TIDMDTL
RNS Number : 7270R
Dexion Trading Limited
27 August 2010
Dexion Trading Limited (the "Company")
INTERIM REPORT AND ACCOUNTS
The Company has today, in accordance with DTR 6.3.5, released its Annual
Financial Report for the period ended 30 June 2010. The Report is available
from the Company's website www.dexiontrading.comand 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 have pleasure in presenting this interim report for the six months ended 30
June 2010 and would like to thank all Shareholders for their continued support
and interest.
Despite a weak start the six months under review saw the global equity and
credit markets rally strongly in the first quarter before falling significantly
in May and June in response to concerns sparked by the S&P credit downgrades of
Greece and Portugal and concerns over any credit contagion as other governments
introduced austerity programmes. Commodities and natural resources similarly
came under pressure as markets responded to negative investor sentiment
triggered initially by the tightening of China's monetary policy. The outlook
remains cautious as uncertainty persists that the global economic recovery may
be slowing with a potential risk of a double-dip recession.
During the six month period to 30 June 2010, the net asset value of the
Company's Shares fell by 0.95%. By comparison, global equity markets also fell
by significantly more with the MSCI World Total Return Index down 9.56% (in US$
terms) whilst global bond markets rose slightly with the JPM Global Government
Bond Total Return Index up just 0.38% (in US$ terms). Over the same period the
Company's Shares traded at an average discount to their net asset value of 8.64%
and ended the period at a discount to NAV of 9.61%.
Following the trigger of the rolling 12 month discount floor provision in
February 2010, a continuation vote was held on 24 March 2010 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 99.9% of those votes cast in favour.
The Board would like to thank Shareholders for their overwhelming support.
Whilst cognisant that the share price discount to NAV is unwelcome for
Shareholders, the Board chose not to pursue its Share buyback programme in the
first half of 2010 on the basis that the discount to NAV of the Company's Shares
was narrower than those of its immediate peer group within the London listed
funds of hedge funds sector, and that the market for the Company's Shares was
relatively liquid. However, the Board continues to monitor the Company's
position amongst its peer group, and accordingly bought back 150,000 Shares in
August 2010.
The Board and the Manager continue to recognise the considerable experience of
the Investment Advisor. Since becoming a feeder fund to Permal Macro Holdings
Limited on 1 October 2007, the Company's net asset value has increased by 9.26%
to 30 June 2010, whilst the HFRX Macro Index has fallen by 0.38% over the same
period.
I look forward to writing to Shareholders again at the time of the Company full
year results for 2010.
Christopher Spencer
Chairman
25 August 2010
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 portfolio review, including 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 by eligible Shareholders on
the Company's website page which can be accessed via 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 | 31 | 30 |
| | June | December | June |
| | 2010 | 2009 | 2009 |
| | | | |
+-----------------------+-----------+-----------+-----------+
| Total Net Assets | GBP130.9m | GBP132.1m | GBP126.7m |
+-----------------------+-----------+-----------+-----------+
| Net Asset Value per | 129.30p | 130.54p | 123.74p |
| Share | | | |
+-----------------------+-----------+-----------+-----------+
| Mid-Market Share | 116.88p | 118.88p | 105.50p |
| Price | | | |
+-----------------------+-----------+-----------+-----------+
| (Discount)/Premium to | (9.61)% | (8.94)% | (14.74)% |
| Net Asset Value | | | |
+-----------------------+-----------+-----------+-----------+
As at 30 July 2010, the discount had moved to 10.79%, whilst Net Asset Value per
Share and Mid-Market Share price stood at 130.31p and 116.25p respectively.
Manager's Report
In the course of a very turbulent market environment, the net asset value of
Dexion Trading Limited fell by 0.95% during the first half 2010. This compares
to a loss of 2.3% for the HFRX Macro index.
The Company's small loss during this volatile period is testament to the
benefits of diversification amongst individual managers and strategies. The
Company's core allocations to Discretionary and Systematic strategies returned
2.1% and -0.4% in the period, whereas the satellite Natural Resources and
Relative Value Arbitrage strategies (both as reconstituted pursuant to the
recategorisation that was undertaken in August and retrospectively applied to
the first half of 2010) returned -5.1% and -0.3% respectively.
