TIDMDTL
RNS Number : 0165N
Dexion Trading Limited
25 August 2011
Dexion Trading Limited (the "Company")
INTERIM REPORT AND ACCOUNTS
The Company has today, in accordance with DTR 6.3.5, released
its Interim Report and Accounts for the period ended 30 June 2011.
The Report is available via www.dexiontrading.comand will shortly
be submitted to the National Storage Mechanism and will also
shortly be available for inspection at www.hemscott.com/nsm.do
SUMMARY INFORMATION
Principal Activity
Dexion Trading Limited ("the Company") is a Guernsey authorised
closed-ended investment company listed on the London Stock
Exchange. Trading in the Company's Shares commenced on 29 November
2004.
Investment Objective and Investment Policy
The Company's investment objective and policy mirrors that of
Permal Macro Holdings Limited ("Permal Macro") and it operates as a
feeder fund into Permal Macro.
Permal Macro's investment objective is to provide investment
returns that have lower risk than traditional investment returns
and, over time, to achieve above market returns. To achieve this
objective, Permal Macro seeks high-quality Portfolio Managers and
invests its assets in either discretionary investment accounts or
investment vehicles managed by such Portfolio Managers. Permal
Macro's asset allocation policy is currently structured so as to
target an annualised return over the medium term of approximately 8
per cent. to 12 per cent. with annualised volatility of 4 per cent.
to 6 per cent. (although Permal may alter this allocation policy at
any time at its sole discretion without reference or notification
to Permal Macro shareholders, including the Company).
Permal Macro's investments are made indirectly in the global
marketplace with exposure to the financial, metal, energy,
agricultural, currency and other markets. In order to manage the
overall volatility of its investments, Permal Macro seeks to
diversify its portfolio through investment in a range of Portfolio
Funds seeking to implement trading strategies in numerous US and
international currency, futures, options, forward and other
derivative markets. Some of Permal Macro's Portfolio Managers may
rely principally on equity strategies (e.g. long/short, long only),
while others may rely principally on fixed income or relative value
strategies. Permal Macro's investments are both listed and unlisted
securities.
Shareholder Information
The Company announces its net asset value on a monthly basis
together with a commentary on investment performance. Estimated net
asset values are normally provided weekly. Share price, net asset
value and performance information can also be found by eligible
Shareholders on the Company's website page which can be accessed
via www.dexiontrading.com. However, information on that website
does not form part of, nor is it incorporated by reference into
this document and that information is not available to certain
overseas Shareholders.
Financial Highlights
30 June 31 December 30 June
2011 2010 2010
----------------------------- ---------- ------------ ----------
Total Net Assets GBP135.1m GBP139.3m GBP130.9m
Net Asset Value per Share 135.87p 138.18p 129.30p
Mid-Market Share Price 123.75p 119.00p 116.88p
Discount to Net Asset Value (8.92)% (13.88)% (9.61)%
----------------------------- ---------- ------------ ----------
As at 23 August 2011, the discount had moved to (9.30)%. Net
Asset Value per Share and Mid-Market Share price stood at 137.30p
and 124.50p respectively.
CHAIRMAN'S STATEMENT
I have pleasure in presenting this interim report for the six
months ended 30 June 2011 and would like to thank all Shareholders
for their continued support and interest.
The period under review was characterised by sovereign debt
concerns, in particular the ongoing European debt crisis which saw
the drawn-out restructuring of Greece's debt, and fears of
contagion as Italian and Spanish government bond yields increased
significantly in the second quarter. Lack of agreement between
politicians over raising the US debt ceiling only served to
increase investor uncertainty. At the same time, global economic
data was mixed which, combined with social unrest in the Middle
East and the earthquake in Japan, resulted in market conditions
being extremely volatile in the first six months of the year.
Following the recent market turmoil in August, the outlook remains
uncertain, although positive corporate results offer encouragement
that market fundamentals may begin to take precedence if
governments finally deal with their sovereign debt issues.
During the six month period to 30 June 2011, the net asset value
of the Company's Shares fell by 1.67%. By comparison, the HFRX
Macro Index had fallen by 2.14% over the same period, although
global equity and bond markets were both up. Over the period the
Company's Shares traded at an average discount to their net asset
value ("NAV") of 9.95% and ended the period at a discount to NAV of
8.92%.
