RNS Number:9295K
North American Banks Fund Ltd
24 October 2006
North American Banks Fund Limited
Interim Results - Correction:
The interim results for the 6 months to 30 June 2006 released on 27 September
2006 contained an error in the cash flow statement regarding the allocation
between categories of the net increase in cash and cash equivalents for the
period. The full corrected statement, together with a consequent additional
narrative in note 6, is as follows:
Unaudited for the period 1 January 2006 to 30 June 2006
Investment Manager's Report
North Atlantic Value LLP acts as Investment Manager to the Company and has
overall responsibility for the Company's day-to-day activities and investment
decisions.
In the six months under review the Company called upon its investors for payment
of the outstanding instalment of $5.00 due and payable in relation to each of
the Company's partly paid ordinary shares. Payment was received on 22 June 2006.
As at the time of writing the Company has made six investments, all of which
continue to be held at cost.
1. $4,000,000 in NHB Holdings Inc., a Jacksonville, Florida
based holding company that is in the process of acquiring a Utah state chartered
bank before opening later this year. Operating out of Utah and Florida, the bank
will specialise in banking and mortgage services to middle market corporate
relocation companies. Fellow initial investors include some of the companies the
bank has targeted for banking and mortgage services.
2. $4,000,000 in Bank of Atlanta, a traditional bank offering
banking services to individuals and businesses within the Atlanta metropolitan
area. The bank opened for business on 28 April 2006. Assets and deposits are
growing rapidly and they are looking to open a second office before the end of
the year.
3. $2,200,000 in Mountain Commerce. The company originally
participated in the seed round in November last year; we are adding to that
commitment now in the Private Placement. The bank opened for business on 1
September 2006 with strong local support to exploit opportunities in the East
Tennessee, Western North Carolina and Virginia banking marketplace.
4. $1,500,000 in Trust Atlantic, a de novo bank headed by an
impressive management team, capitalising on the upheaval and growth in the
regional banking market of Raleigh-Durham, North Carolina.
5. $3,420,000 in Florida Capital Group, a nationally
chartered, state-wide bank committed to serving the business community of
Florida.
6. $150,000 - Texas Lone Star, a de novo bank founded by
senior executives of Houston's Amegy Bank, capitalising on the disruption in the
Houston and Dallas banking markets.
Deal flow has been strong since admission of the fund to AIM in June of 2005. At
the time of writing,with over 55% of the fund already invested , the outlook for
the rest of the year is good. The Company's current deal pipeline includes deals
that will expand NABF's footprint further into Tennessee and Florida. Second
round investments on current seed financed banks will also be a use of funds.
Although to date we have yet to write any of our current investments up from
cost, we are satisfied with their performance. Valuation reviews occur on an
ongoing basis, influencing factors at this point in the life of the investments
would be follow-on financing and third party transactions. Midwest Financial
Holdings, a $1,500,000 seed investment made in July last year, is our only cause
of concern. Although at the moment there is no reason to revalue from cost, it
is taking longer than planned to raise the necessary capital for the private
placement; we are monitoring their progress carefully.
The 30 June net asset value of a share in the Fund has moved to reflect the
second instalment and ongoing expenses.
North Atlantic Value LLP
Investment Manager
22 September 2006
Income Statement
Notes 1 Jan 2006 to 5 May 2005 to
30 Jun 2006 31 Dec 2005*
US$ US$
Income
Interest
income 198,858 251,929
Gain on
disposal of
investments - 40,841
--------- ----------
Total income 198,858 292,770
--------- ----------
Expenses
Administration
fees 2 55,152 58,337
Audit fees 20,844 34,416
Bank charges 1,791 1,529
Insurance 10,773 12,964
Custody fees 2 5,444 6,200
Listing fees 4,732 12,253
FT prices fees 1,454 -
Directors'
fees 57,148 72,689
Disbursements 752 1,661
Investment
manager fees 2 235,548 266,781
Printing costs 4,340 -
Regulatory
fees 2,766 8,429
Registrar fees 38,495 28,133
Travel costs 13,270 14,607
Broker fees 13,913 15,227
Legal fees 1,096 6,155
--------- ----------
Total expenses 467,518 539,381
--------- ----------
--------- ----------
Net loss for
the period (268,660) (246,611)
--------- ----------
--------- ----------
Basic and
diluted
earnings per
share 3 (0.071) (0.065)
--------- ----------
* Commencement of operations 10 June 2005.