Performance by Strategy
Discretionary
Discretionary managers gained 2.1% in the first half of 2010. Early in the
period, gains were predominantly generated in the fixed income sector. In
particular, in the first couple of months of the year, the "lower for longer
theme" - expressed through long positions in developed markets bonds - proved
beneficial. In addition, managers who held positions on the spread between
German and European periphery bonds gained from the trade, which remained one of
the more consistently positive contributors to performance during the first half
of the year. The rally in risk assets which started in February generally
contributed to the strategy's returns. Particularly profitable trades included
long exposures to emerging market and commodity currencies, as well as emerging
market equities.
The bullish positioning however hurt when a radical shift in market sentiment
and a significant sell-off in risk assets took place in May, causing losses
across various asset classes. In currencies, managers' long emerging market and
commodity currencies exposure, as well as their short bias to the euro, proved
costly. A particularly painful position was short the euro versus the Swiss
franc as the Swiss National Bank's intervention caused an unexpected surge in
the euro in mid-May. US fixed income trading resulted in more bifurcated
returns amongst the underlying managers. One camp of managers profited as they
held long positions in US bonds, citing a lack of inflationary pressures and
conviction that central banks would maintain low rates for an extended period in
order to keep the recovery on track. Those that were shorting bonds however,
given their more constructive view on the US economy, suffered.
Systematic
Systematic managers lost 0.4% in the first half of 2010.
The trend-following managers in this category had a difficult start to the year
as a result of the rapid price reversals and lack of clear trends that permeated
the markets in January, generating broad losses across various asset classes.
Performance for the trend-followers subsequently improved in the first quarter,
benefiting from long short-dated bond and long equity exposure, as well as
shorts in the euro and sterling.
The abrupt change in sentiment and sell-off in risk assets that took place in
May caused a reversal of fortune for these managers, and in particular the
longer-term trend followers. Their long equity positioning proved particularly
punishing, offsetting most of the gains made in the fixed income and commodity
sectors. Conversely, shorter-term trend followers, who were able to rapidly
shift their exposure among the various asset classes they trade, fared much
better. Many were already long the US dollar and fixed income and quickly
switched their exposure to the equities and commodities sector from long to
short.
The non-trend following managers posted mixed returns over the period with early
gains coming from yield curve steepening trades in the US , later offset by long
equity index exposure in Australia and the UK, as well as US yield curve
steepeners as the curve flattened. Other managers in the group posted strong
returns for the quarter profiting from long bond exposure in the US and Germany.
Relative Value Arbitrage
Relative Value Arbitrage managers lost 0.3% in the first half of 2010. Gains
made by the fixed income arbitrage and statistical arbitrage managers were
offset by losses in equity market neutral strategies. On the fixed income
arbitrage side, managers posted positive returns early in the quarter as large
distortions caused by 2009 year-end seasonal money flows created opportunities.
These managers continued to profit throughout the period from UK and European
yield curve trading. Statistical arbitrage managers with exposure to
international equities also posted positive returns. These gains were offset by
the losses in equity market neutral strategies, which suffered amid high
volatility and frequent reversals in the equity markets.
Natural Resources
Natural Resources managers lost 5.1% in the first half of the year. Managers
with a long-bias towards natural resource-related equities were hurt early on,
when this sector, as measured by the Goldman Sachs Natural Resources Index, fell
over 6%. However, long positions in agricultural and soft commodities, and in
precious metals and related equities, contributed positively to performance into
the end of the first quarter. Long gold and precious metals exposure continued
to contribute to returns for most of the second quarter; however, the market
sell-off in May proved detrimental for the sector, negatively impacting
performance. Long positions in gold-related equities also hurt performance
despite upward price movements in gold itself. Towards the end of the second
quarter, gains were further offset by long positions in energy-related equities.
Outlook
The Company's managers are increasingly cautious on the outlook for global
growth. The focus has shifted from concerns over contagion from Europe to
trepidation about global growth. In Europe, the sovereign debt crisis
intensified at a critical stage of the global economic recovery, rattling
investor sentiment. In the US, there are indications that we may be in for an
extended period of subdued growth. In addition, many managers believe that the
effects of the stimulus measures have already been largely felt and further
stimulus is unlikely to have much impact going forward. Managers generally
believe that despite signs of a renewed slowdown, the US economy will continue
to outperform Europe. In addition, they do not believe a double-dip recession
will take place, but as growth disappoints, the Fed will maintain the lower for
longer attitude. Concerns about Europe and the US notwithstanding, macro
opportunities appear to remain plentiful. Many countries continue to have solid
fundamentals and may raise interest rates, leading to compelling yield curve and
currency trades. In addition, growth differentials between the core developed
market and emerging markets will continue to drive dispersion trades in various
asset classes. Given the increased level of volatility and uncertainty
permeating the markets however, managers have generally brought down risk in
their portfolios.
