13th Jul 2007 07:30
Avarae Global Coins PLC12 July 2007 AVARAE GLOBAL COINS plc ("Avarae" or the "Company") Placing of 48,000,000 new Ordinary Shares at 12.5 pence per share, auditedresults for the financial period ended 31 March 2007 and appointment of CollinsStewart as nominated adviser and broker 13 July 2007 London (AIM: AVR): 13 July 2007 - Avarae, the specialist investment companydedicated to the rare and antique coin collecting sector, is pleased to announcea secondary placing with institutional and other investors through CollinsStewart. Avarae intends, upon the satisfaction of certain conditions, to raise £6 millionbefore expenses (approximately £5.6 million after expenses) by way of a placingof 48,000,000 new Ordinary Shares with institutional and other investors at aprice of 12.5 pence per new Ordinary share, which represents a discount ofapproximately 2 per cent. to yesterday's closing market price. It is intendedthat the net proceeds from the Placing will be used to continue to fund theCompany's investments in rare coins and coin collections. The Company has todayappointed Collins Stewart as nominated adviser and broker to the Company withimmediate effect and also announces the audited results for the financial periodended 31 March 2007, which are set out below. The Company seeks to achieve capital appreciation from both longer-terminvestments and shorter-term trading opportunities. The Company invests inindividual coins and portfolios of coins with values in the range of a fewhundreds pounds up to £1,500,000. With the additional funds raised through the proposed Placing, the Company willbe able to expand the size of the fund without significantly increasing its costbase. The Directors believe that the increased size of the fund will enable theCompany to purchase a larger range of assets, including larger collections,international collections and more valuable coins. The Directors believe thatthere are sufficient opportunities available to enable Avarae to invest all theproceeds from the Placing in the short to medium term. The Placing is conditional, inter alia, upon the Company obtaining certainauthorities from its Shareholders at an EGM to be held at 2.00 p.m. on 8 August2007 at the offices of Dickinson Cruickshank, 33 Athol Street, Douglas, Isle ofMan IM1 1LB, the notice for which is included in a circular that is expected tobe distributed to Shareholders on Monday 16 July 2007. Subject, inter alia, toobtaining the necessary Shareholder authorities, Admission and dealings in thePlacing Shares are expected to commence on AIM on 9 August 2007. An Annual General Meeting will be held at 2.15 p.m. on 8 August 2007, or iflater, immediately following the EGM of the Company mentioned above at theoffices of Dickinson Cruickshank, 33 Athol Street, Douglas, Isle of Man IM1 1LB,the notice for which is expected to be distributed to Shareholders tomorrow. Audited results for the financial period from 6 February 2006 to 31 March 2007 Highlights: • Avarae is still in its investment phase with approximately £6.5 million gross funds raised to date (prior to the Placing); • No revaluation has been undertaken at year end given the short holding period; • As at 31 March 2007, the coin inventory was of approximately £4.1 million at cost (as at 31 May 2007 approximately £4.9 million), net cash was of £2.0 million (31 May 2007 approximately £1.4 million), NAV per share was 9.5p; • Sales increased to £79,000 from small scale repositioning of the portfolio (2 coins sold soon after purchase for approximately 15 per cent. return, before costs); and • Operating costs were £0.2m reflecting an efficient operating base Commenting on the proposed fundraising, Brian Hatton, Executive Director of theCompany, said: "We are very pleased with the exceptional quality of the portfolio of coinsAvarae has been able to build in its inaugural year. Since the Company'sadmission to AIM, the Advisory Panel and the team at Noble have workedtirelessly, sourcing some of the most important coin collections in thenumismatic world. The Company is seeing growing interest from investors lookingto further diversify their portfolios by seeking to invest in 'alternative'assets such as coins as well as more traditional assets such as equities andproperty. We believe the additional funds raised by the Company through thePlacing, which has effectively doubled the size of the Company, will allow us tobuild on our already impressive collection of valuable rare coins, which willmake Avarae an even more attractive investment." The above summary should be read in conjunction with the full text of thisannouncement. Enquiries: Phoenix Financial PRGordon Puckey 020 7947 2856 Collins Stewart Europe LimitedAdrian Hadden/Stewart Wallace/ Lorraine Delannoy 020 7523 8350Avarae Global Coins plcBrian Hatton 01624 615 614Matthew Wood 020 7552 0215 PLACING STATISTICS Placing Price 12.5 pence Number of Existing Shares 62,133,334 Number of Placing Shares being placed on behalf of the Company (2) 48,000,000 Estimated proceeds receivable by the Company, net of expenses (1)(2) £5.64 million Number of Ordinary Shares in issue following Admission (2) 110,133,334 Placing Shares as a percentage of the Enlarged Share Capital (2) 44 per cent. Market capitalisation of the Company immediately following the Placing at the Placing Price (2) £13.8 million Notes: (1) Net proceeds are stated after the deduction of estimated total expenses of approximately £365,000 (2) Assuming full subscription of the Placing Shares EXPECTED TIMETABLE OF EVENTS Latest time and date for receipt of Forms of Proxy 2.00 p.m. on 6 August Extraordinary General Meeting 2.00 p.m. on 8 August Annual General