RNS Number : 0847V
AIM Realisation Fund Limited
22 May 2008
AIM REALISATION FUND LIMITED
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2008
Chairman's Statement
I am pleased to present the second interim results of AIM Realisation Fund
Limited (the "Company") which covers the period from 1 October 2007 to 31 March
2008.
The period under review has been challenging for UK equity markets generally as
investors became increasingly concerned about the economic outlook. Smaller
companies, as is often the case, were hardest hit due to their inherent lack of
liquidity.
The Company's capital structure consists of Ordinary Shares and Redeemable
Preference Shares and is designed to facilitate the progressive return of
capital as investments are realised. In March and September each year, the
Board intends to apply all available funds after provision for working capital
to effect a pro rata redemption at 100 pence per share of outstanding
Redeemable Preference Shares. If the Redeemable Preference Shares trade at a
sufficient discount to their redemption price, the Board intends to apply, on a
rolling basis, up to 50% of the net cash proceeds of realisations since the
last
William Scott
Chairman
22 May 2008
Income Statement
for the six months ended 31 March 2008 (unaudited)
Note Six months ended 10 August 2006 to 10 August 2006 to
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Income
Realised (loss)/gain from sale 5 (2,790) 1,405 1,877
of investments at fair value
through profit or loss
Movement in unrealised loss on 5 (853) (43) (2,390)
investments at fair value
through profit or loss
Dividends 56 29 79
Bank interest 62 165 293
------------ ------------ ------------
Income after investment losses (3,525) 1,556 (141)
------------ ------------ ------------
Expenses
Management fees 2 (161) (279) (469)
Administration fee 2 (42) (50) (93)
Custodian fee (3) (11) (17)
Audit fee (4) (5) (9)
Directors' fees 3 (33) (42) (74)
Other expenses (30) (73) (240)
------------ ------------ ------------
Total expenses (273) (460) (902)
------------ ------------ ------------
Net (loss)/profit before (3,798) 1,096 (1,043)
taxation
Withholding tax on income (3) (2) (5)
------------ ------------ ------------
Net (loss)/ptofit for the (3,801) 1,094 (1,048)
period
------------ ------------ ------------
Earnings per Ordinary Share: 4 (41.34)p 11.90p (11.40)p
basic and fully diluted
------------ ------------ ------------
Statement of Changes in Equity
for the six months to 31 March 2008 (unaudited)
Note Share Share premium Distributable Non-distributable Total
capital reserve reserve
£'000 £'000 £'000 £'000 £'000
Net assets at 30 September 2 - 17,815 (2,390) 15,427
2007
Redemption of Redeemable 9 - - (2,509) - (2,509)
Preference Shares
Net loss for the period - - (2,948) (853) (3,801)
------------ ------------ ------------ ------------ ------------
Net assets at 31 March 2008 2 - 12,358 (3,243) 9,117
------------ ------------ ------------ ------------ ------------
Statement of Changes in Equity
for the period from 10 August 2006 to 31 March 2007 (unaudited)
Note Share Share premium Distributable Non-distributable Total
capital reserve reserve
£'000 £'000 £'000 £'000 £'000
Net assets at 10 August 2006 - - - - -
Issue of Ordinary Shares 8 1 9,193 - - 9,194
Issue of Redeemable Preference 9 2 21,451 - - 21,453
Shares
Formation expenses - (1,213) - - (1,213)
Cancellation of share premium 8 - (29,431) 29,431 - -
Redemption of Redeemable 9 (1) - (8,580) - (8,581)
Preference Shares
Net profit/(loss) for the - - 1,136 (42) 1,094
period
------------ ------------ ------------ ------------ ------------
Net assets at 31 March 2007 2 - 21,987 (42) 21,947
------------ ------------ ------------ ------------ ------------
Statement of Changes in Equity
for the period from 10 August 2006 to 30 September 2007 (audited)
