TIDMAVR
RNS Number : 7087L
Avarae Global Coins PLC
04 August 2011
News Release 4 August 2011
AVARAE GLOBAL COINS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011
Avarae Global Coins plc ("Avarae" or the "Company"), the UK's
only publicly traded specialist company dedicated to investing in
rare and high quality coins, is pleased to announce its final
audited results for the year ended 31 March 2011.
Highlights for the year:
-- Sales of coins and coin collections in the year increased by
more than 75% to GBP2.19 million (2010: GBP1.22 million);
-- Profit on ordinary activities up more than 20% to GBP0.45
million (2010: GBP0.37 million);
-- Earnings per share up by 49% to 0.52p (2010: 0.35p);
-- NAV per share increased to 13.6p at the year-end (2010:
12.6p);
-- Carrying value of portfolio of rare and high quality coins of
GBP10.07 million (2010: GBP10.34 million); and
-- Net cash of GBP0.44 million at year end (2010: GBP0.82
million).
Commenting on the results, Diane Clarke, Director of Avarae,
said:
"Despite the continued economic difficulties throughout the
wider financial market, credit agencies downgrading sovereign
debts, and inflationary pressures, Avarae has again successfully
demonstrated that it is a genuine alternative asset play in the
current financial environment, as evidenced by it reporting
material increases in profits and NAV for the year, together with
some successful realisations of its investment portfolio.
Since the year end, the Company has made modest additions to the
portfolio with a value of approximately GBP0.12 million and has
made disposals for a total of just over GBP0.05 million. The
Company has a strong balance sheet, including a coin portfolio with
a current carrying value, as reported on by industry experts, of
GBP10.07 million. The Directors, therefore, remain optimistic about
the Company's future prospects."
The Company's audited report and accounts, together with the
notice of the AGM, have today been 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:
Diane Clarke/Matt Wood +44 (0)16 2461 5614
Avarae Global Coins plc
Adrian Hadden/Lorraine Delannoy +44 (0)20 7523 8350
Collins Stewart Europe Limited
Gordon Puckey +44 (0)20 7947 2856
Phoenix Financial PR
Directors' Report
Introduction
We are pleased to present the annual report for the year ended
31 March 2011 to our shareholders. The following pages show the
financial position of the Company for the year ended 31 March 2011.
During the year under review, the Company continued to manage its
portfolio of rare and high quality coins.
The Company provides access for institutions 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
Board's strategy, as set out in its AIM admission document, is to
invest actively in the rare and highest quality segment of the
coin-collecting sector in various countries around the world. The
investing policy of the Company is set out in more detail
below.
Investing policy
The Company's investment policy is to invest in rare, high
quality antique coins and coin collections from across 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. The value of each
investment is expected to range from a few hundred pounds up to
GBP750,000. The most expensive coin acquired by Avarae to date is
the Edward III Double Florin which was acquired for GBP0.4 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 an
investment 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 the value of the coins
acquired. Compound annual returns potentially achievable over the
medium to long-term for the highest quality and rarest coins are
expected to be around 10 per cent., in line with historical
averages. 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 a number of years now, 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.
The coin market has proved buoyant over the last 12 months.
Auction houses continue to achieve record prices, particularly for
the highest quality, rare pieces.
Directors' Report (continued)
The Chinese, Russian, Indian and ancient coin markets have
performed particularly well over the last year and demand for
English coins continues to increase, which is encouraging given the
Company's relatively large exposure to the highest quality English
coins.
Avarae's investments
In the year to 31 March 2011, the Company acquired GBP1.1
million worth of coins (2010: GBP1.1 million), resulting in the
value of the coin portfolio as at 31 March 2011 being GBP10.07
million (2010: GBP10.34 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 Roman gold coins with the
acquisition of gold Aurei and Solidi of Probus, Licinius II,
Marcian, Nerva, Faustina Jnr, Gordian, Herennia Etruscilla and
Honoria. 2010/11 was also a year of repositioning of some of the
sectors previously acquired and disposing of a number of lower
value items acquired as part of other collections.
