TIDMBSRT
RNS Number : 1105N
Baker Steel Resources Trust Ltd
26 August 2011
MANAGEMENT AND ADMINISTRATION
DIRECTORS: Howard Myles (Chairman)
Edward Flood
Charles Hansard
Clive Newall
Christopher Sherwell
all of whom are non-executive and independent
directors
REGISTERED OFFICE: Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey
Channel Islands
MANAGER: Baker Steel Capital Managers (Cayman) Limited
PO Box 309
George Town
Grand Cayman KY1-1104
Cayman Islands
INVESTMENT MANAGER: Baker Steel Capital Managers LLP
86 Jermyn Street
London SW1Y 6JD
England
United Kingdom
BROKERS: RBC Capital Markets
71 Queen Victoria Street
London EC4V 4DE
United Kingdom
Winterflood Securities Limited
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
SOLICITORS TO THE COMPANY: Simmons & Simmons
(as to English law) CityPoint
One Ropemaker Street
London EC2Y 9SS
United Kingdom
ADVOCATES TO THE COMPANY: Ogier
(as to Guernsey law) Ogier House
St. Julian's Avenue
St. Peter Port
Guernsey GY1 1WA
Channel Islands
ADMINISTRATOR & COMPANY SECRETARY: HSBC Securities Services (Guernsey)
Limited
Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey GY1 3NF
Channel Islands
SUB-ADMINISTRATOR TO THE COMPANY: HSBC Securities Services (Ireland)
Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
CUSTODIAN TO THE COMPANY: HSBC Institutional Trust Services
(Ireland) Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
AUDITORS: Ernst & Young LLP
Royal Chambers
St. Julian's Avenue
St. Peter Port
Guernsey GY1 4AF
Channel Islands
REGISTRAR: Capita Registrars (Guernsey) Limited
Longue Hougue House
St. Sampson
Guernsey GY2 4JN
Channel Islands
PRINCIPAL BANKER: HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
DIRECTORS' REPORT
For the period from 1 January 2011 to 30 June 2011
To Shareholders of Baker Steel Resources Trust Limited
The Board is pleased to present the Company's Half-Yearly
Financial Report.
This Directors' Report has been produced solely to provide
additional information to Shareholders as a body, as required by
the UK Listing Authority's Disclosure and Transparency Rules. It
should not be relied upon by Shareholders or any other party for
any other purpose.
This Directors' Report relates to the period from 1 January 2011
to 30 June 2011 and contains information that covers this period
and information relating to any material changes up to the date of
publication of this Half-Yearly Report. Please note that more up to
date performance information, including the monthly report for the
period ending 31 July 2011, is available on the Company's website
www.bakersteelresourcestrust.com.
The objective of the Company is to seek capital growth over the
long term by investing through a focused global portfolio
consisting principally of the equities, or related instruments, of
natural resources companies. These investments will be
predominantly in private companies with strong development projects
and focused management, but also in listed securities to exploit
value inherent in market inefficiencies.
Financial Performance
The unaudited net asset value ("NAV") per Ordinary Share as at
30 June 2011 was 117.0p per share, up 13.2% from the Company's NAV
calculated on 31 December 2010. During this period the HSBC Global
Mining Index was down 5.1%
For the purpose of calculating the NAV per share, unquoted
investments are carried at fair value as at 30 June 2011 as
determined by the Directors and quoted investments are carried at
last traded price as at 30 June 2011.
Net assets at 30 June 2011 comprised the following:
GBPm % net assets
Unquoted Investments 72.4 93.7%
Quoted Investments 4.5 5.8%
Net cash 0.3 0.5%
------ ------
77.2 100.0
Issue of Shares
The Company was admitted to trading on the London Stock Exchange
on 28 April 2010. On that date, 30,468,865 Ordinary Shares and
6,093,772 Subscription Shares were issued pursuant to a placing and
offer for subscription and 35,554,224 Ordinary Shares and 7,110,822
Subscription Shares were issued pursuant to a scheme of
reorganisation of Genus Capital Fund.
In addition 10,000 Management Ordinary Shares were issued.
Following the exercise of Subscription Shares at the end of
September 2010, 7,543 Ordinary Shares were issued and as a result,
the Company had 66,040,632 Ordinary Shares and 13,197,051
Subscription Shares in issue at 31 December 2010.
Following the exercise of Subscription Shares at the end of
March 2011, 2,429 Ordinary Shares were issued and as a result, the
Company has 66,043,061 Ordinary Shares and 13,194,622 Subscription
Shares in issue at 30 June 2011.
Going Concern
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that it has the
resources to continue in business for the foreseeable future.
Furthermore, the Directors are not aware of any material
uncertainties that may cast significant doubt upon the Company's
ability to continue as a going concern. Therefore, the financial
statements have been prepared on a going concern basis.
Related Party Transactions
Transactions with related parties are based on terms equivalent
to those that prevail in an arm's length transaction. There were no
such transactions with related parties which took place for the
period ended 30 June 2011.
Principal Risks and Uncertainties
The principal risks facing the Company relate to the Company's
investment activities. These risks are mainly market risk
(comprising market price risk, currency risk and interest rate
risk), commodity price risk, liquidity risk and credit risk, in
addition to mining development risk, licencing risk, and emerging
market risk. An explanation of these risks is contained in the
Company's prospectus dated 31 March 2010, available on the
Company's website www.bakersteelresourcestrust.com.
