TIDMDTL
RNS Number : 1961Y
Dexion Trading Limited
28 August 2009
DEXION TRADING LIMITED (the "Company")
INTERIM REPORT AND ACCOUNTS
The Company has today, in accordance with DTR 6.3.5, released its Interim
Financial Report for the period ended 30 June 2009. The Report is available from
the Company's website www.dexiontrading.com and will shortly be available for
inspection at the UK Listing Authority's Document Viewing Facility, which is
located at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
CHAIRMAN'S STATEMENT
I am pleased to present the Interim Report and Accounts of Dexion Trading
Limited for the six months ended 30 June 2009.
The period under review has seen an improvement in performance relative to the
last half of 2008 as a result of a decrease in equity market volatility and a
general reduction in correlations across asset classes. However, considerable
uncertainty persists in both the economic environment and worldwide governments'
responses to the ongoing financial crisis. Consequently, as managers deploy
their risk capital actively across the main asset classes, they do so
cautiously.
During the six month period to 30 June 2009, the net asset value of the
Company's Shares rose by 5.24% (in GBP terms). By comparison, global equity
markets rose with the MSCI World Total Return Index up 6.79% (in US$ terms) and
global bond markets fell with the JPM Global Government Bond Total Return Index
down 1.94% (in US$ terms). Over the same period the Company's Shares traded at
an average discount to net asset value of 13.43%. The annualised return on the
Shares from inception in November 2004 to June 2009 is 5.16% and this return has
been achieved with annualised NAV volatility of 6.02%.
Following the trigger of the 12 month discount floor provision in February 2009,
a continuation vote was held on 27 May 2009 at a class meeting of the Company's
Shares. The continuation resolution was passed with a total of 72% of the issued
Share capital voting, and 92% of those votes cast in favour. The Board would
like to thank those Shareholders who voted in favour of continuation for their
support.
The first half of 2009 has seen the continued implementation of Share buybacks
by the Company designed both to reduce the discount and also to address the
liquidity of the Shares. Demonstrating their commitment to addressing investor
concerns, the Board intends to continue to follow an active Share buyback
strategy, principally in circumstances where the share price discount becomes
out of line with discounts then prevailing in the Company's peer group within
the London listed funds of hedge funds sector.
The Board remains confident in the Investment Adviser's ability to maximise the
performance opportunities of the portfolio, and expects that, with continuing
net asset growth, the discount to NAV of the Company's Shares will continue to
narrow in the second half of the year.
Christopher Spencer
Chairman
26 August 2009
SUMMARY INFORMATION
Principal Activity
Dexion Trading Limited ("the Company") is a Guernsey authorised closed ended
investment company listed on the London Stock Exchange. Trading in the Company's
Shares commenced on 29 November 2004.
Investment Objective and Investment Policy
The Company's investment objective and policy mirrors that of Permal Macro
Holdings Limited ("Permal Macro") and it operates as a feeder fund into Permal
Macro.
Permal Macro's investment objective is to provide investment returns that have
lower risk than traditional investment returns and, over time, to achieve above
market returns. To achieve this objective, Permal Macro seeks high-quality
Portfolio Managers and invests its assets in either discretionary investment
accounts or investment vehicles managed by such Portfolio Managers. Permal
Macro's asset allocation policy is currently structured to target an annualised
return over the medium term of approximately 8% to 12% with annualised
volatility of 4% to 6% (although Permal may alter this allocation policy at any
time at its sole discretion without reference or notification to Permal Macro's
shareholders, including the Company).
Permal Macro's investments are made indirectly in the global marketplace with
exposure to financial, metal, energy, agricultural, currency and other markets.
In order to manage the overall volatility of its investments, Permal Macro seeks
to diversify its portfolio through investment in a range of Portfolio Funds
seeking to implement trading strategies in numerous US and international
currency, futures, options, forward and other derivative markets. Some of Permal
Macro's Portfolio Managers may rely principally on equity strategies
(e.g.long/short, long only), while others may rely principally on fixed income
or relative value strategies. Permal Macro's investments comprise both listed
and unlisted securities.
Shareholder Information
The Company announces its net asset value ("NAV") on a monthly basis together
with a commentary on investment performance. Estimated net asset values are
normally provided weekly. Share price, net asset value and performance
information can also be found on the Company's website www.dexiontrading.com.
