TIDMCED2
RNS Number : 6053L
Close Enhanced Commodities Fund II
05 September 2012
Close Enhanced Commodities Fund limited II (the "Company")
ANNOUNCEMENT OF ANNUAL RESULTS
The directors announce the statement of results for the period
ended 30 June 2012 as follows:-
ABOUT THE COMPANY
Close Enhanced Commodities Fund II Limited is a Guernsey
incorporated closed-ended investment company. With the exception of
two Management Shares issued for administrative reasons, the
Company's issued share capital comprises 45,250,000 Participating
Shares (the "Shares") the performance of which is designed to
provide a geared exposure to any increase in the prices of a
notional portfolio of certain industrial and precious metals and
energy related commodities (the "Commodity Portfolio").
Pursuant to the initial placing and offer for subscription,
45,250,000 Shares were issued at a price of 100p each on 31 May
2007. All 45,250,000 Shares in issue rank pari passu, have been
admitted to the Official List of the United Kingdom Listing
Authority and are capable of being dealt in on the London Stock
Exchange. The Company has an unlimited life but the Shares will be
redeemed on or around 14 June 2013 (the "Redemption Date").
Investment Objective and Policy
The investment objective of the Company is to provide
shareholders on the Redemption Date with a capital payment which
will comprise a capital amount of 100p per Share and a growth
amount per Share equal to two times any percentage increase in the
End Value of the Commodity Portfolio relative to its Start Value,
such amount being expressed in pence and rounded down to the next
whole penny (the "Final Capital Entitlement"). If the End Value is
lower than the Start Value, the Shares are designed to repay the
full capital amount of 100p per Share on the Redemption Date. The
final return is subject to there being no counterparty default or
any other unforeseen circumstances.
The Final Capital Entitlement per Share in Sterling is designed
to be determined by applying to the initial issue price of GBP1 per
Share the performance of the Commodity Portfolio as valued and
measured using US Dollar values over the calculation period from 31
May 2007 (the "Start Date") to 31 May 2013 (the "End Date"). The
Commodity Portfolio is a notional portfolio of commodities
comprising by value on the Start Date one eighth oil, one eighth
copper, one eighth aluminium, one eighth zinc, one eighth nickel,
one eighth sugar, one eighth corn and one eighth wheat.
The US Dollar prices used in order to calculate the value of the
Commodity Portfolio on any date are: in respect of oil, the
official closing price of the Inter Continental Exchange crude oil
future contract next to expire in US Dollars per barrel; in respect
of copper, aluminium, zinc and nickel, the Official London Metal
Exchange Closing Cash Price in US Dollars per metric tonne; in
respect of sugar, the official closing price of the New York Board
of Trade Exchange Sugar Number 11 future contract next to expire in
US cents per lbs; and in respect of corn and wheat, the official
closing price of the Chicago Board of Trade Corn and Wheat future
contracts next to expire in US cents per barrel.
As at the End Date, the final value of the Commodity Portfolio
will be calculated by reference to the US Dollar aggregate daily
value of each constituent of the Commodity Portfolio over a
calculation period of one year ending on the End Date.
In accordance with the Company's investment policy, the net
proceeds derived by the Company from the issue of Shares have been
invested in a portfolio of debt securities ("Debt Securities") at
prices relative to the value of the Commodity Portfolio on 31 May
2007.
As both the Shares and the Debt Securities are
Sterling-denominated, shareholders will not be exposed to direct
currency risk. However, each of the commodities is priced in US
Dollars. Accordingly, in the event that the US Dollar strengthens
in value, this may cause a reduction in the US Dollar prices of the
commodities and could result in a reduction in the Final Capital
Entitlement.
CHAIRMAN'S STATEMENT
At launch, the net proceeds derived from the issue of Shares of
the Company were invested in a portfolio of debt securities based
on a notional portfolio of commodities. On 30 June 2012, the
Commodity Portfolio had fallen by 11.7 per cent. over the reporting
period and risen by 18.1 per cent. since launch. The total market
value of the Company's Shares fell by 1.4 per cent. over the 12
month reporting period and rose by 6.0 per cent. since launch.
As the Company's Final Capital Entitlement is based upon the
performance of the Commodity Portfolio, it is possible to show the
potential capital entitlements available to shareholders based on
the percentage increase in the End Value of the Commodity Portfolio
relative to its Start Value. The End Value will be the aggregate of
the average official closing price of each constituent of the
Commodity Portfolio on the last business day of each month in the
one year period prior to the End Date, 31 May 2013. The chart below
is for illustrative purposes only and does not represent forecasts
or take into account any unforeseen circumstances.
Over the reporting period, numerous well documented problems
have affected financial institutions around the world, which has
made it worthwhile to comment on the assets held by the Company.
Your attention is drawn to the Schedule of Investments of this
Annual Report, which shows the assets held by the Company, and note
12, which refers to the credit risk of the issuers of these assets
as at the period end and as at the date of this report.
The Company currently holds five debt securities, the issuers of
which, as at the date of this report, have credit ratings from
either Moody's Investor Services ("Moodys") or from the Standard
and Poor's Rating Agency ("S&P").
Of particular interest, the Company holds a debt security issued
by Irish Life & Permanent ("IL&P") with a nominal value of
GBP9,050,000 and a fair value, as at the reporting date, of
GBP11,224,256. This represented 18.49 per cent of the value of the
Company's net assets as at the reporting date.
Shareholders will be aware of the deteriorating economic
situation in Ireland, which has forced the Irish government to
request contingency funding from the EU/IMF and has led the Irish
Central Bank to implement numerous monetary policy measures. On 12
July 2011, citing growing concerns regarding the Euro area and
significant implementation risks to the Irish deficit reduction
plan, Moodys downgraded Ireland's foreign and local-currency
government bond ratings by one notch to Ba1 from Baa3.
Subsequently, on 14 July 2011, Moodys downgraded to Ba1, with a
negative outlook from Baa3 the government-guaranteed debt of five
Irish banks which included IL&P. On 9 February 2012, Moodys
placed on review for possible downgrade the Ba3, long-term
unguaranteed senior unsecured debt and the Ba2 long-term bank
deposit rating of IL&P. As at the date of this report, the
ratings of IL&P remained the same.