Following the trigger of the rolling 12 month discount floor
provisions in February 2011, a continuation vote was held on 24
March 2011 at a class meeting of the Company's Shareholders. The
continuation resolution was passed with a total of 65% of the
issued share capital voting, and 85% of those votes cast in favour.
The Board would like to thank Shareholders for their support.
The Board has continued its efforts to reduce the Share price
discount to NAV, in particular by continuing to pursue its Share
buyback programme in the first half of 2011. During the period the
Company has bought back 1,355,000 Shares at a cost of GBP1,679,768,
and the discount has reduced from 13.88% as at 31 December 2010 to
8.92% as at 30 June 2011. The Company has continued Share buybacks
from the end of the reporting period to the date of these interim
accounts.
The Board and Manager continue to recognise the considerable
experience of the Investment Adviser. Since becoming a feeder fund
to Permal Macro Holdings Limited on 1 October 2007, the Company's
NAV has increased by 14.81% to June 2011, whilst the HFRX Macro
Index has fallen by 1.92% over the same period.
I look forward to writing to Shareholders again at the time of
the Company results for the full year 2011.
Christopher Spencer
Chairman
24 August 2011
MANAGER'S REPORT
The net asset value of the Company's Shares fell 1.67% during
the first half 2011. This compares to a fall of 2.14% for the HFRX
Macro index. Set out below is the Investment Adviser's strategy
overview for the period.
The Company's core allocations to Discretionary and Systematic
returned -0.6% and -2.0%, whereas the satellite Natural Resources
and Relative Value Arbitrage strategies returned -0.6% and 4.3%,
respectively. References to the Company's managers, allocations and
investments are, where the context requires, to those of Permal
Macro, of which the Company is a feeder fund.
Performance by Strategy
Discretionary
Discretionary managers lost 0.6% in the first half of 2011.
These managers generally entered 2011 with positions designed to
profit from continued turmoil stemming from the European sovereign
debt crisis, and mounting inflation in the developing world.
Managers held short positions in the euro, expecting the currency
to suffer as the crisis at the periphery continued unabated.
However, these positions resulted in losses as the euro rallied
throughout most of the period. Many managers subsequently adjusted
exposures to position for US dollar weakness in the middle of the
period as the US credit outlook was called into question. This
short US dollar, long emerging markets currencies exposure, a
quasi-consensus trade in this group, proved very profitable as the
US dollar fell sharply, particularly in April.
Currency positioning continued to dominate performance heading
into the end of the period, amid a reversal in the US dollar. As
the European debt crisis intensified, investors fled risk assets,
including popular trades in emerging market currencies, resulting
in a rise in the US dollar and losses for many of the Company's
Discretionary managers.
Managers were more successful in navigating fixed income markets
during the period, generating gains in both developed and emerging
market debt. In the US, managers profited from long positions in US
Treasuries, particularly during the second quarter, as the
deteriorating economic outlook and continued dovish stance from the
US Federal Reserve led to a strong rally in fixed income prices.
Long positions in Mexican government debt securities also proved
lucrative as the country's yield curve was priced for hikes that
the Company's managers believed were unlikely given Mexico's close
economic linkages to the US.
Systematic
Systematic managers lost 2.0% in the first half of 2011. The
period proved a difficult trading environment for Systematic
managers due to a lack of clear trends as investor sentiment swung
sharply between "risk on", to the benefit of stocks and
commodities, and "risk off", to the advantage of Treasuries and
(sometimes) the US dollar.
Trend following managers posted losses across most asset
classes, with the biggest losses resulting from equity index
positions. In particular, many managers held long positions in
Japanese equities heading into the Japanese earthquake in March,
resulting in large losses. Further, as equities recovered in March
and April, many programmes reinitiated long equity positions in
developed markets. As this trend reversed on the back of weak
economic data in May and June, performance suffered further. Energy
trading was also costly to the Company's trend followers as gains
captured in the first quarter were reversed as crude oil prices
fell in the latter part of the period. Fixed income was generally
the only profitable asset class for most of these managers.
Although trading was choppy in the early part of the period,
managers
benefited from the sustained uptrend of bond prices in the
second quarter as sentiment shifted to "risk off" amid growing
contagion concerns surrounding the European periphery.
