21st Nov 2007 07:01
Avarae Global Coins PLC21 November 2007 AVARAE GLOBAL COINS PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2007 London (AIM: AVR): 21 November 2007 - Avarae Global Coins plc ("Avarae" or the "Company"), the UK's only publicly traded specialist investment company dedicatedto investing in rare and high quality coins, is pleased to announce itsunaudited interim results for the six months to 30 September 2007. Highlights for the period include: • Successful placing in August of 48.0 million new shares with existing and new institutional investors raising £6.0 million (before expenses). • More than £2.0 million invested in rare and high quality coins in the period, taking value at cost of coin inventory to more than £6.0 million at the period end. • Coin inventory now boasts impressive collections from emerging nations such as India, China and Middle East (Islamic coins), where increasing repatriation of heritage is driving up values. • Collections of English coins still dominate the portfolio with impressive additions in the period, including: o very rare George III gold and silver coins and examples of early 18th Century Queen Anne; and o significant coins from the Anglo-Saxon period, including pennies from the time of Edward the Confessor, William the Conqueror and Alfred the Great. • 19 per cent. average return generated from opportunistic sales in the period of a small number of coins recently acquired into the portfolio, demonstrating potential returns achievable over the longer term. • Net loss for the period of approximately £0.12 million (loss per share of 0.16 pence). • Net assets as at 30 September 2007 of £11.4 million, representing 10.3 pence per share, of which 5.5 pence is coin portfolio at cost and 4.8 pence is net cash. Commenting, Brian Hatton, Executive Director of Avarae, said: "We are pleased with the progress in the period, especially having secured the£6.0 million additional funding in August which enables us to continue to cherrypick the most important coins and collections which we believe will provide thegreatest return to shareholders over the coming years. The market for rare coinsremains a strong one with record prices being paid in the major coin auctionsduring 2007 (New York, London, Hong Kong), all of which augurs well for us whenwe come to realise some of the rarest and most significant coins and collectionswithin our portfolio. We continue to believe that there is increasing interestfrom investors seeking to diversify their investments away from the traditionalassets of stocks, bonds and property and that holding shares in Avarae enablesinvestors to benefit from the solid and predictable returns that can be madefrom assets such as rare coins. Although it still remains early in the investment cycle of the Companyregarding any significant realisations from the resale of coins, we areoptimistic that, as the rare coin market continues to grow and prices continueto rise for the very rarest and most important coins, Avarae is well placed tomake some significant gains over the course of the next few years." For further information on Avarae Global Coins plc, please contact: Brian Hatton/Matthew Wood +44 (0)16 2461 5614 Avarae Global Coins plc Adrian Hadden/Stewart Wallace/Lorraine Delannoy +44 (0)20 7523 8350Collins Stewart Europe Limited Gordon Puckey/Sarah Scott +44 (0)20 7947 2856/7Phoenix Financial PR AVARAE GLOBAL COINS PLC Directors' Review Introduction We are pleased to present Avarae's results for the first half to 30 September2007, a period that was dominated by the successful £6.0 million fundraisingcompleted in August, and to provide an update to shareholders on the Company'sactivities post the period end. Avarae is the UK's only publicly traded specialist investment company dedicatedto investing in rare and high quality coins. It provides access for institutionsand individuals wanting to diversify their investment portfolios away from thetraditional asset classes such as equities, property and bonds without the needto be an expert in the coin collecting sector. Its strategy is to investactively in the coin collecting sector in various countries across the world. Itis currently building up an impressive portfolio of coins which it intends tohold both for the medium and long term (i.e. 2 to 5 years), in order to achievemedium and long term capital growth for its shareholders, while also takingadvantage 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 in early 2006, it has raised more than £12.5 million in a numberof financing rounds, including raising £5.0 million (before expenses) inconjunction with its admission to trading on AIM on 24 May 2006, and a further£6.0 million (before expenses) through a placing of new ordinary shares withexisting and new institutional investors in August 2007. For a publicly traded company, Avarae maintains a very low operational cost baseof approximately £0.35 million per