Meeting 2.15 p.m. on 8 August or after the EGM Admission and dealings in the Placing Shares expected to commence on AIM 8.00 a.m. on 9 August Delivery in CREST of Placing Shares to be held in uncertificated form 9 August Despatch of definitive share certificates for Placing Shares to be held in certificated form 23 August Note: Each of the times and dates above are subject to change. If any of the abovetimes and/or dates change, the revised times and/or dates will be notified toShareholders by announcement on a Regulatory Information Service. NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN. The contents of this announcement have been prepared by and are the soleresponsibility of the Company. Collins Stewart Europe Limited will not regardany person (whether or not a recipient of this announcement) other than theCompany as its customer in relation to the Placing and Admission and CollinsStewart Europe Limited will not be responsible for providing the protectionsafforded to its customers to any other person or for providing advice to anyother person in relation to the Placing and Admission or the matters referred toin or contemplated by this announcement. This announcement does not constituteor form part of any offer or invitation to sell or issue, or any solicitation ofany offer to purchase or subscribe for any securities nor shall it or any partof it or the fact of its distribution form the basis of, or be relied on inconnection with any contract therefore. This announcement is exempt from thegeneral restrictions on communication of invitations or inducements to enterinto investment activity and has therefore not been approved by an authorisedperson, as would otherwise be required by section 21 of the Financial Servicesand Markets Act 2000, as amended. This announcement does not constitute or formpart of any offer or invitation to sell or issue, or any solicitation of anyoffer to purchase or subscribe for, any securities nor shall it or any part ofit or the fact of its distribution form the basis of, or be relied on inconnection with any contract therefor. This announcement does not constitute anoffer to the public of transferable securities and so is not subject to therequirements of, or any legislation that implements, the Prospectus Directive. This announcement provides information about the Placing but does not invite anyperson to participate therein. Collins Stewart Europe Limited has alreadyseparately contacted the investors who may participate in the Placing and doesnot solicit or accept any further subscriptions. Background Information on Avarae Avarae is a strategic investment company, whose strategy is to achieve long-termcapital growth for its Shareholders through the purchase of rare and antiquecoins and coin collections from around the world. Avarae is the UK's onlypublicly traded specialist investment company dedicated to investing in rare andhigh quality coins. Avarae is currently building up a portfolio of coins that it intends to hold forthe medium to long term (i.e. more than one year), primarily in order to achievelong-term capital growth for its Shareholders, and also for shorter periods, inorder to take advantage of short-term trading opportunities, as the market forrare coins continues to grow. Avarae was admitted to trading on AIM on 24 May 2006, having raisedapproximately £5.4 million, before expenses. Further funds of £1.1 million wereraised via a secondary placing of new Ordinary Shares in June 2006 with a majorinstitutional investor. Advisory relationships Avarae is advised by Noble, which acts as an independent and experiencednumismatic adviser, providing Avarae with the necessary experience andspecialist advice regarding investments in the coin collection sector. Noble isa leading UK coin dealer, with approximately 6,000 clients and an internationalreach. Noble arranges for the coins acquired by the Company to be held insecure locations in the Greater London area and for those coins to be suitablyinsured. In order to ensure that the Board has the necessary wide ranging experience, butbearing in mind the desire to keep the Company's cost base as low as possible,the Board has created an Advisory Panel of experts who provide their views onspecific issues raised by the Board; in particular, the Board seeks the AdvisoryPanel's views on coin investment proposals. The Advisory Panel consists of SirJohn Wheeler, who has 40 years of coin collecting experience and is the jointauthor of "British Colonial and Commonwealth Coins", and David Pinckney, achartered accountant with investment fund experience. Neither Sir John Wheelernor David Pinckney currently hold Ordinary Shares, however, Sir John Wheelerwill be subscribing for 80,000 Placing Shares at the Placing Price. The Company is incorporated in the Isle of Man and has engaged the services ofHillberry Trust to provide administrative support to the Directors and to assistin the day-to-day management of the Company. Investments to date Avarae made its first purchase of rare coins just over a week following itsadmission to trading on AIM, and as at 31 May 2007, the Company had acquiredalmost 1,000 coins, investing approximately £4.9 million in aggregate. Thisequates to approximately three quarters of the current funds that the Companyhas for investment purposes. Coins or notable collections purchased include: • An important collection of English hammered and milled gold, silver and bronze coins including 17 English gold five guinea pieces struck during the reigns of Charles II, James II, William & Mary, William III, Anne, George I, II and III; • A 1933 English Pattern Penny thought to be one of only four in the world; • The 