TIDMDIL2
RNS Number : 5363W
Damille Investments II Limited
09 February 2017
DAMILLE INVESTMENTS II LIMITED (the "Company")
Annual Financial Report
In accordance with the FCA's Disclosure Guidance and
Transparency Rules, the Board of directors of the Company announces
the Company's results for the year ended 30 November, 2016. The
full text of the annual financial report is included below.
The Company will make a further announcement once the annual
financial report has been uploaded to the Company's website and
submitted to the FCA's National Storage Mechanism.
For further information, please contact:
For administrative and company information:
JTC Fund Solutions (Guernsey) Limited
+44 (0) 1481 702 400
For shareholder information:
Nimrod Capital LLP
Richard Bolchover
Marc Gordon
+44 (0) 20 7382 4565
9 February, 2017
OF ANNOUNCEMENT
E&OE - in transmission
Damille Investments II Limited
Annual Financial Report
For the year ended 30 November, 2016
Damille Investments II Limited
CONTENTS
Summary Information
Chairman's Statement
Investment Report
Directors
Manager, Administrator and Secretary
Management Report
Directors' Report
Audit Committee Report
Independent Auditor's Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Key Advisers and Contact Information
SUMMARY INFORMATION
Company Overview
Damille Investments II Limited (LSE:DIL2) (the "Company") is a
Guernsey-incorporated company formed as a registered closed-ended
investment company. It was incorporated on 3 November, 2011 and
operates under The Companies (Guernsey) Law, 2008, as amended (the
"Law"), The Protection of Investors (Bailiwick of Guernsey) Law,
1987, as amended, the Registered Collective Investment Scheme Rules
2015 issued by the Guernsey Financial Services Commission (the
"GFSC") and the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority (the "FCA").
The ordinary shares of no par value (the "Shares") of the
Company were admitted to trading on the Specialist Fund Segment
(the "SFS") (formerly the Specialist Fund Market) of the London
Stock Exchange's Main Market for Listed Securities and listed and
admitted to trading on the Channel Islands Stock Exchange (the
"CISX") on 9 November, 2011 ("Admission"). The listing of the
Shares on the Channel Islands Securities Exchange (the successor to
the CISX) was cancelled with effect from 21 July, 2014.
Investment Objective and Policy
The Company's investment objective was to realise significant
capital returns for its shareholders with low volatility, by
investing in a concentrated portfolio of primarily equity
securities. In the opinion of the Company, many but not all of
these companies would have benefited from implementing certain
measures to optimise their balance sheets and align management and
shareholder interests. Such issuers were expected to be, but were
not limited to, closed-ended investment funds, investment companies
and other corporate entities, such as real estate companies or
natural resource companies.
At the Company's annual general meeting held on 4 May, 2016 a
resolution put to the shareholders that, in accordance with Article
172 of the Company's Articles of Incorporation (the "Articles"),
the Company continue its business as a closed-ended investment
company, was not passed. Therefore, on 23 June, 2016 the Company
announced that the Directors proposed to commence an orderly
realisation of the Company's assets, which process was expected to
take approximately 18 months. Shareholders' capital was intended to
be returned to them by way of periodic distributions.
In order to permit the cost-effective return of capital to
shareholders, at an extraordinary general meeting held on 5
September, 2016, the shareholders voted to adopt new articles of
incorporation (the "New Articles") in substitution for and to the
exclusion of the previous Articles. The New Articles include
provisions permitting the Directors at their discretion to
compulsorily redeem any issued Shares in the Company.
The Directors intend to continue to realise the Company's
investment portfolio for cash and to return such cash to
shareholders periodically by means of a compulsory redemption of a
portion of each shareholder's Shares pro rata to their then
percentage holding in the Company.
Capital and Income Distribution Policy
The Company previously aimed to provide shareholders with an
attractive total return, comprising primarily capital growth,
although there was also the potential for distributions of income
to be made.
The nature of the Company's investments is such that the timing
and amount of investment income can not be predicted. Because the
Company is making periodic returns of capital to shareholders via
compulsory redemptions of Shares, there is no current intention to
declare any dividends and any surplus income received which is not
needed to finance the Company's operating expenses will be
distributed to shareholders when making the afore-mentioned
redemptions.
As the Company has been granted "reporting fund" status by H.M.
Revenue & Customs, United Kingdom resident or ordinarily
resident shareholders, or any shareholders who carry on a trade in
the United Kingdom through a branch, agency of permanent
establishment, will be subject to UK income tax or corporation tax
(as appropriate) on their share of the excess of the Company's
"reportable income" for any period of account over any amounts
actually distributed, in addition to such tax on amounts actually
distributed. Since the Directors intend to distribute all
reportable income, such shareholders should not in practice be
subject to UK tax on 'excess' amounts of income not actually
distributed.
Compulsory Redemptions of Shares
Since the adoption of the New Articles on 5 September, 2016, the
Directors have resolved to make the following compulsory
redemptions of Shares:
Date Number of Shares Redemption Price
------------- ----------------- -----------------
9 September, 11,802,243 110.92 pence
2016
------------- ----------------- -----------------
18 October, 5,352,389 118.30 pence
2016
------------- ----------------- -----------------
14 December, 5,199,671 119.90 pence
2016
------------- ----------------- -----------------
Each return of capital via a compulsory redemption of Shares
triggered the payment of a performance fee to Damille Partners
Limited ("Damille"), a 15% portion of which was payable to Nimrod
Capital LLP ("Nimrod") under the Services Agreement with Damille
and the Corporate and Shareholder Advisory Agreement between the
Company and Nimrod Capital LLP. The performance fees were settled
by the sale out of treasury to Damille and Nimrod of Shares at
their prevailing net asset value. All such issues of Shares are
disclosed in note 14 and 10 to the financial statements.
Discount Control
At the annual general meeting held on 4 May, 2016, the
shareholders granted the Directors authority to make market
purchases of up to 14.99% of the Company's Shares in issue within
specified parameters, with a view to addressing any imbalance
between the supply of and demand for Shares. The Directors seek
annual renewal of this authority from shareholders at each annual
general meeting held under section 199 of the Law.
In accordance with the Law, any repurchase of Shares will be
effected by the purchase of Shares in the market for cash at a
price below the estimated prevailing net asset value per Share,
which is accretive to the net asset value per Share. Shares which
are purchased may be cancelled or held in treasury. Although
shareholders can have a reasonable expectation that their Shares
will in due course be redeemed at a price close to their prevailing
net asset value, there can be no guarantee as to the timing of such
future compulsory redemptions, so this discount control mechanism
also offers shareholders an alternative method of realising their
investment sooner and increases liquidity in the Shares.
During the financial year ended 30 November, 2016 the Company
repurchased 2,000 Shares. At the year end, the Company held
3,362,721 Shares in treasury.
Voluntary Redemption Offer
Under both the previous Articles and the New Articles, the
Directors were and are also permitted in each year following the
second anniversary of Admission to offer at their absolute
discretion to each holder of Shares an option to redeem up to 15%
of their shareholding, subject to any legal or regulatory
requirements and, in particular, the Law (the "Redemption
Offer").
Prior to the adoption of the New Articles, the following Shares
were redeemed pursuant to previous Redemption Offers:
Date Number of Shares Redemption Price
------------- ----------------- -----------------
27 February, 5,451,757 103.64 pence
2014
------------- ----------------- -----------------
18 February, 9,554,308 101.64 pence
2015
------------- ----------------- -----------------
26 February, 8,139,756 95.87 pence
2016
------------- ----------------- -----------------
Following the adoption by the shareholders of the New Articles
and the empowerment of the Directors at their discretion to
compulsorily redeem Shares, the Directors do not intend to incur
the additional expense of making any further Redemption Offers.
CHAIRMAN'S STATEMENT
I have pleasure in presenting the fifth audited annual report
and financial statements of the Company.
The Company's audited net asset value per Share (the "NAV") as
at 30 November, 2016 was 121.11 pence. As the NAV as at 1 December,
2015 was 102.15 pence per Share, the performance was up by 18.56%
for the year. Since launch on 3 November, 2011 until 30 November,
2016, the Company's NAV increased by 25%.
As the Company's Shares are traded on the SFS, the Shares may on
occasion trade at a discount to their NAV per Share. In structuring
the Company, the Directors have given detailed consideration to the
discount risk and how this may be managed. During the year, the
Company bought back 2000 Shares, 719,278 Shares were sold out of
treasury and 310,000 Shares were cancelled, so that the Company
held 3,362,721 Shares in treasury at the year end. The Company
intends to continue to buy back Shares opportunistically where they
trade at significant discounts to NAV.
In addition, during the year, the Company announced a redemption
offer in which shareholders could elect to redeem up to 15% of
their shareholding at a price equal to the unaudited NAV per Share
as at 31 January, 2016 less 2.5%. Pursuant to the redemption offer,
8,139,756 Shares were redeemed at 95.87 pence per Share.
As the Continuation Resolution put to shareholders at the
Company's annual general meeting held on 4 May, 2016 was not
passed, on 23 June, 2016 the Company announced that the Directors
proposed to commence an orderly realisation of the Company's assets
and this is currently underway. Pursuant to this, the Company has
begun returning its capital to shareholders and during the year
undertook two compulsory redemptions of Shares, whereby a total of
17,154,632 Shares were redeemed for GBP19.4 million. Post the year
end, the Company has returned a further GBP6.2 million through a
further compulsory redemption of Shares.
It should be noted that since inception (when the Company raised
GBP70.7 million net of expenses) the Company has returned GBP52.9
million to shareholders through redemption offers, share buy backs
and compulsory redemptions.
Richard Prosser
Chairman
INVESTMENT REPORT
During the year, the Company's NAV per Share increased by
18.56%. Since launch on 3 November, 2011 until 30 November, 2016,
the Company's NAV increased by 25%.
At the year end, the Company was invested with weightings of
approximately 86.2% in equities and 14.1% in cash and net working
capital. However shareholders should note that, as the Company is
in realisation mode, equities have been sold and cash returned to
shareholders.
