TIDMBSRT
RNS Number : 4376M
Baker Steel Resources Trust Ltd
23 August 2013
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
23 August 2013
BAKER STEEL RESOURCES TRUST LTD
(the "Company")
Half-Yearly Report and Unaudited Condensed Interim Financial
Statements
For the period ended 30 June 2013
The Company has today, in accordance with DTR 6.3.5, released
its Half-Yearly Report and Unaudited Condensed Interim Financial
Statements for the period ended 30 June 2013. The Report is
available via www.bakersteelresourcestrust.com and will shortly be
submitted to the National Storage Mechanism and will also shortly
be available for inspection at www.hemscott.com/nsm.do
Further details of the Company and its investments are available
on the Company's website www.bakersteelresourcestrust.com
Enquiries:
Baker Steel Resources Trust Limited +44 20 7389 8237
Francis Johnstone
Trevor Steel
RBC Capital Markets +44 20 7653 4000
Martin Eales
Winterflood Investment Trusts +44 20 3100 0250
James Moseley
Pelham Bell Pottinger
Lorna Spears +44 20 7861 3883
Joanna Boon +44 20 7861 3867
HSBC Securities Services (Guernsey) Limited
Company Secretary + 44 (0)1481 707 000
DIRECTORS' REPORT
For the period from 1 January 2013 to 30 June 2013
To Shareholders of Baker Steel Resources Trust Limited (the
"Company")
The Board is pleased to present the Company's Interim Management
Report for the six months to 30 June 2013.
This Interim Management 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 Interim Management Report relates to the period for the six
months to 30 June 2013 and contains information that covers this
period and the period up to the date of publication of this Interim
Report. Please note that more up to date performance information,
including the monthly report for the period ended 31 July 2013, 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 per Ordinary Share as at 30 June
2013 was 69.6p per share, down 36.2% in Sterling terms over the six
months. During this period the HSBC World Mining Index was down
28.9% in Sterling terms.
For the purpose of calculating the Net Asset Value ("NAV") per
share, all investments are carried at fair value as at 30 June
2013. The fair value of unquoted investments is determined by the
Directors and quoted investments are carried at last traded price
as at 28 June 2013 (last business day of the month).
Net assets at 30 June 2013 comprised the following:
GBPm % net assets
Unquoted Investments 30.3 65.9
Quoted Investments 16.3 35.5
Net Cash, Equivalents and Accruals (0.6) (1.4)
-------- -------
46.0 100.0
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, March 2011, March 2012, June 2012 and September
2012 a total of 119,444 Ordinary Shares were issued and as a
result, the Company has a total of 66,142,533 Ordinary and 10,000
Management Shares in issue.
The final exercise date for the Subscription Shares was 2 April
2013. No Subscription Shares were exercised at this time and all
Subscription Shares were subsequently cancelled.
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.
Although there is insufficient cash at 30 June 2013 to settle the
current payables and the Company had net current liabilities, this
was largely due to an accrual for the final tranche of settlement
monies relating to an agreement to acquire shares in Metals
Exploration plc as part of a phased issue of Metals Exploration
plc's shares entered into on 22 March 2013. The Company holds
listed securities that can be realised to meet liabilities as they
become due; as at 30 June 2013, approximately 8.7% of the Company's
assets were represented by cash and unrestricted listed and quoted
investments. 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 during the
period ended 30 June 2013.
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 and in the Company's
Annual Report and Audited Financial Statements for the period ended
31 December 2012, both available on the Company's website
www.bakersteelresourcestrust.com.
A further risk facing the Company is regulatory risk, for
example 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, generally and through mining and mineral development
related markets, have not changed significantly since the
publication of the Company's Annual Report and Audited Financial
Statements for the period ended 31 December 2012 and are not
anticipated to change for the remainder of 2013.
Director' Interests
The Directors' interests in the share capital of the Company at
30 June 2013 are set out below:
Number of
Ordinary Shares
---------------------- -----------------
Edward Flood 65,000
---------------------- -----------------
Christopher Sherwell 25,000
---------------------- -----------------
Clive Newall 25,000
---------------------- -----------------
Mr Sherwell also has an indirect interest in the shares of the
Company through an investment in another fund managed by the
Manager.
