TIDMAVR
RNS Number : 4610Q
Avarae Global Coins PLC
01 September 2014
News Release 01 September 2014
AVARAE GLOBAL COINS PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2014
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
2014.
Highlights for the year:
-- Sales of GBP1.6 million (2013: GBP1.1 million);
-- Profit on ordinary activities of GBP0.3 million (2013: GBP0.4 million);
-- Recommended full year dividend of 0.15 pence per share (2013: 0.18 pence);
-- Carrying value of portfolio of rare and high quality coins of
GBP10.6 million (2013: GBP10.9 million);
-- NAV per share increased for the 8(th) year in succession to 14.5 pence (2013: 14.4 pence).
Commenting on the results, Diane Clarke, Director of Avarae,
said:
"With worldwide economies now emerging from the financial crisis
of 2008, Avarae remains well positioned as an alternative asset
investment. Where other alternative asset plays have suffered as a
result of the downturn and the reduction in available investment
capital, Avarae has continued upwards, 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. 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, 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:
Diane Clarke/Matt Wood +44 (0)16 2461 5614
Avarae Global Coins plc
Adrian Hadden/James Bavister +44 (0)20 7220 1666
WH Ireland Limited
Toby Hall
GTH Communications Limited +44 (0)7713 341072
Directors' Report
Introduction
We are pleased to present the annual report for the year ended
31 March 2014. 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 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 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 potentially achievable over the
medium to long-term for the highest quality and rarest coins are
expected to be around 10 per cent, which is 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 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.
Activity in the rare coin market has remained positive in the
year to 31 March 2014, although one needs to possess the necessary
expertise in identifying which sectors are most appropriate for
investment. 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 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 2014, the Company acquired GBP0.63
million worth of coins (2013: GBP1.2 million), resulting in the
value of the coin portfolio as at 31 March 2014 being GBP10.62
million (2013: GBP10.93 million). This reduction in purchase value
is a symptom of the lack of available high quality pieces rather
than any change in strategy. 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 English and Islamic coins.
Examples of coins acquired during the year include:
-- A very rare J Edward The Black Prince, Hardi d'Or; La
Rochelle Mint, half-length figure of Prince standing facing, sword
in his right hand, left hand pointing, fillet of roses in hair. We
believe to be a very high quality and rare piece;
-- A very rare Edward III, Guyennois d'Or, La Rochelle; third
type, King walking right under portico, two lions below, Mint
letter R on top of right column;
-- Edward VII (1901-10), Satin Finish Proof Sovereign, 1908 C,
Ottawa, Canada Mint, engraved by George William De Saulles, bare
head facing right. Extremely rare with an estimated mintage of only
636 pieces;
-- One of the finest, if not the finest known, Queen Mary of
England, 1553 excessively rare, Ship Ryal in superb condition;
and
-- A beautiful and rare Charles I, 1642 Triple Unite from the
famous Bridgewater House sale in 1972.
Sales
The highlight for the period under review was the sale of GBP0.9
million of Roman gold coins sold at auction in the USA in January
2014. This generated a healthy 23 per cent, gross margin over its
March 2013 carrying value of GBP0.7 million. The balance of revenue
was made up in a large part from sales of our holding of European
coins, which we felt had reached maturity.
During the year, the Company also continued its efforts to
rebalance the portfolio, liquidating some of the lower value items
and inferior duplicates previously acquired as part of important
collections. This process is ongoing and we expect to generate
several hundred thousand pounds of sales during the current
financial year as a result of this exercise. We ended the period
under review with less than 1,100 coins, a reduction from almost
1,200 at the beginning of the period.
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 2014 was GBP1.6 million, up on the previous year's
total of GBP1.1 million.
As at 31 March 2014, 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 2013 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, which the
Directors believe to have been particularly conservative this year,
was that the overall carrying value of the portfolio as at 31 March
2014 has decreased to GBP10.62 million (2013: GBP10.93 million).