1344 Edward III Gold Double Florin or "Double Leopard", one of only three known specimens and the only one understood to be in private hands; • A complete collection of 236 German gold, silver and bronze coins, minted under German rulers over a period of 2,000 years which, because of their exceptional quality, are very rare; • A collection of extremely rare multiple Talers issued in Transylvania, Switzerland, the Netherlands, France, Germany and The Holy Roman Empire between the 16th and 18th centuries; • A collection of rare Islamic and Indian gold and silver coins covering approximately 500 years; • A collection of high quality Chinese gold and silver coinage from the 19th and 20th centuries; and • A collection of South American gold and silver coinage from the 18th to 20th century. Although Avarae is building a valuable collection of English coins, the Companyis also interested in rare coins from emerging countries such as China or India,and as at 31 May 2007, had acquired coins originating from more than 40countries. As at 31 May 2007, the portfolio split by geographic region was as follows:British 41 per cent., German 14 per cent., Italian 12 per cent., Islamic 7 percent., Ancient 5 per cent., Chinese 3 per cent., Dutch 3 per cent., Holy Roman 3per cent., French 2 per cent., Indian 2 per cent. and other regions 8 per cent. Avarae's current intention is to hold the significant majority of its currentportfolio for the foreseeable future. However, Avarae will make disposals ofcoins or coin collections to take advantage of short-term opportunities if,after considering advice from the Advisory Panel, it believes that thosedisposals are in the best interests of the Company and its Shareholders. Avarae is currently focused on its investment phase and thus to date has onlymade minor realisations, as it seeks to rebalance its portfolio by sellingduplicated or unwanted coins, although, where it has sold investments, it hasmade a return on its investments of 15 per cent. (before associated costs). Information on the coin-dealing sector The market for trading coins is international in nature and significant in size,worth several billion pounds. As an alternative investment class to equitiesand property, an investment in coins can provide another form of diversificationfor investors, particularly in periods of high capital market volatility andcomparatively low property yields. The market for rare and antique coins experiences restricted supply, given therelatively few new discoveries and the reduction in the number of coins, ascoins are lost or acquired by institutional collections or museums. Although at an early stage, the UK market is developing quickly. The Directorsbelieve that there is growing interest in the coin sector from investmentprofessionals, including banks, independent financial advisers and high networth individuals. Based on a sample of 50 English coins, typical returns onEnglish coins since 1996 have resulted in a Compound Annual Growth Rate of 11.8per cent. over a ten year period to December 2006, according to Spink, theLondon-based dealer and auctioneer. Avarae and Noble have seen increasing demand in the sector with the number oflots and prices paid in UK auctions increasing over the last few years. Theamount of coins, commemorative medals and banknotes sold at auction in Londonhas increased from c. £7 million in 2002 to c. £16 million in 2006, according tothe Antique Trade Gazette league table. The coin-collecting sector is fragmented and includes a significant number ofprivate and professional collectors as well as investors, dealers and auctionhouses. The Directors consider that the fragmented market providesopportunities for the Company to establish a valuable collection of coins, withthe added possibility of acquiring entire collections from well-knownnumismatists within the sector. The Directors also believe that the associated media coverage regarding coinshas increased the public awareness of coins as a separate investment classpotentially bolstering interest in this sector. Summary of Avarae financial performance The following table has been extracted, without material adjustment, from theaudited results of the Company for the financial period ended 31 March 2007, asset out in full in this announcement. Audited period From 6 February 2006 to 31 March 2007 £000 (or otherwise indicated) Turnover 79Gross profit 9Administrative expenses (218)Interest received 139Loss on ordinary activities (70) Net assets 5,876 NAV (per share) 9.46p The summary results set out above represent approximately 10 months of tradingfor the Company, following its incorporation on 6 February 2006 and admission toAIM at the end of May 2006. Over the period reported, the Company madepurchases of approximately 1,000 coins, investing more than £4.1 million by 31March 2007. The Company is still very much in its initial investment phasealthough it did make opportunistic sales of two coins purchased withincollections, netting an immediate 15 per cent. return (before associated costs). For the financial period ended 31 March 2007, the Directors took the importantdecision not to revalue the coin portfolio at 31 March 2007. This was due tothe fact that the majority of the coins within the portfolio had been acquiredfor less than nine months, and some for less than one month. Consequently,although the Directors are confident that the coins and collections within theportfolio have increased in value since they were purchased, it was deemed tooearly to revalue the entire portfolio and the Directors did not want to revaluecoins on a piecemeal basis. Ongoing Strategy The Company will seek to achieve capital appreciation from