Signed for and on behalf of the Directors
Howard Myles
Chairman
22 August 2013
INVESTMENT MANAGER'S REPORT
For the period from 1 January 2013 to 30 June 2013
Top 10 Holdings - 30 June 2013
% of NAV
Ivanplats Limited 16.8%
Bilboes Gold Limited 13.1%
Ironstone Resources Limited 12.4%
Gobi Coal & Energy Limited 12.1%
Black Pearl Limited Partnership 12.1%
China Polymetallic Mining Limited
(Five Stars BS Ltd) 10.2%
Polar Silver / Argentum 8.5%
Metals Exploration plc 6.2%
Ferrous Resources Limited 6.1%
South American Ferro Metals Limited 1.1%
Other Investments 2.8%
Net Cash and Equivalents (1.4%)
Top 10 Holdings - 30 June 2012
Ivanplats Limited* 28.7%
Gobi Coal & Energy Limited* 23.1%
China Polymetallic Mining Limited (Five
Stars BS Ltd) 8.8%
Ironstone Resources Limited 7.9%
Ferrous Resources Limited 7.2%
Black Pearl Limited Partnership 6.2%
Bilboes Gold Limited 5.2%
Polar Silver / Argentum 4.9%
Metals Exploration plc 3.2%
South American Ferro Metals Limited 2.8%
Other Investments 4.6%
Net Cash and Equivalents (2.6%)
* represented less than 20% in aggregate of the value of gross
assets as at the date of the last relevant acquisition
Review
At the end of June 2013, Baker Steel Resources Trust Limited was
fully invested. During the first six months of the year, the net
asset value per share fell 36.2% to 69.6 pence broadly tracking an
extremely weak market for mining shares with the HSBC Global Mining
Index falling 28.9% in Sterling terms and the XAU Index falling
41.8% in Sterling terms. The biggest contributor to this fall was
the Company's largest investment, Ivanplats Limited, whose share
price on the Toronto Stock Exchange fell 69.4% in Canadian dollar
terms during the period, despite announcing good progress at both
of its two main projects. This resulted in an approximate 25% fall
in the NAV of the Company during the period. At the half year, in
accordance with its valuation policies, the Board decided that the
extreme market weakness in listed mining equities should be
reflected in the carrying values of certain of the unlisted
holdings in the portfolio in the absence of relevant transactions
and taking into account the specific progress and structure of each
investment. In order to quantify how the share price of a
particular stock might have moved during the period had it been
listed, the Investment Manager maintains an index of comparable
listed companies for each unlisted investment. Following this
review, the Company wrote down the carrying values of Ferrous
Resources Limited and Gobi Coal & Energy Limited by 40% and 50%
respectively in line with movements in their respective indices.
These impairments were responsible for falls in the NAV over the
period of approximately 2% and 7% respectively.
The Company made one significant realisation during the period,
the disposal of its shares in Copperbelt Minerals Limited
("Copperbelt") as part of a return of capital following the buyout
of Copperbelt's Deziwa copper project in the Democratic Republic of
Congo by its joint venture partner, Gécamines. The buy-back valued
Copperbelt at US$14 per share compared to the Company's carrying
value at 31 December 2012 of US$7 per share. This transaction
resulted in an increase in the NAV of the Company of approximately
2%. The Company also sold 8% of its holding in Ivanplats for an
average price of GBP2.32 per share versus an average cost of
GBP1.78 per share, once these shares were released from lock-up in
April 2013. A further 8% was released from lock-up in July 2013 and
will be followed by further 8% releases every three months
thereafter.
The Company has reinvested part of these proceeds in a top-up
investment in Metals Exploration plc, in conjunction with other
major shareholders, allowing Metals Exploration plc to commence
full construction of its Runruno Gold Mine in the Philippines.
Runruno is due to produce approximately 100,000 ounces gold per
annum with the first gold pour scheduled towards the end of
2014.
Despite the disappointing performance of the NAV, reflecting
wider investor sentiment towards the mining sector, the Company's
investments continue to make good progress and the Investment
Manager's confidence in the underlying projects has been reinforced
by site visits to the majority of its investee companies during the
period. Ivanplats announced resource upgrades at its two main
projects, the Kamoa copper project in the Democratic Republic of
Congo and the Platreef platinum/nickel project in South Africa and
is due to announce the results of Preliminary Economic Assessments
on each during the second half of 2013. Bilboes Gold has poured its
first gold from the redevelopment of its oxide operations in
Zimbabwe and is on course to be producing at the rate of
approximately 12,000 ounces gold per year by the end of 2013. In
addition infill drilling at Bilboes's project is progressing well
in order to deliver a feasibility study into its larger sulphide
project in 2014. Ironstone has had good success from its
metallurgical testwork programme and is on course to publish a
Preliminary Economic Assessment during the second half of 2013.
Black Pearl has commenced commissioning the first two dredges at
its iron sands project in Indonesia and is on course for full
production of 10 million tonnes of concentrate from next year.
