevant
investment. The indicative fair values of the investments are based
on an approximation of the market value of the investments. As the
investments are not traded in an active market, the indicative fair
value is determined by using valuation techniques. The Investment
Manager uses a variety of methods and makes assumptions that are
based on market conditions existing at the reporting date.
Different assumptions regarding these factors, combined with
different valuation techniques and models used, could lead to
different valuations of the financial instruments by different
parties.
(i) Trade date accounting
All "regular way" purchases and sales of financial assets are
recognised on the "trade date", i.e. the date that the entity
commits to purchase or sell the asset. Regular way purchases or
sales are purchases or sales of financial assets that require
delivery of the asset within the time frame generally established
by regulations or convention in the market place.
(j) Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business and
operates solely from Guernsey, therefore no segmental reporting is
provided.
3 OPERATING INCOME
1 Jul 2010 30 Apr 2009
to 31 Dec to 31 Dec
2010 2010
GBP GBP
Bank interest 36,778 20,872
Loan interest income 24,750 -
Sundry income 107,817 -
----------- ------------
169,345 20,872
----------- ------------
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
4 OPERATING EXPENSES
1 Jul 2010 30 Apr 2009
to 31 Dec to 31 Dec
2010 2009
GBP GBP
Company formation - 28,600
Investment Manager's fee 342,080 97,337
Performance fees 8,408,628 761,004
Accountancy fees 3,024 1,512
Administrator's fee 25,445 21,754
Registrar's fee 3,024 2,631
Directors' fees 33,629 26,088
Custody fees 12,617 1,260
Audit fees 15,074 5,041
Directors' and Officers' insurance 2,722 7,360
Annual fees 8,906 3,674
Printing and stationery 756 756
Bank interest and charges 4,161 5,965
Commissions paid 89,456 57,749
Corporate and Shareholder
Adviser fees 61,291 29,201
Legal and professional fees - 554
Sundry costs 59,727 6,093
(Profit) / loss on foreign
exchange (115,213) 71,427
----------- ------------
Net operating expenses for
the Period 8,955,327 1,128,006
----------- ------------
5 DIRECTORS' REMUNERATION
The Directors are paid GBP15,000 per annum. In addition to
GBP15,000 per annum, Nicholas Falla receives an additional fee of
GBP3,750 as Chairman and Robert Milroy receives an additional fee
of GBP3,000 as Chairman of the audit committee.
6 EARNINGS PER SHARE
Earnings per Share is calculated by dividing the net gain for
the Period attributable to holders of ordinary shares
("Shareholders") of (GBP38,302,372 (31 Dec 2009: GBP8,846,343)) by
the weighted average number of ordinary shares in issue during the
period (39,231,324 (31 Dec 2009: 26,594,445)). There are no
dilutive instruments and therefore basic and diluted earnings per
ordinary share are identical.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
7 INVESTMENTS
FINANCIAL ASSETS DESIGNATED
AS AT FAIR VALUE THROUGH PROFIT TOTAL TOTAL
OR LOSS 31 Dec 2010 30 Jun 2010
GBP GBP
Opening portfolio cost 40,901,786 -
Additions - cost 36,946,176 60,107,517
Sales (33,577,471) (25,306,060)
Unrealised appreciation on
valuation brought forward 6,487,763 -
Realised gain on investments 10,605,682 6,100,329
Unrealised appreciation on
valuation for the period 36,482,672 6,487,763
------------- -------------
Closing valuation 97,846,608 47,389,549
------------- -------------
Unrealised appreciation on
valuation carried forward 42,970,435 6,487,763
------------- -------------
Investments held by the Company have been classified as Level 1,
for those investments that are quoted and are valued using quoted
market bid prices and Level 2, for those unquoted investments that
are valued using standard modelling techniques by the Investment
Manager using observable inputs. This is in accordance with the
fair value hierarchy.
Details of the value of each classification are listed in the
table below. Values are based on the market value of the
investments as at the reporting date:
Market Value Market Value
31 Dec 2010 30 Jun 2010
GBP GBP
Level 1 94,780,084 44,503,981
Level 2 3,066,524 2,885,568
Total 97,846,608 47,389,549
------------- -------------
There have been no transfers between Level 1 and Level 2 of the
fair value hierarchy during the Period under review.