Note Share Share premium Distributable Non-distributable Total
capital reserve reserve
£'000 £'000 £'000 £'000 £'000
Net assets at 10 August 2006 - - - - -
Issue of Ordinary Shares 8 1 9,193 - - 9,194
Issue of Redeemable Preference 9 2 21,451 - - 21,453
Shares
Formation expenses - (1,086) - - (1,086)
Cancellation of share premium 8 - (29,558) 29,558 - -
Redemption of Redeemable 9 (1) - (13,085) - (13,086)
Preference Shares
Net profit/(loss) for the - - 1,342 (2,390) (1,048)
period
------------ ------------ ------------ ------------ ------------
Net assets at 30 September 2 - 17,815 (2,390) 15,427
2007
------------ ------------ ------------ ------------ ------------
Balance Sheet
as at 31 March 2008 (unaudited)
Note 31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non-current assets
Investments at fair value 5 8,184 20,245 14,449
through profit or loss
------------ ------------ ------------
Current assets
Cash and cash equivalents 3,441 10,409 5,572
Receivables and prepayments 6 125 100 81
------------ ------------ ------------
3,566 10,509 5,653
------------ ------------ ------------
Total assets 11,750 30,754 20,102
------------ ------------ ------------
Current liabilities
Payables and accruals 7 (2,633) (8,807) (4,675)
------------ ------------ ------------
Total liabilities (2,633) (8,807) (4,675)
------------ ------------ ------------
------------ ------------ ------------
Net assets 9,117 21,947 15,427
------------ ------------ ------------
Capital and reserves
Share capital - Ordinary 8 1 1 1
Shares
Share capital - Redeemable 9 1 1 1
Preference Shares
Share premium account 8 - - -
Distributable reserve 12,358 21,987 17,815
Non-distributable reserve (3,243) (42) (2,390)
------------ ------------ ------------
Total equity Shareholders' 9,117 21,947 15,427
funds
------------ ------------ ------------
Net asset value per Ordinary 11 35.46p 98.70p 76.79p
Share
------------ ------------ ------------
Net asset value per Redeemable 11 100.00p 100.00p 100.00p
Preference Share
------------ ------------ ------------
Statement of Cash Flows
for the six months ended 31 March 2008 (unaudited)
Note Six months 10 August 2006 to 31 10 August 2006 to 30
ended 31 March 2007 September 2007
March
2008
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Dividends received 60 29 71
Bank interest received 62 160 290
Management fees paid (200) (104) (342)
Administration fee paid (42) (29) (86)
Other expenses paid (74) (116) (318)
------------ ------------ ------------
Net cash outflow from 12 (194) (60) (385)
operating activities before
taxation
Withholding tax on income (3) (2) (4)
------------ ------------ ------------
Net cash outflow from (197) (62) (389)
operating activities
Investing activities
Sale of fair value through 2,570 11,672 15,618
profit or loss investments
------------ ------------ ------------
Net cash inflow from investing 2,570 11,672 15,618
activities
Financing activities
Proceeds from Placing - 11 11
Formation expenses paid 1 (1,212) (1,087)
Redemption of Redeemable 9 (4,505) - (8,581)
Preference Shares
------------ ------------ ------------
Net cash outflow from (4,504) (1,201) (9,657)
financing activities
------------ ------------ ------------
(Decrease)/increase in cash (2,131) 10,409 5,572
and cash equivalents
------------ ------------ ------------
Cash and cash equivalents at 5,572 - -
beginning of period
(Decrease)/increase in cash (2,131) 10,409 5,572
and cash equivalents
------------ ------------ ------------
Cash and cash equivalents at 3,441 10,409 5,572
end of period
------------ ------------ ------------
Notes to the Interim Results
for the six months ended 31 March 2008 (unaudited)
1. Significant accounting policies
a) Statement of compliance
These unaudited interim results have been prepared in accordance with
International Accounting Standard 34: Interim Financial Reporting ("IAS 34").
