TIDMPRF
RNS Number : 5323I
Premier Renewable Energy Fund Ltd
12 March 2010
PREMIER RENEWABLE ENERGY FUND LIMITED
ANNOUNCEMENT OF ANNUAL RESULTS
The Directors announce the statement of results for the year ended 30 November
2009 as follows :
CHAIRMAN'S STATEMENT
For the year ended 30 November 2009
Background to the year
As the global economic situation has stabilised so equity markets have recovered
despite continuing weakness in the banking sector. The zero interest rate
policy adopted by many central banks has forced investors into choosing between
holding cash, offering a real negative return after inflation, or taking on
substantially greater risk in order to achieve a positive return. Central
banks, including the Bank of England and the Federal Reserve, have encouraged
risk taking through quantitative easing and buying low-risk securities with
newly printed money. While the dangers of such stimuli are significant, the
risks of ignoring the need for such action are likely to be more damaging to the
global economy.
Now that the action taken by central banks has created some short term economic
stability, the return of underlying confidence is vital for the recovery to
become more sustained. For this to happen, corporations and individuals will
need to adjust to a world founded on stable equity-driven returns and away from
the highly leveraged, high-risk returns of previous years. This will take time
to effect and will involve important structural changes to the financial sector.
In the meantime volatility is likely to continue, meaning that certainty will
be priced at a considerable premium.
The engines of growth for the renewable energy sector are strong policy support
allied to delivery systems which include accessible credit. Whilst the
structural drivers are still firmly in place, credit markets are only slowly
opening up. However, with climate change remaining high on the political agenda
of most governments around the world, this level of political commitment should
increasingly offer comfort to the providers of credit, and as a result help to
drive further investment in the sector.
Performance
Over the year to 30 November 2009 the Company performed strongly, with restated
total assets increasing from GBP14.52m to GBP17.05m, a rise of 17.4%. Returns to
ordinary shareholders are geared through the Company's capital structure, and
net asset value per ordinary share has risen by 32.7% to 89.65p. The ordinary
share price responded positively to the improvement in underlying net asset
value, rising by 21.25p or 41.9%. The Zero Coupon Preference shares (the "ZCP
shares") also performed well, with net asset value rising by 7.3% and the share
price by 9.7%. The ZCP shares are now covered 3.84 times by total assets making
them one of the best covered issues in the market.
The Company does not have formal benchmarks against which performance is
assessed. Rather the Board considers performance against a range of stock
market indices. The Dresdner Renewable Energy Index rose over the same period
by 26.2% and the FTSE 100 Total Return Index rose by 26.3%. From launch the
Company's investment portfolio has outperformed the Dresdner Renewable Energy
Index by 43.9%.
Dividends
The policy set by the Company and published in its prospectus is that the
Directors will pay out substantially all revenue accrued over an accounting
period by way of dividend. This year, the net revenue was negative and
therefore the Directors do not recommend a dividend payment. The negative net
revenue reflects the Investment Adviser's move into purer, more diversified
renewable companies which generally make lower dividend distributions to
shareholders. An interim dividend of 0.3 pence was paid for the year ended 30
November 2008.
Shareholder relations
The Investment Adviser has spent considerable time and effort over the period
meeting existing and prospective shareholders. The Board and Investment Adviser
welcome contact with shareholders and details of the Company may be found on
www.premierassetmanagement.co.uk.
Outlook
The recent Copenhagen Climate Change Conference, while reaching no legally
binding agreement on emissions targets, did serve to highlight the growing
awareness of the impact of climate change. International efforts towards a low
carbon future are well entrenched and the development of new technologies allied
to the maturation of existing technologies will drive significant investments
into the sector. The Company has weathered the credit crisis, with total assets
having risen marginally since launch, well ahead of comparable indices. With
the sector beginning to demonstrate the first signs of sustained recovery, your
Board is optimistic on prospects for future returns.
The Company's ZCP Shares are due to be redeemed on 31 December 2010. As the
redemption date approaches the Board will consider whether to maintain the
gearing provided by the ZCP Shares through appropriate refinancing or whether to
finance the redemption by selling assets from the Company's portfolio. The
portfolio has adequate liquidity to raise the GBP4.79m required to redeem the
ZCP Shares in full.
Charles Wilkinson
Chairman
12 March 2010
INVESTMENT ADVISER'S REPORT
For the year ended 30 November 2009
Over the 12 months to 30 November 2009 the total assets of the Company rose by
17.4% to GBP17,045,066. Adjusting for the gearing impact of the ZCP shares, the
net asset value of the Company's Ordinary shares rose by 32.7% to 89.65p. This
compares to a rise in the Dresdner Renewable Energy Index of 26.2% and an
accompanying increase in the FTSE 100 Total Return Index of 26.3%, all in
Sterling terms. Following a strong performance in the second half of the year,
since launch the Company's total asset performance is now 36.3% ahead of the
Dresdner Renewable Energy Index in total return terms.