Fixed Income
As fears have recently shifted from inflationary to deflationary concerns,
managers are building long positions at the back of the US yield curve. With
policy rates at basically 0%, there is not much more the Fed can do other than
push the back end lower if the economy appears to require more support in the
coming months. Outside of the US, managers continue to be long bonds in
selected geographies such as Australia, Canada and Norway, due to sound fiscal
characteristics. In addition, managers are bullish sovereign emerging market
debt given the attractive yields.
Currencies
Although the US dollar has been a major beneficiary of safe-haven buying over
the past several months, the potential for slower growth and continued low rates
has reduced its attractiveness. However, managers tend not to be short the US
dollar against the euro, as the euro is also likely to continue weakening.
Growth currencies in countries experiencing current account surpluses and/or
those that will undergo rate hikes are likely to benefit from the decline in the
US dollar and euro. As such, managers typically hold long positions in the
Norwegian krone, Swedish krona, Canadian dollar, Korean won, Mexican peso and
Indian rupee. Given the global growth slowdown, managers have generally grown
somewhat more cautious on certain commodity-based currencies.
Equities
Positioning in equities among the Company's managers tends to be mixed, and
overall equity exposure is light. Some of the Company's managers are long
equities, particularly in emerging markets given the strong fundamentals in
those markets, while other managers choose to be short equities with the view
that the global recovery is slowing and the future for corporate profits is
uncertain.
Commodities
In the short term, until there is greater clarity surrounding global economic
growth, macroeconomic concerns are likely to continue to drive the natural
resources sector. Over the long-term, the Company's managers maintain a
positive view of the sector given the attractive supply and demand fundamentals.
This long-term view is reinforced by recent events in the space, which have
increased the cost of production of many commodities.
Analysis of significant investments
The ten largest holdings of the Company as at 30 June 2010 are set out below.
These investments were held via Permal Macro.
+----------------------------------+---------------+------------+-----------+
| Name of Investment | Strategy | | % of |
| | | Market | Company's |
| | | Value | net |
| | | GBP | assets |
| | | | |
+----------------------------------+---------------+------------+-----------+
| | | | |
+----------------------------------+---------------+------------+-----------+
| Caxton Global Investments | Discretionary | 10,667,746 | 8.15 |
| Limited | | | |
+----------------------------------+---------------+------------+-----------+
| Moore Global Investments Limited | Discretionary | 10,503,259 | 8.03 |
+----------------------------------+---------------+------------+-----------+
| Graham Prop Matrix | Systematic | 7,163,737 | 5.47 |
+----------------------------------+---------------+------------+-----------+
| JNV Overseas Fund Limited | Discretionary | 5,238,389 | 4.00 |
+----------------------------------+---------------+------------+-----------+
| Rubicon Global Fund | Discretionary | 4,917,955 | 3.76 |
+----------------------------------+---------------+------------+-----------+
| Permal Woodbine Limited | Discretionary | 3,565,425 | 2.72 |
+----------------------------------+---------------+------------+-----------+
| Permal Tudor Tensor Limited | Systematic | 3,350,491 | 2.56 |
+----------------------------------+---------------+------------+-----------+
| Permal Systematic Macro Limited | Systematic | 3,339,147 | 2.55 |
+----------------------------------+---------------+------------+-----------+
| BH Emerging Markets Strategies | Discretionary | 3,092,828 | 2.36 |
| Fund Limited | | | |
+----------------------------------+---------------+------------+-----------+
| Tudor BVI Global Fund Limited | Discretionary | 2,937,970 | 2.24 |
+----------------------------------+---------------+------------+-----------+
| | | 54,776,947 | 41.84 |
+----------------------------------+---------------+------------+-----------+
| Source: Dexion Capital plc | | | |
| calculation based on Permal data | | | |
| | | | |
| | | | |
+----------------------------------+---------------+------------+-----------+
Whilst it is generally considered best practice to disclose the full portfolio
of an investment company, the composition of Permal Macro's investment portfolio
is the subject of confidentiality provisions with Permal Macro.