At the year end, the Company held fifteen investments, of which
four are currently notifiable under the Disclosure Guidance and
Transparency Rules ("DGTR"). The five largest investments account
for 73.6% of NAV. In total the top ten investments (including cash)
accounted for 82.7% of the Company's NAV.
At the annual general meeting held on 4 May, 2016, the
resolution put to the Company's shareholders that, in accordance
with Article 172 of the Company's Articles, the Company continue
its business as a closed-ended investment company, did not pass.
Accordingly, and as announced on 23 June, 2016, the Company is now
in an orderly realisation which is expected to have concluded by
the end of the 2017 calendar year.
We set out below a summary of the Company's portfolio
composition as at the year end. Where any particular investments
are notifiable under the DGTR these are detailed as in previous
periods. However, where investments are not notifiable under the
DGTR we do not disclose names, so as not to prejudice our ability
to further deal in those investments and realise these
holdings.
Overview of Investments
The Company's portfolio is demarcated into five distinct
"classes" as follows:
1. Private Equity and Venture (three holdings representing 13.1% of NAV)
Whilst we have realised a substantial amount of this exposure,
we retain some exposure to the Listed Private Equity and Venture
sectors. During the year we disposed of our holding in Private
Equity Investor plc which was the subject of a recommended cash
offer.
2. Real estate and other funds (three holdings representing 19.5% of NAV)
The investment case for these investments was based on the
combination of attractive discounts to realisable net asset value
and rational capital management policies. The underlying exposures
here are extremely diverse.
The Local Shopping REIT plc ("LSR")
The Company holds 22.2% of LSR. LSR is a UK Real Estate
Investment Trust with an established portfolio of local shops in
urban and suburban areas throughout the United Kingdom. LSR is in a
realisation phase whereby it is seeking buyers for its properties
with a view to returning cash to shareholders. During the year we
disposed of a small part of this holding. Since the year end the
Company has obtained board representation at LSR.
St Peter Port Capital Limited ("SPPC")
The Company holds 8.5% of SPPC. SPPC is a Guernsey registered,
closed-ended investment company established with the aim of
generating value for shareholders by investing in growth companies.
During the year SPPC announced a strategic review and commencement
of formal sales process and the Company awaits the outcome of
this.
3. Holding company trading at a discount (one holding, Sistema
JSFC, representing 33.8% of NAV)
During the year we realised a number of holding company
investments but retained our position in Sistema JSFC, a major
private investor in Russia's economy with interests in mobile
telecoms, speciality retail, agriculture, forestry, technology,
defence, real estate and banking.
4. Natural resources companies (six holdings representing 16.6% of NAV)
Certain natural resource companies are valued at significant
discounts to their asset values.
Kolar Gold Limited ("Kolar")
Kolar is a gold exploration company, incorporated in Guernsey
and focused primarily on the Kolar Gold Field region to the east of
Bangalore in India. At the year end the Company had a 14.6%
shareholding in Kolar.
Ovoca Gold plc ("OVG")
OVG is a cash-rich gold explorer incorporated in Ireland and
operating in Russia. At the year end the Company had a 5.0%
shareholding in OVG, which was reduced slightly during the
year.
Sunrise Resources plc
Sunrise Resources plc is an AIM-traded, diversified mineral
exploration and development company. The Company holds 56,500,000
shares in Sunrise Resources plc and 30,000,000 warrants.
Investment Allocation
As at 30 November, 2016, the Company's net assets were allocated
in the following proportions (% net assets):
Notifiable shareholdings: 17.3 %
18,300,000 shares in Local Shopping REIT PLC: 13.8%
4,315,000 shares in St Peter Port Capital Limited: 1.4%
28,183,173 shares in Kolar Gold Limited: 0.9%
4,382,100 shares in Ovoca Gold plc: 1.0%
56,500,000 shares in Sunrise Resources plc: 0.2%
Non-Notifiable shareholdings: 68.9%
Cash (incl. net working capital): 13.8%
Outlook
As the Company has adopted a realisation mode there is currently
every expectation that all its assets will be sold by the end of
2017 - as announced on 23 June 2016.
Brett Miller Rhys Davies
Executive Director Executive Director
DIRECTORS
Richard Prosser: Chairman (independent non-executive)
Richard Prosser is a Chartered Accountant. Richard is a
shareholder of Estera Trust (Jersey) Limited, a corporate and
fiduciary administrator authorised to conduct trust company
business in Jersey and is a director of a number of companies
quoted in London and elsewhere, including property companies, hedge
funds and investment management companies. Richard is Chairman of
Threadneedle Investments (C.I.) Limited, manager of the
Threadneedle Property Unit Trust. He is also Chairman of the
Aberdeen Latin American Income Fund, listed on the CISE and the
London Stock Exchange.
David Copperwaite: Director (independent non-executive)
David Copperwaite retired as the Managing Director of Lloyds
Bank Fund Managers (Guernsey) Limited on 31 December 1997. He is
based in Guernsey and provides consultancy and advisory services to
offshore fund management groups. He is the director of a number of
regional, global, private equity and emerging market investment
funds, including Aberdeen Private Equity Fund Limited which is
listed on the CISE and the London Stock Exchange. David has
considerable experience in the management and administration of
offshore funds.
Martin Tolcher: Director (independent non-executive)
Martin Tolcher is a Chartered Fellow of the Chartered Institute
for Securities and Investment (Chartered FCSI) and has been
involved within the fund administration industry in Guernsey for
over 25 years. He has worked at a senior level for three fund
administration subsidiaries of Bermudan and Canadian international
banks, gaining considerable experience in a wide variety of funds
and private equity structures. Martin joined Legis Group in 2005 as
a director of Legis Fund Services Limited and became Managing
Director of that company at the beginning of 2007, a role he had
until 31 December 2010 (he remained as a director until 30
September 2011). Martin is a non-executive director of a number of
open and closed-ended Guernsey domiciled funds and associated
management companies.
Brett Miller: Director (executive)
Brett Miller is an executive director of the Company. Brett
presently serves as a non-executive Director of M&L Property
& Assets plc, Manchester and London Investment Trust plc and
The Local Shopping REIT plc. Brett graduated from the University of
Witwatersrand (South Africa) with a bachelor's degree majoring in
law and economics and additionally holds a law degree from the
London School of Economics (after having relocated to the United
Kingdom in 1988). He qualified as a solicitor and practised until
December 1997.
Rhys Davies: Director (executive)
Rhys Davies is an executive director of the Company. Rhys also
presently serves as the non-executive Chairman of EIH plc, an AIM
quoted Isle of Man registered investment company. Rhys holds
degrees from the University of Wales, Cardiff and Imperial College,
London, as well as the CFA designation.
MANAGER, ADMINISTRATOR AND SECRETARY
Management and Administration
The Directors, whose details are set out in above, are
responsible for managing the business affairs of the Company in
accordance with its New Articles and have overall responsibility
for the Company's activities, including the review of investment
activity and performance. Rhys Davies and Brett Miller act in an
executive capacity, while each of the other Directors are
non-executive. The Directors have delegated certain functions to
other parties, such as the Consultancy Services Provider, the
Administrator and Secretary and the Registrar.
Consultancy Services Provider
Damille Partners Limited, a company incorporated in the British
Virgin Islands and controlled by the respective family interests of
the executive Directors, provides investment support to the
Directors and the Company. Pursuant to the Services Agreement
between the Company and Damille Partners Limited dated 4 November,
2011, as amended, Damille Partners Limited provides the Company
with the services of the executive Directors, together with certain
support services, including the delivery of research and reports on
investments and monitoring and analysing the Company's
investments.
Administrator and Secretary
Pursuant to an Administration and Secretarial Agreement between
the Company and JTC Fund Solutions (Guernsey) Limited* ("JTCFSL")
dated 4 November, 2011, JTCFSL was appointed to act as the
Company's Administrator and Secretary. JTCFSL carries out the
general secretarial functions required by the Law and supports the
Company's compliance with its continuing obligations as a company
traded on the SFS. JTCFSL also carries out the Company's general
administrative functions, such as the calculation and publication
of the NAV, calculating the performance of the Company's
investments and the maintenance of accounting records.
Registrar
Pursuant to a Registrars Agreement dated 4 November, 2011
between the Company and Anson Registrars Limited ("ARL"), ARL was
appointed to act as the Company's Registrar. ARL maintains the
Company's register of members and also acts as paying agent.
The Board keeps under review the performance of all service
providers and the powers delegated to them. In the opinion of the
Board, the continuing appointment of the current service providers
is in the best interests of the Company and its shareholders as a
whole.
*On 1 January, 2017, JTC (Guernsey) Limited, the Company's
Administrator and Secretary, was amalgamated with JTC Fund
Solutions (Guernsey) Limited, the surviving amalgamated company.
The existing agreement with the Administrator and Secretary was
subsumed into the surviving company and remains in full force and
effect.
MANAGEMENT REPORT
A description of important events that have occurred during the
financial year, their impact on the financial statements and a
description of the principal risks and uncertainties facing the
Company, together with an indication of important events that have
occurred since the end of the financial year and are likely to
affect the Company's likely future development are included in the
Chairman's Statement, the Executive Directors' Investment Report
and the notes to the financial statements. They are considered to
be incorporated here by reference.
There were no events or changes in the related parties during
the financial year which had or could have had a material impact on
the financial position of the Company, other than those disclosed
in the Directors' Report and the notes to the financial
statements.
Responsibility Statement
The Directors jointly and severally confirm that, to the best of
their knowledge:
(a) the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company;
and
(b) this management report (including the information
incorporated by reference) includes 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 the Company faces.
Signed on behalf of the Board of Directors on 9 February
2017.
David Copperwaite Richard Prosser
Director Director
DIRECTORS' REPORT
The Directors present their annual report and the audited
financial statements of the Company for the year ended 30 November,
2016.
Principal Activities and Business Review
The principal activity of the Company is to carry on business as
an investment company. Since the continuation vote was not passed
in May, 2016, the Directors have been realising the Company's
investment portfolio for cash and returning such cash to
shareholders periodically by means of compulsory redemptions of a
portion of each shareholder's Shares pro rata to their then
percentage holding in the Company. The Directors expect all
investments to be realised by the end of 2017, after which the
voluntary liquidation of the Company will be proposed to
shareholders. A description of the activities of the Company in the
year under review is given in the Investment Report above.