Despite an encouraging lead-up to the Copenhagen summit, with both the US and
China quantifying possible emission reductions that could be offered within a
global treaty, the concluding 'Copenhagen Accord' is a broad agreement with
no country-specific commitments, although the countries taking part have made
emissions reduction pledges, as agreed, by 31 January 2010.
Notwithstanding the failure to agree a binding successor to the Kyoto Protocol,
2009 has been a year of significant legislation for the renewable energy sector:
The US Stimulus Bill in February - The American Recovery and Reinvestment Act
2009 - included $15bn for the modernisation of the existing grid and to fund an
electric smart grid, and $6bn in loan guarantees for the development of
renewable energy technologies. Similar stimulus packages were implemented by
governments of other developed nations. The American Clean Energy and Security
Act 2009, or Waxman-Markey Bill, was significant in the run up to international
negotiations for a new climate change treaty at Copenhagen in that it set out
the basis for a new US negotiating stance, and delivered an important boost to
the prospects of reaching some sort of agreement there, although the US remains
opposed to a treaty that imposes international legal obligations. With the US
and China together responsible for more than 40% of greenhouse gas emissions,
the evolution of the Chinese position was also significant. In the weeks before
the summit the country committed to reducing its carbon intensity, the amount of
carbon dioxide that it emits for each dollar of economic output, thus seeking to
limit the rise in total emissions without hampering its economic growth.
Meanwhile, the issue of security of supply and the need to diversify sources of
power generation was highlighted once more by the dispute between Gazprom and
the Ukraine. Also, over the course of the second half of the period under
review, two other key catalysts for the sector, an improved availability of
finance and, in terms of sentiment towards the renewable energy sector, oil
price recovery, had started to manifest themselves.
Partly in response to improving legislative support for the sector, and also as
a result of the gradually improving financing environment, the emphasis of the
portfolio has started to shift away from its focus on green utilities -
Iberdrola, EDP, EDF, FPL, Exelon and SSE - representing around 20% of the
portfolio, down from 30% 12 months ago. The cash raised was channelled towards a
number of purer, more internationally diversified renewable plays, detailed
below.
The most obvious "new" theme during the period under review is the Company's
return to investments in the solar sector, where demand has markedly improved in
recent months, with visibility now through the first half of 2010. The deflation
spiral witnessed over the last year is also coming to an end, although no
rebound in prices appears imminent. The Company now has holdings in 8 different
solar names (almost 15% in total), but remains underweight in relation to the
proportions of the Dresdner Renewable Energy Index. The main focus of solar
investment for the Company has been companies with low cost wafer manufacturing
capabilities in the Far East (Trina Solar, Yingli Green) and those involved
further downstream, either in Europe (Centrotherm, a solar equipment
manufacturer and Phoenix Solar, a systems integrator) or in the Far East (China
Singyes, which designs and installs building-integrated photovoltaic systems).
The global wind sector remains an attractive place to invest, despite the fact
that there is limited evidence as yet to support forecasts of a strong uplift in
2010 installations relative to 2009, in either the US or EU. Other fundamentals
are improving. Financing is showing signs of slight improvement and turbine
prices have fallen around 15% from the mid-2008 peak, which is positive for wind
operators. The fact that some large supply deals are now being signed suggests
that prices may start to stabilise from here, which should give some support to
turbine manufacturers. The last addition to the portfolio during the period in
this sector was the Spanish windfarm developer, Acciona, which has an installed
base of approximately 5300MW, including substantial Australian operations. This
complements the portfolio's other wind operators, Iberdrola Renovables and EDF
Energies Nouvelles in Europe and Infigen Energy, quoted in Australia. Meanwhile
the takeover of Novera Energy by Infinis Energy underscores the growing
recognition by the market of the value that exists in many of the small and
mid-sized operators in this sub-sector.
From a geographical perspective the portfolio was increasingly tilted to reflect
the attractions of the Chinese renewable energy market in particular. Purchases
of Dongfang Electric and China High Speed, together with Yingli Green Energy and
Trina Solar, have increased exposure to this market to almost 20% in an effort
to capture some of the growth signalled by the recent upwards revisions to
Chinese GDP. Dongfang increased the portfolio's position in nuclear power, while
China High Speed Transmission complemented the existing wind turbine gearbox
exposure through Hansen Transmissions. As a result, direct investment in Chinese
stocks at the year end represented around 20% of the portfolio, more than four
times the position a year ago. Despite the restrictions of holding quoted stocks
directly there, India also remains an extremely attractive market for renewable
energy, given the sub-continent's overwhelming power supply-demand imbalance. As
a result the portfolio participated in the IPO in Indian Energy, currently the
only independent pure wind power producer in India. This supplemented its
existing holding in Greenko (hydro and biomass), which has continued to perform
strongly.
Outlook
Many of the fundamentals for growth in the renewable energy sector (stimulus
packages, legislative support, and the availability of financing) have
undoubtedly improved from 12 months ago. Global climate change looks set to
remain high on the agenda of both developed economies and the developing world,
regardless of the immediate outcome of the Copenhagen summit, with the result
that opportunities to invest in the sector globally, with the prospect of
attractive returns, will continue to increase.