The Company also holds a debt security issued by SNS Bank N.V
("SNS") with a nominal value of GBP9,050,000 and a fair value, as
at the reporting date, of GBP12,202,328. This represented 20.11 per
cent of the value of the Company's net assets as at the reporting
date.
On 5 April 2011, Moodys downgraded the long-term senior debt
rating of SNS one notch to Baa1 from A3 and assigned a stable
outlook. Moodys rating action was triggered by the risks resulting
from the wind-down of SNS Property Finance, which the bank placed
in run-off in 2009. Moody's commented that "while we believe the
bulk of associated credit losses are likely to be behind the bank,
we believe that there is still material uncertainty around the
ultimate losses and we anticipate continued pressure on the bank's
earnings in the short-to-medium term."
On 15 June 2012, citing deteriorating economic conditions in the
Eurozone, Moodys downgraded the long-term debt and deposit ratings
for four Dutch financial groups, including SNS Bank N.V., by one
notch to Baa2.
On 20 July 2012, S&P revised its outlook on SNS REAAL N.V.
and its subsidiary SNS Bank N.V to negative from stable. At the
same time, S&P affirmed the BBB+/A-2 long- and short-term
counterparty credit ratings on SNS.
The Company also holds a debt security issued by Erste Group
Bank A.G. ("Erste Bank") with a nominal value of GBP9,050,000 and a
fair value, as at the reporting date, of GBP12,369,443. This
represented 20.38 per cent. of the value of the Company's net
assets as at the reporting date.
On 6 June 2012, Moodys downgraded the debt and deposit ratings
of the three largest Austrian banking groups including Erste Bank.
Alongside downgrading Erste Bank's long term credit rating to A3,
Moodys also downgraded the short term ratings for Erste Bank one
notch to Prime-2.
The Company also holds a debt security issued by Mediobanca. SpA
("Mediobanca") with a nominal value of GBP9,050,000 and a fair
value, as at the reporting date, of GBP12,096,630. This represented
19.93 per cent. of the value of the Company's net assets as at the
reporting date.
On 10 February 2012 S&P, following its lowering of the long
and short-term sovereign credit ratings on the Republic of Italy in
January 2012, lowered the Long Term rating of thirty-four Italian
Financial institutions. Consequently, S&P lowered the rating of
Mediobanca one notch from A with negative outlook to BBB+.
The Company also holds a debt security issued by Caisse Centrale
du Credit Immobilier de France SA ("CCIF") with a nominal value of
GBP9,050,000 and a fair value, as at the reporting date, of
GBP12,336,617. This represented 20.33 per cent. of the value of the
Company's net assets as at the reporting date.
On 15 February 2012, Moodys announced a review and rating
actions affecting 114 financial institutions across 16 European
countries including France. The actions reflected the combined
pressures from (i) the adverse and prolonged impact of the euro
area crisis, which makes the operating environment very difficult
for European banks; (ii) the deteriorating creditworthiness of euro
area sovereigns, which led to the adjustment of the ratings for
nine European sovereigns on 13 February 2012 and (iii) longer-term,
the substantial challenges faced by banks and securities firms with
meaningful capital market activities.
In conjunction with this action, Moodys reviewed the credit
ratings for a number of French financial institutions including
CCIF. Moodys confirmed CCIF's Long Term A1 credit rating without
change. CCIF continues to be on Moodys' credit watch list with
periodic ratings' reviews and negative outlook.
CCIF, until 23 November 2011, was rated by S&P with a long
term A rating. CCIF, as part of a cost reduction measure, withdrew
its rating from S&P in November 2011. CCIF continues to be
rated by Moodys and Fitch rating agencies.
The Board monitors credit risk and formally considers action if
the credit rating of an issuer falls below A- or A3 as ranked by
S&P and Moodys respectively. As a result of the rating agencies
actions, the Board considered both the sale and the retention of
affected debt securities, acting in the best interests of the
Company and its shareholders.
For debt securities affected by ratings' changes during the
reported period and on the basis of the prevailing facts, the Board
concluded that it would not be in the best interests of the Company
and shareholders to sell the affected debt securities. The Board
continues to monitor the credit quality of the underlying debt
securities and will evaluate taking action, in the best interests
of the Company and its shareholders, if deemed appropriate.
In the event of a default by an issuer of a debt security
purchased by the Company, the Company would rank as an unsecured
creditor in respect of sums due from the issuer of such Debt
Security. In such event, the Company may (in respect of that debt
security) receive a lesser amount (if any) and at a different time
than the proceeds anticipated at the maturity of the debt security.
Any losses would be borne by the Company and returns to
shareholders would be significantly adversely affected.
John Stuart
Chairman
5 September 2012
MANAGEMENT REPORT
Detailed in the section entitled "Investment Objective and
Policy", the Chairman's Statement, the Manager's Report and the
Notes to the Financial Statements are a description of important
events that 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.
There were no material related party transactions which took
place in the financial year.
Going Concern
The performance of the investments held by the Company over the
reporting period and the outlook for the future are described in
the Manager's Report. The Company's financial position, its cash
flows and liquidity position are set out in the financial
statements and the Company's financial risk management objectives
and policies, details of its financial instruments and its
exposures to market price risk, credit risk, liquidity risk,
interest rate risk and currency risk are set out at note 12 to the
financial statements.
As part of its investment portfolio, the Company holds a debt
security issued by Irish Life & Permanent ("IL&P") with a
nominal value of GBP9,050,000 accounting for approximately 15 per
cent of the Company's total net assets. As highlighted in the
Chairman's statement, Moodys has lowered IL&P's senior
unsecured credit rating to Ba3.
The Company also holds a debt security issued by SNS Bank N.V
("SNS") with a nominal value of GBP9,050,000. As detailed in the
Chairman's statement, on 15 June 2012, Moodys downgraded the
long-term senior debt rating of SNS one notch to Baa2.
As part of its investment portfolio, the Company holds a debt
security issued by Erste Group Bank A.G. ("Erste Bank") with a
nominal value of GBP9,050,000 accounting for approximately 15 per
cent. of the Company's total net assets. As highlighted in the
Chairman's statement, Moodys has lowered Erste Bank's long term
credit rating to A3 and the short term ratings one notch to
Prime-2.
