TIDMPRF
RNS Number : 4923P
Premier Renewable Energy Fund Ltd
25 March 2009
Premier Renewable Energy Fund Limited
ANNOUNCEMENT OF ANNUAL RESULTS
The Directors announce the statement of results for the period from 26 October
2007 to 30 November 2008 as follows:
CHAIRMAN'S STATEMENT
For the period 26 October 2007 to 30 November 2008
Dear Shareholder
Overview of year
Global equity markets were subject to a severe correction during the course of
2008. The seeds of the global recession were sown a few years ago when the
global economy enjoyed a strong period of growth led by global expansion
accompanying low volatility. This growth and low volatility led investors,
financial institutions and consumers to become comfortable with greater
leverage, in order to boost either investment or lifestyle returns. The current
issue facing the global economy is a direct consequence of this leverage
reaching unsustainable proportions, a situation most pronounced within the US
housing market.
There is already a substantial downturn in economic activity and this has been
reflected in equity markets which have declined severely over the last 12
months.
Performance
This report deals with the performance of the Company from the 4 February 2008
(the date the fund launched) to the 30 November 2008. This year end was adopted
by the Company after its predecessor company European Utilities Trust Plc wound
up. Whilst clearly our portfolio has been adversely affected by events during
the course of the period the performance of the assets, if not of our shares,
has been very encouraging. Total or gross assets have fallen by 12.95 %. The
Company's capital structure includes both Ordinary shares and Zero Coupon
Preference Shares (ZCP shares). The ZCP shares are entitled to a predetermined
capital entitlement of 392p at their anticipated wind up date being the 31
December 2010 and thus the movement in the asset value of the Ordinary shares is
amplified by this prior entitlement to capital. Over the period the asset value
per Ordinary share fell from 99.56 to 67.55, a decline of 32.15%. The Ordinary
share's share price has been poor falling from 95p to 50.75p. The shares now
stand at a 24.87% discount to their net asset value. In common with many
investment companies the discount to asset value widened during the year. Asset
value per ZCP share has increased from GBP3,924,390 to GBP4,140,880 whilst the
share price of the ZCP shares has risen from 335p to 358.50. The ZCP shares
remain one of the best covered issue in the market and as at 30 November had a
terminal asset cover of 3.16 times.
Whilst the fall in assets and the share price is disappointing this should be
set in context of the performance of the universe of renewable energy stocks
into which the Company invests. The Dresdner Kleinwort Renewable Index has
fallen by 61.79% over the period led by a decline in solar stocks. Whilst any
fall in the assets of your Company is unfortunate we have certainly performed
better than most major stock market indices and more importantly substantially
better than the universe of stocks from which we chose our investment portfolio.
Whilst considering the performance of your Company it is worth making the point
that had its predecessor Company, European Utilities Trust Plc (EUT), still been
in existence it is likely that the assets of Ordinary shareholders would have
been substantially lower. Not only has Premier Renewable Energy Fund Limited
(PREF) been holding large cash balances over the course of the last year but EUT
was substantially more highly geared than PREF and this would have exacerbated
the fall in asset value for Ordinary shareholders.
Dividends
Despite the fact that your Company intends to focus primarily on capital
appreciation, some of our investments do pay an annual dividend. Net income
during the course of the year amounted to GBP 45,473. In accordance with the
Board's prospectus commitment to pay out to shareholders substantially all
income received from the portfolio of investments your Board has declared an
interim dividend of 0.3p per share. This dividend will be paid on 21 April 2009
to those shareholders on the register as at 20 March 2009.
Shareholder relations
The Board and the Investment Adviser welcome contact not only with the Company's
existing investors but also potential new investors. The Investment Adviser has
met with many of the Company's investors over the period as well as a number of
potential investors.
Outlook
The last year could scarcely have been worse for the renewable energy sector.
Not only has the global credit crisis affected the ability of renewable energy
companies to finance their activities but the price of crude oil has dropped
from around $147/barrel to under $40/barrel. This impacts the value of all
energy projects and renewable energy projects in particular. Despite the fact
that our asset value has clearly been affected by this the Company remains in a
strong position. Our Investment Adviser believes that there are some excellent
investment opportunities and indeed has been reducing the Company's substantial
cash balances over recent months in order to make long-term investments in
renewable energy stocks that are now trading at a substantial discount to their
intrinsic value. With the forceful action that is being taken by central
governments and banks to reduce leverage and to rebuild confidence our
Investment Adviser believes that equity markets should start to recover during
2009 and is cautiously optimistic that 2009 may prove a more positive year for
investors.
Charles Wilkinson
Chairman
March 2009
INVESTMENT ADVISOR'S REPORT
Since launch on 4 February 2008 the net assets of your Company have fallen by
24.16% to GBP8,860,849 with a consequent fall in the net asset value of the
Company's Ordinary shares of 32.15% to 67.55p. This compares to a fall in the
FTSE 100 Index of 28% and a fall in the Dresdner Renewable Energy Index of
48.6%, all in sterling terms.
Portfolio
A defensive approach has been adopted as a weakening global economic situation
unfolded over the course of the period. The portfolio has been biased towards
utilities that have made significant progress in growing their non-fossil fuel
generation elements of their businesses. These include companies such as
Scottish & Southern Energy (SSE), Iberdrola and Florida Power & Light.
SSE's current renewable generating assets (wind and hydro) represent a
significant proportion of the existing total UK renewable market and the company
expects to continue to invest heavily in the sector. In the US, Florida Power &
Light (FPL) is a leading player in the renewables arena with 34% of its
generation fleet wind powered and spread across 16 US states. FPL also has
exposure to three nuclear plants and nuclear is expected to form a key component
of the global growth in non-fossil fuel based generation over the coming decade
and beyond.
The portfolio is also focused on renewable companies that make use of tried and
tested forms of low carbon generation. The wind sector is, together with hydro
electric power, the most developed of the main renewable energy technologies.
Typically wind projects are assessed for feasibility and once all of the various
permits have been obtained they are project financed typically using long-term
debt, linked to the term of the power purchased agreement under which the wind
farm operates. This model has operated very well for a number of years,
particularly in the US and countries that have progressive feed-in tariffs such
as Germany, Spain and France.