Premier Fund Managers Limited
INVESTMENT OBJECTIVE AND POLICY
The objective of 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.
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).
The Company observes and will continue to observe all of the investment
restrictions necessary to comply with the UKLA's 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 of the UKLA (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 breach and action to be taken by
the Company to rectify such breach by an announcement issued through a
regulatory information service or by including details of such action in the
Company's annual financial report. There was no such breach in the year under
review.
The Company may 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 Company's 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 year ended 30 November 2009
A description of important events which have occurred during the financial year,
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 year.
Going Concern
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
12 March 2010
SCHEDULE OF INVESTMENTS
As at 30 November 2009
+--------------------------+----------+------------+----------+------------+----------+--------+
| INVESTMENT PORTFOLIO | | NOMINAL | | VALUATION | | TOTAL |
| | | HOLDINGS | | | | ASSETS |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | GBP | | % |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Acciona | | 4,500 | | 350,907 | | 2.06 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| AFC Energy | | 1,200,000 | | 138,000 | | 0.81 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| A-Power Energy | | 50,000 | | 521,888 | | 3.06 |
| Generation | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Centrotherm | | 8,000 | | 298,230 | | 1.75 |
| Photovoltaics | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| China High Speed | | 285,000 | | 409,332 | | 2.40 |
| Transmission | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| China Power New Energy | | 14,100,000 | | 708,237 | | 4.16 |
| Development | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| China Singyes Solar | | 1,100,000 | | 296,119 | | 1.74 |
| Technologies | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Comtec Solar | | 750,000 | | 137,739 | | 0.81 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Dongfang Electric Corp | | 165,000 | | 525,115 | | 3.08 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Electricite de France | | 9,200 | | 322,395 | | 1.89 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| EDF Energies Nouvelles | | 25,000 | | 790,062 | | 4.64 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| EDP Renovaveis | | 175,000 | | 1,041,567 | | 6.11 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Energias de Portugal | | 280,000 | | 779,850 | | 4.58 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Exelon | | 18,000 | | 527,190 | | 3.09 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| First Solar | | 3,200 | | 231,844 | | 1.36 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| FPL Group | | 16,000 | | 505,888 | | 2.97 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Gamesa Corp | | 70,000 | | 810,641 | | 4.76 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Greenko Group | | 571,250 | | 634,088 | | 3.72 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Hansen Transmissions Int | | 395,000 | | 415,738 | | 2.44 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Hydrodec Group | | 1,304,320 | | 159,779 | | 0.94 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Iberdrola Renovables | | 285,000 | | 829,668 | | 4.87 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Indian Energy | | 412,500 | | 321,750 | | 1.89 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Infigen Energy | | 450,000 | | 334,717 | | 1.96 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Innergex Renewable | | 117,000 | | 343,622 | | 2.02 |
| Energy | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| ITC Holdings | | 24,000 | | 649,343 | | 3.81 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Novera Energy | | 878,508 | | 672,059 | | 3.94 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Ormat Technologies | | 11,000 | | 275,067 | | 1.61 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Phoenix Solar | | 7,000 | | 226,775 | | 1.33 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Solarworld | | 20,000 | | 274,685 | | 1.61 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Trading Emissions | | 200,000 | | 190,000 | | 1.11 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Trina Solar ADR | | 19,000 | | 538,680 | | 3.16 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Vesta Wind Systems | | 17,000 | | 722,344 | | 4.24 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Yingli Green Energy | | 43,000 | | 370,888 | | 2.18 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | 15,354,217 | | 90.08 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| OTHER ASSETS INCLUDING | | | | 1,690,849 | | 9.92 |
| CASH | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| TOTAL | | | | 17,045,066 | | 100.00 |
+--------------------------+----------+------------+----------+------------+----------+--------+
SCHEDULE OF INVESTMENTS
As at 30 November 2008
+--------------------------+----------+------------+----------+------------+----------+--------+
| INVESTMENT PORTFOLIO | | NOMINAL | | VALUATION | | TOTAL |
| | | HOLDINGS | | | | ASSETS |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | GBP | | % |
+--------------------------+----------+------------+----------+------------+----------+--------+
| A-Power Energy | | 50,000 | | 137,218 | | 0.95 |
| Generation | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Canadian Hydro | | 200,000 | | 272,909 | | 1.88 |