Guernsey Tax Exemption
The Company's management and administration takes place in
Guernsey and the Company had been granted exemption from income tax
in Guernsey by the Administrator of Income Tax under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989. It is the intention of
the Directors to continue to operate the Company so that each year
this exemption is renewed.
Results
The results of the Company for the year are set out on the
Statement of Comprehensive Income below.
Directors
The Directors in office are shown above. Further details of the
Directors' responsibilities are provided below.
The following interests in Shares of the Company are held by
persons discharging managerial responsibility and their persons
closely associated:
Number of Shares Number of Shares
held as at 30 held as at the date
November 2016 of this report
Richard Prosser 10,488 8,706
Damille Partners
Limited 792,691 1,008,470
Brett Miller and Rhys Davies are directors of Damille Partners
Limited, the Company's Consultancy Services Provider. Damille
Partners Limited is owned equally by the respective family
interests of Brett Miller and Rhys Davies.
Other than the above shareholdings as well as the investment
advisory fee and performance fee as disclosed in Note 14, none of
the Directors nor any persons connected with them had a material
interest in any of the Company's transactions, arrangements or
agreements during the year and none of the Directors has or has had
any interest in any transaction which is or was unusual in its
nature or conditions or significant to the business of the Company
and which was effected by the Company during the reporting
year.
As at the year end and as at the date of this report, there were
no outstanding loans or guarantees between the Company and any
Director.
Substantial Shareholdings
As at the date of this report, the following shareholders had
notified the Company that they held or controlled 5% or more of the
total voting rights of the Company in issue:
Name % of Voting Number of Voting
Rights Rights
Nortrust Nominees Limited 38.31% 9,665,864
Damille Investments II
Limited 12.25% 3,092,096
HSBC Global Custody Nominee
(UK) Limited a/c 988424 7.73% 1,949,695
The Bank of New York
(Nominees) Limited a/c
236403 6.06% 1,528,791
Chase Nominees Limited 5.40% 1,363,476
Net Asset Value ("NAV")
The NAV of the Company's Shares as at 30 November, 2016, as
calculated in accordance with the New Articles, was 121.21 pence
per Share.
Principal Risks and Uncertainties
The Board has identified the key risks to the Company and these
are set out below, including the mitigating actions taken to manage
those risks:
-- Investment Risks: The success of the Company depends on the
executive Directors' ability to advise on and realise investments
in accordance with the Company's investment objective and to
realise the assets of the Company in an optimal way. The Board
reviews reports from the executive Directors at each quarterly
Board meeting, paying particular attention to the portfolio, the
performance of underlying investments and the executive Directors'
compliance with the Company's investment policy.
-- Control environment at service providers: The Company is
exposed to risks arising from failures of systems and controls in
the operations of its service providers. The Remuneration and
Management Engagement Committee performs an annual review of each
of the Company's service providers and considers their systems of
internal controls.
-- Regulatory Risk: The Company is required to comply with the
Law, together with the DGTR of the FCA, The Protection of Investors
(Bailiwick of Guernsey) Law, 1987, as amended, the Registered
Collective Investment Scheme Rules 2015 issued by the GFSC and
various EU regulations. The Secretary monitors the Company's
compliance with applicable laws and regulations and will notify the
Board immediately if it identifies or is notified of any breach of
applicable law or regulations.
Corporate Governance
Statement of Compliance with The UK Corporate Governance Code
(as published in September 2014) (the "Code")
The Company is committed to complying with the corporate
governance obligations which apply to Guernsey registered
companies. As a Guernsey incorporated company and under the DGTR,
the Company was not, for the year under review, required to comply
with the Code. However, the Directors place a high degree of
importance on ensuring that high standards of corporate governance
are maintained and have therefore chosen voluntarily to comply with
the provisions of the Code to the extent that they are considered
relevant to the Company.
The Company is committed to the highest standards of corporate
governance, and, having reviewed the Code, considers that it has
maintained procedures during the year to ensure that it has
complied with the Code, other than the exceptions explained
overleaf:
-- There is no chief executive position within the Company,
which is not in accordance with Provision A.1.2 of the Code. The
Company is a self managed investment company and so has no
requirement for a chief executive. The Company has two executive
Directors and three non-executive Directors who each share
responsibilities in running the Company's business.
-- There is no Senior Independent Director, which position is
recommended in Provision A.4.1 of the Code. Taking into account the
size and nature of the Company and the fact there are three
independent non-executive Directors on the Board, this position is
not seen as necessary.
-- Following the annual general meeting held on 4 May, 2016, at
which the continuation resolution was not passed, the Directors are
realising the Company's assets in an orderly manner and returning
shareholders' capital to them by way of periodic compulsory
redemptions of a portion of each shareholder's Shares pro rata to
their then percentage holding in the Company. This process is
expected to be completed by the end of the 2017 calendar year.
Therefore, the Board does not consider that it is necessary or
appropriate to comment on the long term viability of the Company in
detail, as is recommended by and C.2.2 of the Code, so has included
a short term viability statement at the end of this report.
-- There is no internal audit function in the Company. Under
Provision C.3.6 of the Code the Audit Committee considers that, as
all of the Company's administrative functions have been delegated
to independent third parties, there is no need for the Company to
have an internal audit facility.
Subject to the areas of non-compliance explained above, the
Company complied with the other recommendations of the Code during
the year. The Code is available on the UK Financial Reporting
Council's website: www.frc.org.uk.
The Company is also required to have regard to the Finance
Sector Code of Corporate Governance (the "Guernsey Code") published
by the GFSC. As the Company reports against the Code it is deemed
to meet the requirements of the Guernsey Code.
Board Evaluation
The Board has conducted a performance evaluation of itself, its
Committees and each of the Directors, as required by Provision
B.6.1 of the Code. The process was led by the Board and the
consisted of each Director completing questionnaires regarding the
performance of the Board as a whole and of the Chairman. Each
Director also completed a self assessment questionnaire.
The completed questionnaires were sent to and reviewed and
discussed by the entire Board, which agreed that the Board was
effectively constituted and that each Committee and individual
Director was contributing effectively to the Company's ongoing
operations and governance, such that no changes to the Board's
composition or that of any of its committees was necessary or
desirable at this juncture.
Board Responsibilities
The Board comprises five Directors, who meet at least quarterly
to consider the affairs of the Company in a prescribed and
structured manner. Biographies of the Directors appear above,
demonstrating the wide range of skills and experience they bring to
the Board. Rhys Davies and Brett Miller act in an executive
capacity and all the other Directors are independent and
non-executive, with Richard Prosser acting as Chairman.
Each of the non-executive Directors is paid a fee of GBP20,000
per annum and the Chairman is paid a fee of GBP25,000 per annum.
The Chairman of the Audit Committee, David Copperwaite, is paid an
additional GBP3,500 for his services in this role. The executive
Directors, Rhys Davies and Brett Miller, receive a fee of GBP50,000
per annum each in respect of their services in that capacity and
are subject to a Service Agreement dated 4 November, 2011, as
amended.
The Board meets at least four times per year to consider the
business and affairs of the Company for the previous quarter and
the outlook for the coming quarter and beyond, at which meetings
the Directors review the Company's investments and all other
important issues to ensure control is maintained.
The Directors may, in the furtherance of their duties, take
independent professional advice at the Company's expense. The
Directors also have access to the advice and services of the
Corporate and Shareholder Advisory Agent and the Secretary through
their respective appointed representatives, who are responsible for
providing guidance to the Board on their procedures and adherence
thereto, as well as compliance with applicable laws, rules and
regulations. To enable the Board to function effectively and allow
Directors to discharge their responsibilities, full and timely
access is given to all relevant information.
The other significant commitments of the current Chairman are
detailed in his biography above. The Board was satisfied during the
year and remains satisfied that the Chairman's other commitments do
not interfere with his day-to-day performance of his duties to the
Company and that he has the commitment and time to make himself
available at short notice, should the need arise.
During the year the number of full Board meetings and committee
meetings attended by the Directors were as follows:
Board of Full Board Audit Committee Remuneration and
Directors Meetings Management Engagement
Committee
Richard 6 of 9 2 of 2 1 of 1
Prosser
------------------ ----------- ---------------- -----------------------
David Copperwaite 9 of 9 2 of 2 1 of 1
------------------ ----------- ---------------- -----------------------
Martin Tolcher 9 of 9 2 of 2 1 of 1
------------------ ----------- ---------------- -----------------------
Brett Miller 5 of 9 N/A N/A
------------------ ----------- ---------------- -----------------------
Rhys Davies 8 of 9 N/A N/A
------------------ ----------- ---------------- -----------------------
There is a range of matters reserved for the Board, which
includes strategic decisions, performance and risk oversight and
shareholder relations. Day to day management, which includes
investment and divestment decisions, has been delegated to the
Company's executive Directors, who report directly to the Board as
a whole.
Board Committees
Audit Committee
Richard Prosser, David Copperwaite and Martin Tolcher are
members of the Audit Committee, with David Copperwaite acting as
Chairman. The Audit Committee meets at least twice a year and the
principal duties of the Audit Committee are to review the annual
and half-yearly financial reports, to consider the appointment of
the external auditor, to discuss and agree with the auditor the
nature and scope of the audit, to keep under review the scope,
results and cost effectiveness of the audit and the independence
and objectivity of the auditor, to review the auditor's letter of
engagement and reports to management and to analyse the key
financial reporting procedures adopted by the Company's service
providers.
The Audit Committee also considers the nature, scope and results
of the auditor's work and reviews, develops and implements policy
on the supply of any non-audit services that are to be provided by
the auditor. It receives and reviews reports from the executive
Directors for inclusion in financial reports. The Audit Committee
focuses particularly on compliance with legal and regulatory
requirements and financial reporting standards and ensures that an
effective system of internal financial and non-financial controls
is maintained. The ultimate responsibility for reviewing and
approving the annual financial report remains with the Board of
Directors.
During the year the Audit Committee met to consider the annual
financial report for the year ended 30 November, 2015 and the
half-yearly financial report for the period ended 31 May, 2016.