However, information on that website does not form part of, nor is it
incorporated by reference into this document and that information is not
available to certain shareholders including certain overseas shareholders.
Financial Highlights
+------------------------------+-----------+-----------+-----------+
| | 30 June | 31 | 30 June |
| | 2009 | December | 2008 |
| | Shares | 2008 | Shares |
| | | Shares | |
+------------------------------+-----------+-----------+-----------+
| Total Net Assets | GBP126.7m | GBP132.9m | GBP153.4m |
+------------------------------+-----------+-----------+-----------+
| Net Asset Value per Share | 123.74p | 93.00p | 129.99p |
+------------------------------+-----------+-----------+-----------+
| Mid-Market Share Price | 105.50p | 93.00p | 134.88p |
+------------------------------+-----------+-----------+-----------+
| (Discount)/Premium to Net | (14.74)% | (20.90)% | 3.76% |
| Asset Value | | | |
+------------------------------+-----------+-----------+-----------+
MANAGER'S REPORT
The Net Asset Value of Dexion Trading Limited increased by 5.24% (in GBP terms)
in the half year to June 2009.
Investment Review
The Company's underlying discretionary macro managers were the best performers
in the first half of 2009, as anticipated at the start of the year. These gains
were primarily driven by fixed income, credit and emerging market investments.
In fixed income, long positions at the front-end of the curves, and yield curve
steepening trades across the Euro zone and the US, proved profitable for the
majority of the period. Until June, rates at the front end of these curves
continued to be anchored by the reduction in global interest rates, while yields
at the long end increased, due to the huge stimulus packages and looming supply
concerns. In emerging markets, managers believed that interest rates were too
high and needed to decrease, a view that played out correctly with long
positions in bonds proving profitable. Long exposures to the so-called
'commodity currencies' also generated solid returns. Those managers with
positions in credit instruments performed well on the heels of the sector's
strong recovery.
The underlying natural resources managers delivered strong returns during this
period, despite a difficult environment in the first couple of months. Gains
were mostly generated from long positions in both gold and energy equities,
although short exposures in natural gas also proved lucrative.
Underlying relative value arbitrage managers also experienced gains. First
quarter profits were mostly generated in fixed income arbitrage from yield curve
trading in Europe and the US. US focused equity market neutral strategies
contributed to profits, primarily in the early months of the year. Managers
subsequently gave back some of these gains as equities with weaker fundamentals
continued to outperform equities with stronger fundamentals. Statistical
arbitrage strategies focusing on European and Asian equities added to
performance throughout the first half.
The Company's underlying systematic managers were in positive territory at the
end of the first half, despite significant trend reversals in currencies,
commodities, equities and bonds. Their models proved particularly adept at
capturing the reversals in the US dollar, as long exposures were subsequently
replaced by short positions. In equities, systematic managers ultimately
captured the equity rally, having initially suffered earlier losses from being
short. Managers also recorded profits from long exposures to commodities.
Outlook
While some of the Company's underlying managers are becoming more optimistic,
the majority of managers are decidedly bearish, and believe that we are probably
not in the first phase of the 'V-shaped' recovery that the markets have been
pricing in. Managers are closely monitoring employment and housing and believe
that we need to see signs of stabilisation in these areas before we see a
sustained recovery in the broader economy. The Company's underlying managers are
nonetheless mindful that we could witness a further decoupling between real
economic progress, market sentiment and price behaviour. As such, they remain
flexible and continue to trade actively.
Fixed Income
* In fixed income, most of the Company's underlying managers believe that despite
longer term inflationary effects of the huge liquidity injections and
accommodative monetary policy, deflationary forces are becoming a greater
concern and, as such, are taking long positions at the back end of the yield
curve. They argue that given high unemployment and low capacity utilisation,
inflation is not a likely outcome.
Currencies
* In currencies, the Company's underlying managers continue to be cautious about
the US dollar. The US dollar is likely to remain under pressure, with the BRIC
countries calling for a new reserve currency and threatening to reduce their US
dollar holdings. In addition, the financing needs of the US government continue
to increase and a substantial decline in the US dollar will be necessary to
attract foreign capital. The 'commodity currencies', in particular the Brazilian
real, generally remain in favour among the Company's managers. These currencies
have positive carry and are further buoyed by strong domestic demand growth in
emerging economies, which is supportive of higher commodity prices.