However, the credit crisis has caused debt costs to rise substantially whilst
hurdle returns on equity have also increased. This has caused the major wind
companies such as Iberdrola Renovables, EDF Nouvelles and FPL to reduce the pace
of their growth with a consequent impact on their share prices.
Despite this the global wind sector is an attractive place to invest. It is our
belief that the shares of companies such as Iberdrola Renovables and EDP
Nouvelles are discounted very little, if any, on the potential growth in the
assets. It is these operators that form core holdings in the portfolio but there
are also opportunities for equipment manufacturers to benefit from the long-term
growth in the sector. The key holding here is Gamesa, a company that has a
substantial backlog of orders for its wind turbines.
Solar power has seen strong growth in recent years, mainly limited to three
markets, the US, Germany and Japan but more recently in Spain. Although this
sector represents more than one third of the global market capitalisation of
renewable stocks, a very low weighting is held in the portfolio because of some
short-term headwinds for the solar industry. There is potentially a significant
supply over-capacity position building up for 2009 and 2010 which does not bode
well for sector profitability despite falling input costs. Longer term, however,
costs of production should fall enough to make solar more competitive with other
technologies.
China represents 3.3% of the portfolio and, despite a slowdown in overall
electricity demand in the country, offers significant opportunities for
renewable energy companies. Since the government in China enacted the Renewable
Energy Law in 2006, and then released the Medium and Long-term Renewable Energy
Plan in 2007, non-fossil fuel generating plants have been a key focus in the
country. More recently, Chinese authorities have promoted enhanced tariffs for
wind generation in several regions in the country. China Power New Energy is
expected to take advantage of this exciting opportunity in China. India is also
an attractive market because the country requires significant power capacity
infrastructure to be built and the government is providing a supportive
investment environment. With this in mind we have invested in Greenko, which
operates hydro and biomass plants in India, and the KSK Emerging India Fund.
Outlook
Growth in the renewable industry is supported by government mandates and the
need for diversity and security in energy supplies. The election of the
Democrats in the US will reinforce that country's commitment to clean power
whilst other countries, notably the UK, have refreshed their renewables policies
possibly as a means of sustaining activity in the economy. The European
Parliament has recently approved the Renewable Energy Directive which fixes a
binding target on each member state of 20% renewable energy consumption by 2020.
In addition, the oil price may have reached a trough and in the longer term the
key drivers of the global renewables sector being oil prices, energy
independence and falling fossil fuel reserves will undoubtedly reassert
themselves.
Premier Fund Managers Limited
March 2009
INVESTMENT OBJECTIVE AND POLICY
The objective of Premier Renewable Energy Fund Limited (the "Company") is to
provide shareholders with an attractive overall return to be achieved primarily
through long term capital growth.
Asset allocation
The Company's investment policy is to invest principally in companies that
generate power from renewable energy sources, or that will be beneficiaries of
the anticipated growth in this sector. The portfolio may include utilities that
generate a significant proportion of their earnings from renewable energy and
companies that are commercialising other renewable technologies.
The Company's investments in renewable energy may encompass businesses
generating power from wind, hydro, landfill gas, biomass, solar energy, marine
currents, nuclear, energy crops, wave, waste vegetable oil and animal waste.
Investments may be made in manufacturers, operators, energy suppliers and
service providers. The Company will also consider investments in businesses
utilising renewable technologies in sectors such as waste recycling, fuel cells,
the manufacture of renewable related components and those companies providing
services to the renewable energy industry.
Up to 15 per cent. of the Gross Assets (at the time of investment) may be
invested in unquoted securities.
The Company may invest in bonds, warrants, contracts for difference, other forms
of derivative instrument (for the purposes of efficient portfolio management),
bank debt or other debt securities within limits set by the Board of Directors
("Board").
Risk diversification
The Company has a global investment mandate and will maintain an adequate spread
of investment risk in terms of business and technology sector and geographical
allocation.
Except in the case of cash deposits awaiting investment, the Company will not
lend to any one company or group, or invest in the securities of any one company
or group, more than 20 per cent. of the value of its Gross Assets (at the time
the investment or loan is made). Once fully invested, the Company anticipates
that the portfolio will comprise at least 40 investments.
The Company observes and will continue to observe all of the investment
restrictions necessary to comply with the Listing Rules. Pursuant to the Listing
Rules currently in force the investment restrictions complied with by the
Company are as follows:
The Company will not invest more than 10 per cent. in aggregate of the value of
its Gross Assets, at the time of a new investment, in other investment companies
or investment trusts which are listed on the Official List (except to the extent
that those investment companies or investment trusts have stated policies to
invest no more than 15 per cent. of their gross assets in other investment
companies or investment trusts which are listed on the Official List).
In the event of any breach of the investment restrictions applicable to the
Company, Shareholders will be informed of the actions to be taken by the Company
by an announcement issued through a Regulatory Information Service or by
including details of such actions in the Company's annual financial report.
There has been no such breach in the period.
The Company will materially alter its investment policy only with the approval
of Shareholders by ordinary resolution and such an alteration would be announced
by the Company through a Regulatory Information Service. The Company will not
conduct any significant trading activity.
Borrowings
The Company may use gearing and the Directors reserve the right to borrow up to
a maximum of 20 per cent. of the Gross Assets (at the time of drawdown).
CAPITAL STRUCTURE
Summary
The Company is a split-capital closed-ended investment company, which was
incorporated in Guernsey on 26 October 2007. The Company was launched in
connection with a scheme of reconstruction and voluntary winding-up of European
Utilities Trust PLC ("EUT"). On 25 July 2007 EUT announced its intention to seek
shareholder approval to proceed with a winding-up and scheme of reconstruction
under Section 110 of the United Kingdom's Insolvency Act 1986 ("the Scheme").
Under the Scheme holders of EUT Ordinary Income Shares and EUT ZCP Shares were
offered the option to receive a cash realisation for their shares pursuant to
the terms of the Scheme or to receive Ordinary shares or ZCP shares respectively
in the Company.