The Company's non-trend following managers fared somewhat
better, although certain currency trades were particularly
detrimental to performance, including short Swiss franc positions
as the franc appreciated strongly amid safe haven buying in the
second quarter. Losses were partially offset by well-timed long
positions in the Australian dollar, which rallied strongly
throughout March and April. Long Japanese yen positions also
resulted in gains in the latter half of the period as it
appreciated measurably following the Japanese earthquake.
Natural Resources
Natural Resources managers lost 0.6% in the first half of the
year. Managers with long energy and related equity positions
contributed solidly to returns during the first quarter, but gains
were erased amid the second quarter sell off in crude prices.
Managers focused on the natural gas sector posted losses during the
period primarily as relative value relationships deteriorated in
the wake of the Japanese earthquake. In addition, long positions in
gold equities detracted from gains as mining equities significantly
lagged the rise in gold bullion prices, particularly in May and
June.
Relative Value Arbitrage
Relative Value Arbitrage managers gained 4.3% in the first half
of 2011. In general, managers with broad geographical
diversification outperformed those focused on US equities. Profits
were generated in both EMU and UK equities as less liquid stocks
with strong fundamentals outperformed short positions in highly
liquid stocks with weak fundamentals.
Outlook
The recent weeks, and in particular the first weeks of August,
have witnessed sharp declines in global equity prices. Not only has
economic data disappointed, but markets reacted badly to news of
the US credit downgrade by Standard & Poor's on 5 August and
the continued uncertainty among European sovereigns.
Yet amidst this volatility and investor uneasiness, the majority
of managers see few similarities to 2008 noting that currently,
markets may be overcorrecting. They believe that the odds of a
recession have however increased, although a "double-dip" remains
unlikely, and the developed world is set for a "new norm", with
slow growth for the foreseeable future.
Extensive macro headwinds continue to batter the global
economy.
In the US, macroeconomic data has clearly shifted down a gear,
with a fall in consumer spending, lower house prices, declining
industrial activity, and a high unemployment rate. Against this
backdrop, the debt ceiling shenanigans in Washington highlighted
the frailties of the US fiscal situation and fissures amongst
political parties. While many managers viewed the downgrade as a
minor event, it was unprecedented and dealt a significant blow to
already weakening consumer and business confidence. Further
aggravating this, was the recognition that additional economic
stimulus would need to come from a Fed that is visibly running out
of options. Managers believe that if the US is to achieve a
sustained recovery it needs to go through an adjustment process,
shifting labour and capital to the more competitive industries. But
with growth so weak, inflation is no longer a significant
concern.
Managers are generally bearish on Europe. Growth in the region
is disappointing, not helped by a slowing Germany. With European
sovereign debt issues continuing to dominate headlines, the very
sustainability of keeping the Euro-zone intact has come into
question. The European Financial Stability Facility in its current
form, the government bond purchase programmes and the austerity
measures put forth have so far not been sufficient to solve ongoing
fiscal issues. More viable alternatives are required to stimulate
growth and increase revenues. With the current market concerns so
focused on confidence, it is worrying that there is such a distinct
lack of faith in the European central bankers and politicians.
Managers are more optimistic in respect of the emerging markets.
While certain Asian economies have slowed, large Asian economies
are likely to continue posting high single-digit growth this year.
In addition, the recent fall in commodity prices will ease Asian
inflation, reducing pressures on disposable incomes, and supporting
future growth. Others caution that the "decoupling theory" may well
come undone, with the emerging market bloc likely to struggle as
the developed world slows. Furthermore, to keep on growing, they
will need to tolerate a certain amount of inflation which may in
turn cause social unrest.
Despite considerable market turbulence, the majority of the
Fund's managers, particularly in the core Discretionary and
Systematic strategies, have held up well as they have generally
shifted to a more protective positioning in light of the increased
political and economic uncertainty. Many have increased their long
US government bond exposure, a move which proved particularly
beneficial during the first very turbulent trading days of August.
Key in their minds is to remain nimble and flexible and shift their
portfolios as appropriate in a highly proactive fashion.
While there is a distinct lack of trust and confidence in the
developed market's financial and political system, the macro
environment continues to offer considerable trading opportunities.