The primary factor in this reduction was that we added only GBP0.6
million of coins to the portfolio, whereas we sold coins with a
brought forward carrying value of approximately GBP1.3 million. The
Directors would expect coins from the portfolio to achieve
appreciably higher returns if sold at auction, as demonstrated by
the 23 per cent. increase in carrying value achieved on the sale of
Roman gold coins in January 2014.
The result of the revaluation exercise at 31 March 2014 is that,
as at that date, the Company's coin portfolio comprised of coins
purchased at cost for an aggregate GBP8.21 million (2013: GBP8.59
million) and a revaluation amount of GBP2.41 million (net of VAT
payable on sale) (2013: GBP2.34 million).
The effect of the revaluation, together with the profits from
the coin sales, resulted in the Company recording a gross profit of
GBP0.66 million (2013: GBP0.71 million). Administrative expenses
during the year were GBP0.41 million (2013: GBP0.36 million). Net
profit for the year of GBP0.25 million (2013: GBP0.36 million),
delivered earnings per share of 0.31p (2013: 0.44p).
The Company ended the year with a net cash balance of
approximately GBP0.2 million compared to GBP0.4 million reported at
the end of March 2013. This was largely due to trade receivables
being GBP1.7 million at the year end, some GBP1.3 million higher
than at the beginning of the year. A significant proportion of this
balance has been received post year end.
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 GBP0.8million.
During the year, investments of GBP0.63 million (2013: GBP1.2
million) were made in coins and coin collections. At year end, the
Company had net assets of GBP11.74 million (2013: GBP11.63 million)
and no borrowings. Net asset value per share ("NAV") as at 31 March
2014 again increased on the prior year to 14.5 pence (2013: 14.4
pence).
Dividend
Reflecting the Company's continued increase in its NAV
year-on-year and the Board's cautiously optimistic outlook, the
Board is pleased to recommend a full year dividend of 0.15 pence
per share (2013: 0.18 pence per share), subject to shareholder
approval to be sought at the Company's annual general meeting to be
held on 13 October 2014. The dividend will be paid on or around 24
October 2014 to shareholders on the register on17 October 2014.
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 2014,
the level of the dividend will be approximately GBP0.12 million
(2013: GBP0.15 million).
Outlook
With worldwide economies now emerging from the financial crisis
of 2008, Avarae remains well positioned as an alternative asset
investment. Where other alternative asset plays have suffered as a
result of the downturn and the reduction in available investment
capital, Avarae has continued upwards, 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. The
Directors, therefore, remain optimistic about the Company's future
prospects.
Statement of Comprehensive Income for the year ended 31 March
2014
Year ended Year ended
31-Mar-14 31-Mar-13
Note GBP'000 GBP'000
Revenue
Sales 1 1,592 1,102
Cost of Sales (1,301) (995)
Coin revaluation 5 367 605
---- ----
Gross profit 658 712
---- ----
Administrative expenses (406) (359)
---- ----
Profit on ordinary activities
before: 252 353
Finance income 1 2
---- ----
Profit on ordinary activities
before tax 253 355
Tax on profit on ordinary activities 3 - -
---- ----
Profit on ordinary activities
after taxation 253 355
---- ----
Dividends (145) (149)
---- ----
Retained profit for the year 108 206
---- ----
Earnings per share (basic and
diluted) 4 0.31p 0.44p
Statement of Financial
Position as at 31
March 2014 As at As at
31-Mar-14 31-Mar-13
Note GBP'000 GBP'000
Assets
Current Assets
Coin inventory 5 10,621 10,926
Trade and other receivables 6 1,810 398
Cash at bank 171 368
---- ----
Total assets 12,602 11,692
---- ----
Liabilities and equity
Creditors: amounts
falling due within
one year 7 860 58
---- ----
Total Liabilities 860 58
---- ----
Equity
Called up equity share
capital 8 808 808
Share premium 8,880 8,880
Profit and loss account 2,054 1,946