China Polymetallic Mining reached full production rate at its
Shizishan Silver Lead Zinc Mine in China at the end of 2012 and is
on track to generate substantial cash flows in 2013 which could
lead to a maiden dividend. Ferrous is on course for production of 5
million tonnes of iron ore product in 2013, an approximate 60%
increase over 2012 and it has completed a positive feasibility to
increase production to 17 million tonnes of iron ore by 2017.
The only investment where little progress has been made is Gobi
Coal and Energy which halted development of its Shinejinst coking
coal project in Mongolia in the light of a deteriorating
environment for investment in Mongolia and weakening prices for
coking coal delivered at the Chinese border. It is hoped that the
recent re-election of the incumbent President of Mongolia will lead
to an improvement in the investment climate in that country and
allow Gobi to move Shinejinst into production.
At 30 June 2013 Price / Index % Change % Change from
Level in Six Months Inception
--------------------------------------------- -------------- --------------- --------------
Net Asset Value (pence/share)
(Sterling) 69.6 -36.2% -30.4%*
--------------------------------------------- -------------- --------------- --------------
Ordinary Share Price (pence/share)
(Sterling) 55.0 -34.5% -45.0%**
--------------------------------------------- -------------- --------------- --------------
MSCI World Index (US$) 355.81 +4.7% +15.4%
--------------------------------------------- -------------- --------------- --------------
HSBC Global Mining Index (Sterling) 504.73 -28.9% -40.7%
--------------------------------------------- -------------- --------------- --------------
CRB Index (US$) 275.62 -6.6% +0.9%
--------------------------------------------- -------------- --------------- --------------
Chinese Domestic Iron Ore - Hebei/Tangshan
(US$/t) 166 -4.0% -13.5%
--------------------------------------------- -------------- --------------- --------------
Copper (US$/t) 6731.00 -14.9% -9.7%
--------------------------------------------- -------------- --------------- --------------
Gold (US$/oz) 1234.57 -26.3% +5.7%
--------------------------------------------- -------------- --------------- --------------
Source: Bloomberg closing 27/4/10, **Issue price 28/4/10, * NAV
30/4/10
Outlook
Prices for metals have trended lower especially gold which fell
26.3% in US dollar terms in the first half of the year. Equity
markets for mining shares which were already weak in 2012 have
reacted to the lower commodity prices by falling even further
during 2013, with the HSBC Global Mining Index down 28.9% in
Sterling terms during the first half. With investor rating of the
mining sector approaching historic lows, the turnaround in
valuations could be dramatic once sentiment changes towards the
sector. It is important that the Company does not have to sell at
the current distressed prices to meet redemptions, as is the case
for many open-ended investment funds. It is therefore able to "wait
out the storm" until sentiment improves and in the expectation that
the investments can be sold closer to their inherent values.
Baker Steel Capital Managers LLP
22 August 2013
DIRECTORS' RESPONSIBILITY STATEMENT
For the period from 1 January 2013 to 30 June 2013
The Directors' Report and the Investment Manager's Report
comprise the Half-Yearly Management Report.
To the best of the knowledge of the Directors:
This Half-Yearly Management Report and CondensedInterim
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 2013 to 30 June 2013 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 2013 to 30 June 2013 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
22 August 2013
UNAUDITED PORTFOLIO STATEMENT
AT 30 JUNE 2013
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Listed Equity Shares
Australian Dollars
20,560,122 South American Ferro Metals Limited 520,104 1.13
Australian Dollars Total 520,104 1.13
----------------- ---------
Canadian Dollars
3,383,333 BacTech Environmental Corporation 84,490 0.18
1,100,000 Forbes & Manhattan Coal Corporation 350,236 0.76
9,004,496 Ivanplats Limited 7,740,902 16.82
1,931,667 REBgold Corporation 108,536 0.24
Canadian Dollars Total 8,284,164 18.00
----------------- ---------
Great Britain Pounds
48,202,024 Metals Exploration Plc 2,831,869 6.15
Great Britain Pounds Total 2,831,869 6.15
----------------- ---------
United States Dollars
55,246,318 China Polymetallic Mining Limited 4,688,998 10.19
United States Dollars Total 4,688,998 10.19
----------------- ---------
Total Listed Equity Shares 16,325,135 35.47
----------------- ---------
Fixed Income Instruments
Canadian Dollars
Ironstone Resources Limited Convertible
250,500 Note 156,389 0.34
REBGold Corporation Unsecured Convertible