A further risk facing the Company includes regulatory risk (that
the loss of the Company's investment status or a breach of The
Rules of the UK Listing Authority, the London Stock Exchange or the
Guernsey Financial Services Commission, could have adverse
financial consequences and cause reputational damage).
The principal risks and uncertainties that the Company is
exposed to through mining and mineral development related markets
have not significantly changed since the publication of the
Company's Annual Report and Audited Financial Statements for the
period ended 31 December 2010 and are not anticipated to change for
the remainder of 2011.
Directors' Interests
The Directors' interests in the share capital of the Company at
30 June 2011 were as follows:
Number of Number of
Ordinary Shares Subscription Shares
Edward Flood 65,000 13,000
Christopher Sherwell 25,000 5,000
Clive Newall 25,000 5,000
Signed for and on behalf of the Directors:
Howard Myles
Chairman
26 August 2011
INVESTMENT MANAGER'S REPORT
For the period from 1 January 2011 to 30 June 2011
Investment Update
Largest Investments - 30 June 2011
% of NAV
Ivanplats Limited 27.6%
Gobi Coal & Energy Limited 16.9%
Ferrous Resources Limited 13.8%
First Coal Corporation 7.6%
Ironstone Resources Limited 7.0%
Silver China (Five Stars BS
Ltd) 5.6%
Bilboes Holdings 4.8%
Copperbelt Minerals Limited 4.3%
Polar Silver (Argentum) 4.1%
Forbes & Manhattan Coal Corporation 2.7%
Other Investments 5.1%
Net Cash and Equivalents 0.5%
30 June 2010
% of NAV
Net Cash and Equivalents 41.4%
Ferrous Resources Limited 19.5%
Ivanhoe Nickel and Platinum Limited 18.1%
Gobi Coal & Energy Limited 11.0%
Copperbelt Minerals Limited 5.7%
First Coal Corporation 3.5%
Other Investments 4.8%
Review
At the end of June 2011, Baker Steel Resources Trust Limited was
99.5% invested in line with the intention to invest the Company's
capital within a year or so of listing. The investment portfolio
has also been diversified to include silver and gold exposure, in
addition to base metals, iron ore and metallurgical coal. During
the half year, the NAV per share rose 13.2% to 117.0 pence largely
due to increases in the values of Ivanplats Limited ("Ivanplats")
and Gobi Coal and Energy Limited ("Gobi") as both companies
progress towards a listing, possibly in the second half of 2011 or
early in 2012.
In particular Ivanplats, the Company's largest holding, agreed
with ITOCHU Corporation of Japan for it to acquire an 8% interest
in Ivanplats' Platreef project in South Africa for 22.4 billion
Japanese Yen, valuing the Platreef Project at approximately US$3.5
billion. Ivanplats rates its Kamoa copper deposit as the most
significant copper discovery in the Democratic Republic of Congo
since Belgian colonial-era exploration more than 100 years ago. If
Kamoa were to be attributed an equivalent value to the Platreef
project on IPO, this would suggest a valuation more than four times
the Company's current carrying value or almost a doubling of the
current NAV per share. Ivanplats has suggested that subject to
market conditions, it will consider initiating the IPO later this
year or early in 2012.
During the period, the Company made three new significant
additions to its portfolio. US$5.1 million was invested in Polar
Silver Resources Limited, a private company which holds a 50%
indirect interest in the Prognoz silver project, 444km north of
Yakutsk in Russia ("Prognoz"). A NI 43-101 compliant report by
independent consultant Micon International Limited ("Micon") in
July 2009, estimated an indicated resource of 5.86 million tonnes
of ore grading 773g/t silver containing 146 million ounces silver
and inferred resources of 9.64 million tonnes of ore grading 473g/t
silver containing 147 million ounces silver at Prognoz. Polar
Silver has commissioned Micon to undertake a NI 43-101 compliant
scoping study on Prognoz, which is expected to be completed in the
second half 2011 ahead of a proposed IPO. The second investment was
US$7million in 'Silver China', a private company which has an
interest in a significant silver-lead-zinc deposit in south-west
China, where a mine is under construction with first production
expected later this year. The Company is precluded from disclosing
the identity of Silver China or providing further details, until a
prospectus is issued, as Silver China is currently planning a
listing. During June 2011, the Company completed a US$6 million
investment in Bilboes, a private Zimbabwean gold mining company
which owns four previously producing oxide mines in Zimbabwe.
International consultant, SRK, signed off JORC compliant resources
totaling 778,000 ounces and also suggested that there is a good
opportunity to expand significantly the current resource base
through drilling of the underlying sulphide mineralisation. Bilboes
plans to use the proceeds of the investment on resource drilling
and the commencement of a bankable feasibility study.