Dexion Capital (Guernsey) Limited
25 August 2010
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
25 August 2010
INDEPENDENT REVIEW REPORT TO DEXION TRADING LIMITED
We have been engaged by Dexion Trading Limited (the "Company") to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 30 June 2010 which comprises the Condensed Unaudited
Statement of Financial Position, Condensed Unaudited Statement of Comprehensive
Income, the Condensed Unaudited Statement of Changes in Equity, the Condensed
Unaudited Statement of Cashf lows 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 2010 is not prepared, in all material
respects, in accordance with IAS 34 and the DTR's of the UK FSA.
Steven D Stormonth
For and on behalf of
KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors Guernsey
25 August 2010
CONDENSED UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010
+-------------------------------------------+-------+-----------+----------+
| | Notes | 30 June | 31 |
| | | | December |
+-------------------------------------------+-------+-----------+----------+
| | | 2010 | 2009 |
| | | GBP000 | GBP000 |
+-------------------------------------------+-------+-----------+----------+
| Assets | | | |
+-------------------------------------------+-------+-----------+----------+
| Financial assets at fair value through | 3 | 130,943 | 132,966 |
| profit or loss | | | |
+-------------------------------------------+-------+-----------+----------+
| Other receivables | | 14 | 5 |
+-------------------------------------------+-------+-----------+----------+
| Total assets | | 130,957 | 132,971 |
+-------------------------------------------+-------+-----------+----------+
| Liabilities | | | |
+-------------------------------------------+-------+-----------+----------+
| Accounts payable and accrued expenses | 6 | 62 | 47 |
| | | | |
+-------------------------------------------+-------+-----------+----------+
| Bank overdraft | | 21 | 798 |
+-------------------------------------------+-------+-----------+----------+
| Total liabilities | | 83 | 845 |
+-------------------------------------------+-------+-----------+----------+
| Net assets | | 130,874 | 132,126 |
+-------------------------------------------+-------+-----------+----------+
| Represented by: | | | |
+-------------------------------------------+-------+-----------+----------+
| Shareholders' fund and reserves | | | |
+-------------------------------------------+-------+-----------+----------+
| Share Premium | | 86,683 | 86,683 |
+-------------------------------------------+-------+-----------+----------+
| Reserves | | 44,191 | 45,443 |
| | | | |
+-------------------------------------------+-------+-----------+----------+
| Total shareholders' funds | | 130,874 | 132,126 |
+-------------------------------------------+-------+-----------+----------+
| Net assets per Share | 8 | 129.30p | 130.54p |
| | | | |
+-------------------------------------------+-------+-----------+----------+
CONDENSED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2010
+-------------------------------------------+-------+-----------+----------+----------+
| | Notes | 30 June | 30 June |
+-------------------------------------------+-------+-----------+---------------------+
| | | 2010 | 2009 |
| | | GBP000 | GBP000 |
+-------------------------------------------+-------+-----------+---------------------+
| Income | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Interest income | | - | 1 |
| | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Net (losses)/gains on financial assets | 3 | (1,023) | 4,924 |
| held at fair value through profit or loss | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Net (loss)/income | | (1,023) | 4,925 |
+-------------------------------------------+-------+-----------+---------------------+
| Expenses | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Fund administration fee | 9 | (20) | (19) |
+-------------------------------------------+-------+-----------+---------------------+
| Audit fee | | (11) | (22) |
+-------------------------------------------+-------+-----------+---------------------+
| Other professional fees | | (61) | (121) |
+-------------------------------------------+-------+-----------+---------------------+
| Directors' remuneration and expenses | | (34) | (34) |
+-------------------------------------------+-------+-----------+---------------------+
| Custodian charges | 9 | (20) | (19) |
+-------------------------------------------+-------+-----------+---------------------+
| Sundry expenses | | (82) | (151) |
+-------------------------------------------+-------+-----------+---------------------+
| Total operating expenses before finance | | (228) | (366) |
| costs | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Finance costs | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Interest expense | | (1) | (50) |
+-------------------------------------------+-------+-----------+---------------------+
| Total comprehensive (loss)/income for the | | (1,252) | 4,509 |
| period | | | |
+-------------------------------------------+-------+-----------+---------------------+
| Basic & Diluted (loss)/earnings per share | 11 | (1.24p) | 4.29p |
| | | | |
+-------------------------------------------+-------+-----------+----------+----------+
CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2010
+-----------------------------------+----------+----------+----------+
| | |
+-----------------------------------+--------------------------------+
| | Share | Other | Total |
| | Premium | Reserves | GBP000 |
| | GBP000 | GBP000 | |