150,000 Debenture 93,646 0.20
Canadian Dollars Total 250,035 0.54
----------------- ---------
United States Dollars
5,100,000 Argentum Convertible Note 3,355,263 7.29
830,000 Polar Silver Convertible Note 546,053 1.19
United States Dollars Total 3,901,316 8.48
----------------- ---------
Total Fixed Income Instruments 4,151,351 9.02
----------------- ---------
Unlisted Equity Shares and Warrants
Canadian Dollars
6,282,341 Ironstone Resources Limited 5,490,953 11.93
143,143 Ironstone Resources Limited Warrants 22/02/2018 29,219 0.07
3,036,605 Ironstone Resources Limited Warrants 30/09/2013 9,219 0.02
10,250,000 REBgold Corporation Warrants 17/06/2015 26 -
2,400,000 REBgold Corporation Warrants 10/11/2016 5 -
6,666,667 REBgold Corporation Warrants 06/08/2013 0 -
Canadian Dollars Total 5,529,422 12.02
--------------- -----------
Great Britain Pounds
1,594,646 Celadon Mining Limited 143,518 0.31
Great Britain Pounds Total 143,518 0.31
--------------- -----------
United States Dollars
3,034,734 Archipelago Metals Limited 499,134 1.08
451,445 Bilboes Gold Limited 6,010,396 13.06
7,000,000 Black Pearl Limited Partnership 5,587,303 12.14
5,713,642 Ferrous Resources Limited 2,819,231 6.13
4,244,550 Gobi Coal and Energy Limited 5,584,934 12.14
1,186 Polar Silver Resources Limited 780 -
United States Dollars Total 20,501,778 44.55
--------------- -----------
Total Unlisted Equity Shares and Warrants 26,174,718 56.88
--------------- -----------
Financial assets held at fair value through
profit or loss 46,651,204 101.37
--------------- -----------
Other assets & liabilities (629,820) (1.37)
--------------- -----------
Total equity 46,021,384 100.00
--------------- -----------
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
Unaudited Audited
30 June 31 December
2013 2012
Notes GBP GBP
Assets
Cash and cash equivalents 92,836 601,174
Other receivables 3,791 57,671
Financial assets held at fair value through
profit or loss
(Cost: GBP61,575,120 (2012: GBP64,336,833)) 3 46,651,204 75,359,488
Total assets 46,747,831 76,018,333
------------- -------------
Equity and Liabilities
Liabilities
Purchase awaiting settlement 559,394 -
Performance fees payable 6 - 3,651,275
Management fees payable 6 53,657 79,317
Directors' fees payable 36,192 36,000
Audit fees payable 21,573 29,736
Administration fees payable 13,777 7,889
Other payables 41,854 14,461
Total liabilities 726,447 3,818,678
------------- -------------
Equity
Management Ordinary Shares 7 10,000 10,000
Ordinary Shares 7 64,767,056 64,767,056
Profit and loss account (18,755,672) 7,422,599
Total equity 46,021,384 72,199,655
------------- -------------
Total equity and liabilities 46,747,831 76,018,333
============= =============
Ordinary Shares in issue 7 66,152,533 66,152,533
Net asset value per Ordinary Share (in Pence) 4 69.6 109.1
These financial statements were approved by the Board of Directors
on 22 August 2013 and signed on its behalf by:
Howard Myles Christopher Sherwell
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2013 TO 30 JUNE 2013
Unaudited Unaudited Unaudited
period period ended period ended
ended 30 June 30 June
30 June 2013 2013
2013
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 9,831 - 9,831
Net loss on financial assets and
liabilities at fair value through
profit or loss - (25,452,324) (25,452,324)
Net foreign exchange loss - (12,267) (12,267)
Other income 8,028 - 8,028
Net income/(loss) 17,859 (25,464,591) (25,446,732)
---------- -------------- --------------
Expenses
Management fees 6 458,417 - 458,417
Directors' fees 70,000 - 70,000
Directors' expenses 2,796 - 2,796
Audit fees 20,000 - 20,000
Administration fees 52,215 - 52,215
Custody fees 20,807 - 20,807
Other expenses 107,304 - 107,304
Total expenses 731,539 - 731,539
---------- -------------- --------------
Total comprehensive loss for the
period (713,680) (25,464,591) (26,178,271)
========== ============== ==============
Net loss for the period per Ordinary
Share:
Basic and diluted (in pence) 4 (1.1) (38.5) (39.6)
Weighted Average Number of Ordinary
Shares Outstanding:
Basic and diluted 4 66,152,533
In the period ended 30 June 2013 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 1 JANUARY 2012 TO 30 JUNE 2012
Unaudited Unaudited Unaudited
period ended period ended period ended
30 June 30 June 30 June
2012 2012 2012
Revenue Capital Total
Notes GBP GBP GBP
Income
Net loss on financial assets and
liabilities at fair value through
profit or loss - (9,911,647) (9,911,647)
Net foreign exchange loss - (18,710) (18,710)
Net loss - (9,930,357) (9,930,357)
-------------- -------------- --------------
Expenses
Management fees 6 608,334 - 608,334
Directors' fees 70,000 - 70,000
Audit fees 20,000 - 20,000
Administration fees 50,665 - 50,665
Custody fees 26,032 - 26,032