Top quality hammered English gold continues to be in demand and
during the year we added an exceptional Queen Anne Five Guinea
piece from 1711. We also acquired two extremely rare Edward VIII
coins, a silver threepence and a bronze halfpenny and we now own
four different denominations of Edward VIII.
As in previous years, we also increased our holding in Indian
and Islamic gold coins.
We have continued our interest in building up unique collections
of particular sectors of rare coins that our Advisory Panel
believes will be of significant value in the years to come.
Furthermore, a focus remains on picking up extremely rare coins,
where there are only a few examples known to exist worldwide.
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 2011 increased by more than three quarters on the
previous year to GBP2.19 million (2010: GBP1.22 million).
As at 31 March 2011, in line with the strategy outlined in our
AIM admission document and in previous reports, the Company
instructed industry experts to undertake a detailed revaluation of
its coin portfolio. As has been documented, there are numerous
examples of rare, high quality coins and collections being sold
which historically have resulted in an approximate 10 per cent.
annual compound return on average and therefore the Directors
believed that an annual revaluation of the coin portfolio is a
necessity.
The Directors have again taken an extremely prudent approach to
the revaluation exercise instructing experts in the various sectors
in which the Company held coins. These experts considered the open
market resale value of only those coins that had been held within
the portfolio for more than 12 months, i.e. only those coins
acquired and held by Avarae on or before 31 March 2010 and
excluding those purchased during the financial year under
review.
Directors' Report (continued)
The result of the extensive revaluation exercise, carried out on
items as described in the accounting policies, was that the overall
carrying value of the portfolio as at 31 March 2011 has increased
by GBP0.66 million (2010: increase of GBP0.61 million). The
Directors consider this uplift in value to be particularly
conservative and would expect coins from the portfolio to achieve
appreciably higher returns if sold at auction. The effect of the 31
March 2011 revaluation exercise is that, as at 31 March 2011, the
Company's coin portfolio comprised of coins purchased at cost for
an aggregate GBP8.26 million (2010: GBP9.06 million) and a
revaluation amount of GBP1.81 million (net of VAT payable on sale)
(2010: GBP1.28 million).
The effect of the revaluation, together with the profits from
the coin sales, resulted in the Company achieving a comparable
gross profit to the previous year of GBP0.81 million (2010: GBP0.81
million). The directors continually strive to keep the Company's
cost base to a minimum. As a result, administrative expenses during
the year were down materially on the previous year at GBP0.37
million (2010: GBP0.44 million) and now represent less than 3.4 per
cent. of the Company's net assets (2010: 4.0 per cent.). Interest
receivable of GBP0.004 million was, as expected, marginally lower
than last year (2010: GBP0.01 million) and is directly attributable
to the lower levels of cash balances held during the year. Net
profit for the year rose almost 20 per cent. to GBP0.45 million
(2010: GBP0.38 million), resulting in an increase in EPS of more
than 48% to 0.52p (2010: 0.35p).
The Company ended the year with approximately GBP0.44 million of
net cash, down from GBP0.82 million at the end of March 2010. The
Company's cash is prudently managed across a spread of accounts,
thereby reducing the risks of the creditworthiness of any one
financial institution. During the year, investments of GBP1.1
million (2010: GBP1.1 million) were made in coins and coin
collections. As at the year end, the Company had net assets of
GBP10.9 million (2010: GBP11.1 million) and no borrowings. Net
asset value per share ("NAV") as at 31 March 2011 increased by more
than 7 per cent. to 13.6 pence (2010: 12.6 pence). Since March
2007, being the date of the Company's first audited accounts, the
Company has delivered an annual compound increase in its NAV of
approximately 9.5 per cent.
Purchases of own shares for cancellation
On 26 and 27 August 2010, the Company acquired 1,250,000 and
100,000 of its own ordinary shares ("Ordinary Shares"),
respectively for cancellation. On 10 December 2010, the Company
acquired a further 6,000,000 Ordinary Shares for cancellation.