annum on an ongoing basis, which includes thecosts associated with all of the Company's numismatic advisers. The coin dealing sector The market for trading coins is international in nature and significant in size.For a number of years now, the market has seen growing interest in the sector,with ever increasing numbers of buyers at auctions and ever higher prices beingpaid across the world, but particularly for the high quality and very rarecoins. This trend has continued throughout 2007 as evidenced at the recentCoinex auction week in London in September where there was a 74 per cent.increase in the total take and also a two thirds increase in the number of lotssold, as compared to 2006. In previous reports we've mentioned the strength of the US market and thesignificant sums being paid for individual US coins, however 2007 has seengrowth in international demand. This has been marked by the increase ininterest, and therefore prices being paid, in coins originating from certainother territories and sectors, particularly Middle Eastern (Islamic coins),Indian, Chinese and Russian coins. The opening up of China over the last few years has witnessed more money beingspent by more people on the same number of coins, as locals look to repatriatetheir heritage. The key period of interest in Chinese coins appears to be the100 years or so from the mid-nineteenth century onwards, when the quality anduniformity improved. At a recent Hong Kong Auction held on 30 August, recordprices were paid and a recent example of the high levels of interest and thehigh returns achievable can be demonstrated by the sale of a mint state Anhweisilver dollar which sold for $34,000, having previously been bought in 2002 for$1,000, a compounded annual uplift of approaching 90 per cent. Prices remain strong for Indian and Russian coins, particularly as a result ofboth the new found wealth creation within those countries and also by expatriatedemand which has continued to fuel the market. This, together with legalrestrictions on Indian coins older than 100 years leaving India has furtherconstrained the supply of Indian coins worldwide. The market for Islamic coins is a relatively nascent one, with the commercialmarket having only really existed for approximately 35 years. However no othercoins series provides such a rich source of data; commencing soon after thedeath of Prophet Mohammed around 650 CE, they provide an unbroken record.However, as a good proportion of the coins are unrecorded, with the rightexpertise available, it is possible to acquire some extremely rare gold Islamiccoins at affordable prices. Avarae's Investments From the date it floated on 24 May 2006 up to 30 September 2007, the Company hasmade a total of eighteen purchases of significant coins or coin collections,investing more than £6.2 million in aggregate. Over the same period it has madeopportunistic disposals of coins on three separate occasions with an aggregatecost value of approximately £102,000 and achieving an aggregate blended grossreturn of 15 per cent. The portfolio now boasts coins from almost 40 different countries and can nowclaim to be a truly "global fund". British coins still form the largestproportion of the fund's investments to date, with coins from Germany, Italy,India and China together making up an aggregate of approximately one-third ofthe portfolio. The balance includes coins from more than 30 other countries fromArgentina right through to the former Yugoslavia. Avarae's intention is to hold the vast majority of its current portfolio for theforeseeable future and only make disposals of coins or collections when it andits Advisory Panel believe it to be in the best interest of the Company and itsshareholders. Financial Results During the period under review, the Company made a number of opportunisticdisposals of coins from within the portfolio totalling £38,000, achieving agross average return of 19 per cent., up from 15 per cent. in the correspondingperiod last year. A number of these coins had only been purchased in theprevious month. Administrative costs during the period of £189,000 include some one-off costsrelating to the Company's fundraising in August. Ongoing half-yearlyadministrative expenses are anticipated to be of the order of not more than£175,000 and include all the ongoing costs and fees associated with its variousnumismatic advisers. It is our intention to keep administration costs atapproximately three per cent. of net asset value. Interest receivable of £65,000 was lower than the corresponding period last yearreflecting the lower cash balances held during the period as the coin portfoliocontinued to grow. However, during the course of the remainder of the currentfinancial year, dependent upon the rate of coin investment, interest income isexpected to cover a large proportion of the administration costs of the Company. Net loss for the period was £118,228, resulting in a loss per share