longer-terminvestments (which will usually be held for a time period of more than one year)and to take advantage of shorter-term trading opportunities (i.e. investmentssold potentially only days after having been purchased) if, after consideringadvice from the Advisory Panel, the Company believes that those disposals are inthe best interests of the Company and its Shareholders. Investments by theCompany may take the form of the purchase of individual coins or the purchase ofportfolios of coins. The value of each investment is expected to range from afew hundred pounds up to £1,500,000. Current Trading and Prospects As at 31 May 2007, Avarae had a coin inventory (valued at cost) of approximately£4.9 million and net cash balances of approximately £1.4 million, followingadditional investments since the financial year-end. While the Company is currently in its investment phase, it expects further salesto be limited. However, Avarae is targeting more sizeable realisations early in2008. Use of proceeds of the Placing The Company intends to use the net proceeds of the Placing, being approximately£5.6 million, to fund the Company's further investments in rare coins. With theadditional funds raised through the proposed Placing, the Company will be ableto expand the size of the fund without significantly increasing its cost base.The Directors believe that the increased size of the fund will also enable theCompany to purchase a larger range of assets, including larger collections,international collections and more valuable coins. The Directors believe thatthere are sufficient opportunities available to enable Avarae to invest all theproceeds from the Placing in the short to medium term. Details of the Placing The Company proposes to raise approximately £5.6 million (net of expenses)through the issue of the Placing Shares at the Placing Price by way of a Placingto institutional and other investors. The Placing Price represents a discountof approximately 2 per cent. to the closing middle market price of 12.75 penceon 12 July 2007, being the last practicable date prior to this announcement.The Placing Shares will represent 44 per cent. of the Enlarged Share Capital. The Placing Shares will rank pari passu with the existing Ordinary Shares andwill rank in full for any dividends and distributions paid or made in respect ofthe Ordinary Shares after the date of Admission. It is expected that definitiveevidence of title to the Placing Shares will be delivered under CREST on thedate of their Admission where delivery is requested in uncertificated form, orby first class post not later than 14 days after such date where delivery isrequested in certificated form. No temporary documents of title will be issued. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. It is expected that Admission of the PlacingShares will become effective and that dealings in the Placing Shares willcommence at 8.00 a.m. on 9 August 2007. Majority Shareholders The Company is not aware of any interest (within the meaning of article 20.5 ofits Articles of Association) in the Company's share capital which amounts, orwould immediately following the Placing amount, to three per cent. or more ofthe Company's issued Ordinary Share Capital other than the following: Prior to the Placing Following the Placing Percentage of current Percentage Ordinary issued Ordinary of Enlarged Shares share capital Shares Share Capital Elsina Limited - - 24,000,000 21.8Equity Special Situations Limited 15,200,000 24.5 16,050,000 14.6Blackrock, Inc. 8,800,000 14.2 14,000,000 12.7Pershing Keen Nominees Limited 8,533,334 13.7 8,533,334 7.8Gryphon Bond Fund Limited 4,800,000 7.7 4,800,000 4.4Allianz Insurance plc - - 4,400,000 4.0Jupiter Asset Management Limited - - 4,000,000 3.6Westminster Asset Management Limited 3,906,668 6.3 3,906,668 3.5 In addition, Sir John Wheeler, a member of the Advisory Panel, will besubscribing for 80,000 Placing Shares in the Placing and will hold 80,000Ordinary Shares following the Placing. Noble will also subscribe for 2,000,000 Placing Shares in the Placing and willhold 2,000,000 Ordinary Shares following the Placing. Extraordinary General Meeting An EGM will be held at 2.00 p.m. on 8 August 2007 at the offices of DickinsonCruickshank, 33 Athol Street, Douglas, Isle of Man IM1 1LB at which Resolutionswill be proposed for implementing the Placing. These Resolutions, if approved,will increase the authorised share capital of the Company, grant authority tothe Board to allot the Placing Shares and dis-apply pre-emption rights whichwould otherwise apply to the allotment of the Placing Shares. Recommendation The Directors consider that the Placing and the capacity to make marketpurchases are in the best interests of the Company and its Shareholders as awhole. Consequently, the Directors unanimously recommend that you vote infavour of all of the Resolutions to be proposed at the Extraordinary GeneralMeeting. AVARAE GLOBAL COINS PLC AUDITED RESULTS FOR THE FINANCIAL PERIOD FROM 6 FEBRUARY 2006 TO 31 MARCH 2007 Directors' Report Introduction We are delighted to present our first annual report to Shareholders. Thefollowing pages show the financial position of the Company for the period fromits incorporation on 6 February 2006 to 31 March 2007, together with someadditional information covering the period up to 31 May 2007. During this time,the Company floated on the AIM market of the London Stock Exchange andsimultaneously raised its first material funds for investment purposes. Avarae provides access for institutions and individuals wanting to diversifytheir investment portfolios away from the traditional asset classes such asequities, property, bonds