TIDMAVR
RNS Number : 1359K
Avarae Global Coins PLC
19 September 2016
News Release 19 September 2016
AVARAE GLOBAL COINS PLC
FINAL RESULTS FOR THE YEARED 31 MARCH 2016
Avarae Global Coins plc ("Avarae" or the "Company"), the UK's
only publicly traded specialist company dedicated to purchasing,
holding and selling rare and high quality coins, is pleased to
announce its final audited results for the year ended 31 March
2016.
Highlights for the year:
-- Sales of GBP0.77 million (2015: GBP0.63 million);
-- Loss on ordinary activities GBP0.07 million (2015: profit of GBP0.38 million);
-- Recommended full year dividend of Nil pence per share (2015: 0.15 pence);
-- Carrying value of portfolio of rare and high quality coins
decreased 0.5% to GBP11.20 million (2015: GBP11.14 million);
-- Cash balance at period end of GBP0.57 million (2015: GBP0.88 million); and
-- NAV per share decreased to 14.6 pence (2015: 14.9 pence).
Commenting on the results, Nigel Gautrey, Director of Avarae,
said:
"Avarae has continued to trade in line with management's
expectation since the end of the financial year under review,
having generated sales of approximately GBP1.78 million, including
having sold the Edward III Double Florin for GBP0.83 million, an
increase of GBP0.34 million on its cost price in 2006.
The Company's audited report and accounts, together with the
notice of the AGM, will today be posted to shareholders. An
electronic copy of the audited report and accounts will also
shortly be available on the Company's website: www.avarae.com.
For further information on Avarae Global Coins plc, please
contact:
Diane Clarke/Matt Wood +44 (0)16 2461 5614
Avarae Global Coins
plc
Paul Shackleton/ Nick
Prowting +44 (0)20 7220 1666
WH Ireland Limited
Toby Hall
GTH Communications Limited +44 (0)7713 341072
Directors' Report
Introduction
We are pleased to present the annual report for the year ended
31 March 2016. During the year under review, the Company continued
to manage its portfolio of rare and high quality coins.
Avarae Global Coins plc ("Avarae" or the "Company") provides
access for institutional investors and individuals wanting to
diversify their investment portfolios away from the traditional
asset classes such as equities, property and bonds without the need
to be an expert in the coin-collecting sector. The principal
objective of the Company, which has not changed since its admission
to AIM ("Admission") in 2006, is to achieve capital growth for its
shareholders through the purchase, holding and sale of the rarest
and highest quality segment of the coin-collecting sector in
various countries around the world.
Investing policy
Since Admission, we have built up an impressive portfolio of
extremely high quality, rare coins which we intend to hold both for
the long-term, i.e. 3 to 5 years, in order to achieve capital
growth for our shareholders, and also the short-term, in order to
take advantage of short-term trading opportunities, as the market
for rare coins continues to grow. The value of each investment
ranges from a few hundred pounds up to several hundreds of
thousands of pounds.
The Board's decision on whether to acquire or dispose of a coin
or coin collection is made on the recommendation of its industry
expert independent Advisory Panel ("Panel") that assesses and
approves all coin trading related activities. The Panel members are
Sir John Wheeler and Clement Chambers, both of whom have
significant expertise in the field of numismatics.
A principal objective of the Company is to achieve long-term
capital growth through the appreciation in value of the coins
acquired. Compound annual returns achieved over the medium to
long-term for the highest quality and rarest coins can reach as
high as 10 per cent. As at the date of this report, and since its
formation in 2006, the Company has no borrowings and has no present
intention of securing any borrowings.
The coin-dealing sector
The market for trading coins is international in nature and
significant in size. For at least the last 10 years, there has been
a steady increase in interest in the coin sector, however the last
12 months has witnessed a slight cooling in this interest across
the industry. Interest at the very top end of the market, appears
to be stable, whereas mid-lower value coins have not been achieving
the higher values of prior years.
The numismatic industry continues to witness an influx of new
buyers looking for tangible assets and fresh areas to place their
money as traditional asset classes, such as commodities and
currencies, fail to deliver robust financial gains and exhibit high
volatility. The majority of the funds coming into the numismatic
market however are targeting the higher quality coin rarities and
this is adding considerable pressure on availability which has, in
some cases, priced Avarae out of the market.
Avarae's investments
Purchases
In the year to 31 March 2016, the Company acquired an additional
thirteen coins for an aggregate GBP0.58 million (2015: GBP0.32
million) which, together with the year-end revaluation exercise,
resulted in a value of the coin portfolio as at 31 March 2016 of
GBP11.1 million (2015: GBP11.14 million). In line with its
investment strategy, the Company has focused on the purchase of
only the highest quality and rarest coins. In particular, during
the year, the Company increased its exposure to British coins.