Remuneration and Management Engagement Committee
Richard Prosser, David Copperwaite and Martin Tolcher are
members of the Remuneration and Management Engagement Committee,
with Martin Tolcher acting as Chairman. The Remuneration and
Management Engagement Committee meets formally at least annually.
The principal duties of the Remuneration and Management Engagement
Committee are to review the appointment and remuneration of the
executive Directors and Damille Partners Limited, to review the
fees payable to the other Directors and to review the fees of the
Company's other main service providers.
The remuneration of the Board is reviewed on at least an annual
basis and compared with the level of remuneration for directors of
other similar investment companies. All Directors receive the fixed
fees disclosed earlier in this report and there are no share
options or other performance related benefits available to them,
save that Damille Partners Limited, which is owned by the
respective family interests of the executive Directors, receives a
performance fee, payable in Shares, based on NAV performance.
Nomination Committee
All Directors of the Company are members of the Nomination
Committee, with Martin Tolcher acting as Chairman. The Nomination
Committee meets as and when it is deemed appropriate to review,
inter alia, the structure, size and composition of the Board and to
identify, nominate and recommend for approval of the Board
candidates to fill Board vacancies as and when they arise.
Internal Control and Financial Reporting
The Board is responsible for establishing and maintaining the
Company's system of risk management and internal controls, which is
reviewed for effectiveness on an annual basis. Internal controls
are designed to meet the particular needs of the Company and the
risks to which it is exposed and by their very nature provide
reasonable, but not absolute, assurance against material
misstatement or loss.
The key procedures which have been established to provide
effective internal controls are as follows:
-- The Company is a self-managed investment Company with no
separate Investment Manager. The Board is responsible for setting
the overall investment policy.
-- The Board is responsible for the Company's systems of risk
management and internal controls and for reviewing their
effectiveness. The Board confirms that there is an on-going process
for identifying, evaluating and monitoring the significant risks
faced by the Company. The internal controls are designed to meet
the Company's particular needs and the risks to which it is
exposed.
-- Administration and secretarial services are provided to the
Company by JTC Fund Solutions (Guernsey) Limited (previously known
as JTC (Guernsey) Limited).
-- The assets of the Company are held through segregated
brokerage and bank accounts established in the name of the
Company.
-- The duties of investment management, accounting and the
custody of assets are segregated. The procedures of the individual
parties are designed to complement one another.
-- The Directors clearly define the duties and responsibilities
of their agents and advisers. The appointment of agents and
advisers is conducted by the Board after consideration of the
quality of the parties involved and the Board monitors their
on-going performance and contractual arrangements.
-- The Directors regularly review the performance of and
contractual arrangements with the Company's agents and
advisers.
-- The Directors review financial information produced by the
Administrator on a regular basis.
-- Investment transactions and expense payments are approved by
specified Directors in accordance with delegated authorities
approved in advance by the Board.
Dialogue with Shareholders
All shareholders have the right to receive notice of, and
attend, general meetings of the Company, at which the Directors are
available to discuss issues affecting the Company.
The primary responsibility for shareholder relations lies with
the Company's Corporate and Shareholder Advisory Agent. However,
the Directors are always available to enter into dialogue with
shareholders and the Chairman is always willing to meet major
shareholders, as the Company believes such communications to be
important. The Directors can be contacted via correspondence sent
to the Company's registered office.
Going Concern
The Company's principal activities are set out in the Investment
Report above. The financial position of the Company is set out
below. In addition, the Summary Information above and note 13 to
the financial statements include the Company's investment
objectives, policies and processes for managing its capital; its
financial risk management objectives and its exposures to credit
risk and liquidity risk.
Following the annual general meeting held on 4 May, 2016, at
which the continuation resolution was not passed, the Directors are
realising the Company's assets in an orderly manner and returning
shareholders' capital to them, which process is expected to be
completed by the end of the 2017 calendar year. Therefore, the
Company is not a going concern.
However, the Directors believe that the Company has adequate
resources to continue in operational existence whilst its
investment portfolio is realised for cash. Once all investments
have been realised and all invested capital returned to
shareholders, less a reserve for final expenses, the Board will
convene a general meeting of the shareholders for the purposes of
voting the Company into solvent voluntary liquidation.
Viability Statement
As required by provision C.2.1 of the Code, the Directors
confirm that they have carried out a robust assessment of the
principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or
liquidity, and those are reported elsewhere in this annual
financial report.
Provision C.2.2 of the Code recommends that companies publish a
viability statement and this statement is intended to meet that
requirement.
The Directors regularly consider the viability of the Company
and are required by the Law to do so on every occasion that any
distribution is to be declared, including, but not limited to,
dividends, the redemption of Shares, whether pursuant to a
redemption offer or otherwise, and repurchases by the Company of
its own Shares. Under Law, there is no limit on the period of time
for which the Directors are required to consider the Company's
future solvency. However, because the Board expects to have
realised all of the Company's investments for cash by the end of
the 2017 calendar year, where after the Company's liquidation will
be proposed to the shareholders, the Directors have considered the
Company's viability up to its expected liquidation in early
2018.
The Company's assets exceed its liabilities and the Board is
confident that the Company has sufficient liquid assets to meet its
debts as they become due. The Company has no external borrowings.
In addition, should the Company in future temporarily have
insufficient cash to meet its expenses, the Company expects that it
would very rapidly be able to realise sufficient investments to
meet such expenses.
Although the Board is periodically compulsorily redeeming
Shares, such compulsory redemptions require prior satisfaction of a
solvency test, so that no compulsory redemption of Shares could
reasonably be expected to cause the Company to become
insolvent.
The Board therefore confirms that there is reasonable
expectation that the Company will continue to meet its obligations
as they fall due whilst proceeding with an orderly disposition of
the Company's portfolio for its estimated remaining life.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. The Law requires the Directors to prepare
financial statements for each financial period. Under the Law they
have elected to prepare the financial statements in accordance with
the International Financial Reporting Standards ("IFRS") as adopted
by the European Union.
The financial statements are required by Law to give a true and
fair view of the state of affairs of the company and of the profit
or loss of the company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the company and to enable them to ensure that
the financial statements comply with the Law. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the company and to prevent and detect
fraud and other irregularities.
The Directors consider that this Annual Financial Report, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for the members of the Company to assess the
Company's position and performance, business model and
strategy.
Disclosure of information to auditor
The Directors who held office at the date of approval of this
Directors' Report confirm in accordance with the provisions of
Section 249 of the Law that, so far as they are each aware, there
is no relevant audit information of which the Company's auditor are
unaware; and each Director has taken all the steps that he ought to
have taken as a Director to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
Auditor
Grant Thornton Limited has expressed its willingness to continue
in office as auditor. A resolution proposing its reappointment will
be submitted at the forthcoming annual general meeting to be held
pursuant to section 199 of the Law.
Signed on behalf of the Board on 9 February 2017.
David Copperwaite Richard Prosser
Director Director
AUDIT COMMITTEE REPORT
The Company has established an Audit Committee with formally
delegated duties and responsibilities within written terms of
reference (a copy of which is available from the Company' Secretary
on request). The membership of the Audit Committee and its terms of
reference are kept under regular review.
Role and Responsibilities of the Audit Committee
The Audit Committee acknowledges and embraces its role of
protecting the interests of the Company's shareholders as regards
the integrity of published financial information by the Company and
the effectiveness of the audit of the Company.
Audit Committee responsibilities include:
- overseeing the Company's financial reporting process;
- reviewing and maintaining the integrity of the Company's
financial statements, including its annual and half-yearly
financial reports and any other formal announcement relating to its
financial performance and monitoring compliance with statutory,
regulatory and other financial reporting requirements;
- reviewing and reporting to the Board on significant financial reporting judgements;
- advising the Board on whether it believes the annual report
and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy;
- reporting to the Board on the appropriateness of the Company's
accounting policies and practices, including critical accounting
policies and practices;
- making recommendations to the Board for it to put to the
shareholders in general meeting in relation to the appointment,
re-appointment and removal of the external auditor of the Company,
as applicable;
- overseeing the relationship and maintaining active dialogue with the external auditor;
- monitoring the accounting and internal control systems
operated by the Company and by the Company's principal service
providers; and
- reviewing and monitoring the external auditor's independence
and objectivity and the effectiveness of the audit process.
Summary of Audit Committee meetings held during the Year
The Audit Committee met twice during the year, with the
Secretary in attendance at both meetings. The auditor also attended
one of those meetings.
At its two meetings during the year, the Audit Committee focused
on the matters set out below.
Financial reporting
The Audit Committee reviewed the half-yearly and annual
financial statements, particularly, but not limited to, the
existence and valuations of the Company's assets and the clarity
and completeness of the financial reports. To inform its review,
the Audit Committee considered reports prepared by external service
providers and a report from the external auditor on the outcome of
their annual audit. There were no significant issues relating to
these financial statements identified by the auditor during the
course of their audit which needed to be brought to the attention
of the Audit Committee.
Internal Controls
The Audit Committee considered the risks to which the Company
was exposed and the mitigating measures and controls implemented by
the Board and its advisers and satisfied itself that such measures
and controls were adequate and properly implemented.
The Audit Committee also reported to the Board on its activities
and matters of particular relevance to the Board considered in the
conduct of its work.
Internal audit
The Company has no employees and no physical systems of its own,
relying instead on the employees and systems of its external
service providers. The Audit Committee does not believe that it
would be of any benefit to the Company to appoint an internal
auditor. The Audit Committee reviews this decision annually and
reports to the Board on its conclusions.
External audit
The current external auditor, Grant Thornton Limited, was
reappointed as auditor at the annual general meeting held on 4 May,
2016. This is Grant Thornton Limited's fourth year in harness as
the Company's auditor.
The effectiveness of the external audit process is dependent on
appropriate audit risk identification at the start of the audit
cycle. The Audit Committee receives from the auditor a detailed
audit approach memorandum, identifying their assessment of any high
risk areas of the audit. For the year under review, the primary
risks identified were in relation to revenue recognition, financial
asset valuation and existence, fee calculations performed and the
possibility of management's avoidance of controls. These risks were
tracked through the year and the Audit Committee challenged the
work performed by the auditor in these high risk areas.