Managers are generally positioned as follows:
Fixed Income
Many managers believe that long positions in the US fixed income
market continue to make sense, based on the view that growth is
weak and rates will remain low and as such have long exposure to
both the front-end and especially the long-end (10 year sector) of
the US curve. Emerging markets focused managers hold select long
bond positions in countries where inflation is controlled. Mexico,
whose economy and monetary policy is closely linked to the US, is a
good example. In addition, some managers believe these positions
stand to do well if a "risk event" occurs in Europe. In Europe,
certain managers own credit protection on the subordinated debt of
some European financial institutions given the continued turmoil at
the periphery.
Currencies
The US dollar remains the funding currency of choice as the Fed
remains firmly on hold which should serve to keep the dollar under
pressure. Managers continue to be bullish emerging market
currencies given the positive carry and superior growth prospects,
although they caution that some of these positions have become
crowded. Managers are also bullish commodity currencies. The
Australian dollar is an example: over the long-term, the
fundamentals of the Australian economy are far superior to those of
the US (i.e. low unemployment and the fact that Australia never had
a recession) which are supportive of the AUD. Views on the euro
remain varied, with some managers believing that the political will
to solve periphery fiscal issues will support the currency. In
addition, they remark that the ECB has a tighter monetary policy
than the Fed. The "euro bears" however believe the ongoing turmoil
at the periphery will weigh on the euro.
Equities
Managers' equity exposure is generally light and, given recent
events, many have further reduced their exposures. Although some
continue to believe that prolonged accommodative monetary policy in
the US will continue to be supportive of the asset class, sentiment
is becoming increasingly cautious in light of fiscal ambiguity and
deteriorating economic data.
Commodities
Managers expect ongoing volatility in the commodities sector
given fiscal uncertainty in the developed world. Long-term
supply/demand fundamentals of numerous commodities do however
remain attractive and managers have long exposures to the sector,
in particular gold and other precious metals which stand to do well
in times of increased uncertainty.
Analysis of significant investments
The ten largest holdings of the Company as at 30 June 2011 are
set out below. These investments were held via Permal Macro.
% of
Market Company's
Name of Investment Strategy value (GBP) net assets
---------------------------------- -------------- ------------ ------------
Moore Global Investments Limited Discretionary 9,931,549 7.35
Caxton Global Investments Limited Discretionary 9,876,738 7.31
Graham Prop Matrix Systematic 6,486,578 4.80
JNV Overseas Fund Limited Discretionary 5,834,374 4.32
Tudor BVI Global Fund Limited Discretionary 3,995,543 2.96
Permal WCM Limited Systematic 3,718,460 2.75
Permal Covepoint Limited Discretionary 3,446,167 2.55
Permal Systematic Macro Limited Systematic 3,249,310 2.41
Permal Woodbine Limited Discretionary 3,199,575 2.37
Permal Tudor Tensor Limited Systematic 3,041,843 2.25
---------------------------------- -------------- ------------ ------------
52,780,137 39.07
------------------------------------------------- ------------ ------------
Source: Dexion Capital plc calculation based on Permal
(data)
Whilst it is generally considered best practice to disclose the
full portfolio of an investment company, the composition of Permal
Macro's investment portfolio is the subject of confidentiality
provisions with Permal Macro.
Dexion Capital (Guernsey) Limited
24 August 2011
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting;
-- the Chairman's Statement and Manager's Report meet the
requirements of an interim management report, and include 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 during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months 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 first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Christopher Spencer
Director
24 August 2011
CONDENSED UNAUDITED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 31 December
2011 2010
Note GBP000 GBP000
--------------------------------------- ---- -------- ------------
Assets
Current assets
Financial assets at fair value through
profit or loss 3 134,555 139,312
Other receivables 3 9
Cash at bank 596 21
--------------------------------------- ---- -------- ------------
Total assets 135,154 139,342
--------------------------------------- ---- -------- ------------
Liabilities
Current liabilities
Accounts payable and accrued expenses 6 50 59
Total liabilities 50 59
--------------------------------------- ---- -------- ------------
Net assets 135,104 139,283
--------------------------------------- ---- -------- ------------
Represented by:
Shareholders' equity and reserves
Share premium 86,683 86,683
Other reserves 48,421 52,600
--------------------------------------- ---- -------- ------------
Total Shareholders' equity 135,104 139,283
--------------------------------------- ---- -------- ------------
Net assets per Share 8 135.87p 138.18p
--------------------------------------- ---- -------- ------------
The condensed unaudited financial statements were approved by
the Board of Directors on 24 August 2011.
