Final results for the year ended 31 March 2015

News Release 24 August 2015

AVARAE GLOBAL COINS PLC

FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2015

Avarae Global Coins plc ("Avarae" or the "Company"), the UK's only publicly traded specialist company dedicated to purchasing, holding and selling rare and high quality coins, is pleased to announce its final audited results for the year ended 31 March 2015.

Highlights for the year:

· Sales of £0.63 million (2014: £1.59 million);

· Profit on ordinary activities of increased more than 50% to £0.38 million (2014: £0.25 million);

· Recommended full year dividend of 0.15 pence per share (2014: 0.15 pence);

· Carrying value of portfolio of rare and high quality coins increased 5% to £11.14 million (2014: £10.62 million);

· Cash balance at period end of £0.88 million (2014: £0.17 million); and

· NAV per share increased for the 9th year in succession to 14.9 pence (2014: 14.5 pence).

Commenting on the results, Diane Clarke, Director of Avarae, said:

"Avarae remains well positioned as an alternative asset investment. Where other alternative asset players have suffered as a result of volatile international markets and fluctuating commodity prices, Avarae has continued to be successful, posting ever-increasing net asset values and paying regular dividends. The Company has a strong balance sheet with a healthy cash position and no debt. Trading since the year end has been active, with the Company selling more than 150 coins and recording revenues of approximately £0.51 million. Since 1 April 2015, the Company has also acquired coins with a value of approximately £0.16 million. The Directors remain optimistic about the Company's future prospects both for the current year and longer term."

The Company's audited report and accounts, together with the notice of the AGM, will today be posted to shareholders. An electronic copy of the audited report and accounts will also shortly be available on the Company's website: www.avarae.com.

For further information on Avarae Global Coins plc, please contact:

Directors' Report

Introduction

We are pleased to present the annual results for the year ended 31 March 2015. During the year under review, the Company continued to manage its portfolio of rare and high quality coins.

Avarae Global Coins plc ("Avarae" or the "Company") provides access for institutional investors and individuals wanting to diversify their investment portfolios away from the traditional asset classes such as equities, property and bonds without the need to be an expert in the coin-collecting sector. The principal objective of the Company, which has not changed since its admission to AIM ("Admission") in 2006, is to achieve capital growth for its shareholders through the purchase, holding and sale of the rarest and highest quality segment of the coin-collecting sector in various countries around the world.

Investing policy

Since Admission, we have built up an impressive portfolio of extremely high quality, rare coins which we intend to hold both for the long-term, i.e. 3 to 5 years, in order to achieve capital growth for our shareholders, and also the short-term, in order to take advantage of short-term trading opportunities, as the market for rare coins continues to grow. The value of each investment ranges from a few hundred pounds up to many hundreds of thousands of pounds. The most expensive coin acquired by Avarae to date is the Edward III Double Florin which was acquired for £0.4 million in 2006. The Double Florin is on display at the Fitzwilliam Museum in Cambridge.

The Board's decision on whether to acquire or dispose of a coin or coin collection is made on the recommendation of its industry expert independent Advisory Panel ("Panel") that assesses and approves all coin trading related activities. The Panel members are Sir John Wheeler and Clement Chambers, both of whom have significant expertise in the field of numismatics.

A principal objective of the Company is to achieve long-term capital growth through the appreciation in value of the coins acquired. Compound annual returns achieved over the medium to long-term for the highest quality and rarest coins can reach as high as 10 per cent. As at the date of this report, and since its formation in 2006, the Company has no borrowings and has no present intention of securing any borrowings.

The coin-dealing sector

The market for trading coins is international in nature and significant in size. For at least the last 10 years, there has been an increasing interest in the coin sector and its prominence as an alternative investment class is illustrated by continued increases in activity around the world, where record prices have been paid for certain rare pieces. The number of interested parties in coins and coin collections appears to be continuing to grow, with auction houses reporting significant growth in the numbers of interested bidders compared to the corresponding auctions in previous years.