| Developers | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| China Power New Energy | | 12,600,000 | | 195,657 | | 1.35 |
| Development | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Electricite de France | | 19,200 | | 721,624 | | 4.97 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| EDF Energies Nouvelles | | 20,000 | | 394,785 | | 2.72 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| EDP Renovaveis | | 145,000 | | 580,096 | | 4.00 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Energias de Portugal | | 350,000 | | 769,145 | | 5.30 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Exelon | | 20,000 | | 730,181 | | 5.03 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| FPL Group | | 30,000 | | 948,169 | | 6.53 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Gamesa Corp | | 60,000 | | 649,612 | | 4.48 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Greenko Group | | 200,000 | | 104,000 | | 0.72 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Hansen Transmissions Int | | 58,000 | | 50,750 | | 0.35 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Harbin Power Equipment | | 265,000 | | 104,544 | | 0.72 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Hydrodec Group | | 833,000 | | 220,745 | | 1.52 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Hydrodec 8% Unsecured | | 1,973,684 | | 523,026 | | 3.60 |
| Conv Loan Notes | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Iberdrola Renovables | | 285,000 | | 618,543 | | 4.26 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Iberdrola | | 210,000 | | 1,008,582 | | 6.95 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| ITC Holdings | | 10,000 | | 272,875 | | 1.88 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| KSK Emerging India | | 403,918 | | 242,351 | | 1.67 |
| Energy Fund | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Novera Energy | | 570,300 | | 233,823 | | 1.61 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Q-Cells | | 12,000 | | 262,915 | | 1.81 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Renewable Energy Corp | | 55,000 | | 331,599 | | 2.28 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Renewable Energy | | 600,000 | | 357,000 | | 2.46 |
| Generation | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Scottish & Southern | | 85,000 | | 936,700 | | 6.45 |
| Energy | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Trading Emissions | | 450,000 | | 444,375 | | 3.06 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| Vesta Wind Systems | | 7,000 | | 203,263 | | 1.40 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | 11,314,487 | | 77.94 |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| OTHER ASSETS INCLUDING | | | | 3,201,652 | | 22.06 |
| CASH | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| | | | | | | |
+--------------------------+----------+------------+----------+------------+----------+--------+
| TOTAL | | | | 14,516,139 | | 100.00 |
+--------------------------+----------+------------+----------+------------+----------+--------+
INCOME STATEMENT
For the year ended 30 November 2009
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | Year ended 30 Nov 2009 | | 26 Oct |
| | | | | | 07 to |
| | | | | | 30 Nov |
| | | | | | 08 |
+--------------------------+----------+-------+---------------------------------------------------------+----------+-------------+
| | | | Revenue | | Capital | | Total | | Total |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | Notes | GBP | | GBP | | GBP | | GBP |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Net gains / (losses) on | | | | | | | | | |
| financial assets | | | | | | | | | |
| designated as at fair | | 6 | - | | 3,428,071 | | 3,428,071 | | (3,925,087) |
| value through profit or | | | | | | | | | |
| loss | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Investment income | | 2 | 342,941 | | - | | 342,941 | | 467,944 |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Total income and gains | | | 342,941 | | 3,428,071 | | 3,771,012 | | (3,457,143) |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Expenses | | 3 | (403,771) | | (71,905) | | (475,676) | | (469,268) |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Net income before | | | | | | | | | |
| finance costs and | | | (60,830) | | 3,356,166 | | 3,295,336 | | (3,926,411) |
| taxation | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Appropriations in | | | | | | | | | |
| respect of Zero Coupon | | | - | | (301,917) | | (301,917) | | (230,015) |
| Preference shares | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Return on ordinary | | | | | | | | | |
| activities before | | | (60,830) | | 3,054,249 | | 2,993,419 | | (4,156,426) |
| taxation | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Taxation on ordinary | | 1(b) | (55,692) | | - | | (55,692) | | (45,551) |
| activities | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Return on ordinary | | | | | | | | | |
| activities for the year | | | | | | | | | |
| / period attributable to | | | (116,522) | | 3,054,249 | | 2,937,727 | | (4,201,977) |
| Ordinary shareholders | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | Pence | | Pence | | Pence | | Pence |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Earnings per Ordinary | | 5 | (0.89) | | 23.29 | | 22.40 | | (31.84) |
| share | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| | | | | | | | | | |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
| Earnings per Zero Coupon | | | | | | | | | |
| Preference share | | 5 | - | | 24.69 | | 24.69 | | 18.81 |
+--------------------------+----------+-------+-----------+----------+-----------+----------+-----------+----------+-------------+
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 year / period, all amounts above
relate to continuing operations.
No operations were acquired or discontinued in the year / period.
