RNS Number : 8525H
Avarae Global Coins PLC
11 November 2008
AVARAE GLOBAL COINS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2008
London (AIM: AVR): 11 November 2008 - Avarae Global Coins plc ("Avarae" or the "Company"), the UK's only publicly traded specialist
investment company dedicated to investing in rare and high quality coins, is pleased to announce its unaudited interim results for the six
months to 30 September 2008.
Highlights for the period include:
* Continued investment in rare and high quality coins in the period with acquisitions of more than �1.40 million, taking the value
of the coin inventory to almost �9.0 million at the period end, equivalent to approximately 8.7 pence per share.
* Purchases of high quality English coins were again prevalent though the Company has diversified significantly over the last 12
months, now holding sizeable and important examples of Islamic, Indian and Chinese coins. Impressive additions in the period, including:
* * George II Proof Guinea, 1727;
* Charles II Petition Crown, 1663;
* Zanzibar Sultan Said Gold 2� Ryals, 1881;
* Elizabeth I Ship Ryal; and
* Charles II Reddite Crown
* Opportunistic sales of �144,000 (2007: �38,000) recorded in the period of a small number of coins recently acquired into the
portfolio.
* Net loss for the period of approximately �0.06 million (2007: loss �0.16 million), resulting in improved loss per share of 0.06
pence.
* Net assets as at 30 September 2008 of �11.22 million, representing 10.9 pence per share, of which 8.7 pence is coin portfolio and
2.2 pence is net cash.
Commenting, Brian Hatton, Executive Director of Avarae, said:
"The Company has made good progress towards further investment in the period and we are very pleased with the way the collection is
building. The market for rare coins remains a strong one and we are seeing record prices being paid in the major coin auctions, which augurs
well for us when we come to realise some of the rarest and most significant coins and collections within our portfolio.
"We expect to see continued interest from investors seeking to diversify their investments away from the traditional assets of stocks,
bonds and property towards the more solid and predictable returns that can be made from assets such as rare coins. Avarae gives these
investors access to those returns without the need to be an expert in the coin-collecting sector.
"With the likelihood of a global recession, Avarae is well positioned as an alternative asset play in the current environment. The
international nature of the coin market allows the Company to continue to take advantage of rising prices across a number of sectors and
importantly take advantage of sectors which may be starting to show some weakness."
For further information on Avarae Global Coins plc, please contact:
Brian Hatton/Matthew Wood +44 (0)16 2461 5614
Avarae Global Coins plc
Stewart Wallace/Lorraine Delannoy +44 (0)20 7523 8350
Collins Stewart Europe Limited
Gordon Puckey/Sarah Scott +44 (0)20 7947 2856/7
Phoenix Financial PR
Directors' Report
Introduction
We are delighted to present the unaudited interim results of Avarae Global Coins plc ("Avarae" or the "Company") for the six months
ended 30 September 2008 to our shareholders. During the period under review the Company made further investments in its portfolio of rare
and high quality coins which, at the period end, stood at approximately �9.0 million, equivalent to approximately 8.7 pence per share. In
line with the Company's stated strategy, no revaluation has been undertaken for the Company's interim results.
Avarae provides access for institutions and individuals wanting to diversify their investment portfolios away from the traditional asset
classes such as equities, property, bonds etc without the need to be an expert in the coin-collecting sector. The Board's strategy is to
invest actively in the rare and highest quality segment of the coin-collecting sector in various countries around the world. We are
currently building 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 long-term 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.
Financing
Avarae is registered and incorporated in the Isle of Man. Since its admission to trading on the London Stock Exchange's AIM market in
May 2006, it has raised approximately �12.0 million from institutional and private investors. The Company does not have, and has never had,
any borrowings. At the period end, Avarae had cash of approximately �2.24 million, equivalent to approximately 2.17 pence per share.
For a publicly traded company, Avarae maintains a low operational cost base of around 3 per cent of net assets per annum, which includes
the costs associated with all of the Company's numismatic advisers and ongoing plc costs.
The coin-dealing sector
Against a backdrop of worsening global economic conditions, the rare coin market has remained resilient over recent months. Important
coin collections have come up for sale worldwide (including in the world's largest market, the US) with auction houses continuing to achieve
record prices, particularly for the highest quality, rare pieces.
As was noted in the Company's full year report and accounts, English, Islamic, Chinese, Indian, Russian and Polish coins are still the
strong sectors within the industry. A recent example of the strong interest in rare coins includes the sale of a Russian Elizabeth 20
Roubles of 1755 for �1.82 million (including buyers premium), more than double the world record for a non-US coin.
Historically, if purchased correctly, investments in rare and high quality coins can reduce the risk of overall investment portfolios
and have produced significantly better returns than investments in equities, bonds or property over a prolonged period. Coins and coin
collections of the highest quality can produce annual compound returns in excess of 10%.