As a result, activity in the rare coin market has remained positive in the year to 31 March 2015 However, in-depth knowledge of the market remains key to prosper given the changing dynamics of the market . English, Roman and Indian coins continue to show robust healthy growth, whereas the Chinese sector remains broadly flat. The numismatic industry continues to witness an influx of new buyers looking for tangible assets and fresh areas to place their money as traditional asset classes, such as commodities and currencies, fail to deliver robust financial gains and exhibit high volatility. The majority of the funds coming into the numismatic market are targeting the higher quality coin rarities and this is adding considerable pressure on availability. A number of important coins and coin collections have come up for sale worldwide with auction houses continuing to achieve record prices, particularly for the highest quality rare pieces.

Avarae's investments

Purchases

In the year to 31 March 2015, the Company acquired an additional £0.32 million worth of coins (2014: £0.63 million) which, together with the year-end revaluation exercise, resulted in the value of the coin portfolio as at 31 March 2015 increasing by £0.52 million to £11.14 million (2014: £10.62 million). In line with its investment strategy, the Company has focused on the purchase of only the highest quality and rarest coins. In particular, during the year, the Company increased its exposure to British coins.

Examples of coins acquired during the year include:

· Henry VII (1485-1509), Fine Gold Sovereign of Twenty Shillings, Group IV (c.1502-1504), crowned full robed figure of the King seated facing on ornate throne with high canopy, holding orb and sceptre. Very rare.

· Edward VI (1547-1553), Fine Gold Sovereign of Thirty Shillings, Third Period (15 December 1550 to 6 July 1553), Southwark mint, crowned full figure of King seated facing on ornate throne, holding orb and sceptre, portcullis below extending to rim, ornate throne back with large pillars. An extremely rare coin, as fewer than ten known to be held in private hands.

· James I (1603-1625), Rose Ryal of Thirty Shillings, third coinage (1619-25), seated facing full figure of robed King with orb and sceptre, on throne with plain throne back and decorated background, portcullis below. Very rare.

· Charles I (1625-1649), Unite of Twenty Shillings, Tower Mint under Parliament, group G, seventh crowned bust left, value in field behind. A superb coin, the finest known of this the final mark of the reign and of the highest rarity, as it is thought to be one of less than five available to collectors.

Sales

The highlight for the period under review was the sale of £0.5 million of English gold coins. These sales represented a 39 per cent margin over the carrying value of these coins as at the 31 March 2014.

During the year, the Company also continued its efforts to rebalance its portfolio, liquidating a significant number of the lower value items and less high quality duplicates previously acquired as part of important collections. The Company ended the period under review with approximately 1,000 coins, a reduction from almost 1,100 at the beginning of the period. This process is ongoing and the Company expects to generate several hundred thousand pounds of sales during the current financial year as a result of this exercise. Indeed, since the year end, the coin portfolio has been reduced by a further 150 of the lower value coins. It should be noted that the both quantum of gross profit and the gross profit margin achieved on the sale of these lower value coins are expected to be smaller than that expected to be achieved on the higher value and rarer coins sold.

Breakdown of our Portfolio

English milled and hammered coins represent the largest segment of the Company's portfolio, with holdings of Islamic and Indian coins also representing significant proportions of the stock. Other sectors where Avarae holds coins of notable value includes USA and South American coins. In total, Avarae holds coins from more than 50 different regions and nationalities, demonstrating its genuine global exposure.

Avarae's current intention is to hold the vast majority of its current portfolio for the foreseeable future and only make disposals of coins or collections when the Board believes it to be in the best interests of the Company and its shareholders.

Financial results

Revenue from the sale of coins or coin collections for the year ended 31 March 2015 was £0.6 million, down on the previous year's total of £1.6 million. While the overall revenue has decreased, the Company continues to demonstrate its conservative valuation policy as 2014/15 witnessed a strong increase in the gross profit margin, with sales in the year generating a 32 per cent. gross margin as compared with 18 per cent. in the prior year.

