TIDMTRMA TIDMTRMU TIDMTTM
RNS Number : 9170F
Thames River Multi Hedge PCC Ltd
21 June 2012
THAMES RIVER MULTI HEDGE PCC LIMITED
PRELIMINARY ANNOUNCEMENT
The Board of Directors of Thames River Multi Hedge PCC Limited
announces audited results for the year ended 31 March 2012. These
are extracts taken from the audited accounts for the year ended 31
March, approved by the Board of Directors on 21 June 2012.
Chairman's report
I would like to welcome our shareholders to the eighth annual
report for the Hedge + Cell of Thames River Multi Hedge PCC Limited
(the "Company"). My report will follow its usual format of a
performance review followed by a brief market synopsis to place
this performance in context and will conclude with a review of
major events for your Company.
I am disappointed to report net asset value per share losses of
6.11%, 5.96% and 5.86% for the Sterling, Euro and Dollar share
classes of your Company respectively over the course of the
financial year compared to losses of 3.4% for the HFRI fund of
funds and 3.64% for the HFRX Absolute Return index. This relatively
weak performance was primarily due to a difficult first half of the
year in which we underperformed the HFRI fund of funds index by
4.1% in a risk-averse trading environment. In the second half we
outperformed the index by approximately 1% as more directional
hedge fund strategies benefited from substantial central bank
liquidity injections. In share price terms we have actually
outperformed the indices with returns of -2.29%, -2.49% and 0% for
the Sterling, Euro and Dollar classes respectively. This share
price performance has however come at a price as your broker has
aggressively repurchased shares and we have sought your approval to
renew our 14.99% buy-back authority on three separate occasions to
keep the discount at an acceptable level in relation to the
ever-shrinking peer group of listed fund of hedge fund
vehicles.
Our new financial year began on a calm note but rapidly
degenerated into one of the most extreme periods of financial
market volatility since the Lehman crisis in 2008. Bonds, equities
and commodities initially rallied when the Federal Reserve
indicated that it would continue the quantitative easing programme
until the end of June. The calm was short-lived as Greece was
downgraded by Standard & Poor's who added to contagion fears by
placing Italy on negative outlook too. An enormous $11bn IPO of
Glencore marked the top of equity and commodity markets in May.
The European bank stress test results released in July proved
worthless as they ignored the possibility of a sovereign default.
Corporate activity slowed sharply and equity market volatility
increased as investors focused on the lack of leadership in Europe.
The ECB purchased Spanish and Italian 10-year sovereign debt as
yields surged above 6% and the German DAX index plunged by more
than 20% intra month in August. Standard & Poor's soured
sentiment even further by cutting the US debt rating from AAA to
AA+ and the Fed announced "Operation Twist", a strategy to reduce
long-term borrowing costs by paying down long-term debt using
short-term borrowing.
The second half of our financial year which began in October
proved to be a more favourable environment for hedge funds. Risk
asset prices rallied sharply as details of a plan to resolve the
European crisis emerged. As investors' enthusiasm for the plan
faded due to a lack of detail, global central banks staged a
co-ordinated liquidity injection at the end of November which led
to a substantial rally in risk assets on the last day of the month.
This was followed by two further liquidity injections by the ECB in
December and February, each amounting to approximately half a
trillion euro of 3-year finance. Our financial year ended on a
positive note with the successful restructuring of EUR177bn of
Greek debt which, importantly for the hedge fund industry, was
recognised as a technical default triggering CDS payments.
At the start of the financial year, your Board met to consider
the future options for the Company following a difficult year for
the hedge fund industry and your Company's investment portfolio,
which was compounded by the need to redeem investments to meet the
discretionary redemption facility. The directors decided not to
exercise their discretion to operate the redemption facility in
June and December 2011 in order to the inevitable disruption to
portfolio management caused by raising cash to meet redemptions in
potentially unfavourable market conditions, while also continuing
to raise cash for the ongoing programme of share repurchases. The
directors also decided to consult shareholders with a view to
putting forward proposals for the Company's future, including a
liquidity event, early in 2012. In February of this year an EGM was
held at which over 87% of those voting voted for the continuation
of the Company. In addition the Company offered a tender offer of
up to 50% of the shares in issue at the time; valid tender requests
were received for between 73 and 77% of the shares. The tender
offer was settled on 31 May.
At the same time your Board decided to implement a second tender
offer in the event that the portfolio failed to achieve
double-digit NAV growth in the period from 1 November 2011 to 31
October 2012. If this level of return is achieved your Board has
nonetheless retained the ability to implement the tender offer
subject to shareholder approval. The Board also undertook to offer
a continuation vote at the 2013 Annual General Meeting.