The Audit Committee assess the effectiveness of the audit
process through the reporting it receives from the auditor. In
addition the Audit Committee also seeks feedback from the Company's
administrator on the effectiveness of the audit process. During the
year under review, the Audit Committee met with both the
administrator and the auditor and received regular reports on the
annual financial reporting process. The Audit Committee also
reviewed and commented upon several drafts of the annual financial
report. The Audit Committee was satisfied that there had been
appropriate focus and challenge on the high risk areas identified
at the start of the audit cycle and concluded that the quality of
the audit process was satisfactory.
Having considered the position for the current year, the Audit
Committee has recommended to the Board that Grant Thornton Limited
be reappointed as auditor for the current financial year.
Accordingly a resolution proposing the reappointment of Grant
Thornton Limited as auditor will be put to the Company's
shareholders at the annual general meeting to be held in May
2017.
Any non-audit services provided by the auditor would be required
to be approved in advance by the Audit Committee, subject to their
satisfaction that relevant safeguards were in place to protect the
auditor's independence and objectivity.
There were no non-audit services provided for the year ended 30
November 2016.
There are no restrictions on the Audit Committee's and Board's
choice of external auditor.
David Copperwaite
Chairman of the Audit Committee
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF DAMILLE INVESTMENT
II LIMITED
Our opinion on the financial statements is unmodified
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 November 2016 and of its profit for the year then
ended;
-- are in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union; and
-- comply with The Companies (Guernsey) Law, 2008.
Other matter
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
Note 2(a) to the financial statements concerning the basis of
preparation of the financial statements. As described in that note,
the directors have prepared the financial statements on a non-going
concern basis.
Who we are reporting to
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of The Companies (Guernsey) Law,
2008. 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.
What we have audited
Damille Investments II Limited's financial statements for the
year ended 30 November 2016 comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Statement of Cash
Flows, the Statement of Changes in Equity and the related
notes.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union.
Our assessment of risk
In arriving at our opinions set out in this report, we highlight
the following risks that, in our judgement, had the greatest effect
on our audit:
Financial assets designated at fair value through profit or
loss
The risk: The investment objective of the Company is to realise
significant capital returns for its shareholders with low
volatility, by investing in a concentrated portfolio of primarily
equity securities. As described in the Directors' Report under
'Principal Risks and Uncertainties', the ability to realise these
in an optimal way is important to that objective. Accordingly, the
investment portfolio is a significant and material item. The
existence and valuation of the investment portfolio is therefore a
risk that requires special audit attention.
Our response on existence: In order for us to confirm that the
investments referred to above were owned by the Company, our audit
work included, but was not restricted to: obtaining an
understanding of management's process to recognise the investments;
obtaining a confirmation of investments held at the year-end
directly from the independent brokers and testing the
reconciliation of the independent broker's statement to the records
maintained by the Company's administrator; and checking a sample of
investment purchases and sales transactions to contract notes and
Company's bank accounts.
Our response on valuation: Our audit work on valuation for
investments included, but was not restricted to: understanding the
Company's administrator's process to value the quoted investment
and the process to value unquoted investments; agreeing the
valuation of 100% of the quoted investment to an independent source
of market prices; reviewing and challenging the valuation
methodology used to value 100% of the unquoted investments,
including an assessment of whether the valuations were made in
accordance with published guidance and discussions with the
administrator; and, in order to confirm that the quoted investments
were actively traded, we obtained trading volumes of those held at
year end.
The Company's accounting policy on investments, including
financial assets designated at fair value through profit or loss,
is shown in Note 2(j) and related disclosures are included in Note
7. The Audit Committee identified financial asset valuation and
existence as a primary risk in its report above, where the
Committee also described the action that it has taken to address
this issue.
Income
The risk: The Company measures performance through the
realisation of its investments and investment and dividend income.
As described in Note 1 to the financial statements, the ability to
realise significant capital returns for its shareholders is key to
the success of the Company, especially since the continuation vote
put to shareholders at the Company's Annual General Meeting was not
passed and the assets are now being realised in an orderly manner.
Both investment and dividend income are measured in the Statement
of Comprehensive Income. We identified completeness and occurrence
of income as risks that required special audit attention.
Our response on occurrence: Our audit work included, but was not
restricted to: assessing whether the Company's accounting policy
for revenue recognition was in accordance with International
Accounting Standard (IAS) 18 'Revenue'; obtaining an understanding
of the Company's process for recognising revenue in accordance with
the stated accounting policy; testing whether a sample of income
transactions was recognised in accordance with the policy.
Our response on completeness: Our audit work included, but was
not restricted to: obtaining, for a sample of investments held in
the year, the ex-dividend dates and rates for dividends declared
during the year from an independent source and agreeing the
expected dividend entitlements to those recognised in the general
ledger; and performing cut-off testing of dividend income around
the year end.
The Company's accounting policy on income is shown in Notes 2(f)
(dividend income) and 2(g) (bank interest and other income and
related disclosures are included in Note 3. The Audit Committee
identified revenue recognition as a primary risk in its report
above, where the Committee also described the action that it has
taken to address this issue.
Our application of materiality and an overview of the scope of
our audit
Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality in determining the nature, timing
and extent of our audit work and in evaluating the results of that
work.
We determined materiality for the audit of the financial
statements as a whole to be GBP367,000, which is 1% of net assets.
This benchmark is considered the most appropriate because the users
of the financial statements are sensitive to changes in net asset
value as an indicator of the value of their investment in the
Company.
Materiality for the current year is lower than the level that we
determined for the year ended 30 November 2015, which corresponds
with the decrease in the Company's net asset value over the
accounting period.
We use a different level of materiality, performance
materiality, to drive the extent of our testing and this was set at
75% of financial statement materiality for the audit of the
financial statements. We also determine a lower level of specific
materiality for certain areas such as investments, net asset
value-based fees, directors' remuneration and related party
transactions.
We determined the threshold at which we will communicate
misstatements to the audit committee to be GBP18,350. In addition
we will communicate misstatements below that threshold that, in our
view, warrant reporting on qualitative grounds.
Overview of the scope of our audit
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 and to identify any information that
is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
We conducted our audit in accordance with International
Standards on Auditing (ISAs) (UK and Ireland). Our responsibilities
under those standards are further described in the
'Responsibilities for the financial statements and the audit'
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
We are independent of the Company in accordance with the
Auditing Practices Board's Ethical Standards for Auditors, and we
have fulfilled our other ethical responsibilities in accordance
with those Ethical Standards.
Our audit approach was based on a thorough understanding of the
Company's business and is risk-based. The day-to-day management of
the Company's investment portfolio, the custody of its investments
and the maintenance of the Company's accounting records is
outsourced to third-party service providers. Accordingly, our audit
work is focussed on obtaining an understanding of, and evaluating,
internal controls at the Company and the third-party service
providers, and inspecting records and documents held by these
third-party service providers. We undertook substantive testing on
significant transactions, balances and disclosures, the extent of
which was based on various factors such as our overall assessment
of the control environment, the effectiveness of controls over
individual systems and the management of specific risks.
Matters on which we are required to report by exception
Under The Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
-- proper accounting records have not been kept by the Company; or
-- the Company's financial statements are not in agreement with the accounting records; or
-- we have not obtained all the information and explanations
which, to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the annual report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or
-- otherwise misleading.
In particular, we are required to report to you if:
-- we have identified any inconsistencies between our knowledge
acquired during the audit and the directors' statement that they
consider the annual report is fair, balanced and understandable;
or
-- the annual report does not appropriately disclose those
matters that were communicated to the audit committee which we
consider should have been disclosed.
We have nothing to report in respect of any of the above
matters.
We confirm that we do not have anything material to add or to
draw attention to in relation to:
-- the directors' confirmation in the annual report that they
have carried out a robust assessment of the principal risks facing
the Company including those that would threaten its business model,
future performance, solvency or liquidity;
-- the disclosures in the annual report that describe those
risks and explain how they are being managed or mitigated; and
-- the directors' statement in the financial statements about
whether they have considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Company's
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements.
-- the directors' explanation in the annual report as to how
they have assessed the prospects of the company, over what period
they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Responsibilities for the financial statements and the audit
What the directors are responsible for:
As explained more fully in the Statement of Directors'
Responsibilities set out above, the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view.
What are we responsible for:
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and ISAs (UK
and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Cyril Swale
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port, Guernsey, Channel Islands Date: 9 February 2017
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 November 2016
Year ended Year ended
30 Nov 30 Nov
2016 2015
Notes GBP GBP
Net unrealised gains
on financial assets designated
at fair value through
profit or loss 7 6,494,214 1,950,190
Realised (loss) / gain
on financial assets designated
at fair value through
profit or loss 7 1,617,516 (3,129,181)
---------------------- --------------------
Net gain / (loss) on
financial assets designated
at fair value through
profit or loss 8,111,730 (1,178,991)
Operating income 3 1,430,092 1,655,532
Operating expenses 4 (2,353,291) (1,428,959)
Net profit / (loss) before
tax 7,188,531 (952,418)
Withholding taxes (113,694) (40,196)
Profit / (Loss) and Total
Comprehensive Income
/ (Loss) for the year
attributable to Shareholders 7,074,837 (992,614)
---------------------- --------------------
Pence Pence
Earnings / (losses) per
share for the year -
Basic and Diluted 6 22.29 (1.72)
---------------------- --------------------
A non-going concern basis (refer to note 2(c)) has been adopted
in arriving at the results for the year.
The notes below form an integral part of these financial
statements.