BALANCE SHEET
As at 30 November 2009
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | 30 Nov | | 30 Nov |
| | | | 2009 | | 2008 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | Notes | GBP | | GBP |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| NON-CURRENT ASSETS | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| Financial assets | | | | | |
| designated as at fair | | 6 | 15,354,217 | | 11,314,487 |
| value through profit or | | | | | |
| loss | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| CURRENT ASSETS | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| Receivables | | 7 | 205,993 | | 900,541 |
+--------------------------+----------+-------+-------------+----------+-------------+
| Cash and cash | | | 1,484,856 | | 2,301,111 |
| equivalents | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | 1,690,849 | | 3,201,652 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| TOTAL ASSETS | | | 17,045,066 | | 14,516,139 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| CURRENT LIABILITIES | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| Payables - due within | | 8 | 843,041 | | 1,514,410 |
| one year | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| TOTAL ASSETS LESS | | | | | |
| CURRENT LIABILITIES | | | 16,202,025 | | 13,001,729 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| NON-CURRENT LIABILITIES | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| Payables - due after one | | 9 | 4,442,797 | | 4,140,880 |
| year | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| NET ASSETS | | | 11,759,228 | | 8,860,849 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| EQUITY | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| Share capital | | 10 | - | | - |
+--------------------------+----------+-------+-------------+----------+-------------+
| Capital reserve | | 11 | (1,193,201) | | (4,247,450) |
+--------------------------+----------+-------+-------------+----------+-------------+
| Revenue reserve | | 11 | (110,397) | | 45,473 |
+--------------------------+----------+-------+-------------+----------+-------------+
| Distributable reserve | | 12 | 13,062,826 | | 13,062,826 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| TOTAL EQUITY | | | 11,759,228 | | 8,860,849 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | Pence | | Pence |
+--------------------------+----------+-------+-------------+----------+-------------+
| NAV per Ordinary Share | | | 89.65 | | 67.55 |
+--------------------------+----------+-------+-------------+----------+-------------+
| | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
| NAV per Zero Coupon | | | 363.31 | | 338.62 |
| Preference share | | | | | |
+--------------------------+----------+-------+-------------+----------+-------------+
The financial statements were approved by the Board of Directors on 12 March
2010 and are signed on its behalf by:
David Staples
Charles Wilkinson
Director
Chairman
STATEMENT OF CASHFLOWS
For the year ended 30 November 2009
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | Year | | 26 Oct |
| | | | ended | | 2007 |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | 30 Nov | | to 30 |
| | | | 2009 | | Nov 2008 |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Operating activities | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Return on ordinary | | | 2,993,419 | | (4,156,426) |
| activities before taxation | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Add: Net (gains) / losses | | | | | |
| on financial assets | | | (3,428,071) | | 3,925,087 |
| designated as at fair value | | | | | |
| through profit or loss | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Less: Investment income | | | (342,941) | | (467,944) |
| receivable | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Add: Increase in payables | | | 240,721 | | 369,408 |
| and appropriations | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Add: Decrease / (Increase) | | | | | |
| in receivables excluding | | | 7,692 | | (50,035) |
| accrued investment income | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Net cash outflow from | | | | | |
| operating activities before | | | (529,180) | | (379,910) |
| investment income | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Investment income received | | | 342,941 | | 467,944 |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Net cash (outflow) / inflow | | | | | |
| from operating activities | | | (186,239) | | 88,034 |
| before taxation | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Withholding taxes | | | (55,692) | | (45,551) |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Net cash (outflow) / inflow | | | | | |
| from operating activities | | | (241,931) | | 42,483 |
| after taxation | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Investing activities | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Purchase of financial | | | (8,864,571) | | (21,595,488) |
| assets | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Sale of financial assets | | | 8,329,595 | | 6,880,425 |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Net cash outflow from | | | (534,976) | | (14,715,063) |
| investing activities | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Financing activities | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Equity dividends paid | | | (39,348) | | - |
+-----------------------------+----------+----------+-------------+----------+--------------+
| 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 (outflow) / inflow | | | | | |
| from financing activities | | | (39,348) | | 16,973,691 |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| (Decrease) / Increase in | | | | | |
| cash and cash equivalents | | | (816,255) | | 2,301,111 |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Cash and cash equivalents | | | 2,301,111 | | - |
| at beginning of year | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
| Cash and cash equivalents | | | 1,484,856 | | 2,301,111 |
| at end of year | | | | | |
+-----------------------------+----------+----------+-------------+----------+--------------+
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 November 2009
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | Share | Share | Capital | Revenue | Distributable | Total |
| | | | Capital | Premium | Reserve | Reserve | Reserve | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | GBP | GBP | GBP | GBP | GBP | GBP |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| As at | | | - | - | (4,247,450) | 45,473 | 13,062,826 | 8,860,849 |
| beginning of | | | | | | | | |
| year | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| Return on | | | | | | | | |
| ordinary | | | - | - | 3,054,249 | (116,522) | - | 2,937,727 |
| activities for | | | | | | | | |
| the year | | | | | | | | |
| attributable | | | | | | | | |
| to Ordinary | | | | | | | | |
| shareholders | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| Dividends paid | | | - | - | - | (39,348) | - | (39,348) |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| As at 30 | | | - | - | (1,193,201) | (110,397) | 13,062,826 | 11,759,228 |
| November 2009 | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| | | | | | | | | |
+----------------+----------+----------+---------+--------------+-------------+-----------+---------------+-------------+
| for the period from 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 | | | - | (655,727) | - | - | - | (655,727) |
| of 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 | | | | | | | | |
| ordinary | | | - | - | (4,247,450) | 45,473 | - | (4,201,977) |
| 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 year ended 30 November 2009
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, issued in January
2009, where practicable. All accounting policies adopted for the period are
consistent with 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.