At its meeting on 21 June your Board reflected on a variety of
issues including the percentage of Shares in issue which were
tendered by Shareholders in the February tender, the lack of
liquidity in the Company's Shares and their market rating, the
investment outlook in light of the ongoing European debt crisis and
the views of certain core shareholders. As a result, the Board has
now determined to recommend to Shareholders that the Company should
commence a managed wind-down of its portfolio with a view to
realising its investments in an orderly fashion, in a manner
consistent with the principles of prudent investment management. As
this will constitute a material change in the Company's investment
policy, the Board will be preparing documentation to seek
Shareholders' approval at an Extraordinary General Meeting as soon
as practicable.
The last two years have been a testing time for the hedge fund
industry, the closed-ended fund of hedge fund sector and your
Company. I would like to thank our shareholders for their patience
during a difficult period.
William Backhouse
21 June 2012
Balance Sheet
31 March 2012 2012 2011
Notes US$000's US$000's
Current assets
Cash 6 23,558 16,972
Margin cash 7 4,856 4,916
Debtors 4 580 19,613
Financial assets at fair value through 2,
profit or loss 3 155,578 359,566
Total assets 184,572 401,067
----------------- ------------------
Current liabilities
Bank borrowings 8 - (60,000)
demptions payable 9 (90,807) -
Creditors 5 (2,146) (3,949)
Financial liabilities at fair value through 2,
profit or loss 3 (67) (2,839)
Total liabilities (93,020) (66,788)
----------------- ------------------
Total net assets 91,552 334,279
================= ==================
Capital and revenue attributable to the
Fund's equity holders
Share capital 12 - -
Share premium & other distributable reserves 12 281,608 490,018
Retained earnings (190,056) (155,739)
Total equity 91,552 334,279
================= ==================
Shares in issue 12
Sterling shares 39,663,834 135,112,990
Euro shares 875,930 2,339,921
Dollar shares 3,969,241 12,339,368
Net asset value per share 20
Sterling shares GBP1.3508 GBP1.4536
Euro shares EUR1.2297 EUR1.3212
Dollar shares $1.1378 $1.2211
Statement of
Changes in
Equity
For the year end 31
March
2012
Share Premium
Share & Other Distributable Retained
Capital Reserves Earnings Total
US$000's US$000's US$000's US$000's
Management Shares - - - -
================ ================================= ==================== =====================
Sterling Shares
Opening balance 1
April
2011 - 465,847 (151,023) 314,824
Repurchase into
treasury
and cancelled - (109,499) - (109,499)
Redemptions - (88,570) - (88,570)
Switches - 1,287 - 1,287
Net loss for the
year - - (32,441) (32,441)
---------------------
Closing balance 31
March
2012 - 269,065 (183,464) 85,601
================ ================================= ==================== =====================
Euro Shares
Opening balance 1
April
2011 - 2,837 1,550 4,387
Repurchase into
treasury
and cancelled - (556) - (556)
Redemptions - (1,434) - (1,434)
Switches - (440) - (440)
Net loss for the
year - - (522) (522)
---------------------
Closing balance 31
March
2012 - 407 1,028 1,435
================ ================================= ==================== =====================
Dollar Shares
Opening balance 1
April
2011 - 21,334 (6,266) 15,068
Repurchase into
treasury
and cancelled - (3,835) - (3,835)
Redemptions - (4,516) - (4,516)
Switches - (847) - (847)
Net loss for the
year - - (1,354) (1,354)
Closing balance 31
March
2012 - 12,136 (7,620) 4,516
================ ================================= ==================== =====================
Total
Opening balance 1
April
2011 - 490,018 (155,739) 334,279
Repurchase into
treasury
and cancelled - (113,890) - (113,890)
Redemptions - (94,520) - (94,520)
Switches - - - -
Net loss for the
year - - (34,317) (34,317)
Closing balance 31
March
2012 - 281,608 (190,056) 91,552
================ ================================= ==================== =====================
Statement of
Changes in
Equity
For the year end 31
March
2011
Share Premium
Share & Other Distributable Retained
Capital Reserves Earnings Total
US$000's US$000's US$000's US$000's
Management Shares - - - -
================ ================================= ==================== =====================
Sterling Shares
Opening balance 1
April
2010 - 558,257 (165,094) 393,163
Redemption of
shares - (37,447) - (37,447)
Purchase of shares
into
treasury - (30,893) - (30,893)