Other expenses 106,420 - 106,420
Total expenses 881,451 - 881,451
-------------- -------------- --------------
Total comprehensive loss for the
period (881,451) (9,930,357) (10,811,808)
============== ============== ==============
Net loss for the period per Ordinary
Share:
Basic and diluted (in pence) 4 (1.4) (15.0) (16.4)
Weighted Average Number of Ordinary
Shares Outstanding:
Basic and diluted 4 66,096,836
In the period ended 30 June 2012 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 CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2013 TO 30 JUNE 2013
Management
Ordinary Ordinary Profit and Period ended
Shares Shares loss account 2013
GBP GBP GBP GBP
Balance as at 1 January
2013 10,000 64,767,056 7,422,599 72,199,655
Net loss for the period - - (26,178,271) (26,178,271)
Balance as at 30 June 2013 10,000 64,767,056 (18,755,672) 46,021,384
=========== =========== =============== =============
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2012 TO 30 JUNE 2012
Management
Ordinary Ordinary Profit and Period ended
Shares Shares loss account 2012
GBP GBP GBP GBP
Balance as at 1 January
2012 10,000 64,657,584 22,056,066 86,723,650
Proceeds on issue of Ordinary
Shares - 107,549 - 107,549
Net loss for the period - - (10,811,808) (10,811,808)
Balance as at 30 June 2012 10,000 64,765,133 11,244,258 76,019,391
=========== =========== =============== =============
CONDENSED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2013 TO 30 JUNE 2013
Period ended Period ended
30 June 30 June
2013 2012
Notes GBP GBP
Cash flows from operating activities
Net loss for the period (26,178,271) (10,811,808)
Adjustments to reconcile income for the
period to net cash used in operating activities:
Net change in fair value of financial
assets at fair value through profit or
loss 25,452,324 9,911,647
Net decrease in other receivables 53,880 19,233
Net decrease in other payables (3,092,231) (36,339)
------------- -------------
Net cash used in operating activities (3,764,298) (917,267)
------------- -------------
Cash flows from investing activities
Purchase of financial assets at fair value
through profit or loss (1,655,154) (364,615)
Sale of financial assets at fair value
through profit or loss 4,911,114 -
Net cash provided by/(used in) investing
activities 3,255,960 (364,615)
------------- -------------
Cash flows from financing activities
Proceeds from shares issued 7 - 107,549
Net cash provided by financing activities - 107,549
------------- -------------
Net decrease in cash and cash equivalents (508,338) (1,174,333)
Cash and cash equivalents at the beginning
of the period 601,174 1,629,044
Cash and cash equivalents at the end of
the period 92,836 454,711
============= =============
Represented by:
Cash and cash equivalents 92,836 454,711
Cash and cash equivalents at the end of
the period 92,836 454,711
============= =============
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2013 TO 30 JUNE 2013
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 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's Ordinary and Subscription Shares were admitted to the
Premium Listing Segment of the Official List on 28 April 2010.
Effective 1 June 2012 the Subscription Shares were assigned to the
Standard Segment of the Offical List.
The final exercise date for the Subscription Shares was 2 April
2013. No Subscription Shares were exercised at this time and all
Subscription Shares were subsequently cancelled.
The Company's portfolio 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 which 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.
The Half-Yearly financial report has not been audited or
reviewed by the auditors pursuant to the Auditing Practices Board
guidance on review of Interim Financial Information.
2. SIGNIFICANT ACCOUNTING POLICIES
a) 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 2012. 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 2012, except
the adoption of IFRS 13 as described in Note 2b. 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 condensed.
The Company's functional currency is the Great Britain pound
sterling ("GBP"), being the currency in which its Ordinary Shares
are issued and in which returns are made to shareholders. The
presentation currency is the same as the functional currency. The
Company invests in companies around the world whose shares are
denominated in various currencies. Currently the majority of the
portfolio is denominated in US Dollars but this will not
necessarily remain the case as the portfolio develops.
The Statement of Comprehensive Income is presented in accordance
with the Statement of Recommended Practice ("SORP") '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").
Income encompasses both revenue and capital gains/losses.