Christopher Spencer Carol Goodwin
Director Director
CONDENSED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
For the
For the six month
six month period ended
period ended 30 June
30 June 2011 2010
Note GBP000 GBP000
---------------------------------------- ---- ------------- -------------
Income
Interest income 1 -
Net losses on financial assets at
fair value through profit or loss 3b (2,256) (1,023)
---------------------------------------- ---- ------------- -------------
Net loss (2,255) (1,023)
---------------------------------------- ---- ------------- -------------
Expenses
Custodian fee 9e (20) (20)
Fund administration fee 9c (20) (20)
Directors' remuneration and expenses 9a (34) (34)
Audit fee (14) (11)
Legal fees (16) (20)
Other professional fees (76) (61)
Other operating expenses (62) (62)
---------------------------------------- ---- ------------- -------------
Total operating expenses before finance
costs (242) (228)
---------------------------------------- ---- ------------- -------------
Finance costs
Interest expense (2) (1)
---------------------------------------- ---- ------------- -------------
Total comprehensive loss for the period (2,499) (1,252)
---------------------------------------- ---- ------------- -------------
Basic and Diluted loss per Share 11 (2.50p) (1.24p)
---------------------------------------- ---- ------------- -------------
All items derive from continuing activities.
CONDENSED UNAUDITED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2011
Share Other
Premium Reserves
GBP000 GBP000 Total GBP000
------------------------------ -------- -------------- --------------------
Balance at 1 January 2011 86,683 52,600 139,283
------------------------------ -------- -------------- --------------------
Total comprehensive loss for
the period Total loss for the
period - (2,499) (2,499)
------------------------------ -------- -------------- --------------------
Transactions with
Shareholders, recorded
directly in equity Purchase
of own Shares for
cancellation - (1,680) (1,680)
------------------------------ -------- -------------- --------------------
Balance as at 30 June 2011 86,683 48,421 135,104
------------------------------ -------- -------------- --------------------
FOR THE SIX MONTH PERIOD ENDED 30 JUNE
2010
Share
Premium Other Reserves Total
GBP000 GBP000 GBP000
------------------------------ -------- -------------- --------------------
Balance at 1 January 2010 86,683 45,443 132,126
------------------------------ -------- -------------- --------------------
Total comprehensive loss for
the period Total loss for the
period - (1,252) (1,252)
------------------------------ -------- -------------- --------------------
Balance as at 30 June 2010 86,683 44,191 130,874
------------------------------ -------- -------------- --------------------
CONDENSED UNAUDITED STATEMENT OF CASH FLOWS
For the For the
six month six month
period ended period ended
30 June 2011 30 June 2010
GBP000 GBP000
------------------------------------------------ ------------- -------------
Cash flows from operating activities
Total loss for the period (2,499) (1,252)
Adjustments for:
Net losses on financial assets held at fair
value through profit or loss 2,256 1,023
(Decrease)/increase in creditors (9) 15
Decrease/(increase) in debtors 6 (9)
------------------------------------------------ ------------- -------------
Net cash flows used in operating activities (246) (223)
------------------------------------------------ ------------- -------------
Cash flows from investing activities
Proceeds from sale of investments 2,501 1,000
------------------------------------------------ ------------- -------------
Net cash flows from investing activities 2,501 1,000
------------------------------------------------ ------------- -------------
Cash flows from financing activities
Purchase of own Shares for cancellation (1,680) -
------------------------------------------------ ------------- -------------
Net cash flows used in financing activities (1,680) -
------------------------------------------------ ------------- -------------
Net increase in cash and cash equivalents 575 777
------------------------------------------------ ------------- -------------
Cash and cash equivalents at beginning of the
period 21 (798)
------------------------------------------------ ------------- -------------
Cash and cash equivalents at end of the period 596 (21)
------------------------------------------------ ------------- -------------
Analysis of cash and cash equivalents at end
of the period
Cash at bank 596 -
Bank overdraft - (21)
------------------------------------------------ ------------- -------------
596 (21)
------------------------------------------------ ------------- -------------
Cash flows from operating activities include:
Interest income on financial assets that are
not at fair value through profit or loss 1 -
Interest expense for financial liabilities that
are not at fair value through profit or loss (2) (1)
------------------------------------------------ ------------- -------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. General information
Dexion Trading Limited (the "Company") was incorporated with
limited liability in Guernsey, Channel Islands as a closed-ended
investment company on 28 October 2004. The Company's Shares were
listed on the London Stock Exchange on 29 November 2004.
