TIDMCAEL
RNS Number : 8193F
Cazenove Absolute Equity Limited
20 June 2012
CAZENOVE ABSOLUTE EQUITY LIMITED
INTERIM RESULTS ANNOUNCEMENT
The financial information set out in this announcement does not
constitute the Company's statutory financial statements for the
period end 30 April 2012. All amounts are based on the 30 April
2012 unaudited financial statements, approved by the Board of
Directors on 19 June 2012.
The announcement is prepared on the same basis as will be set
out in the interim report and financial statements.
Summary Information
Structure
Cazenove Absolute Equity Limited ("the Company") was
incorporated in Guernsey on 22 September 2006 under the Companies
(Guernsey) Laws 1994 to 1996 (as amended), as a limited liability
closed-ended investment company.
History of the Company
The Company's shares were listed on the Alternative Investment
Market ("AIM") of the London Stock Exchange on 25 October 2006 and
on the Channel Islands Stock Exchange ("CISX") on 27 October 2006.
The Company commenced business on 20 October 2006.
The Board of Directors implemented a 'C' share offer on 11
September 2007.
The Company's shares were delisted from AIM and were
subsequently listed on the official list of the main market of the
London Stock Exchange on 29 November 2007.
The Company's convertible 'C' participating redeemable
preference shares were listed on the official list of the main
market of the London Stock Exchange on 29 November 2007.
The existing convertible 'C' participating redeemable preference
shares were converted to redeemable participating preference shares
and were listed on the main market of the London Stock Exchange on
12 December 2007.
The Company made a new issue of redeemable participating
preference shares on 29 February 2008.
On 16 December 2008, the Company joined The Association of
Investment Companies ("AIC").
During the annual general meeting on 24 June 2011 a continuation
vote was held as a result of the discount floor provision being
triggered at the end of the Company's 31 October 2010 financial
year end. It was resolved that the Company would continue as an
investment company. Also during this annual general meeting, the
authority granted to the Directors to use the Company's Share
Buyback Facility to attempt to close the discount and improve
liquidity in the Company's issued share capital by purchasing in
the market up to 14.99% of shares in issue was renewed.
The Directors had also resolved to introduce a further discount
mechanism where if in any 3 month period the average weekly
discount to NAV at which the shares trade exceeds 5%, the Directors
may in their absolute discretion, propose a tender allowing those
Shareholders at the start of the 3 month period to redeem in
aggregate up to 25% of the issued share capital of the Company at a
tender price equivalent to NAV as at the date of tender less the
costs of the tender offer less 2%. However, if as a result of the
tender offers, share buybacks or otherwise, the Company's aggregate
NAV is below GBP20 million for 3 consecutive calendar months, it is
the Directors intention to draw up proposals for the voluntary
liquidation of the Company. The tender offer facility was approved
by Shareholders during the annual general meeting on 24 June
2011.
Significant share repurchases could take Cazenove Capital's
aggregate ownership over the Takeover Code's Mandatory Offer
trigger level of 30%; the Board applied for and received a waiver
of Rule 9 under Rule 37 of the Takeover Code, which was approved by
the Shareholders.
The Company announced on 14 May 2012 that in accordance with the
articles the Board is required to put forward to the forthcoming
AGM an ordinary resolution that the Company should continue as an
investment company. It is currently the Board's intention to
recommend that Shareholders vote against continuation and, subject
to such resolution being defeated, to vote in favour of managed
winding up proposals which will be put to the same meeting.
The winding up proposals will remove all existing obligations to
propose continuation votes and tender offers which will instead be
replaced with an objective of making cash or in specie
distributions to Shareholders based on the end July and end October
net asset values (less applicable costs and liquidation retention)
following which the Company will be placed into liquidation.
During the year ended 31 October 2010, under the Company's Share
Buyback Facility, the Company re-purchased 5,164,804 shares at a
value of GBP5,565,682. During the year ended 31 October 2011, the
Company re-purchased 2,920,000 shares at a value of GBP3,216,832
and cancelled 2,350,000 shares at a value of GBP2,594,934. The
Company also cancelled 1,450,000 shares which were held in
Treasury. During the period ended 30 April 2012 the Company
cancelled 1,000,000 shares which were held in Treasury. At 30 April
2012, the Company had 32,424,573 participating shares in issue
including 3,284,804 shares held in Treasury. For additional
information refer to note 7.
In accordance with the Tender Offer Facility, on 16 April 2012
and 17 October 2011, the Company purchased and cancelled 9,713,256
and 12,951,004 participating shares at a value of GBP12,405,217 and
GBP16,159,615 respectively. For additional information refer to
note 7.
Investment Objective and Policy
The investment objective of the Company has been to seek to
achieve consistent absolute returns.
The Company has sought to achieve its investment objective
through a policy of investing in a portfolio of long/short equity
funds ("the Underlying Funds"), seeking to achieve consistent
returns with low levels of volatility.
The Company is currently invested in two Underlying Funds, each
managed by Cazenove Capital Management Limited. The Underlying
Funds represent long/short equity strategies, with the flexibility
to exploit a wide range of long/short equity investment
opportunities and are:
-- Cazenove UK Dynamic Absolute Return Fund Limited; and
-- Cazenove Absolute UK Dynamic Fund.
Financial Highlights 30 April 2012 31 October 2011
Net assets GBP38,197,129 GBP50,022,262
Net assets per participating
share 131.08p 128.75p
Management and Administration
Directors Registered Office
John Hallam (Chairman) Trafalgar Court
Paul Le Page Les Banques
Geoffrey Marson St. Peter Port
Andrew Ross Guernsey GY1 3QL
Investment Manager Independent Auditor
Cazenove Capital Management Limited Ernst & Young LLP
12 Moorgate PO Box 9
London EC2R 6DA Royal Chambers
St Julian's Avenue
Corporate Broker St. Peter Port
Numis Securities Limited Guernsey GY1 4AF
The London Stock Exchange Building
10 Paternoster Square CISX Listing Sponsor
London Northern Trust International Fund
EC4M 7LT Administration Services (Guernsey) Limited
Trafalgar Court
J.P. Morgan Securities Ltd Les Banques
125 London Wall St. Peter Port
London EC2Y 5AJ Guernsey GY1 3QL
Legal Adviser (Guernsey) Legal Adviser (UK)
Ogiers Dechert LLP
Ogier House 160 Queen Victoria Street
St. Julian's Avenue London EC4V 4QQ
St. Peter Port
Guernsey GY1 1WA CREST Agent
Computershare Investor Services
Administrator, Secretary and Registrar (Jersey) Limited
Northern Trust International Fund Queensway House
Administration Services (Guernsey) Limited Hilgrove Street
Trafalgar Court St. Helier
Les Banques Jersey JE1 1ES
St. Peter Port
Guernsey GY1 3QL Receiving Agent
Computershare Investor Services PLC Custodian and Principal
Bankers The Pavilions
Northern Trust (Guernsey) Limited Bridgewater Road
PO Box 859 Bristol BS99 1XZ
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1 3DA
Chairman's Statement and Interim Management Report
Cazenove Absolute Equity Limited (CAEL) produced a positive
performance during the six months to end-April 2012. CAEL's share
price increased by 4.16% to 125.25p from 120.25p at the end of
October, while the Net Asset Value (NAV) increased by 1.81% to
131.08p from 128.75p. As at 31 May the NAV stood at 132.13p and the
share price at 128.00p, a discount of 3.13%.