As at 31 March 2015, in line with our long-term policy, the Company instructed industry experts to undertake a detailed revaluation of its coin portfolio. This exercise is intended to apportion changes in the value of coins over the period of their ownership by Avarae rather than allocating profits (or losses) in the year of sale only. The Company's gross profit is calculated as the difference between the sale price of each coin less its carrying value brought forward, which will either be cost or the revalued amount. The industry experts considered the open market resale value of only those coins that had been held within the Company's portfolio for more than 12 months, i.e. only those coins acquired and held by Avarae on or before 31 March 2014 and excluded those purchased during the financial year under review, which were held at cost. In each of the years since the Company's inception, the Company has recorded a gross profit, thereby demonstrating the validity of the revaluation exercise.

The result of the extensive revaluation exercise carried out on the coins, as described in the accounting policies and which the Directors continue to believe to be conservative, was that the overall carrying value of the portfolio as at 31 March 2015 increased to £11.14 million (2014: £10.62 million). The primary causes of this increase of £0.5 million were that £0.3 million of coins were added to the portfolio, the brought forward coin portfolio was revalued upwards by £0.6 million (6% uplift) and coins with a brought forward carrying value of £0.4 million were sold. The Directors would expect coins from the portfolio to achieve appreciably higher returns than their revalued carrying value should they be sold at auction, as demonstrated by the 32 per cent. gross profit margin achieved on coins sold in the financial year under review.

The result of the revaluation exercise at 31 March 2015 is that, as at that date, the Company's coin portfolio comprised of coins purchased at cost of an aggregate £8.29 million (2014: £8.21 million) and a revaluation amount of £2.85 million (net of VAT payable on sale) (2014: £2.41 million).

The effect of the revaluation, together with the profits from the coin sales, resulted in the Company recording a gross profit of £0.82 million (2014: £0.66 million), an uplift of 25 per cent. Administrative expenses during the year were £0.44 million (2014: £0.41 million), the increase due entirely to a £0.4 million increase in unrecoverable VAT suffered in the year when compared to the prior year. Unrecovered VAT arises when the Company's revenue includes sales of exempt gold coins - coins specifically identified by HMRC which are exempt from VAT. Accordingly, each year the Company is unable to recover the proportion of input VAT suffered on its annual expenses equal to the proportion that exempt gold coins represents of its annual revenues. Unfortunately, within the year under review exempt gold coin sales represented a larger than historically normal proportion of overall revenue. Excluding unrecovered VAT, other administrative expenses reduced when compared to the prior year.

Net profit for the year of £0.38 million (2014: £0.25 million), delivered earnings per share of 0.47p (2014: 0.31p).

The Company ended the year with a net cash balance of approximately £0.88 million compared to £0.17 million reported at the end of March 2014. This was largely due to the realisation of receivables held at the beginning of the reporting period.

The Company's cash is prudently managed across a spread of accounts, thereby reducing the risks of the creditworthiness of any one financial institution. At the date of this report, the Company's cash balances stood at approximately £0.83million.

During the year, investments of £0.32 million (2014: £0.63 million) were made in coins and coin collections. At year end, the Company had net assets of £12.0 million (2014: £11.7 million) and no borrowings. The Directors are pleased to report that the Company's net asset value per share ("NAV") as at 31 March 2015 again increased on the prior year to 14.9 pence (2014: 14.5 pence).

Dividend

Reflecting the Company's continued NAV growth and the Board's cautiously optimistic outlook, the Board is pleased to recommend a full year dividend of 0.15 pence per share, in line with the prior year (2014: 0.15 pence per share), subject to shareholder approval which is to be sought at the Company's annual general meeting to be held on 23 September 2015. The dividend will be paid on or around 29 September 2015 to shareholders on the register as at 25 September 2015.