Good operational progress was made during the first half of the
year at several of the companies in which BSRT is invested. Ferrous
Resources announced that it had achieved a number of important
milestones in developing its fully integrated iron ore project in
Brazil including the grant of three key licences for the
installation of the Viga Mine and for a port terminal and the
pipeline between these two facilities. Production of iron ore has
commenced and Ferrous has stated that it remains on schedule to
achieve its target of exporting 25 million tonnes of iron ore per
annum from 2014. South American Ferro Metals ("SAFM") announced the
commissioning of the beneficiation plant at its Ponto Verde Iron
Ore Mine in Brazil with production increasing steadily towards its
design rate of 60,000 tonnes per month. SAFM also achieved the
production milestone for the A Class performance shares held by the
Company, and accordingly these shares were converted into ordinary
shares.
Price / Index % Change % Change
At 30 June 2011 Level in Six Months from Inception
--------------------------- -------------- --------------- ----------------
Net Asset Value
(pence/share) 117.0 +13.2% +19.5%*
--------------------------- -------------- --------------- ----------------
Ordinary Share Price
(pence/share) 103.63 +32.0% +3.6%**
--------------------------- -------------- --------------- ----------------
Subscription Share Price
(pence/share) 22.5 +45.2% n/a
--------------------------- -------------- --------------- ----------------
MSCI World Index 341.82 +3.4% +10.9%
--------------------------- -------------- --------------- ----------------
HSBC Global Mining Index 1536.72 -5.1% +18.2%
--------------------------- -------------- --------------- ----------------
CRB Index 338.05 +1.6% +23.7%
--------------------------- -------------- --------------- ----------------
Chinese Domestic Iron
Ore - Hebei/Tangshan
(US$/t) 209.0 -2.8% +8.9%
--------------------------- -------------- --------------- ----------------
Copper (US$/t) 9414.0 -2.4% +26.3%
--------------------------- -------------- --------------- ----------------
Gold (US$/oz) 1500.35 +5.6% +28.5%
--------------------------- -------------- --------------- ----------------
Source: Bloomberg closing 27/4/10, **Issue price 28/4/10, * NAV
30/4/10
Outlook
Following a strong second half of 2010, markets for mining
equities paused for breath with the HSBC Global Mining Index
falling 5.1% during the first half 2011. The half year saw growing
disconnect between the prices of mining equities and commodities,
particularly gold with the metal rising 5.6% and the FTSE Gold
Mines Index falling 10.1%. This can only be partially explained by
an increase in companies' operating and capital costs as a result
of commodity price rises and is more likely a move away from risk
as governments in Western economies tackle high debt problems. The
cashflows of the producing mining companies have remained robust
and we would expect a recovery in the rating of mining equities in
the second half of the year, in the absence of a major fall in
commodity prices.
The Company's portfolio is well placed to benefit from a
stronger market for mining shares with its top three holdings
representing 58.3% of net assets all potentially seeking an IPO in
the second half of this year.
Baker Steel Capital Managers LLP
August 2011
DIRECTORS' RESPONSIBILITY STATEMENT
For the period from 1 January 2011 to 30 June 2011
To the best of the knowledge of the Directors:
The Directors' Report and the Investment Manager's Report
comprise the Half-Yearly Management Report.
This Half-Yearly Management Report and Condensed Interim
Financial Statements give a true and fair view of the assets,
liabilities, financial position and profit of the Company and have
been prepared in accordance with International Accounting Standard
(IAS) 34 Interim Financial Reporting.
The Half-Yearly Management Report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred in the period
from 1 January 2011 to 30 June 2011 and their impact on the set of
financial statements; and a description of the principal risks and
uncertainties for the remainder of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the period from
1 January 2011 to 30 June 2011 and that have materially affected
the financial position or performance of the entity during that
period.
Signed on behalf of the Board of Directors by:
Howard Myles Christopher Sherwell
26 August 2011
UNAUDITED PORTFOLIO STATEMENT
AT 30 JUNE 2011
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Listed equity shares
Australian Dollars
11,668,950 South American Ferro Metals 1,247,207 1.61
Australian Dollars Total 1,247,207 1.61
--------------- ---------
Canadian Dollars
3,383,333 BacTech Environmental Corporation 480,499 0.62
1,100,000 Forbes & Manhattan Corporation 2,116,090 2.74
16,916,667 REBgold Corporation 655,226 0.85
Canadian Dollars Total 3,251,815 4.21
--------------- ---------
Total investments in listed equity shares 4,499,022 5.82
--------------- ---------
Fixed income instruments
United States Dollars
Polar Silver (Argentum) 0.1%
US$5,100,000 25/01/2013 3,175,394 4.11
United States Dollars Total 3,175,394 4.11
--------------- ---------
Total investments in fixed income instruments 3,175,394 4.11
--------------- ---------
Unlisted equity shares and warrants
Australian Dollars