Revenue includes items such as dividends, interests, fees, rental
income and other equivalent items. Capital is the return, positive
or negative, from holding investments other than that part of the
return that is revenue. The SORP provides guidance on whether to
treat them as capital or revenue. Where specific guidance is not
given an item is recognised in accordance with its economic
substance.
b) Standards issued that are effective and adopted
IFRS 13, 'Fair Value Measurement'
IFRS 13 is effective for periods beginning on or after 1 January
2013, and has been adopted by the Company. The standard improves
consistency and reduces complexity by introducing a precise
definition of fair value and a single source of fair value
measurement and disclosure requirements for use across IFRSs. The
requirements do not extend the use of fair value accounting but
provide guidance on how it should be applied where its use is
already required or permitted by other standards within IFRS. If an
asset or liability measured at fair value has a bid price and an
ask price, the standard requires valuation to be based on a price
within the bid-ask spread that is most representative of fair value
and allows the use of mid-market pricing or other pricing
conventions that are used by market participants as a practical
expedient for fair value measurement within a bid-ask spread. On
adoption of the standard the Company reviewed its valuation methods
for listed financial assets and liabilities and continues to use
last traded prices where the Directors consider this represents
fair value, being the price for which shares can be sold. This is
consistent with the methods prescribed in the Company's offering
document for the calculation of its Net Asset Value. The use of
last traded prices is recognised as a standard pricing convention
within the industry and the Directors consider that it is,
generally, most representative of fair value. Last traded prices
may be adjusted, if appropriate, for various factors including
liquidity, bid-ask spread and credit considerations, where the
Directors consider this to be a better representation of fair
value. Such adjustments are generally based on available market
evidence. With respect to unlisted and unquoted investments, the
Directors consider that the adoption of IFRS 13 does not affect the
measurement of fair value which is further described in Note 3.
3. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed equity
30 June 2013 shares Unlisted equity shares Fixed income instruments Warrants Total
GBP GBP GBP GBP GBP
Financial assets at fair
value through profit or loss
Cost 24,848,725 32,718,928 4,007,467 - 61,575,120
Unrealised (loss)/ gain (8,523,590) (6,582,679) 143,884 38,469 (14,923,916)
Market value at 30 June 2013 16,325,135 26,136,249 4,151,351 38,469 46,651,204
============= ====================== ======================== ======== =============
Listed equity
31 December 2012 shares Unlisted equity shares Fixed income instruments Warrants Total
GBP GBP GBP GBP GBP
Financial assets at fair value
through profit or loss
Cost 24,353,651 35,760,976 4,222,206 - 64,336,833
Unrealised gain/(loss) 13,860,840 (2,745,946) (111,943) 19,704 11,022,655
Market value at 31 December
2012 38,214,491 33,015,030 4,110,263 19,704 75,359,488
============= ====================== ======================== ======== ===========
The following table analyses investments by type and by level
within the fair valuation hierarchy at 30 June 2013.
Quoted prices
in active Quoted market Unobservable
markets based 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 3,895,235 12,429,900 - 16,325,135
Unlisted equity shares - - 26,136,249 26,136,249
Warrants - - 38,469 38,469
Fixed income instruments - - 4,151,351 4,151,351
------------- ------------------ ------------ -----------
3,895,235 12,429,900 30,326,069 46,651,204
============= ================== ============ ===========
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2012.
Quoted prices
in active Quoted market Unobservable
markets based 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 4,560,241 33,654,250 - 38,214,491
Unlisted equity shares - - 33,015,030 33,015,030
Warrants - - 19,704 19,704
Fixed income instruments - - 4,110,263 4,110,263
------------- ------------------ ------------ -----------
4,560,241 33,654,250 37,144,997 75,359,488
============= ================== ============ ===========
The table below shows a reconciliation of beginning to ending
fair value balances for Level 3 investments and the amount of total
gains or losses for the year included in earnings attributable to
the change in unrealised gains or losses relating to assets and
liabilities held at 30 June 2013.
Fixed income
Total Equities instruments Warrants
GBP GBP GBP GBP
Opening balance 1 January
2013 37,144,997 33,015,030 4,110,263 19,704
Purchases of investments 256,669 - 256,669 -
Sale of investments (3,765,151) (3,282,589) (482,562) -
Change in net unrealised
(losses)/ gains (3,562,142) (3,836,733) 255,826 18,765
Net realised gains 251,696 240,541 11,155 -
------------- ------------- ------------- ---------
Closing balance 30
June 2013 30,326,069 26,136,249 4,151,351 38,469
============= ============= ============= =========
The table below shows a reconciliation of beginning to ending
fair value balances for Level 3 investments and the amount of total
gains or losses for the year included in earnings attributable to
the change in unrealised gains or losses relating to assets and
liabilities held at 31 December 2012.
