RNS Number:6280T
Close Enhanced Commodities Fund Ld
03 November 2005
CLOSE ENHANCED COMMODITIES FUND LIMITED
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS
The directors announce the statement of results for the period from
incorporation on 3 February 2005 to 31 August 2005 as follows:-
ABOUT THE COMPANY
Close Enhanced Commodities Fund Limited is a Guernsey incorporated, closed-ended
investment company. With the exception of two Management Shares issued for
administrative reasons, the Company's issued share capital comprises 35,300,000
Participating Shares (the "Shares") the performance of which is designed to
provide a geared exposure to any increase in the prices of a notional portfolio
of certain industrial and precious metals and energy related commodities (the
"Commodity Portfolio").
Pursuant to the initial placing and offer for subscription, 33,700,000 Shares
were issued at a price of 100p each on 23 February 2005. Your Board in
conjunction with the Company's Manager were successful in raising further
capital for the Company by the subsequent issue of 1,600,000 Shares at a price
of 105.5 pence each on 19 May 2005. All 35,300,000 Shares in issue now rank pari
passu, have been admitted to the Official List of the United Kingdom Listing
Authority and are capable of being dealt in on the London Stock Exchange. The
Company has an unlimited life but the Shares will be redeemed on or around 24
February 2010 (the "Redemption Date").
Looking to the future your Board remains open to further opportunities which may
result in the issue of further Shares. As was the case with the 1,600,000
Shares issued in May of this year, any further issues of Shares will only be
made where the proceeds of the issue can be invested in accordance with the
Company's investment objective and policy and on terms which are non-dilutive
for existing shareholders.
It is with much regret we report the untimely and sudden death on 22 June 2005
of Mr Timothy Sinclair, a founder director of the Company.
Consideration is being given to appointing a replacement for Mr Sinclair and an
announcement will be made at the appropriate time.
INVESTMENT OBJECTIVE AND POLICY
The investment objective of the Company is to provide shareholders on the
Redemption Date with a capital payment which will comprise a capital amount of
100p per Share and a growth amount per Share equal to two times any percentage
increase in the End Value of the Commodity Portfolio relative to its Start
Value, such amount being expressed in pence and rounded down to the next whole
penny (the "Final Capital Entitlement"). If the End Value is lower than the
Start Value, the Shares are designed to repay the full capital amount of 100p
per Share on the Redemption Date. The final return is subject to there being no
counterparty default or any other unforeseen circumstances.
The Final Capital Entitlement per Share in Sterling is designed to be determined
by applying to the initial issue price of #1 per Share the performance of the
Commodity Portfolio as valued and measured using US Dollar values over the
calculation period from 22 February 2005 (the "Start Date") to 22 February 2010
(the "End Date"). The Commodity Portfolio is a notional portfolio of
commodities comprising by value on the Start Date one third oil, one third gold
and one third industrial metals (equally weighted between aluminium, copper and
zinc). See the Manager's Report for the opening values.
The US Dollar prices used in order to calculate the value of the Commodity
Portfolio on any date are: in respect of oil, the official closing price of the
NYMEX Exchange crude oil future contract next to expire in US Dollars per
barrel; in respect of gold, the afternoon fixing price for gold as determined by
the London Gold Market Fixing in US Dollars per Troy Ounce; and in respect of
the industrial metals, the official London Metal Exchange Cash Price in US
Dollars per metric tonne.
As at the End Date, the final value of the Commodity Portfolio will be
calculated by reference to the US Dollar aggregate daily value of each
constituent of the Commodity Portfolio over a calculation period of one year
ending on the End Date.
In accordance with the Company's investment policy, the net proceeds derived by
the Company from the issue of Shares have been invested in a portfolio of debt
securities at prices relative to the value of the Commodity Portfolio on 22
February 2005.
As both the Shares and the debt securities are Sterling-denominated,
Shareholders will not be exposed to direct currency risk. However, each of the
commodities is priced in US Dollars. Accordingly, in the event that the US
Dollar strengthens in value, this may cause a reduction in the prices of the
commodities and could result in a reduction in the Final Capital Entitlement.
