Interim Results
17 Juillet 2006 - 6:49PM
UK Regulatory
THIRD ADVANCE VALUE REALISATION COMPANY LIMITED
Preliminary announcement of interim results for the period from 21
October 2005 to 31 May 2006
* Significant realisation progress in first period.
* 26% of original value returned (�19.5 million).
* Holdings reduced from 114 to 60 in period.
* Progress continues in difficult market conditions.
* Next redemption of Preference Shares will be in November 2006.
CHAIRMAN'S STATEMENT
Third Advance Realisation Company Limited ("TAVR" or "the Company")
has made a steady start in its first reporting period and has made
good progress towards achieving its objectives of obtaining liquidity
and value for its shareholders. The Company has already realised more
than a quarter of the value of its acquired portfolio.
The Company was formed to provide a service for institutions wishing
to rationalise their portfolios of smaller listed company shares and
holdings in companies that have moved to AIM from the Main Market.
The Company was admitted to the Official List on 21 December 2005,
with a further tranche of shares from a supplemental placing being
admitted on 11 January 2006. The launch of the Company was by way of
a "stock swap" whereby it issued Ordinary Shares at 100p each and
Redeemable Preference Shares at 100p each, in the ratio 30/70, as
consideration for the acquisition, at mid-market value, of holdings
in 114 smaller companies. The aggregate value of holdings acquired in
the initial and supplemental placings was �76.1 million.
TAVR is managed by Progressive Value Management Limited ("PVML" or
"the Manager"), which has developed considerable expertise in
achieving value and liquidity from such stocks. PVML was the manager
of Advance Value Realisation Company Limited and Second Advance Value
Realisation Company Limited which entered into members' voluntary
liquidations in September 2003 and June 2005 respectively, both
having realised their entire portfolios and returned cash to their
shareholders ahead of schedule.
In the period from the Company's launch to 31 May 2006, stock market
conditions were mixed with relative strength in the earlier part
followed by more difficult conditions. In falling markets,
illiquidity tends to be more pronounced on companies with low market
capitalisations and small trades can have a disproportionately
negative impact on share prices. As a result several holdings have
seen considerable markdowns, certainly from post-float peaks.
However, the Manager has been active during the reporting period,
realising �23.8 million from the sale of TAVR portfolio holdings. The
Company bought in 0.5 million of its Preference Shares at a small
discount to par value and redeemed a further 19 million Preference
Shares at par. As a result the number of preference shares remaining
in issue is 33,763,200.
The change from mid-market to bid share pricing as a result of
modifications to UK accounting standards introduced on 31 December
2005 had an impact on TAVR as on other investment companies. For
TAVR, the reduction in value at 31 December 2005, amounted to �1.4m,
2% of the fund's valuation. Owing to the gearing of the Company's
share structure, the impact on the net asset value ("NAV") of TAVR's
Ordinary shares was a reduction of 6p at that time.
The NAV, excluding revenue reserves, attributable to each Ordinary
Share (net of the expenses of the flotation and valuing investments
at mid-market acquisition cost) at launch was 92.30p. At 31 May 2006,
this had moved to 93.04p on a bid price basis. The NAV per Ordinary
Share has increased since the period end and as at 14 July 2006 was
98.66p. The weighted average NAV, which takes account of the
Preference Shares and cash returned to investors, moved from 97.69p
(net of share issue expenses) at launch to 97.86p at 31 May 2006.
Net revenue return per Ordinary Share for the period to 31 May 2006
was 1.19p. As stated in the prospectus the Company expects to pay its
first dividend, if any, in April 2007 and accordingly the directors
are not declaring an interim dividend.
Since the period end, the Manager has continued to realise value from
the portfolio holdings, a number as a result of public takeovers, and
has accumulated approximately �5m cash, which, together with further
realisation proceeds, will be available for redemption or buy-back of
Preference Shares in the current period. Your Board is encouraged by
this start to the second half of the year.
ROBERT NORBURY
17 July 2006
INCOME STATEMENT
21 October 21 October 2005 to 21 October
2005 31 May 2006 2005 to 31
to 31 May Capital May 2006
2006 Total
Revenue
�'000 �'000 �'000
Gains/(losses) on
investments
Realised - 2,256 2,256
Unrealised - (1,804) (1,804)
452 452
Income - from 656 - 656
investments 92 - 92
- bank
interest
748 452 1,200
Investment management (314) (314) (628)
fees
Other expenses (166) - (166)
Return on ordinary
activities before tax 268 138 406
Taxation - - -
Return after taxation 268 138 406
Return per Ordinary 1.19p 0.61p 1.80p
Share
The Company was incorporated on 21 October 2005. There are no
comparatives as this is the Company's first period of operations and
accordingly the above figures relate to the period from commencement
of operations on 21 December 2005 to 31 May 2006.