As a result of the rating agencies actions, the Board considered
both the sale and the retention of the affected debt security,
acting in the best interests of the Company and its shareholders.
On the basis of the prevailing facts, the Board, with advice from
the Manager, concluded that it would not be in the best interests
of the Company and shareholders to sell the affected debt
securities, but it would continue to monitor the situation.
In the event of a default by an issuer of a debt security
purchased by the Company, the Company would rank as an unsecured
creditor in respect of sums due from the issuer of such debt
security. In such event, the Company may (in respect of that debt
security) receive a lesser amount (if any) and at a different time
than the proceeds anticipated at the maturity of the debt security.
Any losses would be borne by the Company and returns to
shareholders would be significantly adversely affected.
As disclosed in note 12(c) to the financial statements, upon the
issue of Shares in May 2007, the Company created a cash reserve
(the "Expense Provision") in the amount of 2.10 per cent. of the
amount raised by the issue of such Shares (the "Initial Gross
Proceeds") plus GBP600,000, such amount being estimated in the
opinion of the directors upon the advice of the Administrator to be
sufficient (when taken in combination with the additional
arrangements detailed in note 12(c)) to meet the operating expenses
reasonably expected to be incurred over the life of the shares.
After making enquiries, the directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence until the Redemption Date. As the Company's
Shares are due to redeem on 14 June 2013, being less than 12 months
from the Balance Sheet date, in accordance with International
Financial Reporting Standards the financial statements cannot be
prepared on a going concern basis. Accordingly, the financial
statements have been prepared on a break-up basis.
Responsibility Statement
The Board of directors jointly and severally confirm that, to
the best of their knowledge:
(a) The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company; and
(b) This Management Report includes or incorporates by reference
a fair review of the development and performance of the business
and the position of the Company, together with a description of the
principal risks and uncertainties that it faces.
John Stuart Graham Harrison
Director Director
5 September 2012
MANAGER'S REPORT
Investment Performance
At launch, the net proceeds derived from the issue of Shares of
the Company were invested in a portfolio of Debt Securities based
on a notional portfolio of commodities. On 30 June 2012, the
Commodity Portfolio had fallen by 11.7 per cent. over the twelve
month reporting period and had risen by 18.1 per cent. since
launch. Over the same periods, the total market value of the
Company's Shares fell by 1.4 per cent. and rose by 6.0 per cent.
respectively.
Weightings in the Notional Commodity Portfolio as at 30 June
2012
Over the period, the value of the Commodity Portfolio fell by
11.7 per cent. as industrial metals recorded double digit falls on
the back of a slowdown in global economic recovery. Sugar also saw
a sharp decline on the back of fears of oversupply and profit
taking after its recent strong performance.
May- 2007 Jun- 2011 Jun- 2012 Return Return
Since Inception over Period
Brent Crude
Oil 68.0 112.5 97.8 43.7% -13.1%
Nickel 50,900.0 23,125.0 16,475.0 -67.6% -28.8%
Aluminium 2,733.5 2,509.0 1,834.5 -32.9% -26.9%
Copper 7,440.5 9,301.0 7,604.5 2.2% -18.2%
Zinc 3,685.5 2,315.0 1,843.0 -50.0% -20.4%
Wheat 517.0 584.8 739.0 42.9% 26.4%
Corn 390.3 629.0 672.5 72.3% 6.9%
Sugar 9.3 28.4 21.8 134.4% -23.2%
In keeping with the general upward trend in food prices and
agricultural commodities, wheat and corn prices grew over the
Period gaining 26.4 per cent. and 6.9 per cent, respectively. In
contrast, sugar prices which had seen a sharp +50 per cent.
increase in the previous period consolidated towards the tail end
of the reporting period falling by 23.2 per cent. from June 2011 to
June 2012. With continued growth in emerging market populations,
changing food consumption patterns, increased use of agricultural
commodities for bio-fuels and the relatively long time lag to grow
supply; agricultural commodity prices continue to see strong price
growth with a highly positive outlook.
Metals, namely nickel, aluminium, copper and zinc were the worst
performing constituents of the Commodity Portfolio suffering
substantial falls over the period. Fears surrounding the global
economic recovery, sovereign debt crisis in Europe, slowdown in
emerging markets' growth, slowdown in consumer spending and
seasonal reduction in demand substantially accentuated speculative
trading in metals commodities. Looking ahead, this heightened
volatility and pressure to the downside is expected to continue
with price action dependent on the global economic recovery and
general view of emerging markets', especially Chinese, growth.
Similar to metals, oil prices remained relatively volatile over
the reporting period. Demand for oil futures was impacted by
political unrest in the Middle East, strong fluctuations in the US
Dollar, strong fluctuation in investor risk appetite, fears of a
slowdown in the global economic recovery and fears of a slowdown in
emerging markets' demand. At present, crude oil futures are trading
within a narrow USD 85 to USD 105 range and are expected to remain
in that range for the near term.
Charts showing evolution, due to relative performance of
individual commodity weights in the Commodity Portfolio as well as
performance of the overall Commodity Portfolio from inception to
the end of the reporting period are enclosed below.
Commodity Portfolio performance - Inception to June 2012
Market Outlook
The factors underpinning growth in agricultural commodity prices
remain in place especially the growth in middle class populations
across emerging markets, which is supportive of higher prices.
Bio-fuels and long time lags in increasing supply also add further
comfort that agricultural commodities will continue to sustain
higher prices for the foreseeable future.
In contrast, metals and oil continue to be impacted by investor
sentiment regarding the economic recovery, speculative investor
appetite and geopolitical developments across the globe. Economic
ramifications of the European debt crisis, western government
monetary policy measures and concerns of a slowdown in emerging
markets', specifically Chinese, growth have directly translated
into higher volatility within the metals and energy commodity
complex.
Barring idiosyncratic supply side shocks, the greatest risk to
commodity prices is from a slowdown in economic growth and the
corresponding reduction in commodity demand. A resolution to the
European debt situation, improving economic numbers from the US and
a stabilization of growth in emerging markets would trigger a
continuation in commodity price increases. Conversely, if the
economic outlook were to deteriorate further, it is likely that
commodity prices, excluding agricultural commodities, would see a
fall in price.