South American Ferro Metals Class
4,445,586 B 332,609 0.43
South American Ferro Metals Class
4,445,586 C 330,233 0.43
Australian Dollars Total 662,842 0.86
--------------- ---------
Canadian Dollars
BacTech Mining Corporation
10,250,000 Warrants 17/06/2015 193,873 0.25
BacTech Mining Corporation
6,666,667 Warrants 06/08/2013 85,642 0.11
7,428,571 First Coal Corporation 5,850,464 7.58
6,282,341 Ironstone Resources Limited 5,342,176 6.92
Ironstone Resources Limited
3,036,605 Warrants 31/03/2012 56,063 0.07
Canadian Dollars Total 11,528,218 14.93
--------------- ---------
Great Britain Pounds
1,594,646 Celadon Mining Limited 143,518 0.19
Great Britain Pounds Total 143,518 0.19
--------------- ---------
United States Dollars
3,034,734 Archipelago Metals 377,901 0.49
451,445 Bilboes Holdings (Private) Limited 3,735,770 4.84
268,889 Copperbelt Minerals 3,348,347 4.33
5,713,642 Ferrous Resources 10,672,390 13.82
Silver China (Five Stars BS
7,000,000 Limited) 4,358,384 5.64
5,244,550 Gobi Coal and Energy 13,061,578 16.91
1,957,499 Ivanplats Limited 21,328,829 27.61
1,020 Polar Silver Resources Limited 635 -
United States Dollars Total 56,883,834 73.64
--------------- ---------
Total investments in unlisted equity shares 69,218,412 89.62
--------------- ---------
Financial assets held at fair value through
profit or loss 76,892,828 99.55
Other assets & liabilities 349,211 0.45
Total equity 77,242,039 100.00
--------------- ---------
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
Unaudited Audited
30 June 31 December
2011 2010
Notes GBP
Assets
Cash and cash equivalents 8 2,219,003 1,013,506
Receivables 329,114 330,561
Financial assets held at fair value
through profit or loss (Cost
2011:GBP60,468,629 and 2010:
GBP63,126,417) 3 76,892,828 67,160,848
----------- -------------
Total assets 79,440,945 68,504,915
=========== =============
Equity and liabilities
Liabilities
Performance fees payable 6 1,978,050 -
Management fees payable 6 103,183 79,513
Directors' fees payable 36,192 36,000
Formation expenses payable 26,529 26,529
Audit fees payable 24,835 40,000
Administration fees payable 5 7,429 10,193
Other payables 22,688 38,382
Total liabilities 2,198,906 230,617
----------- -------------
Equity
Management Ordinary Shares 10,000 10,000
Ordinary Shares 64,657,584 64,655,155
Revenue reserve 12,574,455 3,609,143
Total equity 77,242,039 68,274,298
----------- -------------
Total equity and liabilities 79,440,945 68,504,915
=========== =============
Ordinary Shares in issue 9 66,043,061 66,040,632
Net asset value per Ordinary Share (in
Pence) - Basic 4 117.0 103.4
These financial statements were approved by the Board of Directors
on 26 August 2011 and signed on its behalf by:
Howard Myles Christopher Sherwell
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2011 TO 30 JUNE 2011
Unaudited Unaudited Unaudited
period ended period ended period ended
30 June 30 June 30 June
2011 2011 2011
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 71,324 - 71,324
Net gain on financial
assets and
liabilities at fair
value through profit
or loss - 11,801,907 11,801,907
Net foreign exchange
loss (52,889) (52,889)
Other income 112 - 112
-------------- -------------- --------------
Net income 71,436 11,749,018 11,820,454
-------------- -------------- --------------
Expenses
Performance fees 7 1,978,050 - 1,978,050
Management fees 7 554,807 - 554,807
Directors' fees and
expenses 70,000 - 70,000
Administration fees 6 42,767 - 42,767
Custody fees 24,576 - 24,576
Audit fees 20,000 - 20,000
Other expenses 164,942 - 164,942
Total expenses 2,855,142 - 2,855,142
-------------- -------------- --------------
Total comprehensive
(expense)/income for
the period (2,783,706) 11,749,018 8,965,312
============== ============== ==============
Net (expense)/income
for the period per
Ordinary Share:
Basic and diluted (in
pence) 4 (4.2) 17.8 13.6
Weighted Average
Number of Ordinary
Shares Outstanding:
Basic and diluted 4 66,041,847
In the current period there were no gains or losses
other than those recognised above.
The Directors consider all results to derive from
continuing activities.
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 9 MARCH 2010 TO 30 JUNE 2010
Unaudited Unaudited Unaudited
period ended period ended period ended
*30 June *30 June *30 June
2010 2010 2010
Revenue Capital Total
Notes GBP GBP GBP
Income
Net loss on financial
assets and
liabilities at fair
value through profit
or loss - (1,589,253) (1,589,253)
Net foreign exchange
gain - 460,613 460,613
-------------- -------------- --------------
Net income - (1,128,640) (1,128,640)
-------------- -------------- --------------
Expenses
Management fees 7 204,514 - 204,514
Formation expenses 152,870 - 152,870
Directors' fees and
expenses 25,414 - 25,414
Administration fees 6 21,600 - 21,600
Audit fees 11,429 - 11,429
Custody fees 7,331 - 7,331
Other expenses 12,430 - 12,430
Total expenses 435,588 - 435,588
-------------- -------------- --------------
Total comprehensive
expense for the
period (435,588) (1,128,640) (1,564,228)
============== ============== ==============
Net expense for the
period per Ordinary
Share:
Basic (in pence) 4 (0.66) (1.71) (2.37)
Diluted (in pence) 4 (0.65) (1.71) (2.36)
Weighted Average
Number of Ordinary
Shares Outstanding:
Basic 4 66,033,089
Diluted 4 66,194,820
In the current period there were no gains or losses
other than those recognised above.