Equities
* The Company's underlying managers remain cautious on equities, as some macro
indicators are starting to show signs of a moderation in the recovery which, if
confirmed, could lead to a decline in equities, particularly in the developed
world.
Commodities
* Within natural resources, the Company's underlying managers expect the lack of
investment on the supply side to be supportive of commodity prices.
Additionally, they remain particularly bullish on gold over the longterm, due
to its appeal as a store of value and as a currency standard should quantitative
easing spin out of control
Analysis of significant investments
The ten largest holdings of the Company as at 30 June 2009 are set out below.
These investments were held via Permal Macro.
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Name of | Strategy | Market | % of |
| Investment | | Value | Company's |
| | | | net |
| | | | assets |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Moore Global | Discretionary | GBP14,511,471 | 11.46 |
| Fund | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Caxton Global | Discretionary | GBP9,418,838 | 7.44 |
| Fund | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Graham Prop | Systematic | GBP6,190,597 | 4.89 |
| Matrix | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| DE Shaw Oculus | Systematic | GBP6,019,050 | 4.75 |
| International | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Bluecrest | Discretionary | GBP4,571,389 | 3.61 |
| International | | | |
| Fund | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| JNV Overseas | Discretionary | GBP4,354,449 | 3.44 |
| Fund | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Signature | Systematic | GBP3,319,054 | 2.62 |
| Advisors | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Rubicon Global | Discretionary | GBP3,259,540 | 2.57 |
| Fund | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Tudor BVI | Discretionary | GBP3,174,019 | 2.51 |
| Global | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| Permal ETS | Systematic | GBP3,130,691 | 2.47 |
| Yield | | | |
| Enhancement | | | |
| Fund | | | |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
| | | GBP57,949,098 | 45.76 |
+-----------------+-----------------------+-------------------------------------------------------------------------------------------+-----------+
Whilst it is generally considered best practice to disclose the full portfolio
of an investment company, the composition of the Company's underlying investment
portfolio is the subject of confidentiality provisions with Permal Macro.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting;
* the Chairman's Statement and Manager's Report meet the requirements of an
interim management report, and include a fair review of the information required
by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the financial
year and their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the remaining six
months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
By order of the Board
Christopher Spencer
Director
26 August 2009
INDEPENDENT REVIEW REPORT TO DEXION TRADING LIMITED
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009 which comprises the Condensed Unaudited Statement of Financial Position,
Condensed Unaudited Statement of Comprehensive Income, the Condensed Unaudited
Statement of Changes in Shareholders' Equity, the Condensed Unaudited Statement
of Cashflows and the related explanatory notes. We have read the other
information contained in the half-yearly financial report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTRs") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this 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 for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-yearly
financial report in accordance with the DTRs of the UK FSA.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with International Financial Reporting Standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with IAS 34 and the DTRs of the UK FSA.
KPMG Channel Islands Limited
Chartered Accountants
Guernsey
26 August 2009
CONDENSED UNAUDITED STATEMENT OFFINANCIAL POSITION
AS AT 30 JUNE 2009
+--------------------------------------------+-------------------------------+------------------------------------------+
| Notes | 30 | 31 |
| | June | December |
| | 2009 | 2008 |
| | GBP000 | GBP000 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Assets | | |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Financial assets at fair value through | 126,001 | 137,327 |
| profit or loss3 | | |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Other receivables | 9 | 35 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Cash at bank | 703 | - |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Total assets | 126,713 | 137,362 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Liabilities | | |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Accounts payable and accrued expenses6 | 51 | 211 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Bank overdraft | - | 4,290 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Total liabilities | 51 | 4,501 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Net assets | 126,662 | 132,861 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Represented by: | | |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Shareholders' equity and reserves | | |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Share premium8 | 86,683 | 86,683 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Other reserves | 39,979 | 46,178 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Total shareholders' equity | 126,662 | 132,861 |
+--------------------------------------------+-------------------------------+------------------------------------------+
| Net assets per Share 9 | 123.74p | 117.58p |
+--------------------------------------------+-------------------------------+------------------------------------------+
The condensed unaudited financial statements on pages 10 to 20 were approved by
the Board of Directors on 26 August 2009.