The Company has adequate financial resources and as a consequence, the Directors
believe the Company is well placed to manage its business risks successfully
despite the current economic climate. After making enquiries, the Directors have
a reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the Directors
have adopted the going concern basis in preparing the financial information.
The following Standards or Interpretations have been issued by the International
Accounting Standards Board but not yet adopted by the Company:
IFRS 7 (revised March 2009) Financial Instruments: Disclosures effective for
periods beginning on or after 1 January 2009.
IFRS 8 Operating Segments effective for periods beginning on or after 1 January
2009.
IAS 1 (revised 2007) Presentation of Financial Statements effective for periods
beginning on or after 1 January 2009.
IAS 27 (revised 2008) Consolidation and Separate Financial Statements effective
for periods beginning on or after 1 July 2009.
Some of these Standards and Interpretations are expected to require additional
disclosure in future financial statements.
(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. The States of Guernsey are currently undertaking a review of the
tax regime, with an outcome expected by the end of 2010. Dividends received have
been grossed up for withholding tax. The withholding tax is not recoverable and
is 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. 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 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, highly liquid investments readily convertible to known amounts of cash and
subject to and insignificant risk of changes in value. 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 as 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.
2. INVESTMENT INCOME
+-----------------------------+----------+----------+---------+----------+----------+
| | | | Year | | 26 Oct |
| | | | ended | | 2007 |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | 30 Nov | | to 30 |
| | | | 2009 | | Nov 2008 |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | | | |
+-----------------------------+----------+----------+---------+----------+----------+
| Bank interest | | | 7,141 | | 138,802 |
+-----------------------------+----------+----------+---------+----------+----------+
| Dividend income | | | 308,873 | | 304,716 |
+-----------------------------+----------+----------+---------+----------+----------+
| Loan note interest | | | 26,927 | | 24,426 |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | | | |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | 342,941 | | 467,944 |
+-----------------------------+----------+----------+---------+----------+----------+
3. EXPENSES
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| | | Year ended 30 Nov 2009 | | 26 Oct |
| | | | | 2007 |
+----------------------+--+---------------------------------------------------+----------+----------+
| | | | | | | | | to 30 |
| | | | | | | | | Nov 2008 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| | | Revenue | | Capital | | Total | | Total |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| | | GBP | | GBP | | GBP | | GBP |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Investment Manager's | | 148,664 | | - | | 148,664 | | 140,507 |
| fee | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Broker's fee | | 22,962 | | - | | 22,962 | | 22,894 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Administrator's fee | | 41,653 | | - | | 41,653 | | 41,779 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Registrar's fee | | 8,494 | | - | | 8,494 | | 10,312 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Marketing fee | | 5,251 | | - | | 5,251 | | 10,164 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Directors' fees | | 83,136 | | - | | 83,136 | | 78,191 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Custody fees | | 12,486 | | - | | 12,486 | | 5,992 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Audit fee | | 21,076 | | - | | 21,076 | | 30,000 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Directors' and | | 6,482 | | - | | 6,482 | | 6,269 |
| Officers' insurance | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Annual fees | | 22,406 | | - | | 22,406 | | 12,684 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Bank interest and | | 1,314 | | - | | 1,314 | | 8,948 |
| charges | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Commission paid | | - | | 35,868 | | 35,868 | | 31,473 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Legal and | | 5,373 | | - | | 5,373 | | - |
| professional fees | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| Sundry costs | | 24,474 | | - | | 24,474 | | 9,180 |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| (Profit) / loss on | | - | | 36,037 | | 36,037 | | 60,875 |
| foreign exchange | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | |
+----------------------+--+---------+----------+---------+----------+---------+----------+----------+
| | | 403,771 | | 71,905 | | 475,676 | | 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 year attributable to Ordinary shareholders of GBP2,937,727
(2008: (GBP4,201.977)) and on 13,115,952 (2008: 13,200,911) shares, being the
weighted average number of shares in issue during the year. There are no
dilutive instruments and therefore basic and undiluted gain per share are
identical.
The revenue return per Ordinary share is based on the revenue return on ordinary
activities for the year attributable to Ordinary shareholders of (GBP116,522)
(2008: GBP45,473) and on 13,115,952 (2008: 13,200,911) shares, being the
weighted average number of shares in issue during the year. There are no
dilutive instruments and therefore basic and diluted gain per share are
identical.
The capital return per Ordinary share is based on the capital return on ordinary
activities for the year attributable to Ordinary shareholders of GBP3,054,249
(2008: (GBP4,247,450)) and on 13,115,952 (2008: 13,200,911) shares, being the
weighted average number of shares in issue during the year. There are no
dilutive instruments and therefore basic and diluted gain 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 GBP301,917 (2008: GBP230,015) and on 1,222,833 (2008: 1,222,833) being the
weighted average number of ZCP shares in issue during the year.