It is with much regret we report the untimely and sudden death on 22 June 2005
of Mr Timothy Sinclair, a founder director of the Company.
Consideration is being given to appointing a replacement for Mr Sinclair and an
announcement will be made at the appropriate time.
The Board
Guernsey
MANAGER'S REPORT FOR THE PERIOD TO 31 AUGUST 2005
INVESTMENT PERFORMANCE
At launch and at the placing on 19 May 2005, the net proceeds derived from the
issue of Shares were invested in a portfolio of debt securities based on a
notional portfolio of commodities. On 31 August 2005, the Commodity Portfolio
had risen 12.6% since launch. Over the same period, the total market value of
the Company's shares rose by 8.0%.
MARKET REVIEW
Since the launch of the Company, the value of the notional Commodity Portfolio
in US Dollar terms has risen by 12.6%, primarily due to the strong rise in the
price of oil over the period.
Start Value As at Return since launch
31 August 2005
Oil $51.15 $68.94 +34.8%
Gold $432.85 $433.25 +0.1%
Aluminium $1972 $1859 -5.7%
Copper $3367 $3915 +16.3%
Zinc $1383 $1360 -1.7%
Commodity Portfolio 100.0% 112.6% +12.6%
For the first three months of the period under review, oil prices traded in a
narrow band, predominately between $50 and $55. Towards the end of May, when
the holiday driving season typically pushes US gasoline demand towards its peak,
several refineries in the US gulf coast encountered glitches driving the oil
price higher.
The oil price continued to climb, reaching $60 in June and July as OPEC
struggled to increase their supply to meet continuing strong demand, Iraqi
production fell, and refineries operated at 95% capacity or higher. In August
the price surged as hurricane Katrina struck the Gulf of Mexico shutting down
95% of American refining capacity and pushing the price above a record $70. The
oil price ended the period at $68.94, a rise of 34.8% over the period.
The prices of industrial metals are set primarily by the interplay of
currencies, tight supply and changes in global demand. The price of copper has
exemplified this interplay over the period since the Company's launch. After a
stable first few months, low inventories and a myriad of supply disruptions
pushed the price of copper up, despite the negative impact of the strengthening
dollar. By the end of the period, copper had risen 16.3% since launch. Having
drifted downwards significantly at the start of the period, the price of
aluminium and zinc also rose substantially over July and August, such that these
metals ended the reporting period down 5.7% and 1.7% respectively.
For most of the first half of 2005 gold prices had been oscillating in a broad
sideways channel between $415/oz and $447/oz. The value of gold was affected,
inter alia, by the strengthening of the US dollar and the revaluing of the Yuan.
In August the price of gold rallied to its high of the period as funds bought
into commodities, with support from fundamental factors including the US dollar
being under pressure, labour strikes in South African mines, and rising global
energy prices. However gold failed to break through $450/oz as funds became
over-exposed and started profit taking, and the price of gold ended the period
flat since launch.
MARKET OUTLOOK
The factors that have led to the growth in oil prices are unlikely to dissipate
over the short to medium term. Demand continues to be strong as developing
countries such as China and India maintain rapid economic expansion and, whilst
the western world's productive use of oil has improved considerably, its
dependency has not. The current high prices may eventually dampen economic
activity, which could lead to a fall in the oil price. However, the world is
getting increasingly used to surging oil prices and whilst demand remains strong
and supply stretched, high oil prices can be expected to remain.
China's demand for base-metals is probably the most significant factor when
considering their market outlook. Over the past few years this demand has
outstripped all expectations. Further growth of Chinese demand is key to
supporting base-metal prices on an on-going basis, and any fears of a slowdown
in this area are few given China's continuing economic growth.
The outlook for gold in the long term remains positive. In the short term if
energy prices continue to rise significantly, it is likely to lead to greater
inflation risk, for which gold has been the traditional hedge. Combined with
further signs of dollar weakness or wider economic troubles this could lead to
greater demand for gold.