Unsurprisingly during a period of rising markets, the main
contribution to performance has come from the long books. As at 30
April 2012 the Company structure was 62.35% in the offshore
Cazenove UK Dynamic Absolute Return Fund Limited and 38.10% in the
daily dealing UCITS fund, the Cazenove Absolute UK Dynamic
Fund.
Since its formation in 2006, the Company's objective has been to
provide consistent absolute returns with low levels of volatility.
CAEL has achieved its aims during that period, with the NAV per
share increasing by 34% compared to a total return from the FTSE
All Share Index of 15%. This performance has been achieved with
volatility of 10.6%, less than half the index's volatility of
22.6%. Despite this return and the actions taken by your Board
described below, the shares have continued to trade at an
unacceptable discount to NAV. We believe this reflects a
combination of investor disillusionment with closed ended fund of
hedge fund structures together with the development of UCITS
legislation. This has meant that investors are able to access
Cazenove Capital's long short equity expertise via two UCITS
product funds, Cazenove UK Absolute Target Fund and Cazenove
Absolute UK Dynamic Fund. These provide the liquidity and tax
effective structure which was previously only available from CAEL.
The Board therefore believes that a managed winding up of CAEL is
in the best interest of Shareholders.
Last year the Board set out within the notice of the 2011 Annual
General Meeting ('2011 AGM') proposals which included an amendment
to the investment policy and the introduction of future
discretionary tender offers with the overall objective of improving
the marketability of the Company thereby reducing the discount at
which the Company's shares trade relative to the NAV. At the 2011
AGM Shareholders approved the adoption of these proposals together
with the continuation of the Company.
However, despite these actions and two tender offers, the
Company has continued to trade at a discount persistently wider
than that which the Board believes to be acceptable. It is in this
context that the Board intends to bring forward proposals at the
2012 AGM regarding the continuation of the Company.
In accordance with the Articles the Board is required to put
forward an ordinary resolution that the Company should continue as
an investment company. It is currently the Board's intention to
recommend that Shareholders vote against continuation and, subject
to such resolution being defeated, to vote in favour of managed
winding up proposals which will be put to the same meeting.
The winding up proposals will remove all existing obligations to
propose continuation votes and tender offers which will instead be
replaced with an objective of making cash or in specie
distributions to Shareholders (less applicable costs and
liquidation retention) following which the Company will be placed
into liquidation. The Board is currently exploring, with its
advisers, the ability to offer as an alternative to cash
distributions the ability for Shareholders to elect to receive
value through a tax-efficient rollover into one of the underlying
investments held by the Company.
It is currently envisaged that a circular to Shareholders
setting out the notice of the 2012 AGM and including the
continuation vote and the winding up proposals will be sent out
shortly. A full announcement setting out details of the proposals
noted above will be made at that time.
John Hallam
Chairman
June 2012
Investment Manager's Report
Against the backdrop of the continuing financial and political
uncertainties that have dominated newspaper headlines, the majority
of risk assets experienced high volatilities during the six months
to the end of April. Conversely, safe-havens, such as 10 year US
treasuries, bunds and gilts, have seen yields remain close to their
historic low levels. Having said that, the first quarter of 2012
was the best opening quarter for many equity markets since 1998,
consequent largely on an improvement in optimism over steps toward
fiscal consolidation and the Longer-Term Refinancing Operations
(LTROs) in the Eurozone and the emergence of better signs from the
US economy. However, the boost from the LTROs proved short-lived,
and markets started to sell-off during the second half of March and
remained volatile during April. While much of the deterioration in
sentiment was still attributable to lingering Eurozone concerns, an
apparent softening in the pace of job creation in the US and a
deceleration in the Chinese economy raised doubt with regard to
whether the world's two largest economies could counteract the
seemingly inevitable recession in the Eurozone.
Focusing on real economic output, growth rates in most western
European economies turned negative in Q4 2011 and many probably
continued in that vein in Q1 2012. While the US and China continued
to expand, growth over the period came in slightly below
expectations. In Germany, it was reported that Q4 GDP contracted by
0.2%, quarter-on-quarter, driven by a falling contribution from net
trade and consumption. However, confidence surveys, trade figures
and industrial production data in the first quarter of 2012 made
for more positive reading, and a return to growth was reported for
that period. While France narrowly escaped a contraction in both Q4
of 2011 and Q1 2012, Italy saw GDP drop sharply during both
periods. Over the remainder of 2012, there will most likely be a
continuing north-south split within the Eurozone due to austerity
and the loss of competitiveness in the south. Thus, while growth
forecasts for Germany are likely to be raised, the debt crisis and
fiscal problems will continue to weigh heavily on Italy and Spain -
not to mention Portugal and Greece.
Disappointingly, aside from the over-indebted peripheral
economies, the UK has also entered into a technical recession. A
fall in GDP of 0.3% in the final quarter of last year was followed
by a further unexpected contraction of 0.2% in Q1 2012, largely
caused by a slump in construction activity. Slightly more
positively, household consumption in Q4 2011 rose for the first
time since Q3 2010, and was the biggest contributor to growth
during the period. As the gap narrows between inflation and income
growth, leading to an improvement in consumer confidence, we expect
to see further progress in household consumption during the current
year. Across the Atlantic, US GDP grew an annualised 2.2% in Q1.
Although this was less than expected, the expenditure components
showed consumption rising 2.9%, which was the strongest gain since
the start of 2011. The improvement in job creation has been a
crucial supporting factor over the past six months, albeit there
has been some slowdown in the most recent rounds of data. Aside
from that, purchasing manager surveys, business optimism indices
and consumer confidence are on track to reach new local highs, and
there remains a reasonable likelihood that the US economy will gain
more momentum in 2012 than predicted at the start of the year.