All items in the above statement are derived from continuing operations.
The accompanying notes form an integral part of the unaudited financial
statements.
Balance Sheet
Notes 30 June 2006 31 Dec 2005
US$ US$
Non-current assets
Available for sale investments 4 16,758,503 5,558,500
Current assets
Prepayments 9,813 11,083
Accrued interest receivable 12,434 31,252
Receivable for shares subscribed 6 50,000 19,000,000
Cash and cash equivalents 19,736,063 12,307,996
----------- -----------
19,808,310 31,350,331
----------- -----------
----------- -----------
Total assets 36,566,813 36,908,831
----------- -----------
Current liabilities
Creditors 5 150,582 223,940
----------- -----------
150,582 223,940
----------- -----------
----------- -----------
Net assets 36,416,231 36,684,891
----------- -----------
Shareholders equity
Share capital 6 38,000 38,000
Share premium 7 36,893,502 36,893,502
Accumulated deficit (515,271) (246,611)
----------- -----------
Total equity 36,416,231 36,684,891
----------- -----------
----------- -----------
Net Asset Value per Share 8 9.58 9.65
----------- -----------
This Interim report was approved by the Board of Directors on 22 September 2006
and signed on its behalf by:
Rupert Evans James Baxter
Director Director
The accompanying notes form an integral part of the unaudited financial
statements.
Statement of Changes in Equity
Notes 1 Jan 2006 to 5 May 2005 to
30 Jun 2006 31 Dec 2005*
US$ US$
Equity at 31
December 2005 36,684,891 -
Loss for the
period (268,660) (246,611)
Issue of
ordinary
shares - 38,000
Premium
arising on
issue of
ordinary
shares - 37,962,000
Issue costs - (1,068,498)
--------- ----------
Equity at 30
June 2006 36,416,231 36,684,891
--------- ----------
* Commencement of operations 10 June 2005.
The accompanying notes form an integral part of the unaudited financial
statements.
Cash Flow Statement
Notes 1 Jan 2006 to 5 May 2005 to
30 Jun 2006 31 Dec 2005*
US$ US$
Operating Activities
Net loss for
the period (268,660) (246,611)
(Increase)/Dec
rease in
receivables 20,088 (42,335)
Increase/(Decr
ease) in
payables (73,358) 223,940
--------- ----------
Cash flow from
operating
activities 321,930 (65,006)
Investing Activities
Proceeds from
sale of
investments 4 - 17,552,000
Purchases of
investments 4 (11,200,003) (23,110,500)
--------- ----------
Cash flow from
investing
activities (11,200,003) (5,558,500)
Financing Activities
Issue costs
paid on
issuance of
ordinary
shares - (1,068,498)
Shares issued 18,950,000 19,000,000
--------- ----------
Cash flow from
financing
activities 18,950,000 17,931,502
--------- ----------
Net increase
in cash and
cash
equivalents at
30 June 2006 7,428,067 12,307,996
--------- ----------
* Commencement of operations 10 June 2005.
The accompanying notes form an integral part of the unaudited financial
statements.
Notes to the Unaudited Financial Statements
1. Significant Accounting Policies
North American Banks Fund Limited is a closed-ended investment company
registered and incorporated in Guernsey. The Company has been established to
invest predominantly in start-up banks based in the US.
The functional currency of the Company is US dollars. These financial statements
are presented in US Dollars.