6. INVESTMENTS
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | 30 Nov | | 30 Nov |
| | | | 2009 | | 2008 |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+-------------+----------+-------------+
| FINANCIAL ASSETS DESIGNATED | | | | | |
| AT FAIR VALUE THROUGH | | | | | |
| PROFIT OR LOSS | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Opening portfolio cost | | | 14,906,065 | | - |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Unrealised appreciation on | | | | | |
| valuation brought forward | | | (3,591,578) | | - |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Opening valuation | | | 11,314,487 | | - |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Movements in the year / | | | | | |
| period | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Purchases at cost | | | 8,254,398 | | 22,970,505 |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Sales | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| - proceeds | | | (7,642,739) | | (7,730,931) |
+-----------------------------+----------+----------+-------------+----------+-------------+
| - realised losses on sales | | | (1,274,446) | | (333,509) |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Unrealised appreciation / | | | | | |
| (depreciation) on valuation | | | 4,702,517 | | (3,591,578) |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Fair value of investments | | | 15,354,217 | | 11,314,487 |
| at year / period end | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Closing book cost | | | 14,243,278 | | 14,906,065 |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Closing unrealised | | | 1,110,939 | | (3,591,578) |
| appreciation / | | | | | |
| (depreciation) | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | 15,354,217 | | 11,314,487 |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Realised losses on sales | | | (1,274,446) | | (333,509) |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Unrealised appreciation / | | | 4,702,517 | | (3,591,578) |
| (depreciation) on valuation | | | | | |
| for the year / period | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
| Net losses on financial | | | | | |
| assets designated as at | | | 3,428,071 | | (3,925,087) |
| fair value through profit | | | | | |
| or loss | | | | | |
+-----------------------------+----------+----------+-------------+----------+-------------+
Transaction costs incidental to the acquisition of investments totalled
GBP20,161 (2008: GBP17,746) and disposals of investments
totalled GBP15,707 (2008: GBP10,771) for the year.
7. RECEIVABLES
+-----------------------------+----------+----------+---------+----------+----------+
| | | | 30 Nov | | 30 Nov |
| | | | 2009 | | 2008 |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | | | |
+-----------------------------+----------+----------+---------+----------+----------+
| Investment transactions not | | | 163,650 | | 850,506 |
| settled | | | | | |
+-----------------------------+----------+----------+---------+----------+----------+
| Prepayments | | | 10,939 | | 5,725 |
+-----------------------------+----------+----------+---------+----------+----------+
| Accrued income | | | 15,534 | | 35,628 |
+-----------------------------+----------+----------+---------+----------+----------+
| Sundry receivables | | | 15,870 | | 8,682 |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | | | |
+-----------------------------+----------+----------+---------+----------+----------+
| | | | 205,993 | | 900,541 |
+-----------------------------+----------+----------+---------+----------+----------+
The comparative information for "Investment transactions not settled" has been
restated to show gross amounts due from brokers, consistent with the current
year's presentation.
8. PAYABLES
+-----------------------------+----------+----------+---------+----------+-----------+
| (amounts falling due within | | | 30 Nov | | 30 Nov |
| one year) | | | 2009 | | 2008 |
+-----------------------------+----------+----------+---------+----------+-----------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+---------+----------+-----------+
| | | | | | |
+-----------------------------+----------+----------+---------+----------+-----------+
| Investment transactions not | | | 764,844 | | 1,375,017 |
| settled | | | | | |
+-----------------------------+----------+----------+---------+----------+-----------+
| Accrued expenses | | | 78,197 | | 139,393 |
+-----------------------------+----------+----------+---------+----------+-----------+
| | | | | | |
+-----------------------------+----------+----------+---------+----------+-----------+
| | | | 843,041 | | 1,514,410 |
+-----------------------------+----------+----------+---------+----------+-----------+
The comparative information for "Investment transactions not settled" has been
restated to show gross amounts due to brokers, consistent with the current
year's presentation.
9. PAYABLES
+-----------------------------+----------+----------+-----------+----------+-----------+
| (amounts falling due after | | | 30 Nov | | 30 Nov |
| one year) | | | 2009 | | 2008 |
+-----------------------------+----------+----------+-----------+----------+-----------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+-----------+----------+-----------+
| | | | | | |
+-----------------------------+----------+----------+-----------+----------+-----------+
| Zero Coupon Preference | | | 4,442,797 | | 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 shall 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 shares of no par | | | | 13,115,952 |
| value | | | | |
+-----------------------------+----------+------------+----------+-------------+
| Zero Coupon Preference | | | | 1,222,833 |
| shares of no par value | | | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| Number of shares in issue | | | | |
| at 30 November 2008 and 30 | | | | 14,338,785 |
| November 2009 | | | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | GBP |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| Issued capital as at 30 | | | | |
| November 2008 and 30 | | | | - |
| November 2009 | | | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| The issue of shares took | | | | Number of |
| place as follows: | | | | shares |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| Ordinary shares | | 4 February | | 13,804,812 |
| | | 2008 | | |
+-----------------------------+----------+------------+----------+-------------+
| | | | | |
+-----------------------------+----------+------------+----------+-------------+
| Zero Coupon Preference | | 4 February | | 1,222,833 |
| shares | | 2008 | | |
+-----------------------------+----------+------------+----------+-------------+
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, all at 95 pence
each and all before 30 November 2008.
