Redemption of financial assets 110,684,599 232,797,531
-------------- --------------
Net cash inflow from operating activities 125,520,115 259,524,689
Financing activities
Distributions to holders of Preference Shares
redeemed (110,684,599) (232,797,531)
Distributions to holders of Preference Shares (15,877,130) (24,557,768)
-------------- --------------
Net cash outflow from financing activities (126,561,729) (257,355,299)
(Decrease) / increase in cash and cash equivalents (1,041,614) 2,169,390
-------------- --------------
Cash and cash equivalents at beginning of
year 2,171,973 2,583
(Decrease) / increase in cash and cash equivalents (1,041,614) 2,169,390
Cash and cash equivalents at end of year 1,130,359 2,171,973
-------------- --------------
The notes as contained within this report form an integral part
of these Financial Statements.
Notes to the Financial Statements
For the year ended 31 October 2013
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted by the Company and
applied in the preparation of these Financial Statements are set
out below. These policies have been consistently applied to all
periods presented, unless otherwise stated in the following
text.
(a) Basis of preparation
The Financial Statements have been prepared in conformity with
International Financial Reporting Standards ("IFRS") and The
Companies (Guernsey) Law, 2008 and The Protection of Investors
(Bailiwick of Guernsey) Law, 1987. The Financial Statements have
been prepared under the historical cost convention as modified for
the measurement at fair value of financial instruments held at fair
value through profit or loss.
The preparation of Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires the Board of directors to exercise judgement in the
process of applying the Company's accounting policies. The areas
involving a high degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements are disclosed in Note 2.
Changes in accounting policy and disclosures:
The following Standards or Interpretations relevant to the
entity 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:
IAS 1 Presentation of Financial Statements - Amendments to
revise the way other comprehensive income is presented for periods
beginning on or after 1 July 2012.
The following Standards or Interpretations have been issued by
the International Accounting Standards Board ("IASB") but not yet
been adopted effective by the Company.
IFRS 7 Financial Instruments: Disclosures - Amendments relating
to the offsetting of assets and liabilities effective for annual
periods beginning on or after 1 January 2013 and interim periods
within those periods.
IFRS 7 Financial Instruments: Disclosures - Deferral of
mandatory effective date of IFRS 9 and amendments to transition
disclosures effective for annual periods beginning on or after 1
January 2015.
IFRS 9 Financial Instruments - Classification and measurement of
financial assets, effective for annual periods beginning on or
after 1 January 2015.
IFRS 9 Financial Instruments - Accounting for financial
liabilities and derecognition, effective for annual periods
beginning on or after 1 January 2015.
IFRS 13 Fair value measurement - This standard aims to increase
consistency and comparability in fair value measurements and
related disclosures requirements for use across IFRSs. The
requirements do no extend to the use of fair value accounting but
provide guidance on how it should be applied. This standard is
effective for annual periods beginning on or after 1 January
2013.
IAS 1 Presentation of Financial Statements - Amendments
resulting from Annual Improvements 2009 - 2011 cycle (comparative
information) for periods on or after 1 January 2013.
IAS 32 Financial Instruments: Presentation - Amendments
resulting from Annual Improvements cycle effective for annual
periods beginning on or after 1 January 2013.
IAS 32 Financial Instruments Presentation - Amendments relating
to the offsetting of assets and liabilities effective for annual
periods beginning on or after 1 January 2014.
IAS 39 Financial Instruments: Recognition and Measurement -
Amendments for novations of derivatives effective for annual
periods beginning on or after 1 January 2014.
The directors have considered the above and are of the opinion
that the above Standards and Interpretations are not expected to
have a material 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) Recognition of expenses and related income
Pursuant to the terms of an Engagement Letter dated 10 January
2006 between the Company and BNP Paribas SA ("BNP"), it is agreed
that BNP will pay a notional quarterly amount in advance to cover
the anticipated expenses of the Company. Any cash at bank relating
to the excess of income over expenses is due to BNP as holder of
the Management Shares of the Company and is not due to the holders
of Preference Shares.
Expenses borne by BNP on behalf of the Company and income
received in order to pay Company expenses are included in the
Statement of Comprehensive Income as the directors are of the
opinion that this more accurately reflects the position of the
Company. Additionally the cash at bank relating to the excess of
income received from BNP over expenses paid out has been allocated
to the holders of Management Shares in the Statement of Financial
Position. The expenses are detailed in Note 7 Related Party
Transactions.
On 27 June 2013 the Company entered into an Expenses Agreement
with BNP Paribas. The Agreement states that there is a surplus of
GBP250,000 in the expense accounts into which BNP Paribas provide
funding for expenses borne by the Company. This surplus was moved
into a separate bank account and is included in cash and cash
equivalents on the Statement of Financial Position. Under the terms
of the Agreement this surplus is not to be returned to BNP but made
available to the Company to be used by the Board to satisfy any
liability incurred by the Board in acting on behalf of the Company
or any of its cells. For this purpose, BNP have requested that the
surplus be capitalised to the two ordinary shares of no par value
issued by the Company which are held by Anson Fund Managers Limited
and Anson Custody Limited for the benefit of BNP Paribas Arbitrage
SNC. The balance of the expense accounts are to be monitored going
forward and any subsequent surplus balances are to be returned to
BNP Paribas.
(c) Functional and presentation currency
Items included in the Company's Financial Statements are
measured using the currency of the primary economic environment in
which it operates (the "functional currency"). This is pounds
sterling, which reflects the Company's primary activity of
investing in sterling-denominated derivative transactions. The
Company has adopted pounds sterling as its presentation currency as
the Company is listed on the Channel Islands Securities Exchange
Authority and the majority of its registered shareholders are
domiciled in the United Kingdom.
(d) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement
of Comprehensive Income. Translation differences on non-monetary
financial assets and liabilities such as equities at fair value
through profit or loss are recognised in the Statement of
Comprehensive Income as unrealised foreign exchange gains /
(losses).
In previous periods the unrealised foreign exchange gains /
(loses) were presented as Other Comprehensive Income. However, this
is not in line with the requirements of IAS1: Presentation of
Financial Statements. Therefore, in the current year unrealised
gains / (losses) on foreign exchange have been reclassified and
included in the increase / (decrease) in net assets attributable to
Preference Shareholders from operations. The unrealised gains /
(losses) on foreign exchange in the year to 31 October 2011 have
not been reclassified as the value is immaterial to the financial
statements.
(e) Taxation
The Company has been granted exemption from Guernsey Income Tax
under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989,
and is charged an annual fee of GBP600. Dividend income is
recognised on a gross basis, including withholding tax, if any.
Withholding tax is recognised through the Statement of
Comprehensive Income.
(f) Expenses
All expenses are accounted for on an accruals basis in the
Statement of Comprehensive Income. As described in Note 1(b) all
expenses are borne by BNP pursuant to the terms of an Engagement
Letter between the Company and BNP Paribas SA. The on-going
expenses for the year under review are detailed in Note 7 to the
Financial Statements.
(g) Cash and cash equivalents
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