Uncertainty over prevailing and prospective growth trends has
maintained pressure on central banks to keep interest rates low
and, where appropriate, to continue to inject liquidity. The most
anticipated and closely watched event was the second round of LTROs
by the European Central Bank (ECB). The result was greeted with not
a little relief, as 800 banks tapped into a total of EUR530bn of
liquidity. Closer to home, the Bank of England extended
Quantitative Easing (QE) by adding GBP50bn to gilt purchases in
February 2012, on top of the GBP75bn added in October 2011, making
a total asset purchase programme of GBP325bn. Consensus forecasts
still suggest there will be an additional GBP50bn or so of gilt
purchases before the end of this year, necessitated by stalling
economic growth. In Asia, the People's Bank of China (PBOC) cut its
reserve requirement ratio (RRR) by 0.5% in February 2012, after a
cut of the same magnitude in November 2011; the total liquidity
added is estimated to be $120bn. More recently, there has been a
further RRR reduction as well as an unexpected interest rate cut
which is the first time since 2008. The Bank of Japan, which has
also been under a spotlight due to flagging GDP growth, increased
the size of its asset purchases by Yen10trn ($120bn) to Yen65trn in
an effort to curb the appreciation in the yen, which had done so
much damage to exports. For the US, the resulting improvement in
economic conditions has increasingly rendered QE3 unnecessary.
Given the outlook for growth outlined above, we are maintaining
a modestly overweight stance toward northern European and US
equities, albeit there may be a pause in the near term. As outlined
earlier in this review, we see the potential for positive growth
surprises in both areas in 2012. As a result, we favour companies
geared to the US and Western growth which are still on relatively
attractive valuations.
The Company has seen a positive six months. Looking at the
Underlying Funds, the main contribution to performance has come
from strong returns from the long books. CAEL's share price
increased by 4.16% to 125.25p from 120.25p at the end of October,
while the NAV increased by 1.81% to 131.08p from 128.75p. As at 30
April 2012 the Company structure was 62.35% in the offshore
Cazenove UK Dynamic Absolute Return Fund Limited and 38.10% in the
daily dealing UCITS fund, the Cazenove Absolute UK Dynamic
Fund.
Allocation NAV/Share
Fund at 30.04.12 30.04.12
% GBP
Cazenove Absolute UK Dynamic
Fund 38.10 49.94p
Cazenove UK Dynamic Absolute
Return Fund Limited 62.35 81.73p
Net current liabilities -0.45 -0.59p
Total 100.00 131.08p
The Cazenove Absolute UK Dynamic Fund ran with a net long
position averaging +35.2% (beta-adjusted +3.0%) in the six months
to end-April. This was off a gross investment of 115.6%, a modestly
higher percentage compared to that averaged last year. For the
Cazenove UK Dynamic Absolute Return Fund Limited, it ran with a net
long position averaging +36.0% (beta-adjusted +2.9%), off a gross
investment of 119.2% in the same period.
Despite the more uncertain market conditions that emerged from
mid-March, the constituent funds proved relatively resilient. The
long book saw strong performance over the six month period. The
short book was a negative contributor, with the funds' index short
positions having one of the larger negative impacts. The funds' two
largest positive contributions were from Scapa and Perform on the
long book, which added +1.1% each. Perform was upgraded by several
brokers on the back of strong financial results, whereas Scapa
rebounded following a period of dull performance. The funds'
position in Barclays, taken to provide a greater exposure to the
strong beta-led large-cap rally at the start of 2012, contributed
+0.5% during the early part of the year. In terms of sectors, the
strongest performances on the long book were from support services
and chemicals, which added a combined 4.6%. Ironically, damage on
the short book was also largely from support services, which cost
1.2%. Against the macro backdrop of heightened risk in Europe and
growth concern in China, it has been important to remain alert and
maintain a fully populated short book for capital protection in
down markets. Should the opposite happen, and risk markets begin to
rebound, the rally will probably broaden beyond the less cyclical
areas, favouring value stocks over high growth names.
Cazenove Capital Management Limited
22 May 2012
Board Members
Directors of the Company
The Directors are responsible for the determination of the
Company's investment objectives and policy and have overall
responsibility for the Company's activities. The Directors bring a
range of expertise in the hedge fund and other financial sectors
and have considerable experience of supervising funds with similar
corporate structures to that of the Company.
The Directors of the Company, all of whom are non-executive, are
listed below:
John Hallam, aged 63 (Chairman), resident in Guernsey, is a
Fellow of the Institute of Chartered Accountants in England and
Wales and qualified as an accountant in 1971. He is a former
partner of PricewaterhouseCoopers having retired in 1999 after 27
years with the firm both in Guernsey and in other countries. He is
currently also chairman of Dexion Absolute Limited and Partners
Group Global Opportunities Ltd as well as being a director of a
number of other financial services companies, some of which are
listed on the London Stock Exchange. He served for many years as a
member of the Guernsey Financial Services Commission from which he
retired in 2006 having been its Chairman for the previous three
years.
Paul Le Page, aged 46,is a Director of Financial Risk Management
("FRM") and is a director of a number of FRM Hedge Fund products.
FRM is in the process of being acquired by the Man Group. He has
extensive knowledge of, and experience in the fund management and
hedge fund industry. Prior to joining FRM he was an Associate
Director at Collins Stewart Asset Management from January 1999 to
July 2005, where he was responsible for managing the firm's fund
research team, reviewing hedge fund managers and managing hedge
fund portfolios. He joined Collins Stewart in January 1999 after a
12 year career in industrial research and development, latterly as
the Research and Development Director for Dynex Technologies
(Guernsey) Limited until 1998, where the development of a world
leading instrumentation family led to the award of a grant which he
used to fund an MBA from Heriot-Watt University in 1999. He
graduated in Electrical & Electronic Engineering from
University College London in 1987.