These interim results have been prepared in accordance with International
Financial Reporting Standards, issued by the International Accounting
Standards Board ("IASB"), interpretations issued by the International
Financial Reporting Interpretations Committee ("IFRIC") and applicable legal
and regulatory requirements of Guernsey Law and reflect the following
policies, which have been adopted and applied consistently.
The Company is a closed-ended investment Company and is domiciled in
Guernsey, which is its country of incorporation.
b) Basis of preparation
The interim results have been prepared on a historical cost basis, except for
the measurement at fair value of fair value through profit or loss financial
assets.
The interim results are presented in Pounds Sterling ("Sterling"), which is
also the Company's functional currency, and all figures are rounded to the
nearest thousand pounds.
The accounting policies have been consistently applied by the Company and are
consistent with those used in the previous period.
c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment in companies traded on AIM, a market
operated by the London Stock Exchange. All investments operate in one
geographic segment, the United Kingdom, in the sense that they are listed on
AIM.
d) Income recognition
Income derived from equity shares is taken into account on the ex-dividend
date and is shown gross of withholding tax. Dividends received from United
Kingdom registered companies are accounted for net of imputed tax credits.
Bank interest is accounted for on an accruals basis.
e) Expenses
All expenses are accounted for on an accruals basis. The Company's investment
management and administration fees, and all other expenses are charged
through the Income Statement in the period in which they are incurred.
f) Transaction costs
Transaction costs are included within other expenses and are charged through
the Income Statement in the period in which they are incurred.
g) Taxation
The Company has been granted exemption from Guernsey taxation under The
Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual
exemption fee of £600. The Directors intend to conduct the Company's affairs
such that it continues to remain eligible for exemption from Guernsey tax.
h) Cash and cash equivalents
Cash in hand and in banks and short-term deposits are carried at cost. Cash
and cash equivalents are defined as cash in hand, demand deposits and
short-term, highly liquid investments readily convertible to known amounts of
cash and subject to an insignificant risk of changes in value.
For the purpose of the Statement of Cash Flows, cash and cash equivalents
consist of cash in hand and deposits at banks.
i) Investments
Designation
All investments are designated as "fair value through profit or loss". The
portfolio of financial assets is managed and its performance evaluated on a
fair value basis, in accordance with a documented investment strategy.
Information about the portfolio is provided internally to the Company's Board
of Directors.
Recognition
The Company recognises financial assets held as fair value through profit or
loss assets on the date it commits to purchase the instruments. From this
date, any gains and losses arising from the changes in fair value of the
assets are recognised in the Income Statement.
Measurement
Fair value through profit or loss assets are initially recognised at fair
value, being the fair value of the consideration given excluding transaction
costs associated with the investment (note 1(f)). Subsequent to initial
recognition, all fair value through profit or loss assets are measured at
fair value with changes in value being recognised in the Income Statement.
For investments actively traded in organised financial markets, fair value is
determined by reference to Stock Exchange quoted market bid prices as at the
close of business on the Balance Sheet date.
Derecognition
A fair value through profit or loss asset is derecognised when the Company
loses control over the contractual rights that comprise that asset. This
occurs when rights are realised, expire or are surrendered. Realised gains
and losses on fair value through profit or loss assets sold are calculated as
the difference between the sales proceeds, excluding transaction costs (note
1(f)) and cost. Fair value through profit
j) Trade date accounting
All "regular way" purchases and sales of financial assets are recognised on
the "trade date", i.e. the day that the Company 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 time frame generally
established by regulation or convention in the market place.
k) Distributable reserve and non-distributable reserve
Realised investment gains and losses and the gross income less the ongoing
costs and expenses of the Company are allocated to the distributable reserve.