Christopher Spencer Carol Goodwin
Director Director
CONDENSED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Notes | 30 | (restated)* |
| | June | 30 June |
| | 2009 | 2008 |
| | GBP000 | GBP000 |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Income | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Net gains on financial assets held at fair | 4,924 | 7,094 |
| value through profit or loss | | |
| 3b | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Interest income | 1 | 151 |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Net investment income | 4,925 | 7,245 |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Expenses | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Fund administration fee | (19) | (22) |
| 10 | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Audit fee | (22) | (15) |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Other professional fees | (121) | (58) |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Directors' remuneration and expenses | (34) | (34) |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Custodian charges | (19) | (17) |
| 10 | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Sundry expenses | (151) | (67) |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Total operating expenses before finance | (366) | (213) |
| costs | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Finance costs | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Interest expense | (50) | (17) |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Total return for the period | 4,509 | 7,015 |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| | | |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| Basic & Diluted earnings per Share 12 | 4.29p | 8.32p |
+--------------------------------------------+-------------------------------+---------------------------------------------+
| All items derive from continuing activities. |
+--------------------------------------------------------------------------------------------------------------------------+
| (* see note 2a) |
+--------------------------------------------+-------------------------------+---------------------------------------------+
CONDENSED UNAUDITED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009
+-----------------------------------+-----------------------------------+----------+------------------------------+
| | | | |
+ +-----------------------------------+----------+------------------------------+
| | Share | Other | Total |
| | Premium | Reserves | GBP000 |
| | GBP000 | GBP000 | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Balance at 1 January 2009 | 86,683 | 46,178 | 132,861 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Total comprehensive income for | | | |
| the period | | | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Total return for the period | - | 4,509 | 4,509 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Transaction with shareholders, | | | |
| recorded directly in equity | | | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Purchase of own Shares | - | (10,708) | (10,708) |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Balance as at 30 June 2009 | 86,683 | 39,979 | 126,662 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| FOR THE SIX MONTH PERIOD ENDED 30 | | | |
| JUNE 2008 | | | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| | Share | Other | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| | Premium | Reserves | Total |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| | GBP000 | GBP000 | GBP000 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Balance at 1 January 2008 | 10,048 | 58,976 | 69,024 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Total comprehensive income for | | | |
| the period | | | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Total return for the period | - | 7,015 | 7,015 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Transaction with shareholders, | | | |
| recorded directly in equity | | | |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Issue of new Shares | 78,000 | - | 78,000 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Issue costs | (1,365) | - | (1,365) |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Sales of own Shares from treasury | - | 742 | 742 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
| Balance as at 30 June 2008 | 86,683 | 66,733 | 153,416 |
+-----------------------------------+-----------------------------------+----------+------------------------------+
CONDENSED UNAUDITED STATEMENT OF CASHFLOWS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009
+--------------------------------------------+------------------------------+---------------------------------------------+
| | 30 | (restated)* |
| | June | 30 June |
| | 2009 | 2008 |
| | GBP000 | GBP000 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Cashflows from operating activities | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Total return for the period | 4,509 | 7,015 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Adjustments: | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Net gains on financial assets held at fair | (4,924) | (7,085) |
| value through profit or loss | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Decrease in creditors | (160) | (883) |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Decrease/(increase) in debtors | 26 | (13) |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Net cash used in operating activities | (549) | (966) |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Cashflows from investing activities | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Investments acquired | - | (77,000) |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Proceeds from sale of investments | 16,250 | 6,551 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Net cashflow from/(used in) investing | 16,250 | (70,449) |
| activities | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Cashflows from financing activities | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Issue of Shares | - | 78,000 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Costs related to issue of Shares | - | (1,365) |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Sale of own Shares from treasury | - | 742 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Purchase of own Shares | (10,708) | - |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Net cashfow (used in)/from financing | (10,708) | 77,377 |
| activities | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Net increase in cash and cash equivalents | 4,993 | 5,962 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Exchange gain on cash and cash equivalents | - | 1 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Cash and cash equivalents at beginning of | (4,290) | (5,383) |
| the period | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Cash and cash equivalents at the end of | 703 | 580 |
| the period | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Analysis of cash and cash equivalents at | | |
| end of the period | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Cash at bank | 703 | 580 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| | 703 | 580 |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Included in the net cashflows from | | |
| operating activities are | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Interest income on financial assets that | 1 | 150 |
| are not at fair value through profit or | | |
| loss | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| Interest expense for financial liabilities | (50) | (17) |
| that are not at fair value through profit | | |
| or loss | | |
+--------------------------------------------+------------------------------+---------------------------------------------+
| (* see note 2a) |
+--------------------------------------------+------------------------------+---------------------------------------------+
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
1. General information
Dexion Trading Limited (the "Company") was incorporated with limited liability
in Guernsey, Channel Islands as a closed-ended investment company on 28 October
2004. The Company's Shares were listed on the London Stock Exchange on 29
November 2004.