Basis of Accounting
The unaudited financial statements of the Company have been prepared in
accordance with International Financial Reporting Standards ("IFRS") issued by,
or adopted by, the International Accounting Standards Board (the "IASB"),
interpretations issued by the International Financial Reporting Standards
Committee, applicable legal and regulatory requirements of Guernsey Law and the
Listing Rules of the UK Listing Authority. The financial statements have been
prepared under the historical cost convention, except for the revaluation of
certain financial instruments. The principal accounting policies are set out
below. The preparation of financial statements in conformity with International
Financial Reporting Standards requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.
Fair Values of Financial Instruments
The Company's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. This portfolio
of financial assets is managed and its performance evaluated on a fair value
basis, in accordance with a documented investment strategy, and information
about the portfolio is provided internally on that basis to the Company's Board
of Directors and other key management personnel. Accordingly, upon initial
recognition investments are designated by the company as 'at a fair value
through profit and loss'. They are included initially at fair value, which is
taken to be their cost (excluding expenses incidental to the acquisition which
are written off in the Income Statement, and allocated to 'capital' at the time
of acquisition). Subsequently, the investments are valued at 'fair value', which
for the unlisted investments where there is not an active market, is measured
using an appropriate valuation technique so as to establish what the transaction
price would have been at the balance sheet date.
Gains and losses on non-current asset investments are included in the Income
Statement as capital.
* For certain of the Company's financial instruments, including cash and
cash equivalents, interest and other receivables and accrued expenses, the
carrying amounts approximate fair value due to their immediate or short-term
maturity.
* The Company holds investments in unquoted start-up banks based in
certain regions of the US as part of its investment strategy. These
financial instruments are held at fair value. Where fair value cannot be
reliably measured, such investments will be valued at cost and will be
subject to an annual impairment review. The maximum credit risk amount for
these instruments is the amount at which they are included in the balance
sheet at 30 June 2006.
Fair value estimates are made at a specific point in time, based on market
conditions and information about the financial instruments. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgement and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realised and unrealised
gains and losses are calculated based on specific identified cost.
Notes to the Unaudited Financial Statements (continued)
1. Significant accounting policies (continued)
Other Accruals and Payables
Other accruals and payables are not interest-bearing and are stated at their
nominal value.
Cash and Cash Equivalents
Cash in banks and short-term deposits that are held to maturity are carried at
cost. Cash and cash equivalents are defined as cash in hand and short-term
deposits in banks.
Income
Interest income derived from cash monies is held in current and deposit accounts
throughout the period and is accounted for on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis. The Company's investment
management fee, administration fees and all other expenses are charged through
the Income Statement. The Company has no employees. The Directors are the only
key management personnel of the Company.
Set-up Costs
The preliminary expenses of the Company directly attributable to the equity
transaction and costs associated with the establishment of the Company that
would otherwise have been avoided are taken to the share premium account.
Segmental Reporting
The Directors are of the opinion that the Company is engaged in a single segment
of business of investing in equity investments, issued by companies operating
and generating revenue in the United States, and therefore no segmental
reporting is provided.
Taxation
The Company has obtained exempt company status in Guernsey under the terms of
the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 so that it is exempt
from Guernsey taxation on income arising outside Guernsey and on bank interest
receivable in Guernsey. The Company is, therefore, only liable to a fixed fee of
#600 per annum. The Directors intend to conduct the Company's affairs such that
they continue to remain eligible for exemption.
2. Investment Management, Accounting and Administration, and Custodian Fee
North Atlantic Value LLP serves as the Investment Manager to the Company.
Pursuant to the terms of the Investment Management Agreement, the Investment
Manager is paid periodic fees, monthly in arrears, at a rate equivalent to 1.25
per cent per annum of Committed Capital.
RBSI Fund Services (Guernsey) Limited serves as the Company's custodian and is
paid an annual custodian fee of 0.03% of the Net Assets of the Company payable
monthly in arrears (plus transaction charges).
RBSI Fund Services (Guernsey) Limited also serves as the Company's
administrator. The Administrator is entitled to a fee calculated on the basis of
0.125% of the Net Assets of the Company payable monthly in arrears, subject to
an overall minimum fee of #60,000 per annum.