Unrealised investment gains and losses are allocated to the non-distributable
reserve.
l) Net asset value per Ordinary Share and earnings per Ordinary Share
The net asset value per Ordinary Share disclosed on the face of the Balance
Sheet is calculated by dividing the net assets attributable to Ordinary
Shareholders by the number of Ordinary Shares in issue at the period end.
Earnings per share is calculated by dividing net gain for the period by the
weighted average number of Ordinary Shares in issue during the period.
m) Foreign currency translations
The currency of the primary economic environment in which the Company
operates (the functional currency) is Sterling, which is also its
presentational currency. Transactions involving currencies other than
Sterling are recorded at the exchange rate ruling on the transaction date.
At each Balance Sheet date, monetary items and non-monetary assets and
liabilities that are fair valued, which are denominated in foreign
currencies, are retranslated at the closing rates of exchange.
Exchange differences arising on settlement of monetary items, and from
retranslating investments and other financial instruments measured at fair
value through profit or loss at the Balance Sheet date, and other monetary
items are included in the Income Statement and allocated to the distributable
or non-distributable reserve as applicable.
Unrealised exchange differences on the retranslation of non-monetary items at
rates of exchange at the Balance Sheet date are charged through the Income
Statement to the non-distributable res
n) Share capital
Ordinary Shares and Redeemable Preference Shares are classified as equity.
Incremental costs directly attributable to the issue of Shares are shown in
equity as a deduction from the placing proceeds.
o) Post Balance Sheet events
Post Balance Sheet events that provide additional information about the
Company's position at the Balance Sheet date (adjusting events) are reflected
in the interim results. Post Balance Sheet events that are not adjusting
events are disclosed in the notes to the interim results when material.
2. Management and Administration fees
Collins Stewart Fund Management Limited ("CSFM") acts as Manager and Collins
Stewart Europe Limited acts as Investment Adviser. The Manager is entitled to
receive from the Company a "basic fee", a "capital return fee" and an "equity
appreciation fee".
The basic fee is calculated on a fixed amount of 1.0% of the aggregate value
at the placing price of the Ordinary Shares and the Redeemable Preference
Shares, payable quarterly in arrears.
The capital return fee is calculated and payable (at the reducing rates
described below) at the specified percentage of (i) 100p in respect of each
Redeemable Preference Shares redeemed or purchased and (ii) the lower of 100p
and the net amount returned to Ordinary Shareholders per Ordinary Share by
the Company by way of purchases of Ordinary Shares and distributions
(collectively "Capital Returns"). The capital return fee was at the rate of
1.0% in respect of Capital Returns made in any calendar month up to and
including 30 September 2007, and at the rate of 0.5% of Cap
In its capacity as Administrator, CSFM is entitled to an annual fee of
£85,000 payable monthly in arrears.
During the period a total of £203,475 (31 March 2007: £328,632, 30 September
2007: £561,971) was incurred in respect of Management-basic,
Management-capital return and Administration fees split into £153,654 (31
March 2007: £179,683, 30 September 2007: £333,337), £7,323 (31 March 2007:
£98,900, 30 September 2007: £136,087) and £42,498 (31 March 2007: £50,049, 30
September 2007: £92,547) respectively.
A total of £96,040 (31 March 2007: £195,718, 30 September 2007: £134,607) was
payable at the period end in respect of Management-basic, Management-capital
return and Administration fees split in the amounts of £76,407 (31 March
2007: £75,568, 30 September 2007: £77,247), £12,550 (31 March 2007: £98,900,
30 September 2007: £50,277) and £7,083 (31 March 2007: £21,250, 30 September
2007: £7,083) respectively.
Under the terms of the Management and Administration agreements, CSFM are
permitted to delega
3. Directors' fees
Six months ended 10 August 2006 to 10 August 2006 to
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
William Scott 10 12.8 23
Paul Harwood 7.5 9.6 17
Michael McKean 7.5 9.6 17
Peter Radford 7.5 9.6 17
------------ ------------ ------------
32.5 41.6 74
------------ ------------ ------------
No bonuses or pension contributions were paid or were payable on behalf of the Directors.