The Company is authorised in Guernsey, Channel Islands under the Companies
(Guernsey) Law, 2008.
2. Significant accounting policies
a)Statement of Compliance
The condensed financial statements for the half year ended 30 June 2009 have
been prepared in accordance with IAS 34, 'Interim Financial Reporting' and the
Disclosures and Transparency Rules of the UK's Financial Services Authority.
The condensed interim unaudited financial statements do not include all of the
information required for full financial statements, and should be read in
conjunction with the financial statements for the Company as at and for the year
ended 31 December 2008. The financial statements of the Company as at and for
the year ended 31 December 2008 were prepared in accordance with International
Financial Reporting Standards ("IFRS").
Except as described below, the accounting policies applied by the Company in
these condensed interim financial statements are the same as those applied by
the Company in its financial statements as at and for the year ended 31 December
2008.
Changes in accounting policies
1) Determination and presentation of operating segments
The Company has adopted IFRS 8, 'Operating segments' as of 1 January 2009. The
new standard requires a 'management approach', under which segment information
is presented on the same basis as that used for internal reporting purposes.
The Board has considered the requirements of IFRS 8 'Operating Segments', and is
of the view that the Company is engaged in a single segment of business, being
investment in a fund of hedge funds. The Board, as a whole, has been determined
as constituting the chief operating decision maker of the Company. The key
measure of performance used by the Board to assess the Company's performance and
to allocate resources is the total return on the Company's net asset value, as
calculated under IFRS, and therefore no reconciliation is required between the
measure of profit or loss used by the Board and that contained in the condensed
financial statements.
2) Presentation of financial statements
The Company applies revised IAS1 'Presentation of Financial Statements (2007)',
which became effective as of 1 January 2009. As a result, the Company presents
in the Statement of Changes in Shareholders' Equity all owner equity changes,
whereas all non-owner changes in equity are presented in the Statement of
Comprehensive Income. This presentation has been applied in these condensed
interim financial statements as of and for the six months period ended on 30
June 2009.
Comparative information has been represented so that it also is in conformity
with the revised standards. Since the change in accounting policy only impacts
presentation aspects, there is no impact on earnings per share.
Certain figures in the Condensed Unaudited Statement of Comprehensive Income and
Condensed Unaudited Statement of Cashf lows have been reclassified but this has
no effect on the net result or on cashflows.
b) Basis of accounting
The financial statements are prepared in pounds sterling (GBP), which is the
Company's functional and presentation currency, rounded to the nearest thousand
pounds. Previous financial statements were rounded to the nearest pound. They
are prepared on a fair value basis for financial assets at fair value through
profit or loss and derivative financial instruments. Other financial assets and
financial liabilities are stated at amortised cost.
The preparation of the condensed interim financial statements requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant
judgements made by management in applying the Company's accounting policies and
the key sources of estimation uncertainty were the same as those that applied to
the financial statements as at and for the year ended 31 December 2008.
3. Financial Instruments
[*** UNPARSEABLE TABLE ***]
Loans and receivables presented above represent cash and cash equivalents and
other receivables as detailed in the condensed statement of financial position.
Liabilities presented above represent bank overdrafts, accounts payable and
accruals as detailed in the condensed statement of financial position.
In the opinion of the Directors, the carrying amounts of loans and receivables
and financial liabilities measured not at fair value through profit or loss
approximate their fair value.