Geoffrey Marson, aged 50,is Managing Director of Odey Wealth
Management (C.I.) Limited. Prior to that, he was Director, Head of
Investment at Credit Suisse (Guernsey) Limited, where he was in
charge of Portfolio Management with responsibility for asset
allocation and investment strategy. Mr Marson started his banking
career in Frankfurt working for Deutsche Bank. In 1984, he joined
Midland Bank International (subsequently Midland Montagu) where he
spent seven years working mainly in London with periods of
secondment in Sydney and Paris. After leaving Midland, he joined
Nikko Securities and subsequently, Union Discount, where he worked
in the financial futures market in London. In 1993, he moved to
Guernsey to work in private banking with Credit Suisse (Guernsey)
Limited. Mr Marson is an Associate of the Chartered Institute of
Bankers and in 1995, qualified as a Fellow of the Securities
Institute. He graduated in Economics with Honours from the
University of York in 1984.
Andrew Ross, aged 52,joined Cazenove in 2001 and is Chief
Executive of Cazenove Capital Management Limited, the Investment
Manager. He was previously Chief Executive of HSBC Asset Management
(Europe) Limited between 1998 and 2001. Prior to that Mr Ross was
Managing Director of James Capel Investment Management between 1997
and 1998 and was an investment manager at James Capel Investment
Management between 1985 and 1997. He is a member of the FSA
Practitioners Panel and Deputy Chairman of APCIMS.
Save for Mr Ross, all Directors are independent of the
Investment Manager.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with IAS 34 - Interim Financial Reporting;
(b) the Chairman's Statement and Interim Management Report,
Investment Manager's Report and Notes to the Financial Statements
include:
-- a fair review of the information required by DTR 4.2.7R
(indication of important events during the first six months and
description of principal risks and uncertainties for the remaining
six months of the year); and
-- a fair review of the information required by DTR 4.2.8R
(disclosure of related parties' transactions and changes
therein).
By order of the Board,
John Hallam Paul Le Page
19 June 2012
Independent Review Report to Cazenove Absolute Equity
Limited
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 April 2012 which comprises the Statement of
Comprehensive Income, Statement of Financial Position, Statement of
Changes in Equity, Statement of Cash Flows and related notes 1 to
12. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the
Company are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union and on a
break up basis.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
April 2012 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Ernst & Young LLP
Guernsey
19 June 2012
Notes: The maintenance and integrity of the Cazenove Absolute
Equity Limited web site is the responsibility of the Directors; the
work carried out by the auditors does not involve consideration of
these matters and accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
financial information since it was initially presented on the web
site.
Legislation in Guernsey governing the preparation and
dissemination of financial information may differ from legislation
in other jurisdictions.
Portfolio Statement
As at 30 April 2012
30.04.12 31.10.11
Fair value % of net % of net
Holding GBP assets assets
Unlisted
Cazenove UK Dynamic Absolute
Return Fund Limited 10,863 23,818,192 62.35 46.57
Cazenove Absolute UK Dynamic
Fund 12,102,690 14,549,854 38.10 47.22
Total investments 38,368,046 100.45 93.79
Net current (liabilities)/assets (170,917) (0.45) 6.21
----------- --------- ---------
Net assets 38,197,129 100.00 100.00
=========== ========= =========
Significant Portfolio Movements
For the period from 1 November 2011 to 30 April 2012
Cost
Holding Purchases GBP
Cazenove
Absolute
UK
Dynamic
4,417,637 Fund 2,600,000
Total
purchase
costs 2,600,000
===========
Proceeds
Holding Sales GBP
Cazenove
Absolute
UK
Dynamic
12,433,392 Fund 12,225,000
Total
sale
proceeds 12,225,000
===========
Statement of Comprehensive Income
For the period from 1 November 2011 to 30 April 2012
(unaudited) (unaudited)
01.11.11 to 01.11.10 to
30.04.12 30.04.11
Notes GBP GBP
Investment income
Net gains on financial assets
at fair value
through profit or loss 4 1,077,426 513,135
Total investment income 1,077,426 513,135
------------ ------------
Expenses
Directors' fees 5(a) (29,091) (29,009)
Administration fees 5(c) (17,902) (17,852)
Investment management fees 5(b) (12,432) (12,397)
Custodian fees 5(d) (7,611) (6,941)
Brokerage fees 5(e) (15,642) (12,414)
Audit fees (6,067) (7,016)
Share costs 7 (55,000) (10,903)
Liquidation costs (328,000) -
Marketing expenses - (22,000)
Other expenses (25,597) (87,566)
Total operating expenses (497,342) (206,098)
------------ ------------
Net profit 580,084 307,037
============ ============
Basic and diluted earnings
per participating share 6 1.52p 0.58p
============ ============
Earnings per founder share 0.00p 0.00p
============ ============
The Company does not have any income or expenses which are
not included in the profit for the period. Accordingly, the
profit for the period is also the "total comprehensive income"
for the period, as determined by IAS1 (revised).
All items in the above statement derive from wind down operations.
Statement of Financial Position
As at 30 April 2012
(unaudited) (audited)
30.04.12 31.10.11
Notes GBP GBP
ASSETS
Non-current assets
Financial assets at fair
value through profit or loss 4 38,368,046 46,915,620
Current assets
Cash and cash equivalents 4 216,869 3,127,644
Prepayments - 18,997
Total assets 38,584,915 50,062,261
============ ============
LIABILITIES
Current liabilities
Payables 4 387,786 39,999
Total liabilities 387,786 39,999
------------ ------------
EQUITY
Share capital account 6,414,613 6,511,746
Treasury shares (6,187,580) (6,187,580)
Reserves 37,970,096 49,698,096
Total equity 38,197,129 50,022,262
------------ ------------
Total equity and liabilities 38,584,915 50,062,261
============ ============
Number of participating shares
in issue 7 29,139,769 38,853,025
============ ============
Net assets attributable to
holders of participating
shares (per share) 131.08p 128.75p
============ ============
Founder share capital (per share) 100.00p 100.00p
============ ============
The financial statements were approved on 19 June 2012 and
signed on behalf of the Board of Directors by:
John Hallam Paul Le Page
Statement of Changes in Equity
For the period from 1 November 2011 to 30 April 2012
(unaudited)
Founder
share Share capital Treasury
capital account Reserves shares Total equity
GBP GBP GBP GBP GBP
Balance as
at
1 November
2011 2 6,511,744 49,698,096 (6,187,580) 50,022,262
Tender offer - (97,133) (12,308,084) - (12,405,217)
Net profit - - 580,084 - 580,084
--------- ------------------ --------------- -------------- ---------------
Balance as at
30 April 2012 2 6,414,611 37,970,096 (6,187,580) 38,197,129
========= ================== =============== ============== ===============
For the period from 1 November 2010 to 30 April 2011
(unaudited)
Founder
share Share capital Treasury
capital account Reserves shares Total equity
GBP GBP GBP GBP GBP
Balance as
at
1 November
2010 2 6,664,754 67,061,143 (5,565,682) 68,160,217
Cancellation
of shares - (23,500) (2,571,434) 2,594,934 -
Treasury shares - - - (3,216,832) (3,216,832)
Net profit - - 307,037 - 307,037
--------- -------------- ------------ ------------- -------------
Balance as at
30 April 2011 2 6,641,254 64,796,746 (6,187,580) 65,250,422
========= ============== ============ ============= =============
Statement of Cash Flows
For the period from 1 November 2011 to 30 April 2012
(unaudited) (unaudited)
01.11.11 to 01.11.10 to
30.04.12 30.04.11
GBP GBP
Operating activities
Operating expenses paid (130,558) (131,886)
------------
Cash outflows from operating activities (130,558) (131,886)
------------- ------------
Investing activities
Purchase of financial assets at
fair value through profit and loss (2,600,000) -
Sale of financial assets at fair
value through profit and loss 12,225,000 2,465,293
Cash inflows from investing activities 9,625,000 2,465,293
------------- ------------
Financing activities
Tender offer (12,405,217) -
Repurchase of shares into treasury - (3,216,832)
Cash outflows from financing activities (12,405,217) (3,216,832)
------------- ------------
Decrease in net cash and cash equivalents (2,910,775) (883,425)
Net cash and cash equivalents at
beginning of the period 3,127,644 1,758,886
Net cash and cash equivalents at
end of the period 216,869 875,461
============= ============
Notes to the Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The condensed set of financial statements included in this
interim report has been prepared in accordance with International
Accounting Standard (IAS) 34 "Interim Financial Reporting", as
adopted by the European Union, the Listing Rules of the London
Stock Exchange and applicable legal and regulatory requirements of
the Guernsey Law. The financial statements have been prepared on
the break up basis, and the accounting policies, presentation and
methods of computation are consistent with this basis, as disclosed
in the going concern paragraph below.