The total column is the profit and loss account of the company.
All capital and revenue items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the period.
Return per Ordinary Share is based on the weighted average number of
22,495,594 Ordinary Shares in issue from the Company's launch on 21
December 2005 to 31 May 2006.
BALANCE SHEET
At 31 May 2006
�'000
FIXED ASSETS
Investments at market value 52,773
CURRENT ASSETS
Sales for future settlement 174
Other debtors 365
Cash at bank and in hand 2,320
2,859
CURRENT LIABILITIES
Accrued liabilities 353
NET CURRENT ASSETS 2,506
TOTAL NET ASSETS 55,279
CAPITAL AND RESERVES
Share capital 5
Capital redemption reserve 2
Share premium account 17,303
Special reserve for purchase of own (see note 10) 37,563
shares
Capital reserves 138
Revenue reserve 268
EQUITY SHAREHOLDERS' FUNDS 55,279
Net asset value per Ordinary Share 94.22p
Net asset value excluding revenue 93.04p
reserves per Ordinary Share
Net asset value per Redeemable 100.00p
Preference Share
No. of Ordinary Shares in issue 22,836,717
No. of Redeemable Preference Shares 33,763,200
in issue
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
21 October 2005 to
31 May
2006
�'000
Profit for financial period 406
Placing of Company's shares* 74,365
Purchase and redemption of Company's
shares (19,492)
Closing shareholders' funds 55,279
* net of share issue expenses
CASH FLOW STATEMENT
21 October 2005 to 31 May
2006
�'000
OPERATING ACTIVITIES
Cash inflow from investment income and 396
bank interest
Cash outflow from management expenses (454)
Cash inflow from disposal of investments 23,627
Net Cash Inflow from Operating 23,569
Activities
FINANCING
Expenses of issue of share capital (1,757)
Payments to purchase own shares (19,492)
NET CASH OUTFLOW FROM FINANCING (21,249)
INCREASE IN CASH 2,320
NOTES
1 Comparatives
There are no comparatives as this is the Company's first reporting
period. The Company was incorporated on 21 October 2005 and listed
on the London Stock Exchange on 21 December 2005.
2 Investments
Investments are listed on the London Stock Exchange or quoted on
AIM. All investments have been classified as "fair value through
profit and loss". At the period end investments have been valued at
market bid prices.
3 Investment management fees
One half of the basic and capital return fees payable have been
charged to capital.
4 Redemption of Preference Shares
On 31 May 2006 the first redemption of Preference Shares took place
and 19,000,000 shares were redeemed at �1 per share.
5 Purchase of own shares
During the period, the Company purchased 522,473 of its own
Redeemable Preference Shares for cancellation, at an aggregate cost
of �492,108.
6 Net assets per Ordinary Share
Net assets per Ordinary Share are based on the number of Ordinary
Shares in issue at the end of the period after attributing a net
asset value of �1 to each Preference Share in issue at the end of the
period.
7 Dividend
In accordance with the Company's stated policy, the directors do not
recommend an interim dividend.
8 Investment company status
The Company is incorporated in Guernsey and tax resident in the
United Kingdom. It manages its affairs to enable it to qualify as an
investment trust for taxation purposes under section 842 of the
Income and Corporation Taxes Act. The Company therefore presents its
accounts in accordance with the Statement of Recommended Practice for
Investment Trust Companies.
9 Status of this report
These financial statements are not the Company's statutory accounts.
They are unaudited. The interim report will be sent to shareholders
and copies will be made available to the public at the office of the
Secretary and the UK Administration Agent of the Company. The
interim report was approved by the Board on 17 July 2006.
10 Special reserve for purchase of own shares
At 31 May 2006
�'000
Redesignation from share premium account 38,057
Cost of purchase of Preference Shares (492)
Cost of redemption of Preference Shares - nominal (2)
value
37,563
On 17 March 2006, an application to the Royal Court of Guernsey to
reduce the share premium account by �38,057,388 was approved. The
reserve created by cancelling that amount is used to redeem the
nominal value of Redeemable Preference Shares and to repurchase both
Redeemable Preference Shares and Ordinary Shares.
Registered office:
1 Le Marchant Street
St Peter Port
Guernsey
GY1 4HP
UK office:
Crusader House
145-157 St John Street
London
EC1V 4RU
For further information, please contact Robert Legget at Progressive
Value Management Limited (020 7566 5552).
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Copyright � Hugin ASA 2006. All rights reserved.
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