+--------------------------------------------+--------+--------+
| b) Net gains and losses on financial assets at fair value |
| through profit or loss |
+--------------------------------------------------------------+
| | 30 | 30 |
| | June | June |
+--------------------------------------------+--------+--------+
| | 2009 | 2008 |
+--------------------------------------------+--------+--------+
| | GBP000 | GBP000 |
+--------------------------------------------+--------+--------+
| Realised gains on | (624) | 10 |
| investments | | |
+--------------------------------------------+--------+--------+
| Movement in unrealised | 5,548 | 7,084 |
| losses on investments | | |
+--------------------------------------------+--------+--------+
| | 4,924 | 7,094 |
+--------------------------------------------+--------+--------+
4. Financial risk management
Aspect of the Company's financial risk management objectives and policies are
consistent with those disclosed in the financial statement as at and for the
year ended 31 December 2008. In the opinion of the Directors, there have been no
changes to the financial risk management objectives.
The Company was previously required to give 95 days prior notice of redemptions
(expiring on a monthly valuation date) to redeem its holding in Permal Macro,
and with effect from July 2009 this has reduced to 65 days prior notice.
5. Operating Segments
Information on realised gains and losses derived from sales of investments are
disclosed in Note 3(b) to the financial statements.
The Company is domiciled in Guernsey. All of the Company's income is from its
investment in Permal Macro which is incorporated outside Guernsey.
The Company has no assets classified as non-current assets.
The Company, indirectly, has a highly diversified portfolio of investments held
via Permal Macro and, as disclosed in the Manager's report on page 4, the
largest single underlying investment accounts for 11 .46% of the Company's net
assets.
The Company also has a highly diversified shareholder population and no
individual investor owns more than 10% of the issued capital of the Company,
except CIS Unit Managers which hold 14% as at 30 June 2009.
6. Amounts payable - amounts falling due within one year
+----------------------------------+------------+-----------+
| | 30 June | 31 |
| | 2009 | December |
| | GBP000 | 2008 |
| | | GBP000 |
+----------------------------------+------------+-----------+
| Other professional fees | 17 | 7 |
+----------------------------------+------------+-----------+
| Fund administration | 3 | 4 |
+----------------------------------+------------+-----------+
| Custodian fee | 3 | 4 |
+----------------------------------+------------+-----------+
| Directors remuneration | 17 | 17 |
+----------------------------------+------------+-----------+
| Sundry expenses | 11 | 13 |
+----------------------------------+------------+-----------+
| Amounts payable for the | - | 166 |
| redemption of Shares | | |
+----------------------------------+------------+-----------+
| | 51 | 211 |
+----------------------------------+------------+-----------+
7. Share Capital
+------------------------------------+----------+------------+
| | 30 June | 31 |
| | 2009 | December |
| | GBP000 | 2008 |
| | | GBP000 |
+------------------------------------+----------+------------+
| Authorised | | |
+------------------------------------+----------+------------+
| Unlimited number of Shares at no | - | - |
| par value | | |
+------------------------------------+----------+------------+
| | |
+------------------------------------+ +
| Issued at no par value | |
+------------------------------------+ +
| 102,359,515 Shares (excluding | |
| treasury Shares) | |
| (2008:112,999,958) | |
+------------------------------------+ +
| Also in issue are two Ordinary | |
| Funding Shares and one | |
| subordinated non-voting Share | |
+------------------------------------+----------+------------+
+------------------------------------+-------------+-------------+
| Reconciliation of number of shares | 30 June | 31 |
| | 2009 | December |
| | No. of | 2008 |
| | Shares | No. of |
| | | Shares |
+------------------------------------+-------------+-------------+
| Issued Shares at the Start of the | 112,999,958 | 56,312,349 |
| period | | |
+------------------------------------+-------------+-------------+
| Issue of new Shares | - | 61,705,200 |
+------------------------------------+-------------+-------------+
| Purchase of own Shares into | (5,844,040) | (5,017,591) |
| treasury | | |
+------------------------------------+-------------+-------------+
| Ordinary Shares purchased and | (4,796,403) | - |
| cancelled | | |
+------------------------------------+-------------+-------------+
| Total Shares with voting rights | 102,359,515 | 112,999,958 |
+------------------------------------+-------------+-------------+
| | | |
+------------------------------------+-------------+-------------+
| Shares in treasury | 10,861,631 | 5,017,591 |
+------------------------------------+-------------+-------------+
The rights attaching to the Ordinary Shares are as follows:
* the existing Ordinary Shares shall confer the right to all other dividends in
accordance with the Articles of Association of the Company.