The condensed set of financial statements do not include all the
information and disclosures required in the annual financial
statements and should be read in conjunction with the Company's
annual report and financial statements for the year ended 31
October 2011.
Going concern
As a listed closed-ended Company, there is always the
possibility that the Company's issued shares may trade at a
discount to their net asset values. In order to manage this
discount risk, the Company's Articles incorporate discount
management provisions which require a continuation vote to be
proposed if, in the 12 months preceding the Company's financial
year end, the participating shares of the Company have traded on
average at a discount in excess of 5% of the net asset value. If
the resolution for the continuation of the Company is not passed,
the Directors are required to formulate proposals to be put to
Shareholders within three months of such resolution being defeated
to wind-up, reorganise or reconstruct the Company.
Last year the Board set out within the notice of the 2011 Annual
General Meeting ('2011 AGM') proposals which included an amendment
to the investment policy and the introduction of future
discretionary tender offers with the overall objective of improving
the marketability of the Company thereby reducing the discount at
which the Company's shares trade relative to the NAV. At the 2011
AGM Shareholders approved the adoption of these proposals together
with the continuation of the Company.
However, despite these actions and two tender offers, the
Company has continued to trade at a discount persistently wider
than that which the Board believes to be acceptable.
In accordance with the Articles of the Company, the Board is
required to put forward an ordinary resolution at the 2012 AGM that
the Company should continue as an investment company. It is
currently the Board's intention to recommend that Shareholders vote
against continuation and, subject to such resolution being
defeated, to vote in favour of managed winding up proposals which
will be put to the same meeting.
The winding up proposals will remove all existing obligations to
propose continuation votes and tender offers which will instead be
replaced with an objective of making cash or in specie
distributions to Shareholders (less applicable costs and
liquidation retention) following which the Company will be placed
into liquidation.
The condensed set of financial statements included in this
interim report has been prepared on a break up basis reflecting the
intention to wind down the Company. Accordingly, the going concern
basis of accounting is no longer considered appropriate. All assets
have been written down to net realisable values. The investments
are expected to be realised at fair values without significant
liquidity discounts. A provision for winding up costs has been
included in these financial statements. Future operating profits
and losses expected to be incurred up to the date the Company
ceases to exist were not included as these are estimated to be
insignificant.
2. TAXATION
The Company is exempt from taxation in Guernsey under the
provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance
1989 and has paid an annual exemption fee of GBP600.
3. DISTRIBUTIONS TO PARTICIPATING SHAREHOLDERS
The Directors do not expect income (net of expenses) to be
significant and do not currently expect to declare any dividends.
In the event that net income is significant, the Directors may
consider the distribution of net income in the form of dividends.
To the extent that any dividends are paid, they will be paid in
accordance with any applicable Guernsey laws and the regulations of
the UK listing authority.
The Company was established with a feature which, subject to a
Shareholder making an election and at the Directors' discretion,
might allow a Shareholder to benefit from an annual capital
distribution representing, as closely as possible, one-third of the
increase in the net asset value per share during the relevant
financial year. If it was considered to be in the interests of
Shareholders, distributions would be made by way of a partial
redemption of each Shareholder's holding of shares. No such capital
distribution is proposed for the current period.
4. FINANCIAL INSTRUMENTS
The following table analyses the carrying amounts of the
financial assets and financial liabilities by category as defined
in IAS 39 and by Statement of Financial Position heading.
Designated
as fair value
through profit Other financial
or loss instruments Total
GBP GBP GBP
30 April 2012
Financial assets
Financial assets at
fair value
through profit or
loss 38,368,046 - 38,368,046
Cash and cash equivalents - 216,869 216,869
38,368,046 216,869 38,584,915
---------------- ---------------- -----------
Financial liabilities
Payables - 387,786 387,786
- 387,786 387,786
---------------- ---------------- -----------
31 October 2011
Financial assets
Financial assets at
fair value
through profit or
loss 46,915,620 - 46,915,620
Cash and cash equivalents - 3,127,644 3,127,644
46,915,620 3,127,644 50,043,264
---------------- ---------------- -----------
Financial liabilities
Payables - 39,999 39,999
---------------- ---------------- -----------
- 39,999 39,999
---------------- ---------------- -----------
The movement in cost and fair value of financial assets at fair
value through profit or loss is shown below:
01.11.11 01.11.10
to to
30.04.12 31.10.11
GBP GBP
Cost of investments
Balance at 1 November 38,547,670 55,617,414
Purchases at cost 2,600,000 24,000,000
Sales proceeds (12,225,000) (45,171,631)
Realised gain on sales 56,897 4,101,887
Balance at 30 April/31 October 28,979,567 38,547,670
------------- -------------
Unrealised gain on revaluation
Balance at 1 November 8,367,950 10,813,497
Movement in unrealised gains for the period/year 1,020,529 (2,445,547)
Balance at 30 April/31 October 9,388,479 8,367,950
------------- -------------
Fair value 38,368,046 46,915,620
5. RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operating
decisions.