2. Significant accounting policies
a) Statement of Compliance
The condensed financial statements for the six months ended 30
June 2011 have been prepared in accordance with IAS 34 'Interim
Financial Reporting' and the Disclosures and Transparency Rules of
the UK's Financial Services Authority.
The condensed interim unaudited financial statements do not
include all of the information required for the full annual
financial statements and should be read in conjunction with the
annual financial statements for the Company for the year ended 31
December 2010. The annual financial statements of the Company for
the year ended 31 December 2010 were prepared in accordance with
International Financial Reporting Standards ("IFRS").
The information for the year ended 31 December 2010 is derived
from the Financial Statements delivered to the UK Listing
Authority, and does not constitute Statutory Accounts as defined by
Guernsey Law. A copy of the Statutory Accounts for that year has
been delivered to the Shareholders. The Auditors' Report on those
Financial Statements was not qualified.
The accounting policies applied by the Company in these
condensed interim financial statements are consistent with those
applied by the Company in its annual financial statements for the
year ended 31 December 2010, except as described below.
Annual improvements project 2010
The annual improvements project 2010 amended IAS 34 and
introduced the requirement to disclose significant events and
transactions such as significant changes in business or economic
conditions affecting the fair values of an entity's financial
instruments; significant transfers of an entity's financial
instruments between levels of the fair value hierarchy and changes
in the classification of financial assets as a result of a change
in the purpose or use of those assets.
The amendments are effective for annual periods beginning on or
after 1 January 2011. The company has no such significant events
and transactions to report for the six months ended 30 June
2011.
Applicable new standards and interpretations not yet
effective
The following standards have been published and are mandatory
for accounting periods beginning on 1 January 2013 and have not
been early adopted:
-- IFRS 9, 'Financial instruments', issued in December 2009. The
standard addresses the classification and measurement of financial
assets. IFRS 9 divides all financial assets that are currently in
the scope of IAS 39 into two classifications - those measured at
amortised cost and those measured at fair value. The standard is
not applicable until 1 January 2013 but is available for early
adoption. The Directors have not yet decided when to adopt IFRS 9.
Its adoption is not expected to have a very significant impact on
the financial statements because the majority of the Company's
financial assets are designated as at fair value through profit or
loss.
-- IFRS 13, 'Fair value measurement', issued in May 2011. The
standard explains how to measure fair value for financial reporting
and sets out disclosure requirements. It does not address or change
the requirements on when fair values should be used. IFRS 13 has
been issued to provide a single source of guidance for all fair
value measurements and to clarify the definition of fair value. The
standard is not applicable until 1 January 2013 but is available
for early adoption.
(b) Basis of Accounting
The financial statements are prepared in pounds sterling (GBP),
which is the Company's functional and presentational currency,
rounded to the nearest thousand pounds. They are prepared on a fair
value basis for financial assets at fair value through profit or
loss and derivative financial instruments. Other financial assets
and financial liabilities are stated at amortised cost.
The preparation of the condensed unaudited interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed unaudited interim financial
statements, the significant judgements made by management in
applying the Company's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
financial statements for the year ended 31 December 2010.
3. Financial Instruments
a) Categories of financial instruments
As at 31 December
As at 30 June 2011 2010
--------------------------- --------------------- --------------------------
Carrying Carrying
amount % of amount % of net
GBP000 net assets GBP000 assets
--------------------------- -------- ----------- -------- ----------------
Financial assets at fair
value through profit or
loss:
Designated at fair value
through profit or loss:
- Investment in Fund of
Hedge Funds 134,555 99.60% 139,312 100.02%
Loans and receivables: 599 0.44% 30 0.02%
Financial liabilities
measured at amortised
cost: (50) (0.04%) (59) (0.04%)
--------------------------- -------- ----------- -------- ----------------
135,104 100.00% 139,283 100.00%
--------------------------- -------- ----------- -------- ----------------
Loans and receivables presented above represent cash and cash
equivalents and other receivables as detailed in the Statement of
Financial Position.