Accordingly, during the year ended 31 March 2011, the Company
acquired an aggregate of 7,350,000 Ordinary Shares for cancellation
for a total consideration of approximately GBP0.63 million,
including expenses, which reduced the Company's issued ordinary
share capital to 80,783,334 Ordinary Shares.
Change of Director
As previously announced, Tanya O'Carroll resigned from the Board
on 17 September 2010 to pursue other interests and was replaced by
Clement Chambers, an experienced numismatist and company director,
on 16 November 2010. Clement has also joined the Company's Advisory
Panel and we look forward to gaining from his continued input over
the coming months and years.
Directors' Report (continued)
Outlook
Despite of the continued economic difficulties throughout the
wider financial market, credit agencies downgrading sovereign
debts, and inflationary pressures, Avarae has again successfully
demonstrated that it is a genuine alternative asset play in the
current financial environment, as evidenced by it reporting
material increases in profits and NAV for the year, together with
some successful realisations of its investment portfolio.
Since the year end, the Company has made modest additions to the
portfolio with a value of approximately GBP0.12 million and has
made disposals for a total of just over GBP0.05 million. The
Company has a strong balance sheet, including a coin portfolio with
a current carrying value, as reported on by industry experts, of
more than GBP10.1 million. The Directors, therefore, remain
optimistic about the Company's future prospects.
Statement of Comprehensive Income for the year ended 31 March
2011
Year ended Year ended
31-Mar-11 31-Mar-10
Note GBP'000 GBP'000
Revenue
Sales 1 2,188 1,224
Cost of Sales (2,037) (1,021)
Coin revaluation 8 664 607
---- ----
Gross profit 815 810
---- ----
Administrative expenses (369) (441)
---- ----
Profit on ordinary activities
before: 446 369
Finance income 5 4 11
Finance expenses 5 - -
---- ----
Profit on ordinary activities
before tax 450 380
Tax on profit on ordinary activities 6 - -
---- ----
Profit on ordinary activities
after taxation 450 380
---- ----
Earnings per share (basic and 7 0.52p 0.35p
diluted)
Statement of Financial Position as at 31 March 2011
As at As at
31-Mar-11 31-Mar-10
Note GBP'000 GBP'000
Assets
Current Assets
Coin inventory 8 10,067 10,340
Trade and other receivables 9 461 20
Cash at bank 435 822
---- ----
Total assets 10,963 11,182
---- ----
Liabilities and equity
Creditors: amounts falling
due within one year 10 40 78
---- ----
Total Liabilities 40 78
---- ----
Equity
Called up equity share
capital 12 808 881
Share premium 8,880 9,438
Profit and loss account 1,235 785
---- ----
Total Equity Shareholders'
Funds 10,923 11,104
---- ----
Total Liabilities and
equity 10,963 11,182
---- ----
Cash Flow Statement for the year ended 31 March 2011
Note Year ended Year ended
31-Mar-11 31-Mar-10
GBP'000 GBP'000
Cash flows from operating
activities:
Profit on ordinary activities
for the year 446 369
Adjustments for:
(Decrease) in payables (39) (35)
(Increase)/Decrease in receivables (440) 523
Decrease/(Increase) in inventory 273 (702)
---- ----
Net cash flow from operations 240 155
---- ----
Interest received 4 11
---- ----
Net cash from investing
activities 4 11
---- ----
Purchase of own shares for
cancellation (631) (1,242)
---- ----
Net cash from financing
activities (631) (1,242)
---- ----
Net decrease in cash and
cash equivalents (387) (1,076)
Opening cash position 13 822 1,898
---- ----
Cash and cash equivalents
at 31 March 13 435 822
---- ----
Statement of Changes in Equity for the year ended 31 March
2011
Retained
Company Share capital Share premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2009 1,101 10,460 405 11,966
Share capital reduction (220) (1,022) - (1,242)
Profit for the year - - 380 380
--- --- --- ---
At 31 March 2010 881 9,438 785 11,104
Share capital reduction (73) (558) - (631)
Profit for year - - 450 450
--- --- --- ---
At 31 March 2011 808 8,880 1,235 10,923
--- --- --- ---
Notes to the Financial Statements for the year ended 31 March
2011
(1) Accounting policies
Basis of accounting
The financial statements have been prepared under the historical
cost convention and in accordance with International Financial
Reporting Standards (IFRS). This is the fourth year that the
Company has prepared its financial statements in accordance with
IFRSs, having previously prepared its financial statements in
accordance with previous accounting standards. The functional
currency is GBP-Sterling.