Examples of coins acquired during the year include:
-- An extremely rare Edward IV, Gold Ryal struck at the Norwich mint;
-- One of the finest known Charles II, Five Guinea pieces;
-- A mint state James I, gold Spur Ryal; and
-- A mint state US Continental Dollar dated 1776 struck in pewter.
Sales
During the year, the Company also continued its efforts to
rebalance its portfolio, liquidating a significant number of the
lower value items and less high quality duplicates previously
acquired as part of important collections. During the year, the
Company sold almost 200 coins to end the period under review with a
little over 800 coins. As flagged in last year's report, it should
be noted that the both quantum of gross profit and the gross profit
margin achieved on the sale of these lower value coins was and is
be expected to be smaller than that expected to be achieved on the
higher value and rarer coins sold.
Accordingly, sales during the year were GBP0.77 million, up from
GBP0.63 million in the previous year, which generated a gross
profit of GBP0.03 million (2015: GBP0.2 million). Unlike last year,
however, sales in the period under review were of a higher number
of lower value European, Indian and English coins whereas the prior
year benefited from the sale of GBP0.5 million of individually
higher value rare English gold coins which alone generated a gross
profit margin of 39 per cent.
Breakdown of our Portfolio
English milled and hammered coins represent the largest segment
of the Company's portfolio, with holdings of Islamic coins also
representing significant proportions of the stock. Other sectors
where Avarae holds coins of notable value includes USA and South
American coins. In total, Avarae holds coins from more than 40
different regions and nationalities, demonstrating its genuine
global exposure.
Financial results
Revenue from the sale of coins or coin collections for the year
ended 31 March 2016 was GBP0.77 million, up on the previous year's
total of GBP0.63 million. While the overall revenue has increased,
the margin was materially lower at GBP0.03 million (2015: GBP0.2
million), reflecting the Board's policy to continue to dispose of
the lower value coins within the portfolio for which the Directors
do not believe there will be any material future value
appreciation..
As at 31 March 2016, in line with its long-term policy, the
Company instructed industry experts to undertake a detailed
revaluation of its coin portfolio. This exercise is intended to
apportion changes in the value of coins over the period of their
ownership by Avarae rather than allocating profits (or losses) in
the year of sale only. The Company's gross profit is calculated as
the difference between the sale price of each coin less its
carrying value brought forward, which will either be cost or the
revalued amount. The industry experts considered the open market
resale value of only those coins that had been held within the
Company's portfolio for more than 12 months, i.e. only those coins
acquired and held by Avarae on or before 31 March 2015 and excluded
those purchased during the financial year under review, which were
held at cost. In each of the years since the Company's inception,
the Company has recorded a gross profit, thereby demonstrating the
validity of the revaluation exercise.
The result of the extensive revaluation exercise carried out on
the coins, as described in the accounting policies and which the
Directors continue to believe to be conservative, was that the
overall carrying value of the portfolio as at 31 March 2016
remained broadly flat at GBP11.20 million (2015: GBP11.14 million),
despite recording sales of GBP0.77 million and purchases of only
GBP0.58 million during the year. At the period end, the coin
portfolio was comprising coins purchased with an aggregate cost of
GBP8.31 million (2015: GBP8.29 million) and a revaluation amount of
GBP2.8 million (net of VAT payable on sale) (2015: GBP2.85
million). The Directors continue to expect many coins from the
portfolio to achieve appreciably higher returns than their revalued
carrying value should they be sold at auction.
The effect of the revaluation, together with the profits from
the coin sales, resulted in the Company recording a gross profit of
GBP0.25 million (2015: GBP0.82 million). Administrative expenses
during the year were down 25 per cent. at GBP0.32 million (2015:
GBP0.44 million), due to cost reduction measures carried out during
the year, in particular the termination of the numismatic advisory
agreement with AH Baldwin & Sons in November 2015.
Administrative costs for the year ended 31 March 2016 represented
2.7 per cent. of the Company's year-end net assets (2015: 3.7 per
cent.). Administrative costs for the current financial year are
expected to be reduced further.
Net loss for the year of GBP0.07 million (2015: GBP0.38 million
(profit)), delivered a loss /earnings per share of (0.09p) (2015:
0.47p (profit)).
The Company ended the year with a net cash balance of
approximately GBP0.57 million compared to GBP0.88 million reported
at the end of March 2015. The Company's cash is prudently managed
across a spread of accounts, thereby reducing the risks of the
creditworthiness of any one financial institution. At the date of
this report, the Company's cash balances stood at approximately
GBP2.13 million.