Repurchase into
treasury
and cancelled - (32,453) - (32,453)
Switches - 8,383 - 8,383
Net gain for the
year - - 14,071 14,071
---------------------
Closing balance 31
March
2011 - 465,847 (151,023) 314,824
================ ================================= ==================== =====================
Euro Shares
Opening balance 1
April
2010 - 9,402 1,357 10,759
Redemption of
shares - (459) - (459)
Purchase of shares
into
treasury - (365) - (365)
Switches - (5,741) - (5,741)
Net gain for the
year - - 193 193
---------------------
Closing balance 31
March
2011 - 2,837 1,550 4,387
================ ================================= ==================== =====================
Dollar Shares
Opening balance 1
April
2010 - 29,035 (6,031) 23,004
Redemption of
shares - (1,738) - (1,738)
Purchase of shares
into
treasury - (1,542) - (1,542)
Repurchase into
treasury
and cancelled - (1,779) - (1,779)
Switches - (2,642) - (2,642)
Net loss for the
year - - (235) (235)
Closing balance 31
March
2011 - 21,334 (6,266) 15,068
================ ================================= ==================== =====================
Total
Opening balance 1
April
2010 - 596,694 (169,768) 426,926
Redemption of
shares - (39,644) - (39,644)
Purchase of shares
into
treasury - (32,800) - (32,800)
Repurchase into
treasury
and cancelled - (34,232) - (34,232)
Switches - - - -
Net gain for the
year - - 14,029 14,029
Closing balance 31
March
2011 - 490,018 (155,739) 334,279
================ ================================= ==================== =====================
Income Statement
For the year end 31 March 2012
2012 2011
US$000's US$000's
Revenue
Interest income 1 17
Other income 188 595
Net (loss)/gain on financial assets and liabilities
at fair value
through profit or loss (27,921) 22,177
Total investment income (27,732) 22,789
------------------ ----------------
Expenses
Management fees 3,379 5,788
General expenses 554 310
Administration fee 234 363
Directors' fees 177 172
Custody fees 144 183
Legal fees 135 5
Audit fee 42 40
Directors' and Officers' Insurance 27 30
Total operating expenses 4,692 6,891
------------------ ----------------
Operating (loss)/profit (32,424) 15,898
Finance costs - interest expense (1,893) (1,869)
Net (loss)/gain for the year attributable
to the Fund's equity holders (34,317) 14,029
================== ================
2012 2012 2012
Sterling Euro US Dollar
Earnings per share Shares Shares Shares
Net loss attributable to the Fund's equity
holders (US$000's) (32,441) (522) (1,354)
Number of shares in issue (weighted average
in the year) 96,312,233 1,795,781 9,054,978
Basic earnings per share (expressed in US$
per share) (33.68)c (29.07)c (14.95)c
Basic earnings per share in share class currency (20.99)p (21.01)c (14.95)c
2011 2011 2011
Sterling Euro US Dollar
Earnings per share Shares Shares Shares
Net gain/(loss) attributable to the Fund's
equity holders (US$000's) 14,071 193 (235)
Number of shares in issue (weighted average
in the year) 164,910,576 4,287,663 15,191,349
Basic earnings per share (expressed in US$
per share) 8.53c 4.51c (1.55)c
Basic earnings per share in share class currency 5.47p 3.39c (1.55)c
Cashflow Statement
For the year end 31 March 2012
2012 2011
US$000's US$000's
Cash flows from operating activities
Purchase of financial assets and settlement
of financial liabilities (153,547) (92,143)
Proceeds from sale of financial assets at
fair value through
profit or loss and forward foreign currency
contracts 281,814 242,876
Movements in margin accounts 60 1,006
Other operating expenses (4,659) (7,074)
Interest received 2 15
Net cash inflow from operating activities 123,670 144,680
----------------- ----------------
Cash flows from financing activities
Interest paid (3,301) (14)
Repayment of bank borrowings 60,000 (60,000)
Purchase of shares for cancellation (113,890) (108,565)
Net cash outflow from financing activities (57,191) (168,579)
----------------- ----------------
Net increase/(decrease) in cash and cash
equivalents 66,479 (23,899)
Cash and cash equivalents at 1 April (43,028) (19,239)
Exchange gain on cash and cash equivalents 107 110
Cash and cash equivalents at 31 March 23,558 (43,028)
================= ================
Cash at the end of the year is comprised
of:
Cash at bank 23,558 16,972
Bank borrowings - (60,000)
23,558 (43,028)
================= ================
This information is provided by RNS
The company news service from the London Stock Exchange
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