Avarae's investments
In the period to September 2008, the Company acquired approximately �1.40 million worth of coins (H1 2007: �2.05 million), taking the
value of the coin portfolio to �8.99 million (31 March 2008: �7.72 million). The rate of investment in the portfolio slowed marginally
during the period, primarily as a result of the Company's numismatic advisers concentrating on identifying and acquiring specific coins to
complete existing collections or themes within the portfolio and then only those coins of sufficiently high quality and rarity.
Purchases of high quality English coins were again prevalent, although the Company has diversified significantly over the last 12
months, such that it now holds sizeable and important examples of Islamic and Chinese coins. During the period under review, Avarae acquired
some rare and noteworthy coins from Hong Kong's auctions held in August 2008. Examples of rare coins acquired during the period and since
the period end include:
* George II Proof Guinea, 1727;
* Charles II Petition Crown, 1663;
* Zanzibar Sultan Said Gold 2� Ryals, 1881;
* Elizabeth I Ship Ryal; and
* Charles II Reddite Crown
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
During the period, the Company made a number of opportunistic disposals of coins from within the portfolio, totalling �144,000 (H1 2007:
�38,000). The majority of the coins sold were examples of duplicates within the fund which had only been recently acquired for a number of
weeks or months. In line with our stated strategy, the Company will only undertake revaluation exercises at the end of each financial year,
rather than mid-year and, only then, revaluing coins that have been held by the Company for more than 12 months. Accordingly, the �1.40
million of coins acquired in the period under review, together with the �3.36 million of coins acquired during the year to 31 March 2008,
remain valued at cost.
Pleasingly, administrative expenses during the period of �0.18 million were down on the same period in 2007 (H1 2007: �0.19 million),
reflecting the directors continual efforts to keep a tight control on costs. Interest receivable of �0.1 million was higher than last year
(H1 2007: �0.07 million) and is directly attributable to the higher average levels of cash balances held during the period.
Net loss for the period was �0.06 million (H1 2007: loss �0.19 million), resulting in an improved loss per share of 0.06 pence (H1 2007:
loss per share of 0.16 pence).
The Company ended the period with �2.24 million of net cash (H1 2007: �5.26 million). During the period, the Company spent �0.49 million
acquiring 7.0 million of its own ordinary shares of �0.01 each (equivalent to approximately 6.4 per cent of the then issued share capital)
for cancellation. At the period end, the Company had net assets of �11.22 million (31 March 2008: �11.78 million). Despite the decrease in
total net assets during the period, the share buyback resulted in an increase in net assets per share at the period end of almost 2 per cent
to approximately 10.9 pence (31 March 2008: 10.7 pence). As at 10 November 2008, the Company's shares were trading on a discount to its NAV
per share of approximately 40 per cent.
In line with our stated strategy as set out in our AIM Admission document and as the Company remains in its investment phase, no
dividend has been declared in respect of the interim period.
Outlook
The Directors consider that, with the likelihood of a global recession, Avarae is well positioned as an alternative asset play in the
current environment. The international nature of the coin market allows the Company to continue to take advantage of rising prices across a
number of sectors and importantly take advantage of sectors which may be starting to show some weakness.
Since the period end, the Company has continued to be cautious about its investments, acquiring coins for a value of �0.1 million and
realising �0.03 million. Whilst the fund is still primarily in its investment phase, the directors and their advisers are working on making
further realisations during the year ahead.
Unaudited Income Statement
from 1 April 2008 to 30 September 2008
1 April 08 1 April 07 1 April 07
to 30 Sept 08 to 30 Sept 07 to 31 Mar 08
Unaudited Unaudited Audited
Note �'000 �'000 �'000
Revenue
Sales 1 144 38 119
Cost of Sales (134) (32) (103)
Coin revaluation - - 406
---- ---- ----
Gross profit 10 6 422
Administrative expenses (177) (189) (353)
---- ---- ----
(Loss)/Profit on ordinary (167) (183) (69)
activities before:
Finance income 103 65 216
---- ---- ----
(Loss)/Profit on ordinary (64) (118) 285
activities before tax
Tax on (loss)/profit on 0 0 0
ordinary activities
---- ---- ----
(Loss)/Profit on ordinary (64) (118) 285
activities after taxation
---- ---- ----
(Loss)/Profit per share 2 (0.06p) (0.16p) 0.31p
There were no recognised gains or losses other than the loss for the period.