11. RESERVES
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| | | Revenue | | Capital | | Total | | Total |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| | | 30 Nov | | 30 Nov | | 30 Nov | | 30 Nov |
| | | 2009 | | 2009 | | 2009 | | 2008 |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| | | GBP | | GBP | | GBP | | GBP |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | | |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| Opening balance | | 45,473 | | (4,247,450) | | (4,201,977) | | - |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| Return on ordinary | | | | | | | | |
| activities for the | | | | | | | | |
| year / period | | (116,522) | | 3,054,249 | | 2,937,727 | | (4,201,977) |
| attributable to | | | | | | | | |
| Ordinary shareholders | | | | | | | | |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| Dividends paid | | (39,348) | | - | | (39,348) | | - |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | | |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
| Closing balance | | (110,397) | | (1,193,201) | | (1,303,598) | | (4,201,977) |
+-----------------------+----------+-----------+----------+-------------+----------+-------------+----------+-------------+
12. DISTRIBUTABLE RESERVE
+-----------------------------+----------+----------+------------+----------+------------+
| | | | 30 Nov | | 30 Nov |
| | | | 2009 | | 2008 |
+-----------------------------+----------+----------+------------+----------+------------+
| | | | GBP | | GBP |
+-----------------------------+----------+----------+------------+----------+------------+
| | | | | | |
+-----------------------------+----------+----------+------------+----------+------------+
| Opening balance | | | 13,062,826 | | - |
+-----------------------------+----------+----------+------------+----------+------------+
| Transferred from share | | | - | | 13,062,826 |
| premium | | | | | |
+-----------------------------+----------+----------+------------+----------+------------+
| | | | | | |
+-----------------------------+----------+----------+------------+----------+------------+
| Closing balance | | | 13,062,826 | | 13,062,826 |
+-----------------------------+----------+----------+------------+----------+------------+
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 from a distributable reserve. In accordance with The Companies
(Guernsey) Law, 2008 (as amended) (the "Companies Law"), 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 to be used for all purposes permitted by Guernsey law, including the
buy back of Ordinary shares and the payment of dividends, once the Company has
successfully undertaken a solvency test.
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 risks
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 10% increase and decrease
in the market prices, with 10% 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. The percentage also
reflects the relative volatility of the market over the past six months.
At 30 November 2009, if market prices had been 10% higher with all the other
variables held constant, the net profit attributable to shareholders for the
period would have been GBP1,535,422 higher (2008: GBP1,131,449 net loss 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 13.06% (2008:
12.77%).
If market prices had been 10% lower with all other variables held constant, the
net profit attributable to shareholders for the period would have been
GBP1,535,422 lower (2008: GBP1,131,449 net loss higher) 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 13.06% (2008: 12.77%).
(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.
The Company's maximum exposure to credit risk on bank counterparties at 30
November 2009 was GBP1,484,856 (2008: GBP2,301,111). These banks held AA credit
ratings as rated by Moody's.
(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 its 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).
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.
None of the other 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 profit attributable to shareholders for the
year ended 30 November 2009 would have increased by approximately GBP3,700
(2008: GBP5,800) or 0.03% (2008: 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 profit attributable to shareholders for the
year ended 30 November 2009 would have decreased by approximately GBP3,700
(2008: GBP5.800) or 0.03% (2008: 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
were swept into the Company's GBP bank account on a daily basis. This further
reduced the foreign exchange risk to which the Company is exposed.
(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 next 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 share
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 Royal 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 of dividends.
The Company's share capital is an unlimited number of shares with no par value.
The Company may make further issues of new Ordinary shares or may make reissues
of Ordinary shares held in treasury. 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 in the Companies Laws or the
Articles of Incorporation of the Company provide pre-emption rights for existing
shareholders on the allotment of equity securities for cash but not 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 periods
under review is summarised as follows:
+-------------------+----------+--------+----------+--------+----------+-------------+
| | | | | | | GBP |
+-------------------+----------+--------+----------+--------+----------+-------------+
| | | | | | | |
+-------------------+----------+--------+----------+--------+----------+-------------+
| Retained losses | | | | | | (1,303,598) |
+-------------------+----------+--------+----------+--------+----------+-------------+
| Distributable | | | | | | 13,062,826 |
| reserves | | | | | | |
+-------------------+----------+--------+----------+--------+----------+-------------+
| | | | | | | |
+-------------------+----------+--------+----------+--------+----------+-------------+
| Total | | | | | | 11,759,228 |
+-------------------+----------+--------+----------+--------+----------+-------------+
15. RELATED PARTY TRANSACTIONS
The only related party transactions during the year were the payment of
Directors' remuneration as disclosed in note 4.
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: Guernsey 01481 722260
12 March 2010
END OF ANNOUNCEMENT
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