The Directors consider all results to derive from
continuing activities.
* For the period from 9 March 2010 (date of incorporation)
to 30 June 2010.
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2011 TO 30 JUNE 2011
Management Period ended
Ordinary Ordinary Revenue 30 June
Shares Shares reserve 2011
GBP GBP GBP GBP
Balance at 1 January
2011 10,000 64,655,155 3,609,143 68,274,298
Proceeds on issue of
Ordinary Shares - 2,429 - 2,429
Net income for the
period - - 8,965,312 8,965,312
Balance as at 30 June
2011 10,000 64,657,584 12,574,455 77,242,039
=========== =========== =========== =============
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 9 MARCH 2010 (DATE OF INCORPORATION) TO 30
JUNE 2010
Management Period ended
Ordinary Ordinary Revenue 30 June
Shares Shares reserve 2010
GBP GBP GBP GBP
Proceeds on issue of
Ordinary Shares 10,000 66,023,089 - 66,033,089
Share issue costs - (1,381,175) - (1,381,175)
Net expense for the
period - - (1,564,228) (1,564,228)
Balance as at 30 June
2010 10,000 64,641,914 (1,564,228) 63,087,686
=========== ============ ============ =============
CONDENSED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2011 TO 30 JUNE 2011
Period ended Period ended
30 June *30 June
2011 2010
Notes GBP GBP
Cash flows from operating activities
Net income/(expense) for the period 8,965,312 (1,564,228)
Adjustments to reconcile
income/(expense) for the period to net
cash used in operating activities:
Net change in fair value of financial
assets and at fair value through
profit or loss (11,801,907) 1,589,253
Net decrease/(increase) in other
receivables 1,447 (4,415)
Net increase in other payables 1,968,289 368,577
------------- -------------
Net cash (used in)/provided by
operating activities (866,859) 389,187
------------- -------------
Cash flows from investing activities
Purchase of financial assets at fair
value through profit or loss (12,813,034) (3,364,134)
Sale of financial assets at fair value
through profit or loss 7,382,961 -
Maturity of financial assets at fair
value through profit or loss 7,500,000 -
------------- -------------
Net cash provided by/(used in)
investing activities 2,069,927 (3,364,134)
------------- -------------
Cash flows from financing activities
Proceeds from shares issued 2,429 30,468,865
Share issue costs - (1,381,175)
Net cash provided by financing
activities 2,429 29,087,690
------------- -------------
Net increase in cash and cash
equivalents 1,205,497 26,112,743
Cash and cash equivalents at the
beginning of the period 1,013,506 -
Cash and cash equivalents at the end of
the period 7 2,219,003 26,112,743
============= =============
Represented by:
Cash and cash equivalents 2,219,003 26,113,077
Bank overdraft - (334)
Cash and cash equivalents at the end of
the period 7 2,219,003 26,112,743
============= =============
* For the period from 9 March 2010 (date of incorporation) to 30
June 2010.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2011 TO 30 JUNE 2011
1. GENERAL INFORMATION
Baker Steel Resources Trust Limited (the "Company") is a
closed-ended investment company with limited liability incorporated
on 9 March 2010 in Guernsey under the Companies (Guernsey) Law 2008
with registration number 51576. The Company is a registered
closed-ended investment scheme registered pursuant to the POI
(Protection of Investors) Law and The Registered Collective
Investment Scheme Rules 2008 issued by the Guernsey Financial
Services Commission (GFSC). On 28 April 2010 the Ordinary Shares
and Subscription Shares of the Company were admitted to the
Official List of the UK Listing Authority and to trading on the
Main Market of the London Stock Exchange.
The Company is managed by Baker Steel Capital Managers (Cayman)
Limited (the "Manager"). The Manager has appointed Baker Steel
Capital Managers LLP (the "Investment Manager") as the investment
manager to carry out certain duties. The Company's investment
objective is to seek capital growth over the long-term through a
focused, global portfolio consisting principally of the equities,
or related instruments, of natural resources companies. The Company
invests predominantly in unlisted companies (i.e. those companies
that have not yet made an initial public offering or "IPO") and
also in listed securities (including special situations
opportunities and less liquid securities) with a view to exploiting
value inherent in market inefficiencies and pricing anomalies.
These condensed interim financial statements have not been
audited or reviewed by the auditors pursuant to the Auditing
Practices Board Guidance on the Review of the interim financial
information performed by the independent auditor of the
Company.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The unaudited condensed interim financial statements of the
Company have been prepared in accordance with International
Accounting Standards (IAS) 34: Interim Financial Reporting.
The financial statements have been prepared on a historic cost
basis except for financial assets and financial liabilities at fair
value through profit or loss, which are designated at fair value
through profit or loss.
The accounting policies used in the preparation of these
financial statements are consistent with those used in the
Company's most recent annual financial statements for the year
ended 31 December 2010. There have been no changes to the Company's
accounting policies since the date of the Company's last annual
financial statements, for the year ended 31 December 2010. The
format of these financial statements differs in some respects from
that of the most recent annual financial statements, in that the
notes to the financial statements are presented in summary
form.