STATEMENT OF FINANCIAL POSITION
as at 30 November 2016
30 Nov 30 Nov
2016 2015
Notes GBP GBP
NON-CURRENT ASSETS
Financial assets designated
as at fair value through
profit or loss 7 - 44,942,965
CURRENT ASSETS
Financial assets designated
as at fair value through
profit or loss 7 31,692,067 -
Trade and other receivables 8 292,879 2,147,839
Cash and cash equivalents 5,188,861 9,115,572
------------------------- ----------------------
37,173,807 56,206,376
TOTAL ASSETS 37,173,807 56,206,376
------------------------- ----------------------
CURRENT LIABILITIES
Trade and other payables 9 414,264 119,537
------------------------- ----------------------
NET ASSETS 36,759,543 56,086,839
------------------------- ----------------------
EQUITY
Share capital 10, 11 25,374,076 51,776,209
Accumulated reserves 11,385,467 4,310,630
TOTAL EQUITY 36,759,543 56,086,839
------------------------- ----------------------
Pence Pence
Net asset value per Ordinary
share based on 30,328,369
(Nov 2015: 54,905,479)
shares in issue 121.21 102.15
------------------------- ----------------------
The financial statements were approved by the Board of Directors
and authorised for issue on 9 February 2017 and are signed on its
behalf by:
David Copperwaite Richard Prosser
Director Director
The notes below form an integral part of these financial
statements.
STATEMENT OF CASH FLOWS
as at 30 November 2016
Year ended Year ended
30 Nov 30 Nov
2016 2015
Notes GBP GBP
OPERATING ACTIVITIES
Profit / (Loss) and Total
Comprehensive Income
/ (Loss) for the year
attributable to Shareholders 7,074,837 (992,614)
Adjustments for:
Net unrealised gains
on financial assets designated
at fair value through
profit or loss 7 (6,494,214) (1,950,190)
Interest income 3 - (51,962)
Bond income 3 (40,831) (16,514)
Dividend income 3 (1,389,261) (1,587,056)
(849,469) (4,598,336)
Increase / (decrease)
in payables 9 294,727 (8,301)
Decrease in receivables 8 2,470 2,219
Realised loss / (gain)
on financial assets designated
at fair value through
profit or loss 7 (1,617,516) 3,129,181
(2,169,788) (1,475,237)
Interest received - 51,962
Bond interest received (31,266) 16,514
Dividends received from
investments 1,501,282 3,920,953
Purchase of investments (75,000) (31,557,964)
Proceeds from sale of
investments 23,250,194 14,064,216
Returns of capital - 1,756,444
NET CASH FLOW USED IN
OPERATIONS 22,475,422 (13,223,112)
----------------------- ----------------
FINANCING ACTIVITIES
Costs of redemption of
Ordinary shares 10 (27,226,508) (9,711,000)
Subscription of shares 10 826,465 -
Purchase of own shares 11 (2,090) (921,252)
NET CASH FLOW USED IN
FINANCING ACTIVITIES (26,402,133) (10,632,252)
----------------------- ----------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 9,115,572 32,970,936
Decrease in cash and
cash equivalents (3,926,711) (23,855,364)
CASH AND CASH EQUIVALENTS
AT OF YEAR 5,188,861 9,115,572
----------------------- ----------------
The notes below form an integral part of these financial
statements.
STATEMENT OF CHANGES IN EQUITY
as at 30 November 2016
Share Accumulated
Capital Reserves Total
Notes GBP GBP GBP
Balance as at 1 December
2015 51,776,209 4,310,630 56,086,839
Profit / (Loss) and
total comprehensive
income for the year - 7,074,837 7,074,837
Treasury shares issued
in lieu of Performance
Fees 11 826,465 - 826,465
Share redemptions during
the year 10 (27,226,508) - (27,226,508)
Treasury shares acquired
during the year 11 (2,090) - (2,090)
Transactions with owners (26,402,133) - (26,402,133)
Balance as at 30 November
2016 25,374,076 11,385,467 36,759,543
------------------ ---------------------- ----------------------
Share Accumulated
Capital Reserves Total
GBP GBP GBP
Balance as at 1 December
2014 62,408,461 5,303,244 67,711,705
Profit / (Loss) and
total comprehensive
loss for the year - (992,614) (992,614)
Share redemptions during
the year 10 (9,711,000) - (9,711,000)
Treasury shares acquired
during the year 11 (921,252) - (921,252)
Transactions with owners (10,632,252) - (10,632,252)
Balance as at 30 November
2015 51,776,209 4,310,630 56,086,839
------------------ ---------------------- ----------------------
The notes below form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
as at 30 November 2016
1. GENERAL INFORMATION
Damille Investments II Limited is a closed-ended investment
company incorporated in Guernsey on 3 November 2011 whose Shares
were admitted to trading on the Specialist Fund Segment ("SFS") of
the London Stock Exchange's Main Market on 9 November 2011.
The principal activity of the Company was to realise capital
growth from a portfolio of equities and to generate a significant
capital return to Shareholders.
The Company's investment objective was to realise significant
capital returns for its Shareholders with low volatility, by
investing in a concentrated portfolio of primarily equity
securities. In the opinion of the Company, many but not all of
these companies would have benefited from implementing certain
measures to optimise their financial position and align management
and Shareholder interests. Such issuers were expected to be, but
were not limited to, closed-ended investment funds, investment
companies and other corporate entities, such as real estate
companies or natural resource companies.
At the Company's annual general meeting held on 4 May, 2016 a
resolution put to the shareholders that, in accordance with Article
172 of the Company's Articles of Incorporation (the "Articles"),
the Company continue its business as a closed-ended investment
company, was not passed. Therefore, on 23 June, 2016 the Company
announced that the Directors proposed to commence an orderly
realisation of the Company's assets, which process was expected to
take approximately 18 months. Shareholders' capital is intended to
be returned to them by way of periodic distributions.
2. ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are
as follows:
a) Basis of Preparation
The financial statements have been prepared in conformity with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union on a non-going concern basis (refer to note 2
(c)) which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC"), together
with applicable Guernsey law. The financial statements have been
prepared on an historical cost basis except for the measurement at
fair value of certain financial instruments.
Changes in Standards and Interpretations
The following Standards or Interpretations have been issued by
the IASB but not yet adopted by the Company:
IAS 1 Presentation of Financial Statements - Amendments
resulting from December 2014 disclosure initiative, effective for
annual periods beginning on or after 1 January 2016.
IFRS 7 Financial Instruments - Amendments resulting from
September 2014 Annual Improvements to IFRSs, effective for annual
periods beginning on or after 1 January 2016.
IFRS 7 Financial Instruments: Disclosures - Deferral of
mandatory effective date of IFRS 9 and amendments relating to
additional hedge accounting disclosures (and consequential
amendments). Applies only when IFRS 9 is adopted, which is
effective for annual periods beginning on or after 1 January
2018.
IFRS 9 Financial Instruments - Classification and measurement of
financial assets, effective for annual periods beginning on or
after 1 January 2018.
IFRS 9 Financial Instruments - Accounting for financial
liabilities and derecognition, effective for annual periods
beginning on or after 1 January 2018.
IFRS 9 Financial Instruments - Classification and measurement of
financial liabilities and derecognition, effective for annual
periods beginning on or after 1 January 2018.
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) Use of estimates and judgements
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected. The preparation of the Company's financial statements
requires the Directors to make judgements, estimates and
assumptions that affect the reported amounts recognised in the
financial statements and disclosures. However, uncertainty about
these assumptions and estimates could result in outcomes that could
require material adjustment to the carrying amount of the assets or
liabilities in future periods.
Information about significant areas of estimation, uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amount recognised in the
financial statements are disclosed below. The Directors consider
that the most significant estimate is the valuation of Level 3
investments as shown in Note 7.
c) Non-going concern
The Continuation Resolution put to shareholders at the Company's
annual general meeting held on 4 May 2016 was not passed. The
Directors are realising the Company's assets in an orderly manner
and returning their invested capital to Shareholders via periodic
compulsory redemptions. Therefore, the Directors believe it is
appropriate to adopt a non-going concern basis in preparing the
financial statements, as they consider that the Company will be
voluntarily liquidated within the next 18 months. The Directors
believe that the Company will be able to realise its remaining
investments in an orderly manner and therefore do not consider
there to be a material difference in the value of the Company's
assets, and liabilities, compared to if the financial statements
had been prepared on a going concern basis. This has also not
resulted in changes in the principle accounting policies and
valuation methodology for investments. Non-current assets have been
reclassified to current as a result of the financial statements
being prepared on a non-going concern basis. The estimated costs of
winding up the Company have not been included in preparing these
financial statements as these costs cannot be accurately determined
at this stage. Further information is given in the Directors'
Report above.
d) Taxation
The income tax authority of Guernsey has granted the Company
exemption from Guernsey income tax under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989 and the income of the Company
may be distributed or accumulated without deduction of Guernsey
Income Tax. Exemption under the above mentioned ordinance entails
payment by the Company of an annual fee of GBP1,200 for each year
in which the exemption is granted. It should be noted however, that
interest and dividend income accruing from the Company's
investments may be subject to withholding tax in the country of
origin. With effect from 1 January 2008 the standard rate of income
tax for most companies in Guernsey became 0%. Tax exemption
continues to be available and the Company has been granted this
status for 2016. The Directors intend to conduct the Company's
affairs so that it continues to remain eligible for exemption from
Guernsey income tax.
e) Expenses
All expenses are accounted for on an accruals basis.
f) Dividend income
Dividend income is recognised when the right to payment is
established.
g) Bank interest and other income
Bank interest income and other income is included in the
financial statements on time apportioned basis using the effective
interest rate method.
h) Cash and Cash equivalents
Cash and cash equivalents in the Statement of Financial Position
comprise of cash at bank, call deposits, short term deposits, short
term cash with original maturities of three months or less and
highly liquid investments readily convertible to known amounts of
cash and subject to insignificant risk of changes in value. For the
purposes of the Statement of Cash Flows, cash and cash equivalents
consist of cash and cash equivalents defined above.
i) Share issue costs
The share issue costs borne by the Company are recognised in the
Statement of Changes in Equity, as the Company's Ordinary shares
are classified as equity under paragraphs 16C and 16D of IAS 32
Financial Instruments: Presentation.
j) Financial assets designated as at fair value through profit or loss
All investments have been designated as financial assets "at
fair value through profit or 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 recognised in the Statement of Comprehensive
Income.