Financial liabilities measured at amortised cost presented above
represents accounts payable and accrued expenses as detailed in the
Statement of Financial Position.
b) Net gains and losses on financial assets at fair value
through profit or loss
For the For the
six month six month
period ended period ended
30 June 2011 30 June 2010
GBP000 GBP000
------------------------------------------------ ------------- -------------
Realised gains on investments 267 49
Movement in unrealised losses on
investments (2,523) (1,072)
------------------------------------------------ ------------- -------------
(2,256) (1,023)
------------------------------------------------ ------------- -------------
4. Financial risk management
The Company's financial risk management objectives and policies
are consistent with those disclosed in the financial statements for
the year ended 31 December 2010. In the opinion of the Directors,
there have been no changes to the financial risk management
objectives.
5. Operating segments
Information on realised gains and losses derived from sales of
investments are disclosed in Note (3b) to the financial statements.
The Company is domiciled in Guernsey. All of the Company's income
is from its investment in Permal Macro which is incorporated
outside Guernsey.
The Company has no assets classified as non-current assets. The
Company indirectly has a highly diversified portfolio of
investments held via Permal Macro and, as disclosed in the
Manager's report, the largest single underlying investment accounts
for 7.35% of the Company's net assets.
The Company also has a highly diversified shareholder population
with only 1 investor having more than 10% of the issued capital of
the Company, Co-Operative Insurance Society which held 14.5% as at
30 June 2011.
6. Accounts payable and accrued expenses
As at As at
30 June 31 December
2011 2010
GBP000 GBP000
------------------------- --------------- -------------------
Custodian fee 3 4
Fund administration fee 3 4
Directors' remuneration 17 17
Audit fee 12 18
Other professional fees 3 6
Other operating expenses 12 10
------------------------- --------------- -------------------
50 59
------------------------- --------------- -------------------
7. Share capital
As at As at
30 June 31 December
2011 2010
GBP000 GBP000
------------------------------------------------ -------- ------------
Authorised
Unlimited number of Shares at no par value - -
Issued at no par value
99,440,049 Shares (31 December 2010: 100,795,049 - -
Shares)
------------------------------------------------ -------- ------------
Also in issue is one subordinated non-voting
Share.
Reconciliation of number of Shares
As at As at
30 June 31 December
2011 2010
No. of No. of
Shares Shares
------------------------------------------ ----------- ------------
Issued Shares at beginning of period 100,795,049 101,213,549
Purchase of own Shares for cancellation (1,355,000) (418,500)
------------------------------------------ ----------- ------------
Total Shares in issue (excluding Treasury
Shares) at end of period 99,440,049 100,795,049
------------------------------------------ ----------- ------------
Shares in treasury at beginning of period 10,861,631 10,861,631
Treasury Shares cancelled (742,227) -
------------------------------------------ ----------- ------------
Total Treasury Shares at end of period 10,119,404 10,861,631
------------------------------------------ ----------- ------------
The rights attaching to the Shares are as follows:
a) the holders of existing Shares shall confer the right to all
dividends in accordance with the Articles of Association of the
Company;
b) the existing Shareholders present in person or by proxy or
(being a corporation) present by a duly authorised representative
at a general meeting have, on a show of hands, one vote and, on a
poll, one vote for every Share held; and
c) the capital and surplus assets of the Company remaining after
payment of all creditors shall, on winding-up or on a return (other
than by way of purchase or redemption of own Shares) after
conversion, be divided amongst the Shareholders on the basis of the
capital attributable to the Shares at the date of winding up or
other return of capital.
8. Net asset value
The net asset value of each Share is determined by dividing the
net assets of the Company attributed to the Shares of
GBP135,104,467 (31 December 2010: GBP139,283,186) by the number of
Shares in issue at the period end of 99,440,049 (31 December 2010:
100,795,049 Shares).