etc without the need to be an expert in thecoin-collecting sector. The Board's current strategy is to invest actively inthe coin-collecting sector in various countries around the world. We arecurrently building up an impressive portfolio of coins which we intend to holdboth for the long-term (i.e. more than one year), in order to achieve long-termcapital growth for its Shareholders, and also the short-term, in order to takeadvantage of short-term trading opportunities, as the market for rare coinscontinues to grow. Financing Avarae is registered and incorporated in the Isle of Man. Since itsincorporation, it has raised more than £6.5 million in two financing rounds,including raising £5.0 million (before expenses), in conjunction with itsadmission to trading on AIM on 24 May 2006, and raising a further £1.1 million(before expenses) through a placing with a single major London institution inJune 2006. For a publicly traded company, Avarae maintains a very low operational cost baseof less than £0.3 million per annum, which includes the costs associated withall of the Company's numismatic advisers. The coin-dealing sector The market for trading coins is international in nature and significant in size.Over the last few months, there has been an increasing interest in the coinsector and its prominence as an alternative investment class is illustrated byrecent increases in activity around the world, where record prices have beenpaid for certain rare pieces, especially in the UK and in the US. The UK marketis still trading significantly below the levels of the US market, but the gap isnarrowing and the US market does provide an insight into the substantial sumsbeing paid for individual coins. For example, in the US a 1933 Double Eaglecoin sold for over $7.6 million, whereas the most expensive individual Britishcoin was sold in the middle of last year for £0.4 million. The number of interested parties in coins and coin collections appears to becontinuing to grow rapidly, with auction houses, particularly in the UK,continuing to report strong growth in the numbers of interested bidders comparedto the corresponding auctions in previous years. Historically, if purchased correctly, investments in coins can not only reducethe risk of overall investment portfolios, but can also produce significantlybetter returns than investments in equities, bonds or property. Individualcoins and coin collections have regularly produced annual compound returns inexcess of 10 per cent. Avarae's investments Avarae floated on 26 May 2006 and made its first purchase of rare coins the weekfollowing, on 2 June 2006. In the financial period under review the Company hasacquired almost 1,000 coins or coin collections, issued by more than 40countries investing approximately £4.1 million in aggregate. In the two monthsto the end of May 2007, the Company has acquired coins with a value of more than£0.8 million. Coins or notable collections purchased include: • A 1933 Pattern Penny, thought to be one of only four in the world; • A William III "Five Guinea" dating from 1701; • A 1344 Edward III Gold Double Florin (or "Double Leopard"), one of only three known specimens and the only one understood to be in private hands; • A George III 1770 Pattern Five Guinea; • A complete collection of 236 German gold, silver and bronze coins, minted under German rulers over a period of 2,000 years; • A collection of rare Islamic and Indian gold and silver coins covering approximately 500 years; • A collection of high quality Chinese gold and silver coinage from the 19th and 20th centuries; and • A collection of South American gold and silver coinage from the 18th to 20th century. Avarae's current intention is to hold the vast majority of its current portfoliofor the foreseeable future and only make disposals of coins or collections whenthe Board believes it to be in the best interests of the Company and itsShareholders. Change of Adviser and Placing The Company is pleased to appoint Collins Stewart Europe Limited as theCompany's Nominated Adviser ("Nomad") and Broker with immediate effect. Inconnection with the change in Nomad, the Company is pleased to also separatelyannounce today that it has conditionally placed 48,000,000 new Ordinary Shareswith existing and new institutional and other investors at a price of 12.5 penceper new Ordinary Share, raising £6 million, before costs. The Placing issubject to approval from Shareholders and Admission of the new shares to tradingon AIM. Incorporation These are the first financial statements of the Company, which was incorporatedon 6 February 2006 and commenced operations on that date. Directors' responsibilities Isle of Man company law requires the Directors to prepare financial statementsfor each financial period which give a true and fair view of the state ofaffairs of the Company and of the profit or loss of the Company for that period.In preparing those financial statements the Directors are required to: (i) select suitable accounting policies and apply them consistently; (ii) make judgements and estimates that are reasonable and prudent; (iii)state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; and (iv) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of theCompany and to enable them to ensure that the financial statements have beenproperly prepared in accordance with the Isle of Man Companies Acts 1931 to2004. They are also responsible for safeguarding the assets of the Company andhence for taking reasonable steps for the prevention and detection of fraud andother irregularities. Principal activity The principal activity of the Company is that of achieving capital growth forits Shareholders through the