+-----------------------------------+----------+----------+----------+
| Balance at 1 January 2010 | 86,683 | 45,443 | 132,126 |
+-----------------------------------+----------+----------+----------+
| Total comprehensive income for | | | |
| the period | | | |
+-----------------------------------+----------+----------+----------+
| Total return for the period | - | (1,252) | (1,252) |
+-----------------------------------+----------+----------+----------+
| Transactions with shareholders, | | | |
| recorded directly in equity | | | |
+-----------------------------------+----------+----------+----------+
| Purchase of own shares into | - | - | - |
| treasury | | | |
+-----------------------------------+----------+----------+----------+
| Balance as at 30 June 2010 | 86,683 | 44,191 | 130,874 |
+-----------------------------------+----------+----------+----------+
| | | | |
+-----------------------------------+----------+----------+----------+
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 |
+-----------------------------------+----------+----------+----------+
| Transactions with shareholders, | | | |
| recorded directly in equity | | | |
+-----------------------------------+----------+----------+----------+
| Purchase of own shares into | - | (10,708) | (10,708) |
| treasury | | | |
+-----------------------------------+----------+----------+----------+
| Balance as at 30 June 2009 | 86,683 | 39,979 | 126,662 |
+-----------------------------------+----------+----------+----------+
| | | | |
+-----------------------------------+----------+----------+----------+
CONDENSED UNAUDITED STATEMENT OF CASHFLOWS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2010
+---------------------------------------------+---------------+---------------+
| | 30 June | 30 June |
+---------------------------------------------+---------------+---------------+
| | 2010 | 2009 |
| | GBP000 | GBP000 |
+---------------------------------------------+---------------+---------------+
| Cashflows from operating activities | | |
+---------------------------------------------+---------------+---------------+
| Total return for the period | (1,252) | 4,509 |
+---------------------------------------------+---------------+---------------+
| Adjustments for: | | |
+---------------------------------------------+---------------+---------------+
| Net gains on financial assets held at fair | 1,023 | (4,924) |
| value through profit or loss | | |
+---------------------------------------------+---------------+---------------+
| Increase/(decrease) in creditors | 15 | (160) |
+---------------------------------------------+---------------+---------------+
| (Increase)/decrease in debtors | (9) | 26 |
+---------------------------------------------+---------------+---------------+
| Net cash used in operating activities | (223) | (549) |
+---------------------------------------------+---------------+---------------+
| Cashflows from investing activities | | |
+---------------------------------------------+---------------+---------------+
| Proceeds from sale of investments | 1,000 | 16,250 |
+---------------------------------------------+---------------+---------------+
| Net cashflow from investing activities | 1,000 | 16,250 |
+---------------------------------------------+---------------+---------------+
| Cashflows from financing activities | | |
+---------------------------------------------+---------------+---------------+
| Purchase of own shares into treasury | - | (10,708) |
+---------------------------------------------+---------------+---------------+
| Net cashflow used in financing activities | - | (10,708) |
+---------------------------------------------+---------------+---------------+
| | | |
+---------------------------------------------+---------------+---------------+
| Net increase in cash and cash equivalents | 777 | 4,993 |
+---------------------------------------------+---------------+---------------+
| Cash and cash equivalents at beginning of | (798) | (4,290) |
| the period | | |
+---------------------------------------------+---------------+---------------+
| Cash and cash equivalents at the end of the | (21) | 703 |
| period | | |
+---------------------------------------------+---------------+---------------+
| Analysis of cash at end of the period | | |
+---------------------------------------------+---------------+---------------+
| Cash at bank | - | 703 |
+---------------------------------------------+---------------+---------------+
| Bank overdraft | (21) | - |
+---------------------------------------------+---------------+---------------+
| | (21) | (703) |
+---------------------------------------------+---------------+---------------+
| Included in the net cash flows from | | |
| operating activities are: | | |
+---------------------------------------------+---------------+---------------+
| Interest income on financial assets that | - | 1 |
| are not at fair value through profit or | | |
| loss | | |
+---------------------------------------------+---------------+---------------+
| Interest expense for financial liabilities | (1) | (50) |
| that are not at fair value through profit | | |
| or loss | | |
+---------------------------------------------+---------------+---------------+
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
Statement of Compliance
The condensed financial statements for the half year ended 30 June 2010 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 2009. The financial statements of the Company as at and for
the year ended 31 December 2009 were prepared in accordance with International
Financial Reporting Standards ("IFRS").