* each existing Ordinary Shareholder present in person or by proxy or (being a
corporation) present by a duly authorised representative at a general meeting
has, on a show of hands, one vote and, on a poll, one vote for every share held.
* the capital and surplus assets of the Company remaining after payment of all
creditors shall, on winding-up or on a return (other than by way of purchase or
redemption of own Shares) after conversion, be divided amongst the shareholders
on the basis of the capital attributable to the respective classes of Shares at
the date of winding up or other return of capital, and amongst the members of a
particular class pro rata according to their holdings of Shares of that class.
8. Share premium
+-----------------------------------+----------+----------+
| | 30 June | 31 |
| | 2009 | December |
| | GBP000 | 2008 |
| | | GBP000 |
+-----------------------------------+----------+----------+
| Opening balance | 86,683 | 10,048 |
+-----------------------------------+----------+----------+
| Issue of Shares | - | 78,000 |
+-----------------------------------+----------+----------+
| Financing costs | - | (1,365) |
+-----------------------------------+----------+----------+
| Closing balance | 86,683 | 86,683 |
+-----------------------------------+----------+----------+
9. Net asset value
The net asset value of each share is determined by dividing the net assets of
the Company attributed to the Shares of GBP126,662,458 (December 2008:
GBP132,861,048) by the number of Shares in issue (excluding treasury Shares) at
the period end of 102,359,515 (December 2008: 112,999,958 shares).
10. Significant Agreements and Related Parties
a)Directors' Remuneration & Expenses
The annual Directors' fees comprise GBP26,000 (2008: GBP26,000) paid to Mr
Spencer, the Chairman, GBP22,000 (2008: GBP22,000) to Ms Goodwin as Chairman of
the Audit Committee and GBP20,000 (2008: GBP20,000) to Mr Niven. Mr Bowie has
waived his right to his fee of GBP20,000. Directors' fees payable was GBP17,093
at 30 June 2009 (2008: GBP16,908).
b)Manager
Under the terms of the Investment Management Agreement, the Manager is entitled
to receive a management fee from the Company of 1.0% per annum of Total Assets
attributable to each class of Shares, calculated and payable monthly in arrears
(out of which 0.5% will be available as a trail commission to Qualifying
Investors holding Shares of the relevant class).
The Manager is responsible for discharging all the fees of the Investment
Consultant.
The Investment Management Agreement may be terminated by either party giving to
the other not less than 9 months' notice, or otherwise in circumstances where,
amongst other things, one of the parties has a receiver appointed of its assets
or if an order is made or an effective resolution passed for the winding up of
one of the parties or if, following a continuation vote not being passed or if a
resolution for the winding-up of the Company is passed.
Following the restructuring of the Company from 1 October 2007, Permal Macro
pays the Investment Adviser an annual fee (payable monthly in arrears) of 2.0%
of the value of the Total Assets attributable to its Class A Shares held by the
Company (together with certain other operational costs and expenses). The
Investment Adviser has agreed to rebate half of that amount to the Manager in
complete discharge of the Company's obligation to pay fees to the Manager
pursuant to the Investment Management Agreement as referred to below.
During the period ended 30 June 2009, Permal Macro paid a total annual fee in
respect of Class A Shares held by the Company amounting to the equivalent of
GBP1,254,442 to the Investment Adviser and half of this amount (the equivalent
of GBP627,221) was paid by the Investment Adviser to the Manager.
Under the Investment Advisory Agreement, the Company pays a nominal fee to the
Investment Adviser save where the Company's investment in Permal Macro is
redeemed otherwise than on at least nine months' notice (save where such
redemptions are to effect conversions between classes of Ordinary Shares or to
fund repurchases by the Company of Ordinary Shares or to pay costs and expenses
in the ordinary course of business) in which case a termination fee effectively
equal to 33% of the net asset value of the Company's Shares in Permal Macro as
at the Valuation Date immediately preceding redemption is payable.
c) Administrator
RBC Offshore Fund Managers Limited (the "Administrator"), performs
administrative duties for which it was remunerated at a rate of 0.03% of the Net
Asset Value of the Company subject to a minimum of GBP30,000 per annum.
d) Secretary
Dexion Capital (Guernsey) Limited ("the Secretary") performs secretarial duties
for which it was remunerated at an annual fee of GBP20,000.
e) Custodian
Royal Bank of Canada (Channel Islands) Limited ("the Custodian"), is remunerated
at an annual rate of 0.03% of the Net Asset Value of the Company subject to a
minimum of GBP10,000 per annum.