Close Investments Limited
5 September 2012
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF THE
COMPANY
We have audited the financial statements of Close Enhanced
Commodities Fund II Limited for the year ended 30 June 2012, which
comprise the Statement of Comprehensive Income, the Statement of
Financial Position, the Statement of Cash Flows, the Statement of
Changes in Equity Attributable to Shareholders and the related
notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial
Reporting Standards. As described in note 1, they have been
prepared on a break up basis.
This report is made solely to the company's members, as a body,
in accordance with section 262 of The Companies (Guernsey) Law,
2008 as amended. Our audit work has been undertaken so that we
might state to the company's members those matters we are required
to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's
members, as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the United Kingdom Auditing
Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the Annual
Financial Report to identify material inconsistencies with the
audited financial statements. If we become aware of any apparent
material misstatements or inconsistencies, we consider the
implications for our report.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view;
-- are in accordance with International Financial Reporting Standards; and
-- comply with The Companies (Guernsey) Law, 2008 as amended.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where The Companies (Guernsey) Law, 2008 as amended requires us to
report to you if, in our opinion:
-- proper accounting records have not been kept by the company;
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and
explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
Under the Listing Rules we are required to review:
-- the directors' statement in relation to going concern;
-- the part of the Corporate Governance Statement relating to
the company's compliance with the nine provisions of the UK
Corporate Governance Code specified in our review; and
-- certain elements of the report to the shareholders by the Board on directors' remuneration.
Roy Alan Angliss FCA Senior Statutory Auditor
SAFFERY CHAMPNESS GAT
CHARTERED ACCOUNTANTS
5 September 2012
Notes Year to Year to
STATEMENT OF COMPREHENSIVE INCOME 30 Jun 2012 30 Jun 2011
For the year ended 30 June 2012
GBP GBP
Net movement in unrealised (depreciation)/
appreciation on investments 5 (8,008,900) 18,746,763
Operating expenses 2 (474,750) (466,954)
-------------- -------------
Net (loss)/gain for the year attributable
to Shareholders (8,486,650) 18,279,809
-------------- -------------
Other Comprehensive Income - -
-------------- -------------
Total Comprehensive Income (8,483,650) 18,279,809
-------------- -------------
Pence Pence
(Loss)/earnings per Share for
the year - Basic and Diluted 4 (18.75) 40.40
In arriving at the results for the financial year, all amounts
above relate to continuing operations.
There are no recognised gains or losses for the year other than
those disclosed above.
Reconciliation of earnings per Share for investment purposes to
earnings per Share per the financial statements:
Year to Year to
30 Jun 2012 30 Jun 2011
Pence Pence
(Loss)/earnings per Share for investment
purposes (18.00) 41.00
Adjustment to include expenses on an
accruals basis (0.75) (0.60)
(Loss)/earnings per Share per the financial
statements (18.75) 40.40
In accordance with International Financial Reporting Standards
("IFRS"), expenses should be attributed to the year to which they
relate.
The loss per Share for investment purposes represents the
earnings per Share attributable to Shareholders in accordance with
the Prospectus, which recognises all expenses of the Company up to
and including the date that the redemption proceeds become
payable.
STATEMENT OF FINANCIAL POSITION 30 Jun 30 Jun
As at 30 June 2012 2012 2011
Notes GBP GBP
NON CURRENT ASSETS
Unquoted financial assets designated
as at fair value through profit
or loss 5 - 68,238,172
------------- -------------
CURRENT ASSETS
Unquoted financial assets designated
as at fair value through profit
or loss 5 60,229,272 -
Receivables 6 171,292 341,420
Cash and cash equivalents 336,159 621,612
------------- -------------
60,736,723 963,032
CURRENT LIABILITIES
Payables - due within one year 7 44,601 25,432
------------- -------------
NET CURRENT ASSETS 60,692,122 937,600
TOTAL ASSETS LESS CURRENT LIABILITIES 60,692,122 69,175,772
NON-CURRENT LIABILITIES
Payables - due after one year (excluding
net assets attributable to Shareholders) 8 - -
NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS 60,692,122 69,175,772
------------- -------------
SHARES IN ISSUE 45,250,000 45,250,000
Pence Pence
NAV PER SHARE 134.13 152.87
Reconciliation of NAV per Share for investment purposes to NAV
per Share per the financial statements:
30 Jun 2012 30 Jun 2011
Pence Pence
NAV per Share for investment purposes 133.10 150.80
Adjustment to include expenses on an
accruals basis 1.03 2.07
NAV per Share per the financial statements 134.13 152.87
In accordance with IFRS, expenses should be attributed to the
year to which they relate.
The NAV per Share for investment purposes represents the NAV per
Share attributable to Shareholders in accordance with the
Prospectus, which recognises all expenses of the Company up to and
including the date that the redemption proceeds become payable.
The financial statements were approved and authorised for issue
by the Board of directors on 5 September 2012 and are signed on its
behalf by:
John Stuart Graham Harrison
Director Director
STATEMENT OF CASH FLOWS Year to Year to
For the year ended 30 June 2012 30 Jun 2012 30 Jun
2011
GBP GBP
Operating activities
Net (loss)/gain for the year attributable
to Shareholders (8,483,650) 18,279,809
Unrealised depreciation/(appreciation) on
investments 8,008,900 (18,746,763)
Interest received (2,212) (3,151)
Amortisation of debt issue costs 168,995 168,534
Increase in accrued expenses 19,169 3,793
Decrease/(increase) in prepayments and accrued
income excluding debt issue costs 1,133 (1,741)
--------------- ---------------
Net cash outflow from operating activities (287,665) (299,519)
--------------- ---------------
Investing activities
Interest received 2,212 3,151
Net cash inflow from investing activities 2,212 3,151
--------------- ---------------
Cash and cash equivalents at beginning of
year 621,612 917,980
Decrease in cash and cash equivalents (285,453) (296,368)
--------------- ---------------
Cash and cash equivalents at end of year 336,159 621,612
--------------- ---------------
STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO SHAREHOLDERS
For the year ended 30 June 2012
Share Capital Share Premium Accumulated Total
gains
GBP GBP GBP GBP
Balance as at 1 July
2011 2 45,250,000 23,925,770 69,175,772
Net loss for the year
attributable to
Shareholders - - (8,483,650) (8,483,650)
-------------- -------------- ------------------ ---------------------
Balance as at 30 June
2012 2 45,250,000 15,442,120 60,692,122
-------------- -------------- ------------------ ---------------------
Share Capital Share Premium Accumulated Total
gains
GBP GBP GBP GBP
Balance as at 1 July
2010 2 45,250,000 5,645,961 50,895,963
Net gain for the year
attributable to Shareholders - - 18,279,809 18,279,809
-------------- -------------- ------------- -------------
Balance as at 30 June
2011 2 45,250,000 23,925,770 69,175,772
-------------- -------------- ------------- -------------
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June
2012
1 ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements have been prepared in accordance with
IFRS; which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC") and
applicable Guernsey law. The financial statements have been
prepared on a historical cost basis except for the measurement at
fair value of financial instruments, and give a true and fair
view.