Under the terms of the Scheme the holders of EUT Ordinary Income Shares received
3.05 Ordinary shares in the Company (rounded to the nearest whole number) for
each EUT Ordinary Income Share rolled over under the Scheme. This was based on a
formula asset value per EUT Ordinary Income Share calculated as at 29 January
2008 of GBP3.05. The holders of EUT ZCP Shares received one ZCP share in the
Company for every one EUT ZCP Share rolled over under the Scheme. The resulting
issued share capital of the Company as at 4 February 2008, as admitted to the
Official List on that date, was 13,804,812 Ordinary shares and 1,222,833 ZCP
shares.
Following approval and implementation of the Scheme the liquidators and the
Company entered into a Transfer Agreement under which all of the then assets of
EUT (other than those assets appropriated to the Liquidation Fund in accordance
with the Scheme), were transferred to the Company.
Three of the Company's Directors, Messrs Wilkinson, Clinton and Hagan, were also
directors of EUT.
Ordinary shares
Holders of Ordinary shares are entitled to all the net income of the Company to
be distributed. On a winding-up, after satisfying all liabilities of the
Company, including the payment of the accrued capital entitlement due to the
holders of ZCP shares (if any are in issue), the holders of Ordinary shares will
be entitled to all of the remaining assets of the Company. Holders of Ordinary
shares are entitled to attend and vote at all general meetings of the Company.
ZCP shares
ZCP shares carry no entitlement to income distributions to be made by the
Company. The ZCP shares will not pay dividends but will have a final capital
entitlement at the end of their life on 31 December 2010 of 392.00p. The
predetermined capital entitlement of a ZCP share is not guaranteed and is
dependent upon the Company's gross assets on 31 December 2010 being sufficient
to meet the final capital entitlement of the ZCP shares. The ZCP shares have the
right to receive notice of and attend, but shall not have the right to vote at,
any general meeting. Under the Articles of Incorporation, the Company is obliged
to redeem all of the ZCP shares on 31 December 2010 (if such redemption has not
already been effected).
DURATION
The Company does not have a fixed life and is intended as a long-term investment
vehicle. The Directors, however, consider that it is appropriate that
shareholders have the opportunity to consider the continuation of the Company at
appropriate intervals. Consequently at the annual general meeting of the Company
to be held in 2014 the Directors will propose a resolution that the Company
continue as currently constituted. In the event that this resolution is not
passed the Board will be required to formulate proposals to be put to
shareholders to reorganise, reconstruct or wind-up the Company. If the
resolution is passed the Company will continue its operations and a similar
resolution will be put to shareholders every three years thereafter.
MANAGEMENT REPORT
For the period 26 October 2007 to 30 November 2008
A description of important events which have occurred during the financial
period, their impact on the performance of the Company as shown in the financial
statements and a description of the principal risks and uncertainties facing the
Company is given in the Chairman's Statement, Investment Adviser's Report and
the notes to the financial statements and is incorporated here by reference.
There were no material related party transactions which took place in the
financial period.
Responsibility Statement
The Board of Directors jointly and severally confirm that, to the best of their
knowledge:
(a) the financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company; and
(b) This Management Report includes or incorporates by reference a fair
review of the development and performance of the business and the position of
the Company, together with a description of the principal risks and
uncertainties that it faces.
David Staples
Director
24 March 2009
INCOME STATEMENT
for the period from 26 October 2007 to 30 November 2008
+-------------------------------+--+--------+--+-----------+--+-------------+--+------+------+
| | | Notes | 26 Oct 2007 to 30 November 2008 |
+-------------------------------+--+--------+-----------------------------------------+
| | | | | Revenue | | Capital | | Total |
| | | | | GBP | | GBP | | GBP |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Net losses on financial | | 6 | | - | | (3,925,087) | | (3,925,087) |
| assets designated as at fair | | | | | | | | |
| value through profit or loss | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Investment income | | 2 | | 467,944 | | - | | 467,944 |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Total income and losses | | | | 467,944 | | (3,925,087) | | (3,457,143) |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Expenses | | 3 | | (376,920) | | (92,348) | | (469,268) |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Net income before finance | | | | 91,024 | | (4,017,435) | | (3,926,411) |
| costs and taxation | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Appropriations in respect of | | 5 | | - | | (230,015) | | (230,015) |
| Zero Coupon Preference shares | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Return on ordinary activities | | | | 91,024 | | (4,247,450) | | (4,156,426) |
| before taxation | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Taxation on ordinary | | 1(b) | | (45,551) | | - | | (45,551) |
| activities | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Return on ordinary activities | | | | 45,473 | | (4,247,450) | | (4,201,977) |
| for the period attributable | | | | | | | | |
| to Ordinary shareholders | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | Pence | | Pence | | Pence |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Earnings per Ordinary share | | 5 | | 0.34 | | (32.18) | | (31.84) |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+-------------+
| Earnings per Zero Coupon | | 5 | | - | | 18.81 | | 18.81 |
| Preference share | | | | | | | | |
+-------------------------------+--+--------+--+-----------+--+-------------+--+------+------+
The total column of this Statement is the Income Statement of the Company. The
supplementary revenue return and capital return columns have been prepared in
accordance with the Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC").
In arriving at the results for the financial period, all amounts above relate to
continuing operations.
No operations were acquired or discontinued in the period.