8 TRADE AND OTHER RECEIVABLES
31 Dec 2010 30 Jun 2010
GBP GBP
Prepayments 2,027 9,210
Broker debtors 735,147 21,166
------------ ------------
737,174 30,376
------------ ------------
The above carrying value of receivables is equivalent to its
fair value.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
9 TRADE AND OTHER PAYABLES
(amounts falling due within
one year) 31 Dec 2010 30 Jun 2010
GBP GBP
Accrued expenses 243,354 109,475
Broker creditors 970,579 138,124
1,213,933 247,599
------------ ------------
The above carrying value of payables is equivalent to its fair
value.
10 PAYABLES
(amounts falling due after
one year) 31 Dec 2010 30 Jun 2010
GBP GBP
Accrued expenses 9,615,098 1,206,471
------------ ------------
9,615,098 1,206,471
------------ ------------
The above carrying value of payables is equivalent to its fair
value.
11 SHARE CAPITAL
Authorised SHARES GBP
Unlimited number of Shares Unlimited -
of no par value
----------- ----
Issued
Date of issue SHARES GBP
29 June 2009 26,000,000 -
21 December 2009 10,997,233 -
----------- ----
Ordinary shares in issue as 36,997,233 -
at 30 June 2010
3 August 2010 2,722,336 -
Ordinary shares in issue as 39,719,569 -
at 31 December 2010
----------- ----
Shareholders are entitled to receive, and participate in, any
dividends out of income; other distributions of the Company
available for such purposes and resolved to be distributed in
respect of any accounting period; or other income or right to
participate therein.
On a winding up, Shareholders are entitled to the surplus assets
remaining after payment of all the creditors of the Company.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
11 SHARE CAPITAL (continued)
Shareholders also have the right to receive notice of and to
attend, speak and vote at general meetings of the Company and each
Member being present in person or by proxy or by a duly authorised
representative at a meeting shall upon a show of hands have one
vote and upon a poll each such holder present in person or by proxy
or by a duly authorised representative shall have one vote in
respect of every ordinary share held by him.
12 SHARE PREMIUM
GBP
Premium on shares issued 29 June 2009 26,000,000
Premium on shares issued 21 December
2009 14,667,020
Issue costs (1,767,232)
------------
Share premium as at 30 June 2010 38,899,788
Premium on shares issued 3 August 2010 3,818,894
Issue costs (116,428)
Share premium as at 31 December 2010 42,602,254
------------
Under IAS 32 'Financial Instruments: Presentation', transaction
costs of an equity transaction are accounted for as a deduction
from equity to the extent they are incremental costs directly
attributable to the equity transaction that otherwise would have
been avoided.
13 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the
Company's operations; and
(b) Quoted and unquoted investment securities.
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Company's financial instruments
are market price risk, credit risk, liquidity risk, interest rate
risk, foreign exchange risk and capital management risk. The Board
regularly review and agrees policies for managing each of these
risks and these are summarised below:
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(continued)
(a) Market Price Risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held. It represents the potential
loss the Company might suffer through holding market positions in
the face of price movements. The Investment Manager actively
monitors market prices and reports to the Board as to the
appropriateness of the prices used for valuation purposes. A list
of the top 10 investments held by the Company is shown in the
Schedule of Top 10 Investments on page 30.
If the value of the Company's investment portfolio were to
increase by 30%, it would represent a gain of GBP29,353,982 (30 Jun
2010: GBP14,216,865). This would cause the net asset value of the
Company to rise by 32.02% (30 Jun 2010: 28.62%).
If the value of the Company's investment portfolio were to
decrease by 30%, it would represent a decrease of GBP29,353,982 (30
Jun 2010: GBP14,216,865). This would cause the net asset value of
the Company to fall by 32.02% (30 Jun 2010: 28.62%).
(b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company. The Directors receive financial information on a
regular basis which is used to identify and monitor risk.
It is Company policy not to invest more than 20% of the gross
assets of the Company in the securities of any one company or group
at the time the investment is made.