ofapproximately 0.16 pence (2006: loss of 0.07 pence). The Company's coin portfolio of approximately £6.1 million at the period endremains valued at cost and will be subject to a revaluation as part of the fullyear financial results on 31 March 2008. At that time a number of coins willhave been held for almost two years and we expect a number of coins to besubject to some material upward revaluations. During the period, investmentstotalling more than £2.0 million were made. At the period end, the Company had net assets of £11.4 million, of whichapproximately £5.3 million was in cash or short term deposits. The Company hadno borrowing during the period. Net asset value per share stood at 10.3 pence atthe period end, up from 9.6 pence at the corresponding time last year. Outlook The Directors believe that Avarae has made good progress in the period underreview and during October has made investments in important coins worth afurther £0.3 million and made selective disposals of approximately £50,000. We are especially pleased to have secured the £6.0 million additional funding inAugust which enables us to continue to cherry pick the most important coins andcollections which we believe will provide the greatest return to shareholdersover the coming years. The market for rare coins remains a strong one withrecord prices being paid in the major coin auctions during 2007 (New York,London, Hong Kong), all of which augurs well for us when we come to realise someof the rarest and most significant coins and collections within our portfolio.We continue to believe that there is increasing interest from investors seekingto diversify their investments away from the traditional assets of stocks, bondsand property and that holding shares in Avarae enables investors to benefit fromthe solid and predictable returns that can be made from assets such as rarecoins. Although it still remains early in the investment cycle of the Company regardingany significant realisations from the resale of coins, we are optimistic that,as interest in the rare coin market continues to grow and prices continue torise for the very rarest and most important coins, Avarae is well placed to makesome significant gains over the course of the next few years. Brian Hatton, Executive Director, 21 November 2007 AVARAE GLOBAL COINS PLC UNAUDITED INTERIM RESULTS FOR THE PERIOD FROM 1 APRIL 2007 to 30 SEPTEMBER 2007 Unaudited interim income statement 6 Feb. 06 - 6 Feb. 06 - 1 April 07 - 30 Sept. 06 31 March 07 30 Sept. 07 Note £'000 £'000 £'000 Turnover 1b 23 79 38Cost of Sales (20) (70) (32) Gross profit 3 9 6 Administrative expenses (98) (218) (189) Loss on ordinary activities before interest (95) (209) (183)Financial income 4 71 139 65Financial expense 4 0 0 0 Loss on ordinary activities before tax (24) (70) (118)Tax on profit/(loss) on ordinary activities 5 0 0 0 Loss on ordinary activities after taxation (24) (70) (118) Loss per share 3 (0.07p) (0.13p) (0.16p) There were no recognised gains or losses other than the loss for the period. Unaudited interim balance sheet As at As at 31 As at 30 30 Sept 06 March 07 Sept. 07 Note £'000 £'000 £'000 Current Assets Coin inventory 6 2,576 4,067 6,094Debtors 7 130 86 106Cash at bank 3,526 2,017 5,259 Total Assets 6,232 6,170 11,459 Liabilities: amounts falling due within one year 8 295 294 86 Capital and ReservesCalled up equity share capital 621 621 1,101 Share premium 5,340 5,325 10,460 Profit and loss account (24) (70) (188) Total Equity 5,937 5,876 11,373 Total Liabilities 6,232 6,170 11,459 Cash flow statement 6 Feb. 06 - 6 Feb. 06 - 1 April 07 - 30 Sept. 06 31 March 07 30 Sept. 07 Note £'000 £'000 £'000 Net cash outflow from operating activities 10 (2,506) (4,068) (2,438)Returns on investment and servicing of financeInterest received 71 139 65Interest paid 0 0 0 (2,435) (3,929) (2,373)Taxation 0 0 0 Net cash outflow before financing (2,435) (3929) (2,373) FinancingIssue of equity shares 5,961 5,946 5,615 Increase in cash in the period 3,526 2,017 3,242 Reconciliation of net cash to movement in net funds 6 Feb. 2006 - 6 Feb. 2006 - 1 April 2007- 30 Sept.2006 31 March 2007 30 Sept. 2007 £'000 £'000 £'000 Increase in cash in the period 3,526 2,017 3,242 Movement in net funds in period 3,526 2,017 3,242Net funds at start of period 0 0 2,017 Net funds at end of period 3,526 2,017 5,259 Unaudited Statement of Changes in Equity Share Share Retained Total capital premium earnings equity £ 000 £ 000 £ 000 £ 000 Balance at 6 February 2006 - - - - Issue of share capital 621 5,879 (70) 6,430 Issue costs incurred - (554) - (554) Equity dividends - - - - 621 5,325 (70) 5,876 Balance at 31 March 2007 (Audited) 621 5,325 (70) 5,876 Loss for the period ended 30 September 2007 - - (118) (118) Issue of share capital 480 5,520 - 6,000Issue costs incurred - (385) - (385)Equity dividends - - - - 480 5,135 (118) 5,497 Balance at 30 September 2007 (Unaudited) 1,101 10,460 (188) 11,373 Notes to the