The information for the year ended 31 December 2009 is derived from the
Financial Statements delivered to the UK Listing Authority, and does not
constitute Statutory Accounts as defined by Guernsey Law. A copy of the
Statutory Accounts for that year has been delivered to the Shareholders. The
Auditors' Report on those Financial Statements was not qualified.
The accounting policies applied by the Company in the 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 2009.
The following new standards, new interpretations and amendments to standards and
interpretations have been issued but are not effective for the financial year
beginning 1 January 2010 and have not been adopted:
In November 2009, the IASB issued IFRS 9 "Financial Instruments" which becomes
effective for accounting periods commencing on or after 1 January 2013. This
represents the first of a three part project to replace IAS 39 "Financial
Instruments: Recognition and Measurement". The objective of the standard is to
enhance the ability of investors and other users of financial information to
understand the accounting of financial assets as to reduce the complexity. The
standard is not expected to have a significant impact on the financial
statements since the majority of the Company's financial assets are designated
at fair value through profit or loss.
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. 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 judgments, 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
judgments 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 2009.
[*** UNPARSEABLE TABLE ***]
Loans and receivables presented above represent other receivables as detailed in
the condensed statement of financial position.
Liabilities presented above represent bank overdrafts and 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.
+------------------------------------------------+----------+-----------+
| Net gains and losses on financial assets at fair value |
| through profit or loss |
+-----------------------------------------------------------------------+
| | 30 June | 30 June |
+------------------------------------------------+----------+-----------+
| | 2010 | 2009 |
+------------------------------------------------+----------+-----------+
| | GBP000 | GBP000 |
+------------------------------------------------+----------+-----------+
| Realised gains/(losses) on investments | 49 | (624) |
+------------------------------------------------+----------+-----------+
| Movement in unrealised (loss)/gain on | (1,072) | 5,548 |
| investments | | |
+------------------------------------------------+----------+-----------+
| | (1,023) | 4,924 |
+------------------------------------------------+----------+-----------+
4. Financial Risk Management
Aspect of the Company's financial risk management objectives and policies are
consistent with those disclosed in the financial statements as at and for the
year ended 31 December 2009. In the opinion of the Directors, there have been no
changes to the financial risk management objectives.
5. Operating segments
Information on realised gains and losses derived from sales of investments are
disclosed in Note 3(b) to the financial statements ( see full interim report).
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 starting on page 4, the largest
single underlying investment accounts for 8.15% of the Company's net assets.
The Board, as a whole, is determined as constituting the chief operating
decision maker of the Company.
The Company also has a highly diversified shareholder population with only two
investors holding more than 10% of the Company's issued share capital (CIS Unit
Managers and Newton Investment Management Limited which held 14.1% and 10.3%
respectively as at 30 June 2010).
6. Accounts payable and accrued expenses
+------------------------------------+--------+-----------+
| | 30 | |
| | June | 31 |
| | | December |
+------------------------------------+--------+-----------+
| | 2010 | 2009 |
+------------------------------------+--------+-----------+
| | GBP000 | GBP000 |
+------------------------------------+--------+-----------+
| Other professional fees | 20 | 12 |
+------------------------------------+--------+-----------+
| Fund administration fee | 4 | 3 |
+------------------------------------+--------+-----------+
| Custodian fee | 4 | 3 |
+------------------------------------+--------+-----------+
| Directors remuneration | 17 | 17 |
+------------------------------------+--------+-----------+
| Sundry expenses | 17 | 12 |
+------------------------------------+--------+-----------+
| | 62 | 47 |
+------------------------------------+--------+-----------+
7. Share capital
+------------------------------------+--------+-----------+
| | 30 | |
| | June | 31 |
| | | December |
+------------------------------------+--------+-----------+
| | 2010 | 2009 |
+------------------------------------+--------+-----------+
| | GBP000 | GBP000 |
+------------------------------------+--------+-----------+
| Authorised | | |
+------------------------------------+--------+-----------+
| Unlimited number of Shares at no | - | - |
| par value | | |
+------------------------------------+--------+-----------+
| | | |
+------------------------------------+--------+-----------+
| Issued at no par value | | |
+------------------------------------+--------+-----------+