Fixed income
Total Equities instruments Warrants
GBP GBP GBP GBP
Opening balance 1 January
2012 79,407,912 75,640,878 3,565,922 201,112
Purchases of investments 801,287 88,489 712,798 -
Transfer out of Level
3 (15,347,517) (15,347,517) - -
Change in net unrealised
losses (27,716,685) (27,366,820) (168,457) (181,408)
------------- ------------- ------------- ----------
Closing balance 31
December 2012 37,144,997 33,015,030 4,110,263 19,704
============= ============= ============= ==========
In determining an investment's placement within the fair value
hierarchy, the Directors take into consideration the following
factors:
Investments whose values are based on quoted market prices in
active markets are classified within Level 1. These include listed
equities with observable market prices. 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 held such investments
at 30 June 2013 amounting to GBP12,429,900 (30 June 2012:
GBPNil).
Investments classified within Level 3 have significant
unobservable inputs. They include unlisted fixed income
instruments, 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 if representative in volume and nature, 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. In cases where there have been no
relevant transactions during the year, the Directors will take due
consideration of the change in Development Risk Adjusted Net
Present Values of the assets underlying the investments, prepared
by the Investment Manager, since the last change in valuation and
of whether such change is indicative of a change in fair value.
The following table presents the Company's other assets and
liabilities at 30 June 2013. The assets and liabilities in the
table are carried at amortised cost; their carrying values are a
reasonable approximation of fair value.
Level Level Total
1 Level 2 3
30 June 2013
GBP GBP GBP GBP
Assets
Cash and cash equivalents 92,836 - - 92,836
Other receivables - 3,791 - 3,791
Total assets 92,836 3,791 - 96,627
-------- -------- ------ -------------
Liabilities
Due to broker 559,394 - 559,394
Investment management fees payable - 53,657 - 53,657
Directors' Fees Payable - 36,192 - 36,192
Audit fees payable - 21,573 - 21,573
Administration fees payable - 13,777 - 13,777
Other payables - 41,854 - 41,854
Total liabilities 559,394 167,053 - 726,447
-------- -------- ------ -------------
Cash and cash equivalents include cash in hand, deposits held
with banks and other short-term investments in an active
market.
Other receivables include the contractual amounts for settlement
of trades and other obligations due to the Fund. Amount due to
brokers, investment management fees payable, directors' fees
payable, audit fees payable, administration fees payable and other
payables represent the contractual amounts and obligations due by
the Fund for settlement for trades and expenses.
4. NET ASSET VALUE PER SHARE AND EARNINGS PER SHARE
Basic Net Asset Value per share is based on the net assets of
GBP46,021,384 (31 December 2012: GBP72,199,655) and 66,152,533 (31
December 2012: 66,152,533) Ordinary Shares, being the number of
shares in issue at the period end. The final exercise date for the
Subscription Shares was 2 April 2013. No Subscription Shares were
exercised at this time and all Subscription Shares were
subsequently cancelled. The Subscription Shares were entitled to be
converted to Ordinary Shares at 100p per share. The calculation for
basic net asset value is as below:-
30 June 2013 31 December 2012
Ordinary Subscription Ordinary Subscription
Shares Shares Shares Shares
Net assets at the period end
(GBP) 46,021,384 - 72,199,655 13,085,150
Number of shares 66,152,533 - 66,152,533 13,085,150
Basic net asset value per share
(in pence) 69.6 109.1
The basic earnings per share is based on the net loss for the
period of the Company of GBP26,178,271 (net loss for the year ended
31 December 2012: GBP14,633,467) and on 66,152,533 (31 December
2012: 66,152,533) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the period. In addition,
at 31 December 2012 the average market share price during the
period of 95.8p was lower than the exercise price of 100p. Basic
and diluted earnings per share were the same due to the fact that
the conversion of subscription shares to ordinary shares would
decrease the loss per share, and hence subscription shares were
anti-dilutive. This calculation was prepared in accordance with
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. 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. The performance period is each 12 month period
ending on 31 December in each year (the "Performance Period"). For
this purpose the "Hurdle" means an amount equal to the Issue Price
of GBP1 per Ordinary Share 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 any Performance Period which is less than a full 12
months, the Hurdle is 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) is 15 per cent of the
total increase in the Net Asset Value, if the Hurdle has been met,
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. In addition, the performance fee
will only become payable if there have been sufficient net realised
gains.