Adoption of new and revised International Financial Reporting
Standards ("IFRS"):
In the current year, the company has adopted the following new
and revised standards and interpretations issued by the
International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee
("IFRIC") of the IASB that are relevant to its operations during
the year, The adoption of these new and revised standards and
interpretations has not resulted in any changes to the company's
accounting policies that would affect the amounts reported for the
current or prior years.
IFRS 8 - Operating Segments effective 1 January 2010
IAS 1 - Presentation of Financial Statements effective 1 January
2010
IAS 7 - Statement of cashflows effective 1January 2010
IAS 32 - Financial Instruments Presentation effective 1 February
2010
IAS 36 - Impairment of Assets effective 1 January 2010
IAS 39 - Financial Instruments: Recognition and Measurement
effective 1 January 2010
Revenue recognition
The Company's sales consist of sales of coins or collections of
coins and accounted for on an accruals basis.
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.
Year ended Year ended
31-Mar-11 31-Mar-10
GBP'000 GBP'000
Profit before tax 450 380
---- ----
Isle of Man tax at 0% - -
---- ----
Tax expense for the - -
year
---- ----
(4) Earnings per share
The earnings per share (basic and diluted) for the year ended 31
March 2011 was 0.52p (2010: 0.35p). The calculation of earnings per
share is based on the profit of GBP450,000 (2010: GBP380,000) for
the year and the weighted average number of shares in issue being
85,506,348 (2010: 108,459,361).
(5) Coin inventory
At the year end, only those coins that had been acquired by the
Company before 31 March 2010, 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 2011 has been
carried at cost. This is considered by the directors to give a fair
value for the inventory. Inventory of GBP10,067,000 (2010:
GBP10,340,000) is carried as 'Inventory carried at fair value less
costs to sell'. The purchase cost of inventory held at 31 March
2011 was GBP8,259,165 (2010: GBP9,058,000).
(6) Trade and other receivables
As at As at
31-Mar-11 31-Mar-10
GBP'000 GBP'000
Trade debtors 439 -
Prepaid expenses 22 20
---- ----
Total 461 20
---- ----
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
As at As at
31-Mar-11 31-Mar-10
GBP'000 GBP'000
Accrued expenses 36 61
Other creditors 4 17
---- ----
40 78
---- ----
All creditors are due within one year.
(8) Share capital and premium
As at As at
31-Mar-11 31-Mar-10
GBP'000 GBP'000
Authorised
200,000,000 ordinary shares of GBP0.01
each 2,000 2,000
---- ----
Allotted, called up and fully paid
80,783,334 ordinary shares of GBP0.01
each (2010: 88,133,334) 808 881
---- ----
On 26 and 27 August 2010, the Company acquired 1,250,000 and
100,000 Ordinary Shares, respectively for cancellation. On 10
December 2010, the Company acquired a further 6,000,000 Ordinary
Shares for cancellation. Accordingly, during the year ended 31
March 2011, the Company acquired an aggregate of 7,350,000 Ordinary
Shares for cancellation for a total consideration of approximately
GBP0.63 million, including expenses.
The cost to the company of acquiring its own shares, over and
above the nominal value of those shares, has been accounted for by
way of a deduction to the share premium account.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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