The Directors have no beneficial interest in the share capital of the Company.
4. Earnings per Ordinary Share
The basic return per Ordinary Share is based on a net loss of £3,801,017 (31
March 2007: gain of £1,093,656, 30 September 2007: loss of £1,048,260) and on
a weighted average number of 9,193,965 (31 March 2007 and 30 September 2007:
9,193,965) Ordinary Shares in issue throughout the period.
5. Fair value through profit or loss investments
Six months ended 10 August 2006 to 10 August 2006 to
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Opening valuation 14,449 - -
Investments received at placing - 30,636 30,636
Sales - proceeds (2,622) (11,753) (15,674)
- realised (2,790) 1,405 1,877
(loss)/gain on sale
of investments
Movement in unrealised depreciation (853) (43) (2,390)
------------ ------------ ------------
Closing valuation 8,184 20,245 14,449
------------ ------------ ------------
Closing book cost 11,427 20,288 16,839
Closing unrealised depreciation (3,243) (43) (2,390)
------------ ------------ ------------
Closing valuation 8,184 20,245 14,449
------------ ------------ ------------
See note 1(i) regarding the designation, recognition, measurement and derecognition of fair value through profit or
loss investments.
With the exception of Cartucho Group and CardioMag Imaging, which have been deemed to have a nil value, all
investments are quoted securities.
The portfolio is managed and its performance evaluated on both a bid and a mid price basis. Information about the
portfolio is provided internally to the Company's Board of Directors.
6. Receivables and prepayments
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Accrued income 6 5 10
Funds due from broker 108 81 56
Other receivables and 11 14 15
prepayments
------------ ------------ ------------
125 100 81
------------ ------------ ------------
7. Other payables and accruals
31 March 2008 31 March 2007 30 September 2007
Note (unaudited) (unaudited) (audited)
£'000 £'000 £'000
Management fee - basic 2 76 76 77
Management fee - capital 2 13 99 50
return
Administration fee 2 7 21 7
Funds due to Redeemable 2,510 8,581 4,505
Preference Shareholders
Other payables and accruals 27 30 36
------------ ------------ ------------
2,633 8,807 4,675
------------ ------------ ------------
8. Ordinary Shares
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Authorised:
60,000,000 Ordinary Shares of 6 6 6
0.01p each
------------ ------------ ------------
Allotted, called-up and fully
paid:
9,193,965 Ordinary Shares of 1 1 1
0.01p each
------------ ------------ ------------
The Company has the authority to utilise the distributable reserve to buy back up to 14.99% of the
Ordinary Shares issued for cancellation.
The share premium reserve was cancelled and redesignated as a distributable reserve on 1 September
2006.
9. Redeemable Preference Shares
Six months ended 10 August 2006 to 10 August
2006 to
31 March 2008 (unaudited) 31 March 2007 (audited) 30
September 2007
Due to Redeemable Nominal value Due to Redeemable Nominal value Due to
Redeemable Nominal value
Preference Preference
Preference
Shareholders Shareholders
Shareholders
£'000 £'000 £'000 £'000
£'000 £'000
Brought forward 8,367 0.8 - -
- -
21,452,585 Redeemable - - 21,453 2.1
21,453 2.1
Preference Shares issued on 30
August 2006
Redemption on 30 March 2007 - - (8,581) (0.8)
(8,581) (0.8)
[1]
Redemption on 28 September - - - -
(4,505) (0.5)
2007 [2]
Redemption on 28 March 2008 (2,510) (0.2) - -
- -
[3]
------------ ------------ ------------ ------------
------------ ------------
5,856,589 Redeemable 5,857 0.6 12,872 1.3
8,367 0.8
Preference Shares as at 31
March 2008
------------ ------------ ------------ ------------
------------ ------------
[1] On 30 March 2007 and in accordance with the Prospectus, the Company redeemed 8,581,023 Redeemable Preference Shares at 100p each which
were
subsequently cancelled.