(a) Directors
The Directors are responsible for the determination of the
investment policy of the Company and have overall responsibility
for the Company's activities.
The Directors, other than the Chairman, are entitled to
remuneration for their services of GBP17,500 per annum, Mr Ross has
waived his right to a fee. The Chairman is entitled to receive
GBP23,500 per annum.
During the period ended 30 April 2012, Directors' fees of
GBP29,091 (30 April 2011: GBP29,009) were charged to the Company
and GBP4,716 (31 October 2011: GBP4,875) was payable at the
period/year end.
All Directors are non-executive. Mr Ross is a Director and the
Chief Executive of Cazenove Capital Management Limited, the
Investment Manager.
As at 30 April 2012, the Directors held the following interests
either directly or beneficially:
Mr Hallam - 20,000 (31 October 2011: 20,000) redeemable
participating preference shares.
Mr Ross - 66,000 (31 October 2011: 66,000) redeemable
participating preference shares.
(b) Investment Management
The Company's Investment Manager is Cazenove Capital Management
Limited ("the Investment Manager"). The Investment Manager is
entitled to an annual management fee, payable monthly in arrears,
of GBP25,000 (30 April 2011: GBP25,000). The Investment Manager is
also entitled to reimbursement of certain expenses incurred by it
in connection with its duties. During the period ended 30 April
2012 investment management fees of GBP12,432 (30 April 2011:
GBP12,397) were charged to the Company and GBP10,376 (31 October
2011: GBP4,177) was payable at the period/year end.
The Underlying Funds pay the Investment Manager a periodic
management fee in arrears at rates ranging from 1.25% to 1.75% per
annum of the net asset value. Total management fees charged and
payable by the Underlying Funds to Cazenove Capital Management
Limited were as follows:
01.11.11 to 01.11.10 to
Charged during the period 30.04.12 30.04.11
European Equity Fund - EUR1,282,707
Absolute UK Dynamic Fund GBP1,156,856 -
UK Dynamic Fund GBP822,782 GBP614,457
UK Equity Fund - GBP237,253
Leveraged UK Fund - GBP213,428
European Alpha Fund - EUR639,405
% of Underlying % of Underlying
Payable at period Fund held Fund held
end 30.04.12 as at 30.04.12 31.10.11 as at 31.10.11
Absolute UK Dynamic
Fund GBP202,209 5.78% GBP415,136 11.38%
UK Dynamic Fund GBP284,613 20.90% GBP243,792 23.43%
A performance fee equal to 20% of the increase in the net asset
value per share (after adding back any distributions made)
outstanding in respect of each performance period less any loss
carried forward per share, is also payable by the Underlying Funds
to Cazenove Capital Management Limited annually.
As at 30 April 2012 the Investment Manager held 7,240,134 shares
in the Company as a discretionary Fund Manager, through Chase
Nominees Limited (31 October 2011: 10,868,821 shares), representing
24.85% (31 October 2011: 27.96%) of the issued capital. No other
related parties held a notifiable interest in the Company under the
UK Takeover Code.
(c)Administrator
The Company's Administrator is Northern Trust International Fund
Administration Services (Guernsey) Limited ("the Administrator").
In consideration for the services provided by the Administrator
under the Administration, Secretarial and Registrar Agreement the
Administrator is entitled to receive from the Company a fee of
GBP36,000 per annum (30 April 2011: GBP36,000). The Administrator
is also entitled to be paid or reimbursed for all reasonable out of
pocket expenses incurred by it in providing administrative services
to the Company as set out in the Administration, Secretarial and
Registrar Agreement. During the period ended 30 April 2012
administration fees of GBP17,902 (30 April 2011: GBP17,852) were
charged to the Company and GBP11,885 (31 October 2011: GBP2,983)
was payable at the period/year end.
(d) Custody
The Company's Custodian is Northern Trust (Guernsey) Limited
("the Custodian"). In consideration for the services provided by
the Custodian under the Custodian Agreement, the Custodian is
entitled to receive such fees as agreed with the Company from time
to time. Initially the Custodian will be entitled to a fee of
GBP14,000 per annum (30 April 2011: GBP14,000). The Custodian is
also entitled to reimbursement of certain expenses incurred by it
in connection with its duties. During the period ended 30 April
2012 custodian fees of GBP7,611 (30 April 2011: GBP6,941) were
charged to the Company and GBP1,148 (31 October 2011: GBP11,114)
was payable at the period/year end.
(e) Corporate Brokers
Numis Securities Limited ("the Broker"), will act on behalf of
the Company in relation to the provision of advisory and corporate
broking services ("Broking Services"), including the purchase of
ordinary shares in the Company on a principal to principal basis
("Buyback Services"). For the Broking Services, the Broker is
entitled to receive an annual retainer of GBP25,000. The Broker is
also entitled to the reimbursement of certain expenses incurred by
it, in connection with its duties. For the Buyback Services, the
Broker is entitled to receive the amount equal to the aggregate
purchase price of any shares purchased at a fee of 0.5%, including
any stamp duties or other relevant transfer taxes arising from the
transaction. During the period ended 30 April 2012, semi annual
fees of GBP15,642 (30 April 2011: GBP12,414) were charged to the
Company and GBPnil (31 October 2011: GBP3,142) was prepaid at
period/year end. Fees related to Buyback Services amounted to
GBPnil (30 April 2011: GBP6,446). Corporate Advisory Fees payable
in connection with the liquidation total GBP100,000.
The Company entered into a repurchase agreement with the Broker,
wherein the Broker acts on behalf of the Company in relation to the
tender offer. The fees charged during the period, in connection
with the tender offer, amounted to GBP20,000 (30 April 2011:
GBPnil) which were effectively absorbed by those existing
Shareholders tendering shares as a consequence of the discount at
which shares were repurchased. In addition, the Broker is also
entitled to reimbursement of certain expenses incurred by it in
connection with its duties up to a maximum of GBP5,000.
6. BASIC AND DILUTED EARNINGS PER PARTICIPATING SHARE
The earnings per participating share for the period has been
calculated on a weighted average basis and is arrived at by
dividing the net profit for the period by the weighted average
number of participating shares in issue. The weighted average
number of participating shares is 38,101,724 (30 April 2011:
52,804,527).