---- ----
Total Equity Shareholders'
Funds 11,742 11,634
---- ----
Total Liabilities
and equity 12,602 11,692
---- ----
Cash Flow Statement for the year ended 31 March 2014
Note Year ended Year ended
31-Mar-14 31-Mar-13
GBP'000 GBP'000
Cash flows from operating
activities:
Profit on ordinary activities
for the year 253 353
Adjustments for:
Increase/(decrease) in payables 802 (172)
(Increase) in receivables (1,414) (151)
Decrease/(increase) in inventory 306 (814)
---- ----
Net cash flow from operations (53) (784)
---- ----
Interest received 1 2
---- ----
Net cash from investing
activities 1 2
---- ----
Dividends paid 9 (145) (149)
---- ----
Net cash from financing
activities (145) (149)
---- ----
Net (decrease)/increase
in cash and cash equivalents (197) (931)
Opening cash position 368 1,299
---- ----
Cash and cash equivalents
at 31 March 171 368
--- --- --- ---
Statement of Changes in Equity for the year ended 31 March
2014
Retained
Company Share capital Share premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2012 808 8,880 1,740 11,428
Profit for the year - - 355 355
Dividends paid - - (149) (149)
At 31 March 2013 808 8,880 1,946 11,634
--- --- --- ---
Profit for year - - 253 253
Dividends paid - - (145) (145)
--- --- --- ---
At 31 March 2014 808 8,880 2,054 11,742
Notes to the audited results for the year ended 31 March
2013
(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.
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-14 31-Mar-13
GBP'000 GBP'000
Profit before tax 253 355
---- ----
Isle of Man tax at 0% - -
---- ----
Tax expense for the - -
year
(4) Earnings per share
The retained earnings per share (basic and diluted) for the year
ended 31 March 2014 was 0.31p (2013: 0.44p). The calculation of
earnings per share is based on the profit of GBP253,000 (2013:
GBP355,000) for the year and the weighted average number of shares
in issue being 80,783,334 (2013: 80,783,334).
(5) Coin inventory
As at
31-Mar-14
Coins GBP'000
At Cost
At 01 April 2013 8,586
Additions 628
Disposal of coins (999)
----------
At 31 March 2014 8,215
----------
Revaluation
At 01 April 2013 2,340
Revaluation for the year 367
Disposal of coins (301)
At 31 March 2014 2,406
----------
Net Book Values
At 31 March 2014 10,621
==========
At 31 March 2013 10,926
==========
At the year end, only those coins that had been acquired by the
Company before 31 March 2013 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 2014 has been
carried at cost. This is considered by the directors to give a fair
value for the inventory. Inventory of GBP10,620,470 (2013:
GBP10,926,000) is carried as 'Inventory carried at fair value less
costs to sell'. The purchase cost of inventory held at 31 March
2014 was GBP8,214,761 (2013: GBP8,586,152).
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
As at As at
31-Mar-14 31-Mar-13
GBP'000 GBP'000
Trade debtors 1,749 368
Other debtors 47 21
Prepaid expenses 14 9
---- ----
Total 1,810 398
---- ----
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-14 31-Mar-13
GBP'000 GBP'000
Trade creditors 800 -
Accrued expenses 60 58
---- ----
860 58
---- ----
All creditors are due within one year.
(8) Share capital
As at As at
31-Mar-14 31-Mar-13
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 (2013: 80,783,334) 808 808
---- ----
(9) Dividends
Reflecting the Company's continued increase in its NAV
year-on-year and the Board's cautiously optimistic outlook, the
Board is pleased to recommend a full year dividend of 0.15 pence
per share (2013: 0.18 pence per share), subject to shareholder
approval to be sought at the Company's annual general meeting to be
held on 13 October 2014. The dividend will be paid on or around 24
October 2014 to shareholders on the register on 17 October
2014.
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 2014,
the level of the dividend will be approximately GBP0.12 million
(2013: GBP0.15 million) or 0.15 pence per share (2013: 0.18 pence
per share).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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