If the Company wishes to terminate the Management Agreement
without cause it is required to give the Manager 12 months prior
notice or pay to the Manager an amount equal to: (a) the aggregate
investment management fee which would otherwise have been payable
during the 12 months following the date of such notice (such amount
to be calculated for the whole of such period by reference to the
Market Capitalisation prevailing on the Valuation Day on or
immediately prior to the date of such notice); and (b) any
performance fee accrued at the end of any Performance Period which
ended on or prior to termination and which remains unpaid at the
date of termination which shall be payable as soon as, and to the
extent that, sufficient cash or other liquid assets are available
to the Company (as determined in good faith by the Directors),
provided that such accrued performance fee shall be paid prior to
the Company making any new investment or settling any other
liabilities; and (c) where termination does not occur at 31
December in any year, any performance fee accrued at the date of
termination shall be payable as soon as and to the extent that
sufficient cash or other liquid assets are available to the Company
(as determined in good faith by the Directors), provided that such
accrued performance fee shall be paid prior to the Company making
any new investment or settling any other liabilities.
The performance fees accrued for the period ended 30 June 2013
were GBPNil (30 June 2012: GBPNil) of which GBPNil was payable at
30 June 2013 (31 December 2012: GBP3,651,275).
No further performance fee will be accrued or paid until the Net
Asset Value exceeds GBP86,831,199 (131.3p per share) as adjusted
for further issues and repurchases of shares.
The management fees paid for the period ended 30 June 2013 were
GBP458,417 (30 June 2012: GBP608,334) of which GBP53,657 was
payable at 30 June 2013 (31 December 2012: GBP79,317).
7. SHARE CAPITAL
The share capital of the Company on incorporation was
represented by an unlimited number of Ordinary Shares of no par
value. The Company may issue an unlimited number of shares of a
nominal or par value and/or of no par value or a combination of
both.
The Company has a total of 66,142,533 Ordinary Shares in issue.
In addition, the Company has 10,000 Management Ordinary Shares in
issue, which are held by the Investment Manager.
The final exercise date for the Subscription Shares was 2 April
2013. No Subscription Shares were exercised at this time and all
Subscription Shares were subsequently cancelled.
The Ordinary Shares are currently admitted to the Premium
Listing segment of the Official List.
The details of issued share capital of the Company are as
follows:
30 June 2013 31 December 2012
Issued and fully paid share capital
Ordinary Shares of no par value* 66,152,533 66,152,533
Subscription Shares of no par value - 13,085,150
============= =================
The issue of Ordinary Shares during the period ended 30 June
2013 took place as follows:
Subscription
Ordinary Shares Shares
Balance at 1 January 2013 66,152,533 13,085,150
Cancellation of Subscription Shares - (13,085,150)
Balance at 30 June 2013 66,152,533 -
================ =============
The issue of Ordinary Shares during the year ended 31 December
2012 took place as follows:
Subscription
Ordinary Shares Shares
Balance at 1 January 2012 66,043,061 13,194,622
Conversion of Subscription Shares 109,472 (109,472)
Balance at 31 December 2012 66,152,533 13,085,150
================ =============
* On 9 March 2010, 1 Management Ordinary Share was issued and on
26 March 2010, 9,999 Management Ordinary Shares were issued.
8. RELATED PARTY TRANSACTIONS
The Directors' interests in the share capital of the Company at
30 June 2013 were as follows:
Number of Number of
Ordinary Shares Subscription Shares
Edward Flood 65,000 -
Christopher Sherwell 25,000 -
Clive Newall 25,000 -
The Directors' interests in the share capital of the Company at
31 December 2012 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
Mr Sherwell also has an indirect interest in the share of the
Company through an investment in another fund managed by the
Manager.
The Manager, Baker Steel Capital Managers (Cayman) Limited, had
an interest in 504,832 Ordinary Shares at 30 June 2013 and 31 Dec
2012.
The Investment Manager, Baker Steel Capital Managers LLP, had an
interest in 10,000 Management Ordinary Shares at 30 June 2013 and
31 Dec 2012.
9. APPROVAL OF HALF-YEARLY REPORT AND UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
The Half-Yearly Report and Unaudited Condensed Interim Financial
Statements to 30 June 2013 were approved by the Board of Directors
on 22 August 2013.
MANAGEMENT AND ADMINISTRATION
DIRECTORS: Howard Myles (Chairman)
Edward Flood
Charles Hansard
Clive Newall
Christopher Sherwell
(all of whom are non-executive and independent)
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
Thames Court
One Queenhithe
London EC4V 3DQ
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
UK PAYING AGENT AND TRANSFER AGENT: Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
RECEIVING AGENT Capita Registrars
Corporate Actions
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
PRINCIPAL BANKER: HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGZRKFGGFZM
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