TIDMTRMA TIDMTRMU
RNS Number : 8288W
Thames River Multi Hedge PCC Ltd
25 November 2010
THAMES RIVER MULTI HEDGE PCC LIMITED
PRELIMINARY ANNOUNCEMENT
The Board of Directors of Thames River Multi Hedge PCC Limited
announces interim results for the six months ended 30 September
2010. These are extracts taken from the interim accounts for the
six months ended 30 September, approved by the Board of Directors
on 25 November 2010.
Chairman's report
I welcome our investors to this interim report for the Hedge+
Cell of Thames River Multi Hedge PCC Limited (the company) for the
period covering 1 April to 30 September 2010. My report to you will
follow its usual format of a market context followed by a
performance analysis and a summary of key events for your company
over the period.
The first quarter of our financial year threw into sharp focus
the divergence in the economic cycles of Asia, the US and Europe.
China reported that its GDP grew at an annualised rate of 11.9% in
Q1, causing the government to relax the yuan peg to reduce
inflation and slow export growth. Europe by way of contrast
continued to suffer from the after-effects of a credit induced boom
and excessive public spending. Greek bond yields surged to
distressed levels as the size of the bail-out package needed to
repair the country's finances grew to over EUR100bn and Portugal
and Spain received credit downgrades leading to fears of contagion
across the region. To prevent this, European governments enacted a
program of austerity measures. Spain imposed a 5% public sector pay
cut, France raised the retirement age to 62 and the UK chancellor
presented one of the toughest ever post war budgets with a public
sector pay freeze and an increase in VAT to 20%. Germany took a
different stance as the government tried to win support for a ban
on short selling European sovereign credit much to the dismay of
the hedge fund industry. The financial sector suffered particularly
heavy losses as Spain nationalised one of its many regional savings
banks on concerns over losses in its property portfolio. The ECB
predicted that European banks would need to make a further EUR195bn
in write-downs and agreed to make the results of its US-style
stress tests public. The US on the other hand continued on the path
to recovery with strong growth in non-farm payrolls and outstanding
first quarter results from the banking sector.
The tug-of-war between strong corporate profits growth and a
deteriorating macro economic outlook dominated market sentiment in
the second quarter. The European banking sector passed the ECB
tests but the regulatory regime for the sector tightened further as
the FSA brought in additional mortgage lending rules in the UK, the
EU enacted a stringent bonus deferral programme, and President
Obama signed the Financial Reform Bill in the US. The auto industry
produced some spectacular earnings recovery data as BMW's and
Toyota's profits surged and GM prepared to re-list to escape from
government control following its strong recovery. The insurance and
banking sectors also produced some excellent earnings from AIG in
the US, HSBC and Barclays in the UK and BNP Paribas in France. At
the macro level there was considerable evidence of dispersion both
between countries and within regions as US consumer spending and
home sales stalled whilst German exports and GDP surged compared to
Greece where the economy shrank for the seventh successive quarter.
Emerging markets continued to show strong evidence of de-coupling
from the West as China officially became the world's second largest
economy and McDonalds made history with the first yuan denominated
bond issue in Hong Kong by a US company. The quarter ended on a
strong note as markets rallied strongly in reaction to the Fed
hinting that monetary policy would remain loose and Moodys cutting
their corporate default rate projection to 3% for the end of this
year. In Japan, the BoJ announced a Yen11trn stimulus programme in
an attempt to weaken the yen, which soared to a record monthly high
of Yen83.5 against the US dollar.
This interim reporting period has been divided into one quarter
of risk-averse trading conditions and one quarter of risk-seeking
behaviour. In addition, markets have switched regimes intra-month
making trading conditions for hedge fund managers unusually
difficult. This has been reflected in the HFRX Hedge Fund Index
returning only 0.28% for the period and the HFRI Fund of Funds
Composite Index only returning 0.58% over the review period. The
NAV of the underlying portfolio of your company has fallen by 0.9%
over this period. This is a slightly below average performance and
I think it is fair to say that this has been reflected in the
prices of each of your respective share classes. The discount to
NAV for the Sterling, Euro and Dollar Share Classes has widened
significantly from 12.5% to 18.7%; 11.9% to 17.2% and 15.4% to
18.4% respectively. The widening of the discount has occurred
despite an extensive programme of share repurchases by your
company. During the reporting period we repurchased 8.05% of the
Sterling Shares and 9.02% of the Dollar Shares in issue at 1 April
2010.