BALANCE SHEET
as at 30 November 2008
+-------------------------------------------------+--+--------+--+-------------+
| | | Notes | | 30 Nov |
| | | | | 2008 |
+-------------------------------------------------+--+--------+--+-------------+
| NON-CURRENT ASSETS | | | | GBP |
+-------------------------------------------------+--+--------+--+-------------+
| Financial assets designated as at fair value | | 6 | | 11,314,487 |
| through profit or loss | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| CURRENT ASSETS | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| Receivables | | 7 | | 50,035 |
+-------------------------------------------------+--+--------+--+-------------+
| Cash and cash equivalents | | | | 2,301,111 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | 2,351,146 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| TOTAL ASSETS | | | | 13,665,633 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| CURRENT LIABILITIES | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| Payables - due within one year | | 8 | | 663,904 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| NON-CURRENT LIABILITIES | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| Payables - due after one year | | 9 | | 4,140,880 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| TOTAL LIABILITIES | | | | 4,804,784 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| NET ASSETS | | | | 8,860,849 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| EQUITY | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| Share capital | | 10 | | - |
+-------------------------------------------------+--+--------+--+-------------+
| Capital reserve | | 11 | | (4,247,450) |
+-------------------------------------------------+--+--------+--+-------------+
| Revenue reserve | | 11 | | 45,473 |
+-------------------------------------------------+--+--------+--+-------------+
| Distributable reserve | | 12 | | 13,062,826 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| TOTAL EQUITY | | | | 8,860,849 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | Pence |
+-------------------------------------------------+--+--------+--+-------------+
| NAV per Ordinary share | | | | 67.55 |
+-------------------------------------------------+--+--------+--+-------------+
| | | | | |
+-------------------------------------------------+--+--------+--+-------------+
| NAV per Zero Coupon Preference share | | | | 338.62 |
+-------------------------------------------------+--+--------+--+-------------+
The financial statements were approved by the Board of Directors on 24 March
2009 and are signed on its behalf by:
David Copperwaite David Staples
Director Director
STATEMENT OF CASH FLOWS
for the period 26 October 2007 to 30 November 2008
+----------------------------------------------------+---------+--+--------------+
| | Notes | | 26 Oct |
| | | | 2007 to |
| | | | 30 Nov |
| | | | 2008 |
| | | | GBP |
+----------------------------------------------------+---------+--+--------------+
| Operating activities | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Return on ordinary activities before taxation | | | (4,156,426) |
+----------------------------------------------------+---------+--+--------------+
| Add: Net losses on financial assets designated as | 6 | | 3,925,087 |
| at fair value through profit or loss | | | |
+----------------------------------------------------+---------+--+--------------+
| Less: Investment income receivable | | | (467,944) |
+----------------------------------------------------+---------+--+--------------+
| Add: Increase in payables and appropriations | | | 369,408 |
+----------------------------------------------------+---------+--+--------------+
| Less: (Increase) in receivables excluding accrued | | | (50,035) |
| investment income | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Net cash outflow from operating activities before | | | (379,910) |
| investment income | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Investment income received | | | 467,944 |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Net cash inflow from operating activities before | | | 88,034 |
| taxation | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Withholding taxes | 1b | | (45,551) |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Net cash inflow from operating activities after | | | 42,483 |
| taxation | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Investing activities | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Purchase of financial assets | | | (21,595,488) |
+----------------------------------------------------+---------+--+--------------+
| Sale of financial assets | | | 6,880,425 |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Net cash outflow from investing activities | | | (14,715,063) |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Financing activities | | | |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Proceeds of issue of shares | | | 15,443,104 |
+----------------------------------------------------+---------+--+--------------+
| Proceeds of debt securities | | | 3,910,865 |
+----------------------------------------------------+---------+--+--------------+
| Cancellation of shares | | | (655,727) |
+----------------------------------------------------+---------+--+--------------+
| Repurchase of shares | | | (1,311,457) |
+----------------------------------------------------+---------+--+--------------+
| Costs of issue of shares | | | (413,094) |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Net cash inflow from financing activities | | | 16,973,691 |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Increase in cash and cash equivalents | | | 2,301,111 |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Cash and cash equivalents at beginning of period | | | - |
+----------------------------------------------------+---------+--+--------------+
| | | | |
+----------------------------------------------------+---------+--+--------------+
| Cash and cash equivalents at end of period | | | 2,301,111 |
+----------------------------------------------------+---------+--+--------------+
STATEMENT OF CHANGES IN EQUITY
for the period 26 October 2007 to 30 November 2008
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | Share | | Share | | Capital | | Revenue | | Distributable | | Total |
| | | Capital | | Premium | | Reserve | | Reserve | | Reserve | | GBP |
| | | GBP | | GBP | | GBP | | GBP | | GBP | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| As at beginning | | - | | - | | - | | - | | - | | - |
| of period | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| Proceeds of | | - | | 15,443,104 | | - | | - | | - | | 15,443,104 |
| shares issued | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| Cancellation of | | - | | (655,727) | | - | | - | | - | | (655,727) |
| shares | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| Repurchase of | | - | | (1,311,457) | | - | | - | | - | | (1,311,457) |
| shares | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| Share issue | | - | | (413,094) | | - | | - | | - | | (413,094) |
| costs | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| Transfer to | | - | | (13,062,826) | | - | | - | | 13,062,826 | | - |
| other | | | | | | | | | | | | |
| distributable | | | | | | | | | | | | |
| reserves | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| Return on | | - | | - | | (4,247,450) | | 45,473 | | - | | (4,201,977) |
| ordinary | | | | | | | | | | | | |
| activities for | | | | | | | | | | | | |
| the period | | | | | | | | | | | | |
| attributable to | | | | | | | | | | | | |
| Ordinary | | | | | | | | | | | | |
| shareholders | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
| As at 30 | | - | | - | | (4,247,450) | | 45,473 | | 13,062,826 | | 8,860,849 |
| November 2008 | | | | | | | | | | | | |
+-----------------+--+---------+--+--------------+--+-------------+--+---------+--+---------------+--+-------------+
NOTES TO THE FINANCIAL STATEMENTS
For the period 26 October 2007 to 30 November 2008
1 ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements are prepared in accordance with International Financial
Reporting Standards ("IFRS") issued by the International Accounting Standards
Board ("IASB"), interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC"), and with the AIC's SORP (as revised in
December 2005) where practicable. All accounting policies adopted for the period
are consistent IFRS issued by the IASB and as adopted by the European Union and
applicable Guernsey law.
The financial statements have been prepared on an historical cost basis except
for the measurement at fair value of certain financial instruments.
IFRS7 "Financial Instruments Disclosure" and the amended International
Accounting Standard ("IAS") 1 "Capital Disclosures" have been adopted in the
current period.