7. SHARE BUYBACK AND TENDER OFFER
In accordance with the Share Buyback Facility, the Company has
purchased its own participating shares in the market to attempt to
close the discount to net asset value at which the participating
shares are trading and improve the liquidity of its issued share
capital.
During the period, the Company has not purchased any of its own
participating shares. However, the Company has cancelled 1,000,000
(31 October 2011: 1,450,000) shares held in treasury.
During the year to 31 October 2011 under the Share Buyback
Facility, the Company purchased its own shares as follows:
Date Price per Percentage of
Shares share Total issued
GBP GBP share capital
5 November 2010 570,000 1.09 621,898 0.95%
======== ======== ==============
Bought back and cancelled
shares:
Date Price per Percentage of
Shares share Total issued
GBP GBP share capital
10 November
2010 400,000 1.09 434,869 0.67%
18 November
2010 350,000 1.09 382,264 0.58%
7 December
2010 100,000 1.09 109,470 0.17%
24 December
2010 500,000 1.07 536,071 0.83%
29 March 2011 1,000,000 1.13 1,132,260 1.67%
2,350,000 2,594,934 3.92%
========== ========== ================
Total 2,920,000 3,216,832 4.87%
========== ========== ================
Tender offer
In accordance with the Tender Offer Facility which was approved
by the Shareholders at the annual general meeting held on 24 June
2011, the Company purchased its own participating shares in the
market to attempt to close the discount to net asset value at which
the participating shares are trading and improve the liquidity of
its issued share capital.
During the period under the Tender Offer Facility, the Company
purchased and cancelled its own shares as follows:
Date Price per
Shares share Total
GBP GBP
16 April 2012 9,713,256 1.28 12,405,217
During the year to 31 October 2011 under the Tender Offer
Facility, the Company purchased and cancelled its own shares as
follows:
Date Price per
Shares share Total
GBP GBP
17 October 2011 12,951,004 1.25 16,159,615
Shares in Shares
Issued share capital issue in Total
(3(rd) party) Treasury shares
30 April 2012
Founder shares 2 - 2
-------------- ------------ ------------
Equity shares
Participating shares
Balances at 1 November 2011 38,853,025 4,284,804 43,137,829
Cancellation of shares - (1,000,000) (1,000,000)
Tender offer (9,713,256) - (9,713,256)
-------------- ------------ ------------
Balances at 30 April 2012 29,139,769 3,284,804 32,424,573
-------------- ------------ ------------
Issued share capital Shares in issue Shares in Total
(3(rd) party) Treasury shares
31 October 2011
Founder shares 2 - 2
---------------- ------------ -------------
Equity shares
Participating shares
Balances at 1 November 2010 54,724,029 5,164,804 59,888,833
Share buybacks held in Treasury (570,000) 570,000 -
Cancellation of shares (2,350,000) (1,450,000) (3,800,000)
Tender offer (12,951,004) - (12,951,004)
---------------- ------------ -------------
Balances at 31 October 2011 38,853,025 4,284,804 43,137,829
---------------- ------------ -------------
Where the Company purchases its own shares, the consideration
paid, which includes any directly attributable costs, is recognised
as a deduction from equity shareholders' funds through the share
capital account. When such shares are subsequently sold or reissued
to the market, any consideration received, net of any directly
attributable incremental transaction costs, is recognised as an
increase in equity shareholders' funds through the share capital
account. Where the Company cancels treasury shares, no further
adjustment is required to the share capital at the time of
cancellation. Shares held in treasury are excluded from
calculations when determining NAV per share.
Because significant share repurchases could take the Investment
Manager's aggregate ownership over the Takeover Code's Mandatory
Offer trigger level of 30 percent, the Board applied for and
received a waiver of Rule 9 under Rule 37 of the Takeover Code. As
at 18 May 2012 Cazenove Capital Management held 7,213,134 shares in
the Company as a discretionary Fund Manager, through Chase Nominees
Limited, representing 24.75% of the issued capital.
Share costs of GBP55,000 (30 April 2011: GBP10,903) were
incurred for the continuation vote, Whitewash and Tender Offer and
represent expenses for legal, advisory and other professional fees.
Fees paid to Numis and Herbert Smith in relation to the tender
offer amounted to GBP20,000 and GBP10,000 respectively. Included in
other expenses are non audit fees of GBP8,861 (30 April 2011:
GBP7,558) also paid to Ernst & Young LLP which relate to the
interim review.
8. FINANCIAL INSTRUMENTS AND RISK PROFILE
The investment objective of the Company is to seek to achieve
consistent absolute returns by investing in two Underlying
Funds.
The Company's financial instruments comprise financial assets at
fair value through profit or loss, cash and cash equivalents,
receivables and payables.
The main risks arising from the Company's financial instruments
are market risk (market price risk, foreign currency risk and
interest rate risk), credit risk and liquidity risk.
Market risk
The Company's investments are subject to market fluctuations and
the risk inherent in the purchase, holding or selling of securities
and there can be no assurance that appreciation or maintenance in
the value of those investments will occur.
Investments in unlisted securities are more illiquid than listed
securities and there may be no ready market for such securities at
an appropriate price or even at all. Furthermore, the net asset
values for such unlisted securities tend to be published on a less
frequent basis than for listed securities.
The Investment Manager of the Underlying Funds continues to
monitor and oversee the profile of the portfolio on a regular basis
to ensure risks are managed.
Strategies of the Underlying Funds
The Company's Investment Manager currently classifies the
strategies of the Cazenove UK Dynamic Absolute Return Fund Limited
and Cazenove Absolute UK Dynamic Fund as alpha enhancing and more
directional. These Underlying Fund's managers aim to deliver
consistent, absolute returns irrespective of market conditions with
lower market volatility in the medium to long term. The approach
will consider the macro and business cycle factors. However, the
key strategy will be a bottom up approach in identifying
undervalued stocks with an investment angle. Each stock held will
have a valuation target.
Market price risk
Market price risk arises mainly from the uncertainty about
future prices of the financial instruments held by the Company. It
represents the potential loss the Company may suffer through
holding market positions in the face of price movements.
The Company's investment portfolio is exposed to market price
fluctuations which are monitored by the Manager in pursuance of the
investment objectives and policies.
Foreign currency risk
Foreign currency risk arises from fluctuations in the value of
foreign currency. It represents the potential loss the Company may
suffer through holding foreign currency assets in the face of
foreign exchange movements.