Unaudited Balance Sheet
as at 30 September 2008
As at As at As at
30 Sept 08 30 Sept 07 31 Mar 08
Unaudited Unaudited Audited
Note �'000 �'000 �'000
Assets
Current Assets
Coin inventory 3 8,989 6,094 7,724
Trade and other receivables 4 97 106 74
Cash at bank 2,238 5,259 4,221
---- ---- ----
Total Assets 11,324 11,459 12,019
---- ---- ----
Liabilities and Equity
Creditors: amounts falling due 5 104 86 243
within one year
---- ---- ----
Total Liabilities 104 86 243
---- ---- ----
Equity
Called up equity share capital 6 1,031 1,101 1,101
Share premium 10,038 10,460 10,460
Retained earnings 151 (188) 215
---- ---- ----
Total Equity Shareholders' Funds 11,220 11,373 11,776
---- ---- ----
Total Liabilities and Equity 11,324 11,459 12,019
---- ---- ----
Brian Hatton Neil Orders
Unaudited Cash Flow Statement
as at 30 September 2008
1 April 08 1 April 07 1 April 07
to 30 Sept 08 to 30 Sept 07 to 31 Mar 08
Unaudited Unaudited Audited
�'000 �'000 �' 000
Cash flows from operating
activities:
(Loss)/profit for the period (167) (183) 69
Adjustments for:
(Decrease) in payables (139) (208) (51)
(Increase)/decrease in (23) (20) 12
receivables
(Increase) in inventory (1,265) (2,027) (3,657)
Taxation - - -
---- ---- ----
Net cash flow from operations (1,594) (2,438) (3,627)
Interest received 103 65 216
---- ---- ----
Net cash received from investing 103 65 216
activities
Proceeds from issue of shares - 5,615 5,615
Purchase of own shares for (492)
cancellation
---- ---- ----
Net cash from financing (492) 5615 5,615
activities
---- ---- ----
Net (decrease)/increase in cash (1,983) 3,242
and cash equivalents 2,204
---- ---- ----
Opening cash position 4,221 2017 2,017
---- ---- ----
Closing cash and cash equivalents 2,238 5,259 4,221
---- ---- ----
Unaudited Statement of Changes in Equity
as at 30 September 2008
Company Share capital Share premium Retained Earnings Total
�'000 �'000 �'000 �'000
At 31 March 2007 621 5,325 (70) 5,876
Issue of shares (net) 480 5,135 5,615
Loss for the period (118) (118)
---- ---- ---- ----
At 30 September 2007 1,101 10,460 (188) 11,373
Profit for the period 403 403
---- ---- ---- ----
At 31 March 2008 1,101 10,460 215 11,776
Share repurchase (70) (422) (492)
Loss for the period (64) (64)
---- ---- ---- ----
At 30 September 2008 1,031 10,038 151 11,220
---- ---- ---- ----
Notes to the Unaudited Interim Financial Statements:
(1) Accounting policies
Basis of accounting
The unaudited interim financial statements have been prepared under the historical cost convention and in accordance with International
Financial Reporting Standards. The accounting policies and methods of computation in the unaudited interim financial statements are the
same as those of the audited financial statements 31 March 2008.
Share repurchase
On 21 August 2008, the Company announced a market purchase of 7,000,000 of its own ordinary shares of 1 pence each ("Ordinary Shares")
for cancellation. These shares were purchased at a price of 7 pence each and represented approximately 6.36 per cent of the issued share
capital of the Company on 20 August 2008. As at 30 September 2008 and the date of this document, the Company had 103,133,334 Ordinary Shares
in issue.
(2) Earnings per share
The (loss) per share for the period was 0.06p (H1 2007: 0.16p). The calculation of earnings per share is based on the loss of �64,000
for the period and the weighted average number of shares in issue 108,756,285 (75,810,046).
(3) Coin inventory
At the end of each financial year, the coin inventory is revalued to market value less the VAT payable on sale. Inventory purchased
since 31 March 2008 is shown at its original cost price and has not been the subject of any revaluations. The valuation of the portfolio
held as at 31 March 2008 was carried out by independent experts and only those coins held by the Company for at least 12 months were the
subject of a revaluation exercise. This is considered by the directors to give a fair value for the inventory. The directors anticipate
undertaking a further revaluation exercise for the coming financial year end.
(4) Trade and other receivables
As at As at As at
30 Sept-08 30 Sept 07 31 Mar 08
Unaudited Unaudited Audited
�'000 �'000 �'000
Trade debtors 8 - 13
Prepaid expenses 89 106 61
---- ---- ----
Total 97 106 74
---- ---- ----
(5) Payables
As at As at As at
30 Sept-08 30 Sept 07 31 Mar 08
Unaudited Unaudited Audited
�'000 �'000 �'000
Trade creditors 32 86 171
Accrued expenses 72 - 72
---- ---- ----
104 86 243
---- ---- ----
All creditors are due within one year.
(6) Share capital
As at As at As at
30 Sept 08 30 Sept 07 31 Mar 08
Unaudited Unaudited Audited
�'000 �'000 �'000
Authorised
ordinary shares of �0.01 each 2,000 2,000 2,000
---- ---- ----
Allotted, called up and fully paid
103,133,334 ordinary shares of �0.01 1,031 1,101 1,101
each
---- ---- ----
(7) Preparation of the Interim Report
This report was approved by the Directors on 10 November 2008.
The results for the period ended 30 September 2008 are unaudited and do not constitute statutory accounts as defined in The Companies
Act.
The interim report is being sent to shareholders as soon as practicably possible. In addition, copies are available from the Company's
registered office, Ground Floor, West Suite, 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 Exchange
END
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