At year end, the Company had net assets of GBP11.8 million
(2015: GBP12.0 million) and no borrowings. The Company's net asset
value per share ("NAV") as at 31 March 2016 was 14.6 pence (2015:
14.9 pence).
Dividend
Due to the Company's announcement today that it is seeking to
return cash to shareholders by way of a tender offer, the Board
does not recommend the payment of a dividend in respect of the year
under review. The dividend policy adopted by the Board will be
reviewed again at the end of the current financial year.
Tender offer and delisting
Avarae has been well positioned as an alternative asset
investment for more than a decade, against a backdrop of volatile
international markets and fluctuating commodity prices. Over the
last 10 years, Avarae has performed relatively well in its
objective of delivering capital appreciation with its net asset
value per share having increased by more than 50 per cent. from 9.5
pence to 14.6 pence, as well as having distributed more than GBP0.5
million in dividends, as compared to the AIM All Share Index, which
has fallen by approximately 36 per cent. over the same period.
However, Avarae has, over recent times, been finding it more and
more challenging to acquire the highest quality and rarest coins
which are being priced at ever higher prices. Furthermore, Avarae's
share price has consistently traded at a discount to its net asset
value, making it extremely difficult to raise additional funds for
investment purposes in order to compete in today's numismatic
market. This, coupled with the relatively high costs associated
with having the Company's shares traded on AIM and the
prohibitively high costs of returning cash to shareholders as an
AIM company whose shares are thinly traded, has led the Board to
its decision to seek to delist the Company's shares from AIM, with
the intention to liquidate the coin portfolio in a controlled
manner over a number of years in order to return as much cash to
shareholders in the most cost effective ways possible.
Accordingly, your Board has today announced its intention to
undertake a tender offer to acquire and cancel up to 16,156 667
existing ordinary shares at 11.5p each, representing a 3 per cent.
premium to the volume weighted average closing mid-price per
ordinary share since 1 January 2016. This will provide shareholders
with nil-cost dealing facility and an opportunity to divest some or
all of their shareholding in the Company, should they so wish. The
Directors are then proposing to delist the Company's shares from
trading on AIM, subject to obtaining the approval of shareholders
to be sought at an extraordinary general meeting to be held on 13
October 2016 ("EGM").
Outlook
Avarae has continued to trade in line with management's
expectation since the end of the financial year under review,
having generated sales of approximately GBP1.78 million, including
having sold the Edward III Double Florin for GBP0.83 million, an
increase of GBP0.34 million on its cost price in 2016. Dependent
upon the outcome of the de-listing resolution to be put to
shareholders at the EGM, the Company will continue to trade in line
with its existing trading policies.
Statement of Comprehensive Income for the year ended 31 March
2016
Year ended Year ended
31-Mar-16 31-Mar-15
Note GBP'000 GBP'000
Revenue
Sales 1, 2 768 626
Cost of Sales (739) (425)
Coin revaluation 5 220 618
---- ----
Gross profit 249 819
---- ----
Administrative expenses (319) (440)
---- ----
(Loss)/profit on ordinary
activities before: (70) 379
Finance income 1 1
---- ----
(Loss)/profit on ordinary
activities before tax (69) 380
Tax on (loss)/profit
on ordinary activities 3 - -
---- ----
(Loss)/profit on ordinary
activities after taxation (69) 380
---- ----
Earnings per share (basic
and diluted) 4 (0.09)p 0.47p
Statement of Financial Position as at 31 March 2016
As at As at
31-Mar-16 31-Mar-15
Note GBP'000 GBP'000
Assets
Current Assets
Coin inventory 5 11, 200 11,141
Trade and other receivables 6 55 105
Cash at bank 571 882
---- ----
Total assets 11,826 12,128
---- ----
Liabilities and equity
Creditors: amounts falling
due within one year 7 15 127
---- ----
Total Liabilities 15 127
---- ----
Equity
Called up equity share
capital 8 808 808
Share premium 8,880 8,880
Profit and loss account 2,123 2,313
---- ----
Total Equity Shareholders'
Funds 11,811 12,001
---- ----
Total Liabilities and
equity 11,826 12,128
---- ----
Cash Flow Statement for the year ended 31 March 2016
Note Year ended Year ended
31-Mar-16 31-Mar-15
GBP'000 GBP'000
Cash flows from operating
activities:
(Loss)/profit on ordinary
activities for the
year (69) 380
Adjustments for:
Decrease in payables (113) (733)
Increase in receivables 50 1,705
Decrease/(increase)
in inventory (59) (521)
---- ----
Net cash flow from
operations (191) 831
---- ----
Interest received 1 1
---- ----
Net cash from investing
activities 1 1
---- ----
Dividends paid 9 (121) (121)
---- ----
Net cash from financing
activities (121) (121)
---- ----
Net (decrease)/increase
in cash and cash equivalents (311) 711
Opening cash position 882 171
---- ----
Cash and cash equivalents
at 31 March 571 882
---- ----
Statement of Changes in Equity for the year ended 31 March
2016
Share Share Retained
Company capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2014 808 8,880 2,054 11,742
Profit for the year - - 380 380
Dividends paid - - (121) (121)
--- --- --- ---
At 31 March 2015 808 8,880 2,313 12,001
Profit for year - - (69) (69)
Dividends paid - - (121) (121)
--- --- --- ---
At 31 March 2016 808 8,880 2,123 11,811
--- --- --- ---
Notes to the Financial Statements for the year ended 31 March
2016
(1) Accounting policies
Revenue recognition
The Company's sales consist of sales of individual coins or
collections of coins and are accounted for on an accruals basis.
