RNS Number:1105M
Close Enhanced Commodities Fund Ld
15 November 2006
CLOSE ENHANCED COMMODITIES FUND LIMITED
PRELIMINARY ANNOUCEMENT OF INTERIM RESULTS
The directors announce the statement of results for the period ended 31 August
2006 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 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 last 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.
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.
MANAGER'S REPORT FOR THE PERIOD TO 31 AUGUST 2006
INVESTMENT PERFORMANCE
At launch, and at the placing on 19 May 2005, the net proceeds derived from the
issue of Shares of the Company were invested in a portfolio of debt securities
based on a notional portfolio of commodities. On 31 August 2006, the Commodity
Portfolio had risen 59.5% since launch and 41.7% over the reporting period.
Over the same periods, the total market value of the Company's shares rose by
69.5% and 56.9% respectively.
MARKET REVIEW
The notional Commodity Portfolio value has risen significantly, rising 59.5%
since the launch of the Company and 41.7% over the financial period, on strong
returns across almost all of the constituents.
Start Value As at Return since launch
31 August 2006
Oil $51.15 $70.26 +37.4%
Gold $432.85 $623.5 +44.1%
Aluminium $1972 $2437 +23.6%
Copper $3367 $7647 +127.1%
Zinc $1383 $3330 +140.8%
Commodity Portfolio 100.0% 159.5% +59.5%
The dispute over Iran's nuclear program impacted oil prices early in the
reporting period on concerns that a confrontation over this issue would lead to
an interruption of oil supplies from the Islamic republic. Concerns the
geopolitical conflicts would disrupt supplies rose further in early July when
North Korea test-fired missiles into the Sea of Japan, resulting in oil prices
setting yet another new high. Oil prices fell back slightly in August as US
demand for gasoline fell at the end of the summer driving season, and a
cease-fire between Israel and Hezbollah eased concern that Middle East supplies
might be cut. The oil price ended the period at $70.26, a rise of 14.4% over the
period.
The industrial metals in the basket all experienced strong growth over the first
ten weeks of the period as the factors that had been driving momentum continued.
Copper, zinc and aluminium all reached record highs as tight supply, increased
demand and speculative buying combined to produce some spectacular price hikes,
being at their zenith up 82%, 73% and 38% respectively. These gains could not
be maintained, however, and they all slipped back in the following months over
concerns of the strength of global growth. Copper and zinc did still produce
very good returns over the period, finishing up 62% and 47% respectively.
Aluminium struggled somewhat, finishing up just 5%.
Gold climbed 14% over the period as it benefited from increased demand from
investors using it as an inflation hedge. As with the industrial metals, the
start of the period saw very strong growth, with the price rising by 30% to a
high of $725; the general demand for commodities combined with inflation worries
and a weakening US Dollar to push the gold price to its the highest level since
1980. Prices then fell back substantially in June as US interest rates were
forecast to continue rising, paring future inflation expectations and supporting
the Dollar. From here, prices bounced back a little before stabilising to end
the period at $623.50.
MARKET OUTLOOK
There continue to be many possible causes of increased geopolitical instability
globally, particularly in major oil producing countries, which would be likely
to lead to higher oil prices in the coming months. Among these, the threat of
possible United Nations sanctions over Iran's nuclear research program may lead
Iran to cut its oil production. The still precarious situation regarding
Hezbollah in the Middle East may also lead to disruptions in the oil supply.
Although in September members of the Organization of Petroleum Exporting
Counties, OPEC, agreed to keep production at current levels, if the price of oil
softens further, it may spur OPEC to reduce production in the future.
The long term trends for industrial metals continue to be positive. Demand from
emerging economies such as India and China shows little sign of abating whilst
commodities are becoming more recognised as a distinct asset class, leading to
increased demand from investors such as pension funds. One possible headwind
could come from interest rates which have been rising across the world to combat
inflation and could slow global growth. However, the US has held rates steady
since June and will only resume its rate hikes if inflation ticks up.
Gold has enjoyed a very strong run due to the general bullishness over
commodities, its use as a hedge against inflation and its status as a haven in
times of uncertainty. These trends show little sign of changing. Inflation in
the US is still higher than authorities would like and the Dollar is displaying
signs of weakness whilst the on-going dispute between the UN and Iran over its
nuclear program together with generally heightened terrorist fears should all
continue to be positive for the gold price.
Close Fund Management (Investments) Limited
STATEMENT OF OPERATIONS
for the period from 1 March to 31 August 2006
1 Mar to 31 Aug 3 Feb to 31 Aug
2006 2005
GBP GBP
Net movement in unrealised appreciation
on investments 13,092,879 4,178,808
Operating expenses (173,136) (500,788)
Net gain for the period attributable to
shareholders 12,919,743 3,678,020
Pence Pence
Earnings per share for the period - Basic
and Diluted 36.60 10.63
In arriving at the results for the financial year, all amounts above relate to
continuing operations.
There are no recognised gains or losses for the year other than those disclosed
above.
Reconciliation of gain per share for investment purposes to gain per share per
the financial statements:
Pence Pence
Gain per share for investment purposes 37.09 12.08
Adjustment to include expenses on an accruals basis (0.49) (1.45)
Gain per share per the financial statements 36.60 10.63
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate.
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.