The Company has no significant concentration of credit risk,
with exposure spread over a large number of investments. At 31
December 2010 the Company's largest exposure to a single investment
was GBP8,348,734 (30 Jun 2010: GBP4,004,066), which represents
8.53% (30 Jun 2010: 8.45%) of the total market value of the
Company's investments.
Investors should be aware that the prospective returns to
Shareholders mirror the returns under the investments held or
entered into by the Company and that any default by an issuer of
any such investment held by the Company would have a consequential
adverse effect on the ability of the Company to pay some or all of
the entitlement to Shareholders. Such a default might, for example,
arise on the insolvency of an issuer of an investment.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(continued)
(b) Credit Risk (continued)
The Company's financial assets exposed to credit risk are as
follows:
31 Dec
2010 30 Jun 2010
GBP GBP
Investments in equities / warrants
/ loan notes 97,846,608 47,389,549
Cash and cash equivalents 3,932,934 3,716,991
Trade and other receivables 737,174 30,376
------------ ------------
102,516,716 51,136,916
------------ ------------
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is limited because
the counterparties are banks with high credit ratings assigned by
international credit-rating agencies. The Company monitors the
placement of cash balances on an ongoing basis.
The Company invests its cash and cash equivalents with Royal
Bank of Canada (Channel Islands) Limited and Barclays Private
Clients International Limited.
The investments of the Company are held in custody by Anson
Custody Limited or Royal Bank of Canada (Channel Islands) Limited.
Bankruptcy or insolvency of the Custodians may cause the Company's
rights with respect to investments held by the Custodian to be
delayed. Investments held with Anson Custody Limited are held in a
Crest account maintained by Anson Registrars Limited in a
sub-account designated exclusively for the Company. This ensures
that the investments are ring fenced and will be protected should
Anson Custody Limited become bankrupt or insolvent.
(c) Liquidity Risk
Liquidity risk is the risk that the Company will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments. The Company's main financial commitment is
its ongoing operating expenses.
The Investment Manager ensures that the Company has sufficient
liquid resources available to fulfil its operational plans and to
meet its financial obligations as they fall due.
The table below details the residual contractual maturities of
financial liabilities:
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(continued)
(c) Liquidity Risk
As at 31 December 2010 1-3 months Over 1 year
GBP GBP
Accrued expenses 243,354 9,615,098
Broker creditors 970,579 -
----------- ------------
1,213,933 9,615,098
----------- ------------
(d) Interest Rate Risk
The Company holds cash in several bank accounts, the return on
which is subject to fluctuations in market interest rates.
Other than cash and cash equivalents, none of the assets or
liabilities of the Company, attract or incur interest.
The following table details the Company's exposure to interest
rate risks:
Fixed
Floating 3 months
As at Less than - Non-interest
31 December 2010: 1 month 6 months bearing Total
GBP GBP GBP GBP
Assets
Designated as at fair
value through profit or
loss on initial
recognition:
Investments - - 97,846,608 97,846,608
Loans and receivables
Prepayments - - 2,027 2,027
Broker debtors - - 735,147 735,147
Cash and cash
equivalents 3,932,934 - 3,932,934
----------- ---------- ------------- ------------
Total Assets 3,932,934 - 98,583,782 102,516,716
----------- ---------- ------------- ------------
Liabilities
Financial liabilities
measured at amortised
cost:
Accrued expenses - - 9,858,452 9,858,452
Broker creditors - - 970,579 970,579
----------- ---------- ------------- ------------
Total Liabilities - - 10,827,031 10,829,031
----------- ---------- ------------- ------------
Total interest 3,932,934 -
sensitivity gap
----------- ----------
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(continued)
(d) Interest Rate Risk (continued)
Interest rate sensitivity
If interest rates had been 25 basis points higher and all other
variables were held constant, the Company's net gain attributable
to Shareholders for the period ended 31 December 2010 would have
increased by approximately GBP4,916 (30 Jun 2010: GBP9,292) or
0.01% (30 Jun 2010: 0.02%) of Net Assets due to an increase in the
amount of interest receivable on the bank balances.