The Company has adopted the Great Britain pound sterling ("GBP")
as its presentation currency, being the currency in which its
Ordinary Shares and Subscription Shares are issued. The
presentation currency is the same as the functional currency.
The statement of comprehensive income is presented in accordance
with the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' issued in
January 2009 by the Association of Investment Companies, to the
extent that it does not conflict with International Financial
Reporting Standards (IFRS).
3. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS
Listed Unlisted
equity equity Fixed income
30 June 2011 shares shares instruments Warrants Total
GBP GBP GBP GBP GBP
Financial
assets at
fair value
through
profit or
loss
Cost 4,169,537 53,067,152 3,231,939 - 60,468,628
Unrealised
gain/(loss) 329,485 15,815,682 56,545 335,578 16,537,290
Market value
at 30 June
2011 4,499,022 68,882,834 3,175,394 335,578 76,892,828
============ ============ ============ ========== ==========
Listed Unlisted
31 December equity equity Fixed income
2010 shares shares instruments Warrants Total
GBP GBP GBP GBP GBP
Financial
assets at
fair value
through
profit or
loss
Cost 5,021,326 36,930,304 12,766,600 8,408,187 63,126,417
Unrealised
(loss)/gain 1,983,502 (1,741,792) (13,090)* 3,805,811 4,034,431
Market value
at 31
December
2010 7,004,828 35,188,512 12,753,510 12,213,998 67,160,848
============ ============ ============ ========== ==========
* includes interest income of GBP170,235.
The following table analyses investments by type and by level
within the fair valuation hierarchy at 30 June 2011.
Quoted prices Quoted market
in active based Unobservable
markets observables inputs
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets
at fair value
through profit or
loss
Listed equity
shares 4,499,022 - - 4,499,022
Unlisted equity
shares - - 68,882,834 68,882,834
Warrants - - 335,578 335,578
Fixed income
instruments 3,175,394 - - 3,175,394
------------- ----------------- ------------ ----------
7,674,416 - 69,218,412 76,892,828
============= ================= ============ ==========
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2010.
Quoted prices Quoted market
in active based Unobservable
markets observables inputs
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets
at fair value
through profit or
loss
Listed equity
shares 7,004,828 - - 7,004,828
Unlisted equity
shares - - 35,188,512 35,188,512
Warrants - - 12,213,998 12,213,998
Fixed income
instruments 12,753,510 - - 12,753,510
------------- ----------------- ------------ ----------
19,758,338 - 47,402,510 67,160,848
============= ================= ============ ==========
In determining an investment's placement within the fair value
hierarchy, the Directors take into consideration the following.
Investments whose values are based on quoted market prices in
active markets are classified within level 1. These include listed
equities and fixed income instruments with observable market price.
The Directors do not adjust the quoted price for such instruments,
even in situations where the Company holds a large position and a
sale could reasonably impact the quoted price.
Investments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer
quotations or alternative pricing sources supported by observable
inputs, are classified within level 2. These include certain less
liquid listed equities. As level 2 investments include positions
that are not traded in active markets and/or are subject to
transfer restrictions, valuations may be adjusted to reflect
illiquidity and/or non-transferability, which are generally based
on available market information. The Company did not hold any such
investments at 30 June 2011.
Investments classified within level 3 have significant
unobservable inputs. They include unlisted equity shares and
warrants. Level 3 investments are valued using valuation techniques
explained in the Company's accounting policies. The inputs used by
the Directors in estimating the value of level 3 investments
include the original transaction price, recent transactions in the
same or similar instruments, completed or pending third-party
transactions in the underlying investment of comparable issuers,
subsequent rounds of financing, recapitalisations and other
transactions across the capital structure, offerings in the equity
or debt capital markets, and changes in financial ratios or cash
flows. Level 3 investments may also be adjusted to reflect
illiquidity and/or non-transferability, with the amount of such
discount estimated by the Directors in the absence of market
information.
4. NET ASSET VALUE PER SHARE AND EARNING PER SHARE
Basic net asset value per share is based on the net assets of
GBP77,242,039 (31 December 2010: GBP68,274,298) and 66,043,061 (31
December 2010: 66,040,632) Ordinary Shares, being the number of
shares in issue at the period end. The subscription shares are
entitled to be converted to Ordinary Shares at 100p per share.
The calculation for basic net asset value is as below:-
30 June 2011 31 December 2010
Ordinary Subscription Ordinary Subscription
Shares Shares Shares Shares
Net assets at the
period end (GBP) 77,242,039 13,194,622 68,274,298 13,197,051
Number of shares 66,043,061 13,194,622 66,040,632 13,197,051
Basic net asset value
per share (in pence) 117.0 103.4
The basic and diluted earnings per share is based on the net
income for the period of the Company of GBP8,965,312 and on
66,041,847 Ordinary Shares, being the weighted average number of
shares in issue during the period.
For the period from 9 March 2010 to 30 June 2010, the basic
earnings per share is based on the net loss for the period of the
Company of GBP1,564,228 and on 66,033,089 Ordinary Shares, being
the weighted average number of shares in issue during the period.