Your board is mindful of the requirement to meet the needs of
both continuing and redeeming shareholders. In view of this, your
company has continued to be one of the most pro-active companies in
the closed-ended fund of hedge fund space in returning capital to
shareholders. Your board has announced an intention to offer a
discretionary semi-annual redemption facility to shareholders this
December in addition to the ongoing buy-back programme.
In my last report, I mentioned the then recently-announced
acquisition of the Investment Manager by F&C Asset Management
plc and I am pleased to say that the transaction was completed in 1
September of this year. As advised at the time, there has been no
change to the investment team or process at Thames River and the
board is advised that the integration of the businesses is
proceeding according to plan.
The investment manager's report, which follows, will explain why
your board regards the last six months to be a short term setback
in an otherwise solid track record.
William Backhouse
25 November 2010
BALANCE SHEET
As at 30 September 2010
September March
2010 2010
US$000's US$000's
Current assets
Cash 31,610 20,761
Margin cash - 5,922
Debtors 1,700 16,886
Financial assets at fair value through profit
or loss 398,650 429,085
Total assets 431,960 472,654
------------ ------------
Current liabilities
Bank borrowings (25,000) (40,000)
Creditors (3,370) (4,592)
Financial liabilities at fair value through
profit or loss (372) (1,136)
Total liabilities (28,742) (45,728)
------------ ------------
Total net assets 403,218 426,926
============ ============
Capital and revenue attributable to the Fund's
equity holders
Share capital - -
Share premium 569,501 596,694
Retained earnings (166,283) (169,768)
Total equity 403,218 426,926
============ ============
Shares in issue
Sterling shares 168,288,005 182,229,082
Euro shares 6,022,076 6,142,715
Dollar shares 16,390,031 19,280,007
Net asset value per share
Sterling shares GBP1.4078 GBP1.4223
Euro shares EUR1.2769 EUR1.2943
Dollar shares $1.1827 $1.1932
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September
2010
Share Share Retained
Capital Premium Earnings Total
US$000's US$000's US$000's US$000's
Management Shares - - - -
======================== ========= ========== =========
Sterling Shares
Opening balance 1
April 2010 - 558,257 (165,094) 393,163
Redemption of
shares - - - -
Purchase of
shares into
treasury - - - -
Purchase of
shares for
cancellation - (25,415) - (25,415)
Switches - 1,584 - 1,584
Net gain for the
year - - 4,002 4,002
---------
Closing balance
30 September
2010 - 534,426 (161,092) 373,334
======================== ========= ========== =========
Euro Shares
Opening balance 1
April 2010 - 9,402 1,357 10,759
Redemption of
shares - - - -
Purchase of
shares into
treasury - - - -
Switches - (212) - (212)
Net loss for the
year - - (48) (48)
---------
Closing balance
30 September
2010 - 9,190 1,309 10,499
======================== ========= ========== =========
Dollar Shares
Opening balance 1
April 2010 - 29,035 (6,031) 23,004
Redemption of
shares - - - -
Purchase of
shares into
treasury - - - -
Purchase of
shares for
cancellation - (1,778) - (1,778)
Switches - (1,372) - (1,372)
Net loss for the
year - - (469) (469)
Closing balance
30 September
2010 - 25,885 (6,500) 19,385
======================== ========= ========== =========
Total
Opening balance 1
April 2010 - 596,694 (169,768) 426,926
Redemption of
shares - - - -
Purchase of
shares into
treasury - - - -
Purchase of
shares for
cancellation - (27,193) - (27,193)
Net gain for the
year - - 3,485 3,485
Closing balance
30 September
2010 - 569,501 (166,283) 403,218
======================== ========= ========== =========
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September
2009
Share Share Retained
Capital Premium Earnings Total
US$000's US$000's US$000's US$000's
Management Shares - - - -
========== ========= ========== =========
Sterling Shares
Opening balance 1 April 2009 - 640,032 (232,374) 407,658
Purchase of shares into
treasury - (34,414) - (34,414)
Purchase of shares for
cancellation - (12,321) - (12,321)
Switches - 5,603 - 5,603
Net gain for the period - - 93,419 93,419
---------
Closing balance 30 September
2009 - 598,900 (138,955) 459,945