purchase, holding and sale of coins. Results and dividends Since incorporation, the Company has made two disposals, selling two coins for£80,500 inclusive of VAT and achieving a profit margin of 15 per cent. (13 percent. after associated costs), having previously purchased each coin only monthsearlier. Administrative costs during the period of £218,000 include some one-off costsrelating to the Company's admission to AIM and also include approximately£12,000 of costs relating to the period from the Company's incorporation to 31March 2006. Interest receivable of £139,000 during the period is expected to reduce on apro-rata basis over time as more of the fundraising proceeds are invested incoins. Net loss for the period was £70,491, resulting in a loss per share ofapproximately 0.13 pence on a weighted average number of shares in issue at theyear-end. At the period end, the Company had net assets of approximately £5.88 million, ofwhich approximately £2.0 million was in cash or short term deposits. TheCompany had no borrowings during the period. The Directors cannot recommend a dividend for the period. Directors' remuneration and interests The Directors of the Company who served during the period were: Brian Hatton (appointed 6 February 2006)Neil Orders (appointed 6 February 2006)Robert Eijkelhof (appointed 15 May 2006)Matthew Wood (appointed 23 November 2006) The remuneration of the Directors of the Company is set out in Notes 10 and 11to the accounts. None of the Directors held any shares in the Company during the year. Substantial shareholdings At 31 March 2007, the issued share capital of the Company was 62,133,334Ordinary Shares of one pence each and the following Shareholders were believedby the Board to hold 3 per cent. or more of the Company's share capital: Shareholder % HoldingEquity Special Situations Limited 24.46Blackrock, Inc. 14.16Pershing Keen Nominees Limited 13.73Gryphon Bond Fund Limited 7.73Westminster Asset Management Limited 6.29Other third party minority Shareholders subject to lock-in provisions 19.30 Corporate governance The Company continues to give careful consideration to the principles ofcorporate governance to ensure that we comply with current UK corporategovernance requirements to the extent to which the Directors consider these tobe appropriate for a company of its size and taking into account its wish toconserve cash for investments. The Board meets regularly and has ultimate responsibility for the management ofthe Company. We also meet to review our remuneration and that of the AdvisoryPanel. Relationship with Shareholders The Directors seek to build a mutual understanding of objectives between theCompany and its Shareholders. The Company reports formally to Shareholders inits interim and annual reports setting out details of its activities. Inaddition, the Company keeps Shareholders informed of events and progress duringthe year through the issue of press releases. The Annual Report is sent to Shareholders at least 23 clear days before theAnnual General Meeting. Directors are required to attend Annual GeneralMeetings of the Company unless unable to do so for personal reasons or due topressing commercial commitments. Shareholders are given the opportunity to voteon each separate issue. The Company counts all proxy votes and will indicatethe level of proxies lodged on each resolution, after it has been dealt with bya show of hands. Statement as to disclosure of information to auditors The Directors who were in office on the date of approval of these financialstatements have confirmed, as far as they are aware, that there is no relevantaudit information of which the auditors are unaware. Each of us has confirmedthat we have taken all the steps that we ought to have taken as Directors inorder to make ourselves aware of any relevant audit information and to establishthat this information has been communicated to the auditors. Auditors A resolution to re-appoint BDO Isle of Man as auditors will be proposed at theAnnual General Meeting of the Company on 8 August 2007. APPROVED BY THE BOARD OF DIRECTORS13 July 2007 AUDITORS' REPORTINDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AVARAE GLOBAL COINS PLC We have audited the financial statements of Avarae Global Coins plc for the yearended 31 March 2007, which comprise the Balance Sheet, the Profit and LossAccount, and Statement of Cash Flows, and the related notes numbered 1 to 12.These financial statements have been prepared under the accounting policies setout therein. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Directors' responsibilities for preparing the Directors' Report and thefinancial statements in accordance with applicable United Kingdom accountingstandards are set out in the statement of Directors' responsibilities. Ourresponsibility is to audit the financial statements in accordance with relevantlegal and regulatory requirements and International Standards on Auditing (UKand Ireland) issued by the Auditing Practices Board. This Report is made solelyto the Company's members, as a body, in accordance with Section 15 of theCompanies Act 1982. Our audit work has been undertaken so that we might stateto the Company's members those matters we are required to state to them in anauditor's report and for no other purpose. We do not, in giving this opinion,accept or assume responsibility for any other purpose or to any other person towhom this Report is shown or in to whose hands it may come save where expresslyagreed by our prior consent in writing. We report to you our opinion as to whether the financial statements give a trueand fair view and are properly prepared in accordance with the Companies Acts1931-2004. We