The Underlying Fund portfolio investment in equity funds which
in turn invest in equities denominated in currencies other than
Sterling. The Underlying Funds use forward foreign exchange
contracts to manage but not eliminate the risk associated with
holding assets in foreign currency.
Interest rate risk
Interest rate risk represents the uncertainty of investment
return due to changes in the market rates of interest. Interest
receivable on bank deposits or payable on bank overdraft will be
affected by fluctuations in interest rates. All cash balances are
at variable rates. Increases in interest rates will also increase
the borrowing costs of the Company should the borrowing facility be
used.
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
within the Company.
The Company is exposed to material credit risk in respect of
cash and cash equivalents and debtors. All cash is placed with
Northern Trust (Guernsey) Limited ("NTGL"). The Company is subject
to credit risk to the extent that this institution may be unable to
return this cash. NTGL is a wholly owned subsidiary of The Northern
Trust Corporation ("TNTC"). TNTC is publicly traded and a
constituent of S&P 500. TNTC has a credit rating of AA- from
Standard & Poor's and Aa3 from Moody's.
The credit risk associated with debtors is limited to interest
on bank balances. Credit risk is mitigated by the Company's policy
to transact only with leading commercial and investment banks. It
is the opinion of the Directors that the carrying amounts of these
financial assets represent the maximum credit risk exposure at the
statement of financial position date.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in
realising assets or otherwise raising funds to meet financial
commitments.
Dealings in the Cazenove UK Dynamic Absolute Return Fund Limited
are done on a monthly basis. Requests for redemption must be
received not less than thirty days prior to the relevant dealing
day. Settlement period is usually two weeks after the dealings. The
Directors of this Underlying Fund may at their absolute discretion
refuse to accept a redemption request in respect of shares of a
class held for a period of less than three months. They may also
refuse a redemption request for shares in a particular class where
the relevant request is in excess of 10% of the total net asset
value of such class of shares on any dealing day. Furthermore, the
Company has a borrowing facility to meet financial commitments.
Dealings in the Cazenove Absolute UK Dynamic Fund are done on a
daily basis. There is no gate provision on this Underlying
Fund.
Fair Value
The Company's investments in the Underlying Funds are classified
under Level 2. The level within which the financial assets are
classified is determined based on the lowest level of significant
input to the fair value measurement. The Underlying Funds are not
quoted in active markets and are fair-valued using the official
month-end net asset value of each Underlying Fund as supplied by
each fund's managers or administrators.
9. CAPITAL MANAGEMENT
The fair value of the Company's financial assets and financial
liabilities approximates their carrying amounts as at the statement
of financial position date. Redeemable participating preference
shares are considered to be part of capital.
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern in order to
provide returns for Shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The Company does not have any structural gearing. The Company is
indirectly exposed to gearing to the extent that investee funds are
themselves geared. Cash (if any) will be held in G8
currency-denominated accounts.
At the Directors' discretion and subject to the Shareholders'
approval, the Company can make an annual capital distribution of
one third of the increase in its net asset value by way of partial
redemption. Any such distribution will only be made if the
Directors, in their discretion, consider prior to any distribution
being made it to be in the interest of Shareholders and only to
holders of participating shares who have made the relevant
election, having given consideration to the prevailing price of the
participating shares, the net asset value per participating share
and the response of the holders of participating shares.
Shareholders should have no expectation that a distribution will be
made and there can be no guarantee that the Directors will
determine to make distribution in respect of any year.
The Company has a Share Buyback Facility whereby, at the
discretion of the Directors and subject to the Shareholders'
approval, it can purchase its own participating shares in the
market with a view to addressing any imbalance between the supply
of and demand for shares in the market and to assist in narrowing
any discount to net asset value at which the participating shares
maybe trading. Purchases will be made in accordance with the
Listing Rules, the CISX Rules and the Companies (Guernsey) Law
2008. Any such purchases would only be made at prices which
represent a discount to the last available net asset value per
participating share so as to enhance the net asset value per
participating share for the remaining Shareholders. The Share
Buyback Facility was renewed on 24 June 2011, as part of the
Company's capital management. Purchases made by the Company are
shown in note 7.
The Directors had also resolved to introduce a further discount
mechanism where if in any 3 month period the average weekly
discount to NAV at which the shares trade exceeds 5%, the Directors
might in their absolute discretion, propose a tender allowing those
Shareholders at the start of the 3 month period to redeem in
aggregate up to 25% of the issued share capital of the Company at a
tender price equivalent to NAV as at the date of tender less the
costs of the tender offer less 2%. The Tender Offer Facility was
approved by Shareholders during the annual general meeting on 24
June 2011.
Despite the two tender offers and use of Share Buybacks, the
Company has continued to trade at a discount persistently wider
than that which the Board believes to be acceptable, and therefore
the Board intends to recommend that Shareholders vote against
continuation of the Company at the 2012 AGM, as discussed under
going concern in note 1 to these financial statements.
10. RECONCILIATION OF NET ASSETS ATTRIBUTABLE TO
SHAREHOLDERS
The adjustments below have been made to reflect the potential
liquidation costs of the Company and the adjustment of investments
from the market value as at 30 April 2012 to the realisable value
as at 31 May 2012, given that the Directors have recommended that
the Shareholders vote against continuation of the Company at the
forthcoming AGM.
NAV per
participating
NAV share
GBP GBP
Net asset value reported to London Stock
Exchange 38,539,024 1.3226
Adjustment of investments to realisable value (13,895) (0.0159)
Adjustment for liquidation costs (328,000) (0.0113)
Net assets attributable to Shareholders per
financial statements 38,197,129 1.2954
----------- --------------
11. LIQUIDATION COSTS
The Directors estimate that the liquidation costs are as
follows:-
GBP
Legal advice 160,000
Financial advice and sponsor 100,000
Liquidator 50,000
Other 18,000
Total costs 328,000
========
12. SUBSEQUENT EVENTS
There were no subsequent events.
The Company has today, in accordance with DTR 6.3.5, released
its Interim Financial Report for the period ended 30 April 2012.
The Report will shortly be available on the Company's website
http://www.cazenovecapital.com/Microsites/cael/Literature/
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFIRREIIFIF
Cazenove AB. (LSE:CAEL)
Historical Stock Chart
From May 2024 to Jun 2024
Cazenove AB. (LSE:CAEL)
Historical Stock Chart
From Jun 2023 to Jun 2024