Investments are derecognised when the rights to cash flows from
the investments have expired or substantially all risks and rewards
of ownership have been transferred. Upon derecognition any
previously recognised unrealised gain or loss is reversed in the
current period's "net movement in unrealised depreciation on
investments" and recognised in the "realised gain on investments"
along with any additional gain or loss recognised for the year. In
accordance with IFRS the "net gains on investments" shows the total
gain or loss recognised in the current year.
Commissions paid on the sale or purchase of investments are
recognised in the Statement of Comprehensive Income as
incurred.
IFRS 13 Fair value measurement defines fair value as a price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. Fair value also reflects the credit quality
of the issuers of the financial instruments.
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 reporting
date. If no quoted market bid price is available at the close of
business on the reporting date, the last available market bid price
is used.
Where no quoted market prices are available, the valuation of
the investment is based on the quarterly NAV provided to the
Company, adjusted for any subsequent distributions received.
Warrants held by the Company are valued using an option pricing
model which uses directly observable market inputs.
k) 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 time frame generally established
by regulations or convention in the market place.
l) Segmental Reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business and
operates solely from Guernsey. Therefore, no segmental reporting
has been provided based on operating segments. Geographical
information is based on the location of the Company's investments.
Geographical locations are determined based on the country of
primary listing for listed investments and the country of
incorporation for unlisted investments. All dividend income as
detailed in note 3 was primarily received from investments with a
country of incorporation or primary listing in Europe, with less
than 10% of the income being derived from investments incorporated
or listed in the rest of the world.
m) Foreign Currencies
The financial statements are expressed in Pounds Sterling
('GBP'), which is the functional and presentation currency of the
Company.
Transactions denominated in foreign currencies are translated
into GBP at the rate of exchange ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
Statement of Comprehensive Income.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to GBP at
the rate of exchange ruling at the dates the values were
determined.
3. OPERATING INCOME
Year
ended Year ended
30 Nov 30 Nov
2016 2015
GBP GBP
Bank interest - 51,962
Bond income 40,831 16,514
Dividend income 1,389,261 1,587,056
1,430,092 1,655,532
-------------------- ---------------
4. OPERATING EXPENSES
Year
ended Year ended
30 Nov 30 Nov
2016 2015
GBP GBP
Investment advisory
fees 702,244 880,991
Performance fees 14 1,154,235 -
Directors' fees 168,378 168,500
Corporate and shareholder
advisory fees 90,090 120,943
Brokerage 34,908 83,274
Custody fees 45,868 38,898
Administrator's fee 49,321 51,238
Annual fees 13,049 12,584
Audit fees 14,845 14,068
Directors' and Officers'
insurance 8,135 8,043
Public Offering of
Securities Insurance 2,257 2,260
Legal and professional
fees 11,267 3,003
Sundry costs 34,958 12,034
Registrar's fee 9,832 7,732
Bank interest and
charges 389 2,040
Loss on foreign exchange 13,515 23,351
Net operating expenses for
the year 2,353,291 1,428,959
------------------ --------------------
5. DIRECTORS' REMUNERATION
The non-executive Directors are paid GBP20,000 per annum (2015:
GBP20,000 per annum). David Copperwaite receives an additional fee
of GBP3,500 (2015: GBP3,500) as Chairman of the audit committee and
Richard Prosser receives an additional fee of GBP5,000 (2015:
GBP5,000) as Chairman of the Company. The executive Directors are
each paid GBP50,000 per annum (2015: GBP50,000 per annum).
6. EARNINGS PER SHARE
Earnings per share is calculated by dividing the earnings for
the year attributable to Shareholders of GBP7,074,837 (2015: loss
of GBP992,614) by the weighted average number of ordinary shares in
issue during the year 31,744,653 (2015: 57,589,850). There are no
dilutive instruments and therefore basic and diluted earnings per
ordinary share are identical.
7. FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS
TOTAL TOTAL
30 Nov
30 Nov 2016 2015
GBP GBP
Opening valuation 44,942,965 33,345,272
Additions - cost 75,000 30,584,646
Returns of capital - (1,756,444)
Proceeds from sales (21,509,725) (16,051,518)
Realised (loss) / gain on
investments 1,617,516 (3,129,181)
Accrued amortisation 72,097 -
Movement in unrealised appreciation
on investments 6,494,214 1,950,190
Closing valuation 31,692,067 44,942,965
-------------------- ----------------------
Closing portfolio cost 25,882,145 45,699,354
-------------------- ----------------------
Unrealised depreciation
on valuation carried forward 5,809,922 (756,389)
-------------------- ----------------------
IFRS 13 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).
As at 30 November Level Level Level
2016 1 2 3 Total
----------------- ----------------- ------------------ -----------
Equity securities 26,471,625 387,989 - 26,859,613
Investment funds - - 4,832,454 4,832,454
26,471,625 387,989 4,832,454 31,692,067
================= ================= ================== ===========
As at 30 November Level Level Level
2015 1 2 3 Total
------------------ ------------------ ------------------ -----------
Equity securities 39,951,569 11,291 - 39,962,860
Investment funds - - 4,980,105 4,980,105
39,951,569 11,291 4,980,105 44,942,965
================== ================== ================== ===========
Investments held by the Company have been classified as Level 1,
for those investments that are quoted and are valued using quoted
market bid prices.
The Company invests in warrants which are valued using an option
pricing model using observable market inputs and are therefore
classified as Level 2. Where the Net Asset Value (NAV) or current
market price per share is below the warrants' exercise price the
warrants are being valued at the Directors' best estimate of fair
value, considering the likelihood of the warrants being exercised,
and are therefore classified as Level 3.
The Company also invests in managed funds which are not quoted
in an active market and which may be subject to restrictions on
redemptions. Investments in those funds are valued based on the Net
Asset Value (NAV) per share published by the administrator of those
funds adjusted for any distributions. The Company classifies the
fair value of these investments as Level 3. The value of these
investments as at 30 November 2016 was GBP4,832,454 (2015:
GBP4,980,105). If the NAV of these investments was to increase/
decrease by 10%, this would result in an increase/ decrease in the
fair value as at 30 November 2016 of GBP483,245 (2015:
GBP498,011).
The following table shows a reconciliation of all movements in
the fair value of financial instruments categorised within Level 3
between the beginning and the end of the reporting period:
30 Nov 30 Nov
2016 2015
GBP GBP
Opening valuation 4,980,105 7,059,771
Sale proceeds - (1,841,199)
Net gain on valuation - 162,030
Movement in unrealised depreciation
on valuation (147,651) (400,497)
Closing valuation 4,832,454 4,980,105
------------------ -------------
8. TRADE AND OTHER RECEIVABLES
30 Nov 30 Nov
2016 2015
GBP GBP
Prepayments and
accrued income 35,026 149,517
Broker debtors 257,853 1,998,322
292,879 2,147,839
------------- ------------
The above carrying value of receivables is equivalent to its
fair value.
9. TRADE AND OTHER PAYABLES
30 Nov 30 Nov
2016 2015
GBP GBP
Accrued expenses 414,264 119,537
414,264 119,537
-------------- ---------
The above carrying value of payables is equivalent to its fair
value.
10. SHARE CAPITAL
The Company is authorised to issue an unlimited number of
ordinary shares of no par value.
30 Nov 2016 30 Nov 2015
SHARES GBP SHARES GBP
Shares of no par
value
Issued shares at
the start of the
year 54,905,479 51,776,209 65,516,734 62,408,460
Shares issued in
lieu of Performance
Fees 719,278 826,465 - -
Redemption of shares (25,294,388) (27,226,508) (9,554,308) (9,711,000)
Purchase of shares
into Treasury (2,000) (2,090) (1,056,947) (921,252)
Shares in issue
at the end of the
year 30,328,369 25,374,076 54,905,479 51,776,209
--------------- -------------- -------------------- ----------------------
Shareholders are entitled to receive, and participate in any
dividends out of income, other distributions of the Company
available for such purposes and resolved to be distributed in
respect of any accounting period, or other income or right to
participate therein.
On a winding up, Shareholders are entitled to the surplus assets
remaining after payment of all the creditors of the Company.
Shareholders also have the right to receive notice of and to
attend, speak and vote at general meetings of the Company and each
shareholder being present in person or by proxy or by a duly
authorised representative at a meeting shall upon a show of hands
have one vote and upon a poll each such holder present in person or
by proxy or by a duly authorised representative shall have one vote
in respect of every ordinary share held by him (or her).
11. TREASURY SHARES
30 Nov 2016 30 Nov 2015
SHARES GBP SHARES GBP
Shares held in
Treasury
Opening balance 4,389,999 3,928,697 3,333,052 3,007,445
Purchase of shares
into Treasury 2,000 2,090 1,056,947 921,252
Treasury shares
issued in lieu
of Performance
Fees (719,278) (826,465) - -
Treasury shares
cancelled during
the year (310,000) - - -
Shares in Treasury
at the end of the
year 3,362,721 3,104,322 4,389,999 3,928,697
--------------- ------------- -------------------- ----------------------
The treasury shares represent 3,362,721 (2015: 4,389,999) Shares
purchased in the market at various prices per share ranging from
GBP0.83 to GBP1.045 and held by the Company in treasury.
Cancellations of 310,000 treasury shares took place during the
year.
12. FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
a) Cash and cash equivalents that arise directly from the Company's operations; and
b) Quoted investment securities;
c) Unquoted investment securities;
d) Trade and other receivables; and
e) Trade and other payables.
13. 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 capital management risk. The Board regularly reviews and
agrees 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 Executive Directors actively
monitor market prices and report to the Board as to the
appropriateness of the prices used for valuation purposes.
If the value of the Company's investment portfolio were to
increase by 30%, it would represent a gain of GBP9,507,620 (2015:
GBP13,482,889) and this would cause the net asset value of the
Company to rise by 25.86% (2015: 24.04%).
If the value of the Company's investment portfolio were to
decrease by 30%, it would represent a loss of GBP9,507,620 (2015:
GBP13,482,889) and this would cause the net asset value of the
Company to fall by 25.86% (2015: 24.04%).
A substantial proportion of the Company's investments is in
closed-ended funds or companies sharing similar characteristics to
closed-ended funds and is subject to the risk of concentrating its
investments in this asset class. The Directors attempt to minimise
this market risk by undertaking a detailed analysis of the
risk/reward relationship prior to any investment being made. In
addition, the Company have invested in equity securities reducing
the concentration of assets to one type of asset class. No further
investments are being made as the Company is in the process of
realising its assets.