Break up basis of accounting
As the Company's Participating Shares are due to be redeemed
within twelve months, on or around 14 June 2013, the financial
statements have been prepared on a break up basis. The directors do
not anticipate the costs of liquidation to be material. Such costs
will be borne out of the Expenses Provision described in note 8 to
the financial statements.
The preparation of financial statements in accordance with the
break up basis requires that assets are reduced to their
recoverable amounts and that provisions are made for future losses.
The directors have considered whether there is any indication that
the recoverable amount of the Company's assets is lower than the
amount recorded as fair value at 30 June 2012. They have concluded
that any post balance sheet changes in value reflect fair value
changes and do not indicate a reduction in the recoverable amount
at 30 June 2012 and, accordingly, that no adjustment is required to
the carrying amount of the Company's assets or increase in the
Company's liabilities at fair value through profit or loss. In
addition the directors have considered whether any provision is
required for future losses. The Company will continue to incur
expenses up to the date of redemption of the Shares. However, the
anticipated excess of redemption value over the fair value at 30
June 2012 of the Company's investments is expected to exceed the
Company's estimated future expenses and, accordingly, the directors
do not consider that a provision for future losses is required.
Changes in accounting policy and disclosures:
The following Standards or Interpretations have been adopted in
the current year. Their adoption has not had any impact on the
amounts reported in these financial statements and is not expected
to have any impact on future financial periods:
IFRS 7 Financial Instruments: Disclosures - amendments resulting
from annual improvements effective for annual periods beginning on
or after 1 January 2011.
IFRS 7 Financial Instruments: Disclosures effective for annual
periods beginning on or after 1 July 2011.
IAS 1 Presentation of Financial Statements - amendments
resulting from annual improvements effective for annual periods
beginning on or after 1 January 2011.
IAS 24 Related party disclosures - revised definition of related
parties effective for annual periods beginning on or after 1
January 2011.
IAS 34 Interim Financial Reporting - amendments resulting from
annual improvements effective for annual periods beginning on or
after 1 January 2011.
The following Standards have been issued by the IASB but not yet
adopted by the Company:
IFRS 7 Financial Instruments: Disclosures - amendments related
to the offsetting of assets and liabilities effective for annual
periods beginning on or after 1 January 2015.
IFRS 9 Financial Instruments - original issue (classification
and measurement of financial assets) effective for annual periods
beginning 1 January 2015.
IFRS 9 Financial Instruments - reissue to include requirements
for the classification and measurement of financial liabilities and
incorporate existing derecognition requirements effective for
annual periods beginning on or after 1 January 2015.
IFRS 13 Fair Value Measurement - original issue of standard
effective for annual periods beginning on or after 1 January
2013.
IAS 1 Presentation of Financial Statements - amendments to
revise the way other comprehensive income is presented effective
for annual periods beginning on or after 1 July 2012.
IAS 1 Presentation of Financial Statements - amendments
resulting from Annual Improvements 2009-2011 Cycle (comparative
information) effective for annual periods beginning on or after 1
January 2013.
The directors have considered the above and are of the opinion
that the Standards and Interpretations detailed are not expected to
have an impact on the Company's financial statements except for the
presentation of additional disclosures and changes to the
presentation of components of the financial statements. These items
will be applied in the first financial period for which they are
required.
(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.
(c) Expenses
All expenses are accounted for on an accruals basis.
(d) Debt issue costs
The debt issue costs incurred amounted to GBP1,018,125. Because
the Company's participating Shares are redeemable on or around 14
June 2013, and because the Management Shares are subordinate they
are required to be classified as debt instruments under IAS 32.
Consequently, issue costs are required to be amortised over the
life of the instrument.
(e) Interest Income
Interest income is accounted for on an accruals basis.
(f) Cash and cash equivalents
Cash at bank and short term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits and highly liquid investments readily
convertible to known amounts of cash and subject to insignificant
risk of changes in value. For the purpose of the Statement of Cash
Flows, cash and cash equivalents consists of cash and deposits at
bank.
(g) Investments
All investments are classified as "at fair value through profit
and loss". Investments are initially recognised on the date of
purchase at cost, being the fair value of the consideration given,
excluding transaction costs associated with the investment. After
initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments being recognised in the
Statement of Comprehensive Income.
Fair value is the amount for which the financial instruments
could be exchanged, or a liability settled, between knowledgeable
willing parties in an arms length transaction. Fair value also
reflects the credit quality of the issuers of the financial
instruments.
Valuations of the Company's investments are based on valuations
provided to the Company by Future Value Consultants Limited (the
"Calculation Agent"). These valuations are intended to be an
indication of the fair value of the Company's investments,
including an issuer's credit risk, designed to reflect the best
estimation of the price at which they could be sold, even though
there is no guarantee that a willing buyer might be found if the
Company chose to sell the relevant investment.
The indicative fair values of the investments are based on an
approximation of the market level of the investments. As the
investments are not traded in an active market, the indicative fair
value was determined by using valuation techniques. The Calculation
Agent uses a variety of methods and makes assumptions that are
based on market conditions existing at the reporting date.
Valuation techniques used may include the use of comparable
recent arm's length transactions (where available), discounted cash
flows analysis, option pricing models and other valuation
techniques commonly used by market participants.
Models use observable data, to the extent practicable. However,
areas such as counterparty credit risk, volatilities and
correlations require the Calculation Agent to make estimates.
Changes in assumptions about these factors could affect the
reported fair value of financial instruments.