If interest rates had been 25 basis points lower and all other
variables were held constant, the Company's net gain attributable
to Shareholders for the period ended 31 December 2010 would have
decreased by approximately GBP4,916 (30 Jun 2010: GBP9,292) or
0.01% (30 Jun 2010: 0.01%) of Net Assets due to a decrease in the
amount of interest receivable on the bank balances.
(e) Foreign Exchange Risk
A substantial proportion of the Company's portfolio is invested
in overseas securities and movements in exchange rates can
significantly affect their Sterling value. The Company does not
normally hedge against foreign currency movements affecting the
value of the investment portfolio, but takes account of this risk
when making investment decisions.
The Company undertakes certain transactions denominated in
foreign currencies. Hence, exposures to exchange rate fluctuations
arise. Exchange rate exposures are managed by minimising the amount
of foreign currency held at any one time.
The carrying amounts of the Company's foreign currency
denominated monetary assets at the reporting date are as
follows:
GBP
Australian Dollar 2,056,861
Canadian Dollar 437,444
US Dollar 9,897
----------
2,504,202
----------
(f) Capital Management
The investment objective of the Company is to provide
Shareholders with attractive long term returns, expected to be in
the form of capital, through a diversified portfolio.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(continued)
(f) Capital Management (continued)
As the Company's ordinary shares are traded on the Specialist
Fund Market of the London Stock Exchange ("SFM"), the ordinary
shares may trade at a discount to their Net Asset Value per share
on occasion. However, in structuring the Company, the Directors
have given detailed consideration to the discount risk and how this
may be managed.
The Company monitors capital on the basis of the carrying amount
of equity as presented on the face of the statement of financial
position.
15 RELATED PARTY TRANSACTIONS AND DIRECTORS BENEFICIAL
INTERESTS
The Company is managed by the Investment Manager, a wholly-owned
FSA authorised and regulated subsidiary of Altus Strategies
Limited. Altus Strategies Limited owns 150,000 ordinary shares
(0.38%) in the Company.
The Director David Netherway is a non-executive chairman of
Altus Strategies Limited, which as mentioned above, owns 150,000
shares (0.38%) in Altus Resource Capital Limited. David Netherway
is also a director of GMA Resources, whose loan stock is invested
in by the Company during the current and previous periods. The
investment in GMA Resources was disposed of before the reporting
date.
The Director Nick Falla holds 20,000 shares (0.05%) in the
Company.
The Director David Gelber holds 50,000 shares (0.13%) in the
Company. This is held as part of a nominee trust holding in the
Company.
The Director Robert Milroy holds 20,000 shares (0.05%) in the
Company.
Under the Investment Management Agreement, the Investment
Manager is entitled to receive fees of, the greater of 0.85% per
annum of the Company's Net Asset Value or GBP150,000 per annum.
During the Period the Company incurred GBP342,080 of fees, of which
GBP196,439 was outstanding at the Period end as shown in accrued
expenses.
During the Period, the Company was charged travel expenses
totalling GBP48,065 by the Investment Manager.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
15 RELATED PARTY TRANSACTIONS AND DIRECTORS BENEFICIAL INTERESTS
(continued)
The Investment Manager is also entitled to receive a performance
fee (the "Performance Fee"). The first component of the Performance
Fee will be calculated for the first time in respect of the
financial accounting period first ending following the second
anniversary of the date of Admission. The fee is equal to 20% of
the excess of the NAV per Share as at the end of the financial
accounting period (adjusted to account for dividends and returns of
capital paid out during the period and in respect of which the
Investment Manager has been paid or is to be paid the second
component of the Performance Fee) over the basic performance
hurdle, this being an amount equal to the Issue Price increased by
10% of the Issue Price per annum up to the end of the relevant
performance period. Thereafter this fee shall be paid on an annual
basis in respect of each financial period subject to the basic
performance hurdle and a high watermark having been exceeded. The
high watermark is the NAV at the end of the financial period in
respect of which the last Performance Fee was paid. If, however,
the high watermark is not exceeded for any consecutive period of
three years it shall be re-based to a value equal to the NAV as at
the end of the third financial period. The basic performance
hurdle, as described above, must however still be exceeded in order
for this
component of the performance fee to be payable.