The following Standards or Interpretations have been issued by the IASB but not
yet adopted by the Company:
IFRS 2 (revised 2008) "Share-based Payment" effective for annual periods
beginning on or after 1 January 2009
IFRS 3 (revised 2008) "Business Combinations" effective for annual periods
beginning on or after 1 July 2009
IFRS 8 "Operating Segments" effective for annual periods beginning on or after 1
January 2009
IAS 1 (revised 2007) "Presentation of financial statements" effective for annual
periods beginning on or after 1 January 2009
IAS 23 (revised 2008) "Borrowing Costs" effective for annual periods beginning
on or after 1 January 2009
IAS 27 (revised 2008) "Consolidated and Separate Financial Statements" effective
for annual periods beginning on or after 1 July 2009
Amendments to IAS 32 and IAS 1 "Puttable Financial Instruments" effective for
annual periods beginning on or after 1 January 2009
Some of these Standards and Interpretations are expected to require additional
disclosure in future financial statements. None are expected to affect the
financial position of the Company.
(b) Taxation
The Company has been granted exemption under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 from Guernsey Income Tax, and is charged an annual
fee of GBP600. Dividends received have been grossed up for withholding tax. The
withholding tax is not recoverable and shown in Taxation on ordinary activities
in the Income Statement.
(c) Zero Coupon Preference shares
Under IAS 32, the Zero Coupon Preference shares are classified as financial
liabilities. The appropriation for the period in respect of Zero Coupon
Preference shares is included in the Income Statement as a finance cost and is
calculated using the effective interest method.
(d) Capital reserve
The following are accounted for in this reserve:
- gains and losses on the realisation of investments;
- expenses charged to this account in accordance with the policy below;
- increases and decreases in the valuation of the investments held at the
period end; and
- unrealised exchange differences of a capital nature.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the
capital reserve where a connection with the maintenance or enhancement of the
value of the investments can be demonstrated.
(f) Investment income
Interest income and distributions receivable are accounted for on an accruals
basis. Interest income relates only to interest on bank balances, money market
deposits and loan notes.
(g) Foreign currency translation
The currency of the primary economic environment in which the Company operates
(the functional currency) is Great Britain Pounds which is also the
presentational currency.
Transactions denominated in foreign currencies are translated into Great Britain
Pounds at the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities, other than investments, denominated in foreign
currencies at the balance sheet date are translated to the functional currency
at the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the Income Statement. Foreign exchange
differences relating to investments are taken to the capital reserve. Realised
and unrealised foreign exchange differences on non-capital assets or liabilities
are taken to the Income Statement in the period in which they arise.
(h) Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits and
short-term deposits with an original maturity of three months or less. For the
purposes of the Statement of Cash Flows, cash and cash equivalents consist of
cash, deposits at bank and money market deposits.
(i) Investments
All investments have been designated as financial assets at "fair value through
profit or loss". Investments are initially recognised on the date of purchase at
cost, being the fair value of the consideration given. Subsequently, investments
are measured at fair value, with unrealised gains and losses on investments and
impairment of investments recognised in the Income Statement. Investments are
derecognised on the date of sale. Gains and losses on the sale of investments
are taken to the Income Statement in the period in which they arise.
(j) Trade date accounting
All "regular way" purchases and sales of financial assets are recognised on the
"trade date", i.e. the date that the entity commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial assets
that require delivery of the asset within the timeframe generally established by
regulation or convention in the market place.
(k) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment
of business, being investment business.
(l) Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Company's accounting policies, the Company has
determined that the following judgements and estimates have the most significant
effect on the amounts recognised in the financial statements:
Valuation of investments
The Company holds quoted and unquoted investments. The quoted investments are
traded in an active market and therefore the valuations are based on the bid
prices obtained from an independent pricing source. The unquoted investment has
an option to be converted to a quoted investment and has been valued as if it
had been converted in order to obtain the most accurate price available.
2 INVESTMENT INCOME
+---------------------------------------------------+--+------------+
| | | 26 Oct |
| | | 2007 to |
| | | 30 Nov |
| | | 2008 |
| | | GBP |
+---------------------------------------------------+--+------------+
| | | |
+---------------------------------------------------+--+------------+
| Bank | | 138,802 |
| interest | | |
+---------------------------------------------------+--+------------+
| Dividend | | 304,716 |
| income | | |
+---------------------------------------------------+--+------------+
| Loan note | | 24,426 |
| interest | | |
+---------------------------------------------------+--+------------+
| | | |
+---------------------------------------------------+--+------------+
| | | 467,944 |
+---------------------------------------------------+--+------------+
3 EXPENSES
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| | 26 Oct 2007 to |
| | 30 Nov 2008 |
+---------------------------------------------------------+-----------------------------------------------+
| | | Revenue | | Capital | | Total |
| | | GBP | | GBP | | GBP |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Investment | | 140,507 | | - | | 140,507 |
| Manager's | | | | | | |
| fee | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Broker's | | 22,894 | | | | 22,894 |
| fee | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Administrator's | | 41,779 | | - | | 41,779 |
| fee | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Registrar's | | 10,312 | | - | | 10,312 |
| fee | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Marketing | | 10,164 | | - | | 10,164 |
| fee | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Directors' | | 78,191 | | - | | 78,191 |
| fees | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Custody | | 5,992 | | - | | 5,992 |
| fees | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Audit | | 30,000 | | - | | 30,000 |
| fees | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Directors' | | 6,269 | | - | | 6,269 |
| and | | | | | | |
| Officers' | | | | | | |
| insurance | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Annual | | 12,684 | | - | | 12,684 |
| fees | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Transaction | | - | | 2,956 | | 2,956 |
| fees | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Bank | | 8,948 | | - | | 8,948 |
| interest | | | | | | |
| and | | | | | | |
| charges | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Commission | | - | | 28,517 | | 28,517 |
| paid | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| Sundry | | 9,180 | | - | | 9,180 |
| costs | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| (Profit)/loss | | - | | 60,875 | | 60,875 |
| on foreign | | | | | | |
| exchange | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| | | | | | | |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
| | | 376,920 | | 92,348 | | 469,268 |
+---------------------------------------------------------+--+------------+--+------------+--+------------+
4 DIRECTORS' REMUNERATION
Under their terms of appointment, each Director is paid a fee of GBP15,000 per
annum by the Company, except for the Chairman, who receives GBP20,000 per annum.