also report to you if, in our opinion, the Directors' Report isnot consistent with the financial statements, if the Company has not kept properaccounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law regardingDirectors' fees and transactions with the Company is not disclosed. We have read the Directors' Report and have considered its implications for ourreport in particular in relation to any apparent misstatements or materialinconsistencies with the financial statements. Our responsibilities do notextend to any information other than the Director's Report and informationreviewed as part of our audit. COIN PORTFOLIO In forming our opinion we have considered the adequacy of the disclosures madein the financial statements concerning the valuation of the coin portfolio. Thevaluation included in the Company's balance sheet is based on the cost of thecoins (which the Directors believe is still a reasonable estimate of marketvalue at the year end given the relatively short period of time since thepurchase of the majority of the Company's coin investments), but the realisationof this value is dependent on market conditions which may vary substantiallyover time. Our opinion is not qualified in this respect. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgements made by the Directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financial statements. OPINION In our opinion the financial statements give a true and fair view of the stateof affairs of the Company as at 31 March 2007 and of the profit and cash flowsof the Company for the year then ended, are consistent with the Directors'Report and have been properly prepared in accordance with the Companies Acts1931-2004 and United Kingdom Accounting Standards. BDO Isle of Man Chartered Accountants & Registered AuditorsDouglas, Isle of Man13 July 2007 AUDITED RESULTS FOR THE PERIODFROM 6 FEBRUARY 2006 TO 31 MARCH 2007Audited profit and loss account 6 February 2006 - 31 March 2007 Note £'000 Turnover 1 79Cost of Sales (70) ----Gross profit 9 ----Administrative expenses (218) ----Loss on ordinary activities before interest (209) Interest received 139 Interest paid 0 ----Loss on ordinary activities before tax (70) Tax on profit/(loss) on ordinary activities 4 0 ----Loss on ordinary activities after taxation (70) ----Loss per share 2 (0.13p) There were no recognised gains or losses other than the loss for the period. The notes numbered 1 to 12 form part of these financial statements. Audited balance sheet As at 31 March 2007 Note £'000Current AssetsCoin inventory 3 4,067Debtors 5 86Cash at bank 2,017 ---- 6,170Creditors: amounts falling due within one year 6 (294) ----Net current assets 5,876 ----Net Assets 5,876 ----Capital and ReservesCalled up equity share capital 7 621Share premium 8 5,325Profit and loss account (70) ----Total Equity Shareholders' Funds 5,876 ----The notes numbered 1 to 12 formpart of these financialstatements. Cash flow statement 6 February 2006 - 31 March 2007 Note £'000 Net cash outflow from operating 9 (4,068)activitiesReturns on investment andservicing of financeInterest received 139Interest paid 0 ---- (3,929)Taxation 0 ----Net cash outflow before financing Financing (3,929)Issue of equity shares 6,500Expenses of issue of equity shares (554) ----Increase in cash in the period 2,017 ----Reconciliation of net cash tomovement in net funds 6 February 2006 - 31 March 2007 £'000 Increase in cash in the period 2,017 ----Movement in net funds in period 2,017Net funds at start of period 0 ----Net funds at end of period 2,017 ---- Notes to the interim results: (1) Accounting policies Basis of accounting The financial statements have been prepared under the historical cost conventionand in accordance with United Kingdom Financial Reporting Standards. Turnover Turnover represents the sale of coins exclusive of VAT. Foreign currency Foreign currency transactions are recorded at the exchange rate prevailing atthe time of the transaction. Monetary assets and liabilities denominated inforeign currencies are translated at year end rates, and non-monetary items areheld at historical cost unless carried at market value. Any exchangedifferences arising are taken to the income statement. (2) Earnings per share The loss per share for the period was 0.13p. The calculation of earnings pershare is based on the loss of £70,491 for the period and the weighted averagenumber of shares in issue (53,266,000). (3) Coin inventory Coin inventory represents the original value of coins purchased, less the costof those sold. The Directors consider this to represent a reasonable marketvalue for this year; in future years it is intended to revalue the coininventory at the end of each subsequent financial year. (4) Taxation The Company is subject to taxation in the Isle of Man at 0 per cent. As theCompany is listed on a recognised stock exchange it is also classified as a 'distributing company' and is, therefore, exempt from the Manx Government'sdistributable profits charge. Accordingly no provision for taxation has beenmade. (5) Debtors As at 31 March 2007 £'000 Trade debtors 28Prepaid expenses 58 ----Total 86 ---- (6) Creditors As at 31 March 2007 £'000Trade creditors 263Accruals 31 ---- 294 ---- All creditors are due within one year. (7) Share capital As at 31 March 2007 £'000Authorised100,000,000 ordinary shares of £0.01 each 1,000 ----Allotted, called up and fully paid62,133,334 ordinary shares of £0.01 each 621 ----(8) Share premium account As at 30 September 2006 £'000 Share premium received 5,879Less expenses (554) ---- Share premium 5,325 (9) Reconciliation of operating loss to net cash outflow from operatingactivities 6 February 2006 - 31 March 2007 £'000 Operating loss (209)(Increase) in debtors (86)(Decrease) in creditors 294(Increase) in inventory (4,067) ---- (4,068) ---- (10) Directors emoluments During the period Directors' fees were paid as detailed below. The Directorsreceived no other benefits from the Company. No Director had any interest inthe shares of the Company at any time during the period. 