Close Fund Management (Investments) Limited
STATEMENT OF OPERATIONS
for the period from incorporation on 3 February 2005 to 31 August 2005
GBP
Net movement in unrealised appreciation on investments 4,178,808
Operating expenses (690,184)
Gain before financing costs and taxation 3,488,624
Gain on ordinary activities before taxation 3,488,624
Taxation on ordinary activities -
Net gain for the period 3,488,624
Pence
Gain per share for the period 10.08
In arriving at the results for the financial period, all amounts above relate to
continuing operations.
There are no recognised gains or losses for the period other than those
disclosed above.
Reconciliation of gain per share for investment purposes to gain per share per
the financial statements:
Gain per share for investment purposes 5.58
Adjustment to include expenses on an accruals basis 4.50
Gain per share per the financial statements 10.08
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate. The adjustment to expenses to
reflect the application of this accruals basis increases the gain per share of
the Company by 4.50 pence.
The gain per share for investment purposes represents the gain per share
attributable to shareholders in accordance with the Prospectus, which recognises
all expenses of the Company up to and including the date that the Final Capital
Entitlement becomes payable.
BALANCE SHEET
as at 31 August 2005
MANAGE-
MENT
FUND FUND TOTAL
GBP GBP GBP
FIXED ASSETS
Investments 37,271,558 - 37,271,558
CURRENT ASSETS
Debtors 10,226 2 10,228
Cash at Bank 1,083,753 - 1,083,753
1,093,979 2 1,093,981
CURRENT LIABILITIES
Creditors - due within one year 9,560 - 9,560
NET CURRENT ASSETS 1,084,419 2 1,084,421
Total Assets Less Current Liabilities 38,355,977 2 38,355,979
Creditors - due after one year - - -
NET ASSETS 38,355,977 2 38,355,979
SHAREHOLDERS' FUNDS
Share capital 3,530 2 3,532
Share premium 34,863,823 - 34,863,823
34,867,353 2 34,867,355
Retained earnings 3,488,624 - 3,488,624
TOTAL SHAREHOLDERS' FUNDS 38,355,977 2 38,355,979
SHARES IN ISSUE 35,300,000 2
Pence Pence
NAV PER SHARE 108.65 100.00
The NAV per share calculated in accordance with International Financial
Reporting Standards is based on net assets as at 31 August 2005 of #38,355,977.
Reconciliation of NAV per share for investment purposes to NAV per share per the
financial statements:
Pence
NAV per share for investment purposes 105.58
Adjustment to include expenses on an accruals basis 3.07
NAV per share per the financial statements 108.65
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate. The adjustment to expenses to
reflect the application of this accruals basis increases the gain per share of
the Company by 3.07 pence.
The NAV per share for investment purposes represents the NAV per share
attributable to shareholders in accordance with the Prospectus, which recognises
all expenses of the Company up to and including the date that the Final Capital
Entitlement becomes payable.
STATEMENT OF CASH FLOWS
for the period from incorporation on 3 February 2005 to 31 August 2005
GBP
Operating activities
Gain on ordinary activities after taxation 3,488,624
Less: Unrealised (appreciation) on investments (4,178,808)
Less/add: (Decrease)/increase in accrued expenses 9,560
Add/less: Decrease/(increase) in prepaid expenses (10,226)
Net cash outflow from operating expenses (690,850)
Investing activities
Purchase of financial assets (33,092,750)
Net cash outflow from investing activities (33,092,750)
Financing activities
Proceeds of issue of shares 35,384,470
Costs of issue of shares (520,647)
Net cash inflow from financing activities 34,863,823
Increase in cash and cash equivalents 1,080,223
Opening cash balance -
Closing cash balance 1,083,753
Movement in cash 1,083,753
Interest income in the period of #35,755 was received. Interest income has been
netted off against operating expenses.
STATEMENT OF CHANGES IN EQUITY
for the period from incorporation on 3 February 2005 to 31 August 2005
MANAGE-
MENT
FUND FUND TOTAL
GBP GBP GBP
Share Capital Issued 3,530 2 3,532
Share Premium 35,384,470 - 35,384,470
Less initial expenses (520,647) - (520,647)
Balance as at 31 August 2005 34,867,353 2 34,867,355
For further information contact:
Anson Fund Managers Limited
Company Secretary
for Close Enhanced Commodities Fund Limited
Tel: Guernsey 01481 722260
3 November 2005
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
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