NET ASSET STATEMENT
as at 31 August 2006
Management
Fund Fund Total
GBP GBP GBP
FIXED ASSETS
Unquoted financial assets designated
as fair value through profit or
loss 63,474,173 - 63,474,173
CURRENT ASSETS
Debtors 565,746 2 565,748
Cash at Bank 901,950 - 901,950
1,467,696 2 1,467,698
CURRENT LIABILITIES
Creditors - due within one year 12,722 - 12,722
NET CURRENT ASSETS 1,454,974 2 1,454,976
TOTAL ASSETS LESS CURRENT
LIABILITIES 64,929,147 2 64,929,149
Creditors - due after one year
excluding net assets attributable
to shareholders - - -
NET ASSETS ATTRIBUTABLE TO
SHAREHOLDERS 64,929,147 2 64,929,149
SHARES IN ISSUE 35,300,000 2
Pence Pence
NAV PER SHARE 183.94 100.00
Reconciliation of NAV per share for investment purposes to NAV per share per the
financial statements:
Pence
NAV per share for investment purposes 179.81
Adjustment to include expenses on an accruals basis 4.13
NAV per share per the financial statements 183.94
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate.
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.
NET ASSET STATEMENT
as at 28 February 2006
Management
Fund Fund Total
GBP GBP GBP
FIXED ASSETS
Unquoted financial assets designated
as fair value through profit and
loss 50,381,294 - 50,381,294
CURRENT ASSETS
Debtors 648,751 2 648,753
Cash at Bank 1,001,051 - 1,001,051
1,649,802 2 1,649,804
CURRENT LIABILITIES
Creditors - due within one year 21,692 - 21,692
NET CURRENT ASSETS 1,628,110 2 1,628,112
TOTAL ASSETS LESS CURRENT
LIABILITIES 52,009,404 2 52,009,406
Creditors - due after one year
excluding net assets attributable
to shareholders - - -
NET ASSETS ATTRIBUTABLE TO
SHAREHOLDERS 52,009,404 2 52,009,406
SHARES IN ISSUE 35,300,000 2
Pence Pence
NAV PER SHARE 147.34 100.00
Reconciliation of NAV per share for investment purposes to NAV per share per the
financial statements:
Pence
NAV per share for investment purposes 142.72
Adjustment to include expenses on an accruals basis 4.62
NAV per share per the financial statements 147.34
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate.
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.
NET ASSET STATEMENT
as at 31 August 2005
Management
Fund Fund Total
GBP GBP GBP
FIXED ASSETS
Unquoted financial assets designated
as fair value through profit or
loss 37,271,558 - 37,271,558
CURRENT ASSETS
Debtors 725,997 2 725,999
Cash at Bank 1,083,753 - 1,083,753
1,809,750 2 1,809,752
CURRENT LIABILITIES
Creditors - due within one year 15,288 - 15,288
NET CURRENT ASSETS 1,794,462 2 1,794,464
TOTAL ASSETS LESS CURRENT
LIABILITIES 39,066,020 2 39,066,022
Creditors - due after one year
excluding net assets attributable
to shareholders - - -
NET ASSETS ATTRIBUTABLE TO
SHAREHOLDERS 39,066,020 2 39,066,022
SHARES IN ISSUE 35,300,000 2
Pence Pence
NAV PER SHARE 110.67 100.00
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 5.09
NAV per share per the financial statements 110.67
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate.
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 ended 31 August 2006
1 Mar 2006 3 Feb 2005
to 31 Aug 2006 to 31 Aug 2005
GBP GBP
Operating activities
Net gain for the period attributable to 12,919,743 3,678,020
shareholders
Less: Unrealised (appreciation) on (13,092,879) (4,178,808)
investments
Add: Amortisation of debt issue costs 80,404 80,459
Add: (Decrease) / Increase in accrued (8,971) 15,288
expenses
Less: Decrease / (Increase) in prepayments and
accrued income excluding debt issue costs 2,602 (10,228)
Net cash outflow from operating activities (99,101) (415,269)
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 - 35,388,002
Costs of issue of shares - (796,230)
Net cash inflow from financing activities - 34,591,772
Cash at beginning of year 1,001,051 -
(Decrease) / Increase in cash and cash (99,101) 1,083,753
equivalents
Cash at end of year 901,950 1,083,753
Interest income in the year of #19,708 was received. Interest income has been
netted off against operating expenses.
STATEMENT OF CHANGES IN NET ASSETS
for the period ended 31 August 2006 Management
Fund Fund Total
GBP GBP GBP
Opening balance 52,009,404 2 52,009,406
Net gain for the period 12,919,743 - 12,919,743
Closing balance as at 31 August 2006 64,929,147 2 64,929,149
for the period ended 28 February Management
2006
Fund Fund Total
GBP GBP GBP
Share capital issued 3,530 2 3,532
Share premium at issue 35,384,470 - 35,384,470
Net gain for the period 16,621,404 - 16,621,404
Closing balance as at 28 February 52,009,404 2 52,009,406
2006
for the period ended 31 August 2005 Management
Fund Fund Total
GBP GBP GBP
Share capital issued 3,530 2 3,532
Share premium at issue 35,384,470 - 35,384,470
Net gain for the period 3,678,020 - 3,678,020
Closing balance as at 31 August 2005 39,066,020 2 39,066,022
For further information contact:
Anson Fund Managers Limited
Company Secretary
Telephone: 01481 722260
15 November 2006
End of announcement
E&OE / in transmission
This information is provided by RNS
The company news service from the London Stock Exchange
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