6 February 2006 - 31 March 2007 £Robert Eijkelhof 10,500Matthew Wood 4,000 ----Total 14,500 ---- (11) Related party transactions Brian Hatton and Neil Orders are directors of Hillberry Trust. Administrationfees of £35,057 were paid to Hillberry during the period, of which £14,742 wasin connection with the Company's admission to trading on AIM on 24 May 2006,£5,000 was in respect of the annual responsibility fee, which covers theprovision of resident statutory services and £3,000 was for the establishment ofthe Company. Matthew Wood is a director of Combined Management Services Ltd (CMS). Fees forfinancial services of £76,626 were paid to CMS during the period, of which£50,000 was in respect of the Company's admission to trading on AIM on 24 May2006. Although not formally disclosable related party issues, the Directors believethat the following information is of use to members of the Company. Stockpurchases of £4,137,264 have been made through AH Baldwin & Sons Limited ("Baldwin"), a subsidiary company of Noble. Avarae pays fees to Noble forservices related to sourcing suitable purchases for Avarae; these fees include aperformance-based element. The Managing Director of Baldwin, who is also adirector of Noble, was a founding shareholder of Avarae and continues to hold aminority stake. All purchases made by Avarae, including those made throughNoble and its subsidiaries, are independently assessed and approved by theCompany's Advisory Panel. The members of the Advisory Panel are Sir JohnWheeler and David Pinckney. Neither member has any connection with Avarae orNoble except as a member of this Panel. (12) Capital commitments and post balance sheet events At the year end the Company had no capital commitments except for the coinpurchase included in trade creditors, and there were no post balance sheetevents that the Directors believed needed disclosure. DEFINITIONS The following definitions apply throughout this announcement, unless the contextrequires otherwise: "Acts" the Isle of Man Companies Acts 1931 to 2004 "Admission" admission of the Placing Shares to AIM becoming effective in accordance with the AIM Rules for Companies. "Advisory Panel" the advisory panel constituting David Pinckney and Sir John Wheeler, who act as independent consultants to the Company "AIM" a market of the London Stock Exchange "AIM Rules for Companies" the rules of the London Stock Exchange which govern the admission to trading on and operation of AIM "AIM Rules for Nominated the AIM Rules for Nominated Advisers issued by the London Stock ExchangeAdvisers" "Avarae" or "the Company" Avarae Global Coins plc "Board" or "Directors" the board of directors of Avarae, namely Brian Hatton, Neil Orders, Robert Eijkelhof and Matthew Wood "certificated form" or "in an Ordinary Share recorded on the Company's share register as being held incertificated form" certificated form (namely, not in CREST) "Collins Stewart" Collins Stewart Europe Limited, the Company's nominated adviser, broker and placing agent "CREST" the relevant system (as defined in the Isle of Man Uncertificated Securities Regulations 2005) in respect of which Euroclear is the operator (as defined in those regulations) "Enlarged Share Capital" the Existing Shares and the Placing Shares "Euroclear" Euroclear UK & Ireland Limited, the operator of CREST "Existing Shares" the 62,133,334 Ordinary Shares in issue prior to the Placing "Extraordinary General Meeting" the extraordinary general meeting of the Company convened for 2.00 p.m. on 8or "EGM" August 2007 (or any adjournment thereof) "Form of Proxy" the form of proxy for use by Shareholders in relation to the EGM "FSA" or "Financial Services The UK Financial Services AuthorityAuthority" "Hillberry Trust" Hillberry Trust Company Limited, a company registered in the Isle of Man with registered number 001009V "London Stock Exchange" London Stock Exchange plc "Noble" Noble Investments (UK) plc, which, acting as an independent adviser, provides Avarae with specialist advice regarding investments in the coin collecting sector "Notice of EGM" the notice of EGM "Ordinary Shares" ordinary shares in the capital of Avarae having a nominal value of 1 pence each "Placing" the proposed placing of the Placing Shares pursuant to the Placing Agreement "Placing Agreement" the agreement dated 13 July 2007 made between (1) the Company and (2) Collins Stewart pursuant to which the Placing Shares will be conditionally placed at the Placing Price "Placing Price" 12.5 pence per Placing Share "Placing Shares" 48,000,000 new Ordinary Shares which are to be conditionally placed for cash in accordance with the terms of the Placing Agreement and whose allotment and issue is conditional, inter alia, on the approval of Shareholders at the EGM "Resolutions" the resolutions set out in the Notice of EGM "Shareholders" holders of Ordinary Shares "uncertificated" or "in an Ordinary Share recorded on the Company's share register as being held inuncertificated form" uncertificated form in CREST and title to which, by virtue of the Isle of Man Uncertificated Securities Regulations 2005, may be transferred by means of CREST "UK" or "United Kingdom" The United Kingdom of Great Britain and Northern Ireland This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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