The Chairman of the audit committee receives an additional fee of GBP2,000 per
annum.
5 EARNINGS PER SHARE
Ordinary shares
The total return per Ordinary share is based on the total return on ordinary
activities for the period attributable to Ordinary shareholders of
(GBP4,201,977) and on 13,200,911 shares, being the weighted average number of
shares in issue during the period. There are no dilutive instruments and
therefore basic and diluted return per share are identical.
The revenue return per Ordinary share is based on the revenue return on ordinary
activities for the period attributable to Ordinary shareholders of GBP45,473 and
on 13,200,911 shares, being the weighted average number of shares in issue
during the period. There are no dilutive instruments and therefore basic and
diluted return per share are identical.
The capital return per Ordinary share is based on the capital return on ordinary
activities for the period attributable to Ordinary shareholders of
(GBP4,247,450) and on 13,200,911 shares, being the weighted average number of
shares in issue during the period. There are no dilutive instruments and
therefore basic and diluted return per share are identical.
Zero Coupon Preference ("ZCP") shares
The return per ZCP share is based on the appropriation in respect of ZCP shares
of GBP230,015 and on 1,222,833 shares, being the weighted average number of ZCP
shares in issue during the period.
6 INVESTMENTS
+--------------------------------------------------------------+---+-------------+
| FINANCIAL ASSETS | | 30 Nov |
| DESIGNATED AS AT FAIR | | 2008 |
| VALUE THROUGH PROFIT OR | | GBP |
| LOSS | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Opening portfolio cost | | - |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Unrealised appreciation | | - |
| on valuation brought | | |
| forward | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Opening valuation | | - |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Movements in the period | | |
+--------------------------------------------------------------+---+-------------+
| Purchases at cost | | 22,970,505 |
+--------------------------------------------------------------+---+-------------+
| Sales | | |
+--------------------------------------------------------------+---+-------------+
| - proceeds | | (7,730,931) |
+--------------------------------------------------------------+---+-------------+
| - realised losses on | | (333,509) |
| sales | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Unrealised depreciation | | (3,591,578) |
| on valuation for the | | |
| period | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Fair value of | | 11,314,487 |
| investments at 30 | | |
| November 2008 | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Closing book cost | | 14,906,065 |
+--------------------------------------------------------------+---+-------------+
| Closing unrealised | | (3,591,578) |
| depreciation | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| | | 11,314,487 |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Realised losses on sales | | (333,509) |
+--------------------------------------------------------------+---+-------------+
| Increase in unrealised | | (3,591,578) |
| depreciation | | |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Net losses on financial | | (3,925,087) |
| assets designated as at | | |
| fair value through | | |
| profit or loss | | |
+--------------------------------------------------------------+---+-------------+
Transaction costs incidental to the acquisition of investments totalled
GBP17,746 and to the disposal of investments totalled GBP10,771 for the period.
7 RECEIVABLES
+--------------------------------------------------------------+---+-----------+
| | | 30 Nov |
| | | 2008 |
| | | GBP |
+--------------------------------------------------------------+---+-----------+
| | | |
+--------------------------------------------------------------+---+-----------+
| Prepayments | | 5,725 |
+--------------------------------------------------------------+---+-----------+
| Accrued income | | 35,628 |
+--------------------------------------------------------------+---+-----------+
| Sundry receivables | | 8,682 |
+--------------------------------------------------------------+---+-----------+
| | | |
+--------------------------------------------------------------+---+-----------+
| | | 50,035 |
+--------------------------------------------------------------+---+-----------+
8 PAYABLES
+---------------------------------------------------------------+---+-----------+
| (amounts falling due | | 30 Nov |
| within one year) | | 2008 |
| | | GBP |
+---------------------------------------------------------------+---+-----------+
| | | |
+---------------------------------------------------------------+---+-----------+
| Investment transactions | | 524,511 |
| not settled | | |
+---------------------------------------------------------------+---+-----------+
| Accrued expenses | | 139,393 |
+---------------------------------------------------------------+---+-----------+
| | | |
+---------------------------------------------------------------+---+-----------+
| | | 663,904 |
+---------------------------------------------------------------+---+-----------+
9 PAYABLES
+---------------------------------------------------------------+---+-----------+
| (amounts falling due | | 30 Nov |
| after one year) | | 2008 |
| | | GBP |
+---------------------------------------------------------------+---+-----------+
| | | |
+---------------------------------------------------------------+---+-----------+
| Zero Coupon Preference | | 4,140,880 |
| share entitlement | | |
+---------------------------------------------------------------+---+-----------+
ZCP shares carry no entitlement to income distributions to be made by the
Company. The ZCP shares will not pay dividends but will have a final capital
entitlement at the end of their life on 31 December 2010 of 392.00p. It should
be noted that the predetermined capital entitlement of a ZCP share is not
guaranteed and is dependent upon the Company's gross assets being sufficient on
31 December 2010 to meet the final capital entitlement of the ZCP shares. The
ZCP shares have the right to receive notice of and attend, but do not have the
right to vote at, any general meeting.
Under the Articles of Association, the Company is obliged to redeem all of the
ZCP shares on 31 December 2010 (if such redemption has not already been
effected).