Diluted earnings per ordinary share is calculated by adjusting
basic earnings per ordinary share to reflect the notional exercise
of the number of dilutive subscription shares outstanding during
the period, using a weighted average calculation based on the
average market price per ordinary share during the period. The
diluted earnings per share figure is similar to the basic earnings
per share figure because the average market share price during the
period of 101.2p is only 1.2% greater than the exercise price.
These calculations are prepared in accordance with the IFRS.
5. TAXATION
The Company is a Guernsey Exempt Company and is therefore not
subject to taxation on its income under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989. An annual exempt fee of GBP600
has been paid.
6. ADMINISTRATION FEES
The Administrator, HSBC Securities Services (Guernsey) Limited,
is paid fees for acting as administrator of the Company at the rate
of 7 basis points of gross asset value up to US$250 million and the
rate reduces to 5 basis points of gross asset value above US$250
million. The Administrator is also reimbursed by the Company for
reasonable out-of-pocket expenses. These fees accrue and are
calculated as at the last Business Day of each month and paid
monthly in arrears.
The Administrator is also entitled to a fee for its provision of
corporate secretarial services provided to the Company on a time
spent basis and subject to a minimum annual fee of GBP40,000. The
Company is also responsible for any sub-administration fees as
agreed in writing from time to time, and reasonable out-of-pocket
expenses.The Administrator is also entitled to fees of EUR5,000 for
preparation of the financial statements of the Company.
The administration fees paid for the period ended 30 June 2011
were GBP42,767 (30 June 2010: GBP21,600) of which GBP7,429 was
payable at 30 June 2011 (31 December 2010: GBP10,193).
7. MANAGEMENT AND PERFORMANCE FEES
The Manager was appointed pursuant to a management agreement
with the Company dated 31 March 2010 (the "Management Agreement").
The Company pays to the Manager a management fee which is equal to
1/12th of 1.75% of the total market capitalisation of the Company
per month. The management fee is calculated and accrued as at the
last Business Day of each month and is paid monthly in arrears.
The Manager may in certain circumstances also be entitled to be
paid a performance fee if the Net Asset Value at the end of any
Performance Period exceeds the Hurdle as at the end of the
Performance Period. For this purpose the "Hurdle" means an amount
equal to the Issue Price of GBP1 multiplied by the number of shares
in issue as at Admission, as increased at a rate of 8% per annum
compounded to the end of the relevant Performance Period. In
respect of the first Performance Period and any other Performance
Period which is less than a full 12 months, the Hurdle will be
applied pro rata. The performance fee is subject to adjustments for
any issue and/or repurchase of Ordinary Shares.
The amount of the performance fee (if any) will be 15 per cent
of the total increase in the Net Asset Value at the end of the
relevant Performance Period over the highest previously recorded
Net Asset Value as at the end of a Performance Period in respect of
which a performance fee was last accrued, (or the Issue Price
multiplied by the number of shares in issue as at Admission, if no
performance fee has been so accrued) having made adjustments for
numbers of Ordinary Shares issued and/or repurchased as described
above.
The first performance period commenced on the date of Admission
and ended on 31 December 2010 and thereafter, is each 12 month
period ending on 31 December in each year (the "Performance
Period"). The last Performance Period will end on the date on which
the Management Agreement is terminated or the Company is wound up.
The performance fees accrued for the period ended 30 June 2011 were
GBP1,978,050 (30 June 2010: GBPNil).
The management fees paid for the period ended 30 June 2011 were
GBP554,807 (30 June 2010: GBP204,514) of which GBP103,183 was
payable at 30 June 2011 (31 December 2010: GBP79,513).
8. CASH AND CASH EQUIVALENTS
31 December
30 June 2011 2010
GBP GBP
Represented by:
Deposits at HSBC Bank plc 2,219,003 1,013,506
============= ============
9. SHARE CAPITAL
The authorised share capital of the Company on incorporation was
represented by an unlimited number of Ordinary Shares of no par
value. The Company raised GBP30,468,865 through the issue of
30,468,865 Ordinary Shares and 6,093,772 Subscription Shares via a
Placing and Offer. In addition, the Company issued 35,554,224
Ordinary Shares and 7,110,822 Subscription Shares to the holders of
shares in Genus Capital Fund pursuant to a scheme of reorganisation
of Genus Capital Fund, in exchange for substantially all the
non-cash assets of Genus Capital Fund which are detailed as
follows:
Transfer
Quantity Investments value
GBP
Listed equity shares
358,333 MBAC Fertilizer Corporation 567,717
567,717
------------
Unlisted equity shares and warrants
500 BacTech Mining 328,699
1,594,646 Celadon Mining 297,720
268,889 Copperbelt Minerals 3,545,594
6,123,642 Ferrous Resources 14,130,705
2,571,429 First Coal Corporation 2,315,920
3,350,285 Gobi Coal and Energy 4,417,716
500,000 Ivanhoe Nickel and Platinum 2,884,457
791,666 Ivanhoe Nickel Platinum warrants 1 for 1.2 ordinary 5,480,463
306,980 Ivanhoe Nickel Platinum warrants 1 for 1 ordinary 1,770,941
6,500,000 South American Ferro Metals 2,024,889
37,197,104
------------
Total assets transferred 37,764,821
Less Cash (2,210,597)
Value of shares issued 35,554,224
------------
With effect from 30 September 2010, 7,543 Ordinary Shares were
issued as a result of the exercise of Subscription Shares. With
effect from 31 March 2011, 2,429 Ordinary Shares were issued as a
result of the exercise of Subscription Shares. The Company has in
issue 66,033,061 Ordinary Shares and 13,194,622 Subscription Shares
denominated in sterling. In addition, the Company has 10,000
Management Ordinary Shares in issue, which are held by the
Investment Manager.