The dividend policy adopted by the Board is intended to be progressive and a dividend is expected to be declared on an annual basis. The level of the dividend will reflect the Company's reported profits over a three year period, thereby smoothing out any years of one-off profits (or losses). The policy will be to pay out approximately 1/3 of the average net profits reported over the most recent three year period. For the year ended 31 March 2015, the level of the dividend will be approximately £0.12 million (2014: £0.12 million).

Outlook

Avarae remains well positioned as an alternative asset investment. Where other alternative asset players have suffered as a result of volatile international markets and fluctuating commodity prices, Avarae has continued to be successful, posting ever-increasing net asset values and paying regular dividends. The Company has a strong balance sheet with a healthy cash position and no debt. Trading since the year end has been active, with the Company selling more than 150 coins and recording revenues of approximately £0.51 million. Since 1 April 2015, the Company has also acquired coins with a value of approximately £0.16 million. The Directors remain optimistic about the Company's future prospects both for the current year and longer term.

Statement of Comprehensive Income for the year ended 31 March 2015

Statement of Financial Position as at 31 March 2015

Cash Flow Statement for the year ended 31 March 2015

Statement of Changes in Equity for the year ended 31 March 2015

Notes to the Financial Statements for the year ended 31 March 2015

(1) Accounting policies

Revenue recognition

The Company's sales consist of sales of individual coins or collections of coins and are accounted for on an accruals basis. Any sales made at auction are accounted for net of any incidental auction costs incurred.

Finance income is accounted for on a received basis.

(2) Segmental information

The Company has one class of business, that of the sale of antiquarian and collectable coins. All sales have been through dealers based in the single geographic segment of the United Kingdom. Accordingly no further segmental information is presented.

(3) Taxation

The Company is resident for tax purposes in the Isle of Man.

The Company is chargeable to Isle of Man corporate income tax at the standard rate of 0%, which took effect from 6 April 2006.

(4) Earnings per share

The profit per share (basic and diluted) for the year ended 31 March 2015 was 0.47p (2014: profit per share of 0.31p). The calculation of earnings per share is based on the profit of £380,000 (2014: £253,000) for the year and the weighted average number of shares in issue being 80,783,334 (2014: 80,783,334).

(5) Coin inventory

At the year end, only those coins that had been acquired by the Company before 31 March 2014 were revalued by industry experts to their expected current market value less the VAT payable on sale. Inventory purchased during the year ended 31 March 2015 has been carried at cost. This is considered by the directors to give a fair value for the inventory. Inventory of £11,141,208 (2014: £10,620,470) is carried as 'Inventory carried at fair value less costs to sell'. The purchase cost of inventory held at 31 March 2015 was £8,293,780 (2014: £8,214,761). This cost includes all incidental costs of acquisition (including premiums and irrecoverable VAT).

IFRS 13, Fair Value Measurement, requires disclosure about fair value measurements. The coin inventory revaluation is a fair value adjustment to revalue coins to their expected current market value less VAT payable on sale. It is a level 2 fair value adjustment, as it is a valuation technique where all significant inputs are directly or indirectly observable from market data, as the revaluation is based on sales of similar coins in the market.

(6) Trade and other receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

(7) Payables

All creditors are due within one year.

(8) Share capital

(9) Dividends

Reflecting the Company's continued NAV growth and the Board's cautiously optimistic outlook, the Board is pleased to recommend a full year dividend of 0.15 pence per share (2014: 0.15 pence per share), subject to shareholder approval to be sought at the Company's annual general meeting to be held on 23 September 2015. The dividend will be paid on or around 29 September 2015 to shareholders on the register on 25 September 2015.

The dividend policy adopted by the Board is intended to be progressive and a dividend is expected to be declared on an annual basis. The level of the dividend will reflect the Company's reported profits over a three year period, thereby smoothing out any years of one-off profits (or losses). The policy will be to pay out approximately 1/3 of the average net profits reported over the most recent three year period. For the year ended 31 March 2015, the level of the dividend will be approximately £0.12 million (2014: £0.12 million) or 0.15 pence per share (2014: 0.15 pence per share).