Interim Results
September 10 2003 - 5:56AM
UK Regulatory
RNS Number:5941P
Dexion Absolute Limited
10 September 2003
Dexion Absolute Limited
Preliminary announcement of the unaudited interim results for the period 26
November 2002 to 30 June 2003
Chairman's Statement
Introduction
In presenting this initial update on developments since the Company's launch on
19 December 2002, I would like firstly to welcome all shareholders and to thank
you for your support.
The Company raised #34 million through the placing which, by 1 January 2003, had
been substantially invested by the Company's investment adviser, Harris
Associates L.P., in a portfolio comprising 37 hedge funds at 30 June 2003,
diversified across eight hedge fund strategies. Two additional investments were
made as at 1 July 2003, post the Company's initial reporting period, further
diversifying the Company's investment base.
Performance
I am pleased to report that in the period from 19 December 2002 to 30 June 2003,
the net asset value of the Company's ordinary shares had appreciated from 98.25p
to 105.61p, a rise of 7.5% and in line with the Company's stated investment
objective. Over the same period, traditional UK equity market and fixed
interest benchmarks, as measured by the FTSE All Share Index (total return) and
the FTSE Government Securities All Stocks Index (total return), rose 8.9% and
3.5% respectively. Over the period from 1 January 2003 to 30 June 2003, the
HFRI Fund of Funds Index (a US dollar based index representing the performance
of funds investing with multiple hedge fund managers) returned 5.1%.
The Company has profited from good and stable performance in both rising and
falling equity markets and the positive net asset appreciation has been achieved
with substantially lower volatility than traditional equity benchmarks.
Investment Review
Global financial markets remained volatile during the period, which helped a
number of trading strategies. All hedge fund strategies, with the exception of
short selling, contributed positively to the return achieved, with the largest
contribution coming from distressed securities where the Company's underlying
hedge fund managers gained from a range of opportunities created by corporate
balance sheet restructurings and the continued narrowing of credit spreads which
started in late 2002.
An end to geopolitical uncertainty surrounding the war in Iraq refocused
investor's attention to value and corporate acquisition opportunities, which
benefited hedged equities and event driven strategies while tactical trading
returns were driven largely by exploiting opportunities in currencies and
interest rates. The negative contribution from short selling was not unexpected
as a result of the strong recovery in equity markets during the second quarter
of 2003.
The Company continues with its stated policy of hedging all currency exposure
back to Sterling through the use of rolling monthly forward foreign exchange
contracts. This policy eliminated volatility that would otherwise have occurred
as a result of fluctuations in the Sterling/US dollar exchange rate over the
period.
Secondary Fundraising
The Board announced on 21 July 2003 that a further issue of shares is being
considered. This was in view of the strong asset performance in the period
since the Company's launch and against the background of secondary market demand
which has resulted in the Company's ordinary shares trading at an average
premium to their net asset value of 1.5% over the period from launch to 30 June
2003.
It is currently hoped that the Board will be in a position to write to
shareholders at the end of September 2003 providing details of the fundraising
proposals.
Investment Outlook
Continued uncertainty in global financial markets remains the dominant theme in
both debt and equity markets. Rising bond yields and rising equity prices are
indicative of global economic recovery, however this is at odds with economic
fundamentals. This uncertainty continues to create opportunities for hedge fund
managers from which to extract returns and acts to attract new talented managers
into the market place.
The Company's Investment Adviser continues to believe that the current market
environment offers many opportunities to make positive returns.
Peter Walsh
Chairman
8 September 2003
Profit and Loss Account (unaudited)
For the period 26 November 2002 (date of incorporation) to 30 June 2003
Note 2003
# #
Income 2
Bank interest 26,695
Expenses 2
Performance fee 3 (278,142)
Management fee 3 (273,085)
Fund administration fee 3 (47,836)
Other professional fees (41,902)
Directors remuneration & expenses (29,410)
Directors & Officers insurance (18,794)
Custodian charges (17,900)
Sundry expenses (25,762)
(732,831)
Net loss for the period (706,136)
Loss per share 5 (2.08p)
All items derive from continuing activities.
Balance Sheet (unaudited)
at 30 June 2003
Note 2003
# #
Investments 6 34,214,330
Current assets
Cash at bank 2,296,678
Prepayments 19,092
2,315,770
Liabilities due within one year
Net forward currency deals awaiting settlement 7 (252,960)
Creditors 8 (368,865)
(621,825)
Net current assets 1,693,945
Net assets 35,908,275
Represented by:
Capital and reserves
Called up share capital 10 340,000
Special reserves 11 33,065,000
Capital reserves 11 3,209,411
Profit and loss account 11 (706,136)
35,568,275
Total shareholders funds 35,908,275
Net assets per share 9 105.61p
The financial statements were approved by the Board of Directors on 8 September
2003
Statement of Total Recognised Gains and Losses
For the period 26 November 2002 (date of incorporation) to 30 June 2003
2003
#
Net loss for the period (706,136)
Realised gains on investments 70,671
Unrealised gains on investments 1,931,971
Realised gains on forward currency contracts 1,614,596
Unrealised losses on forward currency contracts (252,960)
Net realised losses on currency translation* (154,867)
Total recognised gain for the period 2,503,275
*Net realised losses arise on revaluation of foreign currency assets and
liabilities.
Reconciliation of Movements in Shareholders Funds
For the period 26 November 2002 (date of incorporation) to 30 June 2003
2003
#
Net proceeds from placing 33,405,000
Total recognised gain for the period 2,503,275
Opening shareholders funds -
Closing shareholders funds 35,908,275
Cashflow Statement (unaudited)
For the period 26 November 2002 (date of incorporation) to 30 June 2003
2003
#
Operating Activities
Net loss for the period (706,136)
Increase in creditors 368,865
Increase in prepayments (19,092)
Net cash outflow from operating activities (356,363)
Financial Investment
Cost of investments purchased (32,856,657)
Sale of investments 644,969
Realised gain from forward foreign currency contracts 1,614,596
Net cash outflow from financial investment (30,597,092)
Financing
Issue of shares 34,000,000
Costs related to issue of shares (595,000)
Net cash inflow from financing 33,405,000
Increase in cash 2,451,545
Reconciliation of net cash flow to movement in net funds
Increase in cash as above 2,451,545
Net realised losses on currency translation (154,867)
Net movement in the period 2,296,678
Cash at beginning of the period 0
Cash at end of the period 2,296,678
This information is provided by RNS
The company news service from the London Stock Exchange
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