Notes to the Unaudited Financial Statements (continued)
3. Basic and Diluted Earnings per Share
The basic and diluted earnings per share is based on the net loss for the period
of US$268,660 and a weighted average number of Ordinary Shares in issue during
the period of 3,800,000.
4. Investments
30 June 2006 31 Dec 2005
US$ US$
Fair values at 31 December 2005 5,558,500 -
Additions during the period 11,200,003 23,110,500
Disposals during the period - (17,552,000)
----------- ------------
Fair values at 30 June 2006 16,758,503 5,558,500
----------- ------------
5. Creditors
30 June 2006 31 Dec 2005
US$ US$
Administration fee accrual 8,955 26,024
Audit accrual 36,170 34,416
Custody fee accrual 905 1,841
Directors fee accrual 28,523 27,103
Investment fee accrual 39,041 119,726
Registrar fee accrual 33,238 -
Other payables 3,750 14,830
----------- ------------
150,582 223,940
----------- ------------
6. Share Capital
30 June 2006 30 June 2006 31 Dec 2005 31 Dec 2005
No. of shares US$ No. of shares US$
Authorised:
---------- ---------- ---------- -----------
Ordinary shares of
US$0.01 each 100,000,000 1,000,000 100,000,000 1,000,000
---------- ---------- ---------- -----------
Issued and fully
paid: ---------- ---------- ---------- -----------
Ordinary shares of
US$0.01 each 3,800,000 38,000 3,800,000 38,000
---------- ---------- ---------- -----------
During the period the second instalment of US$5 per share was called from
Shareholders. As at 30 June 2006 the second call on 10,000 shares was still
outstanding; these funds were received shortly after the period end. All other
shares were fully paid up as at 30 June 2006.
7. Share Premium
30 June 2006 31 Dec2005
US$ US$
Balance at 31 December 2005 36,893,502 -
Premium arising on issue of equity shares - 37,962,000
Expenses incurred on issue of equity shares - (1,068,498)
---------- ------------
Balance at 30 June 2006 36,893,502 36,893,502
---------- ------------
Notes to the Unaudited Financial Statements (continued)
8. Net Asset Value
The net asset value per ordinary share is based on net assets at the period end
and on 3,800,000 ordinary shares, being the number of ordinary shares in issue
at the period end.
9. Risk Factors
The main risks to which the Company is exposed are foreign currency, liquidity,
market price, and credit risk:
Foreign Exchange Risk
All of the Company's assets and liabilities are denominated in US dollars. For
investors resident outside the United States or whose functional currency is not
the US dollar, fluctuations in the value of the US dollar may affect the value
of their investment.
Liquidity and Market Price Risk
Unquoted securities, which form all of the Company's investments, will be valued
at their fair value and where their fair value cannot be reliably measured such
securities will be valued at cost. There can be no guarantee that any such
investments will ultimately be realised at any such valuation. The company seeks
to minimise this risk by close monitoring of its' investments by the Board of
Directors and the Investment Manager. In addition, the unquoted nature of the
Company's investments may mean that they may be difficult to realise in a timely
manner or at all.
Credit Risk
Included within current assets is US$50,000 (31/12/2005 US$19,000,000)
receivable for shares subscribed. There is a risk that monies receivable from
investors is not received, or not received on a date on which it is due to be
received. The company has sought to minimise the risk of such events occurring
by stating in the AIM Admission Document that any investor defaulting on payment
for the Second Instalment is liable to have their Ordinary Shares forfeited,
together with the First Instalment thereon.
10. Related Party Transactions
In the Directors' opinion there are no related party transactions to disclose in
accordance with the requirements of IFRS 24.
11. Ultimate Controlling Party
The Directors are not aware of any ultimate controlling party.
12. Approval of the Financial Statements
The unaudited financial statements were approved by the Board of Directors on 22
September 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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