10 SHARE CAPITAL
+-------------------------------------------------+---+----------+--+------------+
| Authorised | | | | GBP |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Unlimited | | | | - |
| number of | | | | |
| shares of | | | | |
| no par | | | | |
| value | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Issued | | | | SHARES |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Ordinary | | | | 13,115,952 |
| shares of | | | | |
| no par | | | | |
| value | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Zero Coupon | | | | 1,222,833 |
| Preference | | | | |
| shares of | | | | |
| no par | | | | |
| value | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Number of | | | | 14,338,785 |
| shares in | | | | |
| issue at 30 | | | | |
| November | | | | |
| 2008 | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | GBP |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Issued | | | | - |
| capital as | | | | |
| at 30 | | | | |
| November | | | | |
| 2008 | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| The issue | | | | Number of |
| of shares | | | | shares |
| took place | | | | |
| as follows: | | | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Ordinary | | 4 Feb | | 13,804,812 |
| shares | | 2008 | | |
+-------------------------------------------------+---+----------+--+------------+
| | | | | |
+-------------------------------------------------+---+----------+--+------------+
| Zero Coupon | | 4 Feb | | 1,222,833 |
| Preference | | 2008 | | |
| shares | | | | |
+-------------------------------------------------+---+----------+--+------------+
Pursuant to the scheme of reconstruction under section 110 of the United
Kingdom's Insolvency Act 1986 implemented by European Utilities Trust plc
("EUT"), the above numbers of shares in the Company were issued in exchange for
4,526,168 EUT Ordinary Income shares and 1,222,833 EUT Zero Coupon Preference
shares.
On 14 February 2008, the Company purchased 2,069,341 Ordinary shares at 95 pence
each, of which 688,860 were cancelled and 1,380,481 were held in treasury. The
shares held in treasury were subsequently sold out of treasury during the
period, at 95 pence each.
11 RESERVES
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
| | | Revenue | | Capital | | Total |
| | | 30 Nov | | 30 Nov | | 30 Nov |
| | | 2008 | | 2008 | | 2008 |
| | | GBP | | GBP | | GBP |
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
| | | | | | | |
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
| Balance | | - | | - | | - |
| as at | | | | | | |
| 26 | | | | | | |
| October | | | | | | |
| 2007 | | | | | | |
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
| Return | | 45,473 | | (4,247,450) | | (4,201,977) |
| on | | | | | | |
| ordinary | | | | | | |
| activities | | | | | | |
| for the | | | | | | |
| period | | | | | | |
| attributable | | | | | | |
| to Ordinary | | | | | | |
| shareholders | | | | | | |
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
| | | | | | | |
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
| Balance | | 45,473 | | (4,247,450) | | (4,201,977) |
| as at | | | | | | |
| 30 | | | | | | |
| November | | | | | | |
| 2008 | | | | | | |
+--------------------------------------------------+--+-----------+---+-------------+---+-------------+
12 DISTRIBUTABLE RESERVE
+--------------------------------------------------------------+---+------------+
| | | Total |
| | | 30 Nov |
| | | 2008 |
| | | GBP |
+--------------------------------------------------------------+---+------------+
| | | |
+--------------------------------------------------------------+---+------------+
| Balance as at 26 October | | - |
| 2007 | | |
+--------------------------------------------------------------+---+------------+
| | | |
+--------------------------------------------------------------+---+------------+
| Transferred from share | | 13,062,826 |
| premium | | |
+--------------------------------------------------------------+---+------------+
| | | |
+--------------------------------------------------------------+---+------------+
| Balance as at 30 | | 13,062,826 |
| November 2008 | | |
+--------------------------------------------------------------+---+------------+
The Company has passed a special resolution cancelling the amount standing to
the credit of the share premium account following admission, and that the
surplus created form a distributable reserve. In accordance with The Companies
(Guernsey) Law, 1994 (as amended), the law in force at that time, the Directors
applied to the Royal Court in Guernsey for an order confirming such cancellation
of the share premium account. The distributable reserve created on cancellation
is available as distributable profits to be used for all purposes permitted by
law, including the buy back of Ordinary shares and the payment of dividends.
13 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the Company's
operations; and
(b) Investments in listed entities
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Company's financial instruments are market price
risk, credit risk, liquidity risk, interest rate risk and foreign exchange risk.
The Board regularly review and agrees policies for managing each of these risk
and these are summarised below.
(a) Market Price Risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments held. It represents the potential loss the Company might
suffer through holding market positions in the face of price movements. The
Investment Adviser actively monitors market prices and reports to the Board as
to the appropriateness of the prices used for valuation purposes.
Price sensitivity
The following details the Company's sensitivity to a 25% increase and decrease
in the market prices, with 25% being the sensitivity rate used when reporting
price risk internally to key management personnel and representing management's
assessment of the possible change in market prices. This percentage also
reflects the relative volatility of the market over the past six months.
At 30 November 2008, if market prices had been 25% higher with all the other
variables held constant, the net loss attributable to shareholders for the
period would have been GBP2,828,622 lower, due to the increase in the fair value
of financial assets at fair value through profit or loss. This would represent
an increase in Net Assets of 31.92%.
If market prices had been 25% lower with all other variables held constant, the
net loss attributable to shareholders for the period would have been
GBP2,828,622 greater, due to the decrease in the fair value of financial assets
at fair value through profit or loss. This would represent a decrease in Net
Assets of 31.92%.
(b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company. The
Directors receive financial information on a regular basis which is used to
identify and monitor risk.
The prospective returns to Ordinary shareholders are dependent on the returns
achieved by the quoted and unquoted securities held or entered into by the
Company and that any default by an issuer of any such quoted or unquoted
security held by the Company would have a consequential adverse effect on the
ability of the Company to pay some or all of the entitlement to Ordinary
shareholders. Such a default might, for example, arise on the insolvency of an
issuer of a security.
Counterparty credit risk arises as a result of cash deposits placed with banks.
This risk is managed by the Directors ensuring that cash deposits are only made
with high quality counterparties, with the level of permitted exposure to a
counterparty firmly linked to the strength of its credit rating. Cash deposits
are also spread between two banks. At the date of this report, one of these
banks held a AA credit rating, whilst the other held an A credit rating as rated
by Moody's.
The Company's maximum exposure to credit risk on bank counterparties at 30
November 2008 was GBP2,301,111.
(c) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in
realising assets or otherwise raising funds to meet financial commitments. The
Company's main financial commitments are its ongoing operating expenses and the
settlement of the obligation upon maturity of the ZCP shares on 31 December
2010.