Any sales made at auction are accounted for net of any incidental
auction costs incurred.
Finance income is accounted for on a received basis.
(2) Segmental information
The Company has one class of business, that of the sale of
antiquarian and collectable coins. The analysis of the Company's
revenue by location of customer is as follows:
Year Year ended
ended
31-Mar-16 31-Mar-15
GBP'000 GBP'000
UK 633 478
International
Canada 18 -
Switzerland 117 -
Japan - 148
---- ----
Total Sales 768 626
---- ----
(3) Taxation
The Company is resident for tax purposes in the Isle of Man.
The Company is chargeable to Isle of Man corporate income tax at
the standard rate of 0%, which took effect from 6 April 2006.
Year ended Year ended
31-Mar-16 31-Mar-15
GBP'000 GBP'000
Profit before tax (69) 380
---- ----
Isle of Man tax - -
at 0%
---- ----
Tax expense for - -
the year
---- ----
(4) Earnings per share
The loss per share (basic and diluted) for the year ended 31
March 2016 was 0.20p (2015: profit per share of 0.47p). The
calculation of earnings per share is based on the loss of GBP161,
000 (2015: GBP380,000) for the year and the weighted average number
of shares in issue being 80,783,334 (2015: 80,783,334).
(5) Coin inventory
As at
31-Mar-16
Coins GBP'000
At Cost
At 01 April 2015 8,294
Additions 577
Disposal of coins (562)
----------
At 31 March 2016 8,309
----------
Revaluation
At 01 April 2015 2,847
Revaluation for the year 220
Disposal of coins (176)
At 31 March 2016 2,891
----------
Net Book Values
At 31 March 2016 11,200
==========
At 31 March 2015 11,141
==========
At the year end, only those coins that had been acquired by the
Company before 31 March 2015 were revalued by industry experts to
their expected market value as at 31 March 2016 less the VAT
payable on sale. Inventory purchased during the year ended 31 March
2016 has been carried at cost. This is considered by the directors
to give a fair value for the inventory. Inventory of GBP11,107,614
(2015: GBP11,141,208) is carried as 'Inventory carried at fair
value less costs to sell'.
The purchase cost of inventory held at 31 March 2016 was
GBP8,309,284 (2015: GBP8,293,780). This cost includes all
incidental costs of acquisition (including premiums and
irrecoverable VAT).
IFRS 13, Fair Value Measurement, requires disclosure about fair
value measurements. The coin inventory revaluation is a fair value
adjustment to revalue coins to their expected current market value
less VAT payable on sale. It is a level 2 fair value adjustment, as
it is a valuation technique where all significant inputs are
directly or indirectly observable from market data, as the
revaluation is based on sales of similar coins in the market.
(6) Trade and other receivables
As at As at
31-Mar-16 31-Mar-15
GBP'000 GBP'000
Trade debtors 23 83
Other debtors 13 -
Prepaid expenses 19 22
---- ----
Total 55 105
---- ----
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
(7) Payables
As at As at
31-Mar-16 31-Mar-15
GBP'000 GBP'000
Trade creditors 5 23
Other creditors - 47
Accrued expenses 10 57
---- ----
15 127
---- ----
All creditors are due within one year.
(8) Share capital
As at As at
31-Mar-16 31-Mar-15
GBP'000 GBP'000
Authorised
200,000,000 ordinary shares
of GBP0.01 each 2,000 2,000
---- ----
Allotted, called up and fully
paid
80,783,334 ordinary shares
of GBP0.01 each (2015: 80,783,334) 808 808
---- ----
(9) Dividends
Due to the Company's announcement today that it is seeking to
return cash to shareholders by way of a tender offer, the Board
does not recommend the payment of a dividend in respect of the year
under review. The dividend policy adopted by the Board will be
reviewed again at the end of the current financial year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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