9. Significant agreements and related parties
a) Directors' Remuneration and Expenses
The annual Directors' fees comprise GBP26,000 paid to Mr
Spencer, the Chairman, GBP22,000 to Ms Goodwin as Chairman of the
Audit Committee and GBP20,000 to Mr Niven. Mr Bowie has waived his
right to his fee of GBP20,000. Directors' fees payable at 30 June
2011 were GBP16,953 (31 December 2010: GBP17,140). With effect from
1 July 2011 the annual Director's fee paid to Mr Spencer, Ms
Goodwin and Mr Niven were each increased by GBP6,000.
b) Manager
Permal Macro will pay the Investment Adviser an annual fee
(payable monthly in arrears) of 2.0% of the value of the Total
Assets attributable to its class A shares in Permal Macro held by
the Company (together with certain other operational costs and
expenses). The Investment Adviser has agreed to rebate half of that
fee to the Manager in complete discharge of the Company's
obligation to pay fees to the Manager pursuant to the Investment
Management Agreement out of which 0.5% will be available as a trail
commission to Qualifying Investors.
During the period ended 30 June 2011, Permal Macro paid a total
annual fee amounting to the equivalent of GBP1,351,606 (30 June
2010: GBP1,297,861) to the Investment Adviser and half of this fee
(the equivalent of GBP675,803, (2010: GBP648,930) was paid by the
Investment Adviser to the Manager.
The Manager is responsible for discharging all the fees of the
Investment Consultant.
The Investment Management Agreement may be terminated by either
party giving to the other not less than 9 months' notice, or
otherwise in circumstances where, amongst other things, one of the
parties has a receiver appointed of its assets or if an order is
made or an effective resolution passed for the winding up of one of
the parties or if, following a continuation vote not being passed
or if a resolution for the winding-up of the Company is passed.
Under the Investment Advisory Agreement, the Company pays a
nominal fee to the Investment Adviser save where the Company's
investment in Permal Macro is redeemed otherwise than on at least
nine months' notice in which case a termination fee equal to the
fee which would otherwise have been payable if due notice had been
given in respect of the Company's investment in Permal Macro which
is then being redeemed (as at the Valuation Date immediately
preceding redemption) is payable by the Company to the Investment
Adviser.
c) Administrator
RBC Offshore Fund Managers Limited (the "Administrator"),
performs administrative duties for which it was remunerated at a
rate of 0.03% of the Net Asset Value of the Company subject to a
minimum of GBP30,000 per annum.
d) Secretary
Dexion Capital (Guernsey) Limited ("the Secretary") performs
secretarial duties for which it was remunerated at an annual fee of
GBP20,000.
e) Custodian
Royal Bank of Canada (Channel Islands) Limited ("the
Custodian"), is remunerated at an annual rate of 0.03% of the Net
Asset Value of the Company subject to a minimum of GBP10,000 per
annum.
10. Taxation
The Company is registered for taxation purposes in Guernsey
where it pays an annual exempt status fee of GBP600 under the
Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989.
11. Earnings per Share
The calculation of the return per Share is based on the total
loss for the period attributable to ordinary Shareholders of
GBP(2,498,821) (30 June 2010: GBP(1,251,744)) and on the weighted
average number of Ordinary Shares in issue during the period of
99,921,355 (30 June 2010: 101,213,549).
12. Ultimate controlling party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no ultimate controlling party.
13. Short term borrowing
The Company has a facility dated 18 November 2008 with Royal
Bank Canada (Channel Islands) Limited for an overdraft of
GBP20,000,000 or 15% of Net Asset Value in custody whichever is
lower. The facility is secured by an interest over cash and the
investment portfolio of the Company. The facility has been extended
for drawdown or use until further notice and it is repayable on
demand. This facility will be reviewed on 18 November 2011.
14. Distribution policy
The Directors do not expect income (net of expenses) to be
significant and do not currently expect to declare any dividends.
In the event that future net income is significant, the Directors
may consider the distribution of net income in the form of
dividends.
15. Seasonality
The Company's operations are not affected by seasonality or
cyclicality and as such they have no impact on the interim
financial statements.
16. Subsequent Events
Subsequent to the period end the Company has bought back
1,109,978 of its own Shares, all of which were cancelled.
These are not full statutory accounts. The full unaudited
accounts for 30 June 2011 will be sent to Shareholders and will be
available for inspection at 1 Le Truchot, St Peter Port, Guernsey,
the registered office of the Company or the Company's website
www.dexiontrading.com.
Enquiries:
Carol Kilby:
Dexion Capital (Guernsey) Limited
Tel: +44 (0) 1481 743943
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GRGDILDDBGBU
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