Different assumptions regarding these factors, combined with
different valuation techniques and models used, could lead to
different valuations of the financial instruments produced by
different parties. As at the reporting date, valuation data for the
Debt Securities, provided by J.P. Morgan Securities Limited was
GBP1,800,331 (2011: GBP7,702,188) higher than that provided by the
Calculation Agent.
Being cognisant of current market conditions, the Company
believes that the valuations provided by the Calculation Agent
comply with the definition of fair value as defined by IFRS and are
more appropriate.
The investments will be derecognised on their redemption date,
being 14 June 2013 and accordingly, the investments have been
reclassified as current assets as at 30 June 2012. Gains and losses
on the sale of investments will be taken to the Statement of
Comprehensive Income.
(h) 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.
(i) Segmental Reporting
The directors are of the opinion that the Company is engaged in
a single segment of business, being investment business in the
United Kingdom.
2 OPERATING EXPENSES
Year to Year to
30 Jun 30 Jun
2012 2011
GBP GBP
Amortisation of debt issue costs 168,995 168,533
Management fees (1) 158,809 158,375
Auditor remuneration 10,000 10,000
Directors' and Officers' insurance 6,978 6,931
Registration fees 9,736 10,684
Administration fees 38,623 33,500
Custody fees 20,156 20,877
Directors' remuneration 21,000 21,000
Annual fees 28,703 28,408
Printing costs 9,395 7,368
Sundry costs and charges 4,567 4,429
-------- --------
476,962 470,105
Less: Interest earned on expense provision
bank account (2,212) (3,151)
474,750 466,954
-------- --------
(1) The Manager is entitled to receive a fee from the Company at
an annual rate of 0.35% of the Initial Gross Proceeds.
3 DIRECTORS' REMUNERATION
The Prospectus provides that each director will be paid a fee of
GBP7,000 per annum by the Company. The remuneration will remain
fixed over the life of the Company.
4 (LOSS)/EARNINGS PER SHARE
The (loss)/earnings per Share is based on the net
(loss)/earnings attributable to Shareholders of GBP8,483,650 (2011:
GBP18,279,809) and on 45,250,000 Shares (2011: 45,250,000 Shares),
being the weighted average number of Shares in issue during the
year. There are no dilutive instruments and therefore basic and
diluted loss/(earnings) per Share are identical.
5 INVESTMENTS
UNQUOTED FINANCIAL ASSETS DESIGNATED 30 Jun 30 Jun 2011
AS AT FAIR VALUE THROUGH PROFIT OR 2012 GBP
LOSS GBP
Opening portfolio cost 38,424,943 38,424,943
Unrealised appreciation on valuation
brought forward 29,813,229 11,066,466
Unrealised (depreciation)/appreciation
on valuation for the year (8,008,900) 18,746,763
Unrealised appreciation on valuation
carried forward 21,804,329 29,813,229
Closing valuation 60,229,272 68,238,172
-------------- -------------
Valuations of investments are based on valuations provided by
the Calculation Agent. The provided valuations are derived from
proprietary models based upon well-recognised financial principles
and reasonable estimates about relevant future market conditions
using suitable inputs from market data such as interest rates,
credit default swap spreads and notional Commodity Portfolio
levels.
To comply with the definition of fair value as defined by IFRS,
the Calculation Agent was engaged to provide valuations of the
investments, taking account of the current counterparty credit risk
of the issuers of the Debt Securities held by the Company for the
account of the Fund. Details of the quantitative effect of using
different valuation providers are given in note 1(g).
IFRS 7 requires the fair value of investments to be disclosed by
the source of inputs, using a three level hierarchy as detailed
below:
Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1);
Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (Level 2);
Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3).
All Debt Securities held by the Company for the account of the
Fund have been classified as Level 2 in accordance with the fair
value hierarchy. There have been no transfers between Level 1 and
Level 2 of the fair value hierarchy during the year.
The performance of the financial assets is based on the
performance of a notional portfolio of commodities between 31 May
2007 and 31 May 2013. The instruments are designed to give a return
of two times the performance of the notional portfolio of
commodities.
Valuation data provided by the Calculation Agent to the Company
is provided for informational purposes only and does not represent
an offer to buy or sell the Debt Securities by the Calculation
Agent or any other party. The valuations provided are an indication
of market levels and do not imply that they can be sold at that
valuation price. They are based on assumptions and data the
Calculation Agent considers in its judgement reasonable, but an
alternative valuer might arrive at different valuations for the
same investments.
6 RECEIVABLES
30 Jun 2012 30 Jun 2011
GBP GBP
Prepaid debt issue costs 161,145 330,140
Prepayments 10,147 11,280
171,292 341,420
------------ ------------
7 PAYABLES
(amounts falling due within one year)
30 Jun 2012 30 Jun 2011
GBP GBP
Accrued administration fees 3,287 3,009
Accrued registration fees 800 812
Accrued audit fees 10,000 10,000
Accrued custody fees 5,131 5,696
Accrued printing costs 5,590 4,100
Accrued Investment Managers' 13,017 -
Fees
Other accrued expenses 6,776 1,815
Expense provision 332,739 315,837
Less: Prepaid expense provision
(see note 8) (332,739) (315,837)
44,601 25,432
------------ ------------
8 PAYABLES
(amounts falling due after one year)
30 Jun 2012 30 Jun 2011
GBP GBP
Expense provision 297,319
Less: Prepaid expense provision - (297,319)
- -
----------------------------------------------- ------------
The prepaid expense provision represents monies set aside to
meet the on-going, annual and redemption expenses of the Company,
as set out in the Prospectus.
If, at the Redemption Date, there is any surplus remaining from
the expense provision (together with accrued interest thereon),
this surplus will revert to the Manager. In the event of redemption
or repurchase of all the Shares, or upon a winding-up of the
Company, in each case prior to the Redemption Date, any balance of
the expense provision (together with accrued interest thereon)
other than the investment management fee will also revert to the
Manager.