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. The Directors receive financial information on a
regular basis which is used to identify and monitor risk.
It is Company policy not to invest more than 20% of the NAV of
the Company as at the date of admission in the securities of any
one company or group at the time the investment is made. No further
investments are currently being made as the Company is in the
process of realising its assets.
Investors should be aware that the prospective returns to
Shareholders mirror the returns under the investments held or
entered into by the Company and that any default by an issuer of
any such investment held by the Company would have a consequential
adverse effect on the ability of the Company to pay some or all of
the entitlement to Shareholders. Such a default might, for example,
arise on the insolvency of an issuer of an investment.
The Company's financial assets exposed to credit risk are as
follows:
30 Nov 30 Nov
2016 2015
GBP GBP
Cash and cash equivalents 5,188,861 9,115,572
Broker debtors and
accrued income 281,314 135,483
5,470,175 9,251,055
------------------- ----------------
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is limited because
the counterparties are banks with high credit ratings assigned by
international credit-rating agencies. The Company monitors the
placement of cash balances on an on-going basis.
At the year end the cash was held in an account with Barclays,
which has a credit rating of BBB, as rated by Standard &
Poor's. No cash is held in Broker custody at year end.
The investments of the Company are held in custody by Midas
Investment Management Limited and Redmayne Bentley. Bankruptcy or
insolvency of the Brokers may cause the Company's rights with
respect to investments held by the Brokers to be delayed.
Investments held with Midas Investment Management Limited and
Redmayne Bentley are ring fenced and will be protected should the
Brokers become bankrupt or insolvent.
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.
The Directors ensure that the Company has sufficient liquid
resources available to meet its financial obligations as they fall
due.
The table below details the residual contractual maturities of
financial liabilities:
As at 30 November Over
2016 1-3 months 1 year
GBP GBP
Accrued expenses 414,264 -
Broker creditors - -
414,264 -
----------------------- -------------------
As at 30 November Over
2015 1-3 months 1 year
GBP GBP
Accrued expenses 119,537 -
Broker creditors - -
119,537 -
----------------------- -------------------
d) Interest Rate Risk
At the year end the Company held cash with Barclays, the returns
on which are subject to fluctuations in market interest rates. The
Company also holds an immaterial investment that is accruing
interest at the fixed rate of 8%.
The following table details the Company's exposure to interest
rate risks:
As at 30 November
2016:
Floating Fixed Fixed
Less 1-3 months Greater Non-interest Total
than than bearing
1 month 3 months
GBP GBP GBP GBP GBP
Assets
Designated
as at fair
value through
profit or
loss on initial
recognition:
Investments - - - 31,692,067 31,692,067
Loans and
receivables:
Trade and
other
receivables - - - 292,879 292,879
Cash and
cash equivalents 5,188,861 - - - 5,188,861
------------------- ------------------- ------------------- ------------------- --------------
Total Assets 5,188,861 - - 31,984,946 37,173,807
------------------- ------------------- ------------------- ------------------- --------------
Liabilities
Financial
liabilities
measured
at amortised
cost:
Accrued expenses - - - 414,264 414,264
------------------- ------------------- ------------------- ------------------- --------------
Total Liabilities - - - 414,264 414,264
------------------- ------------------- ------------------- ------------------- --------------
Total interest
sensitivity
gap 5,188,861
-------------------
As at 30 November
2015:
Floating Fixed Fixed
Less 1-3 months Greater Non-interest Total
than than bearing
1 month 3 months
GBP GBP GBP GBP GBP
Assets
Designated
as at fair
value through
profit or
loss on initial
recognition:
Investments - - - 44,942,965 44,942,965
Loans and
receivables:
Trade and
other receivables - - 31,254 2,116,585 2,147,839
Cash and
cash equivalents 9,115,572 - - - 9,115,572
----------------- ----------------- ----------------- ----------------- ------------------
Total Assets 9,115,572 - 31,254 47,059,550 56,206,376
----------------- ----------------- ----------------- ----------------- ------------------
Liabilities
Financial
liabilities
measured
at amortised
cost:
Accrued expenses - - - 119,537 119,537
Broker creditors - - - - -
----------------- ----------------- ----------------- ----------------- ------------------
Total Liabilities - - - 119,537 119,537
----------------- ----------------- ----------------- ----------------- ------------------
Total interest
sensitivity
gap 9,115,572
-----------------
Interest rate sensitivity
If interest rates had been 25 basis points higher and all other
variables were held constant, the Company's net gain attributable
to Shareholders for the year ended 30 November 2016 would have
increased by approximately GBP12,972 (2015: GBP22,789) or 0.04%
(2015: 0.04%) of Net Assets due to an increase in the amount of
interest receivable on the bank balances at the year end.
If interest rates had been 25 basis points lower and all other
variables were held constant, the Company's net gain attributable
to Shareholders for the year ended 30 November 2016 would have
decreased by approximately GBP12,972 (2015: GBP22,789) or 0.04%
(2015: 0.04%) of Net Assets due to an decrease in the amount of
interest receivable on the bank balances at the year end.
e) Foreign Exchange Risk
The Company does not have significant monetary assets and
liabilities denominated in currencies other than GBP at the end of
the reporting period. GBP13,883,107 (2015: GBP20,266,528) of the
Company's portfolio is invested in securities priced in foreign
currencies. The Company does not normally hedge against foreign
currency movements affecting the value of the investment portfolio,
but takes account of this risk when making decisions.
If the value of the Company's investment portfolio priced in
foreign currencies were to increase by 10%, it would represent a
gain of GBP1,388,311 (2015: GBP2,026,653) and this would cause the
net asset value of the Company to rise by 3.78% (2015: 3.61%).
If the value of the Company's investment portfolio priced in
foreign currencies were to decrease by 10%, it would represent a
loss of GBP1,388,311 (2015: GBP2,026,653) and this would cause the
net asset value of the Company to fall by 3.78% (2015: 3.61%).
f) Capital Management Risk
The investment objective of the Company was to provide
Shareholders with attractive long term returns, expected to be in
the form of capital, through a diversified portfolio.
As the Company's Ordinary shares are traded on the SFS, the
Ordinary shares may trade at a discount to their NAV per Share on
occasion. However, in structuring the Company, the Directors have
given detailed consideration to the discount risk and how this may
be managed.
The Company monitors capital on the basis of the carrying amount
of equity as presented on the face of the statement of financial
position.
There are no external requirements for the Company to maintain a
minimum level of capital.
14. RELATED PARTY TRANSACTIONS AND DIRECTORS' BENEFICIAL INTERESTS
The Company is provided with investment advice by Damille
Partners Limited (the "Service Provider"), which owns 792,691
Ordinary Shares (2.61%) in the Company. Brett Miller and Rhys
Davies are directors of both the Service Provider and the
Company.
Under the Services Agreement, Damille Partners Limited is
entitled to receive fees of 1.45% per annum of the Company's NAV
per annum on a monthly basis. During the year the Company incurred
GBP702,244 (2015: GBP880,991) of fees, of which GBP43,898 (2015:
GBP69,396) was outstanding as at the year end and is shown as part
of accrued expenses.
The Service Provider and Nimrod Capital LLP shall be entitled to
receive a Performance Fee from the Company payable in certain
circumstances. The details of the fee can be found in the Company's
prospectus available from the Company's website. The performance
fee accrued for the period amounted to GBP1,154,235 (2015: GBPnil)
of which GBP327,776 was outstanding at year end (2015: GBPnil).
There have been no related party transactions with the Directors
during the year (other than those disclosed in Note 5).
There is no one entity with ultimate control over the
Company.
15. SIGNIFICANT AGREEMENTS
Nimrod Capital LLP is the Company's Corporate and Shareholder
Advisory Agent and is entitled to receive fees of 0.20% of the
Company's NAV per annum. The minimum annual total fees payable to
Nimrod Capital LLP is GBP75,000. During the year the Company
incurred GBP90,090 (2015: GBP120,943) of costs of which GBP12,410
(2015: GBP19,377) was outstanding at the year end as shown as part
of accrued expenses.
16. SUBSEQUENT EVENTS
On 9 December 2016, the Company announced that it would return
to Shareholders by way of a compulsory partial redemption of Shares
a further amount of approximately GBP6.2 million, representing
approximately 17 percent of the Company's issued share capital.
5,199,671 Ordinary Shares were redeemed on 14 December, 2016 and
cancelled. The redemption proceeds due on the redemptions of those
Ordinary Shares were paid on 20 December, 2016.
KEY ADVISERS AND CONTACT INFORMATION
Key Information
Exchange: Specialist Fund Segment
of the LSE's Main Market
Mnemonic: for Listed Securities
Admitted to trading on: DIL2
Financial year end: 9 November, 2011
Base currency: 30 November
ISIN: Pounds Sterling
SEDOL: GG00BDFF8F11
Country of Incorporation BDFF8F1
and registered number: Guernsey - Registered
Website: number 54192
www.damilleinv.com
Management and Administration
Registered Office Secretary and Administrator
Ground Floor JTC Fund Solutions (Guernsey)
Dorey Court Limited
Admiral Park (formerly JTC (Guernsey)
St Peter Port Limited)
Guernsey GY1 2HT Ground Floor
Dorey Court
Admiral Park
St Peter Port
Guernsey GY1 2HT
Consultancy Service Provider Registrar
Damille Partners Limited Anson Registrars Limited
Blenheim Trust (BVI) Limited PO Box 426
PO Box 3483 Anson House
Road Town Havilland Street
Tortola St Peter Port
British Virgin Islands Guernsey GY1 3WX
Placing and Corporate Auditor
and Shareholder Advisory
Agent
Nimrod Capital LLP Grant Thornton Limited
3 St Helen's Place PO Box 313
London EC3A 6AB Lefebvre House
Lefebvre Street
St Peter Port
Guernsey GY1 3TF
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSSSLFIUFWSEIE
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February 09, 2017 10:56 ET (15:56 GMT)
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