The first component of the Performance Fee will be paid on a per
share basis, multiplied by the time weighted average of the number
of shares in issue in the relevant performance period (or since
Admission in the first performance period). In the event that there
is a further issue of shares, a redemption of shares or other
capital reorganisation of the Company, the calculation of the
Performance Fee will be adjusted appropriately.
The second component of the Performance Fee is an amount equal
to 20% of the sum of all dividends, distributions and other returns
of capital paid out to Shareholders during the relevant performance
period (but excluding redemptions and share buy backs that are
deemed distributions under the Companies Law), subject to the
performance hurdle having been satisfied.
The performance hurdle is the requirement that the NAV on the
relevant calculation date must exceed an amount equal to the Issue
Price increased by 10% of the Issue Price per annum up to the end
of the relevant performance period.
At the end of the Company's second financial year, the Company
will pay to the Investment Manager 80% of the Performance Fee.
Where the performance hurdle has been exceeded a Performance Fee
will be accrued. However, as at 31 December 2010, no performance
fee has been paid, but a Performance Fee of GBP9,615,098 has been
accrued as it appears likely based on the current performance the
performance hurdle will be exceeded.
Altus Resource Capital Limited
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the period from 1 July 2010 to 31 December 2010
15 RELATED PARTY TRANSACTIONS AND DIRECTORS BENEFICIAL INTERESTS
(continued)
Nimrod Capital LLP is the Company's Corporate and Shareholder
Adviser and is entitled to receive fees of 0.15% of the Company's
Net Asset Value per annum. In addition, Nimrod Capital LLP will
receive the remaining 20% of the Performance Fee, but as per the
Investment Manager, no Performance Fee was paid as at 31 December
2010. During the period the Company incurred GBP61,291 of costs, of
which GBP34,666 was outstanding at the period end as shown in
accrued expenses.
TOP 10 INVESTMENTS IN SECURITIES AS AT 31 DECEMBER 2010
31 Dec 2010
Unrealised
Market profit /
Investment Cost Value (loss)
GBP GBP GBP
Adamus Resources Limited 3,337,542 8,348,734 5,011,192
Perseus Mining Limited 3,360,078 6,664,467 3,304,389
Minera Andes Inc Com
Npv 1,532,151 5,115,676 3,583,525
Kenmare Resources 2,031,482 4,874,439 2,842,957
Griffin Mining Limited 2,857,438 4,749,800 1,892,362
Minera Irl Limited 3,899,341 4,472,967 573,626
Eastern Platinum Limited 2,594,021 4,011,227 1,417,206
Baja Mining Corp 3,809,288 3,990,243 180,955
European Goldfields
Com 797,158 3,596,112 2,798,954
Bathurst Resources
Limited 1,368,136 3,524,108 2,155,972
25,586,635 49,347,772 23,761,137
----------- ----------- ------------
TOP 10 INVESTMENTS IN SECURITIES AS AT 30 JUNE 2010
30 Jun 2010
Unrealised
Market profit /
Investment Cost Value (loss)
GBP GBP GBP
Adamus Resources Limited 2,656,440 4,004,066 1,347,626
Kenmare Resources 3,758,167 3,527,878 (230,289)
Gryphon Minerals Limited 1,962,470 3,493,641 1,531,171
Perseus Mining Limited 1,659,152 3,176,278 1,517,126
Greystar Resources 2,981,252 2,620,989 (360,263)
European Goldfields
Com 1,169,478 2,566,240 1,396,762
Banro Corporation
Com 2,629,124 2,537,862 (91,262)
Nevsun Resources Com 1,700,235 2,094,717 394,482
Eastern Platinum Limited 1,904,705 1,971,321 66,616
Griffin Mining Limited 1,993,325 1,765,800 (227,525)
22,414,348 27,758,790 5,344,442
----------- ----------- ------------
By order of the Board
Altus Resource Capital Limited
Administrative Enquiries:
Anson Fund Managers Limited
Tel: +44 (0) 1481 722 260
Shareholder Enquiries:
Nimrod Capital LLP
Tel: +44 (0) 20 3355 6855
info@nimrodcapital.com
E&OE - In Transmission
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR XXLFLFLFLBBX
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