9 SHARE CAPITAL
Authorised SHARES GBP
Participating Shares of no par Unlimited -
value
Management Shares of GBP1.00 2 2
2
-------------
Issued SHARES
Participating Shares - fully
paid 45,250,000
Management Shares - fully paid 2
Number of Shares in issue at
30 June 2012 and at 30 June 2011 45,250,002
-------------
GBP
Issued capital at 30 June 2012
and at 30 June 2011 2
-------------
The issue of participating shares
took place as follows:
Amount
Number Price per received
of shares share pence GBP
31 May 2007 45,250,000 100.00 45,250,000
Shares are redeemable on or around 14 June 2013. The Company is
closed-ended and therefore Shareholders have no right to request
the Company to repurchase their Shares or to redeem them prior to
the Redemption Date. If the Company is wound up prior to the
Redemption Date, Shareholders will be entitled to the net asset
value of the Shares on the winding up date. No dividends will be
paid on the Shares.
Management shares are not redeemable; do not carry any right to
dividends and in a winding up rank only for a return of the amount
of paid up capital after return of capital on Shares and nominal
shares.
Given the immateriality of the management shares to the net
assets of the Company, they have been included in net assets
attributable to participating Shareholders.
10 SHARE PREMIUM
GBP
Share premium at 30 June 2012 and at 30 June
2011 45,250,000
-----------
11 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the Company's operations; and
(b) Debt Securities.
12 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 currency risk. The Board regularly review and agree
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 Manager actively monitors market
prices and reports to the Board as to the appropriateness of the
prices used for valuation purposes. A list of investments held by
the Company is shown in the Schedule of Investments.
Details of the Company's Investment Objective and policy are
given.
Price sensitivity
The following details the Company's sensitivity to a 10%
increase and decrease in the final market prices of its constituent
financial assets and liabilities.
The performance of the financial assets is based on the
performance of a notional portfolio of commodities between the
Start Date and the End Date. The final redemption value of the
Shares will comprise a capital amount of 100 pence per Share and a
growth amount per Share equal to two times the percentage increase
in the End Value of the Commodity Portfolio relative to its Start
Value.
If the value of the commodities as at 30 June 2012 had been 10%
higher, and assuming these values were to remain unchanged through
to the end of the life of the Company, with all other variables
held constant, the increase in the estimated Final Capital
Entitlement (based on the commodity portfolio valuation) on the
Redemption Date would have been 159 pence per Share arising due to
an increase in the amount payable per Share on redemption of 23
pence per Share.
If the value of the commodities as at 30 June 2012 had been 10%
lower, and assuming these values were to remain unchanged through
to the end of the life of the Company, with all other variables
held constant, the decrease in the estimated Final Capital
Entitlement (based on the commodity portfolio valuation) on the
Redemption Date would have been 112 pence per Share arising due to
an decrease in the amount payable per Share on redemption of 24
pence per Share.
(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. At the date of this report, 4 out of 5 issuers
carried an investment grade credit rating. This is per Moody's
ratings as no S&P rating was available for Caisse Centrale du
Credit Immobiliser ("CIF").
Investors should be aware that the prospective returns to
Shareholders mirror the returns under the Debt Securities held or
entered into by the Company and that any default by an issuer of
any such Debt Securities held or entered into by the Company would
have a consequential adverse effect on the ability of the Company
to pay some or all of the redemption to Shareholders. Such a
default might, for example, arise on the insolvency of an issuer of
a debt security.
The following table details the aggregate grades of the debt
instruments in the portfolio, based on the valuations of the
investments as at 30 June 2012 (30 June 2011 for the comparative
period) as rated by S&P.
Rating 5 Sep 2012* 30 Jun 2012 30 Jun 2011
AAA 0.00% 0.00% 0.00%
AA 0.00% 0.00% 0.00%
A 20.54% 20.54% 84.24%
BBB 40.34% 40.34% 0.00%
BB 0.00& 18.64% 15.76%
B 18.64% 0.00% 0.00%
NR 20.48% 20.48% 0.00%
* Based on the value of the Company's investments at 30 June
2012.
It should be noted that the S&P rating of CIF debt security
is not rated as at 30 June 2012 and as at the date of signing (30
June 2011: rated by S&P as A). S&P withdrew the
counterparty credit ratings and issue ratings of CIF on 23 November
2011 at the request of the French bank. CIF has been given an
investment grade rating of A1 by Moody's as at 30 June 2012 and at
the date of signing.
Credit risk was mitigated at launch by the Company by purchasing
the Debt Securities from five different issuers. At the time of
purchase four of the issuers were rated by S&P at grade A, with
the remaining issuer rated by S&P at grade AA.
The Company's financial assets exposed to credit risk are as
follows:
30 Jun 2012 30 Jun 2011
GBP GBP
Unquoted financial assets designated
as at fair value through profit or
loss 60,229,272 68,238,172
Receivables 171,292 341,420
Cash and cash equivalents 336,159 621,612
------------- -------------
60,736,723 69,201,204
------------- -------------
(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 commitment is
its ongoing operating expenses.
Upon the issue of Shares in May 2007, the Company created a cash
reserve (the "Expense Provision") in the amount of 2.10% of the
Initial Gross Proceeds plus GBP600,000, such amount being estimated
in the opinion of the directors upon the advice of the Manager to
be sufficient to meet operating expenses reasonably expected to be
incurred over the life of the Shares.
At each quarterly Board meeting and at the end of each financial
year the Directors review the Expense Provision against the
expected future expenses (other than the Manager's fee) of the
Company. To the extent that the Directors consider that the Expense
Provision is less than 150 per cent of the expected future expenses
of the Company (other than the Manager's fee), the Directors may,
having first consulted the Manager, at their discretion reduce the
amount of investment management fees payable to the Manager
(subject to a maximum reduction of 50%) in order to re-establish
the 150% cover.
If at any time during the life of the Company, notwithstanding
the arrangements summarised above, the Expense Provision is
exhausted then, subject to the relevant excess expenses having been
agreed by the Manager, the Manager will make good such shortfall
from its own resources, subject to a maximum of 0.25% of the
Initial Gross Proceeds. Should these expenses exceed this cap the
return to Shareholders will be adversely impacted. The directors do
not anticipate that the expenses will exceed the Expense
Provision.