========== ========= ========== =========
Euro Shares
Opening balance 1 April 2009 - 7,004 (434) 6,570
Purchase of shares into
treasury - (227) - (227)
Switches - 4,172 - 4,172
Net gain for the period - - 2,470 2,470
---------
Closing balance 30 September
2009 - 10,949 2,036 12,985
========== ========= ========== =========
Dollar Shares
Opening balance 1 April 2009 - 45,692 (8,307) 37,385
Purchase of shares into
treasury - (446) - (446)
Purchase of shares for
cancellation - (4,244) - (4,244)
Switches - (9,775) - (9,775)
Net gain for the period - - 2,996 2,996
Closing balance 30 September
2009 - 31,227 (5,311) 25,916
========== ========= ========== =========
Realisation Shares
Opening balance 1 April 2009 - 12,439 (5,260) 7,179
Redemption of shares - (241) - (241)
Purchase of shares into
treasury - (469) - (469)
Switches - - - -
Net gain for the period - - 1,569 1,569
Closing balance 30 September
2009 - 11,729 (3,691) 8,038
========== ========= ========== =========
Total
Opening balance 1 April 2009 - 705,167 (246,375) 458,792
Redemption of shares - (241) - (241)
Purchase of shares into
treasury - (35,556) - (35,556)
Purchase of shares for
cancellation - (16,565) - (16,565)
Switches - - - -
Net gain for the period - - 100,454 100,454
Closing balance 30 September
2009 - 652,805 (145,921) 506,884
========== ========= ========== =========
INCOME
STATEMENT
For the six
months ended 30
September 2010
September September
2010 2009
Notes US$000's US$000's
Revenue 2
Net gain on
financial
assets and
liabilities at
fair value
through profit
or loss 7,682 105,741
Total
investment
income 7,682 105,741
----------- ------------
Expenses 2
Management fees 2,824 3,754
Administration
fee 187 213
General
expenses 125 180
Custody fees 90 137
Directors' and
officers'
insurance 37 37
Total operating
expenses 3,263 4,321
----------- ------------
Operating
profit 4,419 101,420
Finance costs
Interest
expense (453) (517)
Facility fee (481) (449)
Total finance
costs (934) (966)
----------- ------------
Net gain for
the period
attributable
to the
Company's
equity
holders 3,485 100,454
=========== ============
September 2010
Sterling Euro US Dollar Realisation
Earnings per
share Shares Shares Shares Shares
Net gain/(loss)
attributable
to the
Company's
equity holders
(US$000's) 4,002 (48) (469) NA
Number of
shares in
issue
(weighted
average in the
period) 174,521,338 6,022,076 16,680,031 NA
Basic earnings
per share
(expressed in
US$ per
share) 2.29c (0.80)c (2.81)c NA
Basic earnings
per share in
share class
currency 1.50p (0.61)c (2.81)c NA
September 2009
Sterling Euro US Dollar Realisation
Earnings per
share Shares Shares Shares Shares
Net gain
attributable
to the
Company's
equity holders
(US$000's) 93,419 2,470 2,996 1,569
Number of
shares in
issue
(weighted
average in the
period) 215,070,718 7,023,872 22,195,488 5,905,626
Basic earnings 43.44c 35.17c 13.50c 26.57c
per share
(expressed in
US$ per
share)
Basic earnings 27.07p 24.95c 13.50c 16.56p
per share in
share class
currency
CASHFLOW STATEMENT
For the six months ended 30 September 2010
September September
2010 2009
US$000's US$000's
Cash flows from operating activities
Purchase of financial assets and settlement
of financial liabilities (39,789) (83,763)
Proceeds from sale of financial assets at fair
value through
profit or loss and forward foreign currency
contracts 92,371 223,526
Movements in margin accounts 5,922 -
Other operating expenses (937) (4,170)
Interest received - 2
Net cash inflow from operating activities 57,567 135,595
---------- ----------
Cash flows from financing activities
Interest paid (2,291) (449)
Proceeds from participating shares issued - -
Redemption of participating shares (29,082) (52,375)
Net cash outflow from financing activities (31,373) (52,824)
---------- ----------
Net increase in cash and cash equivalents 26,194 82,771
Cash and cash equivalents at the beginning of
the period (19,239) (35,425)
Exchange loss on cash and cash equivalents (345) (69)
Cash and cash equivalents at the end of the
period 6,610 47,277
========== ==========
Cash at the end of the period is comprised of:
Cash at bank 31,610 47,277
Bank borrowings (25,000) -
6,610 47,277
========== ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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