interim results 1) General information Avarae Global Coins plc ("The Company") is a limited liability company, whichwas incorporated in the Isle of Man on 6 February 2006, and was admitted totrading on AIM on 24 May 2006. The Company undertook no trading prior to itsadmission to trading on AIM. The interim financial statements for the Company have been prepared as at 30September 2007 and for the period of six months then ended. The comparative figures (which commence on 6 February 2006, the date of theCompany's incorporation) are shown on a consistent basis with the figures of thecurrent reported period. The Company's functional currency is sterling as their operations are primarilybased in the United Kingdom, and these interim, unaudited, financial statementsare presented in sterling. 2) Accounting policies The principal accounting policies adopted in the preparation of the interimunaudited financial information are set out below. The policies have beenconsistently applied to all periods presented, unless otherwise stated a) Basis of preparation The interim unaudited financial information on the Company has been prepared inaccordance with International Financial Accounting Standards ("IFRS") whichcomprise standards and interpretations approved by the International AccountingStandards Board and International Accounting Standards and Standings CommitteeInterpretations approved by the International Accounting Standards Committeethat remain in effect. The abridged financial information relating to the period ended 31 March 2007 isbased on an extract from the latest financial statements. The report of theauditors on these financial statements was unqualified. The financialinformation summarised above does not constitute statutory accounts. Thesestatements were presented under United Kingdom accounting standards. Noadjustments have been found necessary to present this comparative informationunder IFRS. b) Turnover Turnover represents the sale of coins exclusive of VAT c) Foreign currency transactions Foreign currency transactions are translated into the functional currency usingthe exchange rate prevailing at the date of the transaction. Any foreignexchange gains and losses resulting from the settlement of such transactions,and from translation at period end of any monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement. d) Segmental analysis The company has only one business segment, that of dealing in collectible coins,and carries out the majority of its operations in the United Kingdom.Therefore the directors do not consider it necessary to prepare a segmentalanalysis. 3) Earnings per Share The loss per share for the period was 0.16 pence. The calculation of earningsper share is based on the loss of £118,228 for the period and the weightedaverage number of shares in issue (75,810,046). 4) Financial Revenues Financial income consists of interest received on bank deposits of £65,000, nofinancial expenditure was incurred. 5) Taxation The Company is subject to Isle of Man income tax at 0%, and made losses in theperiod. Accordingly there is no difference between the tax charged in theaccounts of nil, and the application of the basic applicable tax rate to theCompany's result. 6) Coin Inventory Coin inventory represents the original value of coins purchased, less the costof those sold. It is intended to revalue the coin inventory at the end of eachfinancial year. 7) Debtors As at As at 31 As at 30 30 Sept. 06 March 07 Sept. 07 £'000 £'000 £'000Trade debtors - 58 -Other debtors 49 6 21Prepaid expenses 81 22 85 130 86 106 8) Creditors As at As at 31 As at 30 30 Sept. 06 March 07 Sept. 07 £'000 £'000 £'000 Trade creditors 274 263 86Accruals 21 31 0 295 294 86 All creditors are due within one year. 9) Share Capital As at As at 31 As at 30 30 Sept. 06 March 07 Sept. 07 £'000 £'000 £'000Authorised 200,000,000 ordinary shares of £0.01 each 1,000 1,000 2,000 Allotted, called up and fully paid 110,133,334 ordinary shares of £0.01 each 621 621 1,101 10) Reconciliation of operating loss to net cash outflow from operating activities 6 Feb. 06 - 6 Feb. 06 - 1 April 07 - 30 Sept.06 31 March 07 30 Sept. 07 £'000 £'000 £'000Operating loss (95) (209) (183)(Increase) in debtors (130) (86) (20)(Decrease) in creditors 295 294 (208)(Increase) in inventory (2,576) (4,067) (2,027) (2,506) (4,083) (2,438) 11) Preparation of the Interim Report This report was approved by the Directors on 20 November 2007. The results for the period ended 30 September 2007 are unaudited and do notconstitute statutory accounts as defined in The Companies Acts. The interim report is being sent to shareholders as soon as practicablypossible. In addition copies are available from the Company's registeredoffice, Hillberry Trust Company Limited, Exchange House, 54-58 Athol Street,Douglas, Isle of Man, IM1 1JD This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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