11.Taxation
The Company is registered for taxation purposes in Guernsey where it pays an
annual exempt status fee of GBP600 under The Income Tax (Exempt Bodies)
(Guernsey) Ordinances 1989.
12. Earnings Per Share
The calculation of the return per ordinary share is based on the total return
for the period attributable to ordinary shareholders of GBP4,509,122 (2008:
GBP7,014,506) and on the weighted average number of ordinary shares in issue
during the year ended 30 June 2009 of 105,218,540 (30 June 2008: 84,267,191).
13. Determination of fair value
The Company relies on and uses the NAV per class A share in Permal Macro
provided by Permal Macro's administrators to determine its fair value.
The net asset value of Permal Macro is calculated semi-monthly by Permal Macro's
administrator, Citco Fund Services (Curacao) N.V. and the Company is notified of
such net asset value by the Permal group. The method of calculation of Permal
Macro's net asset value was set out in the Company's Prospectus for the Placing
and Offer for Subscription for C Shares dated March 2008. In valuing the net
assets of Permal Macro, investments in shares of open-end underlying funds are
valued at their net asset values as indicated by the management of the
underlying funds, as adjusted from time to time in good faith. If
contemporaneous net asset value calculations of an underlying fund are not
consistently available for timely calculation of Permal Macro's net asset value,
the fund may, on a consistent basis, use the last previously reported net asset
value of such underlying fund for purposes of calculating Permal Macro's net
asset value. Investments in closed-end underlying funds whose shares are
publicly traded are valued at the last reported sales prices on the valuation
date or, if there is no sale on that date, at the mean between the closing bid
and asked prices. The securities in the managed accounts of Permal Macro are
valued at the last reported sales prices in the principal market where such
securities trade on the valuation date or, if there is no sale on such exchange
on the valuation date, at the mean between the closing bid and asked prices on
such exchange on such valuation date.
Short-term securities having a maturity of 60 days or less are valued at cost
plus any accrued interest or discount earned. Securities for which market
quotations are not readily available and other assets are valued at fair value
as determined by Permal Macro's Financial Services Adviser (Permal Asset
Management Inc.) and/or underlying portfolio managers under the supervision of
Permal Macro's directors. In cases in which a valuation date falls on a date on
which the principal market for a particular security to be valued is not open,
the security is valued in the same manner on the immediately preceding day on
which such market was open.
14. Ultimate Controlling Party
In the opinion of the Directors on the basis of shareholdings advised to them,
the Company has no ultimate controlling party.
15. Short term borrowing
The Company has a facility dated 18 November 2008 with Royal Bank Canada
(Channel Islands) Limited for an overdraft of GBP20,000,000 or 15% of Net Asset
Value in custody whichever is lower. The facility is secured by an interest over
cash and the investment portfolio of the Company. The facility covers a period
of 12 months and it is repayable on demand.
On 2 February 2009, a temporary facility was agreed for an overdraft facility of
GBP30,000,000 or 25% of Net Asset Value in custody whichever is lower until 20
April 2009. Since this date, the facility agreement has reverted to the previous
limitations.The facility is to be used for the purpose of funding day to day
operating expenses and/or timing and settlement requirements of the
Counterparty. The rate of interest will be RBC's base rate plus 1% per annum.
16. Events occurring after the balance sheet date
Subsequent to 30 June 2009, the Company bought back 50,000 of its own Shares,
all of which were cancelled.
17. Distribution policy
The Directors do not expect income (net of expenses) to be significant and do
not currently expect to declare any dividends. In the event that future net
income is significant, the Directors may consider the distribution of net income
in the form of dividends.
18. Seasonality
The Company's operations are not affected by seasonality or cyclicality and as
such they have no impact on the interim financial statements.
The full interim accounts for 30 June 2009 will be sent to Shareholders and will
be available for inspection at 1 Le Truchot, St Peter Port, Guernsey, the
Registered Office of the Company or the Company's website www.dexiontrading.com.
Enquiries:
Carol Kilby
Dexion Capital (Guernsey) Limited
Tel: +44(0)1481 743943
This information is provided by RNS
The company news service from the London Stock Exchange
END
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