TIDMAVR
RNS Number : 8124W
Avarae Global Coins PLC
24 August 2015
News Release 24 August 2015
AVARAE GLOBAL COINS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2015
Avarae Global Coins plc ("Avarae" or the "Company"), the UK's
only publicly traded specialist company dedicated to purchasing,
holding and selling rare and high quality coins, is pleased to
announce its final audited results for the year ended 31 March
2015.
Highlights for the year:
-- Sales of GBP0.63 million (2014: GBP1.59 million);
-- Profit on ordinary activities of increased more than 50% to
GBP0.38 million (2014: GBP0.25 million);
-- Recommended full year dividend of 0.15 pence per share (2014: 0.15 pence);
-- Carrying value of portfolio of rare and high quality coins
increased 5% to GBP11.14 million (2014: GBP10.62 million);
-- Cash balance at period end of GBP0.88 million (2014: GBP0.17 million); and
-- NAV per share increased for the 9(th) year in succession to 14.9 pence (2014: 14.5 pence).
Commenting on the results, Diane Clarke, Director of Avarae,
said:
"Avarae remains well positioned as an alternative asset
investment. Where other alternative asset players have suffered as
a result of volatile international markets and fluctuating
commodity prices, Avarae has continued to be successful, posting
ever-increasing net asset values and paying regular dividends. The
Company has a strong balance sheet with a healthy cash position and
no debt. Trading since the year end has been active, with the
Company selling more than 150 coins and recording revenues of
approximately GBP0.51 million. Since 1 April 2015, the Company has
also acquired coins with a value of approximately GBP0.16 million.
The Directors remain optimistic about the Company's future
prospects both for the current year and longer term."
The Company's audited report and accounts, together with the
notice of the AGM, will today be posted to shareholders. An
electronic copy of the audited report and accounts will also
shortly be available on the Company's website: www.avarae.com.
For further information on Avarae Global Coins plc, please
contact:
Diane Clarke/Matt Wood +44 (0)16 2461 5614
Avarae Global Coins plc
Adrian Hadden/James Bavister +44 (0)20 7220 1666
WH Ireland Limited
Toby Hall
GTH Communications Limited +44 (0)7713 341072
Directors' Report
Introduction
We are pleased to present the annual results for the year ended
31 March 2015. During the year under review, the Company continued
to manage its portfolio of rare and high quality coins.
Avarae Global Coins plc ("Avarae" or the "Company") provides
access for institutional investors and individuals wanting to
diversify their investment portfolios away from the traditional
asset classes such as equities, property and bonds without the need
to be an expert in the coin-collecting sector. The principal
objective of the Company, which has not changed since its admission
to AIM ("Admission") in 2006, is to achieve capital growth for its
shareholders through the purchase, holding and sale of the rarest
and highest quality segment of the coin-collecting sector in
various countries around the world.
Investing policy
Since Admission, we have built up an impressive portfolio of
extremely high quality, rare coins which we intend to hold both for
the long-term, i.e. 3 to 5 years, in order to achieve capital
growth for our shareholders, and also the short-term, in order to
take advantage of short-term trading opportunities, as the market
for rare coins continues to grow. The value of each investment
ranges from a few hundred pounds up to many hundreds of thousands
of pounds. The most expensive coin acquired by Avarae to date is
the Edward III Double Florin which was acquired for GBP0.4 million
in 2006. The Double Florin is on display at the Fitzwilliam Museum
in Cambridge.
The Board's decision on whether to acquire or dispose of a coin
or coin collection is made on the recommendation of its industry
expert independent Advisory Panel ("Panel") that assesses and
approves all coin trading related activities. The Panel members are
Sir John Wheeler and Clement Chambers, both of whom have
significant expertise in the field of numismatics.
A principal objective of the Company is to achieve long-term
capital growth through the appreciation in value of the coins
acquired. Compound annual returns achieved over the medium to
long-term for the highest quality and rarest coins can reach as
high as 10 per cent. As at the date of this report, and since its
formation in 2006, the Company has no borrowings and has no present
intention of securing any borrowings.
The coin-dealing sector
The market for trading coins is international in nature and
significant in size. For at least the last 10 years, there has been
an increasing interest in the coin sector and its prominence as an
alternative investment class is illustrated by continued increases
in activity around the world, where record prices have been paid
for certain rare pieces. The number of interested parties in coins
and coin collections appears to be continuing to grow, with auction
houses reporting significant growth in the numbers of interested
bidders compared to the corresponding auctions in previous
years.
As a result, activity in the rare coin market has remained
positive in the year to 31 March 2015 However, in-depth knowledge
of the market remains key to prosper given the changing dynamics of
the market . English, Roman and Indian coins continue to show
robust healthy growth, whereas the Chinese sector remains broadly
flat. The numismatic industry continues to witness an influx of new
buyers looking for tangible assets and fresh areas to place their
money as traditional asset classes, such as commodities and
currencies, fail to deliver robust financial gains and exhibit high
volatility. The majority of the funds coming into the numismatic
market are targeting the higher quality coin rarities and this is
adding considerable pressure on availability. A number of important
coins and coin collections have come up for sale worldwide with
auction houses continuing to achieve record prices, particularly
for the highest quality rare pieces.