The subscription rights conferred by the Subscription Shares are
exercisable every six months from 30 September 2010 until 31 March
2013 (inclusive). Each Subscription Share carries the right to
subscribe for one Ordinary Share at a price of 100 pence.
On 28 April 2010 the Ordinary Shares and Subscription Shares
were admitted to the Official List of the UK Listing Authority and
to trading on the Main Market of the London Stock Exchange.No
application has been or will be made to have the Management
Ordinary Shares admitted to listing on the Official List or to
trading on the London Stock Exchange's Main Market for listed
securities.
Holders of Ordinary Shares have the right to receive notice of
and to attend and vote at general meetings of the Company. Each
holder of Ordinary Shares being present in person or by proxy at a
meeting will, upon a show of hands, have one vote and upon a poll
each such holder of Ordinary Shares present in person or by proxy
will have one vote for each Ordinary Share held by him.
Holders of Management Ordinary Shares have the right to receive
notice of and to attend and vote at general meetings of the
Company, except that the holders of Management Ordinary Shares are
not entitled to vote on any resolution relating to certain specific
matters, including a material change to the Company's investment
objective, investment policy or borrowing policy. Each holder of
Management Ordinary Shares being present in person or by proxy at a
meeting will, upon a show of hands, have one vote and upon a poll
each such holder of Management Ordinary Shares present in person or
by proxy will have one vote for each Management Ordinary Share held
by him.
Holders of Subscription Shares are not entitled to attend or
vote at meetings of Shareholders.
Holders of Ordinary Shares and Management Ordinary Shares are
entitled to receive, and participate in, any dividends or other
distributions out of the profits of the Company available for
dividend and resolved to be distributed in respect of any
accounting period or other income or right to participate therein.
The Subscription Shares carry no right to any dividend or other
distribution by the Company.
The details of issued share capital of the Company are as
follows:
30 June 2011 31 December 2010
Issued and fully paid share capital
Ordinary Shares of no par value* 66,033,061 66,030,632
Subscription Shares of no par value 13,194,622 13,197,051
============= =================
The issue of Ordinary Shares during the period ended 30 June
2011 took place as follows:
Subscription
Ordinary Shares* Shares
Balance at 1 January 2011 66,030,632 13,197,051
Conversion of Subscription Shares 2,429 (2,429)
Balance at 30 June 2011 66,033,061 13,194,622
================= =============
The issue of Ordinary Shares during the period ended 31 December
2010 took place as follows:
Subscription
Ordinary Shares* Shares
Issued during the period via Placing
and Offer 30,468,865 6,093,772
Conversion of Subscription Shares 7,543 (7,543)
Issued during the period to holders
of Genus Capital Fund 35,554,224 7,110,822
Balance at 31 December 2010 66,030,632 13,197,051
================= =============
* In addition 10,000 Management Ordinary Shares were issued. On
9 March 2010, 1 Management Ordinary Share was issued and on 26
March 2010, 9,999 Management Ordinary Shares were issued.
Capital Management
The Company's investment objective is to seek capital growth
over the long-term through a focused, global portfolio consisting
principally of the equities or related instruments of natural
resources companies.
The Company's investment strategy is to invest in natural
resources companies, predominantly unlisted. Whilst there are no
fixed limits on the allocation of investments between unlisted
securities and listed equities, equity-related securities and cash,
typically the Investment Manager will aim for the Company over the
long term to be between 40% and 100% invested by value of gross
assets with up to 10% by value of gross assets to be held in cash
and cash like holdings. The Company will aim to hold sufficient
cash to meet ongoing operational expenses. Where deemed
appropriate, the Company may borrow up to 10% of NAV for temporary
purposes such as settlement mismatches.
At 30 June 2011 the Company was 99.55% invested (31 December
2010: 79.7%).
It is not currently envisaged that any income or gains will be
distributed by way of dividend, although this does not preclude the
Directors from declaring a dividend at any time in the future if
they consider it appropriate to do so.
The Board monitors the extent to which capital has been deployed
and the manner in which capital has been invested, using inter
alia, sectoral and geographic analyses.
The Company is not subject to any externally imposed capital
requirements.
10. DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at
30 June 2011 and 31 December 2010 were as follows:
Number of Number of
Ordinary Shares Subscription Shares
Edward Flood 65,000 13,000
Christopher Sherwell 25,000 5,000
Clive Newall 25,000 5,000
11. SUBSEQUENT EVENTS
There were no significant subsequent events since the period
end.
12. APPROVAL OF HALF-YEARLY REPORT AND UNAUDITED CONDENSED
INTERIM FINANCIAL STATEMENTS
The Half-Yearly Report and Unaudited Condensed Interim Financial
Statements to 30 June 2011 were approved by the Board of Directors
on 26 August 2011.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGZRLVFGMZG
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