The Investment Manager ensures that the Company has sufficient liquid resources
available to fulfil its operational plans and to meet its financial obligations
as they fall due.
The ZCP shares will not pay dividends but will have a final capital entitlement
at the end of their life on 31 December 2010 of 392.00p. It should be noted that
the predetermined capital entitlement of a ZCP share is not guaranteed and is
dependent upon the Company's gross assets being sufficient on 31 December 2010
to meet the final capital entitlement of the ZCP shares.
Under the Articles of Association, the Company is obliged to redeem all of the
ZCP shares on 31 December 2010 (if such redemption has not already been
effected).
The Directors intend to monitor the financial position of the Company to ensure
that it has sufficient liquid resources available to fulfil its obligation upon
maturity of the ZCP shares.
(d) Interest Rate Risk
The Company holds cash in several bank accounts at two banks, the return on
which is subject to fluctuations in market interest rates.
Other than financial assets designated as at fair value through profit or loss
and cash and cash equivalents, none of the assets or liabilities of the Company,
attract or incur interest.
Interest rate sensitivity
If interest rates had been 25 basis points higher and all other variables were
held constant, the Company's net loss attributable to shareholders for the
period ended 30 November 2008 would have decreased by approximately GBP5,800 or
0.06% of Net Assets due to an increase in the amount of interest receivable on
the bank balances.
If interest rates had been 25 basis points lower and all other variables were
held constant, the Company's net loss attributable to shareholders for the
period ended 30 November 2008 would have increased by approximately GBP5,800 or
0.06% of Net Assets due to a decrease in the amount of interest receivable on
the bank balances.
(e) Foreign Exchange Risk
A substantial proportion of the Company's portfolio is invested in overseas
securities and movements in exchange rates can significantly affect their
Sterling value. The Company does not normally hedge against foreign currency
movements affecting the value of the investment portfolio, but takes account of
this risk when making investment decisions.
The Company undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures
are managed by minimising the amount of foreign currency held at any one time.
With effect from 1 December 2008, all bank balances held in foreign currencies
will be swept into the Company's GBP bank account on a daily basis. This will
further reduce the foreign exchange risk to which the Company is exposed.
The carrying amounts of the Company's foreign currency denominated monetary
assets at the reporting date are as follows:
+--------------------------------------------------------------+---+-----------+
| | | GBP |
+--------------------------------------------------------------+---+-----------+
| Euro | | 382,863 |
+--------------------------------------------------------------+---+-----------+
| US Dollar | | 2,643 |
+--------------------------------------------------------------+---+-----------+
| Norwegian Krone | | (1,989) |
+--------------------------------------------------------------+---+-----------+
| Hong Kong Dollar | | 25 |
+--------------------------------------------------------------+---+-----------+
(f) Capital Management
The investment objective of the Company is to provide shareholders with
attractive long term returns, expected to be in the form of capital appreciation
but with some income, through a diversified portfolio of renewable energy
related investments.
As the Company's Ordinary shares are traded on the London Stock Exchange, the
Ordinary shares may trade at a discount to their Net Asset Value per Share on
occasion. However, in structuring the Company, the Directors have given detailed
consideration to the discount risk and how this may be managed.
Upon Admission, the Directors were granted authority to buy back up to 14.99 per
cent of the Ordinary shares in issue following Admission. The Company's
authority to make purchases of its own issued Ordinary shares will expire at the
conclusion of the first annual general meeting of the Company. A renewal of such
authority to make purchases of Ordinary shares will be sought from shareholders
at each annual
general meeting of the Company. The timing of any purchases will be decided by
the Board.
The Directors intend that purchases will only be made pursuant to this authority
through the market, for cash, at prices below the prevailing Net Asset Value per
Share where the Directors believe such purchases will result in an increase in
the Net Asset Value per Share of the remaining Ordinary shares and to assist in
narrowing any discount to Net Asset Value per Share at which the Ordinary shares
may trade. Any Ordinary shares bought back by the Company will either be held by
the Company in treasury (and which may be reissued) or forthwith be cancelled.
Following approval of the Court in Guernsey, the Company resolved to cancel the
amount standing to the credit of its share premium account following Admission.
The amount released on cancellation has been credited as a distributable reserve
in the books of account and may be used by the Company for the purpose of
funding purchases of its Ordinary shares as described above and the payment
dividends.
The Company's authorised share capital is such that either further issues of new
Ordinary shares or reissues of Ordinary shares held in treasury could be made.
Subject to prevailing market conditions, the Board may decide to make one or
more further such issues or reissues of Ordinary shares for cash from time to
time. Any further issues of new Ordinary shares or reissues of Ordinary shares
held in treasury will rank pari passu with Ordinary shares in issue. There are
no provisions of the Companies Law or the Articles of Association of the Company
providing pre-emption rights for existing Shareholders on the allotment of
equity securities for cash or on the reissue of equity securities out of
treasury.
Unless authorised by Shareholders, the Company will not issue further Ordinary
Shares or reissue Ordinary shares out of treasury for cash at a price below the
prevailing Net Asset Value per Share unless they are first offered pro rata to
existing Shareholders.
The Company monitors capital on the basis of the carrying amount of equity as
presented on the face of the Balance Sheet. Capital for the reporting period
under review is summarised as follows:
+--------------------------------------------------------------+---+-------------+
| | | GBP |
+--------------------------------------------------------------+---+-------------+
| Retained losses | | (4,201,977) |
+--------------------------------------------------------------+---+-------------+
| Distributable reserves | | 13,062,826 |
+--------------------------------------------------------------+---+-------------+
| | | |
+--------------------------------------------------------------+---+-------------+
| Total | | 8,860,849 |
+--------------------------------------------------------------+---+-------------+
15 RELATED PARTY TRANSACTIONS
There were no related party transactions during the period.
16 EVENTS AFTER THE BALANCE SHEET DATE
As at the date of this report, the Board confirms that no material event has
occurred since the balance sheet date.
For further information contact:
Anson Fund Managers Limited
Secretary
Tel. 01481 722260
25 March 2009
END OF ANNOUNCEMENT
E&OE - in transmission
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