Avarae's investments
Purchases
In the year to 31 March 2015, the Company acquired an additional
GBP0.32 million worth of coins (2014: GBP0.63 million) which,
together with the year-end revaluation exercise, resulted in the
value of the coin portfolio as at 31 March 2015 increasing by
GBP0.52 million to GBP11.14 million (2014: GBP10.62 million). In
line with its investment strategy, the Company has focused on the
purchase of only the highest quality and rarest coins. In
particular, during the year, the Company increased its exposure to
British coins.
Examples of coins acquired during the year include:
-- Henry VII (1485-1509), Fine Gold Sovereign of Twenty
Shillings, Group IV (c.1502-1504), crowned full robed figure of the
King seated facing on ornate throne with high canopy, holding orb
and sceptre. Very rare.
-- Edward VI (1547-1553), Fine Gold Sovereign of Thirty
Shillings, Third Period (15 December 1550 to 6 July 1553),
Southwark mint, crowned full figure of King seated facing on ornate
throne, holding orb and sceptre, portcullis below extending to rim,
ornate throne back with large pillars. An extremely rare coin, as
fewer than ten known to be held in private hands.
-- James I (1603-1625), Rose Ryal of Thirty Shillings, third
coinage (1619-25), seated facing full figure of robed King with orb
and sceptre, on throne with plain throne back and decorated
background, portcullis below. Very rare.
-- Charles I (1625-1649), Unite of Twenty Shillings, Tower Mint
under Parliament, group G, seventh crowned bust left, value in
field behind. A superb coin, the finest known of this the final
mark of the reign and of the highest rarity, as it is thought to be
one of less than five available to collectors.
Sales
The highlight for the period under review was the sale of GBP0.5
million of English gold coins. These sales represented a 39 per
cent margin over the carrying value of these coins as at the 31
March 2014.
During the year, the Company also continued its efforts to
rebalance its portfolio, liquidating a significant number of the
lower value items and less high quality duplicates previously
acquired as part of important collections. The Company ended the
period under review with approximately 1,000 coins, a reduction
from almost 1,100 at the beginning of the period. This process is
ongoing and the Company expects to generate several hundred
thousand pounds of sales during the current financial year as a
result of this exercise. Indeed, since the year end, the coin
portfolio has been reduced by a further 150 of the lower value
coins. It should be noted that the both quantum of gross profit and
the gross profit margin achieved on the sale of these lower value
coins are expected to be smaller than that expected to be achieved
on the higher value and rarer coins sold.
Breakdown of our Portfolio
English milled and hammered coins represent the largest segment
of the Company's portfolio, with holdings of Islamic and Indian
coins also representing significant proportions of the stock. Other
sectors where Avarae holds coins of notable value includes USA and
South American coins. In total, Avarae holds coins from more than
50 different regions and nationalities, demonstrating its genuine
global exposure.
Avarae's current intention is to hold the vast majority of its
current portfolio for the foreseeable future and only make
disposals of coins or collections when the Board believes it to be
in the best interests of the Company and its shareholders.
Financial results
(MORE TO FOLLOW) Dow Jones Newswires
August 24, 2015 02:00 ET (06:00 GMT)
Revenue from the sale of coins or coin collections for the year
ended 31 March 2015 was GBP0.6 million, down on the previous year's
total of GBP1.6 million. While the overall revenue has decreased,
the Company continues to demonstrate its conservative valuation
policy as 2014/15 witnessed a strong increase in the gross profit
margin, with sales in the year generating a 32 per cent. gross
margin as compared with 18 per cent. in the prior year.
As at 31 March 2015, in line with our long-term policy, the
Company instructed industry experts to undertake a detailed
revaluation of its coin portfolio. This exercise is intended to
apportion changes in the value of coins over the period of their
ownership by Avarae rather than allocating profits (or losses) in
the year of sale only. The Company's gross profit is calculated as
the difference between the sale price of each coin less its
carrying value brought forward, which will either be cost or the
revalued amount. The industry experts considered the open market
resale value of only those coins that had been held within the
Company's portfolio for more than 12 months, i.e. only those coins
acquired and held by Avarae on or before 31 March 2014 and excluded
those purchased during the financial year under review, which were
held at cost. In each of the years since the Company's inception,
the Company has recorded a gross profit, thereby demonstrating the
validity of the revaluation exercise.
The result of the extensive revaluation exercise carried out on
the coins, as described in the accounting policies and which the
Directors continue to believe to be conservative, was that the
overall carrying value of the portfolio as at 31 March 2015
increased to GBP11.14 million (2014: GBP10.62 million). The primary
causes of this increase of GBP0.5 million were that GBP0.3 million
of coins were added to the portfolio, the brought forward coin
portfolio was revalued upwards by GBP0.6 million (6% uplift) and
coins with a brought forward carrying value of GBP0.4 million were
sold. The Directors would expect coins from the portfolio to
achieve appreciably higher returns than their revalued carrying
value should they be sold at auction, as demonstrated by the 32 per
cent. gross profit margin achieved on coins sold in the financial
year under review.