The Debt Securities purchased by the Company mature on 14 June
2013 (the "Maturity Date") and are designed to pay on the Maturity
Date, a capital payment which will comprise a capital amount of
100p per Share, and a growth amount per Share equal to two times
any percentage increase in the End Value of the Commodity Portfolio
relative to its Start Value, such amount being expressed in pence
and rounded down to the next whole pence. If the End Value is lower
than the Start Value, the Shares are designed to repay the full
initial subscription amount of 100p per Share on the 14 June 2013,
all provided that no counterparty defaults on its obligations to
the Company. The End Value is defined as the aggregate of the
average official closing price of each constituent of the Commodity
Portfolio on the last Business Day of each month in the Calculation
Period. It is not anticipated that dividends will be paid in
respect of the Shares.
The Directors and the Manager monitor the credit ratings of all
issuers of the Debt Securities. In the event of any downgrading in
the long-term credit rating of any issuer below A- or A3, as
determined by S&P and/or Moody's respectively, the Company on
behalf of the Fund in its absolute discretion seek to sell the
relevant Debt Securities to third party purchasers and to reinvest
the proceeds in the purchase of debt securities of another issuer
such that the new debt securities will replicate as closely as
possible the terms and conditions of the original Debt
Securities.
The Directors would only seek to sell the relevant Debt
Securities if they consider on the advice of the Manager that such
would be in the best interests of the Company and its Shareholders.
If the purchase of such debt securities is not possible, the
Directors may reinvest such proceeds as they see fit in investments
which, in the opinion of the Directors, as nearly as is
practicable, replicate the investment characteristics of the Debt
Securities sold and so that the proceeds are invested, as nearly as
is practicable, in accordance with the Company's stated investment
objective. As at the date of signing this report and the reporting
date, four out of five issuers of the Debt Securities carried an
investment grade credit rating as rated by Moody's.
No assurance can be given that the Company will be able to sell
the Debt Securities, for the reasons described above or on a
winding-up of the Company, at a favourable price or at all. Even if
the Company is able to sell such Debt Securities, the sale of the
Debt Securities may result in a lower return than would have been
the case if the long-term credit rating of the issuer of the
relevant Debt Securities had not been downgraded and the original
Debt Securities had been retained and were redeemed on the Maturity
Date.
The table below details the residual contractual maturities of
financial liabilities:
As at 30 June 2012 1-3 months Over 1 year Total
Accrued expenses 44,601 - 44,601
Total 44,601 - 44,601
----------- ------------ -------
As at 30 June 2011 1-3 months Over 1 year Total
Accrued expenses 25,432 - 25,432
Total 25,432 - 25,432
----------- ------------ -------
(d) Interest Rate Risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair value of
financial instruments. Except for cash set aside to meet expenses,
the Company's assets and liabilities are expected to be held until
the Maturity Date.
Interest rate risk is the risk that fluctuations in market
interest rates will result in a reduction in deposit interest
earned on cash deposits held by the Company. The Company holds cash
on fixed deposit, the return on which is subject to fluctuations.
All fixed deposits mature within three months.
The average effective interest rate for cash and bank as at 30
June 2012 was 0.57% (2011: 0.58%).
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 assets attributable
for the year ended 30 June 2012 would have been GBP841 (2011:
GBP1,554) greater 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 assets attributable
for the year ended 30 June 2012 would have been GBP841 (2011:
GBP1,554) less due to a decrease in the amount of interest
receivable on the bank balances.
The Company's sensitivity to interest rates is lower in the year
ended 30 June 2012 than in the year ended 30 June 2011 because of a
decrease in the amount of cash balances held.
(e) Currency Risk
Whilst Shareholders are not exposed to direct currency risk,
since the Shares and Debt Securities are all Sterling-denominated,
in the event that the US Dollar strengthens in value this may cause
a reduction in the prices of the Commodities and could result in a
reduction in the redemption proceeds.
(f) Capital Management
The investment objective of the Company is to provide
Shareholders on the Redemption Date with a capital payment which
will comprise a capital amount of 100p per Share and a gross amount
per Share equal to two times any percentage increase in the End
Value of the commodity portfolio relative to its Start Value, such
amount being expressed in pence and rounded down to the next whole
penny. If the End Value is lower than the Start Value, the Shares
are designed to repay the full capital amount of 100p per Share on
the Redemption Date.
The Shares have a fixed life and a fixed capital and this is not
expected to change during the life of the Shares.
13 RELATED PARTIES
There were no transactions with related parties during the
year.
14 ULTIMATE CONTROLLING PARTY
In the directors' opinion the Company has no controlling
party
NOMINAL VALUATION TOTAL NET
DEBT SECURITIES PORTFOLIOS HOLDINGS GBP ASSETS
Caisse Centrale du Credit
Immobilier de France 0%
EMTN 14 June 2013 9,050,000 12,336,615 20.33%
Erste Bank 0% EMTN 14 June
2013 9,050,000 12,369,443 20.38%
Irish Life & Permanent plc
0% EMTN 14 June 2013 9,050,000 11,224,256 18.49%
Mediobanca SpA 0% EMTN 14
June 2013 9,050,000 12,096,630 19.93%
SNS Bank NV 0% EMTN 14 June
2013 9,050,000 12,202,328 20.11%
45,250,000 60,229,272 99.24%
This schedule does not form part of the audited financial
statements.
NOMINAL VALUATION TOTAL NET
DEBT SECURITIES PORTFOLIOS HOLDINGS GBP ASSETS
Caisse Centrale du Credit
Immobilier de France 0%
EMTN 14 June 2013 9,050,000 14,477,454 20.93%
Erste Bank 0% EMTN 14 June
2013 9,050,000 14,466,444 20.91%
Irish Life & Permanent plc
0% EMTN 14 June 2013 9,050,000 10,756,188 15.55%
Mediobanca SpA 0% EMTN 14
June 2013 9,050,000 14,347,918 20.74%
SNS Bank NV 0% EMTN 14 June
2013 9,050,000 14,190,168 20.51%
45,250,000 68,238,172 98.64%
This schedule does not form part of the audited financial
statements.
A pdf version of the annual financial report will shortly be
posted on the Administrator's web-site and a copy uploaded to the
National Storage Mechanism. A further announcement will be made
once the annual financial report is available to be downloaded.
For further information contact:
Anson Fund Managers Limited
Secretary
Tel: Guernsey 01481 722260
5 SEPTEMBER 2012
END OF ANNOUNCEMENT
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