| 101,213,549 Shares (31 December | - | - |
| 2009: 101,213,549 Shares) | | |
+------------------------------------+--------+-----------+
| | | |
+------------------------------------+--------+-----------+
Also in issue is one subordinated non-voting Share
Reconciliation of number of shares
+------------------------------------+-------------+-----------------------------+
| | 30 | |
| | June | 31 |
| | | December |
+------------------------------------+-------------+-----------------------------+
| | 2010 | 2009 |
+------------------------------------+-------------+-----------------------------+
| | No. of | No. |
| | Shares | of Shares |
| | | |
+------------------------------------+-------------+-----------------------------+
| Issued Shares at the start of the | 101,213,549 | 112,999,958 |
| period | | |
+------------------------------------+-------------+-----------------------------+
| Purchase of own shares into | | (5,844,040) |
| treasury | - | |
+------------------------------------+-------------+-----------------------------+
| Purchase of own shares for | - | (5,942,369) |
| cancellation | | |
+------------------------------------+-------------+-----------------------------+
| | 101,213,549 | 101,213,549 |
+------------------------------------+-------------+-----------------------------+
| | | |
+------------------------------------+-------------+-----------------------------+
| Shares in treasury | 10,861,631 | 10,861,631 |
+------------------------------------+-------------+-----------------------------+
The rights attaching to the Ordinary Shares are as follows:
a) the existing Shares confer the right to all dividends (other than those
payable in respect of any C shares then in issue) in accordance with the
Articles of Association of the Company.
b) the existing Shareholders 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.
c) 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 Shares at the date of winding up
or other return of capital.
8. 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 GBP130,874,039 (31 December 2009:
GBP132,125,783) by the number of Shares in issue at the period end of
101,213,549 (31 December 2009: 101,213,549 shares).
9. Significant Agreements and Related Parties
Directors' Remuneration & Expenses
The annual Directors' fees comprise GBP26,000 (2009: GBP26,000) paid to Mr
Spencer, the Chairman, GBP22,000 (2009: GBP22,000) to Ms Goodwin as Chairman of
the Audit Committee and GBP20,000 (2009:GBP20,000) to Mr Niven. Mr Bowie has
waived his right to his fee of GBP20,000. Directors' fees payable was GBP16,953
at 30 June 2010 (2009: GBP17,093).
Manager
Following the restructuring of the Company from 1 October 2007, Permal Macro
will pay 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 in
Permal Macro 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 out of which 0.5%
will be available as trail commission to Qualifying investors.
During the period ended 30 June 2010, Permal Macro paid a total annual fee
amounting to the equivalent of GBP1,297,861 (2009: GBP1,254,442) to the
Investment Adviser and half of this amount the equivalent of GBP648,930 (2009:
GBP627,221) was paid by the Investment Adviser to the Manager.
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.
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 in which case a
termination fee equal to the fee which would otherwise have been payable if due
notice had been given in respect of the Company's investment in Permal Macro
which is then being redeemed (as at the Valuation Date immediately preceding
redemption) is payable by the Company to the Investment Adviser.
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.
Secretary
Dexion Capital (Guernsey) Limited ("the Secretary") performs secretarial duties
for which it was remunerated at an annual fee of GBP20,000 and separately
remunerated GBP1,000 for additional meetings held during the period.
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.
Investment Consultant
As at 30 June 2010, the investment Consultant has 22,255 Shares in the Company.
10. 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.
11. Earnings per share
The calculation of the return per Share is based on the total return for the
period attributable to ordinary Shareholders of GBP(1,251,744) (2009:
GBP4,509,122) and on the weighted average number of Ordinary Shares in issue
during the period ended 30 June 2010 of 101,213,549 (30 June 2009: 105,218,540).
12. Ultimate Controlling Party
In the opinion of the Directors on the basis of shareholdings advised to them,
the Company has no ultimate controlling party.
13. 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 has been extended
for drawdown or use until further notice and it is repayable on demand. The
facility is subject to review by November 2010.
14. 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.
15. Seasonality
The Company's operations are not affected by seasonality or cyclicality and as
such they have no impact on the interim financial statements.
16. Events occurring after the balance sheet date
Subsequent to 30 June 2010, the Company bought back 150,000 of its own Shares,
all of which were cancelled.
These are not full statutory accounts. The full unaudited accounts for 30 June
2010 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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