[2] On 28 September 2007 and in accordance with the Prospectus, the Company redeemed 4,505,033 Redeemable Preference Shares at 100p each
which were
subsequently cancelled.
[3] On 28 March 2008 and in accordance with the Prospectus, the Company redeemed 2,509,940 Redeemable Preference Shares at 100p each which
were
subsequently cancelled.
10. Duration of the Company
At the Annual General Meeting of the Company to be held in 2011, an ordinary
resolution shall be proposed that the Directors be requested to commence the
winding up of the Company. If that resolution is passed, the Directors will,
within not more than two months, dispatch a notice convening an Extraordinary
General Meeting of the Company to be held within fourteen days of the date of
the notice at which a special resolution will be proposed for the voluntary
winding up of the Company.
11. Net asset value per Ordinary Share
The net asset value per Ordinary Share is based on the net assets of £9,116,662 (31 March
2007: £21,946,160, 30 September 2007: £15,426,409) less the amount due to Redeemable
Preference Shareholders of £5,856,589 (31 March 2007: £12,871,562, 30 September 2007:
£8,366,529) and on 9,193,965 (31 March 2007 and 30 September 2007: 9,193,965) Ordinary
Shares in issue at the end of the period.
Reconciliation of net asset value in accordance with IAS 39 to published net asset value:
31 March 2008 31 March 2008
£'000 per share
Published net asset value 3,227 35.09p
Adjustment to the valuation of investments[1] 33 0.37p
------------ ------------
Net asset value per these interim results (in 3,260 35.46p
accordance with IAS 39)
------------ ------------
[1] The Investment Adviser recommended the write-down of a small number of investments
due to the poor underlying performance of the businesses and a lack of liquidity in the
market. These write-downs were approved by the Board, although this is not in accordance
with International Financial Reporting Standards. The net asset values based on these
write-downs have been announced monthly.
12. Reconciliation of net loss for the period to net cash outflow from operating activities
before taxation
Six months ended 10 August 2006 to 10 August 2006 to
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net (loss)/gain for the period (3,801) 1,094 (1,048)
Realised loss/(gain) from sale 2,790 (1,405) (1,877)
of investments at fair value
through profit or loss
Movement in unrealised loss on 853 43 2,390
investments at fair value
through profit or loss
Withholding tax on income 3 2 5
Movement in other receivables 8 (20) (25)
and prepayments
Movement in other payables and (47) 226 170
accruals
------------ ------------ ------------
Net cash outflow from (194) (60) (385)
operating activities
------------ ------------ ------------
13. Related parties
The relationship between the Company and Collins Stewart Fund Management
Limited is disclosed in note 2.
The Company receives stockbroking services from Collins Stewart Europe
Limited, a sister Company of Collins Stewart Fund Management Limited, in
respect of its AIM responsibilities, for which a nominated adviser fee of
£15,000 (31 March 2007 and 30 September 2007: £15,000) and a nominated broker
fee of £15,000 (31 March 2007 and 30 September 2007: £15,000) per annum is
paid.
During the period, the Company paid Collins Stewart (CI) Limited £3,000 (31
March 2007: £11,000, 30 September 2007: £17,000) in respect of the custodian
services provided.
Collins Stewart (CI) Limited, Collins Stewart Fund Management Limited and
Collins Stewart Europe Limited are all part of the Collins Stewart plc group.
The Directors are not aware of any ultimate controlling party.
14. Capital commitments
All contracted capital commitments have been provided for.
15. Events after the Balance Sheet date
There were no material post Balance Sheet events.
Enquiries to:
Sean O'Flanagan
Collins Stewart Europe Limited
9th Floor
88 Wood Street
London
EC2V 7QR
Tel: 0207 523 4509
www.aimrealisationfund.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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