The result of the revaluation exercise at 31 March 2015 is that,
as at that date, the Company's coin portfolio comprised of coins
purchased at cost of an aggregate GBP8.29 million (2014: GBP8.21
million) and a revaluation amount of GBP2.85 million (net of VAT
payable on sale) (2014: GBP2.41 million).
The effect of the revaluation, together with the profits from
the coin sales, resulted in the Company recording a gross profit of
GBP0.82 million (2014: GBP0.66 million), an uplift of 25 per cent.
Administrative expenses during the year were GBP0.44 million (2014:
GBP0.41 million), the increase due entirely to a GBP0.4 million
increase in unrecoverable VAT suffered in the year when compared to
the prior year. Unrecovered VAT arises when the Company's revenue
includes sales of exempt gold coins - coins specifically identified
by HMRC which are exempt from VAT. Accordingly, each year the
Company is unable to recover the proportion of input VAT suffered
on its annual expenses equal to the proportion that exempt gold
coins represents of its annual revenues. Unfortunately, within the
year under review exempt gold coin sales represented a larger than
historically normal proportion of overall revenue. Excluding
unrecovered VAT, other administrative expenses reduced when
compared to the prior year.
Net profit for the year of GBP0.38 million (2014: GBP0.25
million), delivered earnings per share of 0.47p (2014: 0.31p).
The Company ended the year with a net cash balance of
approximately GBP0.88 million compared to GBP0.17 million reported
at the end of March 2014. This was largely due to the realisation
of receivables held at the beginning of the reporting period.
The Company's cash is prudently managed across a spread of
accounts, thereby reducing the risks of the creditworthiness of any
one financial institution. At the date of this report, the
Company's cash balances stood at approximately GBP0.83million.
During the year, investments of GBP0.32 million (2014: GBP0.63
million) were made in coins and coin collections. At year end, the
Company had net assets of GBP12.0 million (2014: GBP11.7 million)
and no borrowings. The Directors are pleased to report that the
Company's net asset value per share ("NAV") as at 31 March 2015
again increased on the prior year to 14.9 pence (2014: 14.5
pence).
Dividend
Reflecting the Company's continued NAV growth and the Board's
cautiously optimistic outlook, the Board is pleased to recommend a
full year dividend of 0.15 pence per share, in line with the prior
year (2014: 0.15 pence per share), subject to shareholder approval
which is to be sought at the Company's annual general meeting to be
held on 23 September 2015. The dividend will be paid on or around
29 September 2015 to shareholders on the register as at 25
September 2015.
The dividend policy adopted by the Board is intended to be
progressive and a dividend is expected to be declared on an annual
basis. The level of the dividend will reflect the Company's
reported profits over a three year period, thereby smoothing out
any years of one-off profits (or losses). The policy will be to pay
out approximately 1/3 of the average net profits reported over the
most recent three year period. For the year ended 31 March 2015,
the level of the dividend will be approximately GBP0.12 million
(2014: GBP0.12 million).
Outlook
Avarae remains well positioned as an alternative asset
investment. Where other alternative asset players have suffered as
a result of volatile international markets and fluctuating
commodity prices, Avarae has continued to be successful, posting
ever-increasing net asset values and paying regular dividends. The
Company has a strong balance sheet with a healthy cash position and
no debt. Trading since the year end has been active, with the
Company selling more than 150 coins and recording revenues of
approximately GBP0.51 million. Since 1 April 2015, the Company has
also acquired coins with a value of approximately GBP0.16 million.
The Directors remain optimistic about the Company's future
prospects both for the current year and longer term.
Statement of Comprehensive Income for the year ended 31 March
2015
Year ended Year ended
31-Mar-15 31-Mar-14
Note GBP'000 GBP'000
Revenue
Sales 1 626 1,592
Cost of Sales (425) (1,301)
Coin revaluation 5 618 367
---- ----
Gross profit 819 658
---- ----
Administrative expenses (440) (406)
---- ----
Profit on ordinary activities
before: 379 252
Finance income 1 1
---- ----
Profit on ordinary activities
before tax 380 253
Tax on profit on ordinary activities 3 - -
---- ----
Profit on ordinary activities
after taxation 380 253
---- ----
Earnings per share (basic and
diluted) 4 0.47p 0.31p
Statement of Financial Position as at 31 March 2015
As at As at
31-Mar-15 31-Mar-14
Note GBP'000 GBP'000
Assets
Current Assets
Coin inventory 5 11,141 10,621
Trade and other receivables 6 105 1,810
Cash at bank 882 171
---- ----
Total assets 12,128 12,602
---- ----
Liabilities and equity
Creditors: amounts
falling due within
one year 7 127 860
---- ----
Total Liabilities 127 860
---- ----
Equity
Called up equity share
capital 8 808 808
Share premium 8,880 8,880
Profit and loss account 2,313 2,054
---- ----
Total Equity Shareholders'
Funds 12,001 11,742
---- ----
Total Liabilities
and equity 12,128 12,602
---- ----
(MORE TO FOLLOW) Dow Jones Newswires
August 24, 2015 02:00 ET (06:00 GMT)
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